Management an introduction 5th steve paton

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David Boddy is a Research Fellow at the School of Business and Management, University of Glasgow He is the author of

two other books published by Pearson Education: Managing Information Systems (2008) and Managing Projects (2002).

Steve Paton is Lecturer in Management at the University of Strathclyde Business School.

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Management, An Introduction addresses these and many other questions by providing a comprehensive introduction to

the themes and functions of management Now in its fi fth edition, this accessible and academically rigorous text brings

the topic to life with a wide range of appealing and readily identifi able examples

The valuable features of this book include:

Case studies on a broad range of global organisations as diverse as Nokia, The Eden Project, Facebook,

•

Apple and many more

Critical Refl ection exercises throughout the text to encourage the application of personal experience and

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An Introduction

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First published 1998 under the Prentice Hall Europe imprint

Second edition published 2002

Third edition published 2005

Fourth edition published 2008

Fifth edition published 2011

© Prentice Hall Europe 1998

© Pearson Education Limited 2002, 2011

The rights of David Boddy and Steve Paton to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

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ISBN: 978-0-273-73896-1

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Boddy, David.

Management : an introduction / David Boddy ; with Steve Paton – 5th ed.

p cm.

Includes bibliographical references and index.

ISBN 978-0-273-73896-1 (pbk : alk paper) 1 Management I Paton, Steve.

BRIEF CONTENTS

Part 5 case: W.L Gore & Associates in Europe 540

Part 1 Case: Innocent Drinks 67

Part 1Skills development 70

PART 2

THE ENVIRONMENT

OF MANAGEMENT

CHAPTER 3

ORGANISATION CULTURES AND CONTEXTS 76

4.8 Forces driving globalisation 125

Part 3 Case: The Virgin Group 284

Part 3Skills development 287

INFORMATION SYSTEMS AND E-BUSINESS 350

MANAGING CHANGE AND INNOVATION 380

Part 4 Case: The Royal Bank of Scotland 410

Part 4Skills development 413

PART 5

LEADING

CHAPTER 14

14.4 Behavioural models 428

Part 5 Case: W.L Gore & Associates in Europe 540

Part 5Skills development 544

PART 6

CONTROLLING

CHAPTER 18

MANAGING OPERATIONS AND QUALITY 550

FINANCE AND BUDGETARY CONTROL 602

Part 6 Case: Tesco 624

Part 6Skills development 627

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This book is intended for readers who are undertaking

their first systematic exposure to the study of

manage-ment Most will be first-year undergraduates following

courses leading to a qualification in management or

business Some will also be taking an introductory

course in management as part of other qualifications

(these may be in engineering, accountancy, law,

infor-mation technology, science, nursing or social work) and

others will be following a course in management as an

element in their respective examination schemes The

book should also be useful to readers with a first degree

or equivalent qualification in a non-management

sub-ject who are taking further studies leading to

Certifi-cate, Diploma or MBA qualifications

The book has the following three main objectives:

 to provide newcomers to the formal study of

man-agement with an introduction to the topic;

 to show that ideas on management apply to most

areas of human activity, not just to commercial

en-terprises; and

 to make the topic attractive to students from many

backgrounds and with diverse career intentions

Most research and reflection on management has

focused on commercial organisations However, there

are now many people working in the public sector and

in not-for-profit organisations (charities, pressure

groups, voluntary organisations and so on) who have

begun to adapt management ideas to their own areas of

work The text reflects this wider interest in the topic It

should be as useful to those who plan to enter public or

not-for-profit work as to those entering the commercial

sector

European perspective

The book presents the ideas from a European

perspec-tive While many management concepts have developed

in the United States, the text encourages readers to

con-sider how their particular context shapes management

practice There are significant cultural differences that

influence this practice, and the text alerts the reader to

these – not only as part of an increasingly integrated

Europe but as part of a wider international

manage-ment community So the text recognises European

ex-perience and research in management The case studies

and other material build an awareness of culturaldiversity and the implications of this for working inorganisations with different managerial styles andbackgrounds

Integrated perspective

To help the reader see management as a coherent whole,the material is presented within an integrative model ofmanagement and demonstrates the relationships be-tween the many academic perspectives The intention is

to help the reader to see management as an integratingactivity relating to the organisation as a whole, ratherthan as something confined to any one disciplinary orfunctional perspective

While the text aims to introduce readers to the ditional mainstream perspectives on managementwhich form the basis of each chapter, it also recognisesthat there is a newer body of ideas which looks at devel-opments such as the weakening of national boundariesand the spread of information technology Since theywill affect the organisations in which readers will spendtheir working lives, these newer perspectives are intro-duced where appropriate The text also recognises themore critical perspectives that some writers now taketowards management and organisational activities.These are part of the intellectual world in which man-agement takes place and have important practical im-plications for the way people interpret their role withinorganisations The text introduces these perspectives atseveral points

tra-Relating to personal experience

The text assumes that many readers will have little if anyexperience of managing in conventional organisations,and equally little prior knowledge of relevant evidenceand theory However, all will have experience of beingmanaged and all will have managed activities in theirdomestic and social lives Wherever possible the bookencourages readers to use and share such experiencesfrom everyday life in order to explore the ideas pre-sented In this way the book tries to show that manage-ment is not a remote activity performed by others, but aprocess in which all are engaged in some way

PREFACE TO THE

FIRST EDITION

Most readers’ careers are likely to be more

frag-mented and uncertain than was once the case and many

will be working for medium-sized and smaller

enter-prises They will probably be working close to

cus-tomers and in organisations that incorporate diverse

cultures, values and interests The text therefore

pro-vides many opportunities for readers to develop skills of

gathering data, comparing evidence, reflecting and

generally enhancing self-awareness It not only mits knowledge but also aims to support the develop-ment of transferable skills through individual activities

trans-in the text and through ltrans-inked tutorial work The manycases and data collection activities are designed to de-velop generic skills such as communication, teamwork,problem solving and organising – while at the sametime acquiring relevant knowledge

This fifth edition takes account of helpful comments

from staff and students who used the fourth edition,

and the suggestions of reviewers (please see below) The

book retains the established structure of six parts, and

the titles of the 20 chapters are substantially as they

were before Within that structure each chapter has

been updated where necessary, and several also provide

readers with additional academic material and/or a

clearer sequence The main changes of this kind are:

Chapters:

Chapter 3 (Organisation cultures and contexts) – a

new section on corporate governance

Chapter 4 (Managing internationally) – same

(updated) material but clearer structure

Chapter 8 (Managing strategy) – fuller discussion of

the process of forming strategy

Chapter 9 (Managing marketing) – same (updated)

material but clearer structure

Chapter 12 (Information technology and e-business) –

substantial revision, beginning with current

develop-ments in social networking and co-creation

Chapter 13 (Managing change and innovation) –

latter half on innovation completely new

Chapter 17 (Teams) – same (updated) material but

clearer structure using ‘inputs, processes, outcomes’

The order of these last three chapters (forming Part 6)

has also been changed

Academic content: This remains substantially as

be-fore, but has been extended and updated where

appro-priate Examples include new material on corporate

governance in Chapter 3, more on biases in decision

making in Chapter 7, a new section on the processes of

managing strategy in Chapter 8, a fuller treatment of

in-novation in Chapter 13, and more on managing service

operations in Chapter 18

Integrating themes – NEW and stronger: Theconcluding ‘current themes and issues’ section of eachchapter has been re-titled, and while the ‘international-isation’ theme remains, the others reflect two currentthemes – ‘sustainable performance’ and ‘governanceand control’ respectively The section aims to relate as-pects of the chapter to each theme, bringing each chap-ter to a consistent close In addition, I have strengthenedthe potential value of this feature by including it as anitem in the chapter objectives, in the chapter summaryand in the review questions

