Slide 1: Management Process & Organization BP Mukherjee Slide 2: Prologue Organization Characteristics : Organization Characteristics Distinct purpose
A deliberate arrangement of people to accomplish some specific purpose Traditional Vs. New Organization : Traditional Vs. New Organization Slide 5: Competitive advantage and the ‘three C’s’ Slide 6: The Value Chain
(Source:Porter,Competitive Advantage,The Free Press,1985) Slide 7: The extended value chain Slide 8: The Concept of Management Business OrganismAnatomy &Physiology : Business OrganismAnatomy &Physiology Heart: Buying,making and selling
Blood supply: Management
Skeleton: Organization structure
Nervous system: Communication Channel
Behaviour: Predatory to Contributory Management Definition : Management Definition Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected goals.
Manager is a person who plans, organizes, leads and controls human, physical, financial and information resources in the efficient and effective pursuit of organizational goals. Management Work Domains : Management Work Domains Management of People
Management of Process
Supply chain etc.
Management of Technology
Management of Environment
Management of Market
Management of Regulations Managerial Challenges : Managerial Challenges Globalization
Customers ever-growing expectations
Ethics & social responsibility
Workforce spirituality Scope of Management : Scope of Management Demands: Meeting business objectives, minimum performance criteria
Constraints: Resource scarcity, legal complexity, technological limitations, attitudinal hindrance, logistical bottlenecks
Choices : Method, product/services, domain, opportunities Scope of ManagementThree Fold Concept of Herbison & Myers : Scope of ManagementThree Fold Concept of Herbison & Myers Management as a economic resource
Management is one of the factors of production along with land, labour & capital
Management as a system of authority
Management is the rule-making & rule-enforcing body. It is bound together by a web of relationship between superior and subordinates, that is people are bound by authority relationship.
Management as a class or elite
Sociological view management as a distant class in society having its value system. Management Art or Science : Management Art or Science Art :not systematized, learned by rote nor practised according to formula—is an art, even a creative art
Science : Systematized approach to work, people and environment
Experiences clearly analyzed, shared, and discussed WHAT IS MANAGEMENT? : WHAT IS MANAGEMENT? MANAGEMENT = MAN + AGE + MEN + T
Man + Age : Man with age gets experience
Men : Human resource
T : Tact
Managing HR with experience & tact is management all about Art Vs. Science : Art Vs. Science Management Relevance to Art or Science : Management Relevance to Art or Science Art
Use of knowledge
Constant practice & learning from mistakes
Systematized body of knowledge
Managers are instant decision-makers while scientist experiments & evolves Every Organization is a Sentient Living System : Every Organization is a Sentient Living System Not biologically alive
Intelligent & conscious of its environment
Is born, can grow and can die also
Dominant, dependent, competitive collaborative relationship with others
Sentient, but not omniscient Administration Vs. Management : Administration Vs. Management Management as a Profession : Management as a Profession Profession meets the following criteria
System of accreditation
Clear code of universally enforced ethics
Common body of knowledge
However, management occupation is developing a professional character
Management has become the pervasive, the universal organ of the modern society: Peter Drucker Examples of Resources used by Organization : Examples of Resources used by Organization Slide 23: MANAGERIAL ROLE CONSTELLATION Slide 24: Executive Managers Conceptual Technical Human Middle Managers Conceptual Technical Human First Line Managers Conceptual Technical Human Differences in skills required for Successful Management
according to Level in the Hierarchy The Classical Approach : The Classical Approach The classical approach : It emphasises organizational efficiency to increase organizational success
Classical Approach Bureaucracy
Max Weber Scientific Management (Taylor) Administrative Theory (Fayol) Frederick Winslow Taylor (1856-1915) , was an American mechanical engineer who sought to improve industrial efficiency A management consultant in his later years, he is sometimes called "the father of scientific management ." He was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly conceived, were highly influential in the progressive era Henri Fayol ( 1841-1925) was a French management theorist. Fayol was one of the most influential contributors to modern concepts of management, having proposed that there are five primary functions of management: (1) planning, (2) organizing, (3) commanding, (4) coordinating, and (5) controlling Maximilian Carl Emil Weber (1864-1920) was a German political economist and sociologist who is considered one of the founders of the modern study of sociology and public administration Bureaucracy : Bureaucracy A structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control and decision-making that follows the chain of control Scientific Management : Scientific Management Scientific Management is an approach that emphasizes the scientific study of work in order to improve worker efficiency
Basis of Scientific Management
Each task must be scientifically designed so that it can replace the old rule-of-thumb methods
Workers must be scientifically selected and trained so that they can be more productive on their job
Bring the scientifically designed jobs and workers so that there will be a match
There must be divisional labour and cooperation between management and worker
To sum up
Science, not rule of thumb
Harmony, not discord
Cooperation, not individualism
Maximum output in place of restricted output
Development of each work and responsibility between management & labour Scientific Management : Scientific Management Productivity
Increases Allows Mgt to Pay workers
more money Fayol’s Fourteen Universal Principles of Management : Fayol’s Fourteen Universal Principles of Management Division of work: specialization
Discipline- obedience and respect
Unity of command
Unity of direction
Subordination of individual interest to the general interest
Centralization: optimum balancing
Order – material & people to be put in proper place
Equity – combination of kindness & justice
Stability & tenure of personnel
Initiatives – formulating & implementing plans
Espirit de corps – harmonious effort among individuals towards organizational success Dissimilarities between Contributions of Taylor & Fayol : Dissimilarities between Contributions of Taylor & Fayol According to Claude George (1968), a primary difference between Fayol and Taylor was that Taylor viewed management processes from the bottom up, while Fayol viewed it from the top down NEO-CLASSICAL THEORY: : NEO-CLASSICAL THEORY: Human Relation Theory:
A movement in management thinking and practice that emphasized satisfaction of employee’s basic needs as the key to increased worker productivity.
