MGMT 321 Principles of Management

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MGMT 321Principles of Management

• Pre-final Examination Review

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Principles of Management

• Management
• How to plan, organize, lead and control
  resources (people, money, material and
  information) in order to achieve organizational
  goals efficiently and effectively
• Henri Fayol
• General Industrial Management

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Performance

• Efficiency
• Are we using resources productively to achieve
  the goal?
• Effectiveness
• Is the goal appropriate and how much of it are
  we achieving?

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Planning

• Planning is the process of identifying and
  selecting appropriate goals and courses of
  action.
• Selecting goals (Vision, Mission, Values,
  Objectives)
• Deciding actions (Strategy)
• Allocating resources, assigning responsibility,
  setting timetables, measuring results, etc.

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Organizing

• Establishing a structure of working
  relationships that enables people to work
  together to achieve organizational goals.

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Leading

• Defining and communicating clear and compelling
  vision, mission and values, setting effective
  goals, then empowering, equipping, training and
  energizing people to fulfill themselves by
  achieving the goals.
• Using the four Ps (position, power, personality
  and persuasion) to inspire and energize people to
  achieve goals efficiently and effectively

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Controlling

• Evaluating individual and organizational
  performance and taking actions to improve them.
• The C and A in Plan, Do, Check, Act (PDCA)
• You use Key Performance Indicators (KPIs) to do
  this.
• Peter Drucker What gets measured gets done.
• Olson Be careful what you measure.

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Building Sustainable Competitive Advantage

• Increase efficiency
• Increase quality
• Decrease cost
• Increase appropriate technology
• Increase speed, flexibility and innovation
• Increase responsiveness to customers
• Remove waste
• Improve continuously (kaizen)
• Build a set of organizational capabilities that
  are difficult for competitors to duplicate
• Run scared (never, ever get complacent)

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Evolution of Management Thought

• Job Specialization/Division of Labor
• 18th century economist Adam Smith observed that
  manufacturing went much faster when each worker
  specialized in one step instead of doing all
  steps himself.

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Scientific Management

• Defined by Frederick W. Taylor in late
• 1800s
• Focused on the process by breaking it down into
  steps, optimizing each step through
  time-and-motion studies, reassembling it,
  codifying it into Standard Operating Procedures
  (SOPs), and then finding workers whose skills
  best matched the new process. Result greatly
  enhanced efficiency and productivity. Side
  effects management abuse and worker
  depersonalization/boredom.

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Administrative Management

• Propounded by Max Weber and based on the concept
  of bureaucracy a formal system of organization
  and administration designed to maximize
  efficiency and effectiveness.

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Henri Fayols 14 Principles

• Division of Labor (but Fayol warned against its
  failings)
• Authority and Responsibility (flip sides of the
  management coin)
• Unity of command (reporting to more than one boss
  leads to confusion)
• Unity of Direction (a single plan that everyone
  follows)
• Equity (fair and impartial treatment of
  employees)
• Order (a logical structure optimizes
  organizational performance and provides
  opportunity for advancement)

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Fayols Principles

• Line of Authority (clear chain of command)
• Centralization (power centralized at the top)
• But with worker Initiative (fostering creativity,
  innovation and independent action)
• Discipline (organization cant function without
  respectful employees)
• Subordination of Interest (interest of
  organization supersedes interest of individual)

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Fayols Principles

• Uniform Remuneration (an equitable and uniform
  payment system motivates high employee
  performance)
• Stability of Tenure (long-term employment
  supports skill development)
• Esprit de Corps (comradeship and shared
  enthusiasm foster devotion to organizational
  success)

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Theories X and Y

• Propounded by Douglas McGregor
• Theory X Workers are lazy, will do as little as
  possible, and must be closely supervised and
  controlled through reward and punishment.
• Theory Y Workers want to do a good job, so make
  the job stimulating and empower them.
• GM theory X Toyota theory Y
• Example experience at NUMMI

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Management EvolutionSummary

• From process to people
• From rigid to flexible and adaptive
• From tall to flat
• From internal focus to external focus
• From totalitarian to team
• From command to consensus fostered by
  communication

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Values, Attitudes, Cultures

• Corporate Chemistry
• Question Why should we pay attention to it?
• Answer To get things done efficiently and
  effectively.

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Personality Traits

• To some degree, personality traits determine the
  way managers think and feel. This can affect
  their approach to managing, their actions and
  their behaviors.
• Traits effective in one situation may be
  ineffective in another. Be flexible! If you are
  selecting someone for a particular task, be
  observant and match the right person to the right
  job!