Teachers may wish to use this feature by, for ample, setting a class project or assignment on one ofthe themes (such as sustainable performance) andinviting students to draw on the multiple perspectives

ex-on the topic which each chapter provides For example:Chapter 3 (Section 3.9) provides material on sus-tainability from the Stern report

Chapter 6 (Section 6.9) shows how one company isplanning to work more sustainably

Chapter 10 (Section 10.10) relates the familiardilemma of centralisation/de-centralisation to sus-tainability

Chapter 15 (Section 15.8) links motivation to tainability and illustrates it with a company whichincludes measures of sustainability in the manage-ment reward system

sus-Chapter 18 (Section 18.8) argues that all waste is theresult of a failure in operations, which therefore needs

to be the focus of improving sustainable performance

Cases: These have been revised and updated – andseven are completely new; Crossrail (Chapter 6), IKEA(Chapter 7, was Chapter 15), HMV Group (Chapter 8),Apple (Chapter 14), The Eden Project (Chapter 15),Facebook (Chapter 16), Zara (Chapter 18) and an NHSFoundation Hospital (Chapter 19)

MyManagementLab: With every purchase of a newcopy of this textbook, the reader receives a Student AccessKit that allows them to make use of MyManagementLab,

an unrivalled suite of online resources that accompanythis textbook It provides a variety of tools to enable stu-dents to assess and progress their own learning, includingaudio summaries, questions, tests and learning aids for

PREFACE TO THE

FIFTH EDITION

each chapter of the book, as well as material for

instruc-tors to assign, including video case studies (See pages i

and xxii–xxv for a more detailed outline of the content

and functionality of MyManagementLab.) To

encour-age students to use this resource, each of the companies

which features in the video clip also features in some

way in the book itself The Eden Project is the Chapter

Case in Chapter 15 (Motivation) while the others provide

Management in Practice features in several chapters

Features: Many of the Management in Practice

fea-tures have been updated and renewed, as have some

Key Ideas There are over 180 new references and

ad-ditional suggestions for Further Reading Several of the

Case Questions and Activities have been revised to

connect more closely with the theories being

pre-sented The Learning Objectives provide the structure

for the Summary section at the end of each chapter

Critical thinking: At the end of the first chapter I

con-tinue to present ideas on the components of critical

thinking: assumptions, context, alternatives and

limi-tations These themes are used systematically to frame

many of the learning objectives, and structure the

Criti-cal Reflection feature at the end of each chapter

Web-based activities: Each chapter concludes with

a list of the websites of companies that have appeared in

the chapter, and a suggestion that students visit these

sites (or others in which they have an interest) to find

some information and seek information on some of the

themes in the chapter This should add interest and help

retain the topicality of the cases

Each part continues to conclude with several skills

development activities, drawing on and in some cases

integrating ideas from several of the chapters in that

part

List of reviewers

I would like to express thanks to the original reviewers

and review panel members who have been involved in

the development of this book I am extremely grateful

for their insight and helpful recommendations

Reviewers of the second edition

John Clark (London Metropolitan University) James Edgar (Queens University, Belfast)Olaf Sigurjonsson (Reykjavik University, Iceland)Eddie Pargeter (Birmingham College of Food, Tourismand Creative Study)

Bart Bossink (Vrije University, Amsterdam)Ian Parkinson (Hull College)

Nicky Metcalf (St Martin’s College, Lancaster)Jackie Shaw (Macclesfield College)

Jos Weel (Hogeschool van Amsterdam)Peter Williams (Leeds Metropolitan University)Iraj Tavakolo (Brighton University)

Ray Rogers (Coventry)John Chamberlain (Derby)Siobhan Tiernan (University of Limerick)Andrew Godley (University of Reading)

Reviewers of the third edition

Peter Falconer (Glasgow Caledonian University)

Ad van Iterson (Maastricht University)Gail Shepherd (Coventry University)Abby Cathcart (University of Sunderland)Paschal McNeill (University College, Dublin)

Reviewers of the fourth edition

Paul DudleyDearbhla FinnBobby MackieHoward WestonColin CombeJoyce LiddleMatyna SiiwaPaul GriseriNerys Fuller LoveFrank van LuixBoon Tan

Reviewers of the fifth edition

Hadyn Bennett, University of UlsterJohn Clark, London Metropolitan University Colin Combe, Glasgow Caledonian University John Middleton, Bath Spa University

Martijn van Velzen, University of Twente

Chapter 10 describes the main elements of organisation structure and the contrasting human resource management policies These are intended to ensure that employees work towards organisational objectives.

Chapter 12 focuses on information technology and e-business, showing how Chapter 13 looks at some of the issues that arise in implementing organisational change and in stimulating innovation.

infor-The Part case is infor-The Royal Bank of Scotland, which has gone from being a highly the UK government, it is trying to rebuild its reputation.

1Outline the links between strategy, structure and performance

2Give examples of how managers divide and co-ordinate work, with their likely advantages and disadvantages

3Compare the features of mechanistic and organic structures

4Summarise the work of Woodward, Burns and Stalker, Lawrence and Lorsch and John Child, showing how they contributed to this area of management

5Use the ‘contingencies’ believed to influence choice of structure to evaluate the structure unit

6Explain and illustrate the features of a learning organisation

7Show how ideas from the chapter add to your understanding of the integrating themes

Key terms

ORGANISATION STRUCTURE

This chapter introduces the following ideas:

organisation structure organisation chart formal structure informal structure vertical specialisation horizontal specialization formal authority responsibility delegation span of control centralisation decentralisation formalisation functional structure

divisional structure matrix structure network structure mechanistic structure organic structure contingencies technology differentiation integration contingency approaches determinism structural choice learning organisation

Each is a term defined within the text, as well as in the Glossary at the end of the book.

The book is divided into six partseach of which opens with an

introductionhelping you toorientate yourself within the book

Chapter openers provide abrief introduction to chapter

aimsand objectives

A list of key terms

introduces the main ideascovered in the chapter

GUIDED TOUR

Oticon is a small Danish company which competes

unusual organisation structure It employs about

facilities, which supply high-tech devices to the

culties Competition intensified during the 1980s and

vals such as Siemens Lars Kolind was appointed

new approach was needed to counter the threats

stronger Oticon’s only hope for survival was to be

the changes to turn Oticon from an industrial

cal product.

He organised product development around

pro-jects The project leader was appointed by the

man-to do the work: they chose whether or not man-to join –

agreed Previously most people had a single skill;

specialties – one based on professional qualification

could develop skills in customer support and

adver-company to respond quickly to unexpected events

and use skills fully.

Previously Oticon had a conventional hierarchical

structure, and a horizontal structure of separate

func-is the ten-person management team, each member

through which work is done Kolind refers to this as

the dangers of this by developing a strong and clear

with X’; and a common set of written values

Ex-adults (who can be expected to act responsibly)’, and

they are doing it’, so all information is available to

everyone (with a few legally excepted areas).

There are no titles – people do whatever they think

is right at the time The potential for chaos is averted

re-Sources: Based on Bjorn-Andersen and Turner (1994); Rivard et al.

(2004): and company website.

Information systems help to ensure that people who need to work in a consistent way have

ternet applications enable different parts of an organisation, as well as suppliers and customers,

to work from common information, making co-ordination much easier (see Chapter 12).

Key ideas Co-ordinating sales and marketing

Large organisations typically create separate sales and marketing departments, which must then co-ordinate

(from a survey of German firms in financial services, consumer goods and chemicals) that the best

per-formance was in firms where managers had:

 developed strong structural links between the two functions, especially by using teams, and requiring staff

to plan projects jointly; and

 ensured that staff in both functions had high market knowledge, by rotating them between other functions

to work effectively together.

