Management: Definitions, Roles

1
Principles of Management

• Management Definitions, Roles Skills

2
Management Definitions

• Management is the process of designing and
  maintaining an environment in which individuals,
  working together in groups, efficiently
  accomplish selected aim(s) viz. to create a
  surplus(s). . Weihrich Koontz
• Management is not an absolute rather it is
  socially and culturally determined. Across all
  cultures and in all societies, people coming
  together to perform certain collective acts
  encounter common problems having to do with
  establishing direction, coordination and
  motivation. Culture affects how these problems
  are perceived and resolved. The Art of Japanese
  Management by R. Pascale A. Athos .

3
Management Definition ctd.

• Applies to and through any kind of organization
• Applies to Managers at all levels
• Concerned with Doing the right things right at
  all times
• Effectiveness Achievement of objectives (Right
  Things)
• Efficiency Achieving those objectives with least
  amount/ sacrifice of resources (Things Right)
• Continuous Improvement in creating increasing
  surplus (at all times)
• Improve or die survival of the fittest
• what gets measured, gets managed and improved
  e.g. Productivity Output / Input ratio
• Collective, cohesive and consistent human effort
  towards accomplishing a common objective.

4
Management Definition ctd.
Additionally, Managers need to factor in external
environmental forces
For maximum benefit to the organization
5
Management Roles Skills

• Management - what managers do
• Fredrick Taylors path-breaking scientific
  approach
• Henri Fayols classical definition of
  functions, now modified to
• Plan -- Organize -- Lead(CommandCoordinate) --
  Control
• Mintzbergs map of managerial roles
• Interpersonal Informational Decisional
• Katzs interpretation of skills
• Technical / Human / Conceptual
• Management get things done through others
• Leadership The ability to influence a group
  towards achievement of goals.
• Motivation The willingness to exert high level
  of effort towards goals
• CommunicationThe transference and understanding
  of meaning

6
Management roles skills ctd.
Managerial Roles (Mintzberg)

• Role Description Examples
• Interpersonal
• Figurehead symbolic head required to
  show Ceremonial,
• face in social legal conditions. Civic
  etc.
• Leader Motivating directing subordinates projec
  t plan
• Liaison Networking outside for
  information Industry -
• favours group meets
• Informational
• Monitor nerve centre and interpretator Reports
• Disseminator networking within the
  organization Meetings etc.
• Spokesperson Transmit intent to outsiders
  expert Board Meets
• Decisional
• Entrepreneur Opportunity finding
  reacting Strategy Plan
• Trouble shooter Handling unexpected
  disturbance Contingency
• Resource allocator Initiating/approving
  changes Budgeting
• Negotiator Getting best deal for
  Organization Contracts

7
Management roles skills
Managerial Skills(Katz others)

• Technical Skills
• Application of specialized knowledge or expertise
  acquired though formal training its use.
• Human Skills
• Ability to work with people, understand and
  motivate groups individuals.
• Conceptual Skills
• Mental ability to recognize, analyze, diagnose
  and think through complex situations.

Skills Needed
8
Principles of Management 2

• Management A Systems Approach

9
Systems approach to Management
Organization as a System receives Input,
transforms it through a Process for Output and
Operates in an Environment (economic, regulatory
and other forces)
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Systems approach to Management ctd.
11
Systems approach to Management ctd.
12
Systems approach to Management ctd.
Inputs 5 Ms of Management

• Inputs or the resources managers deal with are
• Man human resources, both inside and connected
  with an organization
• Materials goods (hard software, processed or
  semi-finished) and services required to create
  the sellable end product
• Machines technology and expertise deployed
  towards the transformation process
• Methods systems, procedures and processes
  seamlessly put together for the transformation
• Measurement score-keeping and in-process
  monitoring continuously with due feedback to keep
  on-course on time.
• Money is required for generating all theses Ms
  managers need to acquire, deploy, generate and
  distribute money as a primary need for business!

