chap12 introduction evolution of mgt

Learning Objectiveso After studying the chapter, you should be able to: n Describe what management is, why management is important, what managers do, and how managers utilize organizatio

FUNDAMENTALS OF MANAGEMENT

BY: LAI VAN TAI

Chapter

INTRODUCTION

Learning Objectives

o After studying the chapter, you should be able to:

n Describe what management is, why management is

important, what managers do, and how managers utilize organizational resources efficiently and effectively to

achieve organizational goals

n Distinguish among planning, organizing, leading, and

controlling (the four managerial functions), and explain how managers’ ability to handle each one can affect organizational performance

Learning Objectives (cont’d)

n Differentiate among three levels of management, and

understand the responsibilities of managers at different levels in the organizational hierarchy

n Identify the roles managers perform, the skills they

need to execute those roles effectively and the way new information technology is affecting these roles and skills

n Discuss the principal challenges managers face in

today’s increasingly competitive global environment

n People Ø Skills Ø Knowledge Ø Information

n Raw materials Ø Machinery Ø Financial capital

Management Key Concepts

o Organization

n People working together and coordinating their actions

to achieve specific goals

o Goal

n A desired future condition that the organization seeks to

achieve

Organizational Performance

o Organizational Performance

n A measure of how efficiently and effectively managers

are using organizational resources to satisfy customers and achieve goals

o Efficiency

n A measure of how well or productively resources are

used to achieve a goal (Doing things right)

o Effectiveness

n A measure of the appropriateness of the goals an

organization is pursuing and the degree to which they are achieved (Doing the right things)

Efficiency and Effectiveness

Figure 1.1

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Four Functions of Management

Figure 1.2

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Managerial Functions

o Henri Fayol

n First outlined the four managerial functions in his book

General Industrial Management

n Managers at all levels in all organizations perform each of

the functions of Planning, Organizing, commanding, Coordinating, Controlling (NOW: planning, organizing, leading, and controlling)

o Identifying and selecting appropriate goals and

courses of action for an organization.

n The planning function determines how effective and

efficient the organization is and determines the strategy

of the organization

o Three Steps in the Planning Process:

o Structuring working relationships in a way that

allows organizational members to work together to achieve organizational goals.

o Organizational Structure

n A formal system of task and reporting relationships that

coordinates and motivates organizational members

n Creating organizational structure:

o Grouping employees into departments according to the tasks

performed.

o Laying out lines of authority and responsibility for organizational

members.

o Articulating a clear vision to follow, and energizing

and enabling organizational members so they

understand the part they play in attaining

organizational goals.

n Leadership involves using power, influence, vision,

persuasion, and communication skills

n The outcome of leadership is highly motivated and

committed organizational members

o Evaluating how well an organization is achieving its

goals and taking action to maintain or improve

performance.

n Monitoring individuals, departments, and the

organization to determine if desired performance standards have been reached

n Taking action to increase performance as required

n The outcome of control is the ability to measure

performance accurately and to regulate the organization for efficiency and effectiveness

Types of Managers

o Levels of Management

n First-line managers

o Responsible for day-to-day operations Supervise people

performing activities required to make the good or service

n Middle managers

o Supervise first-line managers Are responsible to find the best

way to use departmental resources to achieve goals.

n Top managers

o Responsible for the performance of all departments and have

cross-departmental responsibility.

o Establish organizational goals and monitor middle managers

o Form top management team along with the CEO and COO.

Levels of Management

Figure 1.3

TOP managers

MIDDLE managers

FIRST LINE managers

Non-managerial Employees

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Relative Amount of Time That Managers Spend on the Four Managerial Functions

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Roles of a Manager

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Decisional Roles

o Roles associated with methods managers use in

planning strategy and utilizing resources:

to initiate and to invest resources in

crisis

functions and divisions, setting the budgets of lower managers

managers, unions, customers, or shareholders

Informational Roles

o Roles associated with the tasks needed to obtain

and transmit information in the process of

managing the organization:

and external environment

attitudes and behavior of employees

the way people in and out of the organization respond to it

Interpersonal Roles

o Roles that managers assume to provide direction

and supervision to both employees and the

organization as a whole:

what it is seeking to achieve

employee performance

and groups both inside and outside the organization

Managerial Skills

o Conceptual Skills

n The ability to analyze and diagnose a situation and

distinguish between cause and effect

o Human Skills

n The ability to understand, alter, lead, and control the

behavior of other individuals and groups

o Technical Skills

n The specific knowledge and techniques required to

perform an organizational role

Skill Types Needed by Managerial Levels

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Challenges for Management

in a Global Environment

o Increasing Number of Global Organizations.

o Building a Competitive Advantage.

o Maintaining Ethical Standards.

o Managing a Diverse Workforce.

o Utilizing Information Technology and E-commerce.

