Introduction to Management

Contents

Detailed Contents

Part One: Introduction to Management

1. MANAGEMENT: AN OVERVIEW 3
Introduction 4
Definitions of Management 4
The Role of Management 6
Functions of Managers 7
Planning 8
Organizing 8
Staffing 8
Leading 9
Controlling 9
Levels of Management 9
Top-Level Managers 10
Middle-Level Managers 12
First-Level Managers 13
Time Spent in Carrying out Managerial Functions 14
Management Skills and Organizational Hierarchy 14
Technical Skills 14
Human Skills 15
Conceptual and Design Skills 15
Approaches to Management 16

2. EVOLUTION OF MANAGEMENT THOUGHT 19
Introduction 20
Early Approaches to Management 20
Robert Owen: Human Resource Management Pioneer 20
Charles Babbage: Inventor and Management Scientist 22
Andrew Ure and Charles Dupin: Management Education Pioneers 22
Henry Robinson Towne (1844-1924) 22
Classical Approach 23
Scientific Management 23
Administrative Theory 27
Bureaucratic Management 29
Characteristic 30
Description 30
Behavioral Approach 31
Mary Parker Follet: Focusing on Group Influences 31
Elton Mayo: Focusing on Human Relations 31
Abraham Maslow: Focusing on Human Needs 35
Douglas McGregor: Challenging Traditional Assumptions about Employees 35
Chris Argyris: Matching Human and Organizational Development 36
Quantitative Approach 36
Management Science 37
Operations Management 37
Management Information Systems 38
Modern Approaches to Management 38
Systems Theory 38
Contingency Theory 39
Theory Z 40

3. SOCIAL AND ETHICAL RESPONSIBILITIES MANAGEMENT 42
Introduction 43
Social Responsibilities of Management 43
Arguments for and against Social Responsibilities of Business 46
Arguments for Social Responsibilities of Business 46
Arguments against Social Responsibility of Business 48
Social Stakeholders 49
Shareholders 49
Employees 49
Customers 49
Creditors and Suppliers 50
Society 50
Government 50
Measuring Social Responsiveness 50
What should be Measured? 51
How to Measure SR? 57
Managerial Ethics 57
Types of Managerial Ethics 57
Factors that Influence Ethical Behavior 59
Ethical Guidelines for Managers 64
Mechanisms for Ethical Management 64

Part Two: Planning

4. FUNDAMENTALS OF PLANNING 69
Introduction 70
Definitions of Planning 70
Nature of Planning 71
Planning is Goal-oriented 71
Planning is an Intellectual or Rational Process 71
Planning is a Primary Function 71
Planning is All-pervasive 71
Planning is Forward-looking 71
Planning is a Perpetual Process 71
Planning is an Integrated Process 71
Planning Involves Choice 72
Significance of Planning 72
Focuses Attention on Objectives 72
Offsets Uncertainty and Risk 72
Provides Sense of Direction 72
Provides Guidelines for Decision-making 72
Increases Organizational Effectiveness 73
Provides Efficiency in Operations 73
Ensures Better Coordination 73
Facilitates Control 73
Encourages Innovation and Creativity 73
Facilitates Delegation 73
Types of Plans 73
Plans based on Organizational Level 73
Plans based on Frequency of Use 76
Plans based on Time frame 79
Steps in the Planning Process 80
Analyzing Opportunities 80
Establishing Objectives 80
Determining Planning Premises 81
Identifying Alternatives 82
Evaluating Available Alternatives 82
Selecting the Most Appropriate Alternative 82
Implementing the Plan 83
Reviewing the Plan 83
Prerequisites for Effective Planning 83
Establishing the Right Climate for Planning 83
Clear and Specific Objectives 83
Planning Premises 85
Initiative at Top Level 85
Participation in Planning Process 85
Communication of Planning Elements 85
Integration of Long-term and Short-term Plans 86
An Open Systems Approach 86
Management Information System 86
Limitations of Planning 86
Lack of Accurate Information 86
Time Consuming Process 86
Expensive 86
Inflexibility 88
Resistance to Change 89
Environmental Constraints 89
Lack of Ability and Commitment 89
False Sense of Security 89
Reluctance to Establish Goals 89

