Complete Notes Principles of Management
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BBA102 Complete Notes - Principles of Management
Principles of Management (Macquarie University)
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Nowshin Hassan
B B A 1 0 2 :
P R I N C I P L E S
O F
M A N A G E M E N T
PART
ONE:
INTRODUCTION
CHAPTER 1: MANAGERS AND MANAGEMENT
Who are managers and where do they work?
Managers
work
in
organisations.
An
organisation
is
a
deliberate
arrangement
of
people
brought
together
to
accomplish
a
specific
purpose.
There
are
3
common
characteristics
of
organisations:
1. A
distinct
purpose
–
a
set
of
goals
2. People
working
together
–
to
achieve
organisational
goals
by
making
decisions
and
engaging
in
work
activities
3. A
deliberate
systematic
structure
–
defines
and
limits
the
behaviour
of
its
members
These
3
characteristics
determine
the
products
and
services
the
org.
provides
for
its
customers/clients.
Difference
between
non-‐managerial
employees
and
managers:
Ø Non-‐managerial
employees:
people
who
work
directly
on
a
job
or
task
and
have
no
responsibility
overseeing
the
work
of
others,
e.g.
sales
or
service
staff
Ø Managers:
individuals
in
an
org.
who
direct
the
activities
of
others
(giving
instructions,
training
employees
and
checking
their
performance)
Management
Levels:
TOP
MANAGERS:
Responsible
for
making
decisions
about
the
direction
of
the
org,
e.g.
CEO,
Vice-‐
President
MIDDLE
MANAGERS:
Manage
the
activities
of
other
managers
and
some
non-‐managerial
employees,
e.g.
district
manager
FIRST-‐LINE
MANAGERS:
Responsible
for
directing
nonmanagerial
employees,
e.g.
supervisor,
team
leader
What is management?
Management
is
the
process
of
getting
things
done
effectively
and
efficiently
with
and
through
other
people.
− Process:
a
set
of
ongoing
activities
required
to
achieve
particular
outcomes
− Effectiveness:
doing
the
tasks
that
help
the
org.
reach
its
goals
(concerned
with
‘ends’
–
attainment
of
goals)
− Efficiency:
getting
more
output
with
less
input
(concerned
with
‘means’
–
efficient
use
of
resources)
Good
Management
=
Attaining
goals
with
efficient
use
of
resources
(low
wastage)
What do managers do? – (Functions, Roles, Skills)
FUNCTIONS
–
Henri
Fayol
In
the
functions
approach
proposed
by
Henri
Fayol,
all
managers
perform
4
management
activities
in
order
to
achieve
the
organisation’s
stated
purpose:
1. Planning:
defining
goals,
establishing
strategy,
developing
subplans
to
coordinate
activities
2. Organising:
determining
what
needs
to
be
done,
how
it
will
be
done,
who
will
do
it
3. Leading:
directing
and
coordinating
work
activities
of
the
organisation’s
people
4. Controlling:
monitoring
activities
to
ensure
they
are
completed
as
planned
ROLES
–
Mintzberg’s
Managerial
Roles
• Interpersonal
roles
–
involve
people
and
other
duties
that
are
ceremonial
and
symbolic
in
nature
• Informational
roles
–
involve
collecting,
receiving
and
disseminating
info.
• Decisional
roles
–
entail
making
decisions
or
choices
SKILLS
–
Robert
Katz
1. Conceptual
Skills:
used
to
analyse
and
diagnose
complex
situations
(help
managers
make
good
decisions)
2. Interpersonal
Skills:
used
to
communicate,
motivate,
mentor
and
delegate
(with
other
people)
3. Technical
Skills:
job-‐specific
knowledge
and
techniques
needed
to
perform
work
tasks
4. Political
Skills:
used
to
build
a
power
base
and
establish
the
right
connections
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Nowshin Hassan
Is
the
manager’s
job
universal?
A
manager’s
job
varies
along
several
dimensions.
Factors
influencing
the
performance
of
a
manager
include:
Ø Level
in
the
organisation:
The
level
at
which
the
manager
operates
affects
the
degree
to
which
they
perform
diff.
tasks,
e.g.
top
level
managers
do
more
planning
than
supervisors
Ø Size
of
the
organisation:
Managers
in
small
and
large
firms
both
perform
the
same
work
activities
however
approach
them
each
differently,
e.g.
in
small
businesses,
managers
are
mostly
spokespersons
whereas
in
large
firms
they
are
resource
allocators
Ø Profit
vs.
Non-‐profit;
Profit-‐orientated
organisations
–
managers
focus
on
efficiency
in
minimising
costs
and
effectiveness
in
generating
revenue
to
maximise
profits
Non-‐profit
organisations
–
managers
focus
on
efficiency
in
minimising
costs
and
effectiveness
in
delivering
services
so
as
to
help
as
many
people
as
possible
Ø Management
concepts
and
national
borders:
Management
concepts
vary
across
certain
countries
and
must
be
modified
in
other
global
environments
Why formally study management?
§ Management
is
about
influencing
human
behaviour
in
order
to
achieve
organisational
goals
§ Formally
studying
management
can
provide
a
toolkit
of
perspectives
and
approaches
from
which
you
can
draw
to
manage
in
diff.
situations
What factors are reshaping and redefining management?
3
factors,
which
are
reshaping
and
redefining
management:
1. INCREASING
IMPORTANCE
OF
CUSTOMERS:
Business
success
depends
on
customer
satisfaction
–
source
of
revenue.
Customers
have
become
increasingly
sceptical,
cautious
and
frugal.
2. SUSTAINABILITY:
‘Meeting
the
needs
of
the
people
today
without
comprising
the
needs
of
those
in
the
future’-‐
managing
the
impacts
of
organisational
products
and
activities.
