Principles of management


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  • Only 125 years ago, business ideas and practices were very different from today’s widely accepted management ideas. Management wasn’t even a field of study, and there were no management jobs or management careers. This chapter presents origins of management ideas and practice throughout history and the historical changes that produced the need for managers. On this slide are some of the management examples that can be found throughout history, and how they are related to the management functions in the textbook.
  • Before scientific management, organizational decision making could best be described as ‘seat-of-the-pants.” Decisions were made haphazardly with no standardization of procedures, systematic study, or collection of information. In contrast, scientific management thoroughly studied and tested different work methods to identify the best, most efficient ways to complete a job.
  • Frederick W. Taylor, the “father of scientific management,” spent three years to improve output of workers who were deliberately restricting output. His principles are described on this slide. Taylor’s key ideas have stood the test of time. These include: using systematic analysis to identify the best methods scientifically selecting, training, and developing workers promoting cooperation between management and labor developing standardized approaches and tools setting specific tasks or goals and then rewarding workers with financial incentives giving workers shorter work hours and frequent breaks
  • In addition to their use of motion studies to simplify work, Frank and Lillian Gilbreth also made significant contributions to the employment of handicapped workers and industrial psychology. Lillian Gilbreth, the first woman to receive a Ph.D. in Management, also convinced the government to enact laws regarding workplace safety, ergonomics, and child labor.
  • In addition to their use of motion studies to simplify work, Frank and Lillian Gilbreth also made significant contributions to the employment of handicapped workers and industrial psychology. Lillian Gilbreth, the first woman to receive a Ph.D. in Management, also convinced the government to enact laws regarding workplace safety, ergonomics, and child labor.
  • Henry Gant, in addition to creating the Gantt chart, made significant contributions to management with pay-for-performance plans and the training and development of workers. A Gantt chart shows time in various units on the x-axis and tasks on the y-axis, visually indicating what tasks must be completed at which times in order to complete a project.
  • When we hear the term bureaucracy, we think of inefficiency and “red tape”, incompetence and ineffectiveness. However, when German sociologist Max Weber proposed the idea of bureaucratic organizations, monarchies were associated with these problems. Bureaucracy literally means to rule from a desk or office. In a bureaucracy, people would lead by virtue of rational-legal authority—from knowledge, expertise, and experience.
  • The aim of bureaucracy is to achieve an organization’s goals in the most efficient way possible.
  • Henri Fayol is best known for developing five functions of managers and 14 principles of management, as well as his belief that management could and should be taught to others. The five functions of successful management are: planning, organizing, coordinating, commanding, and controlling. His principles of effective management are shown on this slide.
  • Scientific management focuses on improving the efficiency of manufacturing facilities and their workers. Bureaucratic management focuses on using knowledge, fairness, and logical rules to increate the organization’s efficiency. Administrative management focuses on how and what managers should do in their jobs. In contrast, the human relations approach to management focuses on the psychological and social aspects of work. People are valuable organizational resources whose needs are important.
  • Follett is known for developing ideas regarding constructive conflict and coordination. She said that conflict is the appearance of difference, difference of opinions, of interests. Follett believed that managers could deal with conflict in three ways, as shown on this slide. Domination is a victory of one side over the other. Compromise involves both parties giving up some of what they want in order to reach an agreement. Integrative conflict resolution involves both parties indicating their preferences and then working together to find an alternative that meets the needs of both.
  • Speaker should address all topics on list briefly.
  • Speaker should also add that the experiments were conducted on six women whose job was to assembly telephone relay assemblies.
  • The speaker should take ideas from the audience and write them on the board. Ideas can include: scheduling, employee rewards, and group activities.
  • Mayo also had an associate helping him with the studies named Fritz Roethlisberger.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers. If the response is wrong this time, discuss why output fell.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers.
  • The speaker should have the audience anticipate what effect the experiment had on the workers. Have them try to explain why the outcome was what is was before advancing to the next slide.
  • Again take answers from the audience and write them on the board. Discuss why these things affect productivity and how managers can deal with them.
  • Again the speaker should go over all points on the list.
  • 1 Day Workshop on Strategic Planning Model – See Notebook for exercises.
  • The Overall Model consists of five major phases
  • Before you begin, make sure the groundwork has been done to make the planning process work.
