Summary

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Summary Revision

• Engineering Management
• ELE 2EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage/
Lecture 11 4 October 2007
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About the exam

• 2 pm 15/11, Language Centre but check venue
• Structure has changed from last year
• 20 multiple choice questions on management topics
  - worth 40 of exam
• Two Accounting questions - each worth 15 of exam
• Two Economics questions - each worth 15 of exam
• The exam is worth 70 of the total unit
  assessment
• Previous exam questions/solutions available at
  http//www.latrobe.edu.au/eemanage/ will be
  useful preparation, as well as these revision
  slides.

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The subject objectives were

• Present a general overview of the management
  principles in the schools of management and human
  resources management.
• Provide some practical insights into how these
  principles are applied in the business world.
• Hopefully this has given you some idea of the
  issues confronted in management, and will help
  you decide, at a later date, where management
  might sit in your future career direction.

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The topics covered were

• The challenge of management
• Pioneering ideas in management
• Understanding internal and external environment
• Social responsibility and ethics in management
• Managerial decision making
• Establishing organisational goals and plans
• Strategic management
• Basic elements of organisation structure
• Human resources management
• Motivation

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Management Activities

• Planning - setting goals and deciding how best to
  achieve them,
• Organising - allocating and managing resources,
• Leading - influencing others to work towards
  goals, and
• Controlling - regulating activities to reach goals

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Business Resources

• Human resources
• Buildings, land, etc.
• Plant equipment,
• Working capital

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The Management Process
knowledge base and key management skills
1
work agenda
work methods and roles

• Management
• functions
• planning
• organising
• leading
• controlling

performance (goal achievement)
2
3
4
5
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Vertical Differences inManagement Roles
Top Managers - planning, conceptual skills
Top
Middle Managers - mixed skill needs
Middle
First-Line Managers - leading, technical skills
First Line
Operational level staff
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Horizontal Differences in Management Roles

• Entrepreneurial managers - growth focus
• Functional managers - specific, technical focus
• General managers - broad, whole of
  organisation/unit responsibilities
• Project managers - integrative, team focus

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The Development of Management Ideas

• From the industrial revolution (1800s), the
  emphasis was on the need for efficiency in
  producing goods.
• This emphasis in viewing human beings as machines
  continued well into the 20th century.
• The emphasis has now shifted to studying the
  psychological factors.
• What makes people tick? What motivates them?

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THE MEGA-ENVIRONMENT
Economic element
Technological element
Legal-political element
The organisation
Physical Environment
Sociocultural element
International element
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The Task Environment
Competitors
Government regulators
Customers/clients
The Organisation
The employment market
Suppliers
Public pressure groups
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The Internal Environment Organisational/Corporate
Culture

• Definition a system of shared values,
  assumption, beliefs and norms uniting
  organisational members (Smircich 1983 Kilman et
  al 1986)
• The way we do things around here
• The glue binding the disparate parts (or the
  oil that keeps them moving)
• The interpretive part of organisational
  behaviour It explains, gives direction, sustains
  energy, commitment, and cohesion

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Changing Organisational Culture

• Surfacing actual norms
• Articulating new directions
• Establishing new norms
• Identifying culture gaps
• Closing culture gaps

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How Leaders can Influence Cultural Change ?

• Identification of a crisis
• Communication of a new vision
• Build motivation to implement the vision, induce
  cultural change

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What is Social Responsibility?

• The social responsibility of an organisation is
  its obligation to seek actions that protect and
  improve the welfare of society along with its own
  interest.
• It is difficult to define the social
  responsibility, public perception sometimes links
  it to charity.
• Charitable activities of an organisation affect
  its profit, employment policies, products and
  service offered by the organisation.

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Perspectives of the Economic Legal
Responsibilities

• The invisible hand - make profits obey the
  law...
• The hand of government - control legislation
• The hand of management - improve social welfare
  and mind profit

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Social Responsibilities of Managers

• Managers have an ethical and discretionary
  responsibility to act beyond the economic and
  legal responsibility
• Ethical responsibilities include behaviours and
  activities that are expected of business
  societys members
• Discretionary responsibilities are those the
  company is not expected to perform, but that do
  benefit some members of society

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Social Stakeholders
Employees
The organisation
Shareholders
Customers
International community
Local community
Society (regional national)
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Does social responsibility pay?

• Evidence is mixed
• Strategically beneficial, long term
• Likely, profit ? socially responsible management
• Shareholders sensitive to extent it affects profit

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Types of Problems

• Crisis problem
• a serious difficulty requiring immediate action.
• A non-crisis problem
• an issue requiring resolution but not with the
  importance and immediacy characteristics of a
  crisis.
• An opportunity problem
• a situation offering a strong potential for
  significant organisational gain if appropriate
  actions are taken.

