Certification Study Group Principles and Theories of Management October 11, 2005
Management <ul><li>Management is a set of activities directed at an organization’s resources with the aim of achieving org...
Management <ul><li>Activities include the four functions of management </li></ul><ul><ul><li>Planning (and decision making...
Management <ul><li>Resources include: </li></ul><ul><ul><li>Human </li></ul></ul><ul><ul><li>Financial </li></ul></ul><ul>...
Management in Organizations Inputs from the environment • Human resources • Financial resources • Physical resources • Inf...
Important Definitions <ul><li>Top Managers   </li></ul><ul><li>Middle Managers </li></ul><ul><li>First-line Managers </li>...
The Management Process Figure  1.2 Organizing Determining how best to group activities and resources Controlling Monitorin...
The Basic Functions of Management   A Circular Process Planning and Decision Making Organizing Leading Controlling
Skills and the Manager
Fundamental Management Skills <ul><li>Management Skill Mixes at Different Organizational Levels </li></ul>
Classical Management Perspective <ul><li>Scientific Management </li></ul><ul><ul><li>Frederick Taylor </li></ul></ul><ul><...
Steps in Scientific Management Develop a science for each element of the job to replace old rule-of-thumb methods Scientif...
The Classical Management Perspective <ul><li>Administrative Management  – focuses on managing the total organization </li>...
Weber’s Theory of Bureaucracy <ul><li>Division of labor </li></ul><ul><li>Reliance on rules and regulations </li></ul><ul>...
The Behavioral Management Perspective <ul><li>Placed much more emphasis on individual attitudes and behaviors and on group...
Behavioral Management Perspective <ul><li>Elton Mayo – Hawthorne Studies </li></ul><ul><ul><li>Illumination study </li></u...
Human Relations Movement <ul><ul><li>Grew out of the Hawthorne studies. </li></ul></ul><ul><ul><li>Proposed that workers r...
Behavioral Management Perspective <ul><li>Abraham Maslow </li></ul><ul><ul><li>Advanced a theory that employees are motiva...
Maslow’s Hierarchy of Needs <ul><li>Five levels </li></ul><ul><ul><li>Physiological – hunger, thirst, shelter, sex </li></...
Maslow’s Hierarchy of Needs SA Esteem Needs Social Needs Security Needs Physiological Needs
Theory X and Theory Y <ul><li>Theory X Assumptions </li></ul><ul><ul><li>People do not like work and try to avoid it. </li...
Theory X and Theory Y <ul><li>Theory Y Assumptions </li></ul><ul><ul><li>People do not dislike work; work is a natural par...
Theory X and Theory Y <ul><li>Theory Y Assumptions </li></ul><ul><ul><li>People seek both seek responsibility and accept r...
Theory X – Theory Y Think of these theories as a continuum Theory X Theory Y Employees fall somewhere in between the two e...
The Behavioral Management Perspective <ul><li>Contemporary behavioral science in management  – emerged  because of the too...
Organizational Behavior <ul><li>Important topics in organizational behavior research: </li></ul><ul><ul><li>Job satisfacti...
The Quantitative Management Perspective <ul><li>Focuses on decision making, economic effectiveness, mathematical models, a...
The Quantitative Management Perspective <ul><li>Contributions </li></ul><ul><ul><li>Developed sophisticated quantitative t...
Contemporary Management Theory <ul><li>The Systems Perspective </li></ul><ul><ul><li>A system is an interrelated set of el...
The Integrated Systems Model Feedback Inputs From the environment: Human Material Financial Information Processing Transfo...
Systems Perspective <ul><li>Synergy </li></ul><ul><ul><li>Subsystems are more successful working together than working alo...
Contemporary Management Issues & Challenges <ul><li>Downsizing </li></ul><ul><li>Diversity and the New Workforce </li></ul...
Certification Study Group The Functions of Management
The Functions of Management   A Circular Process Planning Organizing/ Staffing Leading/Directing Controlling
Plans Strategic Tactical Operational Mission Statement
<ul><li>Written explanation of company aims </li></ul><ul><li>What goods and services the company will offer </li></ul><ul...
Plans Are Classified on Their Scope Strategic Tactical Operational Plans become more specific as they move from strategic ...
Strategic Tactical Operational Management & Planning Levels Top Middle Supervisory
Certification Study Group Decision Making
Managers As Decision Makers <ul><li>Decision making –  the process of recognizing a problem or opportunity and creating a ...