Source: Homburg et al (2008).

Most companies purchase goods and services electronically, ensuring that orders and

pay-ments to suppliers flow automatically to match current demand This co-ordinates a

labori-ous task where mistakes were common.

Direct personal contact

The most human form of co-ordination is when people talk to each other Mintzberg (1979)

There is so much uncertainty in the latter that information systems cannot cope – only

di-ness units (Sull and Spinosa, 2005) (see the above Key Ideas and the following Management

in Practice).

Management in practice Co-ordination in a social service

The organisation cares for the elderly in a large city Someone who had worked there for several years

re-flected on co-ordination:

Within the centre there was a manager, two deputies, an assistant manager, five senior care officers

the supervisor and the subordinates While this defines job roles quite tightly, it allows a good

com-groups, and individual appraisals of the care officers by the SCOs Staff value this opportunity for

praise and comments on how they are doing.

Contact at all levels is common between supervisor and care officers during meetings to assess the

needs of clients, for whom the care officers have direct responsibility Frequent social gatherings and

the behaviour of the care officers come from senior management, often derived from legislation such

as the Social Work Acts or the Health and Safety Executive.

Source: Private communication.

306 CHAPTER 10 ORGANISATION STRUCTURE

Networks

Network structuresrefer to situations in which organisations remain independent but

agree to work together to deliver products or services Sometimes this happens when The remaining organisation concentrates on setting strategy direction and managing the companies that specialise in such work The arrangement is becoming common in per- ernment, and in Community Health Partnerships (see the following Management in Practice).

man-Management in practice Community Health Partnerships (CHP) www.communityhealthpartnerships.co.uk

A network structure is when tasks required by one company are performed by other companies with expertise in those areas.

Many social and health problems are caused by a range of conditions which have traditionally been the believe that effective solutions depend on these independent agencies working together to offer a more com- prehensive service than any agency could do alone.

re-A prominent example is Community Health Partnerships (CHP), an independent company, wholly owned

by the UK Department of Health It aims to deliver innovative ways to improve health and local authority health and local authority services in England.

ser-It has established 48 LIFT partnerships, covering two-thirds of England’s population, and is responsible for more than 250 buildings that are either open or under construction More recently, CHP has developed health and social care.

The different backgrounds, priorities and cultures of the organisations taking part make such ventures challenging to manage.

Sources: Company website; other published sources.

Mixed forms

Large organisations typically combine functional, product and geographical structures within the same company – see for example BP (Part 2 Case) or RBS (Part 4 Case) The counterpart of dividing work is to co-ordinate it, or there will be confusion and poor performance.

Think of an organisation you have worked in or about which you can gather information.

 Which of the five structural forms did it correspond to most closely?

 What were the benefits and disadvantages of that approach?

 Compare your conclusions with colleagues on your course, and use your structure.

experi-Activity 10.4 Comparing structures

Case studiesthroughout the bookengage student interest andencourage critical analysis Theyalso come with some questions tohelp you test your understanding

Key ideasare short vignetteswhich illustrate how developments

in management thought influencepractice today

Management in practice boxes provide

real-world examples and encourage

students to identify and engage with

managerial issues and challenges

Activitiesenable students to personally

engage and investigate managerial

theory and practice

THE INTERNET AND E-BUSINESS

process control systems to make structured decisions Banks analyse the pattern of a customer’s

line the administrative processes of a business, and can provide an input into other systems.

Management information systems (MIS)

A management information system (MIS)is a computer-based system that provides managers

with the information they need for effective decision making The MIS is supported by the

oper-cally includes systems for information reporting, decision support and executive information,

throughout the organisation can access and use information from these systems, with many

advo-Managers in charge of production or service facilities constantly face choices about, for

ex-ample, whether to engage more or fewer staff, arrange schedules or accept a reservation To

ample, existing capacity, current orders or available materials Good information increases

rate and up-to-date information on the current operation.

Decision support systems(DSS), sometimes called expert or knowledge systems, help

managers to calculate the likely consequences of alternative actions A DSS incorporates a

examples include:

 businesses use DSS to calculate the financial consequences of investments;

 banks use knowledge systems to analyse proposed loans These incorporate years of

lend-ing experience and enable less experienced staff to make decisions;

 NHS Direct in the UK uses an expert system to enable nurses in a call centre to deal with calls

ask, interprets the answers and recommends the advice the nurse should give to the caller.

Executive information systemsare essentially management information systems aimed

at the most senior people in the business Rather than great detail, they aim to provide easy

top management requirements.

Decision support systemshelp people to calculate the consequences of alternatives before they decide which to choose.

An executive information system

provides those at the top

of the organisation with easy access to timely and relevant information.

A management information system

provides information and support for managerial decision making.

Collect new examples of one operational and one management information system,

from someone working in an organisation.

 What information do they deal with?

 How do they help people who use them in their work?

 What issues about the design of these systems should managers be considering, in

view of the growth of social networking and similar technologies?

 Have they begun to think about these in the organisations you have studied?

Activity 12.4 Collecting examples of applications

e-commercerefers to the activity of selling goods or service over the internet.

refers to the integration, through the internet, of all an organisation’s processes from its suppliers through to its customers.

The internet and e-business

12.5

The internet is clearly transforming the way many organisations work, and creating new

re-monly used terms are e-commerceand e-business.

322 CHAPTER 10 ORGANISATION STRUCTURE

 Organic – people contribute experience to common tasks, network structure of

con-more important than to superiors.

4 Summarise the work of Woodward, Burns and Stalker, Lawrence and Lorsch, and John

Child, showing how they contributed to this area of management

 Woodward: appropriate structure depends on the type of production system

(‘technol-ogy’) – unit, small batch, process.

 Burns and Stalker: appropriate structure depends on uncertainty of the organisation’s

environment – mechanistic in stable, organic in unstable.

 Lawrence and Lorsch: units within an organisation face different environmental

de-mands, which implies that there will be both mechanistic and organic forms within the

same organisation, raising new problems of co-ordination.

 John Child: contingency theory implies too great a degree of determinism – managers

have a greater degree of choice over structure than contingency theories implied.

5 Use the ‘contingencies’ believed to influence choice of structure to evaluate the

suit-ability of a form for a given unit

 Strategy, environment, technology, age/size and political contingencies (Child) are

be-relation to their circumstances.

6 Explain and illustrate the features of a learning organisation

 Learning organisations are those which have developed the capacity to continuously

learning-friendly processes for looking in, looking out, learning opportunities, strategy

and structure.

7 Show how ideas from the chapter add to your understanding of the integrating

 The drive for sustainable is another example of the dilemma between central and local

policy, or may lead to more sustainable performance if local managers use their

knowl-edge to find better solutions.

 The financial crisis led many to call for tighter systems of governance and control – but

used.

 Bartlett and Ghoshal (2002) trace the many dilemmas companies face in creating a

structure for their international operations.

1What did Chandler conclude about the relationship between strategy, structure and performance?

2Draw the organisation chart of a company or department that you know Compare it with the structures

shown in Figure 10.5, writing down points of similarity and difference.

3List the advantages and disadvantages of centralising organisational functions?

4Several forms of co-ordination are described Select two that you have seen in operation and describe in

detail how they work – and how well they work.

5Explain the difference between a mechanistic and an organic form of organisation.

6Explain the term ‘contingency approach’ and give an example of each of the factors that influence the

choice between mechanistic and organic structures.

Review questions

321

SUMMARY

global efficiency through economies of scale Others, including Philips and Unilever, were

to respond to local conditions.