Why
manage
for
sustainability?
–
Global
climate
change
and
depletion
of
natural
resources,
GFC
and
its
impacts
on
society,
organisations
must
demonstrate
their
sense
of
responsibility
to
stakeholders
3. ETHICS
AND
SOCIAL
RESPONSIBILITY:
Important
to
the
manager’s
job
because
society
expects
them
to
behave
in
ethical
and
socially
responsible
ways
(acting
unethically
can
bring
a
bad
reputation
to
the
org.)
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Hassan
CHAPTER 2: THE MANAGERIAL ENVIRONMENT
How do changing environments affect organisations?
Systems
theory
of
organisations
–
sees
an
organisation
as
a
set
of
interrelated
parts
that
function
together
to
achieve
a
common
purpose
A
manager
must
efficiently
and
effectively
manage
all
parts
of
the
system
(à)
to
achieve
established
goals.
ORGANISATIONS
AS
SYSTEMS
Organisations
function
as
open
systems:
• They
are
influenced
by
and
interact
with
their
environment
• Changing
environments
influence
managers
and
organisations
by
creating
uncertainty
Environmental
Uncertainty
–
how
well
managers
can
understand
or
predict
changes
and
trends
in
the
environments
affecting
their
organisations
What determines environmental uncertainty?
Three
aspects
of
the
environment
determine
how
uncertain
an
environment
is:
è DYNAMISM:
the
rate
and
predictability
of
change
in
the
organisation’s
external
environment
− Dynamic
environment
à
changes
occur
quickly
− Stable
environment
à
changes
occur
slowly
è ENVIRONMENTAL
COMPLEXITY:
determined
by
the
number
of
external
factors
affecting
the
organisation
− Simple
environments
à
organisations
affected
by
few
factors
− Complex
environments
à
organisations
influenced
by
many
factors
è RESOURCE
AVAILABILITY:
how
abundant
are
critical
resources
in
an
organisation’s
external
environment
− Abundant
resources
à
plenty
of
resources
− Scarce
resources
à
few
resources
Simple
&
Stable
Environment
+
Abundance
Complex
&
Dynamic
Environment
+
Scarce
of
Resources
+
Resources
+
Slow
Change
Quick
Change
=
Low
Environmental
Uncertainty
=
High
Environmental
Uncertainty
Example:
Taco
bell
operated
in
a
relatively
stable
environment
until
2013
in
which
a
food
testing
identified
horsemeat
in
the
beef
patty
of
one
of
its
items
à
sudden
need
for
a
quick
response
Environmental
uncertainty
determines:
⇒ Level
of
attention
of
managers
towards
monitoring
conditions
and
spotting
emerging
trends
− High
uncertainty
requires
more
attention
to
external
conditions
+
spotting
new
emerging
trends
⇒ Level
of
responsiveness
to
new
information
and
new
circumstances
− High
uncertainty
requires
managers
to
respond
quickly
What is the external environment of an organisation?
External
organisational
environment:
refers
to
the
forces
and
conditions
outside
the
organisation’s
boundaries
that
can
potentially
affect
it
Two
components
à
General
Environment
&
Specific
Environment
What is the sociocultural dimension of the general environment?
Sociocultural dimensions include:
• Cultural characteristics: -‐ customs, values, tastes, attitudes and behaviours in society
− These characteristics determine what society is likely to value, e.g. Increasing concern for global warming à
increased demand for products and services that reduce greenhouse gas emissions
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•Demographic
conditions:
physical
characteristics
of
the
population
such
as
gender,
average
age,
level
of
education,
geographic
dispersal,
income
and
household
composition
− Demographic
characteristics
affect:
markets
for
organisational
products
and
services
and
organisational
staffing,
e.g.
decline
in
Australia’s
fertility
rate
à
shrinks
market
for
baby
products
Workplace
diversity:
ways
in
which
people
are
similar
or
different
to
each
other
§ Forms
of
diversity
in
the
workplace:
gender,
race/ethnicity,
disability,
sexual
orientation
§ Paradox
of
diversity
à
organisations
hire
diverse
individuals
because
of
their
unique
strengths,
yet
their
diverse
behaviours
and
strengths
are
likely
to
diminish
in
strong
cultures
as
people
attempt
to
fit
in
What is the technological dimension of the general environment?
The
technological
dimension
of
the
general
environment
comprises
knowledge,
tools
and
methods
that
are
used
to
convert
resources
(e.g.
raw
materials,
information
and
labour)
into
products
and
services.
⇒ Technological
advancements
relate
to
changes
in
product
or
process
technologies
⇒ Process
technological
changes
alter
how
organisations
operate,
e.g.
bar-‐codes
changes
sales
processes
and
inventory
management
What is the economic dimension of the general environment?
The
general
economic
health
of
the
country
in
which
the
organisation
operates
(def.):
• Type
of
economic
system
under
which
a
country
operates
–
capitalist
(businesses
own
means
of
production)
or
socialist
(govt
owns
means
of
production)
à
most
countries
combine
• Current
economic
conditions
–
current
interest
rates,
levels
of
inflation,
levels
of
unemployment
− These
elements
influence
costs,
prices
and
demand
for
products
and
services
• Economic
cycles
–
speed
and
strength
of
growth
and
decline
cycles,
e.g.
impact
of
GFC
on
global
env.
What is the political/legal dimension of the general environment?