The possibility that individual singles out for a study may improve their performance simply because of the added attention they receive from the researchers, rather than because of any specific factors being tested
Behavioural Science Approach:
It emphasizes scientific research as the basis for developing theories about human behaviour in organizations that can be used to develop practical guidelines for managers
Human Resources Approach:
It suggests that jobs should be designed to meet higher level needs by allowing worker to use their full potential Slide 32: It attempts to solve problems by diagnosing them within a framework of inputs, transportation processes, outputs & feedback
A set of interrelated parts (sub-system). Each part may have various subparts which are mutually related to each other.
There are 5 sub-systems within an organization:
Goal sub-system: individual & group goals
Technical sub-system : tools, equipments, employee skills, knowledge
Structural sub-system : authority layers & relationship
Managerial sub-system : managers who plan, lead/control
Psycho-social sub-system: psychological & social factors influencing people at work
It means that the whole is greater than the sum of its parts.
Open and closed system:
Open system does interact with the environment closed system doe not
In closed system, system boundary is rigid, in open system the boundary is more flexible. Systems Theory Slide 33: Environment E
t Environment Feedback Remedial
actions An Open System Contingency Theory : Contingency Theory It argues that managerial actions depend on the particular parameters of the situation.
Popular contingency variables:
Routineness of Task Technology
Individual Differences Slide 35: Top Managers Middle
Managers First Line
Managers Levels of Management Managerial Levels and Areas Marketing Finance Operation Human Resource Administration Other areas Slide 36: Management Functions Management Functions: : Management Functions: Planning P
Visualizing course of events,cater for implementations
Sequencing:Who will do what I.e. allocate the resources
Orchestrating activity (how to do) by synerging
Assigning right person, right job at right time
Synchronizing / synergising / telescoping activity
Checking the activity
Budgeting B Slide 38: Management in Organisations Slide 39: Planning
and deciding how
best to achieve them Organizing
best to group
activities and resources Controlling
activities to facilitate
goal attainment Leading
to work in the
best interest of the
organization The Managerial Process Slide 40: Managerial Knowledge,goals of claimants and use of inputs(The Basis of Management Theory and Science) Planning To produce outputs Organizing Controlling Facilitated by communication that also links the organisation with the external environment (Parts 1 and 7. Domestic and International Environment Leading Staffing Reengineering the system EXTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT SYSTEM APPROACH TO MANAGEMENT : PLANNING Inputs
Technologies Goal inputs of claimants
Employees / Consumers / Suppliers / Stockholders / Governments / Community / Other Outputs
Products / Services / Profits / Satisfaction / Goal integration / Other EXTERNAL ENVIRONMENT Illustration of Organization Culture and Management Practice : Illustration of Organization Culture and Management Practice Slide 42: THE HIERARCHY OF PLANS Slide 43: STEPS IN PLANNING Importance of Planning : Importance of Planning Provides direction
Provides a unifying framework
Reduces the risk of uncertainty
Facilities control Limitations of Planning Rigidity
Costly &time consuming exercise
False sense of security
External limiting factors
- Difficult to predict
- Projected too far into the future
- Environmental turbulence
- Emergency situations Planning Techniques : Planning Techniques Assessing the Environment
Environmental scanning/ market intelligence
Benchmarking Allocating Resources
Linear programming Contemporary Techniques
What if analysis Organizing : Organizing It is defined as the management function of assigning duties, grouping tasks, establishing authority and allocating resources to carry out a specific plan.
Thus organization structure is created specifying the set of tasks assigned to a individual and work units, formal reporting relationship and integration systems for coordination of workers across work units. Chain of Command : Chain of Command Scalar Principle: There should be a clear and unbroken chain of command that links every individual in the organization with successively higher level of authority
Unity of Command: Each individual should have one and only one supervisor Organizational Patterns : Organizational Patterns Centralized: Authority is concentrated in one central point
Decentralized: Decision-making is dispersed into small units
Functional: Resources and authority structure based on industrial or professional skills
Matrix: Project-oriented authority superimposed on functional skills
Line & Staff: Line management controlling line processes consisting of staff of varied disciplines. Leadership : Leadership Definition: The process whereby one individual influences other group members towards attaining defined group or organizational goal.
Leadership is a process in which one person, the leader, influences a follower in anon-coercive manner to attain a goal.
