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CH- 1 MANAGEMENT OVERVIEW.pptx
1. Adama Science and Technology
University,
School of Humanities and Social
Science
Department of Social Science Unit
Course:
Introduction to Management
Instructor: Dr. Bogale Alemu
2. Learning objectives:
At the end of the chapter, you should be able to:
Define the term management
Discuss the characteristics and significance of
management
Describe the managerial functions
Describe the levels of management
Discuss the managerial roles and skills
Discuss the management and the new work place
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Dr.
Bogale
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4. • DEFINITIONS
- No single and universal definition for the term
management.
- F.W.Taylor
Management is the art of knowing what you want
to do and doing it in the best and cheapest way.
- Stanly
Management is the process of decision making and
control over the action of human being for
purpose of attaining the predetermined goals.
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5. Cont…
- H. Fayol
Management is a process of planning,
organizing, commanding, coordinating, and
controlling.
- Boone and Kurtz
Management is the use of people and other
resources to accomplish organizational
objectives.
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6. Cont’d…
• Management is the attainment of
organizational goals in an effective and
efficient manner through planning,
organizing, leading, and controlling
organizational resources.
• This definition holds two important ideas:
1) the four managerial functions and
2) the attainment of organizational goals in an
effective and efficient manner.
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7. Cont’d…
Organizational effectiveness is the
degree to which the organization
achieves a stated goal, or succeeds in
accomplishing what it tries to do.
Organizational effectiveness means
providing a product or service that
customers value.
Organizational efficiency refers to the
amount of resources used to achieve
an organizational goal. It is based on
how much raw materials, money, and
people are necessary for producing a
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8. Introduction to Management
• What do Managers do?
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Efficiency Effectiveness
(means) (ends)
Resource
usage
Goal
attainment
Low waste High attainment
Management strive for Low resource wastage
(high efficiency)
High goal attainment (high effectiveness)
Dr. Bogale Alemu
9. Characteristics of management
- It is goal oriented
- It is a group activity
- It is a social process
- It is a dynamic function
- It is a system of authority
- It is intangible
- It is a profession
- It is universal
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10. Significance of management
It help to identify companies goals or objectives.
It facilitate accomplishment of goals by planning
resources and by directing and controlling activities.
It establish sound organizational structure by clearly
defining authority and responsibility.
To formulate and implement organizational policies.
Coordination of factors of production.
There are basically three management objectives.
Objective one is ensuring organizational goals with
least cost and minimum waste
The second objective is looking after health,
welfare, and safety of staff
The third objective is protecting the resources of the
organization
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11. Managerial Functions
• The five managerial functions are
1. Planning
2.Organizing
3. Staffing
4. Leading
5.Controlling
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12. 1. Planning
• The first function of all managers
Planning means defining goals for future
organizational performance and deciding on the
tasks and use of resources needed to attain them.
It is concerned with determining the objectives of
an organization and the means of achieving them.
It is a function that determine in advance
What should be done?
How it should be done?
When it is to be done?
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13. Planning (cont…)
Planning requires ability to foresee,
visualize, and to look ahead purposefully.
Plans can be classified as
- Long range
- Intermediate range
- Short range
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14. 2. Organizing
• Organizing involves assigning tasks, grouping
tasks into departments, delegating authority,
and allocating resources across the
organization.
It is the function in which the managers develop
the organization structure that allows working
together and achieve organizational goals.
It involves grouping similar activities in one
department .
It also involves clearly stating authority and
responsibility.
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15. 3. Staffing
It deals with filling the position in the
organizational structure.
This requires putting the right person at the
right place.
It involves
. Recruiting and selecting
. Transferring employees
. Promotion
. Lay off
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16. 4. Leading
- It is the process of influencing, motivating, and
directing of employees to achieve organizational
goals.
• Leading means creating a shared culture and values,
communicating goals to employees throughout the
organization, and infusing employees with the desire
to perform at a high level.
- Managers need to understand
. Individual and group behavior
. Techniques of communication
. Techniques of motivation
. Effective style of leadership
- The outcome of the leading function is high level of
motivation and commitment by the employees.
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17. 5. Controlling
- Controlling means monitoring employees’
activities, determining whether the organization
is on target toward its goals, and making
corrections as necessary.
- It is the process of comparing actual performance
with the sated standard.
- The aim of controlling is to take corrective action if
the performance is lower than the plan.
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18. Levels of management
- One of the best ways to study the activities of
management is classifying them in to different
levels.
- Organizations’ level of management varies with
the size of the organization this is because not
all managers’ jobs are the same.
- Hence, an important determinant of the
manager’s job is hierarchical level.
- Management level commonly classified in to
three.
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19. Management Levels in the Organizational Hierarchy
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20. Cont…
Top Level Managers
• Top managers are at the top of the hierarchy and are
responsible for the entire organization.
• Manage the overall activity of the organization.
• Establish policies, strategies, long term plans, and make
major decisions.
• They look to the long-term future and concern
themselves with general environmental trends and the
organization’s overall success.
• Represent the organization (deal with external bodies)
• They are few in number.
• Their title includes Board of Directors, Executive
Directors, Chief Executive Officer (CEO), President, and
General Manager.
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21. Cont…
Middle Level Managers
• Middle managers work at middle levels of the
organization and are responsible for business
units and major departments.
• They are specialists (their activity is limited to a
particular area of operation)
• They act as intermediary between top and
operating level managers.
• Develop medium range plans
• They supervise first line managers.
• Their title includes; Department Managers,
Division Managers, and Operation Manager.
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22. Cont…
Operating Level Management
• First-line managers are directly responsible for the
production of goods and services.
- Plan daily and weekly activities (short range plans)
- They manage only non managers.
- Their typical title includes; Section Chief, Office
Manager, Foreman, and Supervisor.
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23. Cont’d..
• Managers can also be classified based on the scope
of activities they manage.
- Functional Managers
- General Managers
1. Functional Managers have specialized skills in
single area of operation such as accounting,
marketing, and production.