They go on to suggest that as global pressures increase, companies needed to develop a more complex range of capabilities:

To compete effectively, a company had to develop global competitiveness, multinational was primarily an organizational challenge, which required organizations to break away model we call the transnational (Bartlett and Ghoshal, 2002, p 18)

They also observe that successful transnational companies have:

recognized that formal structure is a powerful but blunt weapon for effecting strategic making systems, and in doing so, the management processes of the company – the provided tools for managing such change that were more subtle but also more effective than formal structure (p 37)

Bartlett and Ghoshal go on to elaborate the evidence and research on the organisational challenges that companies face if they wish to perform effectively in the international economy.

Summary

1 Outline the links between strategy, structure and performance

 The structure signals what people are expected to do within the organisation, and is Equally, a structure may enable a new strategy to emerge which a different structure would have hindered.

in-2 Give examples of management choices about dividing and co-ordinating work, with their likely advantages and disadvantages

 Managers divide work to enable individuals and groups to specialise on a limited ision needs to be accompanied by suitable methods of co-ordination.

as- Centralisation brings consistency and efficiency, but also the danger of being slow and local conditions but risk acting inconsistently.

 Functional forms allow people to specialise and develop expertise and are efficient, but they may be inward looking and prone to conflicting demands.

 Divisional forms allow focus on particular markets of customer groups, but can cate facilities thus adding to cost.

dupli- Matrix forms try to balance the benefits of functional and divisional forms, but can again lead to conflicting priorities over resources.

 Networks of organisations enable companies to draw upon a wide range of expertise, but may involve additional management and co-ordination costs.

3 Compare the features of mechanistic and organic structures

 Mechanistic – people perform specialised tasks, hierarchical structure of control, valued.

Key termsare definedalongside the text for easyreference and to aid yourunderstanding

Review questionsenablestudents to check theirunderstanding of the main themes and concepts

Chapter summaries aid revision

by supplying a concise synopsis

of the main chapter topics

FURTHER READING

7If contingency approaches stress the influence of external factors on organisational structures, what is

the role of management in designing organisational structures?

8What is the main criticism of the contingency approaches to organisation structure?

9What examples can you find of organisational activities that correspond to some of the features of a

learning organisation identified by Pedler et al (1997)?

10Summarise an idea from the chapter that adds to your understanding of the integrating themes.

Further reading

Burns, T and Stalker, G.M (1961), The Management of Innovation, Tavistock, London.

Lawrence, P and Lorsch, J.W (1967), Organization and Environment, Harvard Business

School Press, Boston, MA.

Woodward, J (1965), Industrial Organization: Theory and practice, Oxford University Press,

Oxford Second edition 1980.

These influential books give accessible accounts of the research process, and it would

of Woodward’s book (1980) is even more useful, as it includes a commentary on her work

by two later scholars.

Bartlett, C.A and Ghoshal, S (2002), Managing Across Borders: The transnational solution

(2nd edn) Harvard Business School Press, Boston, MA.

Applies ideas on organisations and their structure to international management.

Think about the structure and culture of your company or one with which you are familiar Review the

ma-questions:

 What examples of the themes discussed in this chapter are currently relevant to your company? What

methods of co-ordination identified do you typically use? Which form of culture best describes the one in

which you work? What structural or cultural issues arise that are not mentioned here?

In responding to issues of structure, what assumptions about the nature of organisations appear to guide

proach? What are their assumptions, and are they correct?

What factors in the context of the company appear to shape your approach to organising – what kind of

people from other organisations, and why is that?

 Have you seriously considered whether the present structure is right for the business? Do you regularly

compare your structure with that in other companies to look for alternatives? How do you do it?

What limitations can you identify in any of the ideas and theories presented here? For example, how

To help you develop your skills, as well as knowledge, this section includes tasks that

help you to deepen your understanding of the topic, and develop skills and insights

which you can use in many situations.

While every organisation is unique, all are made up of the elements shown in Figure 1.3.

which the manager faces A useful skill is that of being able to use this model to identify and

analyse just four of the elements – select more if they seem relevant to the situation.

Analyse a department or organisation with which you are familiar, by making a few notes in

response to these questions:

 What is the main objective or mission of the department or organisation?

 What is the structure?

 What are the main characteristics of the people?

 What technologies (and in what layout) do people use to meet the objectives? This

includes all kinds of physical facilities, including computer systems.

Consider a recent large change What were the direct and indirect effects on each of these

components? What difficulties, if any, had to be managed?

Compare your answers with those prepared by another student, to further increase your

skills of analysis, and of identifying key organisational features.

Distinguishing mechanistic from organic structures

Task 4.2

Chapter 10 distinguished between mechanistic and organic forms Since these greatly affect

can, whether intended or not, lead an organisation towards one or the other.

Analyse a department or organisation with which you are familiar by making a few notes in

response to the following questions:

 Identify a department that is mainly mechanistic, and indicate the features or practices

that illustrate it.

 Identify a department that is mainly organic, and indicate the features or practices that

Bernoff, J and Li, C (2008), ‘Harnessing the power of the oh-so-social web’, MIT Sloan

Management Review, vol 49, no 3, pp 36–42.

Boulding, W., Staelin, R and Ehret, M (2005), ‘A customer relationship management

no 4, pp 155–166.

Bozarth, C (2006), ‘ERP implementation efforts at three firms’, International Journal of

Operations & Production Management, vol 26, no 11, pp 1223–1239.

Three recent empirical studies of the organisational aspects of managing information systems.

Iyer, B and Davenport, T H (2008), ‘Reverse engineering Google’s innovation machine’,

Harvard Business Review, vol 86, no 4, pp 58–68.

Many insights into the company.

Laudon, K.C and Laudon, J.P (2004), Management Information Systems: Organization and

technology in the networked enterprise, Prentice Hall, Harlow.

This text, written from a management perspective, focuses on the opportunities and falls of information systems.

pit-Phillips, P (2003), E-Business Strategy: Text and cases, McGraw-Hill, Maidenhead.

A comprehensive European perspective on internet developments relevant to business and strategy.

Tapscott, E and Williams, A.D (2006), Wikinomics: How mass collaboration changes

everything, Viking Penguin, New York.

Best-selling account of the rise of co-creation.

Weblinks

These websites are those that have appeared in the chapter:

www.google.com www.connectingforhealth.nhs.uk www.bbc.co.uk www.selectminds.com www.renault.com www.siemens.com www.Yahoo.com www.amazon.com www.moneyfacts.com www.tesco.com www.irisnation.com www.nestle.com www.buckman.com

Visit two of the business sites in the list, or any others that interest you, and answer the lowing questions:

fol- If you were a potential employee, how well does it present information about the company and the career opportunities available? Could you apply for a job online?