Ingredients of Leadership:
Existence of followers
Uneven sharing of influence and power
Rallying followers to goal
Situational Albert Einstein : The leader is one who, out of clutter, brings simplicity, out of discord – harmony, out of difficulty-opportunity. Chart of DistinctionsManager & Leader : Chart of DistinctionsManager & Leader Manager administers, Leader innovates
Manager is a copy, Leader is an original
Manager maintains, Leader develops
Manager focuses on system, Leader on people
Manager asks how & when, Leader what & why
Manager eyes bottom line, Leader on horizon
Manager accepts status quo, Leader challenges it
Manager does things right, Leader does the right thing
Manager commands authority, Leader commands respect Slide 51: Inspiration DISTINGUISHING BETWEEN MANAGEMENT AND LEADERSHIP Controlling : Controlling It is the process of comparing the actual performance with standards & taking any corrective action.
Management control is a systematic effort to set performance standards with planning objectives, to design information feedback systems, to compare the actual performance with these predetermined standards to determine whether there are any deviations and to measure their significance and to take any action required to assure that all corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.
Positive force -Continuous process
Forward looking - Universal
Dynamic - Goal oriented
Delegation is the key - Planning-based Controlling (contd) : Controlling (contd) Characteristics of Effective Control
Suitable - Reasonable
Simple - Objective
Selection - Responsibility
Flexible/Acceptable - Forward-looking Types of Control
Predictive (Feed-forward) Controlling (contd) : Controlling (contd) Dimensions of Control
Critical or strategic point of control
Management by Exception (MBE) Resistance to Control
Rewards for inefficiency
Immaterial Slide 55: Measure performance Evaluate performance against standards Implement corrective action Enforce standards Control cycle Global co-ordination and local management : Global co-ordination and local management Global
Network structure for production and transport optimization
Information systems development and control
Internal transport mode and sourcing decisions
Trade-off analyses and supply chain cost control Local
Customer service management
Gathering market intelligence
Warehouse management and local delivery
Customer profitability analyses
Liaison with local sales and marketing management
Human resource management Communication : Communication Defining Communication : Defining Communication Communication is a two-way process of in which there is an exchange and progression of ideas towards a mutually accepted direction or goal. It is the transfer and understanding of meaning.
For this process to materialize, it is essential that the basic elements of communication be identified: These elements are:
Feedback Definitions contd… : Definitions contd… Message: A purpose to be conveyed
Encoding: Conveying a message into symbols
Channel: The medium a message travels along
Decoding: Retranslating a sender’s message
Noise: Any disturbance that interfere with the transmission, receipt or feedback of a message Slide 60: Communication Process Model Thought Encoding Transmission
of message Reception Decoding Under
standing Sender Receiver Noise Feedback The Communication Process : The Communication Process Channel (verbal,
Process Phase 1:
an Idea Phase 3:
Message Phase 2:
Idea Phase 6:
Sends Feedback Phase 4:
Message Phase 5:
Message Situation Governing Paradigm… : Governing Paradigm… Effective communication is the essence of leadership and management. It is neither top-down nor bottom-up, but two-way and continuous. Combine different media and techniques to give the right message to the right people at the right time.
Communication is the process of sending and receiving messages. However, communication is effective when the message is understood and when it stimulates action or encourages the receiver to think in new ways. Slide 63: Effective
flow Benefits of Effective Communication Importance of Communication skills : Importance of Communication skills Peter Drucker calls “the one basic skill” of “the ability to organize and express ideas in writing and speaking” as perhaps the “most valuable for the future employee”
The “ability to express oneself is perhaps the most important of the skills a person can possess”
Its importance increases with size of organization and the farther away one is from manual labor Communication skills : Communication skills Imp in personal/professional life
Verbal: reading, writing, speaking, listening
Non-verbal: body language etc.
Effective communication effective organization
Effective communicator effective member of orgn
Common denominator of employers’ wish-list Communication skills : Communication skills Strengthening communication skills strengthens your chances of success
As job-seekers/ promotion-seekers your communication and leadership skills set you above competitors
People judge your ability, intelligence, sincerity etc by your communication
Communication skills – how you speak and write, your body language and other non-verbals - necessary to impress people Communication Skills (contd) : Communication Skills (contd) Communication necessary to gain knowledge/skills
Everything we know, we have learnt through observing, reading, listening, discussing, analysing
Can any knowledge be imparted/acquired without verbal (languages) or non-verbal codes?
The better our communication skills, the more knowledge we can gain Organizational Communication : Organizational Communication An organization cannot function/survive without communication
Is team work possible without communication?
Is all communication equally good/bad, effective/ineffective?
How much reading, writing, speaking, listening actually goes on?