13
Systems approach to Management ctd.
Output for Stake-holders in Business

• Stake Something wagered or risked
• an interest in an enterprise with contingent
  gain or loss Webster s dictionary
• Holders who have stake in Business
• Shareholders are the owners. They have put in
  their money in the enterprise, expecting better
  returns from it than from other ventures
• Society includes the State, provincial and local
  governments for the improvement of quality of
  life of its citizens

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Systems approach to Management ctd.
Output for Stake-holders in Business ctd.

• Suppliers continuity of their enterprise depends
  on the success of the customer enterprise
• Customers require the goods and services
  provided by the enterprise, better than than
  those from its competitors. The enterprise is, in
  turn, a supplier to its customers
• Employees livelihood depends on the progress and
  success of the employing enterprise
• There is a freedom of choice (for association)
  between each of these stake-holders and the
  enterprise in the longer term
• But they sink or swim together in the shorter
  term
• Length of term definition varies with individuals!

15
Systems approach to Management ctd.
Management as a system transforms inputs

• by the process of
• Planning
• Organizing
• Staffing
• Leading
• Controlling
• to accomplish certain pre-determined, (as derived
  from stakeholder needs) goals or objectives

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Systems approach to Management ctd.
Stakeholders Shareholders Society
Customers Employees Suppliers
Man, Machine Material, Method, Measurement
Product/Services, Profits, Customer Societal
satisfaction, Other Long-term Goals
Organizing
Inputs (Goal Oriented)
Outputs (External To Orgnzn.)
Planning
Staffing
Controlling
Leading
Stake holder Feedback (reenergizing the system)
EXTERNAL ENVIRONMENT(Opportunities, Constraints)
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Principles of Management 3

• Management Process
• First Step Planning

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Planning

• Planning involves selecting objectives or goals
  and the course of actions to achieve them
• Provides the bridge to take us from where we are
  to where we want to go
• Is a rational approach to achieving pre-selected
  objectives - based on innovation, knowledge and
  purpose
• Decision making in choosing the best from
  alternative courses of action and is integral to
  planning

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Plans as foundation of Management
The primacy of Planning
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Types of Plans

• Mission / Purpose
• The basic function or reason for existence of
  an enterprise/ organization

Case in point Mission of Indira Institute
To train our students to become the best
business minds and entrepreneurs today, who will
lead their companies successfully into the future
tomorrow , locally, nationally and globally.
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Type of Plans (Contd)

• Objectives/ Goals
• The end towards which activity of an organization
  is aimed, e.g.
• For a Business enterprise profit, surplus
  creation
• For a Management Institute The number of
  employable/useful trainees
• Strategies
• Determination of the long term objectives and
  adoption of a course of action
• Gives a frame work for linked action-plans,
  communicated systematically to guide thinking and
  actions.

22
Types of Plans (contd)

• Policies
• Plans that are general directional statements
  (or understandings) that guide/help in decision
  making
• Repeat decisions taken reflexively
• Delegation of tasks without loss of control.
• Some discretion is permissible depending on
  circumstances thus encouraging initiative within
  limits and situational adjustments
• Issues with Policy
• Seldom documented in writing
• Subject to interpretations

23
Types of Plans (contd)

• Procedures
• Plans that are chronological sequences of
  required actions task-oriented in nature
• Cuts across department boundaries (sub-systems)
  in an organization e.g. customer complaint
  handling procedure
• Procedures and policies are inter related e.g.
  authorization for paid leave
• Policy governs quota, responsible authority etc.
• Procedure governs application, grant and
  record-keeping.
• Rules
• Specific actions or non-actions allowing no
  discretion
• Caution rules (and procedures too) limit
  initiative!

24
Types of Plans (contd)

• Programs
• Action plans (mainly non-routine or for changed
  activities) including, task assignments, steps to
  be taken, resources to be deployed etc. to
  achieve a (new/renewed) goal
• Primary program may require supporting programs,
  spreading across the enterprise
• Perfect coordination between supporting primary
  programs essential to avoid delays, unnecessary
  costs and expected roll-out.
• Programs are a complex of (sub)goals, policies,
  rules and other elements necessary for the course
  of action e.g. obtaining ISO certification.