Steps in the Decision Making Process Recognize and define the decision situation Develop options Analyze options Implement...
Decision Making Process Recognizing Identifying Alternatives Evaluate Alternatives Select Alternative Implement decision E...
Steps in the Rational  Decision-Making Process
Steps in the Rational  Decision-Making Process
Evaluating Alternatives in the Decision-Making Process Figure 4.3 Is the alternative feasible? Eliminate from consideratio...
Rational Decision-making Process Steps The Classical Model 1 2 3 4 5 6 A Circular Process
Types of Decisions <ul><li>Programmed Decisions </li></ul><ul><ul><li>A structured decision or one that occurs frequently ...
Decision-Making Conditions Level of ambiguity and chances of making a bad decision Lower Higher Moderate Certainty Uncerta...
Distinguishing Between  Decision Making Conditions Source: Barney, Jay B. and Ricky W. Griffin.  The Management of Organiz...
Decision-Making Conditions <ul><li>Decision Making Under Certainty </li></ul><ul><li>Decision Making Under Risk </li></ul>...
Rational Perspectives on Decision Making <ul><li>The Classical Model of Decision Making </li></ul>When faced with a decisi...
Behavioral Aspects of Decision Making The Administrative Model of Decision Making When faced with a decision situation man...
<ul><li>Bounded rationality </li></ul><ul><li>Satisficing </li></ul><ul><li>Coalition </li></ul><ul><li>Intuition </li></u...
Ethics and Decision Making <ul><li>Components of managerial ethics: </li></ul><ul><ul><li>Relationships of the firm to emp...
Group and Team Decision Making in Organizations <ul><li>The most common method of group and team decision making are:  </l...
Group Decision Making <ul><li>Advantages   </li></ul><ul><li>More information & knowledge are available </li></ul><ul><li>...
Groupthink Source: Gregory Moorhead,  Group & Organizations Studies  (Vol. 7, No. 4), pp. 429-444. Copyright © 1982 by Sag...
Managing Group and Team  Decision-Making Processes <ul><li>Be aware of the pros and cons of having a group or team make a ...
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  • Certification Study Group

    1. 1. Certification Study Group Principles and Theories of Management October 11, 2005
    2. 2. Management <ul><li>Management is a set of activities directed at an organization’s resources with the aim of achieving organizational goals in an efficient and effective manner </li></ul>
    3. 3. Management <ul><li>Activities include the four functions of management </li></ul><ul><ul><li>Planning (and decision making) </li></ul></ul><ul><ul><li>Organizing </li></ul></ul><ul><ul><li>Leading </li></ul></ul><ul><ul><li>Controlling </li></ul></ul>
    4. 4. Management <ul><li>Resources include: </li></ul><ul><ul><li>Human </li></ul></ul><ul><ul><li>Financial </li></ul></ul><ul><ul><li>Physical </li></ul></ul><ul><ul><li>Information </li></ul></ul>
    5. 5. Management in Organizations Inputs from the environment • Human resources • Financial resources • Physical resources • Information resources Planning and decision making Leading Organizing Controlling Goals attained • Efficiently • Effectively
    6. 6. Important Definitions <ul><li>Top Managers </li></ul><ul><li>Middle Managers </li></ul><ul><li>First-line Managers </li></ul><ul><li>Operative Employees </li></ul>
    7. 7. The Management Process Figure 1.2 Organizing Determining how best to group activities and resources Controlling Monitoring and correcting ongoing activities to facilitate goal attainment Planning and Decision Making Setting the organiza- tion ’ s goals and deciding how best to achieve them Leading Motivating members of the organization to work in the best interests of the organization
    8. 8. The Basic Functions of Management A Circular Process Planning and Decision Making Organizing Leading Controlling
    9. 9. Skills and the Manager
    10. 10. Fundamental Management Skills <ul><li>Management Skill Mixes at Different Organizational Levels </li></ul>
    11. 11. Classical Management Perspective <ul><li>Scientific Management </li></ul><ul><ul><li>Frederick Taylor </li></ul></ul><ul><ul><li>The Gilbreths </li></ul></ul><ul><ul><li>Henry Gantt </li></ul></ul>