Formal: eg orders, reports, memos, meetings, instructions, feedback
External-operational communication: inbound/outbound eg inquiries, advertising, press releases, customer dealings 7 C’s of Communication : 7 C’s of Communication Credibility : Builds trust
Courtesy: Improves relationship
Clarity: Makes comprehension easier
Correctness: Builds confidence
Consistency: Introduces stability
Concreteness: Reinforces confidence
Conciseness: Saves time 4 S’s of Communication : 4 S’s of Communication Shortness: Economizes
Simplicity: Impresses Builds trust
Sincerity: Appeals Ten Commandments of Listening(formulated by Keith Davis & John Newstorm) : Ten Commandments of Listening(formulated by Keith Davis & John Newstorm) Ten Commandments of Listening(formulated by Keith Davis & John Newstorm)- contd : Ten Commandments of Listening(formulated by Keith Davis & John Newstorm)- contd Types of Nonverbal Communication : Types of Nonverbal Communication Maximizing Nonverbal Communication Skills : Maximizing Nonverbal Communication Skills Smile genuinely
Be aware of false cues
Keep appropriate distance
Use touch carefully
Shake hands appropriately Motivation : Motivation Motivation refers to the initiation, direction, intensity and persistence of human behavior Slide 76: GENERAL EXAMPLES
Food ORGANISATIONAL EXAMPLES
Friends at work
Base salary Slide 77: Motivators:
Growth advancement Hygiene Factors:
Work conditions HERZBERG TWO-FACTOR THEORY Slide 78: Growth Relatedness Existence Motivators Hygiene Factors E R G Theory HERZBERG’S THEORY Techniques of Motivation : Techniques of Motivation Carrot & stick approach
Job Redesign : Job Enlargement & Job Enrichment
Employee participation in management
Management by Objectives
Pay for performance
Open-book management Vroom’s Theory : Vroom’s Theory This theory of motivation was put forward by Victor Vroom of Yale School of Management. It examines motivation from the perspective of why people choose to follow a particular course of action.
Vroom introduces three variables which he calls Valence, Expectancy and Instrumentality.
Valence is the importance that the individual places upon the expected outcome of a situation.
Expectancy is the belief that output from the individual and the success of the situation are linked, e.g. if I work harder then this will be better.
Instrumentality is the belief that the success of the situation is linked to the expected outcome of the situation, e.g. it's gone really well, so I'd expect praise Everything that is done in the world is done in hope Theory X & Theory Y : Theory X & Theory Y Theory X and theory Y are theories of human motivation created and developed by Douglas McGregor at the MIT Sloan School of Management in the 1960s that have been used in HRM, OB & OD. They describe two very different attitudes toward workforce motivation. McGregor felt that companies followed either one or the other approach.
In theory X, management assumes employees are inherently lazy and will avoid work if they can. Because of this workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each level. According to this theory employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can.
In theory Y, management assumes employees may be ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control, self-direction, autonomy and empowerment. It is believed that employees enjoy their mental and physical work duties. It is also believed that if given the chance employees have the desire to be creative and forward thinking in the workplace. There is a chance for greater productivity by giving employees the freedom to perform at the best of their abilities without being bogged down by rules Theory Z : Theory Z Theory Z is the name applied to the so-called "Japanese Management" style popularized during the Asian economic boom of the 1980s. In contrast Theory X, which stated that workers inherently dislike and avoid work and must be driven to it, and Theory Y, which stated that work is natural and can be a source of satisfaction when aimed at higher order human psychological needs, Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. According to Dr. William, its leading proponent, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction.
Characteristics of the Theory Z
Implicit, informal control with explicit, formalized measures
Slow evaluation and promotion
Moderately specialized careers
Concern for a total person, including their family Job Rotation : Job Rotation Cross-training
More flexibility in scheduling work,adopting changes,filling vacancies
De-motivates ambitious trainees
Reduced productivity The process of systematically moving a single individual from one job to another over a course of time. The job assignments may be in various functional areas of the company or movement may be between jobs in a single area or department. Job Enlargement: : Job Enlargement: Adding challenges or new responsibilities to an
employee’s current job.
Jobs with more diversity Job Enrichment: : Job Enrichment: Ways to add complexity and meaningfulness to a
Vertical expansion of jobs
Increases employee freedom, independence
Increases satisfaction Leadership : Leadership Leadership : Leadership Leadership is a process in which one person, the leader, influences a follower in anon-coercive manner to attain a goal.
Ingredients of Leadership:
Existence of followers
Uneven sharing of influence and power
Rallying followers to goal
Situational Leadership Follower Goal Non-coercive Influence Attains Transactional & Transformational Leaders : Transactional & Transformational Leaders Transactional Leader:
Active & achieving
Charismatic Leadership Vs. Management : Leadership Vs. Management Importance of Leadership : Importance of Leadership Inspires employees
Ensures cooperation of employees
Provides good working climate Qualities of a Good Leader: Intelligence
Human relation skills
“What’s next” mentality Leadership Style : Leadership Style Directive/Autocratic or Authoritarian Style
Centralized power or decision-making
Close supervision and control
Discipline through rewards/punishment
Total dependence on subordinates or superiors
Participative or Democratic Style
Involves people in decision-making and goal-setting
Attitudes, feelings, suggestions of members considered while making decisions
Freedom of thinking and action available to a great extent
Two-way communication between members
Opportunity to use one’s potential in the service of organization exists Leadership Style (Contd) : Leadership Style (Contd) Laissez-faire or Free-rein Style:
Group Members set goals and decide on their own
Leader is a passive observer of things
Leader dose not decide, does not control or exercise influence over the group
Leader abdicates responsibility
Members operate in an unrestricted environment
Communication is open and can take any decision Leadership Theories : Leadership Theories Trait Theory: The theory that propounds that people become leaders because of special traits they possess.