5. MANAGEMENT BY OBJECTIVES 91
Introduction 92
Nature of Objectives 92
Hierarchy of Objectives 92
The Process of Formulating Objectives and the Organizational Hierarchy 92
A Network of Objectives 94
Multiplicity of Objectives 94
Concepts in MBO 95
Early Impetus to MBO 96
Emphasis on Performance Appraisal 98
Emphasis on Short-term Objectives and Motivation 98
Inclusion of Long-range Planning in the MBO Process 98
The Systems Approach to MBO 98
The Process of MBO 99
Steps in the MBO Process 99
Benefits of MBO 102
Better Managing 103
Clarity in Organizational Action 103
Encouragement of Personal Commitment 103
Personnel Satisfaction 103
Basis for Organizational Change 103
Development of Effective Controls 103
Limitations of MBO 104
Failure to Teach MBO Philosophy 104
Failure to Give Guidelines to Goal Setters 104
Difficulty in Goal-setting 104
Emphasis on Short-term Goals 105
Inflexibility 105
Other Dangers 105
Making MBO Effective 105
Top Management Support 105
Training for MBO 107
Formulating Clear Objectives 107
Effective Feedback 107
Encouraging Participation 107

6. STRATEGIES, POLICIES AND PLANNING PREMISES 110
Nature and Purpose of Strategies and Policies 111
The Key Function: Giving a Direction to Planning 112
The Guide: Furnishing a Framework for Plans 112
The Need for Operational Planning: Tactics 112
The Effect on all Areas of Management 112
The Three Levels of Strategy 112
Corporate-level Strategy 112
Business-level Strategy 116
Functional-level Strategy 116
Strategic Planning 117
Characteristics of Strategic Planning 117
Significance of Strategic Planning 117
Limitations of Strategic Planning 118
Strategic Planning Process 118
Step One: Defining the Mission of the Organization 119
Step Two: Drawing up Organizational Objectives 119
Step Three: Assessing Organizational Resources, Risks and Opportunities 119
Step Four: Formulating Strategy 120
Step Five: Implementing Strategy 120
Step six: Monitoring and Adapting Strategic Plans 120
Strategic Planning Vs Operational Planning 121
Competitive Analysis in Strategy Formulation 121
Environmental Assessment 121
Organizational Assessment 123
Major Kinds of Strategies and Policies 126
Growth 126
Finance 126
Organization 127
Personnel 127
Public Relations 127
Products or Services 127
Marketing 127
Porter’s Competitive Strategies 130
Overall Cost Leadership 130
Differentiation 131
Focus 131
Strategy Implementation 132
Carrying Out Strategic Plans 132
Maintaining Strategic Control 133
Effective Implementation of Strategy 134
Communicating Strategies to all Key Decision-making Managers 134
Developing and Communicating Planning Premises 134
Developing an Appropriate Fit Between
Organizational Structure and Planning Needs 134
Ensuring that Action Plans Contribute to and
Reflect Major Objectives and Strategies 134
Developing Contingency Strategies and Programs 135
Reviewing Strategies Regularly 135
Continuing to Emphasize Planning and Implementing Strategy 135
Creating a Proper Organizational Climate 135
Planning Premises 135
Planning Premises versus Future Expectations 136
Effective Premising 136

7. MANAGERIAL DECISION-MAKING 138
Introduction 139
Significance and Limitations of Rational Decision-Making 139
Significance of Rational Decision-making 139
Limitations of Rational decision-making 139
Managers as Decision-Makers 140
The Rational Model 140
Non-rational Models 140
Decision-Making Process 141
Identifying the Problem 141
Identifying Resources and Constraints 143
Generating Alternative Solutions 144
Evaluating Alternatives 144
Selecting an Alternative 145
Implementing the Decision 145
Monitoring the Decision 146
Types of Managerial Decisions 146
Programmed Decisions 146
Non-programmed Decisions 147
Decision-Making under Certainty, Uncertainty and Risk 148
Decision-making under Certainty 148
Decision-making under Risk 148
Decision-making under Uncertainty 148
The Systems Approach to Decision-Making 149
Management Information System 150
Decision Support System 150
Group Decision-making 151
Forms of Group Decision-making 152
Decision-making Techniques 156
Marginal Analysis 156
Financial Analysis 156
Break-Even Analysis 156
Ratio Analysis 157
Operations Research Techniques 158

Part Three: Organizing

8. FUNDAMENTALS OF ORGANIZING 165
Introduction 166
Definitions of Organizing 166
Benefits of Organizing 166
Traditional Perspectives on Organizing 168
Challenges to the Traditional View of Organizations 169
Closed System Vs Open System 171
Closed System View of Organizations 171
Open System View of Organizations 172
Formal Vs Informal Organization 176
The Process of Organizing 178
The Logic of Organizing 179
Some Misconceptions 179
Bases for Departmentation 179
Departmentation by Simple Numbers 179
Departmentation by Time 181
Departmentation by Process or Equipment 182
Choosing the Pattern of Departmentation 183