Concluding critical reflectionsare a series ofquestions intended to developcritical thinking skills andanalysis of key debates

Skills developmentsectionsinclude tasks which allow students

to relate key managerial themes topersonal experience

Further reading and weblinks

provide a starting point for furtherresearch and project work

xxi

GUIDED TOUR

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This book has benefited from the comments, criticisms

and suggestions of many colleagues and reviewers of

the fourth edition It also reflects the reactions and

com-ments of students who have used the material and

earlier versions of some of the cases Their advice and

feedback have been of immense help

Most of the chapters were written by the author, who

also edited the text throughout Chapter 11 (Human

resource management) was created by Professor Phil

Beaumont and then developed by Dr Judy Pate and

Sandra Stewart: in this edition it was revised by the

author Chapter 18 (Managing operations and quality)

was created by Professor Douglas Macbeth and

devel-oped in the fourth edition by Dr Geoff Southern: in this

edition it was rewritten by Dr Steve Paton Chapter 20(Financial and budgetary control) was created by DouglasBriggs: in this edition it was rewritten by Dr StevePaton Dr Paton has also revised and added new ma-terial to Chapters 13 and 19 – and also helped in otherways in preparing this edition Errors and omissions are

my responsibility

Finally, I gratefully acknowledge the support andhelp that my wife, Cynthia, has provided throughoutthis project

David Boddy University of Glasgow, April 2010

We are grateful to the following for permission to

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Figures

Figure 2.2 from Becoming a master manager (Quinn,

R E., Faerman, S.R., Thompson, M P and McGrath,

M R 2003) Copyright © 2003 John Wiley & Sons, Inc

Reproduced with permission of John Wiley & Sons,

Inc.; Figure 2.3 after GREENBERG, JERALD; BARON,

ROBERT A., BEHAVIOR IN ORGANIZATIONS,

6th Edition © 1997, p 13 Reprinted by permission of

Pearson Education, Inc., Upper Saddle River, NJ; Figure 2.7

from Chaos, Management and Economics: The

implica-tions of non-linear thinking, Hobart Paper 125, Institute

of Economic Affairs, London (Parker, D and Stacey, R

1994) First published by the Institute of Economic

Affairs, London,1994; Figure 3.4 Reprinted with the

permission of The Free Press, a Division of Simon &

Schuster, Inc., from COMPETITIVE STRATEGY:

Tech-niques for Analyzing Industries and Competitors by

Michael E Porter, Copyright © 1980, 1998 by The Free

Press All rights reserved; Figure 4.4 from Clustering

countries on attitudinal dimensions: A review and

syn-thesis, Academy of Management journal by S Ronen

and O Shenkar Copyright 1985 by ACADEMY OF

MANAGEMENT (NY) Reproduced with permission of

ACADEMY OF MANAGEMENT (NY) in the formatTextbook via Copyright Clearance Center; Figure 4.5

adapted from YIP, GEORGE S., TOTAL GLOBAL

STRATEGY II, 2nd Edition © 2003, p 10 Reprinted by

permission of Pearson Education, Inc., Upper SaddleRiver, NJ; Figure 5.3 from Carroll, A B., Corporate

social responsibility, Business and Society, vol 38, no 3,

pp 268–95 (1999), Copyright © 1999 by Sage tions Reprinted by permission of SAGE Publications;Figure 5.5 from Does it pay to be green? A systematicoverview, The Academy of Management perspectives

Publica-by S Ambec and P Lanoie, vol 22, no 4, pp 45–62.Copyright 2008 by ACADEMY OF MANAGEMENT(NY) Reproduced with permission of ACADEMY OFMANAGEMENT (NY) in the format Textbook viaCopyright Clearance Center; Figure 5.6 from VodafoneCorporate Responsibility Report for the year ended

31 March 2009, reproduced with permission; Figure 5.7from ‘Implicit’ and ‘Explicit’ CSR: A conceptual frame-work for a comparative understanding of corporatesocial responsibility, The Academy of Managementreview by D Matten and J Moon, vol 33, no 2,

pp 404–424 Copyright 2008 by ACADEMY OF AGEMENT (NY) Reproduced with permission ofACADEMY OF MANAGEMENT (NY) in the formatTextbook via Copyright Clearance Center; Figure 6.6

MAN-Publisher’s acknowledgements

ACKNOWLEDGEMENTS

from Managing Information Systems: Strategy and

Or-ganisation, 3 ed., Financial Times/Prentice Hall (Boddy,

D., Boonstra, A., & Kennedy, G 2009), reproduced with

permission; Figure 7.4 from ROBBINS, STEPHEN P.;

COULTER, MARY, MANAGEMENT, 8th Edition,

© 2005, p 144 Reprinted by permission of Pearson

Ed-ucation, Inc., Upper Saddle River, NJ; Figure 7.5 from

Making Management Decisions, 2 ed., Prentice Hall

(Cooke, S and Slack, N 1991) Reproduced with

per-mission; Figure 8.2 from The rise and fall of strategic

planning, Prentice Hall International (Mintzberg, H.

1994) with permission from Prentice Hall and the

au-thor; Figure 7.8 from Figure 9.1 Decision-Process Flow

Chart from Leadership and Decision-Making, and the

taxonomy used in the figure is from Table 2.1 Decision

Method for Group and Individual Problems from

Lead-ership and Decision-Making, by Victor H Vroom and

Philip W Yetton, © 1973 Reprinted by permission of

the University of Pittsburgh Press; Figure 8.3 from

Strategic planning in a turbulent environment:

evi-dence from oil majors, Strategic Management Journal,

vol 24, no 6, pp 491–517 (Grant, R M 2003),

repro-duced with permission from John Wiley & Sons Ltd.;

Figure 8.4 from Closing the gap between strategy and

execution, MIT Sloan Management Review, vol 48,

no 4, pp 30–38 (Sull, D N 2007) © 2010 from MIT

Sloan Management Review/Massachusetts Institute of

Technology All rights reserved Distributed by Tribune

Media Services; Figure 8.5 from Reprinted with the

permission of The Free Press, a Division of Simon &

Schuster, Inc., from COMPETITIVE ADVANTAGE:

Creating and Sustaining Superior Performance by

Michael E Porter, Copyright © 1985, 1998 by Michael E.

Porter All rights reserved; Figure 8.8 adapted from

Exploring Corporate Strategy, 7ed., FT/Prentice Hall

(Johnson, G., Scholes, K and Whittington, R 2006),

where it was adapted from Chapter 6 of H I Ansoff,

Corporate Strategy, pub Penguin, 1988, reproduced

with permission from Prentice Hall and the Ansoff

Family Trust; Figure 8.9 reprinted with the permission of

The Free Press, a Division of Simon & Schuster, Inc., from

COMPETITIVE ADVANTAGE: Creating and Sustaining

Superior Performance by Michael E Porter , Copyright ©

1985, 1998 by Michael E Porter All rights reserved;

Fig-ure 9.6 from KOTLER, PHILIP; ARMSTRONG, GARY,

PRINCIPLES OF MARKETING, 13th ed © 2010, p 52.

Reprinted by permission of Pearson Education,

Inc., Upper Saddle River, NJ; Figure 10.2 from www

baesystems.com, http://www.baesystems.com/ContactUs/

index.aspx, reproduced with permission; Figure 10.10

from The learning company: A strategy for sustainable

development, 2 ed., McGraw-Hill Publishing Company

(Pedler, M., Burgoyne, J and Boydell, T 1997)

repro-duced with the kind permission of the McGraw-Hill

Publishing Company; Figure 11.1 from Managing

human assets, Macmillan (Beer, M., Spector, B., Lawrence,

P R and Quinn Mills, D 1984), reproduced with sion from Professor Michael Beer; Figure 11.3 adapted

permis-from Developments in the Management of Human

Resources, Blackwell (Storey, J 1992) reproduced with

permission; Figure 11.4 adapted from Successful

selec-tion interviews, Blackwell (Anderson, N and

Shackle-ton, V 1993) reproduced with permission; Figures 12.1,

12.4 and 16.2 from Managing information systems: An

organisational perspective, 2 ed., FT/Prentice Hall

(Boddy, D., Boonstra, A and Kennedy, G 2005)

repro-duced with permission; Figure 12.2 from Managing

Information Systems: Strategy and Organisation,

FT/Prentice Hall (Boddy, D., Boonstra, A., & Kennedy,

G 2009) p 62, reproduced with permission; Figure 12.9adapted and reprinted by permission of Harvard Busi-ness Review Exhibit adapted from Strategy and the

