Introduction

The Management Process:

Planning: selection of goals for the organization
Organizing: managers must match an organizaitons structure to its goals
and resources, a process called organizational design
Leading
Controlling: establish standards of performance; measuring current
performance comparing this performance to established standards and
taking corrective action if deviations are detected

Innovative developments in small businesses:
1) Workers Defining their own jobs
2) Open-book policy of sharing business operations information with employees
3) Opportunity for employees to develop the versatility of management
practices that workers need in todays challenging work environment
Types of Managers:
1) First line managers: foreman or production supervisor
2) Middle managers
3) Top managers: CXOs, VPs, President overall mgmt of organization
Demings fourteen points for quality improvement for top managers:
1) Create constancy of purpose for improvement of product and service
2) Adopt the new philosophy
3) Cease dependence on mass inspection
4) End the practice of awarding business on price tag alone
5) Constantly and forever improve the system of production and service
6) Institute modern methods of training on the job
7) Institute leadership
8) Drive out fear
9) Break down barriers between staff areas
10) Eliminate slogans, exhortations, and targets for the work force
11) Eliminate numerical quotas
12) Remove barriers to pride of workmanship
13) Institute a vigorous program of education and training
14) Take action to accomplish the transformation
Note:
The marketing function commonly consists of sales, promotion, distribution
and market research activities. Functional Managers handle each specific
area and General Managers handle the overall operations
Managers must look at change as a constant in their lives
Henry Fayol (management theorist) identified 3 skills every manager must possess:
1) Technical Skill
2) Human Skill
3) Conceptual Skill: see the organization as a whole, understand and
anticipate how a change in any of its parts will affect the whole
Example:
NUMMI (New United Motor Manufacturing Inc. marked the 1
st
JV between GM(US)
and Toyota(Japan) at Fremont, California plant. It produces Toyota Corolla and
Toyota trucks through its 3 goals:
1) To serve management by improving overall quality and productivity
2) To serve workers by involving them in the design and control of their own
work
3) To encourage learning, to communicate innovation and to systematize
continuous improvement
Note:
Toyota Production System [TPS] operating philosophy:
1) Kaizen
2) Kanban: reduce costs with JIT
3) Development of full human potential
4) Build mutual trust
5) Developing team performance
6) Treating every employee as a manger
7) Providing a stable livelihood for all employees
Note: Ethics of an Organization
1) Nike has developed a technological process model of recycling every type of
shoe the company makes except for cleated models
2) Ethics deals with both conflict and opportunity in human relationships
3) child-care hotline, education hotline, part-time & flexible working for
women is needed to become more responsive to changes in cultural and
gender diversities in a fast-changing business environment
4) MBWA: Management by walking around


The Evolution of Management Theory
Example:
Body Shop [boutique and cosmetics company](1976) owner Anita Roddick
says, She allocates promotional money to social activism instead of
consumer advertising. She is always available to press. She respects and
adheres both to the staffs expectations and Citys (Londons Wall Street)
expectations

Note:
Ford company established in 1903 and Model T [the affordable mass
produced automobile] built in 1908 to cater to all masses in general
GM founder Alfred Sloan (1920s) made Buick, Oldsmobile, Pontiac,
Cadillac, Chevrolet lines to cater to different segments of the public
The Scientific Management School [Frederick Taylor (worked with Ford), Henry
Gantt (initially worked with Taylor), Frank & Lillian Gilbreth (husband-wife team)]
focussed on increasing productivity by improving worker efficiency
Taylors philosophy is based on 4 basic principles:
1. The development of a true science of management: time study and devise
the best suited method
2. The scientific selection of workers: differential (pay) rate system (incentive
system)
3. The scientific education and development of the worker
4. Intimate, friendly cooperation between management and labour
Note:
Taylors idea was to break each function or operation into much smaller
units so that each could be mechanized and speeded up and eventually
flow into a straight line production of little pieces becoming steadily
larger
Limitations:
Undue worker pressure and exploitation
Gantts technique:
1. Incentive for supervisor who trains workers to meet daily set targets
2. Gantt chart for production scheduling
Note: basis was Gantt Chart
CPM (Critical Path Method) developed by Du Pont
PERT (Program Evaluation and Review Technique developed by the Navy
Lotus 1-2-3 is also a creative application
Gilbreths:
Using motion picture cameras, they tried to find the most economical
motions for each task in order ot upgrade performance and reduce fatigue.