2. General Managers are responsible for overall
operation.
• They are responsible for several departments that
perform different functions.
- They coordinate two or more departments.
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24. Managerial Roles
• All managers must play some role and must have
some skills to be effective.
• A role is a set of expectations for a manager’s
behavior.
• Henery Mintzberg identified ten managerial roles
by closely observing the day to day activities of a
group of CEOs and divided them in to three;
1. Interpersonal (managing through people) role
2. Informational role (managing by information)and
3. Decision making role (managing through action)
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29. Cont’d…
• Although it is necessary to separate the
components of the manager’s job to
understand the different roles and activities
of a manager, it is important to remember
that the real job of management cannot be
practiced as a set of independent parts; all
the roles interact in the real world of
management.
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30. Managerial Skills
• Managerial Skills and their Relative Importance
• A manager’s job is complex and multidimensional
and, it requires a range of skills.
- Skill is an ability to perform a particular task.
- The three managerial skills are
1. Conceptual Skills
2. Human Relation/ Interpersonal Skills
3. Technical skills
• Remark: the application of these skills changes as
managers move up in the organization.
• Although the degree of each skill necessary at
different levels of an organization may vary, all
managers must possess skills in each of these
important areas to perform effectively.
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31. Cont…
1. Conceptual skills
• Conceptual skill is the cognitive ability to see the
organization as a whole and the relationships among its
parts.
Managers need the mental capacity to understand the overall
working of the organization.
It involves the managers information processing, thinking, and
planning abilities.
The managerial activities that require conceptual skill includes
decision making, planning, and organizing.
• It means the ability to think strategically—to take the broad,
long term view.
Conceptual skill is more important for the top level managers.
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32. Cont…
2. Human Relation/ Interpersonal Skills
- It is the manager’s ability to work with other
people and to work effectively as a group member.
- It includes the managers ability to
- Motivate
- Facilitate
- Coordinate
- Lead
- Communicate effectively
- Resolve Conflict
• Human skills are important for managers at all levels.
• A manager with human skills allows subordinates to
express themselves without fear of ridicule and
encourages participation.
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33. Cont…
3. Technical Skills
• It is the ability to use specific knowledge, technique,
methods or resources in specialized field.
• It is acquired through education
- Formal
- Informal
• Technical skill also includes;
Specialized knowledge,
Analytical ability, and
The competent use of tools and techniques to solve
problems in that specific discipline.
• It is very important for first line managers
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35. Cont....
• Generally, manager's level in the organization
determines the relative importance of
possessing technical, human, and conceptual
skills.
• Top level managers need conceptual skills in
order to view the organization as a whole.
• Conceptual skills are used in planning and
dealing with ideas and abstractions.
• Supervisors need technical skills to manage
their area of specialty.
• All levels of management equally need human
skills in order to interact and communicate with
other people successfully.
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36. Is management a science or an
art?
Management is science, in that it requires the use
of Technical, Diagnostic, Decision-Making skills,
logics and analyses.
In addition it uses computers and quantitative
formulas to problems on hand.
Problems can be solved using systematic methods.
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37. Cont…
Management is an art as it requires the use
of behavioral and judgmental skills.
It can be developed as other arts like
athletics, songs etc
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38. Management and the New Work
Place
Rapid environmental shifts, such as changes in
technology, globalization, and shifting social values, are
causing fundamental transformations that have a
dramatic impact on the manager’s job
The primary characteristic of the new workplace is the
digitization of business, which has radically altered
the nature of work, employees and the work itself.
Structures are flatter, and lower-level employees make
decisions based on widespread information
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39. Cont’d…
Empowered employees are expected to seize
opportunities and solve problems as they
emerge.
Knowledge is widely shared , and people
throughout the company keep in touch with the
broad range of colleagues via advanced
technology.
The new workplace is organized around
networks rather than rigid hierarchies.
The work is often virtual / computer-generated
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40. Cont’d…
Flexible hours, telecommuting and virtual teams are
increasingly popular way of working that require
new skills from managers
Characteristics
The new
workplace
The old workplace
Technology Digital mechanical
Work Flexible, virtual Structured
workforce Empowered, diverse Loyal employees, homogenous
Management competencies
Leadership Empowering Autocratic
Doing work By teams By individuals
Relationship Collaboration Conflict, competition
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Dr. Bogale Alemu
41. Management and the New Work
Place…
An important management challenge in the
new workplace is to build a learning
organization
The role of manager in learning organization is
not to make a decisions but to create learning
capability, where everyone is free to
experiment and learn what works best
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42. Management and the New
Workplace…
The most important part of managers job
would be to make sure that the company was
profitable. Do you agree? Discuss
Managers should also focus on customers
needs & employee expectations
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43. Management and the New
Workplace…
How do you see the scope of WP & culture?
In the traditional “old school” perspective, the
workplace is viewed solely as a physical container
for work.
However, in the 21st century it is viewed as the
integrated combination of work strategies, space
and culture.
Work Strategies + Space + Culture = Workplace
Industry today is driven by information, global
competition and knowledge
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44. Management and the New
Workplace…
Current research and leading businesses agree
that the workplace significantly influences
employee satisfaction, health, hiring, retention,
and productivity
Modern workplace is a virtual and/or physical
environment, characterized by connections,
collaboration and user choice
Success in the new workplace depends on the
strength and quality of collaborative
relationships and managers realization staying
connected to employees and customers
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Dr. Bogale Alemu
45. Management and the New
Workplace…
Diversity
One of the business topics over two
decades
It ranks with modern business
discipline-quality, leadership & ethics
Different from & similar to one another
All forms of individual differences, including
culture, gender, age, ability, personality,
religious affiliation, economic class, social
status, and sexual orientation
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46. Management and the New
Workplace…
Age, race, gender, ethnicity etc. are the tip of
the iceberg
They are surface level diversity- do not reflect
how people think
Difference in values, personality and work
preference become more important
These deep level difference can affect the way
people view organizational work rewards
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Dr. Bogale Alemu
47. Management and the New
Workplace…
Two recent innovations in management
include the shift to a learning organization
and managing the technology-driven
workplace
Nowadays best managers know that sustained
competitive advantage can come only by
developing the learning capacity of everyone
in the organization
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48. Managing the Technology-Driven
Workplace..
