Managing for Quality and Competitiveness

Managing for Quality and Competitiveness
Part 3 Managing for Quality and Competitiveness Part 3 of your textbook is: Managing for Quality and Competitiveness. © 2015 McGraw-Hill Education.

CHAPTER 6 CHAPTER 7 CHAPTER 8 The Nature of Management
Organization, Teamwork, and Communication CHAPTER 8 Managing Service and Manufacturing Operations 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.

Learning Objectives LO 6-1 Define management and explain its role in the achievement of organizational objectives. LO Describe the major functions of management. LO Distinguish among three levels of management and the concerns of managers at each level. LO Specify the skills managers must have to be successful. LO Describe the different types of leaders and how leadership can be used to empower employees. LO Summarize the systematic approach to decision making used by many business managers. 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.

The Importance of 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 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.

Management Functions 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.

Management Functions Planning is the process of determining the organization’s objectives and deciding how to accomplish them; the first function of management 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 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.

Crisis Management/Contingency Planning
Management Functions Establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission Strategic Plans Short-range plans designed to implement the activities and objectives specified in the strategic plan Tactical Plans Very short-term plans, specify actions individuals, work groups, or departments must accomplish to achieve the tactical plan and ultimately the strategic plan Operational Plans An element in planning that deals with potential disasters Crisis Management/Contingency Planning 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.

Management Functions Organizing
The structuring of resources and activities to accomplish objectives in an efficient and effective manner 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.

Manager’s duties include
Management Functions Staffing Hiring of people to carry out the work of the organization 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.

Management Functions 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.

Management Functions Downsizing
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 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.

Management Functions Directing
Motivating and leading employees to achieve organizational objectives 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.

Control involves five activities
Management Functions Controlling 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 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.

Levels of Management 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.

Importance of Management Functions to Managers in Each Level
Levels of Management 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.

Levels of Management 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 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.

Levels of Management 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.

Levels of Management Middle Managers Those 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 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.

Levels of Management First-Line Managers Those who supervise both workers and the daily operations of an organization 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.

Areas of Management At each level, managers specialize in: 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 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.

Productions and Operations Managers
Areas of Management Productions and Operations Managers Develop and administer the activities involved in transforming resources into goods, services and ideas ready for the marketplace 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

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 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 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”. August 7, (September 24, 2013). SOURCE: Lauren Webber. “Robots Need Managers, Too”. August 7, (September 24, 2013).

Human Resources Managers
Areas of Management Human Resources Managers Handle the staffing function and deal with employees in a formalized manner 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

Specific jobs are found in areas such as
Areas of Management Marketing Managers 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 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

Areas of Management IT managers are tasked with
Information Technology (IT) Managers Responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks 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

Administrative Mangers
Areas of Management Administrative Mangers Manage an entire business or a major segment of a business; they are not specialists but coordinate the activities of specialized managers 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.

Skills Needed by Managers
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.

Leadership The ability to influence employees to work toward organizational goals 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.

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 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.

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 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.

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.

Where Do Managers Come From?
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.

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

Recognizing and Defining the Decision Situation
Decision Making 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.

Decision Making 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.

Decision Making 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.

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 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 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 Pages SOURCE: Robert D. Gatewood, Robert R. Taylor, and O.C. Ferrell. Management: Comprehension, Analysis, and Application. Austen Press: Homewood, IL Pages

The Reality of Management
Managers spend a lot of time establishing and updating an agenda of goals and plans for carrying out their responsibilities 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 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.

The Reality of Management
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. Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals

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. 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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