25
Types of Plans (contd)

• Budgets
• A statement of expected results expressed in
  Numerical terms e.g. financial operating budget
  profit plan
• Budgets enforce precision in thinking
• Making a budget is planning by itself
• Encourages innovation a different way to work
• Budgets serve for Control
• Enforces discipline in execution of plans
• Instills cost consciousness
• Makes people (constantly) plan!

26
Steps in Planning
27
The Planning Process

• Planning Period
• Short range plans e.g. material procurement plan
  in a factory
• Long range plans e.g. product development plan,
  plant/production facility installation
• Urgent drives out the Important mismatch
  between short long term plans!
• Planning horizon must allow for actions to run
  their course requiring commitments
• Thus decisions today are key to good plans
• Long-term plans reap benefits of good short-term
  plans.

28
Steps in Planning
Being aware of Opportunity
Setting Goals/ Objectives
Considering, Market, Competition, Customers
wants, Own strengths weakness
What to accomplish when
Objective Important end towards which
activities are directed therefore needs
verification at the end of the plan period.
29
Hierarchy of Objectives Org. Levels
Objectives set end results they need to be
supported by a hierarchy of sub-objectives, duly
networked through the organization to avoid
discord and wasted effort.
30
Hierarchy of Objectives Org. Levels ctd.

• The Organizational Objectives is deployed into
  the objectives of
• Divisions ?Departments ? Individual objectives
• The cascade principle seamless flow
• Mutual support interlocking of goals is
  essential
• Managers must ensure that the components of the
  network fit each other
• Departments/divisions can be blind-sided.

31
Hierarchy of Objectives Org. Levels ctd.
While setting Objectives, ideally, Top Management
should get information / buy-in from lower
levels to set realistic goals for a good result.
32
Key Result Areas (KRA)

• Are areas in which performance is essential for
  the success of an enterprise
• Examples of generic KRAs
• Market share
• Return on Investment (ROI)
• Service level
• Customer satisfaction
• Peter Drucker recommends Market standing,
  innovation, productivity, physical financial
  resource, profitability, managerial performance
  development, worker performance attitude and
  public responsibility.

33
Management By Objectives (MBO)

• A comprehensive managerial system that integrates
  many key managerial activities in a systematic
  manner and that is consciously directed towards
  the effective and efficient achievement of
  organizations and individual objectives
• Set-out by Peter Drucker in 1954
• Integrated to personal performance appraisal by
  Douglas McGregor in 1957
• Has formed the basis for many theories on
  motivation
• Has been criticized for introducing a short-term
  focus and undesirable behaviour
• Currently viewed as a way of managing not a
  specific tool.

34
MBO (contd)

• Managing the MBO way involves
• Identifying clearly defined KRAs
• Setting verifiable measurement of KRAs
• Facilitating self-direction, accountability
  commitment by subordinates
• Motivation of subordinates to achieve and exceed
  set targets
• Emphasis on performance rather than on
  personality

35
Guidelines for setting Objectives

• Clear Verifiable
• Clarity scores over precision approximately
  right over accurately wrong!
• Expressed in Quantitative terms
• Figures
• Percentage
• Time frame (by which date)
• Should cover main deliverables of the job/
  function
• Challenging yet reasonable S.M.A.R.T

36
Guidelines for setting Objectives (Contd)

• Identification of assumptions underlying the
  objectives
• Consistency of
• objectives with those of superiors, Organization
  other departments
• Short time action-plans with Long-term objectives
• Inclusion of personal growth, development and
  improvement targets
• Ensuring availability of and access to needed
  resources
• Documentation and communication of objectives to
  concerned persons

37
Benefits of MBO

• Result oriented planning of goals, resources,
  organization
• Setting of standards for Control
• Decentralization of Management and clarification
  of Organizational roles responsibilities
• Accountabilty commitment of employees
• Enables timely corrective actions (as required)

38
Weaknesses of MBO

• Emphasis on
• short term at the expense of long term
• Results over Process
• Individual over collective effort
• Failure to grasp and deploy the concept of
  seamless cascade
• Difficulty in setting agreed, harmonized goals
• Danger of inflexibility