The shift to the learning organization goes hand-
in-hand with the current transition to a
technology-driven workplace
Many employees perform much of their work in
virtual teams, connected electronically to systems
around the world
Companies are using technology to keep in touch
with customers and collaborate with other
organizations on an unprecedented scale
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49. Managing the Technology-Driven
Workplace…
Customer relationship management (CRM)
systems use the latest information technology
to keep in close touch with customers and to
collect and manage large amounts of
customer data
These data can help employees and managers
act on customer insights, make better
decisions, and provide superior customer
service
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50. Importance of Innovation to Managers
Innovations include:
– New products, services, technologies
– Management systems, Controlling costs
– Investing in the future
– Corporate values
Nothing is more risky than not innovating
Innovation means doing things differently,
exploring new territory and taking risks.
Innovation efforts can be found in all types
organizations.
Enable to think out of the box
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Dr. Bogale Alemu
51. Importance of Innovation to
Managers…
Why does innovative management matter?
Innovations keep companies growing,
changing, and thriving. Without innovation,
no company can survive over the long run.
• In today’s turbulent and hypercompetitive
global environment, managers must help their
companies innovate more—and more
quickly—than ever.
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Dr. Bogale Alemu
54. Learning objectives
After studying this chapter, you should be able to;
Discuss the what and the why of planning
Describe the foundation of planning
Discuss the different types of plan
Identify the approaches to goal setting
Discuss the planning tools and techniques
Identify techniques for allocating resources
Discuss the concept of decision making and the
rational decision making steps
Discuss how to make “good enough” decisions
Discuss types of decision, decision making levels,
and decision making conditions
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Dr. Bogale A.
55. The Planning Function
The what and the why of planning
Planning usually incorporates both ideas; it
means determining the organization’s goals and
defining the means for achieving them.
Planning involves defining the organization’s
goals, establishing strategies for those goals, and
developing plans to integrate and coordinate
activities.
The process of thinking about and organizing the
activities required to achieve a desired goal
In formal planning, specific goals covering specific
time period are defined
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56. Why do Managers plan?
At least four reasons can given:
Provides direction to managers and non-
managers alike
Reduce uncertainty by forcing managers to look
ahead, anticipate change, and develop
appropriate strategies
Minimize waste and redundancy.
Establish the goals or standards used in
controlling
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57. Cont’d…
• Managers use:
– Strategic,
– Tactical, and
– Operational goals
• to direct employees and resources toward
achieving specific outcomes that enable
the organization to perform efficiently and
effectively
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58. Planning Process
Step1. Establishing goals /objectives
Step 2. Environmental analysis and forecasting
Step 3. Determining alternative course of action
Step 4. Evaluating the alternatives
Step 5. Select the best alternatives
Step 6. Implementing the plan
Step 7. Controlling and evaluating the results
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59. Foundation of Planning
What is the difference b/n goals , objectives and
plans?
Goals/objectives are the organization’s desired
outcomes.
Plans are documents that outline how goals are
going to be met.
Planning is the process of Stated and real goals
Stated goals are official statement that
organizations addressed
Real goals are what organization actually pursue
What are the university’s stated and real goal in
relation to; class size, quality of education? 59
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60. Cont’d…
Goals are the outcome statements that define what an organization is
trying to accomplish, both programmatically and organizationally.
Goals are usually ;
a collection of related programs,
a reflection of major actions of the organization, and
provide rallying points for managers.
In contrast to goals, objectives are very precise, time-based, and
measurable actions that support the completion of a goal.
Objectives typically must ;
1) be related directly to the goal;
2) be clear, concise, and understandable;
3) be stated in terms of results;
4) begin with an action verb;
5) specify a date for accomplishment; and
6) be measurable.
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62. Types of plan based on frequency of
use
Single use plans
• They include: programs, projects, and budgets.
• Single use plans are those plans which have no
more use after objective is accomplished.
Standing plans
• Are ongoing plans that provide guidance for
activities performed repeatedly.
– Policy, Procedures, Rules
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63. Types of plan based on breadth
Strategic plans apply to the entire organization
and establish the organization’s overall goals
• The process of determining a company's long-term
goals and then identifying the best approach for
achieving those goals.
Operation plans encompass a particular
operational area of the organization
• The two plans differ in scope where the prior focus
on broad issues while the later the narrow term
operations
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64. Types of plan based on time
Long term plans defined as those with the
time frame beyond three years.
Short term plans cover one year or less.
• Any time period in between would be
considered as intermediate plan
• Although this time frame is common,
organizations can use any planning time
frame as required.
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65. Types of plan based on specificity
Specific plans… are clearly defined and leave
no room for interpretation.
• It states objectives in a way that eliminates
ambiguity and problem with misunderstanding.
• Such type of plans are used under condition of
certainty.
Directional plans… are flexible and set out
general guidelines
• Preferable when there is high uncertainty.
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66. Approaches to Goal setting
Traditional Vs. MBO
In traditional goal setting, top managers flow down
through the organization and become sub goals for
each succeeding level.
Clarity is lost as the goals make their way down from the
top of the organization to the lower levels.
Turning broad strategic goals into department, teams,
individual is not clear
Managers at each level define the goals and apply
their own interpretations and bias as they make
them more specific.
For instance; $ Achieving sufficient profits
$ Increasing market leadership
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67. Management by Objectives (MBO)
Management by objectives (MBO) is a method
whereby managers and employees define
mutually agreed goals for every department,
project, and person and use them to evaluate
employee performance.