Internet, Harvard Business Review, vol 79, no 3, pp 63–78

by M E Porter, Copyright © 2001 by Harvard BusinessSchool Publishing Corporation; all rights reserved;

Figure 13.4 from Project Management 9 ed., Gower,

Aldershot (Lock, D 2007), © Ashgate Publishing Ltd.,reproduced with permission; Figure 13.8 adapted from

Managing Innovation: Integrating Technological, Market and Organisational Change, Wiley, Chichester (Tidd, J &

Bessant, J 2009), reproduced with permission; ure 14.3 from NHS Institute for Innovation and Im-provement, 2005 NHSLeadership qualities framework,http://www.nhsleadershipqualities.nhs.uk, reproducedwith permission; Figure 14.5 reprinted by permission ofHarvard Business Review Exhibit adapted from How tochoose a leadership pattern: should a manager be de-mocratic or autocratic – or something in between?,

Fig-Harvard Business Review, vol 37, no 2, pp 95–102 by

R Tannenbaum and W H Schmidt, Copyright © 1973Harvard Business School Publishing Corporation; all

rights reserved; Figure 14.7 from Leadership skills, CIPD

(Adair, J 1997), with the permission of the publisher,the Chartered Institute of Personnel and Development,London (www.cipd.co.uk); Figure 15.3 adapted fromThe Psychology of the Employment Relationship: An

Analysis Based on the Psychological Contract, Applied

Psychology, vol 53, no 4, pp 541–555 (Guest, D E.

2004), Reproduced with permission of Blackwell lishing Ltd.; Figure 15.5 reprinted by permission ofHarvard Business Review Exhibit from One more time:

Pub-How do you motivate employees?, Harvard Business

Review, vol 65, no 5, pp 109–120 by F Herzberg,

Copyright © 1987 Harvard Business School PublishingCorporation, all rights reserved; Figure 15.7 adapted

from Development of the job diagnostic survey, Journal

of Applied Psychology, vol 60, no 2, pp 159–170,

Ameri-can Psychological Association (Hackman, J R and

Oldham, G R 1975), adapted with permission;

Fig-ure 16.4 from The selection of communication media

as an executive skill, The Academy of Management

ex-ecutive by R.H Lengel and R.L Daft, vol 11, no 3,

pp 225–232 Copyright 1988 by ACADEMY OF

MAN-AGEMENT (NY) Reproduced with permission of

ACADEMY OF MANAGEMENT (NY) in the format

Textbook via Copyright Clearance Center; Figure 16.5

was published in Group Processes by Berkowitz, L.,

‘Communication networks fourteen years later’, Shaw,

M E., copyright Elsevier, 1978; Figure 16.8 from The

strategic communication imperative, MIT Sloan

Man-agement Review, vol 46, no 3, pp 83–89 (Argenti, P A.,

Howell, R A and Beck, K A 2005) © 2010 from MIT

Sloan Management Review/Massachusetts Institute of

Technology All rights reserved Distributed by Tribune

Media Services; Figure 17.5 from New patterns of

man-agement, The McGraw-Hill Companies, Inc (Lickert, R.

1961), reproduced with permission; Figure 18.4

adapted and reprinted by permission of Harvard

Busi-ness Review Exhibit adapted from Link Manufacturing

Process and Product Lifecycles, Harvard Business

Review, vol 57, no 1, pp 133–140 by R H Hayes and

S C Wheelwright, Copyright © 1979 Harvard

Busi-ness School Publishing Corporation; all rights reserved

Tables

Table on page 69 adapted from Innocent’s website,

re-produced with permission from Innocent Ltd.; Table on

page 625 from Tesco Annual Report and Accounts 2009

from Tesco’s website, reproduced with permission from

Tesco Stores Limited; Table 1.4 adapted from Anderson

& Krathwohl, A TAXONOMY FOR LEARNING,

TEACHING AND ASSESSING, Table 3.3: ‘The Six

Cate-gories of the Cognitive Process Dimension and Related

Cognitive Process’ p 31, © 2001 by Addison Wesley

Longman, Inc Reproduced by permission of Pearson

Education, Inc.; Table 2.3 adapted and reprinted from

Long Range Planning, vol 40, no 6, pp 574–593,

Macmillan, E and Carlisle, Y., Strategy as order

emerg-ing from chaos: A public sector experience, Copyright

(2007), with permission from Elsevier; Table 9.5 from

Financial Times, 22 April 2009, with permission from

Bowen Craggs & Co.; Table 11.1 from Human resource

management and industrial relations, Journal of

Man-agement Studies, vol 24, no 5, pp 502–521 (Guest, D E.

1987), Reproduced with permission of Blackwell

Pub-lishing Ltd.; Table 12.2 from Case studies in knowledge

management, CIPD (Scarborough, H and Swan, J.

1999) with the permission of the publisher, the

Char-tered Institute of Personnel and Development, London

(www.cipd.co.uk); Table on pages 450–1 from

Organi-zational Behaviour, 6 ed., FT/Prentice Hall (Buchanan,

D.A and Huczynski, A.A 2007), reproduced with

per-mission from the author; Table 17.1 from Groups that

work (and those that don’t), Jossey-Bass, San Francisco,

CA (Hackman, J R 1990), p 489, Reprinted with mission of John Wiley & Sons, Inc.; Table 17.6 adapted

per-from Groups that work (and those that don’t),

Jossey-Bass, San Francisco, CA (Hackman, J R 1990),Reprinted with permission of John Wiley & Sons, Inc.;

Table 19.4 adapted from Operations management,

FT/Prentice Hall (Slack, N., Chambers, S and Johnston,

R 2007), reproduced with permission; Table on page 603from BASF Group, Company annual report 2008–2009,reproduced with permission; Table on page 607 fromMarks and Spencer plc Annual Report 2009, www.marksandspencer.com, reproduced with permission;Table on page 610 from BASF Group, reproduced withpermission

Text

Case Study on page 202 from IKEA’s founder warns: we

must cut more jobs, The Guardian, 07/07/2009 (Graeme

Wearden), Copyright Guardian News & Media Ltd2009; Case Study on page 225 adapted from HMVGroup website, with permission from HMV UK Ltd.;Box on page 504 from WHETTEN, DAVID A.;

CAMERON, KIM S., DEVELOPING MANAGEMENT

SKILLS, 6th Edition © 2005, p 216 Reprinted by

permis-sion of Pearson Education, Inc., Upper Saddle River, NJ

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Systems BV 2006: 193; Innocent Ltd: Innocent Ltd 67; Oticon: 293; Press Association Images: Kin Cheung /

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In some instances we have been unable to trace theowners of copyright material, and we would appreciateany information that would enable us to do so

Chapter 1 clarifies the nature and emergence of management and the different ways inwhich people describe the role It explains how management is both a universal humanactivity and a specialist occupation Its purpose is to create wealth by adding value toresources, which managers do by influencing others – the chapter shows how they dothis It concludes with some ideas about managing your study of the topic You arelikely to benefit most by actively linking your work on this book to events in real organ-isations, and the chapter includes some suggestions.

Chapter 2 sets out the main theoretical perspectives on management and shows howthese can complement each other despite the apparently competing values about thenature of the management task Be active in relating these theoretical perspectives toreal events as this will help you to understand and test the theory

The Part case is Innocent Drinks, an innovative company which was established bythree graduates in 1998, and has established a leading position in the smoothies mar-ket The founders have some original and stimulating ideas on managing, which linkmany themes in this part

of entrepreneurs

Each is a term defined within the text, as well as in the Glossary at the end of the book.

