Fundamental of Management

Management in all business and human organization activity is simply the act of getting people together to accomplish desired goals. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources.

Management is creative problem solving. This creative problem solving is accomplished through four functions of management: planning, organizing, leading and controlling. The intended result is the use of an organization's resources in a way that accomplishes its mission and objectives. (Figure 1.1, From Higgins, page 7)

In Management Excel, this standard definition is modified to align more closely with our teaching objectives and to communicate more clearly the content of the organizing function. Organizing is divided into organizing and staffing so that the importance of staffing in small businesses receives emphasis along side organizing. In the management literature, directing and leading are used interchangeably.

The Five Functions of Management

Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal.

Organizing is establishing the internal organizational structure of the organization. The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders.

Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid and unpaid positions held by family members including the owner/operators.

Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives.

Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary.

Each of these functions involves creative problem solving. (Figure 4.2 from Higgins, page 118) Creative problem solving is broader than problem finding, choice making or decision making. It extends from analysis of the environment within which the business is functioning to evaluation of the outcomes from the alternative implemented.

Management Motivating

Motivational needs

Motivational needs simply means what your employees need to help them do their work and how important that need is; for example, an employee might feel that they need a lot of recognition from their employer or manager to boost their ego. Once their ego is boosted this motivational need is fulfilled. An employee might have many motivational needs all varying in importance; your task as employer/manager is to detect these needs and act to allow fulfillment.

You may now be thinking that you have to bend to the pressures of the workforce so that they will work for you, however, you would be wrong in this assumption.

Management Styles

How you go about investigating and satisfying your employees motivational needs boils down to something call a management style; example might be:

You believe that your employees are basically lazy and the only way to motivate them is to shout or even threaten your staff.

- Your motivator is fear and intimidation build on the notion that your staff are lazy
You may value the opinions of your staff and believe you can motivate your staff through mutual trust and respect.
- Your motivator is trust and respect for your employees.
You may believe strongly in recognising achievement and excellence by rewarding employees.
- You motivator is rewarding for good work.

Motivational Factors

Over the years, there have been many studies examining staff motivation and here are just a few examples of what employees feel are their motivational needs or factors:

The working environment - poor or inadequate equipment or work facilities

Working Conditions - too hot, too cold, no breaks, long hours

Social Interaction - isolation, socialisation discouraged etc

Job Security - redundancies, feeling not part of company etc

Skill or intellectual use -inability or discouragement to use intellectual or skill

Promotional prospects and job title - lack of promotion, others promoted but not them

Responsibility - not allowed to work off own initiative

Recognition and appreciation - lack of praise or recognition for achievement

Trust and respect - treated as a machine

Participation in decision making - not allowed to get involved with company

A sense of belonging -

Salary - pay poor for job they are doing

Management issues - conflicts with management, etc

In fact this is only a small sample of the many facets that account for motivational need, once you are aware of these needs and act to resolve and maintain them, you will find that staff are more content and hopefully motivated. If you invest in your staff you are investing in your company.

The only way you can find out what truly motivates your staff is:
Asking your employees what motivates them
Monitoring the changes in work levels as a result of your motivational philosophy

Once you know what makes your employees tick you can formulate a management style which will assist to motivate your staff. For many employers or managers this task is simple, but for many it has been a sadly neglected skill.

Delegation

WHAT IS DELEGATION ?

It is not possible for a single person to handle all the tasks in an enterprise. Moreover, the task of the manager is not to do all the work on his own but to get the work done by other members in the organization. For accomplishing the group purposes, delegation is necessary. Besides, there is a limit to the number of persons, a manager can supervise. Once this limit is crossed, authority needs to be delegated to the subordinates.

Authority gets delegated when a superior gives a subordinate, the discretion to make decisions. A superior can delegate only that authority, which he has and cannot delegate the one be does not have. The important decision for a manager is to decide when to perform them on his own. To determine when delegation is most appropriate, the managers should ask five basic questions:

Do the subordinates have the necessary information and expertise to perform the task ?
Are the subordinates committed for successful implementation of the final decision ?
Will the capabilities and interest of the subordinates be expanded by this delegation ?
Do the subordinates share with management the same set of common values and perspectives ?
Is there sufficient time to do an effective job of delegation ?

If any of these questions remain unanswered, the probability is greater that the delegation will not be effective. More time will be required, lower quality will result, more frustration will be experienced and less empowerment will occur.
THE ART CALLED “DELEGATION”

The failure of delegation occurs not because managers do not understand how effective delegation can be done but because they are unwilling to apply the principles for the fear of loosing their importance. The studies of managerial failures reveal poor and inept delegation. The root cause Lies in the personal bias of the managers.