MBO programs have four elements
1. Goal specificity
2. Participative decision making
3. Explicit time period
4. Performance feedback
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68. Management by Objectives (MBO)
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Corporate strategy goals
Department goals
Individual goals
Action plan
Take corrective
action
Review program
Appraise Performance
Review
progress
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69. Contingency Factors in Planning
Three contingency factors affect the choice of
plan:
i. Organizational level,
ii. Degree of environmental uncertainty and
iii. Length of future commitment
i. Organizational/Managerial level Vs. Planning
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Strategic
Planning
Operational
Planning
Top Executives
Middle level
managers
First line managers
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70. Cont’d…
ii. Environmental uncertainty
• When uncertainty is high, plans should be
specific but flexible.
iii. The commitment concept
• Committed to whatever future expense are
generated by the planned decision
• Managers live with the decision and its
consequence, good or bad
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71. Planning Tools and Techniques
Techniques for Assessing the Environment
• Three commonly used techniques to
assess the environment are;
Environmental Scanning
Forecasting &
Benchmarking
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72. Cont’d…
Environmental Scanning-
• Companies that use environmental scanning
have higher performance.
• Techniques for environmental scanning are;
Competitors intelligence experts suggest that
80% of what managers need to know about
competitors can be found out from their own
employees, suppliers, and customers
Global scanning - subscription to some
information source.
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73. Cont’d…
Forecasting- the second technique is forecasting
which is a prediction of what will occur in the
future.
• Forecasts are estimates of the occurrence, timing
or magnitude of future event.
• Forecasting is the basis of planning ahead even
though the actual demand is quite uncertain.
Techniques for forecasting are;
Quantitative forecasting-applies a set of
mathematical rules when managers have sufficient
data.
Qualitative forecasting-use judgment and opinions
of knowledge.
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74. Technique Description Application
Quantitative
Time series
analysis
Fits a trend line to a mathematical
equation
Predicting next quarter sales
based on 4yrs sales
Regression
models
Predict one variable on the basis
of known variable
Seeking factors that predict sales
Econometric
models
Uses set of regression Predicting change in cars sale as
a result of tax change
Qualitative
Jury of
opinion
Average the opinion of experts Predict recruitment needs
Customer
evaluation
Customer estimation Determine types and quantities
of product desired
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Cont’d…
75. Cont’d…
Benchmarking
The search for the best practices among competitors
that lead to superior performance.
Steps in Benchmarking:
• The benchmarking activity has to come across the
following seven major steps:
1st Identify the benchmark potentials
2nd Target and study focus areas
3rd Form team to benchmark
4th Develop measurement metrics
5th Identify and select partners
6th Study and evaluate target areas
7th Adapt and implement findings
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76. Techniques for Allocating Resources
Four techniques for allocating resources are;
Budgeting
Scheduling
Breakeven Analysis
Linear Programming
Budget is numerical plan for allocating resource to
specific anticipated activities to be done.
Fixed budget
Flexible budget
Zero-level budget and
Capital expenditure
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77. Cont’d…
Scheduling
• The use of Gantt chart
• Time lined at horizontal and activities are arranged
in vertical then, planned vs. actual compared over
time.
Breakeven Analysis
• Breakeven analysis is valuable for managers
because it points out the relationship between
revenue, cost, & profit
BE is given as TFC
P-VC
Revenue, cost, and profit will be identified
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78. Cont’d…
Linear programming
• To solve problems of resource allocation,
managers may use mathematical programming:
linear programming.
• We use linear programming for outcome
optimization.
• It can’t applied for all resource allocation
4S+2B ≤ 600
2S+2B ≤ 450
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Department Sho
e
Bags Monthly
capacity
Manufacturing 4 2 600
Assembly 2 2 450
Profit per unit 18 10
Find a combination that bring optimum
outcome?
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79. Contemporary issue in Planning
Today’s managers face the challenges of
planning in the environment that’s both
dynamic and complex.
Two planning techniques appropriate for such
types of environment are:
Project Management and
Scenarios Planning
Project Management is the task of getting a
project’s activities done on time, within budget,
and according to the specification.
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80. Cont’d…
Typical project work is done by project team
The project planning process
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Define
Objectives
Identify
activities
and
resources
Establish
sequences
Estimate time
for activities
Determine
additional
resource
requirements
Compare
with
objectives
Determine
project
completion
date
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81. Scenario Planning
• A scenario is a consistent view of what future is
likely to be.
• Can be described as contingency planning with
what if…i.e. if this event happens, then we need
to take these actions.
• Ex. What will happen if minimum wage rate
increased by 75 birr/day?
• The intent of scenario planning is not to try to
predict the future but to reduce uncertainty .
• Developing scenario planning can be considered
as contingency planning.
81
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82. In conclusion…
Planning tools and techniques can help
managers prepare confidently for the future
But never replace the manager’s skills and
capabilities in using the information gained to
develop effective and efficient plans
82
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83. Decision making
Decision making refers to making choices
among alternative courses of action—which
may also include inaction
While it can be argued that management is
decision making, half of the decisions made by
managers within organizations fail.
(Ireland, & Miller, 2004)
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Dr. Bogale A.
84. Rational decision making steps
•
84
Establish decision criteria
Identifying a problems
Weight decision criteria
Implementing
Develop alternatives
Choose the alternative
Analyzing the alternatives
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Evaluate the decision
Dr. Bogale A.
85. Steps in the Rational Decision-Making
Model
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86. Making “Good Enough” Decisions
• The bounded rationality model of decision
making recognizes the limitations of our decision-
making processes.
• According to this model, individuals knowingly
• limit their options to a manageable set and
choose the best alternative without conducting
an exhaustive search for alternatives.
• An important part of the bounded rationality
approach is the tendency to sacrifice, which
refers to accepting the first alternative that meets
your minimum criteria
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Dr. Bogale A.
87. Making Decisions
• Managers will make decisions during the exercise
of all managerial functions and most decision
making is routine.