  • Principles of management

    1. 1. Chapter 1
    2. 2. Learning Objectives <ul><li>Define Managers And Management. </li></ul><ul><li>Explain What Managers Do. </li></ul><ul><li>Describe The Competencies Used In Managerial Work And Assess Your Current Competency Levels. </li></ul>
    3. 3. Introductory Concepts: What Is Management? <ul><li>The verb manage comes from the Italian maneggiare (to handle — especially tools), which in turn derives from the Latin manus (hand). </li></ul><ul><li>The French word mesnagement (later ménagement ) influenced the development in meaning of the English word management in the 17th and 18th centuries </li></ul>
    4. 4. Management <ul><li>Management refers to the tasks and activities involved in directing an organization or one of its units: planning, organizing, leading, and controlling. </li></ul><ul><li>The process of reaching organizational goals by working with and through people and other organizational resources. </li></ul>
    5. 5. Some definitions of Management <ul><li>According to the management guru Peter Drucker (1909–2005), the basic task of a management is twofold: marketing and innovation . </li></ul><ul><li>Henri Fayol (1841–1925) :forecasting, planning, organizing, commanding, coordinating, and controlling. </li></ul><ul><li>Another way of thinking, Mary Parker Follett (1868–1933)- defined management as &quot;the art of getting things done through people&quot;. </li></ul>
    6. 6. What are the Types of Managers? <ul><li>Functional Managers: A manager responsible for just one organizational activity such as accounting, human resources, sales, finance, marketing, or production </li></ul><ul><li>Focus on technical areas of expertise </li></ul><ul><li>Use communication, planning and administration, teamwork and self-management competencies to get work done </li></ul><ul><li>Function: A classification referring to a group of similar activities in an organization like marketing or operations. </li></ul>
    7. 7. What are the Types of Managers? <ul><li>General Managers: responsible for the operations of more complex units—for example, a company or division </li></ul><ul><li>Oversee work of functional managers </li></ul><ul><li>Responsible for all the activities of the unit </li></ul><ul><li>Need to acquire strategic and multicultural competencies to guide organization </li></ul>(cont’d) <ul><li>Many Other types of managers </li></ul>
    8. 8. Basic Managerial Functions Organizing Planning Controlling Leading
    9. 9. Management Process and Goal Attainment
    10. 10. Management and Organizational Resources
    11. 11. <ul><ul><li>Planning involves tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed. </li></ul></ul>Planning
    12. 12. <ul><ul><li>Organizing means assigning the planned tasks to various individuals or groups within the organization and cresting a mechanism to put plans into action. </li></ul></ul><ul><ul><li>Division of labour </li></ul></ul><ul><ul><li>Delegation of authority </li></ul></ul><ul><ul><li>Departmentation. </li></ul></ul><ul><ul><li>Span of control </li></ul></ul><ul><ul><li>Coordination </li></ul></ul>Organizing
    13. 13. <ul><ul><li>Leading ( Influencing ) means guiding the activities of the organization members in appropriate directions. Objective is to improve productivity. </li></ul></ul>Leading
    14. 14. <ul><ul><ul><li>1. Gather information that measures recent performance </li></ul></ul></ul><ul><ul><ul><li>2. Compare present performance to pre-established standards </li></ul></ul></ul><ul><ul><ul><li>3. Determine modifications to meet pre-established standards </li></ul></ul></ul>Controlling
    15. 15. Controlling <ul><li>Process by which a person, group, or organization consciously monitors performance and takes corrective action </li></ul>
    16. 16. Basic Levels of Management Top Managers Middle Managers First-Line Managers Nonmanagers
    17. 17. Levels of Management <ul><li>First-line Managers: have direct responsibility for producing goods or services Foreman, supervisors, clerical supervisors </li></ul><ul><li>Middle Managers: </li></ul><ul><ul><li>Coordinate employee activities </li></ul></ul><ul><ul><li>Determine which goods or services to provide </li></ul></ul><ul><ul><li>Decide how to market goods or services to customers </li></ul></ul><ul><ul><li>Assistant Manager, Manager (Section Head) </li></ul></ul><ul><li>Top Managers: provide the overall direction of an organization Chief Executive Officer, President, Vice President </li></ul>
    18. 18. First-line Managers <ul><li>Directly responsible for production of goods or services </li></ul><ul><li>Employees who report to first-line managers do the organization’s work </li></ul><ul><li>Spend little time with top managers in large organizations </li></ul><ul><li>Technical expertise is important </li></ul><ul><li>Rely on planning and administration, self-management, teamwork, and communication competencies to get work done </li></ul>
    19. 19. Middle Managers <ul><li>Responsible for setting objectives that are consistent with top management’s goals and translating them into specific goals and plans for first-line managers to implement </li></ul><ul><li>Responsible for coordinating activities of first-line managers </li></ul><ul><li>Establish target dates for products/services to be delivered </li></ul><ul><li>Need to coordinate with others for resources </li></ul><ul><li>Ability to develop others is important </li></ul><ul><li>Rely on communication, teamwork, and planning and administration competencies to achieve goals </li></ul>
    20. 20. Top Managers <ul><li>Responsible for providing the overall direction of an organization </li></ul><ul><li>Develop goals and strategies for entire organization </li></ul><ul><li>Spend most of their time planning and leading </li></ul><ul><li>Communicate with key stakeholders—stockholders, unions, governmental agencies, etc., company policies </li></ul><ul><li>Use of multicultural and strategic action competencies to lead firm is crucial </li></ul>
    21. 21. <ul><ul><li>Management Level and Skills </li></ul></ul>
    22. 22. Mintzberg’s Managerial Roles (a) Interpersonal roles
    23. 23. Mintzberg’s Managerial Roles (b)
    24. 24. 1- Mintzberg’s Managerial Roles (c)
    25. 25. Introductory Concepts: What Are Managerial Competencies ? <ul><li>Competency – a combination of knowledge, skills, behaviors, and attitudes that contribute to personal effectiveness </li></ul><ul><li>Managerial Competencies – sets of knowledge, skill, behaviors, and attitudes that a person needs to be effective in a wide range of positions and various types of organizations </li></ul>