Traits of successful leaders:
Drive: Desire for achievement, ambition, high energy, tenacity and initiatives
Honesty & Integrity: Trustworthy, reliable and open
Leadership motivation: Desire to influence others to reach shared goal
Self-confidence: Trust in own abilities
Cognitive ability: Intelligence; ability to integrate and interpret large volume of information
Knowledge of the business: Knowledge of industry and relevant technical matters
Creativity: Capacity to come up with original ideas
Flexibility: Ability to adapt to needs of followers and situation Behavioral Theories : Behavioral Theories Leadership theories that identify behaviour that differentiates effective leaders from ineffective leaders are known as Behavioral theories. Slide 95: Concern for production Concern for people THE MANAGERIAL GRID Contingency Theories : Contingency Theories A leadership theory that proposed that effective group performance depended on the proper match between a leader’s style of interacting with his or her followers and the degree to which the situation allowed the leader to control and influence . Therefore Fiedler’s model consists of the three elements:
Leadership style, identified on two dimensions such as task-directed style and human relationship -oriented style. Fiedler used least preferred coworker (LPC) model whereby a leader was to respond on 16 contrasting adjectives on a scale of 1 to 10 for describing his or her coworkers. A high LPC score (say 8 out of 10) would signify that the leader would like work on a relationship-oriented style. Similarly, a low LPC score will indicate task-orientation style of the leader.
Three critically important situational dimensions were identified by Fiedler, which were
Leader-member relation, describing the degree of confidence, trusts and respect employees had for their leader.
Task structure, describing the degree to which job assignments were formalized and procedurized
Position power, describing the degree of influence a leader has over power-based activities such as hiring, firing, disciplining, promotion and salary fixation. Contingencies Theories (Fiedler’s model Contd) : Contingencies Theories (Fiedler’s model Contd) A very favourable situation is at cell 1 where leader-member relation is good, task is highly structured, and leader has enormous position power. Conversely, a very unfavourable situation is characterized by cell 8, where relation is weak, task structure low, position power weak. All these situation variables taken together define the situation to be favourable or unfavourable as shown below: Contingencies Theories (Fiedler’s model Contd) : Contingencies Theories (Fiedler’s model Contd) C. Relationship between Style and Situation: Task-directed leadership style tends to be effective in situations that are either very favorable or very unfavourable to the leader. Human relationship-oriented leadership style tends to be effective in situations that are intermediate in favourableness.All these situation variables taken together define the situation to be favourable or unfavourable as shown below: Hersey-Blanchard’s Situational Model (Life Cycle Theory) : Hersey-Blanchard’s Situational Model (Life Cycle Theory) This contingency theory focuses on followers’ extent of ability and willingness to accomplish a specific task. This model suggests that appropriate leader behaviour depends on maturity of follower.
There are two basic considerations in this theory:
Maturity of Subordinates Leadership behaviour may be classified into four categories based on the combination of two considerations, i.e. relationship behaviour and task behaviour. High Low Low High Relationship
Behaviour Hersey-Blanchard’s Situational Model (Life Cycle Theory) Contd : Hersey-Blanchard’s Situational Model (Life Cycle Theory) Contd Subordinate’s maturity:
Low maturity: Low ability and low willingness
Low to moderate maturity: Low ability and high willingness
Moderate to high maturity: High ability and low willingness
High maturity: High ability and high willingness Four leadership styles emerge by combining leadership behaviour and subordinate’s maturity:
Telling: for subordinates having low maturity. It emphasizes directive behaviour and involves high task behaviour and low relationship behaviour.
Selling: for subordinates of moderate maturity. It represents both supportive and directive behaviuor marked by high task and high relationship behaviuor.
Participating: for subordinates with moderate to high maturity. It represents participating leadership style with low task behaviour and high relationship behaviour.
Delegating: for subordinates having high maturity. It signifies delegation marked by low task behaviour and low relationship. Recap through Refresher : Recap through Refresher Match the right hand column with the correct option on the left hand column Answer Espirit de corps Recap through Refresher : Recap through Refresher Match the right hand column with the correct option on the left hand column 5 4 3 4 1 7 6 Answer Espirit de corps Management by Objective : Management by Objective MBO (Management By Objective) : MBO (Management By Objective) Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management‘. MBO is a dynamic system which integrates the company’s needs to achieve company’s its goals for profit and growth with the manager’s need to contribute and develop himself.