Making decisions Rationally:
Assumptions
1. Objective and logical
2. Decisions are made in the best interest of the
organization
The role of Intuition
• Decisions are given on the basis of experience,
feelings, and accumulated judgments
87
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88. The Intuitive Decision Making-Model
• How common is intuition in DM?
• Survey found that almost half of the executives
surveyed used intuitions more than formal
analysis to run their companies.
88
Intuition
Experience
Based
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89. The Creative Decision-Making Process
The five steps to creative decision making are similar to the
previous decision making models in some keys ways
• All of the models include problem identification
• Immersion is the step in which the decision maker thinks about
the problem consciously and gathers information
• Incubation-working on the problem unconsciously
• Illumination-solution to the problem becomes apparent to the
person
• Verification and application stage happens when the decision
maker consciously verifies the feasibility of the solution and
implements the decision
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93. Types of Decision
Structured and programmed decisions
Problems are straight forward
Problems are familiar
Decision maker goal is clear
Information about the problem is easily defined
and complete
Ex. Student wanting to drop class
Customer return of purchase
Sexual harassment
93
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94. Types of Decision…
Why programmed decision can be
straightforward, familiar and easily defined?
Because program decisions are repetitive
decision that can be handled by a routine
approach
Three types of program decisions:
1. Procedure 2. Rule 3. Policy
94
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95. Types of Decision…
Procedure- series of sequential steps mangers
use to respond to structured problems
Rule- an explicit statement that tells a manager
what can or cannot be done
Policy- guideline for making decisions that
establish general parameters rather than
specific
95
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96. Types of Decision…
• Unstructured and Non-programmed
decisions
• New, unusual and for which information is
ambiguous or incomplete
• Non-programmed decisions are unique and
non recurring and involve custom-made
solutions
96
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97. Types of Decision…
Characteristic Programmed decision Non-programmed decision
Types of problem Structured Unstructured
Managerial level Lower level Upper level
Frequency Routine Unusual
Information Ready, available ambiguous
Time Short Long
Goal Clear, specific Vague
Base of solution Procedure, rule, policy Judgment, creativity
97
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98. Decision Making Levels
Decision making can also be classified into three
• categories based on the level at which they occur.
Strategic decisions set the course of organization.
Tactical decisions are decisions about how things
will get done.
Finally, operational decisions are decisions that
employees make each day to run the organization.
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99. Decision making conditions
• Managers face three different conditions
1. Certainty 2. Risk 3. Uncertainty
• Certainty- The ideal situation to make
decisions
• Risk- conditions in which the decision maker is
able to estimate the likelihood of certain
outcomes
• Uncertainty- when decisions are not certain
about the outcomes and can’t even make
reasonable probability estimates.
99
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100. Decision making styles
• Linear and Non-Linear thinking styles
• Linear-rational, logical and analytical
• The linear thinking style is characterized by a
person’s preference for using external data and
facts through processing this information to
achieve rational and logical thinking that guide
decision actions.
• Non-linear- intuitive, creative, insightful
• The non-linear thinking style characterized by
preference for internal source of information
(feeling and intuition)
100
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101. Decision Making Bias and Errors
1. The over confidence bias…managers assume that
he/she know more about the issue
2. The immediate gratification bias..provide quick
payoffs are more appealing than those in the future
3. The anchoring effect…first impression, ideas and
estimates carry unwarranted weight relative to
information received later.
4. Confirmation bias…seek out information that reaffirms
their choice and discount information that contradicts
past judgments
5.Self-serving bias…quick to take credit for their success
and to blame failure on outside factors
101
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102. Factors Affecting Decision Making
102
Decision
making
Process
DM conditions
Certainty
Risk, uncertainty
DM approach
Rationality
Bounded rationality
Intuition
DM style
Linear and Non-
linear thinking
Decision
Choosing best
alternative
-Implementing
-evaluating
Decision making
Errors/bias
Types of problems
Structured and
unstructured
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103. Effective Decision making in Today’s
World
• Today’s business world revolves around making
decisions, often risky ones, usually with
incomplete or inadequate information and under
intense time pressure
Understand cultural difference
Use an effective decision making process
Focus on what is important
Logical and consistent
Analytical with intuitive
Reliable and flexible
o Build an organization that can spot the unexpected and
quickly adapt to the changed environment
103
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106. After studying this session you should be able to:
Describe the nature and need for organizing.
Define organizational structure, design and chart.
Describe the process of organizing.
Differentiate formal and informal organization.
Differentiate authority, delegation, responsibility and
accountability.
Appreciate authority relationship in an organization.
Define span of management and analyze the types
106
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107. Introduction
In planning, set goals / objectives and determine what to
do to attain these objectives.
Planning, consequently, requires organizing the efforts of
many people. It forces us to address several basic
questions:
1. What specific tasks are required to implement our plans?
2. How many organizational positions are needed to perform
all the required tasks?
3. How should these positions be grouped?
4. How many layers of management (organizational levels)
are needed to coordinate them?
5. How many people should a manager supervise directly?
• The answers to these and other questions enable us to
create an organizational arrangement, a structure, for
putting plans into action.
107
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108. 5.1 THE CONCEPT OF ORGANIZATION
Meaning of Organizing
It is a management function that involves arranging
human and non-human (physical) resources to help
attain organizational objectives.
It is the management function that establishes
relationship between activity and authority.
• Organizing is the deployment of organizational
resources to achieve strategic goals.
The end result of an organizing process is an
organization.
108
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109. Cont’d…
• Organizing involves assigning tasks, grouping
tasks into departments, delegating authority,
and allocating resources across the
organization.
It is the function in which the managers develop
the organization structure that allows working
together and achieve organizational goals.
It involves grouping similar activities in one
department .
It also involves clearly stating authority and
responsibility.
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109
Dr.