Classical Organization Theory School (founder: Henry Fayol)
He drew up a blueprint for a cohesive doctrine of management, investigated
managerial behaviour and systematized it. He was interested in total organization
and focused on management.
Fayols 14 Principles of Management:
1) Division of labour
2) Authority (but with relevant expertise will be long-term sustainable) of
managers
3) Discipline (respect rules and regulations)
4) Unity of Command (Each employee must receive instruction from only one
person
5) Unity of Direction (All operations must have the same objective, should be
directed by only one manager using one plan)
6) Subordination of Individual interest to the Common Good
7) Remuneration for work done
8) Proper degree of Centralization so manager has the final say and subordinates
also enjoy their space to work properly
9) Organization must have proper hierarchy
10) Order: Materials and people (particularly) must be in the jobs or positions they
are most suited to
11) Equity: Managers should be both friendly and fair to their subordinates
12) Stability of staff: low attrition
13) Initiative: Subordinates must be given the freedom to conceive and carry out
their plans
14) Espirit de Corps: Promoting team spirit will give the organization a sense of
unity
Max Weber
He considered the ideal organization to be a bureaucracy whose activities and
objectives were rationally thought out and whose divisions of labour were
explicitly spelled out. He also believed that technical competence should be
emphasized and that performance evaluations should be made entirely on the basis
of merit.
Mary Parker Follett
She believed that individuals could combine their diverse talents into something
bigger and her holistic model of control took into account not just individuals and
groups, but the effects of such environmental factors as politics, economics, and
biology.
Chester Barnard
People come together in formal organizations to achieve ends they cannot
accomplish working alone
An enterprise can operate efficiently and survive only when the
organizations goals are kept in balance with the aims and needs of the
individuals working for it, i.e. people should be able to work in stable and
mutually beneficial relationships over time
The greater the employees zone of indifference (i.e what the employee
would do without questioning the managers authority), the smoother and
more cooperative and organization would be. He understood the role of
individual worker as the basic strategic factor in organization.
The Behavioural School : The Organization is People
To managers frustration, people did not always follow predicted or
expected patterns of behaviour. So, several theorists tried to strengthen
classical organization theory with the insights of sociology and psychology.
Hawthorne experiments:
1. The researchers (Elton Mayo from Harvard and associates) concluded that
employees (test group) would work harder if they believed management was
concerned about their welfare and supervisors paid special attention to
them called the Hawthorne effect
2. Since the control group received no special supervisory treatment or
enhancement of working conditions but still improved its performance, they
speculated that the control groups productivity gains resulted from the
special attention of the researchers themselves
3. Mayos concept was of social man to complement the old concept of
rational man motivated by personal economic needs
Example
At Sky Chiefs, a $45o mn airline in-flight services operations company, they
realised that for a successful restructuring (downsizing and reassigning the roles
of employees), instead of management dictating what would happen, the
employees who are seen as the backbone of the company should be empowered
to facilitate this process. So, prior to restructuring process, an employee-
managed restructuring committee was selected by management to assemble,
interpret, and evaluate the data; help those who were to be let go, extensive
counselling and outplacement services were provided, including group
workshops on networking, interviewing techniques, and hiring. Now, after
restructuring, productivity and operating profits were increasing because
remaining employees had accepted their new roles and responsibilities, and
morale continues to improve.
From Human Relations (Mayo) to the Behavioural Science Approach
(Abraham Maslow and Douglas McGregor)
1. People wanted more than instantaneous pleasure or rewards, viz. self-
actualizing people. Since, many lower-level needs (physical and safety
needs) are satisfied in contemporary society, most people are motivated
more by the higher-level ego and self-actualizing needs
2. But, some behavioural scientists refute this claim and chose the more
realistic model of human motivation, as complex person i.e. no two
people are exactly alike and tailors motivational approaches according to
individual needs
McGregor proposed another angle on this complex person idea.