The
legal
and
governmental
systems
within
which
an
organisation
operates
(def.):
§ General
conditions
and
stability
of
the
political
system
–
well-‐established,
stable/unstable
§ Government
regulation
of
organisational
behaviour
–
passing
legislation
that
dictates
how
org.
must
handle
issues
such
as
OHS,
environmental
protection,
competition,
consumer
protection
and
product
safety,
import
and
export
activities
and
employment
practices
(forces
org.
to
behave
in
ways
that
reflect
societal
values)
§ The
impact
of
government
spending
on
the
economic
environment
–
influences
the
opportunities
and
threats
faced
by
the
org.,
e.g.
govt
increases
pension
à
retailers
benefit
from
pensioners
having
higher
discretionary
income
What is the global dimension of the general environment?
The
global
dimension
of
the
general
environment
comprises
of
factors
that
operate
across
national
boundaries:
⇒ Events
or
changes
that
originate
in
foreign
countries
–
GFC
⇒ Forces
and
developments
having
a
global
impact
–
transport
and
communications
technology,
global
warming,
the
internet
International
forces
may
affect
organisations
directly
or
indirectly
by
affecting
sociocultural,
technological
and
economic
trends.
Advances
in
transportation
and
communications
technology
have
eliminated
geographic
boundaries
to
organisational
activity
–
any
org.
can
become
a
global
player.
WHAT
IS
A
GLOBAL
ORGANISATION?
An
organisation
is
considered
global
if
it:
o Exchanges
goods
and
services
with
consumers
in
other
countries
o Uses
managerial
and
technical
employee
talent
from
other
countries
o Uses
financial
sources
and
resources
outside
their
home
country
(financial
globalisation)
E.g.
Avon,
McDonalds,
etc.
Global
operation
means
that
organisations
have
to
adapt
to
local
conditions
in
each
country
and
to
worldwide
influences
–
managers
must
foster
an
understanding
of
cultures,
systems
and
techniques
diff
from
their
own.
One
consequence
of
cultural
diff
for
global
org.
is
that
managers
need
to
address
inconsistencies
b/w
diff
cultures.
This
is
handled
in
3
ways:
-‐
doing
what
fits
the
local
env
in
each
country,
using
one
approach
in
each
country
even
if
diff
to
local
practices
and
using
overarching
principles
to
guide
adaptations
to
local
norms.
What is the specific environment of an organisation?
The
organisation’s
stakeholders
–
anyone
who
affects
or
is
affected
by
the
achievement
of
the
organisation’s
objectives
–
are
the
organisation’s
specific
environment.
Including:
è Organisations,
groups
and
individuals
with
whom
it
interacts
as
it
conducts
its
business
è Factors
in
the
specific
environment
have
a
direct
and
immediate
effect
on
the
organisation’s
operations
and
performance
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Effectively
managing
stakeholder
relationships
à
lead
to
desirable
organisational
outcomes
–
more
successful
innovations,
improved
predictability
of
env
changes
and
greater
org.
flexibility
to
reduce
the
impact
of
change.
How do customers affect organisations?
Customers:
people
and
organisations
that
acquire
goods
and
services
from
the
org.
usually
in
exchange
for
money.
§ What
the
customer
want
and
need
influences:
− Product
type
− Product
quality
− Product
prices
A
customer
that
buys
a
lot
of
an
org’s
output
can
demand
lower
prices
à
more
power.
How do competitors affect organisations?
Competitors:
individuals
or
organisations
competing
for
resources
with
the
organisation
§ Commonly
competitors
mean
other
organisations
in
the
same
industry
that
offer
products
which
customers
see
as
acceptable
substitutes
§ Substitutes
are
alternative
products
or
services
which
customers
see
as
providing
the
same
value,
e.g.
Sweet
N
Low
is
a
substitute
for
sugar
Competitors
influence:
− Products
and
prices
the
organisation
can
offer
− Access
to
distribution
channels
− Costs
and
availability
of
supplies
− Profitability
How do suppliers affect organisations?
Suppliers:
companies
and
individuals
who
provide
the
organisations
with
input
to
use
to
conduct
operations
§ Inputs
–
material
or
physical
resources,
human
resources,
financial
resources,
informational
resources
and
business
services
§ Suppliers
determine
the
quality,
availability
and
cost
of
inputs
§ Suppliers
influence
an
organisation’s
product
and
service
quality,
production
capacity,
competitiveness
and
profitability
How
strong
is
the
supplier’s
influence?
⇒ Depends
on
the
supplier’s
dependence
–
the
extent
to
which
an
organisation
relies
on
a
particular
supplier
− Input
importance
–
high
importance
=
high
dependence
− Supplier’s
availability
–
few
suppliers
=
high
dependence
⇒ High
supplies
dependence
=
suppliers
can
essentially
set
their
own
business
terms
⇒ Suppliers
can
also
be
integrated
into
the
organisations
business
and
information
systems
How do employees, unions and labour markets affect organisations?
Employees:
individuals
who
labour
on
behalf
of
the
organisation
in
exchange
for
payment
§ Employees
provide
knowledge,
skills,
effort
and
creativity
that
support
organisational
operations
− Thus,
they
are
critical
for
organisational
performance
§ The
labour
market
or
labour
supply
–
the
pool
of
people
employable
by
the
organisation
− The
balance
b/w
supply
and
demand
for
labour
affects
organisational
performance
by
influencing
costs
and
organisational
capacity
Unions
are
employee
associations.
They:
§ Negotiate
pay
and
conditions
with
employers
on
behalf
of
their
members
§ May
affect
organisations
by
taking
industrial
action
on
behalf
of
members
(arranging
work
stoppages,
calling
strikers,
taking
employers
to
court)
How do strategic partners affect organisations?
Strategic
partners:
organisations
that
work
together
for
mutual
benefit,
e.g.
competitors,
suppliers,
customers.