In 2010 Ryanair, based in Dublin, was Europe’s

largest low-fare airline and, despite the recession, it

carried almost 66 million passengers in the 12 months

to the end of February: a record for that period In

1985 the company began offering services between

Dublin and London, in competition with the

estab-lished national carrier, Aer Lingus In the early years

the airline changed its business several times –

initially a conventional competitor for Aer Lingus,

then a charter company, at times offering a cargo

service The Gulf War in 1990 discouraged air travel

and deepened the company’s financial problems In

1991 senior managers decided to focus the airline as

a ‘no-frills’ operator, in which many traditional

fea-tures of air travel (free food, drink, newspapers and

allocated seats) were no longer available It aimed to

serve a group of flyers who wanted a functional and

efficient service, not luxury.

In 1997 changes in European Union regulations

enabled new airlines to enter markets previously

dominated by established national carriers such as

Air France and British Airways Ryanair quickly took

advantage of this, opening new routes between

Dublin and continental Europe Although based

in Ireland, 80 per cent of its routes are between

air-ports in other countries – in contrast with

estab-lished carriers that depend heavily on passengers

travelling to and from the airline’s home country

(Barrett, 2009, p 80).

Managers were quick to spot the potential of the

internet, and in 2000 opened Ryanair.com, a booking

site Within a year it sold 75 per cent of seats online

and now sells almost all seats this way It also made

a long-term deal with Boeing to purchase 150 new

aircraft over the next eight years.

Several factors enable Ryanair to offer low fares:

737 – most of which are quite new) simplifies

maintenance, training and crew scheduling.

major cities keeps landing charges low,

some-times as little as £1 per passenger against £10 at

Case study

a major airport; it also avoids the delays and costs caused by congestion at major airports.

round between flights in 25 minutes, compared with an hour for older airlines This enables aircraft

to spend more time in the air, earning revenue (11 hours compared with seven at British Airways).

check-in simplifies ticketing and administrative processes, and also ensures that passengers arrive early to get their preferred seat.

passengers and baggage between flights, where mistakes and delays are common.

land-ing, saving the cost of cleaning crews which tablished carriers choose to use.

es-Source: Economist, 10 July 2004; O’Connell and Williams (2005);

Doganis (2006); and other published information.

Case questions 1.1

growth of the airline?

man-agers changed what the organisation does and how it works.

Ryanair www.ryanair.com

© Thierry Tronnel/Corbis

Managing transformation processes

Organisation External environment

activity, and is usually

associated with creative

The Ryanair case illustrates several aspects of management A group of entrepreneurs

saw an opportunity in the market, and created an organisation to take advantage of it.They bring resources together and transform them into a service which they sell to cus-tomers They differ from their competitors by using different resources (e.g secondaryairports) and different ways to transform these into outputs (e.g short turnrounds) Theyhave been innovative in the way they run the business, such as in identifying what somecustomers valued in a flight – cost rather than luxury – and carried a record 65 millionpassengers in 2009

Entrepreneurs such as Michael O’Leary of Ryanair are always looking for ways to innovate

and make the most of new opportunities Other managers face a different challenge – moredemand with less resources Those managing the United Nations World Food Programmestruggle to raise funds from donor countries – aid is falling while hunger is increasing In al-most every public healthcare organisation, managers face a growing demand for treatment,but have fewer resources with which to provide it

Organisations of all kinds – from rapidly growing operations such as Facebook to lished businesses such as Royal Dutch Shell or Marks & Spencer – depend on people at all levelswho can run the current business efficiently and also innovate This book is about the knowl-edge and skills that enable people to meet these expectations, and so build a satisfying andrewarding management career

estab-Figure 1.1 illustrates the themes of this chapter It represents the fact that people draw sources from the external environment and manage their transformation into outputs thatthey hope are of greater value They pass these back to the environment, and the value theyobtain in return (money, reputation, goodwill, etc.) enables them to attract new resources tocontinue in business (shown by the feedback arrow from output to input) If the outputs donot attract sufficient resources, the enterprise will fail

re-The chapter begins by examining the significance of managed organisations in our world

It then outlines what management means, and introduces theories about the nature of agerial work Finally, it introduces ideas on studying management

man-Innovationis usually

concerned with product

or service development.

MANAGING TO ADD VALUE TO RESOURCES

Write a few notes summarising what you think ‘management’ means.

‘management’ – such as when you have been managed in your school or university.

study project Keep the notes so you can refer to them.

Activity 1.1 What is management?

Managing to add value to resources

1.2

We live in a world of managedorganisations We experience many every day – domestic

arrangements (family or flatmates), large public organisations (the postal service), small

busi-nesses (the newsagent), well-known private companies (the jar of coffee) or a voluntary group

(the club we attended) They affect us and we judge their performance Did the transaction work

smoothly or was it chaotic? Was the service good, reasonable or poor? Will you go there again?

An organisationis a social arrangement for achieving controlled performance towards goals that create value.

What were the most important innovations of the past century? Antibiotics and vaccines that doubled, or even tripled, human life spans? Automobiles and aeroplanes that redefined our idea of distance? New agents

of communication, such as the telephone, or the chips, computers and networks that are propelling us into a new economy?

All of these innovations transformed our lives, yet none of them could have taken hold so rapidly or spread

so widely without another That innovation is the discipline of management, the accumulating body of thought and practice that makes organisations work When we take stock of the productivity gains that drive our prosperity, technology gets all of the credit In fact, management is doing a lot of the heavy lifting.

Source: Magretta (2002), p 1.

Key ideas Joan Magretta on the innovation of management

As human societies become more specialised, we depend more on others to satisfy our

needs We meet some of these by acting individually or within family and social groups:

or-ganisations provide the rest Good managers make things work – so that aid is delivered,

roads are safe, shops have stock, hospitals function and all the rest They do not do the work

themselves, but build an organisation with the resources and competences to deliver what

people need (Johnson et al., 2008, pp 95–6).Tangible resourcesare physical assets such as

plant, people and finance – things you can see and touch.Intangible resourcesare

non-physical assets such as information, reputation and knowledge

To transform these resources into valuable goods and services people need to work together

They need to know what to do, understand their customers, deal with enquiries properly and

generally make the transaction work well Beyond that, they look for opportunities to

improve, be innovative and learn from experience Good managers bring out the best in their

staff so that they willingly ‘go the extra mile’: together they develop effective ways of working

that become second nature These ‘ways of working’ are competences– skills, procedures or

systems that enable people to use resources productively The managers role is to secure and

retain resources and competences so that the organisation adds value– it is producing an

output that is more valuable than the resources it has used

Tangible resourcesare the physical assets of an organisation such as plant, people and finance.

Intangible resourcesare non-physical assets such

as information, reputation and knowledge.

Competencesare the skills and abilities by which resources are deployed effectively – systems, procedures and ways of working.

Valueis added to resources when they are transformed into goods

or services that are worth more than their original cost plus the cost of transformation.

Well-managed organisations create value in many ways If you buy a ticket fromRyanair, you can easily measure the tangible value of a cheap flight In other purchases thevalue is intangible, as people judge a product by its appearance, what it feels or smells like,how trendy it is or whether it fits their image Others value good service, or a clear set ofinstructions Good managers understand what customers value and build an organisation

Mr Parkin has removed poor managers, walks the shop floor twice a day to check on progress, and engages with the workforce.

It’s been essential to tell people the truth about the business, whether it’s good or bad, and giving them the enthusiasm they require to make them want to succeed I also ask [my ‘mentors’ – people I have known in previous jobs] about key strategic decisions, people issues, market penetration, capital spending and general business solutions.

Source: From an article by Peter Marsh and Andrew Bounds, Financial Times, 27 May 2009.

