Principles of

Management
 What is Management?
A set of activities
planning and decision making, organizing,
leading, and controlling

Directed at an organization’s resources

human, financial, physical, and information

With the aim of achieving organizational

goals in an efficient and effective
manner.
Basic Purpose of
Management

EFFICIENTLY
Using resources wisely and
in a cost-effective way

EFFECTIVELY
Making the right decisions and
successfully implementing them
 Why Study OB & Management?

 The better you can work with people, the

more successful you will be in both your
personal and your professional lives.
 Employers want to hire employees
who can participate in managing
the firm.
 Even non-managers (Individual
Contributors) are being trained
to perform management
functions.

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1–4 Economics. All rights reserved.
 Why Study OB & Management?

 The study of management builds the skills

needed in today’s workplace to succeed in:
 Becoming a partner in managing your organization
through participative management.
 Working in a team and sharing in decision making and
other management tasks.

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1–5 Economics. All rights reserved.
 Why Study OB & Management?

 The study of management also applies directly

to your personal life in helping you to:
 Communicate with and interact with people every day.
 Make personal plans and decisions, set goals,
prioritize what you will do, and get others to do things
for you.
 Society Needs Leaders and Team Players
 Be Successful in our Community, Religious, Social,
Professional, Recreational and Other Organizations.
 Become Leaders for a “Just and Humane World”

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What is a Manager?
 Someone whose primary
responsibility is to carry out the
management process.
 Someone who plans and makes
decisions, organizes, leads, and
controls:
human, financial, physical,
and information resources.
What Does It Take to Be a Successful
Manager?

 Management Qualities (Survey of

Execs.)
 Integrity, industriousness, and the
ability to get along with people
 Management Skills
 Technical
 Human and communication (Teaming)
 Conceptual and decision-making skills
• “Systems Thinking” & “Critical
Thinking”

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What Does It Take to Be a Successful
Manager?

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 Copyright © 2006 Thomson Business and
1–10 Economics. All rights reserved.
The Management Process

 Planning and Decision Making

 Setting an organization’s goals and selecting a course of
action from a set of alternatives to achieve them.
 Organizing
 Determining how activities and resources are grouped.
 Leading
 The set of processes used to get organizational
members to work together to advance the interests of
the organization.
 Controlling
 Monitoring organizational progress towards goals.
Fundamental Management Skills
 Management Skill Mixes at Different
Organizational Levels
 What Do Managers Do?
 Management Functions (Different Scope at job
level)
 Planning
• Setting objectives and determining in
advance exactly (?) how the objectives
will be met.
• Monitor for Change and Anticipate or
React
• PDCA – Plan – Do – Check - Act
 Organizing
• Delegating and coordinating tasks
and allocating resources to achieve
objectives.

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1–13 Economics. All rights reserved.
What Do Managers Do?

 Leading
• Influencing employees to work
toward achieving objectives.
• Setting an Example (Shadow of the
Leader)
 Controlling
• Establishing and implementing
mechanisms to ensure that objectives are
achieved.

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The Systems Relationship among the Management Functions

Planning
Management
Functions

Controlling Organizing

Management
Skills

Leading

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Differences between Large and Small
Businesses

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Differences between Large and Small Businesses
(cont’d)

ALSO OFTEN APPLIES TO NON-PROFITS AND CIVIC

ORGANIZATIONS, WITH FOCUS ON THEIR MISSION
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 Copyright © 2006 Thomson Business and
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An Integrative Framework
of Management Perspectives
Systems Approach Contingency Perspective
• Recognition of internal • Recognition of the situational
interdependencies nature of management
• Recognition of • Response to particular
environmental influences characteristics of situation

Classical Behavioral Quantitative

Management Management Management
Perspectives Perspectives Perspectives
Methods for Insights for moti- Techniques for
enhancing vating performance improving decision
efficiency and and understanding making, resource
facilitating planning, individual behavior, allocation, and
organizing, and groups and teams, operations
controlling and leadership

Effective and efficient management

Ten Roles Managers Play

Managers play various roles as necessary while performing their

management functions so as to achieve organizational objectives.