They
provide:
§ Opportunities:
− Combine
resources,
share
ideas,
learn
from
each
other,
spread
risks
§ Threats:
− Strategic
partners
can
use
knowledge
gained
in
collaboration
to
become
competitive
rivals
How do regulators affect organisations?
Regulators:
create
and
enforce
regulations
to
protect
consumers,
workers
and
society.
There
are
2
types:
§ Government
agencies
–
provide
services
and
enforce
compliance
with
laws
and
regulations
at
local,
state
and
federal
levels
§ Regulatory
commissions
–
ACCC,
RBA,
ASIC,
ACMA,
Australian
Human
Rights
Commission,
DEEWR,
DSEWPC
§ Regulators
affect
organisations
by
enforcing
‘the
rules
of
the
game’
How do interest groups affect organisations?
Interest
Groups:
organised
to
serve
the
interests
of
their
members
by
influencing
business
activities
in
specific
areas
(Environmental
impact,
ethical
conduct)
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Nowshin
Hassan
§ Interest
groups
are
generally
organised:
− Around
a
geographic
locality
− A
specific
social
issue
− An
industry
or
profession
§ They
attempt
to
influence
organisational
behaviour
by:
− Negotiating
directly
with
organisations
− Lobbying
governments
and
local
residents
to
exert
pressure
What is an organisation’s culture and how does it help organisations deal with their
environments?
Organisational
culture:
the
shared
values,
principles,
traditions
and
ways
of
doing
things
that
influence
how
organisational
members
act
[manager’s
decision
is
influenced
by
their
org.
culture]
An
organisation’s
culture
defines
how
it
interacts
with
its
environment
as
it
deals
with
2
key
issues:
⇒ Handling
environmental
opportunities
and
threats
so
it
can
survive
and
prosper
⇒ Integrating
and
managing
its
people,
structure
and
activities
to
keep
the
organisation
together
An
organisation’s
culture
acts
as
a
form
of
control
sys.
to
promote
behaviours
that
the
org.
wants
and
doesn’t
want.
Cultures
are
assessed
using
seven
dimensions:
1. Attention
to
detail
–
degree
to
which
employees
are
expected
to
exhibit
attention
to
detail
2. Outcome
orientation
–
degree
to
which
managers
focus
on
outcomes
rather
than
how
they
are
achieved
3. People
orientation
–
degree
to
which
management
decisions
consider
the
effect
on
people
in
organisation
4. Team
orientation
–
degree
to
which
work
is
organised
around
teams
rather
than
individuals
5. Aggressiveness
–
degree
to
which
employees
are
aggressive
and
competitive
rather
than
cooperative
6. Stability
–
degree
to
which
organisational
decisions/actions
emphasise
maintaining
the
status
quo
7. Innovation
and
risk
taking
–
degree
to
which
employees
are
encouraged
to
be
innovative
and
take
risks
An
organisation’s
culture
comes
from
its
founders
but
is
learned
by
employees
through
stories,
rituals,
material
symbols
and
language.
Strong
cultures
–
those
in
which
key
values
are
deeply
held
and
widely
shared
–
have
more
of
an
impact
on
how
organisations
are
structured
and
the
way
work
is
done.
Managers
can
focus
organisational
cultures
on
particular
outcomes
through:
è Employee
selection
and
training
è Organisational
and
authority
structures
è Leadership
è Evaluation
systems
è Rewards
…used
to
manage
the
performance
of
organisational
members.
E THICS,
SUSTAINABILITY
AND
CORPORATE
SOCIAL
RESPONSIBILITY
Social
responsibility
and
managerial
ethics
are
two
issues
that
managers
are
increasingly
being
asked
to
deal
with
as
they
carry
out
their
managerial
responsibilities.
C ORPORATE
SOCIAL
RESPONSIBILITY
What is social responsibility?
Corporate
Social
Responsibility:
-‐
an
organisation’s
intentions
to
go
beyond
its
legal
and
economic
obligations
to
act
in
ways
good
for
the
society
In
all
organisations
managers
are
faced
with
the
difficult
task
of
determining
how
their
organisation
fits
with
the
‘environment’.
Virtually
all
societies
have
developed
rules
and
regulations
about
how
business
should
be
transacted
and
how
organisations
should
be
managed.
Managers
regularly
face
decisions
that
have
a
dimension
of
social
responsibility:
§ Philanthropy
§ Product
quality
§ Pricing
§ Doing
business
in
countries
with
oppressive
§ Employee
relations
governments
§ Resource
conservation
Two Opposing Views
è CLASSICAL
(CONVENTIONAL)
VIEW
Management’s
responsibility
is
to
maximise
profits/value
to
shareholders
(Milton
Friedman’s
approach)
⇒ Short-‐term
focus
à
profit
motive
− Focus
is
on
owners
and
management
− ‘Defeat
the
competitor’
approach
− Meeting
social
obligations
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Hassan
Examples
of
classicists:
James
Hardie,
Manville
Corporation,
etc.
è SOCIOECONOMIC
(SUSTAINABLE)
VIEW
Management’s
responsibility
goes
well
beyond
the
making
of
profits.
It
also
includes
protecting
and
improving
society’s
welfare
⇒ Based
on
belief
that
corporations
not
only
have
a
responsibility
to
its
shareholders
but
also
have
a
responsibility
to
the
larger
society
(allows
their
formations
through
various
laws
and
supports
them
by
purchasing
their
products
or
services)
⇒ Meeting
social
obligation,
being
socially
responsive
and
socially
responsible
More
and
more
organisations
around
the
world
are
embracing
the
socioeconomic
view
–
society
expects
and
even
encourages
businesses
to
become
involved
in
social,
political
and
legal
issues.