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The Nature of Managerial Decision Making

• Programmed decisions - application of experience,
  rules, policy
• Non-programmed decisions - new or complex,
  degrees of uncertainty
• The element of risk

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Non-Programmed Decisions
Decision Type
Programmed Decisions
Lower
Middle
Top
Management Level
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Programmed Decisions

• Programmed decisions are those made in routine,
  repetitive, well-structured situations through
  predetermined decision rules.
• Computers are an ideal tool for dealing with
  complex programmed decisions.
• Most decisions made by first-line managers and
  many by middle managers are programmed decisions.

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Non-Programmed Decisions

• Non-programmed decisions are those for which
  predetermined decision rules are impractical
  (novel situations and/or ill-structured).
• Uncertainty is a condition in which the decision
  maker must choose a course of action without
  complete knowledge of the consequences following
  implementation.

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• Risk is the possibility that a chosen action
  could lead to losses rather than the intended
  results.
• A rapidly changing environment is a major cause
  of uncertainty. Uncertainty is seen as the reason
  why a situation is risky.

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Managers as decision makers Assumptions of the
Rational Model
An optimal decision is possible
All relevant information is available
Rational decision making
All relevant information is understandable
All alternatives are known
All possible outcomes known
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Steps in normative decision-making
Identification of the problem
Generate alternative solutions
Evaluate alternatives
Evaluation of decision effectiveness
Choose an alternative
Implementation and monitoring of the chosen
alternative
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BARRIERS TO EFFECTIVE DECISION-MAKING
Complacency
Defensive avoidance
Panic
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DECISION-ESCALATION
...escalating commitment and accelerating
losses
Non-rational escalation increased commitment of
resources beyond rational limits
Sunk costs not recoverable, and should not
influence decision-making
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Managing diversity Group decision-making
Advantages
Disadvantages
Time consuming
More information available
Delays ill feeling possible
More alternative solutions
Increases solution understanding acceptance
Domination by individuals
Risk of groupthink
Builds member knowledge skill base
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The overall planning process
mission
goals
plans
goal attainment (organisational efficiency
and effectiveness)
Mission Purpose why we exist
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THE NATURE OF ORGANISATIONAL GOALS

• Benefits of goals
• Increases performance
• Clarifies expectations
• Facilitates control
• Increases motivation
• Levels of goals
• 1. Operational goals (base)
• 2. Tactical goals (mid)
• 3. Strategic goals (top)

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strategic goals
strategic plans
Top Management organisational-wide perspective
tactical goals
tactical plans
Middle Management department perspective
First-Level Management unit/individual perspective
operational goals
operational plans
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Goal content - needs to be

• Challenging
• Attainable
• Specific measurable
• Time limited
• Relevant

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Strategy implementation
Strategy formulation
assess environmental factors
Identify current mission and strategic goals

• Conduct competitive analysis
• strengths
• weakness
• opportunity
• threats

• Develop specific strategies
• corporate
• business
• functional

carry out strategic plans
maintain strategic control
assess organisational factors
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SWOT Analysis
External Factors
Key Opportunities
Key Threats
Internal Factors
Key Strengths
Most Likely
Possible
Key Weaknesses
Possible
Unlikely
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Organisational Assessment
Skills levels (competency profiles)
The organisations strengths and weaknesses
Information systems (up-to-date)?
Organisational culture
Tangible assets (buildings and equipment)
Sales and distribution channels
Liquidity (and other financial dimensions)
Organisational structure (flexibility)
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Environmental Assessment
Competitor Analysis
Industry and Market Analysis
Political Regulatory Analysis
Technological Analysis
The organisation
Social Analysis
Human Resources Analysis
Economic Analysis
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Levels of Strategy

• Corporate-Level Strategy
• the business an organisation will operate
• co-ordination of strategies
• allocation of resources
• Business-Level Strategy
• strategic business units
• focusing on a particular business
• Functional-Level Strategy
• managing functional area to support
  business-level strategy
• the day-to-day management of business

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CORPORATE STRATEGY
Corporate Level
Business Level
Business 1 Strategy
Business 2 Strategy
Business 3 Strategy
Functional Level
Operations Management Strategy
R D Strategy
Financial/ Accounting Strategy
Marketing Strategy
Human Resources Strategy
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concentration
Vertical integration
Growth
Diversification
Stability
GRAND STRATEGIES
harvest
turnaround
divestiture
Defensive
bankruptcy
liquidation
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Growth Strategy

• Concentration
• Market development
• Product development
• Horizontal integration
• Vertical Integration
• Backward integration, business grows by becoming
  its own supplier
• Forward integration, business growth encompasses
  a role previously fulfilled by a customer

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Growth Strategy - Cont.