    26. 26. Six Core Managerial Competencies: What It Takes to Be a Great Manager <ul><li>Communication Competency </li></ul><ul><li>Planning and Administration Competency </li></ul><ul><li>Teamwork Competency </li></ul><ul><li>Strategic Action Competency </li></ul><ul><li>Multicultural Competency </li></ul><ul><li>Self-Management Competency </li></ul>
    27. 27. Communication Competency <ul><li>Ability to effectively transfer and exchange information that leads to understanding between yourself and others </li></ul><ul><li>Informal Communication </li></ul><ul><li>Used to build social networks and good interpersonal relations </li></ul><ul><li>Formal Communication </li></ul><ul><li>Used to announce major events/decisions/ activities and keep individuals up to date </li></ul><ul><li>Negotiation </li></ul><ul><li>Used to settle disputes, obtain resources, and exercise influence </li></ul>
    28. 28. Planning and Administration Competency <ul><li>Deciding what tasks need to be done, determining how they can be done, allocating resources to enable them to be done, and then monitoring progress to ensure that they are done </li></ul><ul><li>Information gathering, analysis, and problem solving from employees and customers </li></ul><ul><li>Planning and organizing projects with agreed upon completion dates </li></ul><ul><li>Time management </li></ul><ul><li>Budgeting and financial management </li></ul>
    29. 29. Teamwork Competency <ul><li>Accomplishing tasks through small groups of people who are collectively responsible and whose job requires coordination </li></ul><ul><li>Designing teams properly involves having people participate in setting goals </li></ul><ul><li>Creating a supportive team environment gets people committed to the team’s goals </li></ul><ul><li>Managing team dynamics involves settling conflicts, sharing team success, and assign tasks that use team members’ strengths </li></ul>
    30. 30. A Model of Managerial Competencies (adapted from Figure 1.1) Teamwork Competency Global Awareness Competency Strategic Action Competency Planning and Administration Competency Self-Management Competency Communication Competency
    31. 31. A Model of Managerial Competencies (adapted from Figure 1.1) Teamwork Competency Global Awareness Competency Strategic Action Competency Planning and Administration Competency Self-Management Competency Communication Competency Managerial Effectiveness
    32. 32. What Is An Organization? <ul><li>A formal and coordinated group of people who function to achieve particular goals </li></ul><ul><li>These goals cannot be achieved by individuals acting alone </li></ul><ul><li>An organization has a structure, discussed in depth in Chapter 11 </li></ul>
    33. 33. Characteristics of an Organization <ul><li>An organization has a structure. </li></ul><ul><li>An organization consists of a group of people striving to reach goals that individuals acting alone could not achieve. </li></ul>
    34. 34. The History of Management
    35. 35. Management Ideas and Practice Throughout History 5000 BCE 4000-2000 BCE 1800 BCE 600 BCE 500 BCE 400 BCE 400 BCE 175 284 900 1100 1418 1436 1500 1525 Sumerians Egyptians Planning, organizing, controlling. Hammurabi Nebuchadnezzar Sun Tzu Xenophon Cyrus Cato Diocletian Alfarabi Ghazali Barbarigo Venetians Sir Thomas More Machiavelli Record keeping Plan, organize, control. Written requests. Controls and written documentation Wage incentives, production control Strategy Management as a separate art Human relations and motion study Job descriptions Delegation of authority Listed leadership traits Listed managerial traits Different organizational forms/structures Numbering, standardization, interchangeability Critical of poor management and leadership Cohesiveness, power, and leadership
    36. 36. Why We Need Managers Today Work in families Skilled laborers Small, self-organized groups Unique, small batches of production Then Work in factories Specialized, unskilled laborers Large factories Large standardized mass production Now
    37. 37. The History of Scientific Management <ul><li>Scientific Management </li></ul><ul><li>Studies and tests methods to identify the best, most efficient ways </li></ul><ul><li>“ Seat-of-the Pants” Management </li></ul><ul><li>No standardization of procedures </li></ul><ul><li>No follow-up on improvements </li></ul>
    38. 38. Frederick W. Taylor Frederick Taylor is known today as the father of scientific management. One of his many contributions to modern management is the common practice of giving employees rest breaks throughout the day. © Bettmann/CORBIS / © Walker
    39. 39. Taylor’s Four Management Principles Develop a science for each element of a man’s work, which replaces the old rule-of-thumb method. Scientifically select and then train, teach, and develop the workman. Cooperate with the men to insure all work is done in accordance with the principles of the science. There is almost equal division of the work and the responsibility between management and workmen.
    40. 40. The Boston Consulting Group and Best Practices <ul><li>A recent study by the Boston Consulting Group seems to reaffirm Taylor’s theories about best practices. </li></ul><ul><li>Teams in the BCG study found that when they limited the hours that employees could work, productivity increase. </li></ul><ul><li>Teams had to communicate better, collaborate better, plan ahead, and streamline work. </li></ul><ul><li>Limiting time on the clock can help workers evaluate their processes and find ways to work more efficiently. </li></ul>Source: S. Baker, “Timken Plots a Rust Belt Resurgence”, Business Week , 26 October 2009. 58.
    41. 41. Frank & Lillian Gilbreth © Barsse Frank and Lillian Gilbreth were prolific researchers and often used their family as guinea pigs. Their work is the subject of Cheaper by the Dozen, written by their son and daughter.
    42. 42. Motion Studies: Frank & Lillian Gilbreth Time Study Timing how long it takes good workers to complete each part of their jobs. Motion Study Breaking each task into its separate motions and then eliminating those that are unnecessary or repetitive.
    43. 43. Charts: Henry Gantt
    44. 44. The History of Bureaucratic Management Max Weber, 1864-1920 Bureaucracy The exercise of control on the basis of knowledge, expertise, or experience.