Steps in a typical MBO program:
The organization’s overall objectives and strategies are formulated
Major objectives are allocated amongst divisional and departmental units
Unit managers collaboratively set specific objectives for their units with their managers
Specific objectives are collaboratively set with all departmental members
The action plans defining how objectives are to be achieved and specified and agreed upon by managers and employees
The action plans are implemented
Progress towards objectives is periodically reviewed and feedback is provided
Successful accomplishment of objectives is reinforced by performance-based rewards MBO (Management By Objective)- contd : Benefits of MBO:
Focus on achieving critical business-impact objectives.
Improved control information.
Helps in analyzing training needs to achieve objectives.
Succession planning is realistic and based on past performance.
Environ of managerial self-development is generated.
Helps in unclogging organizational arteries of communication and creates an ambience where manager and employee can discuss emotively organizational objectives in a transparent manner.
Reasons for Success of MBO:
Adequate unfreezing of interpersonal relationship.
Emphasis of change.
Acceptance of human aspect of an organization.
Generation of wealth of information
‘Group’ focus, as opposed to ‘Individual’ focus.
Situational emphasis. MBO (Management By Objective)- contd Slide 106: Reasons for failure :
Lack of commitment.
Top management not involved.
Poor implementation methods.
Little coaching to mangers.
Stifling of creative goals.
Objectives handed over to subordinates who set soft targets. MBO (Management By Objective) - contd Group Dynamics : Group Dynamics GROUP DYNAMICS : GROUP DYNAMICS Group Dynamics : Group Dynamics The social science focusing on the nature of groups, including the factors governing their formation and developments, the elements of their structure and their interrelationship with individuals, other groups and organization Group A group is a collection of two or more interacting individuals, with a stable pattern of relationship between them, who share common goals and perceive themselves as being a unified Rationale for Joining a Group To satisfy mutual interest
To achieve security
To fill social needs
To fill need for teem
To attain goals THEORIES OF GROUP FORMATION : THEORIES OF GROUP FORMATION Propinquity Theory: Individuals affiliate with one another because of spatial or geographical proximity.
Homan’s Interaction :
Balance Theory (Newcoms) :Similarity of attitudes towards commonly relevant objects and goals are the basis for group formation
Exchange theory : IS based upon reward-cost outcomes of interaction. A minimum positive level (rewards generator than cost) of an outcome must exist in order for attraction or affiliation to take place. How Groups are formed : How Groups are formed Five Stage Model The Structural Dynamics of Groups : The Structural Dynamics of Groups The pattern of interrelationship between the individuals constituting a group is called group structure. It provides the guidelines of group behavior that make group functioning both orderly and predictable. Four different aspects of group structure Roles : The hats we wear
Norms : Group’s unspoken rules
Status : Prestige of group membership
Cohesiveness : Getting the team spirit Intergroup Conflicts : Intergroup Conflicts Genesis:
Competitors for resources – access & availability
Task interdependence based on objectives, priorities and personnel
Jurisdictional ambiguity- turf problems
Status struggle – perceived threat to status hierarchy
Power dynamics Characteristics
Clear distinction between “We” and “They”
Presenting as cohesive unit to deflect other
No transmission of positive feelings to out-group
Overestimation of strength & underestimation of other rival group’s strength
Communication characterized by hostility
Losing group locates a scapegoat
Product of group interaction – no neurotic proclivity by individuals Resolving strategies
Avoidance – conflict kept under the carpet
Defusion – deactivation through mutual cooperation
Containment – framework formulation
Confrontation – open discussion
Fragment interaction – mutual interaction
Merging – nipping emerging issues in the bud Groupthink & Group shift : Groupthink & Group shift Groupthink:
Phenomenon in which the norm for consensus overrides the realistic appraisal of alternative courses of action. Group Shift
A change in decision risk between the group’s decision and the individual decision that members within the group would mean; can be either towards greater conservations or greater risk. Symptoms of Groupthink : Symptoms of Groupthink Illusion of invulnerability leading to excessive optimizing
Rationalization by the members to discount warnings
Unquestioned belief in group’s inherent mortality
Opposition to group dubbed as stereotyped & weak
Direct pressure to group members questioning group directions
Self-censorship for deviation from group consensus
Illusion of unanimity leading to silence being interpreted as correct
Self-appointed mind guards protecting the group from adverse
information Some Concepts on Group Dynamics : Some Concepts on Group Dynamics Social Loafing: The tendency for individuals to expand less effort when working collectively than when working individually.
Social Facilitation: The tendency for the presence of others to enhance an individual performance at times and to impair it at others. Presence of others Arousal Enhanced tendency
dominant response If well-learned Improve
performance If not well-learned Evaluation Apprehension: The fear of being evaluated or judged by another person Individuals Versus group Decision Making : Individuals Versus group Decision Making Nature of Problem
If guidelines are provided individual decisions are preferred. When problems call for an assortment of expertise group decision-making is suitable.
Acceptability of Decision
Group decisions are accepted without much
Quality of Decision
Group decisions generally reflect quality in wisdom
Climate of Decision making
Supportive climate encourage group problem solving while competitive climate stimulate individual problem-solving
Group decision making is time-consuming hence not resorted to under time pressure. Turning Groups into Teams : Turning Groups into Teams A team consists of a small number of people with complementary skills who are committed to common purpose, performance goals and approach for which they hold themselves mutually accountable.