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 Copyright © 2006 Thomson Business and
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Management Skills and Functions
 Differences among management levels in skill
needed and the functions performed:

Planning

Controlling Organizing

Copyright © 2006 Thomson Business and Exhibit 1–6

1–22 Economics. All rights reserved. Leading
 Copyright © 2006 Thomson Business and
1–23 Economics. All rights reserved.
Classical Management Perspective

 Scientific Management
 Concerned with improving the
performance of individual workers (i.e.,
efficiency).
 Grew out of the industrial revolution’s
labor shortage at the beginning of the
twentieth century.
 Administrative Management
 A theory that focuses on
managing the total organization.
Scientific Management

 Frederick Taylor (1856–1915)

 Replaced old methods of how to do work with
scientifically-based work methods to eliminate
“soldiering,” where employees deliberately
worked at a pace slower than their capabilities.
 Believed in selecting, training, teaching, and
developing workers.
 Used time studies of jobs, standards planning,
exception rule of management, slide-rules,
instruction cards, and piece-work pay systems
to control and motivate employees.
 Classical Management Perspective

 Administrative Management Theory

 Focuses on managing the whole organization rather
than individuals.
 Henri Fayol (1845–1925)
 Was first to identify the specific management
functions of planning, organizing, leading, and
controlling.
 Max Weber (1864–1920)
 His theory of bureaucracy is based on a rational set
of guidelines for structuring organizations.
Behavioral Management Perspective

 Behavioral Management
 Emphasized individual attitudes and
behaviors, and group processes, and
recognized the importance of
behavioral processes in the workplace.
 Hawthorne Studies (1927–1932)
 Mayo: founder of human relations
 The Hawthorne Studies
(1927–1932)
 Conducted by Elton Mayo and associates at
Western Electric
 Illumination study —workplace lighting
adjustments affected both the control and the
experimental groups of production employees.
 Group study—implementation of piecework
incentive plan caused production workers to
establish informal levels of acceptable individual
output.
• Over-producing workers were labeled “rate
busters” and under-producing workers were
considered “chiselers.”
 Behavioral Management Perspective

 Human Relations Movement

 Grew out of the Hawthorne studies.
 Proposed that workers respond primarily
to the social context of work, including
social conditioning, group norms,
and interpersonal dynamics.
 Assumed that the manager’s
concern for workers would lead to
increased worker satisfaction and
improved worker performance.
Behavioral Management Perspective

 Abraham Maslow
 Advanced a theory that employees are
motivated by a hierarchy of needs that
they seek to satisfy.
 Douglas McGregor
 Proposed Theory X and Theory Y
concepts
of managerial beliefs about people
and work.
 Organizational Behavior

 A contemporary field focusing on behavioral

perspectives on management.
 Draws on psychology, sociology, anthropology,
economics, and medicine.
 Important topics in organizational behavior
research:
 Job satisfaction and job stress
 Motivation and leadership
 Group dynamics and organizational politics
 Interpersonal conflict
 The structure and design of organizations
Quantitative Management Perspective

 Quantitative Management
 Emerged during World War II to help
the Allied forces manage logistical
problems.
 Focuses on decision making, economic
effectiveness, mathematical models,
and the use of computers to solve
quantitative problems.
Quantitative Management Perspective

 Management Science
 Focuses on the development of
representative mathematical models to
assist with decisions.
 Operations Management
 Practical application of management
science to efficiently manage the
production and distribution
of products and services.
 The Systems Perspective of
Organizations

Outputs into
Inputs from the Transformation
the environment:
environment: process: technology,
products/services,
material inputs, operating systems,
profits/losses,
human inputs, administrative
employee behaviors,
financial inputs, and systems, and
and information
information inputs control systems
outputs

Feedback
 The Contingency Perspective

 Universal Perspectives
 Include the classical, behavioral, and quantitative
approaches.
 An attempt to identify the “one best way” to
manage organizations.
 The Contingency Perspective
 Suggests that each organization is unique.
 The appropriate managerial behavior for
managing an organization depends
(is contingent) on the current
situation in the organization.
 Decision Making and the
Planning Process
 The Planning Process
The Environmental Context
The organization’s mission
• Purpose • Premises • Values • Directions