Why Study Management?

o Proper management directly impacts improvements

in the well-being of a society.

o Studying management helps people to understand

what management is and prepares them accomplish managerial activities in their organizations.

o Studying management opens a path to a

well-paying job and a satisfying career.

- Concept definition

- Assumptions for behavioral reasonably

-Should have clear objectives

-All alternatives should be clearly determined

-Weight of criteria should be clearly state and fixed / showing favorable levels of decision makers

-Enough time and cost for collect data and info for decision making

-The final decision always being the best choice to achieve objectives

DECISION MAKING

DECISION MAKING - DECISION TYPES

o According to problems structure

n Structured problems à programmed decision

n Unstructured problems à not in program decision

o According to features/circumstances of problems

n Certainty

n Uncertainty

n Risk

DECISION MAKING PROCESS

DECISION UNDER UNCERTAIN CIRCUMSTANCES

(PAYS OFF MATRIX)

o Maximax (optimistic - Best among the best)

DECISION UNDER UNCERTAIN CIRCUMSTANCES

Alternativ es

o Maximin (pessimistic - Best among the Worst)

DECISION UNDER UNCERTAIN CIRCUMSTANCES

o Equal likely

DECISION UNDER UNCERTAIN CIRCUMSTANCES

Alternativ es

o Hurwicz (with α = 0.3)

Hi = α Max(Sj) + (1-α).Min(Sj)

DECISION UNDER UNCERTAIN CIRCUMSTANCES

Alternativ es

DECISION UNDER RISK CONDITIONS

o Using Decision tables

n EMV approach

n EVWPI (Expected value with perfect information) = Pj*Max(Sj)

n EVPI (Price of Info) = EVWPI – Max EMV = 810 – 434 = 376

Alternativ es

DECISION UNDER RISK CONDITIONS

o Using Decision tables

n EMV approach

o EVPI (Expected value of perfect information)

n Min EOL (Expected Opportunity of loss)

DECISION UNDER RISK CONDITIONS

o Using Decision tables

n EMV approach

o EVPI (Expected value of perfect information)

n Min EOL (Expected Opportunity of loss)

o Using Decision tree

n Assumptions

n 5 Steps for decision making

o Problem statement

o Draw the tree

o Add prob For each status node

o Estimate profit/ loss for each node

o Use EMV for calculation and choice

Decision Tree sample

Chapter

The Evolution of Management Thinking

Learning Objectives

o After studying the chapter, you should be able to:

n Describe how the need to increase organizational

efficiency and effectiveness has guided the evolution of management theory

n Explain the principle of job specialization and division of

labor, and tell why the study of person-task relationships

is central to the pursuit of increased efficiency

n Identify the principles of administration and organization

that underlie effective organizations

n Trace the change in theories about how managers should

behave to motivate and control employees

Learning Objectives (cont’d)

n Explain the contributions of management science to the

efficient use of organizational resources

n Explain why the study of the external environment and

its impact on an organization has become a central issue

in management thought

Management Theories

o Evolution of Modern Management

n Began in the industrial revolution in the late 19th century

as:

o Managers of organizations began seeking ways to better satisfy

customer needs.

o Large-scale mechanized manufacturing began to supplanting

small-scale craft production in the ways in which goods were produced.

o Social problems developed in the large groups of workers

employed under the factory system.

o Managers began to focus on increasing the efficiency of the

worker-task mix.

Job Specialization and the Division of Labor

o Adam Smith (18th century economist)

n Observed that firms manufactured pins in one of two

different ways:

o Craft-style—each worker did all steps

o Production—each worker specialized in one step.

n Realized that job specialization resulted in much higher

efficiency and productivity

o Breaking down the total job allowed for the division of labor in

which workers became very skilled at their specific tasks.