    45. 45. The Aim of Bureaucracy 1. Qualification-based hiring 2. Merit-based promotion 3. Chain of command 4. Division of labor 5. Impartial application of rules and procedures 6. Recorded in writing 7. Managers separate from owners
    46. 46. Administrative Management: Henri Fayol 1. Division of work 2. Authority and responsibility 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interests 7. Remuneration 8. Centralization 9. Scalar chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Esprit de corps
    47. 47. The History of Human Relations Management <ul><li>Efficiency alone is not enough to produce organizational success. </li></ul><ul><li>Success also depends on treating workers well. </li></ul>
    48. 48. Mary Parker Follett <ul><li>Mary Parker Follett is known today as the mother of scientific management. Her many contributions to modern management include the ideas of negotiation, conflict resolution, and power sharing. </li></ul>
    49. 49. Constructive Conflict and Coordination: Mary Parker Follett Dealing with Conflict Compromise Domination Integration
    50. 50. Behavioral Management Theory Behavioral School Recognized employees as individuals with concrete, human needs, as parts of work groups, and as members of a larger society
    51. 51. Behavioral Management Theory <ul><li>The father of modern personnel management </li></ul><ul><li>The quality and quantity of workers’ output influenced by conditions on and off the job </li></ul>2b Robert Owen
    52. 52. Behavioral Management Theory <ul><li>Needs-based theory of motivation </li></ul><ul><ul><li>physiology </li></ul></ul><ul><ul><li>security </li></ul></ul><ul><ul><li>affiliation </li></ul></ul><ul><ul><li>esteem </li></ul></ul><ul><ul><li>self-actualization </li></ul></ul>2b Abraham Maslow
    53. 53. Behavioral Management Theory Results Managers discover… What employees want from work How to unleash talents, energy, and creativity How to enlist cooperation and commitment
    54. 54. Hawthorne Studies
    55. 55. What will be covered: <ul><li>Definition </li></ul><ul><li>Brainstorming Exercise </li></ul><ul><li>Study background </li></ul><ul><li>Explanation of findings </li></ul><ul><li>Real world example </li></ul><ul><li>An exercise </li></ul><ul><li>Summary </li></ul>
    56. 56. Hawthorne studies defined <ul><li>A series of experiments in which the output of the workers was observed to increase as a result of improved treatment by their managers. </li></ul><ul><li>Named for their site, at the Western Electric Company plant in Hawthorne, Illinois. </li></ul>
    57. 57. Brainstorming Exercise <ul><li>What can a manager do to improve productivity? </li></ul>
    58. 58. Study Background <ul><li>Hawthorne studies were conducted from 1927 to 1932 by Harvard Business School Professor Elton Mayo. </li></ul><ul><li>Purpose of study was to examine what effect monotony and fatigue had on productivity and how to control them with variables such as rest breaks, work hours, temperature, and humidity. </li></ul>
    59. 59. Normal conditions <ul><li>Under normal conditions, the work week was 48 hours, including Saturdays. There were no rest pauses. </li></ul>
    60. 60. Experiment One <ul><li>The workers were put on piece-work for eight weeks. </li></ul><ul><li>Output went up. </li></ul>
    61. 61. Experiment Two <ul><li>The workers were given two rest pauses, five minutes each, in the morning and afternoon for a period of five weeks. </li></ul><ul><li>Output went up again. </li></ul>
    62. 62. Experiment Three <ul><li>The rest pauses were increased to ten minutes each. </li></ul><ul><li>Output went up sharply. </li></ul>
    63. 63. Experiment Four <ul><li>The workers were given six five minute breaks. </li></ul><ul><li>Output fell slightly. </li></ul><ul><li>The workers complained that the work rhythm was broken by frequent pauses. </li></ul>
    64. 64. Experiment Five <ul><li>The two original rest pauses were put back in place, and the workers were given a free hot meal by the company. </li></ul><ul><li>Output went up. </li></ul>
    65. 65. Experiment Six <ul><li>The workers were dismissed at 4:30 p.m. instead of 5:00 p.m. </li></ul><ul><li>Output went up. </li></ul>
    66. 66. Experiment Seven <ul><li>The workers were dismissed at 4:00 p.m. </li></ul><ul><li>Output remained the same. </li></ul>
    67. 67. Experiment Eight <ul><li>All improvements were taken away and the workers returned to their original working conditions. </li></ul><ul><li>Output was the highest ever recorded! </li></ul>
    68. 68. Explanation of Findings <ul><li>The experimental group had considerable freedom of movement compared to other workers in the plant. </li></ul><ul><li>The group developed an increased sense of responsibility and discipline no longer needed to come from a higher authority, it came from within the group. </li></ul>
    69. 69. Real World Example <ul><li>Workers improve their productivity when they believe management is concerned with their welfare and pay particular attention to them. </li></ul><ul><li>Productivity can also be explained by paying attention to the workers’ social environment and informal groupings. </li></ul>
    70. 70. An Exercise <ul><li>What kinds of issues affect your productivity? </li></ul><ul><li>What can a manager do to increase or decrease your productivity? </li></ul>
    71. 71. Summary <ul><li>Hawthorne studies defined </li></ul><ul><li>Study background </li></ul><ul><li>Explanation of findings </li></ul><ul><li>Real world example </li></ul>
    72. 72. <ul><li>Strategic Planning </li></ul>
    73. 73. What is Strategic Planning? <ul><li>Process to establish priorities on what you will </li></ul><ul><li>accomplish in the future </li></ul><ul><li>Forces you to make choices on what you will do </li></ul><ul><li>and what you will not do </li></ul><ul><li>Pulls the entire organization together around a </li></ul><ul><li>single game plan for execution </li></ul><ul><li>Broad outline on where resources will get allocated </li></ul>
    74. 74. Why do Strategic Planning? <ul><li>If you fail to plan, then you plan to fail – be </li></ul><ul><li>proactive about the future </li></ul><ul><li>Strategic planning improves performance </li></ul><ul><li>Counter excessive inward and short-term thinking </li></ul><ul><li>Solve major issues at a macro level </li></ul><ul><li>Communicate to everyone what is most important </li></ul>