Work teams are formal groups made up of interdependent groups who are responsible for the attainment of a goal.
Types of teams:
Cross-functional teams Comparing Workgroups & Workteams : Comparing Workgroups & Workteams Characteristics of an Effective Team : Characteristics of an Effective Team Clear purpose
Self-assessment Belbin’s Model : Belbin’s Model Decision Making : Decision Making Decision Making : Decision Making Decision: The choice made from among two or more alternatives
Decision-making: The process of choosing among several alternatives
Characteristics of Decision-making
An intellectual activity
A process of selection
An element of commitment of mind
Continuous in nature
Identify the decision criteria
Types of Decision:
Basic Vs Routine Decision
Personal Vs Organizational Decision
Programmed Vs. Unprogrammed Decision
Decision-making conditions are governed by
i) Certainty ii) Risk iii) Uncertainty Decision-making : Decision-making Rational Decision-making :
Describes the choices that are consistent and value maximizing within specified constraints
Behaviour that is rational within the parameters of a simplified decision-making process which is limited (or bounded) by an individual’s ability to process information.
Escalation of commitment:
An increase in commitment to a previous decision despite evidence that it may have been wrong.
A subconscious process of making decision on the basis of experience and accumulated judgment The Rational Decision Making Process : The Rational Decision Making Process Define the problem
Identify the decision criteria
Allocate weight to the criteria
Develop the alternatives
Evaluate the alternatives
Select the best alternatives Analytic Directive Conceptual Behavioural Tolerance ambiguity Way of thinking Rational Intuitive Low High Factors Affecting Decision Making : Factors Affecting Decision Making Programmed versus non-programmed decisions
Attitude about risk and uncertainty
Intelligence of the decision-maker
Expectation of the decision-maker
Social and cultural influences Overview of Decision Making : Overview of Decision Making Approach
Intuition Decision-making Process Types of Problems & Decisions
Well structured –programmed
Poorly structured –non-programmed Decision-making conditions
Choosing the best alternative
Evaluating Decision- Maker’s Style
Behavioural Organizational Design & Structure : Organizational Design & Structure Defining Organizational Structure : Defining Organizational Structure Organizing: The process of creating an organization’s structure.
Organizational structure: The formal framework by which jobs and tasks are divided, grouped and coordinated.
Bedeian and Zamnuto defined organizations as “social entities that are goal directed, deliberately structured activity systems with a permeable boundary.
Organizational design: Developing or changing an organizational structure.
Work specialization: The degree to which tasks in an organization are divided into separate jobs; also known as division of labor
Purpose of organization:
Divides work to be done into specific jobs and departments
Assigns tasks and responsibilities associated with individual jobs
Cluster jobs into units
Establish relationship among individuals, groups and departments
Establishes formal line of authority
Allocates and deploys organizational resources Henry Mintzberg’s Organization Design Typology : Five organizational parts:
Administrative Support Staff
Mintzberg further proposed five basic forms:
Simple Structure (small organization where supervision is direct)
Machine bureaucracy (standard work, stable environment)
Professional bureaucracy (skillful & knowledgeable worker)
Divisionalized form (multi location & large organization)
Adhocracy (dynamic environment/ structural adjustment) Henry Mintzberg’s Organization Design Typology Henry Mintzberg’s Organization Design Typology : Top
Technical Core Technical Middle Administrative
Professional staff Mgmt Support staff Henry Mintzberg’s Organization Design Typology Organization Design Decision: : Organization Design Decision: Mechanistic Organization:
An organizational design that’s rigid and tightly controlled
An organizational design that’s highly adaptive and flexible Example of departmentalization: : Example of departmentalization: Functional departmentalization: : Functional departmentalization: Grouping of people on the basis of their overall function
+ Suited to a suitable environment
+ Fosters in depth skill specialization & development
+ Allows tasks assignments consistent with technical training
+ Allows economies of scale within functions
Provides poor communication across functional depth
Causes slow response times to external changes Functional Departmentalization: : Functional Departmentalization: PRODUCT DEPARTMENTALISATION: : PRODUCT DEPARTMENTALISATION: PRODUCT DEPARTMENTALISATION: : PRODUCT DEPARTMENTALISATION: Conflict between Line & Staff : Conflict between Line & Staff Line functions assume that staff functionaries assume line authorities –unwanted encroachment on duties & prerogatives
Pedagogical approach of staff functionaries – consequent upon poor understanding of line authorities
Penchant for staff functions to take the credit and pass on the blame to line
Tendency of staff functions to restrict themselves within their ambit and speciality serving limited opportunity
Inability of line functions to utilize resources
Line functions not amenable to change – inclination to work on past legacies
Insufficient authority to the staff functions Emerging trends in Organizational Design : Boundaryless Organization:
An organization whose design is not defined by or limited to horizontal, vertical or external boundaries imposed by a predefined structure. It is an organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.
A small core organization that outsources major business functions. It is also called the networked or modular organization. In structural terms, the virtual organizations are highly centralized, with little or no departmentalization.
The major advantage to the virtual organization is its flexibility.