He distinguished two alternative basic assumptions about people and
their approach to work called Theory X and Theory Y, taking
opposite view of peoples commitment to work in organizations.
Theory X managers assume that people must be constantly coaxed
into putting forth effort in their jobs. Theory Y managers assume that
people relish work and eagerly approach their work as an opportunity
to develop their creative capacities.
Note:
In accordance with McGregors thinking, GE CEO Jack Welch argues,
We are going to win on our ideas, not by whips and chains.
The Management Science School
By pooling the expertise of mathematicians, physicists, and other scientists in OR
teams, the British and Americans (during World War II) were able to achieve
significant technological and tactical breakthroughs. Over the years, OR
procedures were formalized into what is now called the management science
school.
The OR team constructs a mathematical model that shows all relevant
factors bearing on the problem and how they are interrelated. By changing
the values of the variables in the model (such as increasing the cost of raw
materials) and analyzing the different equations of the model with a
computer, the team can determine the effects of each change.
Eventually, the management science tam presents management with a na
objective basis for making a decision
Drawback: It promotes an emphasis on only the aspects of the organization
that can be captured in numbers, missing the importance of people and
relationships
Recent development in Management Theory
1. The Systems Approach
Rather than dealing separately with the various segments of an
organization, this theory views the organization as a unified,
purposeful system composed of interrelated parts
The activity of any segment of an organization affects, in varying
degrees, the activity of every other segment
E.g. Production managers prefer long uninterrupted production runs
of standardized products in order to maintain maximum efficiency
and low costs. Marketing managers want to offer customers quick
delivery of a wide range of products and would like a flexible
manufacturing schedule that can fill special orders on short notice
Systems oriented production manager trade-offs and balances the
production runs accordingly. For this, they must mesh their
department with the whole enterprise
Subsystems (parts that make up whole system); Synergy (whole is
greater than sum of its parts); Open & Close Systems (automobile-
open; monastery or prison-close (do not interact with the
environment); System Boundary; Flow(man, material, information);
Feedback

The Contingency Approach (situational approach)
When methods highly effective in one situation failed to work in other
situations, they (mangers, consultants and researchers) sought an
explanation and understood that a managers task is to identify which
technique will, in a particular situation, under particular circumstances,
and at a particular time, best contribute to the attainment of management
goals.
E.g. for improving worker productivity: if the workers are unskilled and
training opportunities and resources are limited, work simplification would
be the best solution. However, with skilled workers driven by pride in their
abilities, a job-enrichment program might be more effective.
E.g. Taco Bell(restaurant chain) redefined business based on the simple
premise that customers value food, service, and the physical appearance of
the restaurant. So, they outsourced much of the assembly-line food
preparation, such as shredding lettuce, allowing employees to focus on
customers, bringing a 60% growth in sales
Entering an era of Dynamic Engagement
New Organizational Environments
Ethics and Social Responsibility
Globalization and Management
Inventing and Re-inventing Organizations
Cultures and Multiculturalism
Quality
The dynamic engagement approach challenges us to see organizations and
management as integral parts of modern global society.
Case Study: Hewlett Packard and The Digital Revolution
Everything from telephone calls to telephone programs was being
translated into binary computer code so that it could be transmitted
anywhere in the world that a digital network taught
So, Lewis Platt as Chairman, President and CEO of HP company brought
in reengineering team and began developing equipment for the fast-
paced telecommunications industry
Takeaway: A Company has to reinvent itself continuously even if it is
doing well
Organizational Design and Organizational Structure
Managers must take into account two kinds of factors when they organize:
They must outline their goals for the organization, their strategic plans for
pursuing those goals and capabilities at their organizations for carrying out
those strategic plans
They must consider what is going on now, and what is likely to happen in
the future, in the organizational environment
The specific pattern of relationships that managers create in this process is called
the Organizational structure
Four Building Blocks of Organizing
1) Division of Work: Divide the total workload for individuals or groups.