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The Big Five Personality Traits

• Extraversion positive, sociable, outgoing and
  friendly
• Agreeableness likable, affectionate, care about
  others
• Openness has broad interests, original, a daring
  risk-taker
• Conscientiousness careful, scrupulous,
  persevering
• Negative Affectivity judgmental, critical of
  self and others but can be effective

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Other Important Traits

• Internal Locus of Control Im in charge of my
  fate
• External Locus of Control Outside forces are in
  charge of my fate
• Need for Achievement I am driven to meet
  internal standards of high performance
• Self-Esteem I feel good about myself (high) or I
  doubt my abilities (low)
• Need for Affiliation I want to be liked and
  accepted (herd instinct)
• Need for Power I want to control and influence
  others to get things done

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Organizational Culture

• Shared sets of beliefs, expectations, values,
  norms and work routines
• The Toyota Way, The GE Way, The JJ Way,
  The GM Way, The Ford Way
• A strong culture can be either effective (Toyota)
  or ineffective (Ford)
• Often established and maintained by founding
  families who hire people like themselves
• Sometimes reinforced by initial success and not
  re-examined

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Ethics and Social Responsibility

• Ethics
• The inner principles, values and beliefs that
  guide you in analyzing a situation and deciding
  the appropriate way to behave.
• Your internal moral compass

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Ethics and the Law

• Neither laws nor ethics are fixed. Both evolve
  over time and can vary from culture to culture.
• Ethical beliefs lead to the development of laws
  and regulations designed to encourage or
  discourage certain behaviors.

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Ethics and Stakeholders

• Stakeholders
• People and groups who supply a companys
  resources or reason for being and, therefore,
  have a stake in the company customers,
  employees, suppliers, stockholders, et al
• When the law does not specify how to weigh the
  interests of one stakeholder against those of
  another, a manager must make an ethical decision.
• Toyotas philosophy make every decision as if a
  customer is standing next to you implies a
  customer-first stakeholder hierarchy, much as the
  Johnson Johnson Credo (textbook p.138) does.
• Rule you cannot prosper unless your business
  partners prosper

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Stakeholder Versus Stockholder

• Most companies assert a customer-first
  philosophy. Far fewer actually practice it.
• In order to satisfy customers better than your
  competitors, you must maximize efficiency and
  effectiveness. This, in turn, maximizes the
  chance for success and the benefits for all
  stakeholders including stockholders.
• Many business-people overlook this obvious
  pyramidal principle, focusing instead on
  stockholder satisfaction to the detriment of
  other stakeholders and over the long term the
  company.

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Olsons Rule

• A corporations reputation and the trust it
  builds with its stakeholders particularly
  customers -- are its most important assets.
• A good reputation and trust are slowly built
  over time by the seemingly insignificant
  decisions made every day by employees.
• You will be in charge of this vital task. Make
  ethical decisions. If your companys culture
  wont allow you to do so, quit --- because you
  are on a sinking ship!

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Social Responsibility

• Every society has an implied social contract
  with the companies doing business within it.
  Certain minimum norms of corporate behavior are
  expected.
• Part of this unwritten agreement is Corporate
  Social Responsibility (CSR) the way a company
  views its duty to make decisions that protect and
  promote the welfare of stakeholders and society
  as a whole.

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Corporate Social Responsibility

• Obstructionist Approach
• Company behaves unethically and illegally
• Defensive Approach
• Company behaves in the letter but not the spirit
  of the law
• Accommodative Approach
• Company behaves legally and ethically, trying to
  balance interests of various stakeholders
• Proactive Approach
• Company actively embraces CSR, using resources
  to promote the interests of all stakeholders

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CSR

• Currently, CSR is essentially a defensive
  strategy that should be carried out in an
  accommodative way in order to protect the
  long-term interests of the company.
• But public opinion about CSR is evolving and
  should be carefully monitored and adjusted to by
  corporate management.

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Managing Diverse Employees

• Diversity
• Differences among people in age, gender, race,
  ethnicity, religion, sexual orientation,
  socioeconomic background and capabilities/disabili
  ties

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Diversity As An Asset

• Diversity is a Business Asset
• Variety of backgrounds and viewpoints enhances
  understanding, creativity and innovation while
  improving decision-making
• Also provides a more attuned match between
  employees and an increasingly diverse customer
  base
• Can increase retention of valued employees
• Customers and business partners expect a
  corporation to be diverse

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Perception

• Perception The process through which people
  select, organize and interpret what they see,
  hear, touch, smell and taste in order to distil
  meaning and make decisions.
• Can be affected by your internal filters.
  Smart managers work to become aware of their
  filters and factor offsets for them into their
  decision-making. Question both the situation and
  yourself!
• Discrimination whether overt or unintentional
  -- is unproductive unethical, illegal and just
  plain dumb!

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How to Manage Diversity

• Secure top-management support.
• Provide on-going training to build awareness of
  personal filters, diversitys benefits and
  respect for differences.
• Institute and enforce strong zero-tolerance
  anti-discrimination policies.
• Reward employees for promoting/supporting
  diversity (you get the behavior you reward).
• Pay close attention to employee performance
  appraisal and promotion processes (what gets
  measured gets done).
• Incorporate respect for diversity into the
  corporate culture.