    75. 75. Fundamental Questions to Ask <ul><li>Where are we now? (Assessment) </li></ul><ul><li>Where do we need to be? (Gap / Future End </li></ul><ul><li>State) </li></ul><ul><li>How will we close the gap (Strategic Plan) </li></ul><ul><li>How will we monitor our progress (Balanced </li></ul><ul><li>Scorecard) </li></ul>
    76. 76. A Good Strategic Plan should . . . <ul><li>Address critical performance issues </li></ul><ul><li>Create the right balance between what the </li></ul><ul><li>organization is capable of doing vs. what the </li></ul><ul><li>organization would like to do </li></ul><ul><li>Cover a sufficient time period to close the </li></ul><ul><li>performance gap </li></ul><ul><li>Visionary – convey a desired future end state </li></ul><ul><li>Flexible – allow and accommodate change </li></ul><ul><li>Guide decision making at lower levels – </li></ul><ul><li>operational, tactical, individual </li></ul>
    77. 77. Strategic Planning Model A B C D E Matt H. Evans, <ul><li>Environmental Scan </li></ul>A ssessment <ul><li>Background Information </li></ul><ul><li>Situational Analysis </li></ul><ul><li>SWOT – Strength’s, Weaknesses, Opportunities, Threats </li></ul><ul><li>Situation – Past, Present and Future </li></ul><ul><li>Significant Issues </li></ul><ul><li>Align / Fit with Capabilities </li></ul><ul><li>Mission & Vision </li></ul><ul><li>Values / Guiding Principles </li></ul><ul><li>Major Goals </li></ul><ul><li>Specific Objectives </li></ul><ul><li>Performance Measurement </li></ul><ul><li>Targets / Standards of Performance </li></ul><ul><li>Initiatives and Projects </li></ul>B aseline C omponents <ul><li>Performance Management </li></ul><ul><li>Review Progress – Balanced Scorecard </li></ul><ul><li>Take Corrective Actions </li></ul>D own to Specifics E valuate Where we are Where we want to be How we will do it How are we doing <ul><li>Gaps </li></ul><ul><li>Action Plans </li></ul><ul><li>Feedback upstream – revise plans </li></ul>
    78. 78. Pre-Requisites to Planning <ul><li>Senior leadership commitment </li></ul><ul><li>Who will do what? </li></ul><ul><li>What will each group do? </li></ul><ul><li>How will we do it? </li></ul><ul><li>When is the best time? </li></ul>
    79. 79. Matt H. Evans, A ssessment
    80. 80. Assessment Model: S W O T Matt H. Evans, A ssessment External Assessment: Marketplace, competitor’s, social trends, technology, regulatory environment, economic cycles . Internal Assessment: Organizational assets, resources, people, culture, systems, partnerships, suppliers, . . . Good Points Possible Pitfalls SWOT SWOT <ul><li>Easy to Understand </li></ul><ul><li>Apply at any organizational level </li></ul><ul><li>Needs to be Analytical and Specific </li></ul><ul><li>Be honest about your weaknesses </li></ul>
    81. 81. Strength’s A ssessment <ul><li>Strength’s – Those things that you do well, the </li></ul><ul><li>high value or performance points </li></ul><ul><li>Strengths can be tangible: Loyal customers, </li></ul><ul><li>efficient distribution channels, very high quality </li></ul><ul><li>products, excellent financial condition </li></ul><ul><li>Strengths can be intangible: Good leadership, </li></ul><ul><li>strategic insights, customer intelligence, solid </li></ul><ul><li>reputation, high skilled workforce </li></ul><ul><li>Often considered “Core Competencies” – Best </li></ul><ul><li>leverage points for growth without draining your </li></ul><ul><li>resources </li></ul>
    82. 82. Weaknesses Matt H. Evans, A ssessment <ul><li>Weaknesses – Those things that prevent you from </li></ul><ul><li>doing what you really need to do </li></ul><ul><li>Since weaknesses are internal, they are within </li></ul><ul><li>your control </li></ul><ul><li>Weaknesses include: Bad leadership, unskilled </li></ul><ul><li>workforce, insufficient resources, poor product </li></ul><ul><li>quality, slow distribution and delivery channels, </li></ul><ul><li>outdated technologies, lack of planning, . . . </li></ul>
    83. 83. Opportunities Matt H. Evans, A ssessment <ul><li>Opportunities – Potential areas for growth and </li></ul><ul><li>higher performance </li></ul><ul><li>External in nature – marketplace, unhappy </li></ul><ul><li>customers with competitor’s, better economic </li></ul><ul><li>conditions, more open trading policies, . . </li></ul><ul><li>Internal opportunities should be classified as </li></ul><ul><li>Strength’s </li></ul><ul><li>Timing may be important for capitalizing on </li></ul><ul><li>opportunities </li></ul>
    84. 84. Threats Matt H. Evans, A ssessment <ul><li>Threats – Challenges confronting the organization, </li></ul><ul><li>external in nature </li></ul><ul><li>Threats can take a wide range – bad press </li></ul><ul><li>coverage, shifts in consumer behavior, substitute </li></ul><ul><li>products, new regulations, . . . </li></ul><ul><li>May be useful to classify or assign probabilities to </li></ul><ul><li>threats </li></ul><ul><li>The more accurate you are in identifying threats, </li></ul><ul><li>the better position you are for dealing with the </li></ul><ul><li>“ sudden ripples” of change </li></ul>
    85. 85. Matt H. Evans, B aseline
    86. 86. Why create a baseline? Matt H. Evans, B aseline <ul><li>Puts everything about the organization into a </li></ul><ul><li>single context for comparability and planning </li></ul><ul><li>Descriptive about the company as well as the </li></ul><ul><li>overall environment </li></ul><ul><li>Include information about relationships – </li></ul><ul><li>customers, suppliers, partners, . . . </li></ul><ul><li>Preferred format is the Organizational Profile </li></ul>
    87. 87. Organizational Profile 1. Operating Environment Matt H. Evans, B aseline <ul><li>Products and Services – Suppliers, Delivery </li></ul><ul><li>Channels, Contracts, Arrangements, . . . </li></ul><ul><li>Organizational Culture – Barriers, Leadership, </li></ul><ul><li>Communication, Cohesiveness . . . . </li></ul><ul><li>Workforce Productivity – Skill levels, diversity, </li></ul><ul><li>contractor’s, aging workforce, . . . </li></ul><ul><li>Infrastructure – Systems, technology, facilities, . . </li></ul><ul><li>Regulatory – Product / Service Regulation, ISO </li></ul><ul><li>Quality Standards, Safety, Environmental, . . . </li></ul>