Receptiveness :

Delegation involves decision making and decision making always involves use of discretion and foresightedness. Managers fear that their subordinates decision may not be exactly the type the superior would have made. Besides, it involves the willingness to give a chance to the ideas of other people. The manager should be able to welcome the ideas of others as well as be able to compliment them for the good work done.

Readiness to delegate :
People who gradually move up the executive ladder in the organization tend to keep on taking the decisions for the positions they have already left. This is sheer waste of time and effort on the part of a manager because the same time can be devoted for far more important decisions. Managers need to concentrate on tasks that contribute most to the firm’s objectives and the other non-important tasks can be delegated.

Delegation is the giving of something to do to another, explaining his or her own experience in the area, the objectives to be achieved, the resources that are available, and then informing that person that he or she has the authority to perform it. It’s not telling them how to do it, or standing over them while they do it. It’s the means by which the strengths of others are put to best use. If a manager can admit that some subordinates are superior in some ways to themselves, then they can and must delegate. Failure to delegate leads to failure to properly manage others effectively.

Business managers routinely have more responsibilities than time to carry them out. Too often they make the mistake of thinking no one else can make decisions or handle an important task. They’re wrong, of course. This attitude does not inspire subordinates to achieve at enhanced levels of performance and hurts the individual manager’s performance as well.

Follow the flow of authority in issuing instructions to employees. The manager delegates decisions and policies to the department heads and supervisors. They, in turn, instruct and direct the activities of employees under their supervision. If you’ve selected supervisors based upon their abilities, you must now have confidence in your own decisions and let them do their jobs as best they can. Accept the fact that they’re going to make mistakes, just as you have. If you don’t allow them to fail, you’ll prohibit them from enjoying the benefits of succeeding.

Communicate publicly your confidence in your employees. Don’t be afraid of delegating responsibility to others. If you’ve followed proper hiring methods, you should have confidence in the individuals you choose. Let them know you think they can handle the job but that you are available for consultation if they run into trouble. Monitor the work without appearing to hover over their shoulders. Generally, the jobs that should be delegated include:

All routine tasks. A lengthy, repetitive assignment should be assigned to a suitably skilled employee. This includes orienting new workers, preparing some reports, and other reoccurring-type tasks. The jobs in this category probably require more skill and discernment abilities than the routine tasks, so they should be assigned to well-chosen subordinates, not routinely given to everyone in the workplace.

Tasks Designed to Upgrade Performance. Some workers might be ready for promotions or additional task assignments. Their skills at routine tasks are high, and the manager thinks they might be ready to develop new skills. By assigning these workers job tasks outside their current skill areas, they are presented with an opportunity to grow within the organization. This kind of delegation is riskier than the others and requires more supervisory monitoring.

Some jobs simply cannot be delegated. If you are uncertain as to which tasks can be delegated and which cannot, review the job description sheets. Those responsibilities listed under your job classification are yours alone. They include planning, supervising, organizing and plotting workflow. They do not include getting the work done.

Delegation does not mean the abdication of responsibility and control. You should continue to provide input in a timely fashion, but only when the need arises. It requires you to take a specific job, train an individual to do the job, and then letting go. Good delegation is a method of measurement of performance - for you and the employee performing the task. If you have ever given the car keys to a teenager, you know how difficult letting go can be!

Industrial marketing

Industrial marketing is the marketing of goods and services from one business to another. The word "industrial" has connotations of heavy machinery, mining, construction etc. but "industrial marketing" is not confined to these types of business activities. Broadly (and inadequatly) marketing could be split into consumer marketing (B2C "Business to Consumer") and industrial marketing (B2B "Business to Business").

Typical examples of a B2B selling process are...

An organisation is seeking to build a new warehouse building. After carefully documenting their requirements, it obtains three proposals from suitable construction firms and after a long process of evaluation and negotiation it places an order with the organisation that it believes has offered the best value for money.

An organisation has significant need for legal services and obtains submissions from two law firms. Analysis of the proposals and subsequent discussions determines that there is no price advantage to placing all of the work with one fim and the decision is made to split the work between the two firms based on an evaluation of each firm's capabilities.

A sales representative makes an appointment with a small organisation that employs 22 people. He demonstrates a photocopier/fax/printer to the office administrator. After discussing the proposal with the business owner it is decided to sign a contract to obtain the machine on a fully maintained rental and consumables basis with an upgrade after 2 years.