39
Planning Premises Strategies
Setting Goals/ Objectives
Planning premises
Identifying alternatives
Comparing choosing an alternative
What to accomplish when
Decision making
Internal external environment
Strategic Planning Process
Strategy determination of the purpose / the
basic long-term objectives
the adoption of courses of action and
allocation of resources required to
achieve the aims.
40
Planning Premises Strategies ctd.
The Strategic Planning Process
41
Planning Premises
Porters Five Forces an Model for analysis of
the Externals environment.
42
Planning Premises forecast of demand

• Estimate of future demand is made by qualitative
  methods, time-series methods and/or causal
  methods
• Qualitative ? relies on judgement of experts to
  translate to quantities
• Time-series ? statistically interpolate demand on
  historical data
• Causal method ? seek co-relation on cause and
  effect basis between two (or more) variables to
  quantify demand
• However, all forecasting methods are limited by
• Handling of un-quantifiable factors e.g. national
  pride
• Unrealistic assumptions fuelled by a desire to
  succeed
• Excessive data required (often unobtainable) to
  make accurate forecasts
• Uncertainty with environmental changes
  Technology, Govt. Policy, International
  alignments, New materials/sources, Climate etc.
• Coping with uncertainties require
• Sensitivity analysis What if scenarios (trust
  instinct!)
• Planning for contingencies with defined cut-in
  milestones.

43
Generic Strategy

• Competitive Advantage
• Cost Leadership
• To continually work reducing
• the cost prices of products.
• Supplier Q-C-D has very high
• priority.
• Differentiation
• To constantly offer innovative
• and unique solutions. Supplier
• technology quality has focus.
• Customization
• To offer required services in the
• required manner is the focus.
• Speed and flexibility important.

Ultimate competitive position - position w.r.t
major Customers - K.S.Fs of Competitors -
leveraging of suppliers
44
Generic Strategy BCG MatrixRed Marketing
Perspective Blue Financial Perspective
45
Planning Premises Strategies ctd.
Decision Making is the core of the planning
process a plan does not come into being unless
a decision i.e. certain commitments of
resources, managerial time and money are made
and risks are taken. Caution A Plan is not
intentions and should not suffer from Analysis
Paralysis.
46
Decision Making

• Decision making is a rational choice process,
  bounded by
• Limitations time, information and logic
• Behaviour Risk averseness and biases.
• A key step in the process is to identify those
  limiting factors, road-blocks to each effective
  (right thing) alternative then finding a
  solution with least sacrifice of resources
  (thing right)
• Factors quantitative, qualitative/intangible
• Finding solutions
• marginal analyses benefits with incremental
  inputs
• cost-effectiveness assessment of benefits over
  costs.

47
Decision Makingctd.
How to select Amongst the Alternatives ?
48
Decision Makingctd.

• Decision making takes place under varying degrees
  of uncertain conditions and risks. Techniques
  used to aid the process are
• Risk analysis every decision is based on
  interactions amongst different factors/variables
  each of which have their own probabilities
  (towards success). Analysis of these
  probabilities yield a risk profile for each
  alternative path. In the absence of defined
  probabilities, estimates can be used.
• Decision trees the outcome (measure pre-decided
  e.g. cost or time) of every step in the decision
  is charted and a course selected on the most
  favourable outcome. Very much like making a trip,
  navigating by using a road-map (refer example in
  W K, Management a global perspective/10th
  edn. Pg. 209)

49
Decision Makingctd.

• Flow Charts as a process-guide to taking a
  decision and helps as a check-list of key
  variables, the sequence in which they fall and
  the interrelations. Key to making a choice or
  re-examining the path taken are also indicated as
  risk-reduction devices.
• (refer example in W K, Management a global
  perspective/10th edn. Figure 8-5)
• Decision Support Systems a wide variety of
  (proprietary) computer based programs are
  available for managers to use their time more
  effectively for decision making of
  semi-structured tasks by providing alternative
  evaluations. They focus on the process of
  decision making, taking data provide by the
  management information systems in enterprises.