    88. 88. Organizational Profile 2. Business Relationships Matt H. Evans, B aseline <ul><li>Organizational Structure – Business Units, </li></ul><ul><li>Functions, Board, Management Layers, . . . </li></ul><ul><li>Customer Relationships – Requirements, </li></ul><ul><li>Satisfaction, Loyalty, Expectations, . . . </li></ul><ul><li>Value Chain – Relationship between everyone in </li></ul><ul><li>the value chain . . . . </li></ul><ul><li>Partner Relationships – Alliances, long-term </li></ul><ul><li>suppliers, customer partnerships, . . . </li></ul>
    89. 89. Organizational Profile 3. Key Performance Categories Matt H. Evans, B aseline <ul><li>Customer </li></ul><ul><li>Products and Services </li></ul><ul><li>Financial </li></ul><ul><li>Human Capital </li></ul><ul><li>Operational </li></ul><ul><li>External (Regulatory Compliance, Social </li></ul><ul><li>Responsibility, . . . ) </li></ul>
    90. 90. Gap Analysis Matt H. Evans, B aseline Baseline / Org Profile Challenges / SWOT Gap = Basis for Long-Term Strategic Plan
    91. 91. Matt H. Evans, C omponents
    92. 92. Major Components of the Strategic Plan / Down to Action Matt H. Evans, C omponents Mission Vision Goals Objectives Measures Why we exist What we want to be Indicators and Monitors of success Desired level of performance and timelines Planned Actions to Achieve Objectives O1 O2 AI1 AI2 AI3 M1 M2 M3 T1 T1 T1 Specific outcomes expressed in measurable terms (NOT activities) Targets Initiatives What we must achieve to be successful Strategic Plan Action Plans Evaluate Progress
    93. 93. Mission Statement <ul><li>Captures the essence of why the organization </li></ul><ul><li>exists – Who we are, what we do </li></ul><ul><li>Explains the basic needs that you fulfill </li></ul><ul><li>Expresses the core values of the organization </li></ul><ul><li>Should be brief and to the point </li></ul><ul><li>Easy to understand </li></ul><ul><li>If possible, try to convey the unique nature of your </li></ul><ul><li>organization and the role it plays that differentiates </li></ul><ul><li>it from others </li></ul>
    94. 94. Examples – Good and Bad Mission Statements To Make People Happy To Explore the Universe and Search for Life and to Inspire the Next Generation of Explorers NASA Walt Disney Does a good job of expressing the core values of the organization. Also conveys unique qualities about the organization. Too vague and and unclear. Need more descriptive information about what makes the organization special.
    95. 95. Vision <ul><li>How the organization wants to be perceived in the </li></ul><ul><li>future – what success looks like </li></ul><ul><li>An expression of the desired end state </li></ul><ul><li>Challenges everyone to reach for something </li></ul><ul><li>significant – inspires a compelling future </li></ul><ul><li>Provides a long-term focus for the entire </li></ul><ul><li>organization </li></ul>
    96. 96. Examples of Vision Descriptors <ul><li>Adept </li></ul><ul><li>Aggressive </li></ul><ul><li>Agile </li></ul><ul><li>Aligned </li></ul><ul><li>Assertive </li></ul><ul><li>Available </li></ul><ul><li>Best-in-class </li></ul><ul><li>Challenging </li></ul><ul><li>Clear </li></ul><ul><li>Competent </li></ul><ul><li>Complex </li></ul><ul><li>Compliant </li></ul><ul><li>Conservative </li></ul><ul><li>Coordinated </li></ul><ul><li>Critical </li></ul><ul><li>Direct </li></ul>Matt H. Evans, <ul><li>Equal </li></ul><ul><li>Disciplined </li></ul><ul><li>Effective </li></ul><ul><li>Efficient </li></ul><ul><li>Enduring </li></ul><ul><li>Expanding </li></ul><ul><li>Expert </li></ul><ul><li>Fast </li></ul><ul><li>Fast-paced </li></ul><ul><li>Financially-sound </li></ul><ul><li>Focused </li></ul><ul><li>Growth </li></ul><ul><li>Healthy </li></ul><ul><li>Improving </li></ul><ul><li>Incentivized </li></ul><ul><li>Increasing </li></ul><ul><li>Solid </li></ul><ul><li>Solvent </li></ul><ul><li>Stable </li></ul><ul><li>State of the Art </li></ul><ul><li>Strong </li></ul><ul><li>Streamlined </li></ul><ul><li>Sufficient </li></ul><ul><li>Strategic </li></ul><ul><li>Sustainable </li></ul><ul><li>Timely </li></ul><ul><li>Value-added </li></ul><ul><li>Vigilant </li></ul><ul><li>Visionary </li></ul><ul><li>World-class </li></ul><ul><li>Informative </li></ul><ul><li>Innovative </li></ul><ul><li>Leading </li></ul><ul><li>Logical </li></ul><ul><li>Major </li></ul><ul><li>Nimble </li></ul><ul><li>Pioneering </li></ul><ul><li>Protected </li></ul><ul><li>Organized </li></ul><ul><li>Over-Arching </li></ul><ul><li>Quick </li></ul><ul><li>Ready </li></ul><ul><li>Responsive </li></ul><ul><li>Savvy </li></ul><ul><li>Simple </li></ul>C omponents
    97. 97. Guiding Principles and Values Matt H. Evans, C omponents <ul><li>Every organization should be guided by a set of </li></ul><ul><li>values and beliefs </li></ul><ul><li>Provides an underlying framework for making </li></ul><ul><li>decisions – part of the organization’s culture </li></ul><ul><li>Values are often rooted in ethical themes, such as </li></ul><ul><li>honesty, trust, integrity, respect, fairness, . . . . </li></ul><ul><li>Values should be applicable across the entire </li></ul><ul><li>organization </li></ul><ul><li>Values may be appropriate for certain best </li></ul><ul><li>management practices – best in terms of quality, </li></ul><ul><li>exceptional customer service, etc. </li></ul>
    98. 98. Examples of Guiding Principles and Values Matt H. Evans, C omponents We obey the law and do not compromise moral or ethical principles – ever! We expect to be measured by what we do, as well as what we say. We treat everyone with respect and appreciate individual differences. We carefully consider the impact of business decisions on our people and we recognize exceptional contributions. We are strategically entrepreneurial in the pursuit of excellence, encouraging original thought and its application, and willing to take risks based on sound business judgment. We are committed to forging public and private partnerships that combine diverse strengths, skills and resources.