    12. 12. Steps in Scientific Management Develop a science for each element of the job to replace old rule-of-thumb methods Scientifically select employees and then train them to do the job as described in step 1 Supervise employees to make sure they follow the prescribed methods for performing their jobs Continue to plan the work, but use workers to get the work done 2 1 4 3 Figure 1.3
    13. 13. The Classical Management Perspective <ul><li>Administrative Management – focuses on managing the total organization </li></ul><ul><ul><li>Henry Fayol </li></ul></ul><ul><ul><li>Lyndal Urwick </li></ul></ul><ul><ul><li>Max Weber </li></ul></ul>
    14. 14. Weber’s Theory of Bureaucracy <ul><li>Division of labor </li></ul><ul><li>Reliance on rules and regulations </li></ul><ul><li>Hierarchy of authority </li></ul><ul><li>Employment based on expertise </li></ul><ul><li>Inflexible </li></ul><ul><li>Rigid </li></ul><ul><li>Impersonal </li></ul>
    15. 15. The Behavioral Management Perspective <ul><li>Placed much more emphasis on individual attitudes and behaviors and on group processes in organizations. </li></ul><ul><li>Recognized the importance of behavioral processes in organizations </li></ul><ul><ul><li>Hugo Munsterberg </li></ul></ul><ul><ul><li>Mary Parker Follet </li></ul></ul><ul><ul><li>Elton Mayo </li></ul></ul>
    16. 16. Behavioral Management Perspective <ul><li>Elton Mayo – Hawthorne Studies </li></ul><ul><ul><li>Illumination study </li></ul></ul><ul><ul><li>Group study </li></ul></ul>
    17. 17. Human Relations Movement <ul><ul><li>Grew out of the Hawthorne studies. </li></ul></ul><ul><ul><li>Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics. </li></ul></ul><ul><ul><li>Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance. </li></ul></ul>
    18. 18. Behavioral Management Perspective <ul><li>Abraham Maslow </li></ul><ul><ul><li>Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy. </li></ul></ul><ul><li>Douglas McGregor </li></ul><ul><ul><li>Proposed Theory X and Theory Y concepts of managerial beliefs about people and work. </li></ul></ul>
    19. 19. Maslow’s Hierarchy of Needs <ul><li>Five levels </li></ul><ul><ul><li>Physiological – hunger, thirst, shelter, sex </li></ul></ul><ul><ul><li>Safety – security and protection </li></ul></ul><ul><ul><li>Social – affection, interpersonal relationships </li></ul></ul><ul><ul><li>Esteem – self-respect, achievement status </li></ul></ul><ul><ul><li>Self-actualization – achieving full potential </li></ul></ul><ul><li>Usually thought in the form of a pyramid </li></ul>
    20. 20. Maslow’s Hierarchy of Needs SA Esteem Needs Social Needs Security Needs Physiological Needs
    21. 21. Theory X and Theory Y <ul><li>Theory X Assumptions </li></ul><ul><ul><li>People do not like work and try to avoid it. </li></ul></ul><ul><ul><li>Managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals. </li></ul></ul><ul><ul><li>People prefer to be directed, to avoid responsibility, and to want security; they have little ambition. </li></ul></ul>Source: Douglas McGregor, The Human Side of Enterprise , Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.
    22. 22. Theory X and Theory Y <ul><li>Theory Y Assumptions </li></ul><ul><ul><li>People do not dislike work; work is a natural part of their lives. </li></ul></ul><ul><ul><li>People are internally motivated to reach objectives to which they are committed. </li></ul></ul><ul><ul><li>People are committed to goals to the degree that they receive rewards when they reach their objectives. </li></ul></ul>Source: Douglas McGregor, The Human Side of Enterprise , Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.
    23. 23. Theory X and Theory Y <ul><li>Theory Y Assumptions </li></ul><ul><ul><li>People seek both seek responsibility and accept responsibility under favorable conditions. </li></ul></ul><ul><ul><li>People can be innovative in solving problems. </li></ul></ul><ul><ul><li>People are bright, but under most organizational conditions their potentials are underutilized. </li></ul></ul>Source: Douglas McGregor, The Human Side of Enterprise , Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.