Strategic goals Strategic plans

Tactical goals Tactical plans

Operational goals Operational plans

Kinds of Goals
 By Level
 Mission statement is a statement of an
organization’s fundamental purpose.
 Strategic goals are goals set by and for top
management of the organization that address
broad, general issues.
 Tactical goals are set by and for middle
managers; their focus is on how to
operationalize actions to strategic goals.
 Operational goals are set by and for lower-
level managers to address issues associated
with tactical goals.
SWOT
Analysis
Mission
An organization’s fundamental purpose

 Strengths SWOT Analysis

 Weaknesses To formulate strategies that support the mission

 Opportunities Internal Analysis External Analysis

 Threats Strengths Opportunities
(distinctive
competencies)

Weaknesses Threats

Best Strategies
Those that support the mission and
• exploit opportunities and strengths
• neutralize threats
• avoid (or correct) weaknesses
 Managing Diversification
 BCG Matrix
 A method of evaluating businesses relative to the
growth rate of their market and the organization’s
share of the market.
 The matrix classifies the types of businesses that a
diversified organization can engage as:
• “Dogs” have small market shares and no growth
prospects.
• “Cash cows” have large shares of mature
markets.
• “Question marks” have small market shares in
quickly growing markets.
• “Stars” have large shares of rapidly growing
markets.
Organizational Structure

 The Nature of Organizing

 Job Specialization
 Grouping Jobs: Departmentalization

 The Bureaucratic Model of Organization

Design
 Situational Influences on Organization
 Core Technology
 Environment

 Organization Size and Life Cycle

 Alternatives to Specialization

 Job Rotation
 Systematically moving employees from one job to
another. Most frequent use today is as a training
device for skills and flexibility.
 Job Enlargement
 An increase in the total number of tasks workers
perform.
 Job Enrichment
 Increasing both the number of tasks the worker does
and the control the worker has over the job.
Establishing Reporting Relationships

 Chain of Command
 A clear and distinct line of authority among the
positions in an organization.
 Unity of Command
• Each person within an organization must have
a clear reporting relationship to one and
only one boss.
 Scalar Principle
• A clear and unbroken line of authority
must extend from the bottom to the
top of the organization.
 Work-Related Attitudes

 Job Satisfaction or Dissatisfaction

 An attitude that reflects the extent to which an
individual is gratified or fulfilled by his or her
work.
 Job Satisfaction and Work Behaviors
 Job satisfaction is influenced by personal, group,
and organizational factors.
 Satisfied employees are absent from work less
often, make positive contributions, and stay with
the organization.
 Dissatisfied may experience stress which disrupts
coworkers.
Work-Related Attitudes

 Job Satisfaction and Work Behaviors

 High levels of job satisfaction do not
necessarily lead to high job
performance.
 Work-Related Attitudes

 Organizational Commitment
 An attitude that reflects an individual’s
identification with and attachment to an
organization.
 Organizational Commitment and Work
Behaviors
 Employee commitment strengthens with an
individual’s age, years with the organization,
sense of job security, and participation in decision
making.
 Committed employees have highly reliable habits,
plan a longer tenure with the organization.
 Motivation
 The Nature of Motivation
 Content Perspectives on Motivation
 The Need Hierarchy Approach
 The Two-Factor Theory

 Individual Human Needs (nAch, nAff)

 Process Perspectives on Motivation

 Expectancy Theory
 Equity Theory

 Goal-Setting Theory
 Process Perspectives on Motivation
 Porter-Lawler Extension of
Expectancy Theory

Intrinsic
rewards
(outcomes)

Perceived
Performance Satisfaction
equity

Extrinsic
rewards
(outcomes)

Source: Edward E. Lawler III and Lyman W. Porter, “The Effect of Performance on Job Satisfaction,”
Industrial Relations, October 1967, p. 23. Used with permission of the University of California. Figure 10.5
 Popular Motivational Strategies
 Empowerment and Participation

 Empowerment
• The process of enabling workers to set their own
work goals, make decisions, and solve problems
within their sphere of influence.
 Participation
• The process of giving employees a voice in
making decisions about their work.
 Areas of Participation for Employees
• Making decisions about their jobs.
• Participating in decision making about broader
issues of product quality.
 Using Reward Systems to
Motivate Performance