50
Principles of Management 4
Management Process Organizing for results
51
Nature of Organizing

• Organizing may be broadly defined as
• The identification and classification of required
  activities
• The grouping of those activities towards
  attaining their set objectives
• The assignment of those groupings to a
  responsible manager, duly empowered
• The provision for coordination among, within and
  across the groups in the organization.
• Organization structures are designed to
• Clarify tasks responsibilities,
• Remove obstacles,
• Furnish decision making communication network
• Support attainment of enterprise objectives

52
Nature of Organizing ctd.
The Business Organization Model Value Chain
(Porter,1985)
The margin reflects the reward for the risks run
by the company.
All activities together need to generate value
greater than the sum of its costs.
53
Nature of Organizing ctd.
The Value Chain Primary Activities

• Inbound Logistics relate to receiving, storing
  and disseminating inputs
• Operations associated with transformation of
  inputs into final product form
• Outbound Logistics relate to collecting, storing
  and physically distributing the products to
  buyers
• Marketing Sales relate to advertising,
  Promotion, sales, distribution-channel selection
  management and Pricing
• Service associated with enhancement or
  maintenance of product value over life

54
Nature of Organizing ctd.
The Value Chain Support Activities

• Procurement relates to the function of
  purchasing inputs used across the firms primary
  and support activities
• Technology Development relates to know-how,
  processes procedures, technology embodied in
  the product design and delivery. Most activities
  have their own sub-set of technology
• Human Resource Management directed at
  recruiting, training, developing and compensating
  all personnel
• Firm Infrastructure associated with serving and
  supporting the firm as a whole, with the company
  as its customer eg. Finance accounting,
  Quality

55
Nature of Organizing ctd.

• Most practicing mangers would translate this
  value chain to imply an organization as
• a formalized, intentional structure of roles
  and positions
• Thus formal organization implies the
  intentional structure of roles in an enterprise.
• However, in an enterprise informal organization
  will form, not necessarily bad and is
• a network of personal and social relations not
  established or required by formal organizations
  but arising spontaneously as people associate
  with each other.

56
Nature of Organizing ctd.
The building block of an organization is the
Department a group charged with independent
task responsibility.

57
Nature of Organizing ctd.Departmentation

• Grouping activities people into departments
  makes it conceptually possible to expand
  organizations to an infinite degree.
• Different patterns have been successfully used to
  group activities
• By simple nos. is a simple method works well
  for the lowest levels where work is routine,
  uniform and non-specialized time-grouping is an
  extension of this method where shift-working is
  required
• By enterprise functions embodies what
  enterprises typically do e.g. Production,
  Engineering, Sales etc. This method, defined by
  F.W.Taylor, is arguably the most prevalent method
  still used.

58
Departmentation ctd.

• By territory or geography is very common when
  the geographical spread is wide. It was a device
  introduced to speed up management in similar
  units for easy and swift communication e.g.
  Sales N/E/W/S Fire Brigade Camp, Hinjewadi,
  Aundh etc.
• By Customer/Account orientation reflecting the
  primary interest in nature of markets/business/cus
  tomer e.g. Banks Institutional banking, Small
  Savings etc.
• By Process groups encountered primarily in
  specialized/ manufacturing operations where
  processes are vital e.g. Advertising
  Copy-writing, Creative etc. Manufacturing Steel
  Melting, Wire-drawing etc.
• By Product Lines has evolved with enterprises
  becoming multi-line with function needing
  adaptation/integration to suit specific products
  e.g. Tata Motors Passenger Vehicles / Commercial
  vehicles

59
Departmentation ctd.

• By grid control in essence combining the
  functional and the product-line patterns to
  best effect. Functional excellence is not
  subjugated to Operational ease.
  In projects, this serves to bring
  together the diversity of skills required into
  one team.
• The Strategic Business Unit companies today are
  organizing themselves as companies within a
  company to allow for maximum flexibility and
  freedom of operations, especially when the
  products/businesses are unconnected e.g. General
  Electric. Generally, SBUs have
• Their own Missions, Goals and Strategies
• Distinct and definable set of competitors
• Deploy and manage resources in key areas
• A reasonable size.