    24. 24. Theory X – Theory Y Think of these theories as a continuum Theory X Theory Y Employees fall somewhere in between the two ends
    25. 25. The Behavioral Management Perspective <ul><li>Contemporary behavioral science in management – emerged because of the too simplistic descriptions of work behavior by the human relations theorists. </li></ul><ul><li>Organizational behavior takes a holistic view of behavior, including individual, group, and organization processes </li></ul>
    26. 26. Organizational Behavior <ul><li>Important topics in organizational behavior research: </li></ul><ul><ul><li>Job satisfaction and job stress </li></ul></ul><ul><ul><li>Motivation and leadership </li></ul></ul><ul><ul><li>Group dynamics and organizational politics </li></ul></ul><ul><ul><li>Interpersonal conflict </li></ul></ul><ul><ul><li>The structure and design of organizations </li></ul></ul>
    27. 27. The Quantitative Management Perspective <ul><li>Focuses on decision making, economic effectiveness, mathematical models, and the use of computers in organizations </li></ul><ul><ul><li>Management science </li></ul></ul><ul><ul><li>Operations management </li></ul></ul>
    28. 28. The Quantitative Management Perspective <ul><li>Contributions </li></ul><ul><ul><li>Developed sophisticated quantitative techniques to assist decision making </li></ul></ul><ul><ul><li>Models have increased our awareness of complex organizational processes and have aided in the planning and controlling processes </li></ul></ul><ul><li>Limitations </li></ul><ul><ul><li>Cannot fully explain or predict behavior </li></ul></ul><ul><ul><li>Mathematical sophistication may come at the expense of other important skills </li></ul></ul><ul><ul><li>Models may require unrealistic or unfounded assumptions </li></ul></ul>
    29. 29. Contemporary Management Theory <ul><li>The Systems Perspective </li></ul><ul><ul><li>A system is an interrelated set of elements functioning as a whole. An organization as a system is composed of four elements: </li></ul></ul><ul><ul><ul><li>Inputs (material and/or human resources) </li></ul></ul></ul><ul><ul><ul><li>Transformation processes (technical and managerial processes) </li></ul></ul></ul><ul><ul><ul><li>Outputs (products and services) </li></ul></ul></ul><ul><ul><ul><li>Feedback (reactions from the environment) </li></ul></ul></ul>
    30. 30. The Integrated Systems Model Feedback Inputs From the environment: Human Material Financial Information Processing Transformation process: Technology Operating systems Administrative systems Control systems Outputs Into the environment Product Services Profit/loss Employee behavior Information
    31. 31. Systems Perspective <ul><li>Synergy </li></ul><ul><ul><li>Subsystems are more successful working together than working alone. The whole, working together, is greater than the sum of its parts. </li></ul></ul><ul><li>Entropy </li></ul><ul><ul><li>A natural process leading to system decline which can be avoided through organizational change and renewal . </li></ul></ul>
    32. 32. Contemporary Management Issues & Challenges <ul><li>Downsizing </li></ul><ul><li>Diversity and the New Workforce </li></ul><ul><li>Information Technology </li></ul><ul><li>New Ways of Managing </li></ul><ul><li>Globalization </li></ul><ul><li>Ethics and Social Responsibility </li></ul><ul><li>Managing for Quality </li></ul><ul><li>Service Economy </li></ul>
    33. 33. Certification Study Group The Functions of Management
    34. 34. The Functions of Management A Circular Process Planning Organizing/ Staffing Leading/Directing Controlling
    35. 35. Plans Strategic Tactical Operational Mission Statement
    36. 36. <ul><li>Written explanation of company aims </li></ul><ul><li>What goods and services the company will offer </li></ul><ul><li>What market the company will serve </li></ul><ul><li>Company belief vision </li></ul><ul><li>Statement about employee treatment may be included </li></ul>Mission Statement & Objectives Objectives - The ends or results desired by the organization and are derived from the organization’s mission.
    37. 37. Plans Are Classified on Their Scope Strategic Tactical Operational Plans become more specific as they move from strategic to operational Contingency
    38. 38. Strategic Tactical Operational Management & Planning Levels Top Middle Supervisory
    39. 39. Certification Study Group Decision Making
    40. 40. Managers As Decision Makers <ul><li>Decision making – the process of recognizing a problem or opportunity and creating a solution </li></ul>A decision is a choice between alternatives
    41. 41. Steps in the Decision Making Process Recognize and define the decision situation Develop options Analyze options Implement the decision Monitor the consequences Select the best option
    42. 42. Decision Making Process Recognizing Identifying Alternatives Evaluate Alternatives Select Alternative Implement decision Evaluate
    43. 43. Steps in the Rational Decision-Making Process
    44. 44. Steps in the Rational Decision-Making Process
    45. 45. Evaluating Alternatives in the Decision-Making Process Figure 4.3 Is the alternative feasible? Eliminate from consideration Is the alternative satisfactory? Are the alternative’s consequences affordable? Retain for further consideration Yes Yes Yes Eliminate from consideration Eliminate from consideration No No No
    46. 46. Rational Decision-making Process Steps The Classical Model 1 2 3 4 5 6 A Circular Process
    47. 47. Types of Decisions <ul><li>Programmed Decisions </li></ul><ul><ul><li>A structured decision or one that occurs frequently </li></ul></ul><ul><ul><li>Have well established and understood solutions </li></ul></ul><ul><li>Nonprogrammed Decisions </li></ul><ul><ul><li>An unstructured decision, which occurs less frequently than a programmed decision </li></ul></ul><ul><ul><li>Involves complex, important, and nonroutine problems or opportunities </li></ul></ul>
    48. 48. Decision-Making Conditions Level of ambiguity and chances of making a bad decision Lower Higher Moderate Certainty Uncertainty Risk The decision maker faces conditions of...