 Designing Effective Reward Systems

 Reward system must meet an
individual’s needs.
 Rewards should compare favorably with
other organizations.
 Distribution of rewards must be
perceived to be equitable.
 Reward system must recognize
different needs.
 Using Reward Systems to
Motivate Performance
 Popular Approaches to Rewarding
Employees
 Traditional systems
• Fixed hourly or monthly rate.
 Merit systems
• Employees get different pay raises at the end
of the year based on overall job performance.
 Incentive systems
• Employees get different pay amounts at each
pay period in proportion to what they do
(e.g., piece-rate pay plans).
 Using Reward Systems to
Motivate Performance
 Popular Approaches (cont’d)
 Profit sharing plans
• Provides bonus based to corporate profits.
 Gainsharing
• All group members get bonuses when
performance targets are exceeded.
 Lump sum bonuses
• One-time reward, not an increase in base.
 Pay-for-knowledge
• Pay the individual rather than the job.
 Leadership

 The Nature of Leadership

 The Meaning of Leadership

 Leadership Versus Management

 Power and Leadership

 The Search for Leadership Traits

 Leadership Behaviors
 Michigan Studies

 Ohio State Studies

 Leadership Grid

 Situational Approaches to Leadership

 LPC Theory
 Leadership

 Situational Approaches to Leadership

(cont’d)
 Path-Goal Theory
 The Leader-Member Exchange Approach
 Related Perspectives on Leadership
 Substitutes for Leadership
 Charismatic Leadership
 Transformational Leadership
 Types of Power in
Organizations

Source: Van Fleet, David D., and Tim Peterson, Contemporary Management, Third Edition. Copyright © 1994 by Houghton Mifflin Company. Used with permission.
 The Nature of Leadership
Power and Leadership
Power: ability to affect the behavior of others.
•Legitimate power is granted through the
organizational hierarchy.
•Reward power is the power to give or withhold
rewards.
•Coercive power is the capability to force compliance
by means of psychological, emotional, or physical
threat.
•Referent power is the personal power that accrues to
someone based on identification, imitation, loyalty, or
charisma.
•Expert power is derived from the possession of
information or expertise.
 Groups

 Groups and Teams in Organizations

 Types of Groups and Teams

 Why People Join Groups and Teams

 Stages of Group and Team Development

 Characteristics of Groups and Teams

 Role Structures

 Behavioral Norms

 Cohesiveness

 Formal and informal Leadership

Groups and Teams in Organizations

 Functional Group
 A permanent group created to accomplish a
number of organizational purposes within an
indefinite time horizon.
 Informal or Interest Group
 A group created by its own members for
purposes that may or may not be relevant to
organizational goals.
 Task Group
 A group created by the organization to
accomplish a relatively narrow range of purposes
within a stated time horizon.
Groups and Teams in Organizations

 Team
 A group of workers who function as a
unit, often with little or no supervision,
to carry out work-related tasks,
functions, and activities.
 Sometimes are called self-managed
teams, cross-functional teams, or high
performance teams.
Stages of
Group
Development
(Tuchman)

Source: Van Fleet, David D., and Tim

Peterson, Contemporary Management,
Third Edition. Copyright © 1994 by
Houghton Mifflin Company. Used with
permission.
Characteristics of Teams
 Role
 The part an individual plays in helping
the group reach its goals.
• Task-specialist—role concentrating on
getting the group’s tasks accomplished.
• Socioemotional role—providing social
and emotional support to others on
the team.
 Characteristics of Teams

 Cohesiveness
 The extent to which members are loyal and
committed to the group; the degree of mutual
attractiveness within the group.
 Factors That Influence Group Cohesiveness

Factors That Increase Factors That Reduce

Cohesiveness Cohesiveness

Intergroup competition Group size

Personal attraction Disagreement on goals
Favorable evaluation Intragroup competition
Agreement on goals Domination
Interaction Unpleasant experiences
Interpersonal and Intergroup Conflict
 The Nature of Organizational Conflict

High
Performance

Optimal level of conflict

Low
Low Conflict High