• Diversification
• Conglomerate diversification when an organisation
  diversifies into areas unrelated to its current
  business
• Concentric diversification when an organisation
  diversifies into related, but distinct, business
• Growth strategies can be implemented by
• Internal growth
• An acquisition
• A merger

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Stability Strategy

• Maintaining the status quo or growing in a
  methodical, but slow, manner.
• Adopted by small privately owned businesses
• Reasons for adopting this strategy
• Avoid risk
• Provide an opportunity to recover after a period
  of an accelerated growth
• Lets company hold on to current market share
• May occur through default

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Defensive Strategy

• Harvest entails minimising investments while
  attempting to maximise short-run profits and cash
  flow, with the long-run intention of exiting the
  market.
• A turnaround is designed to reverse a negative
  trend and restore the organisation to appropriate
  levels of profitability.
• A divestiture involves an organisation's selling
  or divesting of a business or part of a business.
• Liquidation entails selling or dissolving an
  entire organisation usually under serious
  financial difficulties

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Organisation Design Process

• The purpose and goals of the organisation must be
  very clear.
• The design process of organisation structure
  consists of four elements
• Assignment of tasks and responsibilities for the
  individual job positions,
• Grouping the individual positions into units and
  departments,
• Determining various mechanisms for the vertical
  co-ordination, and
• Determining various mechanisms for the horizontal
  co-ordination

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Functional structure

• A structure in which positions are grouped
  according to their main functional (or
  specialised) area.

CEO
Manager, Distribution
Manager, Administration
Manager, Manufacturing
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Functional structure

• Advantages
• In-depth expertise development
• Clear career path within function
• Efficient use of resources
• Possible economies of scale
• Ease of coordination within function
• Potential technical advantage over competitors

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Functional structure

• Disadvantages
• Slow response to multifunction problems
• Decision backlog at top of hierarchy
• Bottlenecks due to sequential tasks
• Inexact measures of performance
• Narrow training of future managers

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Divisional structure

• A structure in which positions are grouped
  according to similarity of products, services or
  markets.

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Divisional structure

• Advantages
• Fast response to environmental change
• Simplified coordination across functions
• Simultaneous emphasis on organisational goals
• Strong customer orientation
• Accurate measurement of performance
• Broad training in management skills

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Divisional structure

• Disadvantages
• Resource duplication in each division
• Reduction of in-depth expertise
• Competition amongst divisions
• Limited sharing of expertise between divisions
• Innovation restricted to each division
• Neglect of overall goals

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Matrix Management

• All resources and skills are equally shared
  across the organisation
• Suits a project oriented organisation
• Can be very efficient way of utilising resources
• Provides variety of projects, and hence can be
  stimulating and satisfying for employees
• It may result in overloading of some members

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Project 3
Project 4
Project 1
Project 2
System Engineer
Project Engineer
Tech
Installer
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Job Design

• As different job types require different skills
  and activities it is necessary to determine the
  areas of work specialisation.
• Job design involves the specification of tasks
  associated with a particular job.
• Work specification includes a collection of jobs
  necessary for achieving organisational goals.
• A well done job design is important for the
  efficient performance of the organisation and
  motivation of its members.

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Job Design Trends

• Move from efficiency-driven highly defined,
  repetitive, (boring) jobs to -
• More varied approaches to job design featuring -
  
• Job rotation
• Multi-skilling
• Job enrichment
• Greater autonomy especially for groups of
  workers

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Span of Management

• Span of management, or span of control, is the
  number of subordinates reporting directly to a
  specific manager.
• Managers should have neither too many nor too few
  subordinates.
• Then, what is a good balance of the span of
  management?

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Factors influencing span of management

• High competence levels
• Low interaction requirements
• Work similarity (between organisational peers)
• Low problem frequency and seriousness
• Physical proximity
• Few non-supervisory duties of managers
• Considerable available assistance
• High motivational work possibilities
• Ability of management to effectively delegate

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Hierarchical Levels

• Organisational effectiveness is influenced by the
  number of its hierarchical levels.
• Problems with very tall organisations
• high administrative overhead,
• slow communication and decision making,
• more difficult to pinpoint responsibility for
  various tasks, and
• encouragement of formation of dull, routine jobs.