    49. 49. Distinguishing Between Decision Making Conditions Source: Barney, Jay B. and Ricky W. Griffin. The Management of Organizations . Copyright © 1992 by Houghton Mifflin Company. Used with permissions. There are different kinds of conditions in which to make a decision.
    50. 50. Decision-Making Conditions <ul><li>Decision Making Under Certainty </li></ul><ul><li>Decision Making Under Risk </li></ul><ul><li>Decision Making Under Uncertainty </li></ul>
    51. 51. Rational Perspectives on Decision Making <ul><li>The Classical Model of Decision Making </li></ul>When faced with a decision situation, managers should . . . . . . and end up with a decision that best serves the interests of the organization. • obtain complete and perfect information • eliminate uncertainty • evaluate everything rationally and logically
    52. 52. Behavioral Aspects of Decision Making The Administrative Model of Decision Making When faced with a decision situation managers actually… . . . and end up with a decision that may or may not serve the interests of the organization. • use incomplete and imperfect information • are constrained by bounded rationality • tend to satisfice
    53. 53. <ul><li>Bounded rationality </li></ul><ul><li>Satisficing </li></ul><ul><li>Coalition </li></ul><ul><li>Intuition </li></ul><ul><li>Escalation of Commitment </li></ul><ul><li>Risk Propensity </li></ul>The Administrative Model Important Behavioral Concepts
    54. 54. Ethics and Decision Making <ul><li>Components of managerial ethics: </li></ul><ul><ul><li>Relationships of the firm to employees </li></ul></ul><ul><ul><li>Employees to the firm </li></ul></ul><ul><ul><li>The firm to other economic agents </li></ul></ul>
    55. 55. Group and Team Decision Making in Organizations <ul><li>The most common method of group and team decision making are: </li></ul><ul><ul><li>Interacting groups </li></ul></ul><ul><ul><li>Delphi groups </li></ul></ul><ul><ul><li>Nominal groups. </li></ul></ul>
    56. 56. Group Decision Making <ul><li>Advantages </li></ul><ul><li>More information & knowledge are available </li></ul><ul><li>More alternatives are likely to be generated </li></ul><ul><li>More acceptance of the final decision is likely </li></ul><ul><li>Enhanced communication of the decision may result </li></ul><ul><li>Better decisions </li></ul><ul><li>Disadvantages </li></ul><ul><li>The process takes longer, so it is more costly </li></ul><ul><li>Compromise decisions due to indecisiveness may emerge </li></ul><ul><li>One person may dominate the group </li></ul><ul><li>Groupthink may occur </li></ul>
    57. 57. Groupthink Source: Gregory Moorhead, Group & Organizations Studies (Vol. 7, No. 4), pp. 429-444. Copyright © 1982 by Sage Publications, Inc. Reprinted by permission of Sage Publications, Inc. <ul><li>A situation that occurs when a group or team’s desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision. </li></ul>
    58. 58. Managing Group and Team Decision-Making Processes <ul><li>Be aware of the pros and cons of having a group or team make a decision. </li></ul><ul><li>Set deadlines for when decisions must be made. </li></ul><ul><li>Avoid problems with dominance by managing group membership. </li></ul><ul><li>Hold a follow-up meeting to recheck the decision. </li></ul><ul><li>Have each group member individually and critically evaluate all alternatives. </li></ul><ul><li>As a manager, do not make your position known too early. </li></ul><ul><li>Appoint a group member to be a “devil’s advocate.” </li></ul>Promoting the Effectiveness of Group and Team Decision Making:

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