Comparing the two views
Stage
1:
Managers
pursue
shareholder’s
interests
while
complying
with
all
laws
and
regulations
Stage
2:
Managers
expand
their
responsibility
to
employees,
e.g.
improve
working
conditions
Stage
3:
Managers
expand
their
responsibilities
to
other
stakeholders
–
customers
and
suppliers
Stage
4:
Managers
feel
a
responsibility
to
society
as
a
whole,
e.g.
promote
social
justice
Arguments for and against social responsibility
FOR
AGAINST
§ Public
expectations
§ Violation
of
profit
maximisation
Public
opinion
now
supports
businesses
pursuing
economic
and
social
Business
is
being
socially
responsible
only
when
it
pursues
goals
economic
interests
§ Long-‐run
profits
§ Dilution
of
purpose
Socially
responsible
companies
tend
to
have
more
secure
long-‐run
Pursuing
social
goals
dilutes
business’
primary
purpose
–
profits
economic
productivity
§ Ethical
obligations
§ Costs
Businesses
should
be
socially
responsible
because
responsive
actions
Many
socially
responsible
actions
do
not
cover
their
costs
are
the
right
thing
to
do
and
someone
must
pay
for
those
costs
§ Public
image
§ Too
much
power
Businesses
can
create
a
favourable
public
image
by
pursuing
social
Businesses
have
a
lot
of
power
already
and
if
they
pursue
goals
social
goals
they
will
have
even
more
§ Better
environment
§ Lack
of
skills
Business
involvement
can
help
solve
difficult
social
problems
Business
leaders
lack
the
necessary
skills
to
address
social
§ Discouragement
of
further
governmental
regulation
issues
By
becoming
socially
responsible,
businesses
can
expect
less
§ Lack
of
accountability
governmental
regulation
There
are
no
direct
lines
of
accountability
for
social
actions
§ Balance
of
responsibility
and
power
Businesses
have
a
lot
of
power
and
an
equally
large
amount
of
responsibility
is
needed
to
balance
against
that
power
§ Stockholders
interests
Social
responsibility
will
improve
a
business’
stock
price
in
the
long
run
§ Possession
of
resources
Businesses
have
the
resources
to
support
public
and
charitable
projects
that
need
assistance
§ Superiority
of
prevention
over
cures
Businesses
should
address
social
problems
before
they
become
serious
and
costly
to
correct
From obligations, to responsiveness to responsibility
There
are
three
main
stances
an
organisation
can
take
about
its
social
responsibilities:
1. Meeting
social
obligations
–doing
what
the
law
requires
businesses
to
do,
e.g.
minimise
waste
emissions,
meet
national
pollution
standards,
etc.
2. Being
socially
responsive
–
engaging
in
social
actions
because
there
is
demand
for
them
and
even
social
pressure
to
provide
them
(guided
by
social
norms
and
values)
3. Being
socially
responsible
–
actively
considering
the
ways
in
which
society
is
affected
by
their
organisation
and
its
operations
Social
responsibility
vs.
Social
Responsiveness
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Hassan
Social responsibility and Economic performance
Positive
relationship
between
social
involvement
and
economic
performance
of
firms
Difficulties:
• Public
perceptions
(subjective)
• Economic
performance
(more
objective,
but
short
term)
• Social
screening
(long
term)
General
conclusion
–
a
firm’s
socially
responsible
actions
do
not
harm
its
long-‐term
performance.
E COLOGICALLY
SUSTAINABLE
M ANAGEMENT
Ecologically
Sustainable
Management:
using,
conserving
and
enhancing
the
community’s
resources
so
that
ecological
processes,
on
which
life
depends
are
maintained
and
the
total
quality
of
life,
now
and
in
the
future
can
be
increased
Sustainable development now a core issue for managers
For
organisations,
it
means
making
balances
and
equitable
decisions
so
that:
• Financial/economic
outcomes
• Environmental
outcomes
• Social
outcomes
…are
achieved
in
both
short
and
longer
terms.
This
is
the
‘triple
bottom
line’
of
organisations.
Global
environmental
problems
(as
a
result
of
industrial
activities):
− Global
warming
− Toxic
wastes
− Pollution
(air,
water,
soil)
− Natural
resource
depletion
− Industrial
accidents
How organisations adopt a more ecologically sustainable approach
Legal
Approach:
doing
what
is
required
legally
(complying
with
env.
laws)
Market
Approach:
respond
to
the
environmental
preferences
of
its
customers
Stakeholder
Approach:
meeting
the
env.
demands
of
multiple
stakeholders
(employees,
suppliers
or
the
community)
Activist
Approach:
looks
for
ways
to
respect
and
preserve
the
earth
and
its
natural
resources,
e.g.
Ecover
M ANAGERIAL
E THICS
Ethics
helps
us
decide
what
is
‘right’
or
‘wrong’
in
a
particular
social
context
according
to
a
specific
moral
code
§ Absolute
rights
and
wrongs
(Absolutists)
§ Ethical
positions
depend
on
the
circumstances,
the
culture,
the
consequences
of
the
actions
and
so
on
(Relativists)
Ethics
operates
as
rules
or
principles
that
guide
an
individual’s
conduct.
How can managers identify the ethical thing to do?
Managers
can
work
out
which
behaviour
would
be
ethical
by
applying
ethical
principles
in
their
decision-‐making.