The main features of the B2B selling process are...

Marketing is one-to-one in nature. It is relatively easy for the seller to identify a prospective customer and to build a face-to-face relationship.
High value considered purchase.

Purchase decision is typically made by a group of people ("buying team") not one person.
Often the buying/selling process is complex and includes many stages (for example; request for expression of interest, request for tender, selection process, awarding of tender, contract negotiations, and signing of final contract).

Selling activities involve long processes of prospecting, qualifying, wooing, making representations, preparing tenders, developing strategies and contract negotiations.

DIFFERENT APPROACHES AND SYSTEMS OF MANAGEMENT,SKILLS,ROLES AND MODERN CHALLENGES

Objectives Of The Lesson

After studying this lesson, you should understand:
1. The various approaches to management
2. The systems approach to management
3. The social responsibilities of management

Management covers a wide variety of activities. Theorists and academic authors have contributed to the study management and one can see a huge volume of writings on the management. The various approaches to management and umpteen number of differing views have only added to the confusion of what the management is all about. It isn’t surprising to know that a highly respected author had called the situation as “the management theory jungle”.

Various Approaches to Management

Analysis of management from various view points have to led to different approaches. They have been summarized as the following:

Characteristics & Limitations

Empirical/Case Approach

Knowledge based on experience No concrete principles. through case studies. Analyzes Of limited value for developing successes and failures. management theory.

Group Behavior Approach

Importance on people as groups and their behavior. Study of Social and Organizational
Behavior of the people in groups.

Cooperative social systems approach

Concept includes any cooperative This approach overlooks group with a purpose and the managerial concepts is concerned with and is too broad a field both interpersonal and group for the study
behavioral aspects. of management

Interpersonal behavior approach

Generally differs with management concepts, theories and Techniques. Closer integration organization structure is needed. Concentrates on interpersonal This approach too like the behavior, leadership, motivation earlier ones ignores concepts such as planning, managerial and human relations. organizing and Controlling.

Systems approach

There is nothing new about this approach to the management. Socio technical systems approach Technical systems such as production and office operation have great effect on social system such as personal This concept places importance on labor and lower-level office work and ignores other managerial knowledge. In this concept managing is treated as a mathematical processes. It is viewed as a purely logical process and is expressed in mathematical symbols and relationships. Managing is not a pure science and hence cannot be completely modeled.

Mckinsey’s 7-s framework

The seven S’s are

1.Strategy,
2.structure,
3.Systems,
4.Style,
5.Staff,
6.Shared values
7.Skills.

Though the concept is of practical value, the terms used are not discussed in detail.

Contingency approach

Managing different situations and circumstances is influenced by the organizational behaviour. There is no one answer to a problem. There can be more than one best way to do a thing. Calls for creativity and can be very complex.

Operational approach

This approach draws concepts, techniques and knowledge from other fields and managerial approaches. Distinguishes between managerial and non-managerial knowledge. Does not, as some authors say, identify “coordination” as a separate function.

Decision theory approach

Focuses on making of decisions and decision-making process this concept is too bounded i.e. either it is too narrow and at times it is too wide. Management consists of more than making decisions.

Managerial roles approach

Original study consisted of observations of only five chief executives. Sample was very small and some activities considered are not managerial. In the above, we have seen that the operational approach integrates all other approaches. It tries to integrate the concepts, principles and techniques that form basis of managing. The operation approach is also often called “management process” school since it emphasizes on the functions of the managers.

Systems Approach to Management

Just as human body is formed of different interdependent systems so is also an organization. A change in any one of these systems may affect all or some other systems to varying degrees. This ‘ripple effect’ influences the effectiveness of the organization. To understand the interactions and the consequences between the various systems of the organization the managers should posses the ability to get a perspective view. Treating an organization as formed of different Systems is known as systems approach. Systems theory was first applied in the fields of science and engineering. It also has found wide acceptance in the practice of management. A system can be defined as essentially a set or assemblage of things interconnected or interdependent, so as to form a complex unity. Cars, computers, television and radio sets are some examples of systems. There are two major types of systems: closed and open. A closed system has definite boundaries; it operates relatively independently and is not affected by the environment outside the system. Stand by generator is an example of a closed system. With its different systems working together in perfect harmony the generator continues to supply power as long as it has sufficient fuel supply without much regard to the external environment. An open system as the name implies, is characterized by its interaction with the external environment. Clearly, an open-system model that includes interactions between the enterprise and its external environment must describe any business or other organization.