Bogale
Alemu
111. Cont’d….the organizing process
1. Identification/ reviewing of plans /goal
2. Identification of the specific activities task needed to
accomplish the goal
3. Grouping of activities necessary to attain objectives
4. Grouping of activities according to their similarities to
form department
5. Assigning work and delegating authorities
6. Provision for coordination/Design a hierarchy of
relationships
111
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112. Importance of organizing
1. Organizing promotes collaboration. Thus, it improves
communication within the organization.
2. Organizing sets clear-cut lines of authority and
responsibility
3. Organizing improves the directing and controlling
functions of managers.
4. Organizing develops maximum use of time, human,
and material resources.
5. Organizing enables the organization to maintain its
activities coordinated
112
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113. 5.2. TYPES OF ORGANIZATIONS
There are two types of organization:
i. Formal and
ii. Informal
i. Formal organization
• The formal organization represents the classification of activities
within the enterprise, indicates who reports to whom.
Characteristics of formal organization
It is properly planned
It is based on delegated authority.
It is deliberately impersonal
Organizational charts are usually drawn
Unity of command is normally maintained
It provides for division of labor.
The responsibility and accountability at all levels of organization is
clearly defined.
113
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114. Continued…
ii. Informal organization: is an organizational structure which
establishes the relationship on the basis of the likes and dislikes
of officers without considering the rules, regulations and
procedures.
Characteristics of informal organization
• Arises voluntarily.
• It is a social structure formed to meet personal needs.
• Has no place in the organization chart
• It acts as an agency of social control.
• Can be found on all levels of organization
• The rules and traditions are not written but are commonly
followed.
• Develops from habits, conduct, and behavior of social groups.
• Informal organization is one of the parts of total organization
114
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115. 5.3. Elements of the Organizing Function
1. Organizational structure: is the arrangement of people
and tasks to accomplish organizational goals.
• It is the framework in which the organization defines
how tasks are divided, resources are deployed, and
departments are coordinated.
2. Organization design: is the process of developing an
organization structure.
3. Organizational chart: The visual representation of an
organization’s structure.
• It is a line diagram that depicts the broad outlines of an
organization’s structure.
• Organizing enables the organization to maintain its
activities coordinated.
115
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116. 10/26/2022 Dr. Bogale A. 18–116
Sample of Organization chart
Organization
structure
117. Importance of Organization chart
The organization chart can tell us;
1. Who reports to whom (chain of command)
2. The number of managerial levels
3. The span of control.
4. Channel of official communication
5. How the organization is structured by function,
territory,…
6. The work being done in each job
7. The hierarchy of decision-making
8. Type of authority relationships፡ line authority,
staff authority, and functional authority.
117
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118. Major Elements of Organizing Function
• Generally the following are the major elements of the
organizing function
1. 5.3.1. Division the work
2. 5.3.2. Departmentization
3. 5.3.3. Delegation of authority
4. 5.3.4. Centralization and decentralization
5. 5.3.5. Authority relationships in organizations
6. 5.3.6. Span of management
7. 5.3.7. Organization structure
118
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119. 5.3.1. Division the work
• Division of labor refers to the process of dividing the total task
of a unit to successively smaller jobs.
Overall task must be split into its component jobs and
apportioned among the people involved.
All jobs are specialized to some degree, since every one cannot
do everything, but some jobs are considerably more
specialized than other.
In short, division of labor involves:
Breaking down a task into its most basic elements
Training workers in performing specific duties
Sequencing activities so that one person’s efforts build on
another’s
119
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120. 5.3.2. Departmentization: meaning and basis
Meaning
1. Departmentation is a means of dividing the large
and complex organization into smaller, flexible
administrative unit.
2. Department – is a distinct area division or branch
of an organization over which a manager has
authority for the performance of specified
activities.
Bases for Departmentation
1. The five common from of departmentalization are
functional, territorial, product, service and
customer.
120
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121. Bases for Departmentation
Five common forms of departmentation are:
Departmentation Functional- groups based on function
Act., Engineering, HR, Purchasing, manufacturing….
Departmentation Geographical / territorial- good to handle
specific regional issue that arise
Sales director at region x, y, z….
Departmentation Product- allow specialization in particular
products and services
Shoe, Coat product for leather company
Departmentation Process- based on product or customer
flow
Planning, Assembling, Inspection …..
Departmentation Customer- focus on specific & unique
customers
Whole sale accounts, retail accounts …..
121
127. 5.3.3. Delegation of authority
Authority:-
Is the formal and legitimate right of a manager to make
decision, issue order, and allocate resources to achieve
organizational desired outcome.
Is the formal right of a superior to command and compel his
subordinates to perform a certain act.
Level of authority varies with levels of management
It carries with it the burden of responsibility
Delegation of Authority:-
Is the downward pushing of authority from superiors to
subordinates to make decision within their area of
responsibilities.
Use to transfer authority and responsibility to positions
below them
In delegating authority a manager doesn’t surrender his
power.
127
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128. Delegation is the process managers use to
transfer authority and responsibility to positions
below them in the hierarchy.
• For achieving delegation, three steps required
• Assignment of tasks and duties…Clarity of duty as well
as result expected has to be the first step in delegation.
• Granting of authority…. The managers at all levels
delegate authority and power which is attached to
their job positions
• Creating responsibility and accountability
• The delegation process does not end once powers are
granted to the subordinates
128
Cont’d…
129. How to delegate?
1) Delegate the whole task.
2) Select the right person
3) Ensure that authority equals responsibility.
4) Give thorough instruction.
5) Maintain feedback
6) Evaluate and reward performance
129
Cont’d…
130. Cont’d…
The process of delegation of authority
Delegation of authority has the following steps
1. Assignment of tasks
2. Delegation of authority
3. Acceptance of Responsibility : is the obligation to carryout
one’s assigned duties to the best of one’s ability.
4. Creation of accountability: is the fact that the people with
authority and responsibility are subject to reporting and
justifying task outcomes to those above them in the
organizational hierarchy.