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Human Resources Management
Human resource management (HRM) is the management
of various activities designed to enhance the
effectiveness of an organisations workforce in
achieving organisational goals.
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Regulatory and environmental context
Organisational Context
HR Functions
Identifying HR needs
Attracting human resources
Maintaining human resources
Terminating the relationship
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The Regulatory Framework

• Australia - long history of government support
  for union involvement
• Since early 1990s, major shift toward enterprise
  agreements
• Growth of regulation relating to human rights,
  discrimination, OHS, environmental matters
• More recently, especially with a more
  casualised workforce, there is a major trend
  towards individual agreements Australian
  Workplace Agreements AWBs.
• WorkChoices legislation effective 27.03.06

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WorkChoiceshttps//www.workchoices.gov.au/ourplan
/

• A single, national IR system to replace all state
  systems
• Workers in firms with fewer than 100 employees
  lose unfair dismissal protection.
• Minimum wage fixing to be transferred from AIRC
  to a new Fair Pay commission.
• Legislating of five minimum work conditions
• Award conditions cut from 20 to 16
• Small businesses allowed five years to become
  incorporated
• Streamlining of AWAs
• The Age 22.10 05
• Subsequent changes -
• e.g. The Fairness Test introduced for AWAs
  effective 7 May 2007

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HRM Functions

• Human resource planning assesses the human
  resource needs associated with strategic
  management and helps identify staffing needs.
• Staffing includes attracting and selecting
  individuals for appropriate positions.
• Training and performance evaluation are means of
  ensuring that employees can contribute to the
  organisation.

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• Compensation involves rewards that will attract,
  motivate, and retain employees.
• Workforce perceptions of the organisation and its
  treatment of employees must be managed.

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Job Analysis

• Job analysis is the systematic collection and
  recording of information concerning
• the purpose of a job,
• its major duties,
• the conditions under which it is performed,
• the contact with others that performance of the
  job requires, and
• the knowledge, skills, and abilities needed for
  performing the job effectively.

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• A job analysis may be based on information
  obtained through direct observation, interviews,
  diaries or questionnaires.
• A job description is a statement of the duties,
  working conditions, and other significant
  requirements associated with a particular job.
• A job specification is a statement of the skills,
  abilities, education and previous work experience
  that are required to perform a particular job.

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Job Specification

• Outcomes Job descriptions and job specifications
  impacts upon
• Recruitment selection
• Performance appraisal
• Remuneration
• Training development
• Job design redesign

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RECRUITMENT getting the most qualified person
for the vacancy
3 objectives
Maximising the pool of applicants at minimum
cost
Attracting suitably qualified skilled
applicants
Ensuring compliance by organisation with
government regulations
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Key questions before filling a vacancy

• Does the business need still exist? (The needs of
  business change over time).
• If there is still a business need, is the job
  description of the vacant position still
  appropriate?
• Can the business need be met by redesigning
  existing jobs?

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Methods of Recruitment

• Internal promotion
• Advertisements
• Employee referrals
• Employment agencies
• Executive recruitment (head hunters)
• Campus interviews
• Contractors
• Internet job/career sites

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Remuneration Benefits

• Remuneration benefits ..financial payments to
  employees in return for work
• Whether under award, enterprise or individual
  agreement, has legal basis. Subject to regulation
• Tied to job analysis, value of work discerned
• Possibly linked to training development
• Need for regular review
• Need for internal external relativity

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Performance appraisal 360 degree feedback
Mould employee behaviour to company norms
Build consistency of employee actions
organisation goals
Performance appraisal
Improve HR planning, training succession
Improve quality of salary reviews
Provide record for dismissal, demotion,
grievance, appeal
360o feedback - non-hierarchical method
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Performance
Performance
Motivation
Environmental Conditions
Ability

X
X
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The Motivation Process

• Needs
• hierarchy of needs theory
• ERG theory
• two-factor theory
• acquired-needs theory

• Cognitive Activities
• expectancy theory
• equity theory
• goal setting theory

behaviours

• Rewards/reinforcement
• reinforcement theory
• social learning theory

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Maslows Hierarchy of Needs
challenging projects, opportunity for innovation
and creativity, training
self-actualisation needs
important projects, recognition, prestigious
office location
esteem needs
good co-workers, peers, superiors, customers
belongingness needs
job security, benefits (like life insurance),
safety regulations
safety needs
basic pay, work space, heat, water, company
cafeteria
physiological needs
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Reinforcement theory

• Positive
• Uses pleasant, rewarding consequences to
  encourage desired behaviour. Use of shaping.
• Negative
• Uses unpleasant stimuli so that an individual
  will engage in the desired behaviour to stop the
  stimuli.

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Reinforcement theory

• Extinction
• Stopping previously available positive outcomes
  from a behaviour to decrease the behaviour.
• Punishment
• Providing negative consequences to decrease or
  discourage a behaviour.

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References

• Bartol, K.M., Martin, D.C., Tein, M.,
  Matthews, G., Management A Pacific Rim Focus,
  McGraw-Hill, 2002.
• and
• Bartol, K.M., Tein, M., Matthews, G., Ritson, P.,
  Scott-Ladd, B.,Management Foundations - A
  Pacific Rim Focus, McGraw-Hill, 2006.

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• Good luck in your exam!