60
Departmentation ctd.
Example of Grid Control S.B.Us
C.E.O
Qual.
HRM
BU 1
BU 2
Finance
G/H.R
G/H.R
I.R.M
I.S.O
Plant 1
Ind.
Recr.
Sin.
TD
61
Nature of Organizing ctd. Span-of-Management

• The purpose of organizing is to make human
  cooperation effective and is limited by
• the number of persons a manager can supervise
  effectively and efficiently
• while the total number is dictated by the quantum
  of work/ nature of task/spread etc. Thus the two
  dimensions, Level (depth) and Span of control
  (width) are interrelated .
• The reason for creating Levels of organization is
  the limitation in the span of control. Effective
  span is influenced by
• Training/skill of subordinates and personal
  contact required
• Clarity of delegation of authority
• Clarity of plans, use of objective standards and
  communication techniques
• Rate of change
• Maturity and experience of the manager and
  organization.

62
Span-of-Management ctd.

• Levels, per se, are not desireable
• They are expensive as they increase, both
  infrastructure costs and staffing tends to
  increase
• Real work is accomplished at the gemba
  (Japanese workplace) where the actual
  value-addition/transformation takes place. The
  contribution of levels on top are not directly
  co- relatable, thus best avoided
• Communication become complicated omissions,
  filterations and misinterpretations lead to
  wasted and misdirected effort
• Planning and control become tortuous, requiring
  complicated coordination and alignment between
  levels.
• Studies reveal that between 8 to 10 people at
  higher levels and upto 15 at lower levels is a
  good span. Increasingly, enterprises are
  attempting to cut back levels to 5 or less.

63
Management Principles

• Developed by Henri Fayol 
• 1. DIVISION OF WORK Work should be divided among
  individuals and groups to ensure  that effort and
  attention are focused on special portions of the
  task. Fayol presented work specialization as the
  best way to use the human resources of the
  organization.
• 2. AUTHORITY The concepts of Authority and
  responsibility are closely related. Authority was
  defined by Fayol as the right to give orders and
  the power to exact obedience. Responsibility
  involves being accountable, and is therefore
  naturally associated with authority. Whoever
  assumes authority also assumes responsibility.  
                                                   
           
• 3. DISCIPLINE A successful organization requires
  the common effort of workers. Penalties should be
  applied judiciously to encourage this common
  effort.
• 4. UNITY OF COMMAND Workers should receive
  orders from only one manager.
• 5. UNITY OF DIRECTION The entire organization
  should be moving towards a common objective in a
  common direction.

64
Management Principles (ctd)

• 6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE
  GENERAL INTERESTS The interests of one person
  should not take priority over the interests of
  the organization as a whole.
• 7. REMUNERATION Many variables, such as cost of
  living, supply of qualified personnel, general
  business conditions, and success of the business,
  should be considered in determining a workers
  rate of pay.
• 8. CENTRALIZATION Fayol defined centralization
  as lowering the importance of the subordinate
  role. Decentralization is increasing the
  importance. The degree to which centralization or
  decentralization should be adopted depends on the
  specific organization in which the manager is
  working.
• 9. SCALAR CHAIN Managers in hierarchies are part
  of a chain like authority scale. Each manager,
  from the first line supervisor to the president,
  possess certain amounts of authority. The
  President possesses the most authority the first
  line supervisor the least. Lower level managers
  should always keep upper level managers informed
  of their work activities. The existence of a
  scalar chain and adherence to it are necessary if
  the organization is to be successful.            
                                                   
                                       

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Management Principles (ctd)

• 10. ORDER For the sake of efficiency and
  coordination, all materials and people related to
  a specific kind of work should be treated as
  equally as possible.                            
                                               
• 11. EQUITY All employees should be treated as
  equally as possible.
• 12. STABILITY OF TENURE OF PERSONNEL Retaining
  productive employees should always be a high
  priority of management. Recruitment and Selection
  Costs, as well as increased product-reject rates
  are usually associated with hiring new workers.
• 13. INITIATIVE Management should take steps to
  encourage worker initiative, which is defined as
  new or additional work activity undertaken
  through self direction.                          
                           
• 14. ESPIRIT DE CORPS Management should encourage
  harmony and general good feelings among
  employees.