Evolution of Management Thoughts

o Classical approach (scientific, administrative

management)

o Behavioral approach (people focus)

o Quantitative approach

o Systems perspective

o Contingency approach (situational)

o Information technology & beyond

The Evolution of Management Theory

Figure 2.1

Source:

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F.W Taylor and Scientific Management

o Scientific Management

n The systematic study of the relationships between

people and tasks for the purpose of redesigning the work process for higher efficiency

o Defined by Frederick Taylor in the late 1800’s to replace

informal rule of thumb knowledge.

o Taylor sought to reduce the time a worker spent on each

task by optimizing the way the task was done.

Four Principles of Scientific Management

oPrinciples to increase efficiency:

1. Study the ways jobs are performed now and determine new ways to do them

o Gather detailed time and motion information.

o Try different methods to see which is best.

2. Codify the new methods into rules

o Teach to all workers the new method.

3. Select workers whose skills match the rules

4. Establish fair levels of performance and pay a premium for higher performance

o Workers should benefit from higher output

Problems with Scientific Management

o Managers frequently implemented only the

increased output side of Taylor’s plan.

n Workers did not share in the increased output

o Specialized jobs became very boring, dull.

n Workers ended up distrusting the Scientific Management

method

o Workers could purposely “under-perform.”

n Management responded with increased use of machines

and conveyors belts

Frank and Lillian Gilbreth

o Refined Taylor’s work and made many

improvements to the methodologies of time and motion studies.

n Time and motion studies

o Breaking up each job action into its components.

o Finding better ways to perform the action.

o Reorganizing each job action to be more efficient.

o Also studied worker-related fatigue problems

caused by lighting, heating, and the design of tools and machines.

Henry Gantt

o Scheduling chart à project management

o Bonus system from consequence of higher

productivity due to tasks specialization

The Evolution of Management Theory

Figure 2.1

Source:

LAI VAN TAI

Administrative Management Theory

n Developed the concept of bureaucracy as a formal system

of organization and administration designed to ensure

efficiency and effectiveness

Fayol’s Principles of Management

Weber’s Five Principles of Bureaucracy

o Authority is the power to hold people accountable

for their actions.

o Positions in the firm should be held based on

performance, not social contacts.

o Position duties are clearly identified so that people

know what is expected of them.

o Lines of authority should be clearly identified such

that workers know who reports to who.

o Rules, standard operating procedures (SOPs), and

norms guide the firm’s operations.

Behavioral Management Theory

o Behavioral Management

n The study of how managers should behave to motivate

employees and encourage them to perform at high levels and be committed to the achievement of organizational goals

n Focuses on the way a manager should personally manage

to motivate employees

Behavioral Management

o Mary Parker Follett

n An influential leader in early managerial theory

n Organization could be viewed from both individual & group

behavior (group ethnic rather than individual)

n Held a horizontal view of power and authority in

organizations

o Suggested workers help in analyzing their jobs for improvements

-the worker knows -the best way to improve -the job.

o If workers have relevant knowledge of the task, then they should

control the task.

The Hawthorne Studies

o Studies of how characteristics of the work setting

affected worker fatigue and performance at the

Hawthorne Works of the Western Electric Company from 1924-1932.

n Worker productivity was measured at various levels of

light illumination

n Researchers found that regardless of whether the light

levels were raised or lowered, worker productivity increased

The Hawthorne Studies

o Human Relations Implications

n Hawthorne effect—workers responded to the attention

they received and were more productive.

n Managers should be behaviorally trained to manage

subordinates to elicit their cooperation and increase

their productivity

members (both “rate busters” and “chiselers”)

o Group influence on individual behavior significantly

n Gave rise to the field of Organizational Behavior

o The study of the factors that have an impact on how individuals

and groups respond to and act in organizations.

Theory X and Theory Y

o Douglas McGregor proposed the two different sets

of assumptions about workers.

n Theory X assumes the average worker is lazy, dislikes

work and will do as little as possible

o Managers must closely supervise and control through reward

and punishment.

n Theory Y assumes workers are not lazy, want to do a

good job and the job itself will determine if the worker likes the work

o Managers should allow workers greater latitude, and create an

organization to stimulate the workers.

Theory X versus Theory Y

Figure 2.3

Source:

LAI VAN TAI