    99. 99. Goals <ul><li>Describes a future end-state – desired outcome </li></ul><ul><li>that is supportive of the mission and vision. </li></ul><ul><li>Shapes the way ahead in actionable terms. </li></ul><ul><li>Best applied where there are clear choices about </li></ul><ul><li>the future. </li></ul><ul><li>Puts strategic focus into the organization – specific </li></ul><ul><li>ownership of the goal should be assigned to </li></ul><ul><li>someone within the organization. </li></ul><ul><li>May not work well where things are changing fast </li></ul><ul><li>– goals tend to be long-term for environments that </li></ul><ul><li>have limited choices about the future. </li></ul>
    100. 100. Developing Goals <ul><li>Cascade from the top of the Strategic Plan – </li></ul><ul><li>Mission, Vision, Guiding Principles. </li></ul><ul><li>Look at your strategic analysis – SWOT, </li></ul><ul><li>Environmental Scan, Past Performance, Gaps . . </li></ul><ul><li>Limit to a critical few – such as five to eight goals. </li></ul><ul><li>Broad participation in the development of goals: </li></ul><ul><li>Consensus from above – buy-in at the execution </li></ul><ul><li>level. </li></ul><ul><li>Should drive higher levels of performance and </li></ul><ul><li>close a critical performance gap. </li></ul>
    101. 101. Examples of Goals Reorganize the entire organization for better responsiveness to customers We will partner with other businesses, industry leaders, and government agencies in order to better meet the needs of stakeholders across the entire value stream. Manage our resources with fiscal responsibility and efficiency through a single comprehensive process that is aligned to our strategic plan. Improve the quality and accuracy of service support information provided to our internal customers. Establish a means by which our decision making process is market and customer focus. Maintain and enhance the physical conditions of our public facilities.
    102. 102. Objectives <ul><li>Relevant - directly supports the goal </li></ul><ul><li>Compels the organization into action </li></ul><ul><li>Specific enough so we can quantify and measure the results </li></ul><ul><li>Simple and easy to understand </li></ul><ul><li>Realistic and attainable </li></ul><ul><li>Conveys responsibility and ownership </li></ul><ul><li>Acceptable to those who must execute </li></ul><ul><li>May need several objectives to meet a goal </li></ul>
    103. 103. Goals vs. Objectives GOALS OBJECTIVES Very short statement, few words Longer statement, more descriptive Broad in scope Narrow in scope Directly relates to the Mission Statement Indirectly relates to the Mission Statement Covers long time period (such as 10 years) Covers short time period (such 1 year budget cycle)
    104. 104. Examples of Objectives Develop a customer intelligence database system to capture and analyze patterns in purchasing behavior across our product line. Launch at least three value stream pilot projects to kick-off our transformation to a leaner organization. Centralize the procurement process for improvements in enterprise-wide purchasing power. Consolidate payable processing through a P-Card System over the next two years. Monitor and address employee morale issues through an annual employee satisfaction survey across all business functions.
    105. 105. Matt H. Evans, D own to Specifics
    106. 106. What are Action Plans? Matt H. Evans, <ul><li>The Action Plan identifies the specific steps that will be taken to achieve the initiatives and strategic objectives – where the rubber meets the road </li></ul><ul><li>Each Initiative has a supporting Action Plan(s) attached to it </li></ul><ul><li>Action Plans are geared toward operations, procedures, and processes </li></ul><ul><li>They describe who does what, when it will be completed, and how the organization knows when steps are completed </li></ul><ul><li>Like Initiatives, Action Plans require the monitoring of progress on Objectives, for which measures are needed </li></ul>Objectives Initiatives Action Plans D own to Specifics
    107. 107. Characteristics of Action Plans <ul><li>Assign responsibility for the successful completion of the Action Plan. Who is responsible? What are the roles and responsibilities? </li></ul><ul><li>Detail all required steps to achieve the Initiative that the Action Plan is supporting. Where will the actions be taken? </li></ul><ul><li>Establish a time frame for the completion each steps. When will we need to take these actions? </li></ul><ul><li>Establish the resources required to complete the steps. How much will it take to execute these actions? </li></ul><ul><li>Define the specific actions (steps) that must be taken to implement the initiative. Determine the deliverables (in measurable terms) that should result from completion of individual steps. Identify in-process measures to ensure the processes used to carry out the action are working as intended. Define the expected results and milestones of the action plan. </li></ul><ul><li>Provide a brief status report on each step , whether completed or not. What communication process will we follow? How well are we doing in executing our action plan? </li></ul><ul><li>Based on the above criteria, you should be able to clearly define your action plan. If you have several action plans, you may have to prioritize. </li></ul>Matt H. Evans, D own to Specifics
    108. 108. Action Plan Execution Matt H. Evans, <ul><li>Requires that you have answered the Who, What, How, Where, and When questions related to the project or initiative that drives strategic execution </li></ul><ul><li>Coordinate with lower level sections, administrative and operating personnel since they will execute the Action Plan in the form of specific work plans </li></ul><ul><li>Assign action responsibility and set timelines – Develop working plans and schedules that have specific action steps </li></ul><ul><li>Resource the project or initiative and document in the form of detail budgets (may require reallocation prior to execution) </li></ul><ul><li>Monitor progress against milestones and measurements </li></ul><ul><li>Correct and revise action plans per comparison of actual results against original action plan </li></ul>D own to Specifics
    109. 109. Quantify from Action Level Up in terms of Measurements Matt H. Evans, <ul><li>Measure your milestones – short-term outcomes at </li></ul><ul><li>the Action Item level. </li></ul><ul><li>Measure the outcomes of your objectives. </li></ul><ul><li>Try to keep your measures one per objective. </li></ul><ul><li>May want to include lead and lag measures to </li></ul><ul><li>depict cause-effect relationships if you are </li></ul><ul><li>uncertain about driving (leading) the desired </li></ul><ul><li>outcome. </li></ul><ul><li>Establish measures using a template to capture </li></ul><ul><li>critical data elements </li></ul>D own to Specifics