130
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131. Cont’d…
Authority
• Authority is the formal and legitimate right of a
manager to make decisions, issue orders, and
allocate resources to achieve organizationally
desired outcomes
• Authority is distinguished by three characteristics:
– Authority is vested in organizational positions, not
people
– Authority is accepted by subordinates
– Authority flows down the vertical hierarchy
131
132. Quotes
• The key to successful leadership today is influence
not authority- Kenneth Blanchard
• Anyone can stand adversity but to test a person’s
character, give them power - Abraham Lincoln
• The price of greatness is responsibility.“ Winston
Churchill
• It is wrong and immoral to seek to escape the
consequences of one's acts.- Mahatma Gandhi
• Accountability is the measure of a leaders height.-
Jeffrey Benjamin
132
133. Responsibility
• is the duty of the person to complete the task
assigned to him. If the tasks for which he/she was
held responsible are not completed, then he/she
should not give explanations or excuses.
• Responsibility without adequate authority leads
to discontent and dissatisfaction among the
person.
• Responsibility flows from bottom to top. The
middle level and lower level management holds
more responsibility.
133
Cont’d…
135. Accountability
• Means giving explanations for any variance in the
actual performance from the expectations set.
Accountability can not be delegated. For
example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks
him to ensure that task is done well,
responsibility rest with ’B’, but accountability still
rest with ’A’.
• The top level management is most accountable.
• Accountability, in short, means being answerable
for the end result. Accountability can’t be
escaped. It arises from responsibility.
135
Cont’d…
136. When managers have responsibility for task
outcomes but little authority, the job is
possible but difficult.
They rely on persuasion and luck.
When managers have authority exceeding
responsibility, they may become tyrants, using
authority toward frivolous outcomes.
Accountability is the mechanism through
which authority and responsibility are brought
into alignment.
136
Cont’d…
137. Differences between Authority and
Responsibility
Authority Responsibility
It is the legal right of a
person or a superior to
command his subordinates.
It is the obligation of subordinate to
perform the work assigned to him.
Authority is attached to the
position of a superior in
concern.
Responsibility arises out of superior-
subordinate relationship in which
subordinate agrees to carry out duty
given to him.
Authority can be delegated by
a superior to a subordinate
Responsibility cannot be shifted and
is absolute
It flows from top to bottom. It flows from bottom to top.
137
138. 5.3.4. Centralization and decentralization
I. Centralization-is the extent to which power and authority are
systematically retained by top managers.
If an organization is centralized
Decision-making power remains at the top
The participation of lower-level managers in decision-making is very low
II. Decentralization - Is the extent to which power and authority are
systematically dispersed/delegated throughout the organization to middle
and lower level managers.
When decentralization is greater:
The greater is the number of decisions made at lower level of the organization
The more functions are affected by decisions made at lower levels
The less a subordinate has to refer to his/her manager prior to a decision.
138
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139. 5.3.5 Authority Relations in Organization (Line, Staff and Functional)
• Authority: is the legitimate right to make decision, to allocate
resource or to command a subordinate.
• Created in relation between individuals /departments in an organization.
• Of three type
1. Line authority
2. Staff authority
3. Functional authority
139
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140. Authority Relations in Organization(cont…)
1. Line authority
Line authority defines the relationship between superior and subordinate.
It is an exercise of direct command over the subordinate
In line authority a superior exercises direct command over a subordinate.
Line authority is represented by the standard chain of command
Example: department head
2. Staff authority
Staff authority is the authority to give advise , assistance and help.
Have no direct supervisory control over subordinates.
Expertise technical assistance, and support to help line managers to work
more
Example: R&D advisor, Legal advisor, repair and maintenance officer
140
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141. Authority Relations in Organization(cont…)
The line department
1. It is established to meet the
major objective of the firm
2. Headed by a line manager
Example:
1. Marketing department
2. Finance department
3. Production department
The staff department
1. It is established to assist line
department through advice,
service and assistance
2. Created based on the special
need of the organization
Examples:
1. Legal department
2. R&D department
3. Repair and maintenance
department
141
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142. Authority Relations in Organization(cont…)
3. Functional authority
• It is the right, given to an individual or a department to control specified
process or practices undertaken by persons in other
departments.
• If unity of command had strictly applicable only line authority would exist
Examples Functional authority
The finance manager command to the marketing manager
The legal Advisor command to other on legal affairs
The personnel manager command to others regarding
recruitment, selection, performance appraisal systems
142
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143. 5.3.6. Span of Management
• Number of employees reporting to a supervisor and also
called span of control.
• Type…. Narrow and wide span of management. Characteristics of
Narrow SM.
Tall organization structure
More communication
between superiors and
subordinates.
Managers are underutilized
and their subordinates are
over controlled
More trained managerial
personnel and centralized
authority.
143
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144. Span or Management (cont…)
Characteristics Wide span of management
The process of delegation of authority
A flat organization structure
Many number of subordinates
Decentralized authority
Managers are overstrained
and their subordinates receive
too little guidance and control
Fewer hierarchal level
144
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145. Factors Determining an Effective Span of Management
1. Ability of the Manger
2. Manager’s personality
3. The Abilities of Subordinates
4. Motivation and commitment
5. Need for autonomy by (employees)
6. Type of work
7. Geographic dispersion of subordinates
8. The availability of information and control systems
9. Levels of management
145
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148. After studying this session you should be able to:
Define the staffing function.
Describe nature and importance of staffing
List the benefits of staffing function.
Describe the major activities under staffing function.
148
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149. Introduction
• Staffing is now recognized as a separate management
function. Previously it was considered to be a part of
organization function of management.
• The reason for separating the staffing from organizing
is to give proper emphasis to the actual manning of
organizational roles.
• The staffing function has assumed greater importance
these days because of;
Rapid advancement of technology,
Increasing size of organizations and
Complicated behavior of human beings.
• The management of the enterprise must give due
importance to staffing function.