The primary drawback to this structure is that it reduces management control over key parts of its business Emerging trends in Organizational Design Performance Appraisal : Performance Appraisal Performance Appraisal : Performance Appraisal Performance Management System:
A process of establishing performance standards and evaluating performance standards in order to arrive at objective humans resource decision as well as to provide documentation to support those decisions.
It is a formal, structured system of measuring and evaluating an employer’s job-related behaviours and outcomes to discover how and why the employee is presently performing on the job, and how the employee can perform more effectively in the future so that the employee, organization and society all benefit. Slide 143: Objectives of Performance Appraisal:
To effect promotion based on competence & performance.
To confirm the services of probationary employees.
To assess the training & development needs of employee.
To let employee how well they have performed in comparison with the standards of the organization.
To catalyze communication between rater & ratee.
To assess whether the people practices such as selection, training and transfers are effective. Performance Appraisal Performance Appraisal Methods : Performance Appraisal Methods Written Essay:
A performance appraisal technique in which an evaluator writes out a description of an employee’s strength, and weaknesses, past performance and potential. The evaluator would make suggestions for improvement.
A performance appraisal technique in which the evaluator focuses on the critical behaviours that separate effective from ineffective job performance. The appraiser writes down anecdotes that describes what the employee did was effective or ineffective.
Graphic Rating Scale:
A performance appraisal technique in which an employee is rated on a set of performance factors. This method lists a set of performance factors such as quality and quantity of work, job knowledge, cooperation, loyalty, attendance, honesty, creativity and initiative. The evaluator then goes down the list and rates the employee on each factor using an incremental scale. The scale typically specify five points; for instance, a factor that such as job knowledge might be rated from 1 (‘ poorly informed about work duties’) to 5 (‘ has complete mastery of all phases of the job’) Performance Appraisal Methods : Behaviorally Anchored Rating Scales (BARS):
A performance appraisal technique that appraises an employee of actual job behaviour. These scales combine major elements from the critical incident and graphic rating scale approaches. The appraiser rates an employee according to items along a numerical scale, but the items are examples of actual behaviour on a job rather than general descriptions or traits.
A performance appraisal technique that compares one individual’s performance with that of one or more other individuals. It is relative, not an absolute measuring device. Three most popular approaches are listed below:
Group order ranking: A multi-person comparison approach that requires the evaluator to place employees into a particular classification.
Individual Ranking: A multi-person comparison approach that requires the evaluator to list employees in order from lowest to highest.
Paired Comparison: A multi-person comparison approach in which each employee is compared with every other employee in the comparison group and rated as either the superior or weaker member of the pair. Performance Appraisal Methods Performance Appraisal Methods (contd.) : 360-Degree Feedback:
A performance appraisal method that utilizes feedback from supervisors, peers and subordinates. In other words, this type of review utilizes information from the full cycle of people with whom the ratee interacts.
A performance appraisal technique in which supervisors rate employees according to a prescribed distribution of ratings, similar to grading on a curve.
Forced Choice Technique:
A performance appraisal technique in which raters are presented with groups of descriptive statements and are asked to select the phrase in each group that is most descriptive or least descriptive of the employee being evaluated. Performance Appraisal Methods (contd.) Judgmental Biases in Performance Appraisal : Halo Effect
Central Tendency Effect
Perpetual set belief
Performance Dimension Order
Spill over Effect. Judgmental Biases in Performance Appraisal Improvement Tools for Performance Appraisal : Training
Feedback to rater
Post appraisal interaction Improvement Tools for Performance Appraisal Organizational Climate(Maintaining HR) : Organizational Climate(Maintaining HR) Model of Excellence : Model of Excellence Slide 151: Dimensions of Excellence
Excellence drives efficiency in effectiveness.
Excellence means outstanding achievement or extra-ordinary performance.
Forms of human excellence
Excellence for outshining others in competition.
Excellence for perfection
Excellence through innovation & invention
Excellence in philanthropic missions
Excellence in knowledge acquisition.
Excellence in entrepreneurship
Excellence in cost containment & time compression Organizational Excellence Slide 152: Attributes of organizational excellence
(Source: in Search of Excellence, written by Tom Peters & Robert H. Water Man Jr)
A bias for action.
Close to the customer.
Autonomy and entrepreneurship
Productivity through people
Hands-on, value driven
Stick to the knitting
Simple form, lean staff
Simultaneous loose tight properties. Organizational Excellence (contd.) Slide 153: Forms of organizational Excellence
Competitive excellence to enhance adaptability, market orientation & resourcefulness
Rejuvenatory excellence to turn around sick-prone third world organizations.
Institutionalized excellence for government-owned enterprises for continuity momentum of top management is uncertain
Creative excellence propagating innovative and imaginative spirit
Missionary excellence for fulfilling social responsibility.
Versatile excellence for working in multi-faceted, multi-product large organizations Organizational Excellence (contd.) Managerial Skill Inventory : Managerial Skill Inventory Managerial Skill Inventory (contd) : Managerial Skill Inventory (contd) Managerial Skill Inventory : Managerial Skill Inventory