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Understanding the Management Process
Chapter 6 Understanding the Management Process
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Learning Objectives Define what management is.
Describe the four basic management functions: planning, organizing, leading and motivating, and controlling. Distinguish among the various kinds of managers in terms of both level and area of management. Identify the key management skills and the managerial roles. Explain the different types of leadership. Discuss the steps in the managerial decision-making process. Describe how organizations benefit from total quality management. Summarize what it takes to become a successful manager today.
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Management …the process of coordinating people and other resources to achieve the goals of an organization.
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Figure 6.1: The Four Main Resources of Management
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Organizational Resources
Material ─ tangible physical resources Human ─ people, most important asset Financial ─ funds organization uses to meet obligations to investors and creditors Informational ─ knowledge about changes in the industry
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Figure 6.2: The Management Process
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Planning …establishing organizational goals and deciding how to accomplish them.
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Planning Mission A statement of the basic purpose that makes an organization different from others. Strategic planning The process of establishing an organization’s major goals and objectives and allocating the resources to achieve them.
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Establishing Goals and Objectives
Goal An end result an organization is expected to achieve over a one- to ten-year period. Set at every level of company Must be consistent among levels Optimization = balancing process Objective A specific statement detailing what the organization intends to accomplish over a shorter period of time.
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Plan …an outline of the actions by which an organization intends to accomplish its goals and objectives.
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Figure 6.3: Types of Plans
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Strategic Plan …an organization’s broadest plan, developed as a guide for major policy setting and decision making.
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…a smaller-scale plan developed to implement a strategy.
Tactical Plan …a smaller-scale plan developed to implement a strategy.
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…a type of plan designed to implement tactical plans.
Operational Plan …a type of plan designed to implement tactical plans.
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Contingency Plan …a plan that outlines alternative courses of action that may be taken if an organization’s other plans are disrupted or become ineffective.
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Organizing …the grouping of resources and activities to accomplish some end result in an efficient and effective manner.
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Leading and Motivating
Leading ─ influencing people to work toward a common goal Motivating ─ providing reasons for people to work in best interests of an organization; people’s motivations vary Leading + Motivating = Directing
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Controlling …the process of evaluating and regulating ongoing activities to ensure that goals are achieved.
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Figure 6.4: The Control Function
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Managers’ Classifications
Level in organization Area of management
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Levels of Management Top Manager Guides/controls overall fortunes of an organization Middle Manager Implements the strategy and major policies developed by top management First-Line Manager Supervises the activities of operating employees
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Figure 6.5: Management Levels Found in Most Companies
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Figure 6.6: Areas of Management Specialization
Spotlight How Much Do Executives in Selected Business Areas Earn Yearly? Source: accessed November 25, 2008.
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Manager Specialists Financial Manager Responsible for financial resources Operations Manager Manages systems that convert resources into goods/services Marketing Manager Facilitates exchange of products between organization and its customers/clients Human Resources Manager Manages employee programs and employment practices Administrative Manager Not associated with any specific function; provides overall administrative guidance/leadership
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Effective Managers Possess certain important skills Are able to use those skills in a number of managerial roles
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Key Management Skills Technical ability to accomplish a specialized activity Conceptual ability to think in abstract terms Interpersonal ability to deal effectively with people inside and outside organization
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…a set of expectations that one must fulfill.
Role …a set of expectations that one must fulfill.
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Managerial Roles Decisional ─ involves aspects of decision making Interpersonal ─ deals with people Informational ─ gathers or provides information
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Decisional Roles Entrepreneur ─ voluntary initiator of change Disturbance Handler ─ resolves emotional differences Resource Allocator ─ decides how resources should be distributed in the organization Negotiator ─ brings resolution to conflicting points of view
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Interpersonal Roles Figurehead Liaison Leader
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Informational Roles Monitor Disseminator Spokesperson
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…the ability to influence others.
Leadership …the ability to influence others. Formal Informal
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Styles of Leadership Authoritarian Laissez-faire Democratic
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Best Leadership Style? The ‘best’ leadership seems to occur when the leader’s style matches the situation.
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Rules for Leaders Audit your company cultures.
Informed people don’t fear change. Beware “Aspirational Accounting.” Empower your people─turn them loose. Prevent erosion of human assets. Be generous with what you know. Expand your roster. Don’t judge a man by the size of his wallet. Harness your skills for good. Groom your people for success. Fast Company, “25 Rules for Leaders,”
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Figure 6.7: Major Steps in Decision Making
…the act of choosing one alternative from a set of alternatives.
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…the discrepancy between an actual condition and a desired condition.
Problem …the discrepancy between an actual condition and a desired condition.
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Rules of Decision Making
Know what decision should accomplish Allow time to make decision “Sleep on” critical/complex decisions Ask the right questions Seek other opinions Understand the risks Be aware of resources Obtain new information
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Generating Alternatives
Brainstorm “Blast! Then Refine.” Trial and Error
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…describes a solution that is only adequate and not ideal.
“Satisfice” …describes a solution that is only adequate and not ideal.
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Implementation Requires
Time Planning Preparation of personnel Evaluation of results
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Total Quality Management
…the coordination of efforts directed at improving customer satisfaction, increasing employee participation, strengthening supplier partnerships, and facilitating an organizational atmosphere of continuous quality improvement.
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Components of TQM Customer Satisfaction Employee Participation Strengthening Supplier Partnerships Continuous Quality Improvement
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Critical Issues That Affect TQM Success
Top management must give it top priority and frequent attention Management must coordinate specific elements of TQM to work in harmony with each other
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Financial Benefits of TQM
Lower operating costs Higher return on sales/investments Ability to use premium pricing
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Successful Manager Today
Long work hours Time spent getting information from individuals Personal skills Oral communication Written communication Computer Critical thinking
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Highest Paid CEOs, 2008 Rank Name Company Pay ($mil) 1
Lawrence J. Ellison Oracle 192.92 2 Frederic M . Poses Trane 127.1 3 Aubrey K . McClendon Chesapeake Energy 116.89 4 Angelo R. Mozilo Countrywide Financial 102.84 5 Howard D. Schultz Starbucks 98.6 6 Nabeel Gareeb MEMC Electronic Mats 79.56 7 Daniel P. Amos Aflac 75.16 8 Lloyd C . Blankfein Goldman Sachs Group 73.72 9 Richard D. Fairbank Capital One Financial 73.17 10 Bob R. Simpson XTO Energy 72.27 11 Richard S. Fuld, Jr. Lehman Bros Holdings 71.9 Source: Forbes.com, “CEO Compensation,”
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Chapter Quiz People in an organization are what type of resources?
Material Informational Inventory Human Financial
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Chapter Quiz (cont.) In executing their functions, managers must first
organize activities. establish goals. motivate employees. evaluate activities. select employees.
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Chapter Quiz (cont.) Roles such as entrepreneur, disturbance handler, and resource allocator are types of _____________roles. interpersonal informational decisional leadership ownership
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Chapter Quiz (cont.) One type of leadership style is laissez-faire.
CEO. entrepreneur. negotiator. bureaucratic.
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Chapter Quiz (cont.) All of the following are reasons for a greater focus on quality by U.S. firms except competition from foreign firms. customers that are more demanding. unpredictability on Wall Street. poorer financial performance. reduced market share.
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