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150. MEANING OF STAFFING
• The staffing function follows the function of planning and
organizing
1. Staffing is filling and keeping field positions in the
organizational structure through the right man power.
2. Staffing is the executive function of recruiting, selecting,
training, developing, promoting, and retiring subordinates.
3. Staffing involves managing the organization structure
through proper and effective selection, appraisal, and
development of personnel to fill the roles designed into the
structure.
150
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151. Staffing is a broad activity
• People are the most important assets for nature
of staffing that convert inputs into outputs.
• People are appointed at all levels (top, middle,
bottom levels of management) in all functional
areas (production, finance, marketing,
personnel).
• Staffing ensures that the right person is
appointed to the right job so that
the organization can efficiently achieve its
objectives.
Nature of Staffing
10/26/2022 151
152. Cont’d…
Staffing is an important management function:
• Staffing is a management function that
employs people in various positions to run
the organization.
• When creating organizing departments and
positions, staffing ensures that people with
desired skills and abilities occupy these
positions to contribute to organizational goals.
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153. Staffing is a continuous activity:
• Staffing is a continuous managerial function.
This is because the staffing function continues
throughout the life of an organization due to
transfers and promotions.
• People leave and join organization.
• Department and organization grow and
therefore, the need of the people continues to
arise.
• Therefore, hiring, training and staffing are
replenished continuously by managers.
Cont’d…
10/26/2022 153
154. Staffing helps to keep the right men at the right
job:
• This can be done effectively through proper
recruitment processes and then finally selecting
the most appropriate candidates as per job
requirements.
Staffing is done by all managers:
• Top management in small companies performs
this task, depending on nature of business,
company size, qualifications and skills of
managers, etc.
• In medium and small scale industries, this is
particularly done by the personnel department of
that concern.
Cont’d…
10/26/2022 154
155. Staffing is a part of Human Resource
Management:
• Human resource management ensures that
competent people carry out organizational
activities.
• It deals with the set of organizational activities
that attract, develop and sustain an effective
workforce.
• The requirements of human resource
management are filled through staffing as
staff employ people in desired jobs.
Cont’d…
10/26/2022 155
156. Staffing deal with active processing:
• Staffing relates to the most important
resource (people) that converts passive
resources (raw materials) into productive
output.
• It relates to live resources (people) without
which resources will remain as resources only.
They will not convert to output.
Cont’d…
10/26/2022 156
157. Staffing attached with personnel department:
• Recruitment, selection, training and evaluation of
subordinates (production, marketing etc.) of all
departments is done by managers at all levels as
all departments require people to function.
• In performing these tasks, the manager seeks the
assistance of the personnel department.
• The Personnel Department is a service department
that assists line managers in performing staff
tasks.
Cont’d…
10/26/2022 157
158. Importance of Staffing
• The importance of staffing has increased because of the
following factors:
1- Efficient Performance
• The efficient performance of the company depends on
the quality of the people employed. This has increased the
significance of staffing.
2- Use of Latest Technology
• Many significant changes are taking place in technology.
In order to make use of the latest technology, the
appointment of right type of persons is necessary.
3- Development of Manpower
• The management has to train and develop the existing
personnel for future promotion. This will meet the
requirements of the company in future.
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159. 4- Optimum Use of Manpower
• Management has to spend money on
recruitment and selection, training wages,
salaries, etc. In order to get the optimum out
from the personnel.
5- Proper Motivation
• The workers are to be motivated properly
through financial and non-financial incentives.
6- Higher Morale
• Right type of atmosphere should be created for
the workers to contribute to the achievement of
the organizational objectives. This will increase
the morale of the employees.
Cont’d…
10/26/2022 159
160. Benefits of Staffing
1. It helps in discovering and obtaining competent
personnel for various jobs
2. It makes for higher performance by putting the
right man on the right job.
3. It ensures the continuous survival and growth of
the enterprise
4. It helps to ensure optimum utilization of human
resources
5. It Avoids over manning as well as shortage of
manpower in advance
6. It improves job satisfaction and morale of
employees through objective assessment and fair
rewarding of their contributions.
160
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161. ACTIVITIES IN STAFFING FUNCTION
• The major activities in the staffing function include:
A. Manpower planning
B. Recruitment
C. Selection
D. Placement
E. Introduction/ orientation
F. Training and development.
G.Performance appraisal
161
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162. Cont’d…
A. MANPOWER PLANNING / HUMAN
RESOURCE PLANNING:
1. Manpower : the quantity and quality of
workforce.
2. Manpower planning: is the process of forecasting
the number and type of personnel.
Manpower planning process;
1. Forecasting manpower requirements
2. Preparing manpower inventory / manpower audit
3. Identifying man power gaps
4. Formulate manpower plans
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B. RECRUITMENT
• It is the process of searching for prospective employees
and stimulates them to apply for jobs in the organization.
• The purpose of recruitment is to attract potential
employees and generally viewed as a positive process.
Sources of recruitment
1. Internal source : through
• Transfer
• Promotion
2. External source : through
• Advertisements
• Employment agencies
• Educational institutions
• Recommendations by other people
• Direct recruitment.
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C. SELECTION
• Is the process of screening or evaluation of
applicants and selecting the right person for the
right position.
Categorizes applicants as
1. Those who will be employed.
2. Those who will not be employed.
• Selection is described as a negative process.
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D. INTRODUCTION/ ORIENTATION
INTRODUCTION : is a socializing process of the
employee.
ORIENTATION: is a socializing process by
which new employee is provided with
information about work environment and
operating realities.
“First impression is the last
impression” 165
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166. Cont’d…
E. TRAINING AND DEVELOPMENT
• The term "training" and "development" considered
as synonymous :
1. Training: It is the process of increasing the knowledge
and skills of an employee for doing a particular job.
2. Development: It refers to the growth of an individual
in all respects - physically, intellectually, and
socially.
Methods of training
1. On-the-job Training (OJT)
2. Apprenticeship Training
3. Vestibule Training
4. Off- the -Job Training
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