The
three
main
views
of
ethical
behaviour
include:
Ø Utilitarian
view:
behaviour
should
be
based
on
outcomes/sequences
to
provide
the
greatest
good
for
the
greatest
number
Ø Rights
view:
behaviour
should
respect/protect
people’s
individual
liberties
and
privileges,
e.g.
rights
to
privacy,
free
speech
and
due
process
Ø Justice
view:
-‐
behaviour
should
fulfil
principles
of:
⇒ Procedural
justice
à
decisions
consented
by
those
affected
and
administered
impartially
⇒ Distributive
justice
à
rewards/punishments
are
distributed
equitably
and
based
on
performance
⇒ Compensatory
justice
à
if
distributive
or
procedural
justice
is
compromised,
those
adversely
affected
by
the
decision
should
be
compensated
Factors that affect employee ethics
Whether
an
individual
acts
ethically
or
unethically
when
faced
with
an
ethical
dilemma
is
the
result
of
a
complex
interaction
b/w
the
individual’s
stages
of
moral
development
and
several
moderating
variables,
including
individual
characteristics,
structural
variables,
the
organisational
culture
and
issue
intensity.
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Stages of Moral Development
⇒ Pre-‐conventional:
influenced
exclusively
by
personal
interest
⇒ Conventional:
influenced
by
the
expectations
of
others
⇒ Principled:
influences
by
personal
ethical
principles
of
what
is
right
At
each
successive
stage,
an
individual’s
moral
judgement
becomes
less
and
less
dependent
on
outside
influences.
− Higher
Stages
=
More
ethical
person
− An
individual’s
moral
development
can
stop
at
any
stage
à
most
adults
are
at
stage
4
Individual Characteristics
Values:
basic
convictions
about
what
is
right
and
wrong
Personal
Values
Ø Personality
influences:
o Ego
strength
à
personality
measure
of
the
strength
of
a
person’s
convictions
(beliefs)
–
people
with
high
ego
strengths
are
more
likely
to
do
what
they
think
is
right
o Locus
of
control
à
Degree
to
which
people
believe
they
control
their
own
fate
− Internal
locus
of
control
à
believe
they
control
their
own
destinies
–
more
likely
to
take
personal
responsibility
− External
locus
of
control
à
believe
what
happens
to
them
is
by
luck–
less
likely
to
take
personal
responsibility
Structural Variables
An
organisation’s
structural
design
influences
whether
employees
behave
ethically.
Structural
designs
that
minimise
ambiguity
and
uncertainty
through
formal
rules
and
regulations
(e.g.
job
descriptions,
codes
of
ethics)
continually
reminding
employees
what
is
ethical
are
more
likely
to
encourage
ethical
behaviour.
Other
organisational
mechanisms
that
influence
ethics
include
the
use
of
goals,
performance
appraisal
systems
and
reward
allocation
procedures.
NOTE:
Use
of
goals
can
sometimes
promote
unethical
behaviour
Organisational Culture
Culture
influences
ethical
behaviour:
⇒ An
organisation
that
is
high
risk
tolerance,
control
and
conflict
tolerance
à
more
likely
to
influence
ethical
behaviour
–
employees
encourages
to
be
aggressive
and
innovative
⇒ Awareness
of
ethical
issues
can
challenge
employees
Values
Based
Management
The
organisation’s
values
guide
employees
in
the
way
they
do
their
jobs.
Managers
are
guided
by
the
shared
values
in
place.
Four
purposes:
1. Guide
decision
making
2. Shape
employee
behaviour
3. Influence
marketing
efforts
4. Build
team
spirit
Research
shows
the
single
most
important
influence
on
an
individual’s
decision
to
act
ethically
or
unethically
is
the
behaviour
of
managers.
Strong
organisational
culture
à
More
influence
on
employees
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Hassan
Issue Intensity
§ Concentration
of
effect:
How
many
people
are
affected?
E.g.
HIH,
Fanny
Mae
§ Consensus
of
evil:
Belief
that
this
is
good
or
bad,
e.g.
shoplifting
§ Probability
of
harm:
Will
it
affect
people?
E.g.
Trials
of
new
medical
treatments
§ Immediacy
of
consequences:
Immediate
or
much
later?
E.g.
James
Hardie,
asbestos
§ Proximity
to
victim:
Not
in
my
backyard
so
don’t
care,
e.g.
plastic
§ Magnitude
of
consequences:
Degree
of
harm,
e.g.
heart
bypass
vs.
hip
placement
When
an
ethical
issue
is
important,
employees
are
more
likely
to
behave
ethically.
This
is
suggested
by
6
factors,
larger
no.
of
people
harmed,
more
agreement
that
the
action
is
wrong,
greater
the
likelihood
that
the
action
will
cause
harm,
the
more
immediately
that
the
consequences
of
the
action
will
be
felt,
the
closer
the
person
feels
to
the
victim
and
the
more
concentrated
the
effect
of
the
action
on
the
victim,
the
greater
the
issue
intensity/importance.
Ethics in a global context
Ethical
standards
are
not
universal.
The
ethical
principles
adopted
in
particular
cultures
determine
what
is
considered
ethical
behaviour.
Managers
and
organisations
operating
in
multiple
countries
should
consider:
o How
views
of
ethical
behaviour
differ
and
how
to
deal
with
those
differences?
o Whose
view
of
‘ethical’
behaviour
should
determine
organisational
actions?
A
global
organisation
must
clarify
ethical
guidelines
so
that
employees
know
what
is
expected
of
them
which
working
in
a
foreign
location.
The
Global
Compact
CONTEMPORARY
ISSUES
CONTINUED…
How can organisations become more ethical?
What
discourages
unethical
behaviours?
⇒ Rules
⇒ Policies
⇒ Clear
job
descriptions
⇒ Strong
cultural
norms
⇒ Codes
of
ethics:
reduce
ambiguity
about
ethics
of
issues,
are
specific
–
guide
organisational
members
in
what
they
are
supposed
to
do,
loose
–
allow
for
freedom
of
judgement/exercise
of
discretion
How
can
managers
support
codes
of
ethics?