The above shown figure 2-1 is self-explanatory. One important mechanism, which makes the system to adapt and adjust to the changing conditions of its environment and to exercise control over its operations, is ‘feedback’. As explained thus far, systems approach of management provides an integral approach to management. It views management in its totality. It helps in seeing the problems of the organization in wider perspective.

This approach is more useful in managerial decision-making. Based on the systems approach, Talcot Parsons has suggested three meaningful levels in the hierarchy of complex organizations: Technical, Organizational and Institutional.

The Technical Level is concerned with the actual production and distribution of products and services. It also includes activities like research and development, operation research and accounting.

The Organizational Level coordinates and integrates work performance at the technical level. It is concerned with obtaining the continued flow of inputs into the system and maintaining the markets for the outputs from the system.

The Institutional Level is concerned with relating activities of the organization to environmental system. It involves relating the organization to the needs the environment.

Social Responsibilities of Management–The Modern Challenges

According to Keith Davis, “Social responsibilities refer to the businessman’s decisions and actions taken to reasons at least partially beyond the firm’s direct economic or technical interest”. To quote Andrews, “by social responsibility, we mean intelligent and objective concern for the welfare of society that restrains individual and corporate behavior from ultimately destructive activities, no matter how immediately profitable and leads in the direction of positive contribution to human betterment
Variously as the latter may be defined”.

The concept of social responsibility is not new. Although the idea was already considered in the early part of the 20th century, the modern discussion of social responsibility got a major impetus with the book Social Responsibilities of the Businessman by Howard R.Bowen. He suggests that business Managers are bound to “pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society”. In other words businesses should consider the social implications of their decisions. AS one may expect, there is no complete agreement on the definition of social responsibility. A survey conducted on the matter revealed “Corporate social responsibility is seriously considering the impact of the company’s actions on society”. In a broad sense, business owes a lot to the various groups such as customers, employees, shareholders, government and the community at large in which it exists. As one argues for business involvement in social activities, there are also arguments against it, as follows:

Arguments for and against Social Involvement of Business

Arguments for social involvement of business

1. Public needs have changed, leading to changed expectations. Business, it is suggested, received its charter from society and consequently had to respond to the needs of society.
1. Improvement of the social environment benefits both society and business. Society gains through better neighborhoods and employment opportunities; business benefits from a better community, since the community is the source of its work force and the consumer of it products and services.
2. Social involvement discourages additional government regulation and intervention. The result is greater freedom and more flexibility in decision making for business.
3. Business has a great deal of power, which, it is reasoned, should be accompanied by an equal amount of responsibility.
4. Modern society is an interdependent system and the internal activities of the enterprise have an impact on the external environment.
5. Social involvement may be in the interest of stockholders.
6. Problems can become profits. Items that may once have been considered waste (for example, empty soft drink cans) can be profitably used again.
7. Social involvement creates a favorable public image. Thus, a firm may attract customers, employees and investors.
8. Business should try to solve the problems which other institutions have not been able to solve. After all business has a history of coming up with novel ideas.
9. Business has the resources. Specifically, business should use its talented managers and Specialists, as well as its capital resources to solve some of society’s problems.
10. It is better to prevent social problems through business involvement than to cure them. It may be easier to help the hard-core unemployed than to cope with social unrest.

Arguments against Social Involvement of Business

1. The primary task of business is to maximize profit buy focusing strictly on economic activities. Social involvement could reduce economic efficiency.
2. In the final analysis, society must pay for the social involvement of business through higher prices. Social involvement would create excessive costs for business, which cannot commit its resources to social action.
3. Social involvement can weaken the international balance of payments. The cost of social programs, the reasoning goes, would have to be added to the price of the product. Thus American companies selling in international markets would be at a disadvantage when competing with companies in other countries, which do not have these social costs to bear.

4. Business has enough power and additional social involvement would further increase its power and influence.
5. Business people lack the social skill to deal with the problems of society. Their training and experience is with economic matters and their skills may not be pertinent to social problems.

6. There is a lack of accountability of business to society. Unless accountability can be established, business should not get involved.


7. There is not complete support for involvement in social actions. Consequently, disagreements among groups with different viewpoints will cause friction.

8. Not withstanding the above arguments many organizations have taken up the social causes. Though profit is essential to the business the social involvement and its extent of involvement of the organization should be carefully considered. A right balance has to be struck between the organization’s goal and the social obligations.