1. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Chapter 1 Management and Its Evolution

2. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 2 The performance of organizations depends to a large extent on how their resources are allocated and their ability to adapt to changing conditions. Successful organizations know how to manage people and resources efficiently and effectively to accomplish organizational goals and to keep those goals in tune with changes in the external environment.

3. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 3 Management in the New Millennium A firm can be efficient by making the best use of people, money, physical plant, and technology. It is ineffective if its goals do not provide a sustained competitive advantage. A firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions.

4. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 4 Management Functions PlanningOrganizing LeadingControlling

5. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 5 Planning The management function that assesses the management environment to set future objectives and map out activities necessary to achieve those objectives. To be effective, the objectives of individuals, teams, and management should be coordinated to support the firm’s mission.

6. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 6 Organizing The management function that determines how the firm’s human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to achieve desired goals. The deployment of resources to achieve strategic goals.

7. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 7 Leading The management function that energizes people to contribute their best individually and in cooperation with other people. This involves:  Clearly communicating organizational goals  Inspiring and motivating employees  Providing an example for others to follow  Guiding others  Creating conditions that encourage management of diversity

8. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 8 Controlling The management function that measures performance, compares it to objectives, implements necessary changes, and monitors progress. Many of these issues involve feedback or identifying potential problems and taking corrective action.

9. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 9 Management as a Set of Roles Day-to-day management activities are routine, orderly, and rational. These include:  Interpersonal roles - communication with superiors, peers, subordinates, and people from outside the organization.  Information Roles - obtaining, interpreting, and giving out information.  Decisional Roles - choosing among competing alternatives.

10. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 10 Interpersonal & Informational Roles Interpersonal Roles Figurehead-visible personality representing an organization, department, or unit Leader-energizes others to get the job done properly Liaison-links together the activities of people both inside and outside of the organization. Informational Roles Include monitor and disseminator

11. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 11 Decisional Roles Entrepreneur-introduces changes in the organization Disturbance handler-takes corrective action, provide damage control, and responds to unexpected situations or crisis Resource allocator-assigns people and other resources to best meet organizational needs Negotiator-reaches agreements and makes compromises

12. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 12 Strategic Managers Tactical Managers Operational Managers Levels of Management

13. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 13 Strategic Managers The firm’s senior executives with overall responsibility for the firm.

14. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 14 Tactical Managers Responsible for translating the general goals and plans developed by strategic managers into specific objectives and activities.

15. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 15 Operational Managers Lower-level managers who supervise the operations of the organization.

16. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 16 Today’s Organizations More decentralization Employees have more autonomy to define their jobs, prioritize tasks, allocate time, monitor their own work, and set their own objectives. Empowerment allows employees to be less dependant on superiors to tell them what to do, and are encouraged to use their own ideas. Department barriers are breaking down by creating more teams.

17. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 17 Teams Cross-functional teams Composed of individuals from different parts of the organization Cross-disciplinary Composed of team members with diverse background Define the problem, set objectives, establish priorities, proposes new ways of doing things, and assigns members to different tasks.

18. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 18 The Evolution of Management Thought Early Management Thought Contemporary Management Approach Behavioral Perspective Administrative Management Approach Operational Perspectives Bureaucratic Management Approach

19. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 19 Early Management Thought Early ideas about management strategy  Sun Tzu, The Art of War Early ideas about leadership  Nicolò Machiavelli, The Prince Early ideas about the design and organization of work  Adam Smith, The Wealth of Nations division of labor

20. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 20 The Operational Perspective Scientific Management  Frederick W. Taylor Quantitative Management  Ford W. Harris Quality Management  Walter A. Shewhart

21. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 21 Taylor’s Four Principles of Scientific Management Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

22. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 22 Bureaucratic Management Approach Max Weber Key Characteristics Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit

23. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 23 Administrative Management Approach Division of work Authority Discipline Unity of command Unity of direction Subordination of individual interest to the general interest Remuneration Centralization Scalar chain Order Equity Stability and tenure Initiative Esprit de corps Henry Fayol’s 14 Principles of Management

24. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 24 Behavioral Perspective Mary Parker Follett & the Hawthorne Studies Mary Follett questioned the wisdom of scientific management because she believed it ignored many ways in which employees could contribute ideas and exercise initiative. –She advocated increased employee participation, autonomy, and organization of teams It acknowledges that psychological and social processes of human behavior can result in improvements in productivity and work satisfaction.

25. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 25 Behavioral Perspective  The Hawthorne effect - when a manager shows concern for employees, their motivation and productivity levels are likely to improve.  Human Relations Approach - the relationship between employees and a supervisor is a vital aspect of management. Employee motivation Leadership style

26. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 26 Physical Needs Need for Security Need for Social Relations Need for Self Esteem Self-Actualization Maslow’s Hierarchy of Needs

27. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 27 McGregor’s Theory X and Theory Y Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition.  A negative perspective on human behavior. Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization.  A positive perspective on human behavior.

28. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 28 Contemporary Management Approach Systems Theory Contingency Theory The Learning Organization Perspective

29. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 29 Systems Theory Views the organization as a system of interrelated parts that function in a holistic way to achieve a common purpose. Systems theory concepts that affect management thinking:  Open and closed systems  Subsystems  Synergy  Equifinality

30. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 30 Contingency Theory States that there is no “one best way” to manage an organization.  Because what works for one organization may not work for another  Situational characteristics (contingencies) differ  Managers need to understand the key contingencies that determine the most effective management practices in a given situation

31. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 31 The Learning Organization The management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. Rather than reacting to change, which is a normal part of the business landscape, organizations need to anticipate change so they are well positioned to satisfy customer needs.

32. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 32 Emerging Perspectives and Issues The Modular Organization Every function not regarded as crucial is outsourced to an independent organization. “Disaggregated Corporation” The Intangible Organization Shifts from tangible (plant and equipment) to intangible (know-how and product design) investments Mangers and employees in today’s companies focus on opportunities rather than efficiencies