Management in practice Creating value at DavyMarkham www.davymarkham.com

Commercial organisations of all kinds (business start-ups, small and medium-sized prises (SMEs), online firms and international enterprises) aim to add value and create wealth

enter-So do voluntary and not-for-profit organisations – by educating people, counselling thetroubled or caring for the sick There are about 190,000 charities in England and Wales, withannual incoming resources of over £50 billion (equal to about 3 per cent of gross domesticproduct), and employing over 660,000 staff (Charities Commission Annual Report for2008–9, at www.charitycommission.gov.uk) Managing a large charity is at least as demand-ing a job as managing a commercial business, facing similar challenges of adding value tolimited resources Donors and recipients expect them to manage resources well so that theyadd value to them

Theatres, orchestras, museums and art galleries create value by offering inspiration, newperspectives or unexpected insights Other organisations add value by serving particularinterests – such as Unison, a trade union that represents workers in the UK public sector, orthe Law Society, which defends the interests of lawyers Firms in most industries create tradeorganisations to protect their interests by lobbying or public relations work

While organisations aim to add value, many do not do so If people work inefficiently theywill use more resources than customers will pay for They may create pollution and waste, and

so destroy wealth Motorway builders create value for drivers, residents of by-passed villages,and shareholders – but destroy value for some people if the route damages an ancient wood-land rich in history and wildlife The idea of creating value is subjective and relative

Managers face some issues that are unique to the setting in which they operate (charitiesneed to maintain the support of donors) and others which arise in most organisations (busi-ness planning or ensuring quality) Table 1.1 illustrates some of these diverse settings, andtheir (relatively) unique management challenges – which are in addition to challenges thatare common to all

MANAGING TO ADD VALUE TO RESOURCES

Table 1.1 Where people manage

Setting – industry or type Examples in this book ‘Unique’ challenges

days – Part 1 case

Securing funding to launch and enough sales of an unknown product

to sustain cash-flow Building credibility

Small and medium-sized

enterprises (SMEs)

innovate and enter new markets

in Chapter 11

Managing highly-qualified staff delivering customised, innovative services

Voluntary, not-for-profit

organisations and charities

encourages visitors to return, raising funds for educational work,

fulfilling mission

commercial interests

Apple – Chapter 14 case

Maintaining constant innovation

in rapidly changing market

Zara – Chapter 19 case

Managing diverse activities across many cultures; balancing central control and local initiative

Note: MIP ⫽ Management in Practice

Choose ONE of the settings in Table 1.1 which interests you Gather information about

an organisation of that type (using, for example, case studies in this book or someone

you know who works in that setting) so you can:

faces.

set-ting, and summarise similarities or differences in the management challenges.

Activity 1.2 Focus on management settings

Whatever its nature, the value an organisation creates depends on how well those who

work there develops its capabilities

activity and consciously

try to shape its progress

and outcome.

Meanings of management

1.3

Management as a universal human activity

As individuals we run our lives and careers: in this respect we are managing Family membersmanage children, elderly dependants and households Management is both a universal human activityand a distinct occupation In the first sense, people manage an infinite range

of activities:

When human beings ‘manage’ their work, they take responsibility for its purpose, progress and outcome by exercising the quintessentially human capacity to stand back from experience and to regard it prospectively, in terms of what will happen; reflectively, in terms of what is happening; and retrospectively, in terms of what has happened Thus management is an expression of human agency, the capacity actively to shape and direct the world, rather than simply react to it (Hales, 2001, p 2)

Rosemary Stewart (1967) expressed this idea when she described a manageras someonewho gets things done with the aid of people and other resources, which defines management

as the activity of getting things done with the aid of people and other resources So described,management is a universal human activity – domestic, social and political – as well as informally established organisations

In pre-industrial societies people typically work alone or in family units, controlling theirtime and resources They decide what to make, how to make it and where to sell it, combiningwork and management to create value Self-employed craftworkers, professionals in smallpractices, and those in a one-person business do this every day We all do it in household tasks

or voluntary activities in which we do the work (planting trees or selling tickets for a prizedraw) and the management activities (planning the winter programme)

A manageris someone

who gets things done

with the aid of people

and other resources.

Managementis the

activity of getting things

done with the aid of

people and other

resources.

Choose a domestic, community or business activity you have undertaken.

resources’?

Activity 1.3 Think about the definition

Management as a distinct role

Human action can also separate the ‘management’ element of a task from the ‘work’ element,thus creating ‘managers’ who are in some degree apart from those doing the work

Management as a distinct roleemerges when external parties, such as a private owner ofcapital, or the state, gain control of a work process that a person used to complete themselves.These parties may then dictate what to make, how to make it and where to sell it Workers be-come employees selling their labour, not the results of their labour During industrialisation

in Western economies, factory owners took control of the physical and financial means ofproduction They also tried to control the time, behaviour and skills of those who were nowemployees rather than autonomous workers

The same evolution occurs when someone starts an enterprise, initially performing the

technical aspects of the work itself – writing software, designing clothes – and also more conceptual tasks such as planning which markets to serve or deciding how to raise money.

Management as a

distinct roledevelops

when activities

previously embedded in

the work itself become

the responsibility not of

the employee but of

owners or their agents.

SPECIALISATION BETWEEN AREAS OF MANAGEMENT

If the business grows and the entrepreneur engages staff, he or she will need to spend time on

interpersonal tasks such as training and supervising their work The founder progressively

takes on more management roles – a rolebeing the expectations that others have of someone

occupying a position It expresses the specific responsibilities and requirements of the job,

and what someone holding it should (or should not) do

This separation of management and non-management work is not inevitable or

perma-nent People deliberately separate the roles, and they can also bring them together As Henri

Fayol (1949) (of whom you will read more in Chapter 2) observed:

Management is neither an exclusive privilege nor a particular responsibility of the head

or senior members of a business; it is an activity spread, like all other activities, between

head and members of the body corporate (p 6)

A roleis the sum of the expectations that other people have of a person occupying a position.

Key ideas Tony Watson on separating roles

All humans are managers in some way But some of them also take on the formal occupational work of being managers They take on a role of shaping work organisations Managers’ work involves a double task: managing others and managing themselves But the very notion of ‘managers’ being separate people from the ‘managed’, at the heart of traditional management thinking, undermines a capacity to handle this Managers are pressured to be technical experts, devising rational and emotionally neutral systems and corporate structures to ‘solve problems’, ‘make decisions’, ‘run the business’ These ‘scientific’ and rational–analytic practices give reassurance but can leave managers so distanced from the ‘managed’ that their capacity to control events is undermined This can mean that their own emotional and security needs are not handled, with the effect that they retreat into all kinds of defensive, backbiting and ritualistic behav- iour which further undermines their effectiveness.

Source: Watson (1994), pp 12–13.

Someone in charge of part of, say, a production department will usually be treated as a

manager and referred to as one The people who operate the machines will be called

some-thing else In a growing business such as Ryanair, the boundary between ‘managers’ and

‘non-managers’ is likely to be very fluid, with all staff being ready to perform a range of tasks,

irrespective of their title Hales’ (2006) research shows how first-line managers now hold some

responsibilities traditionally associated with middle managers They are still responsible for

supervising subordinates, but often also have to deal with costs and customer satisfaction –

previously a middle manager’s job

Specialisation between areas of management

1.4

As an organisation grows, senior managers usually create separate functions and a hierarchy, so

that management itself becomes divided (there are exceptions such as W.L Gore Associates –

see Chapter 17 – but these are still a small minority)

Functional specialisation

General managerstypically head a complete unit of the organisation, such as a division or

subsidiary, within which there will be several functions The general manager is responsible

for the unit’s performance, and relies on the managers in charge of each function A small

General managersare responsible for the performance of a distinct