§ Emphasise
the
importance
of
codes
§ Regularly
re-‐affirm
their
content
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Hassan
§ Follow
the
rules
themselves
§ Publicly
reprimand
rule
breakers
ORGANISATION
AS
AN
ICEBERG
à
(on
the
right)
What is the focus of Organisational Behaviour?
Individual
behaviour:
⇒ Attitudes,
personality,
perception,
learning
and
motivation
Group
behaviour:
⇒ Norms,
roles,
team
building,
leadership
and
conflict
Organisational
aspects:
⇒ Structure,
culture,
human
resource
policies
and
practices
What are the goals Organisational Behaviour?
GOALS
DESCRIPTION
Employee
productivity
A
performance
measure
of
both
work
efficiency
and
effectiveness
Absenteeism
The
failure
to
show
up
for
work
without
reasonable
cause
Turnover
Voluntary
and
involuntary
permanent
withdrawal
from
an
organisation
Organisational
Discretionary
behaviour
that
is
not
part
of
an
employee’s
formal
job
requirements
but
citizenship
behaviour
promotes
effective
functioning
of
the
organisation
Job
satisfaction
An
employee’s
general
attitude
toward
his/her
job
Workplace
misbehaviour
Any
intentional
employee
behaviour
that
is
potentially
harmful
to
the
organisation
or
to
individuals
within
the
organisation
à
deviance,
aggression,
antisocial
behaviour
and
violence
What roles do attitudes play in job performance?
Attitudes:
evaluative
statements,
either
favourable
or
unfavourable
concerning
objects,
people
or
events
è Cognitive
Component:
that
part
of
an
attitude
made
up
of
beliefs,
opinions,
knowledge
and
information
held
by
a
person
è Affective
component:
that
part
of
an
attitude
that
is
emotional
or
‘feeling’
è Behavioural
component:
that
part
of
an
attitude
that
refers
to
an
intention
to
behave
in
a
certain
way
towards
someone
or
something
è Job
involvement:
the
degree
to
which
an
employee
identifies
with
his/her
job,
actively
participates
in
it
and
considers
his/her
job
performance
important
to
self
worth
è Organisational
commitment:
an
employee’s
orientation
toward
the
organisation
in
terms
of
his/her
loyalty
to,
identification
with,
and
involvement
in
the
organisation
è Employee
engagement:
when
employees
are
connected
to,
satisfied
with,
and
enthusiastic
about
their
jobs
Key
Employee
Engagement
Factors
(Figure
on
the
left)
Globally,
most
important
factor
à
RESPECT
Globally,
least
important
factor
à
VARIABLE
PAYBONUS
What contemporary issues do managers face?
Generational Differences
Four
generations
are
working
side-‐by-‐side
à
Veterans,
Baby
Boomers,
Generation
X,
Generation
Y
• Managing
generational
differences
presents
unique
challengers
• Ageing
population
à
most
skilled
workers
will
soon
be
retiring
and
organisations
need
to
replace
them
with
equally
skilled
workers
however
most
young
workers
don’t
have
enough
experience
or
expertise
at
their
age
• Older
generations
may
consider
themselves
to
be
ranked
higher
in
the
organisation
than
younger
employees
and
expect
greater
pay
Bullying - how do managers deal with bullying in the workplace?
Bullying:
‘Repeated
exposure
to
negative
actions
such
as
a
purposeful
attempt
to
injure
or
inflict
discomfort
upon
another
either
through
words,
physical
contact,
gestures
or
exclusion
from
a
group
by
peers
over
time’
Workplace diversity
Organisations
today
must
adapt
to
the
diverse
workforce.
Workforce
diversity
means
employing
individuals
who
differ
in:
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Ø Gender:
gender
diversity
issues
à
gender
pay
gap,
career
start
and
progress
and
misconceptions
about
whether
women
perform
their
work
as
well
as
men
do
Ø Race/ethnicity:
race
–
biological
heritage
that
people
use
to
identify
themselves,
ethnicity
–
social
traits
shared
by
a
human
population
Ø Disability:
managers
must
create
and
maintain
an
environment
in
which
disabled
employees
feel
comfortable
disclosing
their
needs
for
accommodation
however
this
must
be
perceived
as
equitable
to
those
w/o
disability
Ø Sexual
orientation:
many
in
the
GLBT
community
experience
homophobic
attitudes
in
the
workplace
(Look
at
ch2
notes
under
‘Sociocultural
Dimension
of
General
Environment’
–
pg.
4)
How are organisations and managers dealing with diverse employee expectations?
Managers
must
accommodate
a
diverse
range
of
employee
needs,
as
organisations
cannot
be
run
without
them.
This
is
accomplished
through
work-‐life
balance
programs
and
contingent
jobs.
WORK-‐LIFE
BALANCE
PROGRAMS
Absence
of
clear
boundaries
between
work
and
private
time
creates
personal
conflicts
and
stress.
⇒ Global
business
means
work
never
ends
–
consulting
with
people
in
different
time
zones
⇒ Communication
technology
allows
employees
to
work
out
of
the
office.
No
escape
from
work!
⇒ Longer
working
weeks
due
to
staff
cuts
⇒ Most
families
are
dual-‐earners.
Parents
have
a
hard
time
fulfilling
commitments
to
home,
spouse,
children,
parents
and
friends
How
do
organisations
respond?
v On-‐site
child
care
v Time
off
for
school
v Part-‐time
employment
v Flexitime
functions
v Job
sharing
v Telecommuting
CONTINGENT
JOBS
Companies
want
a
workforce
they
can
switch
on
and
off
as
needed.