9. STRATEGIC ORGANIZATION DESIGN 186
Introduction 187
Span of Management 187
Tall Versus Flat Structure 188
Factors Determining an Effective Span 191
Authority Defined 194
Power: Bases of Power 195
Line and Staff Relationships 197
Concept of Line and Staff 197
Functional Authority 199
Line and Staff Conflicts 201
Nature of Line and Staff Relationship 203
Avoidance of Line and Staff Conflict 204
Centralization versus Decentralization 205
History of an Organization 208
Availability of Competent Managers 209
Size of the Organization 209
Geographical Dispersion 209
Technical Complexity of Tasks 210
Time Frame of Decisions 210
The Importance of a Decision 210
Planning and Control Procedures 210
Views of Subordinates 210
Environmental Influences 211
Delegation of Authority 211
Factors Affecting Delegation of Authority 213
Balance – The Key to Decentralization 215

10. STRATEGIC ORGANIZATION STRUCTURE 218
Introduction 219
Ensuring Understanding of Organization Structure 219
Teaching the Nature of the Organization’s Structure 219
Recognizing the Importance of the Informal Organization and the Grapevine 219
Designing Organizational Structures: An Overview 220
Which Comes First – Strategy or Structure? 220
Factors Influencing Organization Design 222
Major Structural Alternatives 222
Functional Structure 223
Divisional Structure 227
Hybrid Structure 235
Matrix Structure 237
Strategic Business Units 241

11. EFFECTIVE ORGANIZING AND ORGANIZATIONAL CULTURE 245
Introduction 246
Prerequisites for Effective Organizing 246
Avoiding Mistakes in Organizing By Planning 246
Planning for the ideal 247
Modification for Human Factor 247
Advantages of Organization Planning 247
Avoiding Organizational Inflexibility 247
Signs of Inflexibility 248
Avoiding Inflexibility through Reorganization 248
The Need for Readjustment and Changes 248
Avoiding Conflict by Clarification 249
Organization Charts 249
Position Descriptions 250
Organizational Culture 251
Meaning of Culture 251
The Significance of Corporate Culture 253
Characteristics of Organizational Culture 256
Organizational Environment for Entrepreneuring and Intrapreneuring 258

Part Four: Staffing

12. HUMAN RESOURCE MANAGEMENT AND STAFFING 263
Introduction 264
Human resource Management: An Overview 264
Human Resource Planning 265
Staffing 271
Training and Development 271
Performance Appraisal 271
Compensation 272
Recruitment 272
The Recruitment Process 276
Selection 279
The Selection Process 280
Socialization Process of New Employees 283

13. PERFORMANCE APPRAISAL AND CAREER STRATEGY 285
Introduction 286
Significance of Appraisal 286
Informal Vs Formal Appraisals 287
Informal Appraisal 287
Formal Appraisal 288
Corrective action 291
Performance Rating Methods 291
Graphic Rating Method 291
Behaviorally Anchored Rating Scale (BARS) 292
Criteria for Appraising Managers 296
Appraising Managers against Verifiable Objectives 296
Appraising Managers as Managers 298
Formulating Career Strategy 299
Preparation of a Personal Profile 299
Development of Long-range Personal and Professional Goals 299
Analysis of Environment Threats and Opportunities 301
Analysis of Personal Strengths and Weaknesses 302
Development of Strategic Career Alternatives 302
Consistency Testing and Strategic Choices 302
Development of Short-range Career Objectives and Action Plans 302
Development of Contingency Plans 302
Implementation of a Career Plan 302
Monitoring Progress 303

14. ORGANIZATIONAL CHANGE AND ORGANIZATION DEVELOPMENT 304
Introduction 305
Organizational change 305
Factors that lead to Organizational Change 305
Sources of Resistance to Change 306
Measures to Overcome Resistance to Change 307
Change Process 310
Planned Change through Organization Development 313
The Objectives of OD 313
Organizational Development Process 313
Diagnosis 314
Intervention 314
Evaluation 316
Approaches to Manager Development 316
On-the-Job Training 316
Off-the-Job Training 318
Organizational Conflict 319
Sources of Conflict 319
Managing Conflict 320

Part Five: Leading

15. MANAGING AND THE HUMAN FACTOR 325
Introduction 326
The Nature of People 326
Individual Differences 326
The Importance of Personal Dignity 327
Considering the Whole Person 327
Multiplicity of Roles 327
Behavioral Models 327
Edgar H. Schein’s Model of the Complex Person 327
Lyman Porter’s Model of Human Nature 328
McGregor’s Theory X and Theory Y 329
Three Managerial Models by Raymond E. Miles 331
Managerial Creativity 331
The Creative Process 331
Techniques to Enhance Creativity 333
The Creative Manager 334

16. MOTIVATING EMPLOYEES FOR JOB PERFORMANCE 341
Introduction 342
Definitions and Meaning of Motivation 342
Classification of Motivation Theories 343
Content Theories of Motivation 343
Process Theories of Motivation 350
Motivational Techniques 355
Rewards 355
Participation 357
Quality of Work Life (QWL) 357
Job Enrichment 357
A Systems and Contingency Approach to Motivation 358