a) As Adam Smith pointed, by breaking the total job down to small, simple,
separate operations, total productivity was multiplied geometrically
b) It creates a variety of jobs people can choose or be assigned to positions
that match their talents and interests
c) Drawback: Job specialisation leads to alienation the absence of a sense of
control may easily develop as proposed by Karl Marx [Volvo of Sweden
employed flexible assembly-line work to overcome the alienation and
boredom]
2) Departmentalization: Combine tasks/workforce in an efficient and logical
manner
3) Hierarchy: Specify who reports to whom in the organization
a) Span of control/span of management: It is the number of people and
departments that report directly to a particular manager. Universal
maximum span was 6,earlier.
i) Too wide a span mean that managers are overextended and employees
are receiving too little guidance or control. Too narrow a span in
inefficient and underutilization of managers
ii) Narrow span results in tall hierarchies and wide spans result in flat
hierarchies (recent trend)(quick decision making, maximum
competitiveness and productivity by focussing on customer service)
iii) E.g. Enator, a medium-sized Swedish computing consulting company,
once it acquires more than 50 employees , it splits into two separate
companies for better coordination and development of personnel
iv) Latest developments: At Northern Telecoms (North Carolina), under
team direction, the employees order materials, calculate productivity,
schedule and track overtime, review budgets, take interviews, perform
pee performance evaluations and provide feedback for employee
corrective action. But, once such self-direction is implemented, it is
virtually impossible to go back to a traditional management hierarchy
4) Coordination: Set up mechanisms for integrating departmental activities into a
coherent whole and monitoring the effectiveness of the organization
a) A high degree of coordination is required for unpredictable and non-routine
jobs (The Big Three: GM, Chrysler and Ford are coordinating on developing
low-polluting automobiles)
The following process of Differentiation tend to complicate the task of
effectively coordinating work activities:
Perspective: people in different working units tend to develop their own
perspective on the organizations goals and how to pursue them
Time orientation: production people are accustomed to handling crises
while people in R&D may be preoccupied with problems that will take
years to solve
Interpersonal styles: production people may favour somewhat abrupt
communication and clear-cut answers but fast decisions. R&D employees
may prefer easy-going communication that encourages brainstorming and
consideration of multiple alternatives
Formality: production dept. has specific standards of performance while
personnel dept. has a more general standard
Takeaway: It is not advisable to reduce differentiation and not to
go on integrating the functions otherwise sales dept., e.g., instead of
advising to the graphic artists will start interfering & thus impairing their
work
Three Approaches to achieving effective coordination
1) Using basic management techniques:
a) Chain of command facilitates the flow of information
b) Set of rules and procedure allow employee to work independently
c) Management by walking around
2) Boundary spanning: when the number of contacts between departments
increases dramatically, it may be best to create a permanent liaison between
the departments.
3) Reducing the need for coordination
a) Providing slack (additional) resources gives car-mfg units a leeway in
meeting each others requirements. Without this safety margin, having
enough cars at the right time might require close coordination between
production and sales
b) To create independent units whose members can perform all the tasks
themselves rather than relying on other departments
Organizational Design
Classical Approach:
Contributors were Max Weber, Frederick Taylor and Henri Fayol.
Most effective and efficient organization had a hierarchical structure
Members were guided in their actions by a sense of duty to the organization
Abide by rules and regulations
Such organizations were characterized by specialization of task,
appointment by merit, routinization of activities, provision of career
opportunities for members and a rational, impersonal organizational
climate; this was called a bureaucracy by Weber
Task Technology Approach
It refers to the kinds of production technology involved in making different kinds of
products.