    110. 110. Measurement Template Matt H. Evans, D own to Specifics (Insert organization name) (Insert division name) (Insert department name) Risk Frame area objective supports (Insert objective owner) (Insert measurement owner) (Insert reporting contact info) Objective Description – description of objective purpose, in sufficient detail for personnel not familiar with the objective to understand its intent. Objective descriptions are typically two or three paragraphs long. This will appear in the pop-up window when you mouse over the objective in the Balanced Scorecard System. References – source documentation for objective and objective description Comments – additional information about the objective not covered in above blocks, such as recommendations for further revision, additional organizations objective impacts, recommendations for coordination / alignment with other objectives, etc. Measure Name - The name exactly as you want it to appear in the Balanced Scorecard, including the measure number (i.e. Percent Employees Satisfied, etc.) Measure Description – description of the measure, include its intent, data source, and organization responsible for providing measure data. This will appear in the pop-up window when you mouse over the measure in the Balanced Scorecard. Measure Formula – formula used to calculate measure value (if any) Data Source - The source of the data – manual, data spreadsheet, or database name and contact familiar with the data Measure Weight - the relative weight of the measure based on the impact it has on the overall objective. The total weights for all measures for an objective must add to 100 Measure Reporter – Person responsible for providing measure data. Include the name, organization and email. Target Maximum – Maximum expected value for the measure. Effective Date – Date the target first becomes effective Frequency – How often target data will be reported Units – Units of measure Target – Point where the measure goes from green to amber Target Minimum – Point where the measure goes from amber to red. The target minimum and target can not be the same value. Scorecard Perspective Name
    111. 111. Criteria for Good Measures Matt H. Evans, Integrity – Complete; useful; inclusive of several types of measure; designed to measure the most important activities of the organization Reliable: Consistent Accurate - Correct Timely – Available when needed: designed to use and report data in a usable timeframe Confidential and Secure: Free from inappropriate release or attack D own to Specifics
    112. 112. Examples of Measurements Lead Indicators <ul><li>Average time to initiate customer contact => shorter time should lead to better customer service </li></ul><ul><li>Average response time to incident => below average response times should lead to increased effectiveness in dealing with incident </li></ul><ul><li>Facilities that meet facility quality A1 rating => should lead to improved operational readiness for meeting customer needs </li></ul>Matt H. Evans, D own to Specifics
    113. 113. Examples of Measurements Lag Indicators <ul><li>Overall customer satisfaction rating => how well you are doing looking back </li></ul><ul><li>Business Units met budgeted service hour targets => after the fact reporting of service delivery volume </li></ul><ul><li>Number of category C safety accidents at construction sites => historical report of what has already taken place </li></ul>Matt H. Evans, D own to Specifics
    114. 114. Targets <ul><li>For each measurement, you should have at least one target </li></ul><ul><li>Targets should stretch the organization to higher levels of performance </li></ul><ul><li>Incremental improvements over current performance can be used to establish your targets </li></ul><ul><li>Targets put focus on your strategy </li></ul><ul><li>When you reach your targets, you have successfully executed your strategy </li></ul>Matt H. Evans, D own to Specifics
    115. 115. Examples of Targets Matt H. Evans, Average Time to Process New Employee Setups in DB 65 days Year 2007 60 days Year 2008 55 days Year 2009 Utilization Rate for Rental Housing Units 90% for Year 2007 92% for Year 2008 95% for Year 2009 Toxic Sites meeting in-service compliance 55% for Year 2007 70% for Year 2008 95% for Year 2009 Personnel Fully Trained in Safety and Emergency 65% by 2 rd Quarter 75% by 3 th Quarter 90% by 4 th Quarter Open Positions Filled after 30 day promotion period 75 positions Sept 2007 100 positions Jan 2008 135 positions July 2008 % Reduction in Orders Filled Short in 1 st Cycle 50% by Year 2008 65% by Year 2009 85% by Year 2010 D own to Specifics
    116. 116. Sanity Check . . . <ul><li>Make sure everything is linked and connected for a tight end-to-end model for driving strategic execution. </li></ul>Matt H. Evans, INITIATIVE Employee Productivity Improvement Program Employee Satisfaction Survey Rating 90% favorable overall Measure Target Target Actual 90% 45% Percent Satisfaction gap MEASURE / TARGET OBJECTIVE Improve Employee Satisfaction ACTION PLAN Identify issues per a company wide survey D own to Specifics
    117. 117. Matt H. Evans, E valuate
    118. 118. Continuous Feedback through the Balanced Scorecard <ul><li>Cascade and align from the top to create a Strategic Management System. </li></ul><ul><li>Use the Balanced Scorecard framework to organize and report actionable components. </li></ul><ul><li>Use the Scorecard for managing the execution of your strategy. </li></ul><ul><li>Scorecard “forces” you to look at different perspectives and take into account cause-effect relationships (lead and lag indicators) </li></ul><ul><li>Improves how you communicate your strategy – critical to execution. </li></ul>Matt H. Evans, E valuate
    119. 119. Performance Management <ul><li>Establish a regular review cycle using your balanced scorecard. </li></ul><ul><li>Analyze and compare trends using graphs for rapid communication of performance. </li></ul><ul><li>Don’t be afraid to change your metrics – life cycle (inputs to outputs to outcomes) </li></ul><ul><li>Work back upstream to revise your plans: Action Plans > Operating Plans > Strategic Plans </li></ul><ul><li>Planning is very dynamic – must be flexible to change. </li></ul><ul><li>Recognize and reward good performance results </li></ul><ul><li>Brainstorm and change – take corrective action on poor performance results. </li></ul>Matt H. Evans, D2-D5: Build the Balanced Scorecard E valuate
    120. 120. How We Learn “ Tell me and I will forget, Show me and I may remember, but involve me and I will understand” – Chinese proverb