17. LEADERSHIP 359
Introduction 360
Definition and Meaning of Leadership 360
Key Elements of Leadership 361
Leadership Theories 364
Trait Theory of Leadership 364
Behavioral Theories 365
Situational or Contingency Theories 370
Transformational Leadership Theory 377

18. MANAGING COMMUNICATIONS 380
Introduction 381
Definitions of Communication 381
Significance of communication in organizations 381
Communication process 384
Sender 384
Transmission 384
Noise 384
Receiver 385
Feedback 385
Communication Flows in an Organization 385
Downward Communication 386
Upward Communication 386
Crosswise Communication 387
Barriers to Communication 387
Lack of Planning 387
Badly Expressed Messages 387
Faulty Translations 387
Unclarified Assumptions 389
Semantic Distortion 389
Loss by Transmission and Poor Retention 389
Communication Barriers in the International Environment 389
Inattention and Premature Evaluation 389
Impersonal Communication 390
Insufficient Adjustment Period 390
Information Overload 390
Lack of Trust in the Communicator 390
Other Communication Barriers 391
Gateways to Effective Communication 392
Interpersonal Trust 392
Effective Listening 392
Proper Feedback 392
Non-verbal Cues 393
Non-directive Counseling 393
Part Six: Controlling

19. THE CONTROL FUNCTION 397
Introduction 398
Planning and Controlling 398
Importance of Controlling 399
Coping with Uncertainty 399
Detecting Irregularities 400
Identifying Opportunities 401
Handling Complex Situations 401
Decentralizing Authority 401
Minimizing Costs 401
Levels of Control 402
Strategic Control 402
Tactical Control 402
Operational Control 403
Basic Control Process 403
Determining Areas to Control 403
Establishing Standards 403
Measuring Performance 405
Comparing Performance against Standards 406
Recognizing Good or Positive Performance 407
Taking Corrective Action when Necessary 407
Adjusting Standards and Measures when Necessary 408
Direct Control vs. Preventive Control 408
Direct Control 408
Preventive Control 411
Types of Control 415
Controls Based on Timing 415
Cybernetic and Noncybernetic Control 417
Requirements for Effective Controls 418
Certified Management Audit and Enterprise Self-Audit 419
The Certified Management Audit 420
The Enterprise Self-audit 420

20. CONTROL TECHNIQUES 423
Introduction 424
Major Control Systems 424
Managerial Level 424
Nature of Timing 425
Financial Control 427
Financial Statements 428
Ratio Analysis 433
Budgetary Control 435
Responsibility Centers 436
Uses of Responsibility Centers 440
Quality Control 440
Quality Circles 440
Total Quality Management (TQM) 441
Inventory Control 441

21. PRODUCTIVITY AND OPERATIONS MANAGEMENT 443
Introduction 444
Production and Productivity 444
Productivity Problems and Measurement 445
Operations Research, Production & Operations Management 446
Operations Management and its Importance 447
Operations Research for Planning, Controlling and Improving Productivity 449
Some Operations Research Techniques 452
Linear Programming 452
Inventory Control 453
Time-event Networks 457
Value Engineering 458
Work Simplification 458
Limitations of Operations Research 459
Magnitude of Computation 459
Gap between Managers and Operations Research 460
Lack of Quantification and Involvement of Qualitative Factors 460

22. MANAGEMENT INFORMATION SYSTEMS 462
Introduction 463
Management Information 463
Meaning of Information 463
Attributes of Information 464
Information Needs of Managers 464
Components of an Information System 465
Hardware 466
Software 466
People 467
Data 467
Procedures 467
Types of Information Systems 468
Transaction Processing Systems 468
Office Automation Systems 470
Decision Support Systems 471
Executive Support Systems 472
Management Information Systems 473
Evolution of MIS 474
Computers and MIS 475
Advantages of MIS 475
Difference between MIS and DSS 476

Part Seven: Expanding Horizon in Management

23. INTERNATIONAL MANAGEMENT 481
Introduction 482
Reasons for Going International 482
Aggressive and Defensive Reasons 482
Stefan H. Robock and Kenneth Simonds’ Six Motives: 484
International Management Functions 484
Planning 484
Organizing 484
Staffing 485
Leading 485
Controlling 485
Japanese Management 486
Lifetime Employment 486
Seniority System 486
Continuous Training 486
Emphasis on Group Work 487
Decision-making 487
Complicated Performance Evaluation 487
Father Leadership 487
Good Benefits for Employees 488
Simple and Flexible Organization 488
Theory Z 488
Multinational Corporations 492
Orientations toward International Business 492
Advantages of Multinationals 493
Challenges for the Multinationals 494