1) Unit production: production of individual items tailored to a customers
specifications
2) Small-batch production: products made in small quantities in separate stages
and later assembled
3) Large-batch production/ Mass production: manufacture of large quantities of
products on an assembly line (e.g. computer chips)
4) Process production: production of materials that are sold by weight or volume
e.g. chemicals or drugs (continuous flow)
Takeaways:
The more complex the technology ranging from unit to process production
the greater the number of managers and managerial levels
Span of control for 1-level managers increases as we move from unit to mass
production, but decreases when we move from mass to process production
As a firms technological complexity increases, its clerical and
administrative staffs become larger
The Environmental Approach
Mechanistic system: the activities of the organization are broken down into
separate, specialized tasks setup by the higher-level managers
Organic system: individuals are more likely to work in a group setting than
alone, where there Is less emphasis on taking orders from a manager
Burns and Stalker concluded that the mechanistic system was best suited to
a stable environment, whereas organic systems were best suited to a
turbulent one. But, organizations usually uses combinations of both the
systems
In a turbulent environment, jobs must be constantly redefined, the
employees need to communicate openly and involve in creative problem
solving and decision making, which happens in organic system
Downsizing
It is the restructuring usually involving the shrinking of organizations.
Positives are efficiency, productivity and quality, with organizations
converting to leaner, more flexible structures that can respond more readily
to the pace of change in global markets
Negatives include loss of self-esteem, alcoholism and divorce, and
permanently lowered standards of living downward mobility
Types of Organization Structures
Functional Organization (most logical and basic form)
1) An organization divided by function might have separate manufacturing,
marketing and sales departments
2) Advantages:
a) It makes supervision easier, since each manager must be expert in only a
narrow range of skills
b) Used by smaller firms that offer a limited line of products
3) Disadvantage:
a) As organization expands geographically, functional managers have to report
to central headquarters, so it can be difficult to get quick decisions
b) If a new product fails, who is to blame R&D, production or marketing?
c) Because members of each department may feel isolated from those in other
departments, they may have difficulty working with others in a unified way
Product/ Market Organization
1) It is referred to as organization by division, brings together in one work unit all
those involved in the production and marketing of a product or a related group
of products.
2) Most large, multiproduct companies, such as GM, have a product or market
organization because due to sheer size, functional organization becomes
unwieldy.
3) It follows any one of the three patterns:
a) Division by product
b) Division by geography
c) Division by customer: organization is divided according to the different ways
customers use products
Advantages:
All the activities, skills and expertise required to produce and market a
product are grouped in one place under a single head, so quality and
speed of decision making are enhanced; burden on central management
is eased
Accountability is clear
Disadvantages
Interests of the division may be placed ahead of the goals for the total
organization
Matrix Organization (multiple command system)
A hybrid that attempts to combine the benefits of both types of designs while
avoiding their drawbacks.
It has two types of structure existing simultaneously. i.e. employees have
two bosses one is functional command and other is a command by a
project/group manager
Although matrix organizational structures are necessarily complex they have
advantages. It is the efficient means for bringing together the diverse
specialized skills required to solve a complex problem.
Another advantage- it gives the organization a great deal of cost-saving
flexibility
Disadvantage- not everyone adapts well to a matrix system; morale can be
adversely affected when personnel are rearranged once projects are
completed and new ones begin; if hierarchy is not firmly established and
effectively communicated, there is the danger of conflicting directives and
ill-defined responsibilities
The Formal and Informal Organizational Structure
The organization charts are useful for showing the formal organizational
structure but does not capture the informality involved
E.g. an employee in sales may establish a working relationship with an
employee in production, who can provide information about product availability
faster than the formal reporting system first recognized by Chester Barnard.
He noted that informal relationships help organization members satisfy their
social needs and get things done
Virtual Corporations
It is a temporary network of independent companies suppliers,
customers, even erstwhile rivals linked by information technology to
share skills, costs, and access to one anothers markets and exploit the
fast-changing opportunities. It will have neither central office nor
organization chart. It will have no hierarchy, no vertical integration
Key attributes are:
Technology: informational networks help far-flung companies and
entrepreneurs link up and work together
Opportunism: Partnerships will be less permanent, less formal and more
opportunistic
Excellence: because each partner brings its core competencies
Trust: these organizations require far more trust than ever before
No Borders: More cooperation makes it harder to determine where one
company ends and another begins