è Labour
force
is
shifting
− From
full-‐time
workers
towards
a
contingent
workforce
(part-‐time,
temporary,
contract
workers)
è Contingent
workforce
is
available
for
hire
on
as-‐needed
basis
A
contingent
workforce
may
not
identify
with
the
organisation
or
be
as
committed
or
motivated
as
permanent
workers.
It
is
therefore,
the
manager’s
responsibility
to
motivate
all
their
employees,
permanent
or
contingent.
CHAPTER 3: FOUNDATIONS OF DECISION-MAKING
How do managers make good decisions?
Decision-‐making
is
fundamental
to
the
organisation’s
performance.
Decision-‐Making
Process:
A
set
of
8
steps
that
includes
identifying
a
problem,
selecting
a
solution
and
evaluating
the
effectiveness
of
the
solution
What defines a decision problem?
A
problem
is
a
discrepancy
between
an
existing
and
desired
state
of
affairs.
Managers
who
identify
the
wrong
problem
are
more
likely
to
perform
poorly
in
a
business.
Managers
can
identify
the
problem
by
comparing
the
current
state
of
affairs
and
some
standard
(Step
1).
− E.g.
Problem
à
disparity
between
a
manager’s
need
for
a
functional
vehicle
and
the
fact
that
his
current
vehicle
isn’t
working
thus
the
manager
needs
to
find
a
solution
which
fits
the
performance
standard
–
a
vehicle
runs
What is relevant in decision-making process?
Decision
criteria
are
the
factors
that
are
relevant
in
a
decision
(Step
2).
− E.g.
When
buying
a
car,
the
manager
assesses
the
factors
that
are
relevant
in
his
decision
such
as
price,
model
size,
features,
fuel
economy,
etc.
How does the decision maker weight the criteria and analyse alternatives?
Decision
criteria
are
not
all
equally
important.
It
is
necessary
to
allocate
weights
to
items
listed
in
step
2
in
order
to
give
them
relative
priority
in
step
3.
This
involves:
• Using
your
personal
preferences
to
assign
priorities
to
relevant
criteria
in
your
decision
• Indicating
degree
of
importance
by
assigning
weight
to
each
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A
simple
approach
to
this
is
assigning
the
number
10
to
the
most
important
item
and
the
rest
from
9
to
1.
− E.g.
When
buying
a
car,
if
the
manager
thinks
price
is
the
most
important
factor
it
gives
it
a
weight
of
10
and
ranks
other
factors
accordingly
à
interior
comfort
–
8,
fuel
economy
–
8,
safety
rating
–
8,
handling
-‐5,
etc.
The
decision-‐maker
than
lists
the
alternatives
that
could
succeed
in
resolving
the
problem
(Step
4).
− E.g.
When
buying
a
car
the
alternatives
may
include,
Hyundai
i30,
Suzuki
Swift,
Mazda
3,
Holden
Cruze,
etc.
The
decision-‐maker
must
then
critically
analyse
each
of
these
alternatives
(Step
5).
Each
alternative
is
evaluated
by
the
appraising
it
against
the
criteria
and
weights.
Example:
Assessment
Criteria
x
Assessment
Weight
What determines the best choice?
The
manager
must
now
choose
the
best
alternative
by
calculating
the
one
with
the
highest
score
(Step
6).
− E.g.
For
the
example
on
the
left,
the
manager
would
choose
Hyundai
i30
as
it
scored
the
highest
What happens in decision implementation?
Decision
implementation
involves
putting
a
decision
into
action.
It
includes
conveying
the
decision
to
the
persons
who
will
be
affected
by
it
and
getting
their
commitment
to
it
(Step
7).
What is the last step in the
decision process?
In
this
step,
the
managers
evaluate
the
result
of
the
decision
to
see
whether
it
has
corrected
the
problem
(Step
8).
Common Errors in the Decision-
Making Process
Managers
often
use
‘rule
of
thumb’
or
heuristics
simplify
their
decision-‐making.
Heuristics
can
be
useful
because
they
help
make
sense
of
complex,
uncertain
and
ambiguous
information
but
may
lead
to
errors
and
biases
that
managers
make.
What are the three approaches managers can use to make good decisions?
What is the rational model of decision-making?
Managers
are
expected
to
act
rationally
when
making
decisions.
Ration
decision-‐making
means
making
logical
and
consistent
choices
to
maximise
value
and
following
the
8
steps
of
the
decision-‐making
process.
Rationality:
consider
all
possible
alternatives
and
choose
the
one
with
the
highest
possibility
of
success
The
assumptions
of
rationality
include:
è The
problem
is
clear
and
an
unambiguous
è The
final
choice
will
maximise
the
payoff
è A
single,
well-‐define
goal
is
achieved
è The
decision-‐maker
makes
decisions
in
the
è All
alternatives
and
consequences
are
known
best
interests
of
the
organisation
Problem:
Not
all
problems
are
clear
and
unambiguous.
Managers
might
have
biases
à
can
impact
their
thinking.
What is bounded rationality?
The
bounded
rationality
model
recognises
that
managers
are
rational
within
limits
of
their
own
abilities
and
decision
situation.
This
model
considers:
§ Decision-‐making
process
occurs
with
limited
or
incomplete
knowledge
about
alternatives
and
consequences
§ Decision-‐makers
have
cognitive
limits
to
the
amount
of
information
they
can
process
about
each
alternative
Satisficing:
decision-‐makers
search
for
alternatives
that
fit
their
decision
criteria
and
are
‘good
enough’
to
solve
the
problem,
they
consider
a
range
of
options
rather
than
creating
a
list
of
all
possible
alternatives
and
evaluating
each
of
them
An
example
of
decision
bias
that
results
from
bounded
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rationality
is
escalation
of
commitment.
⇒ Escalation
of
commitment
–
increased
commitment
to
a
previous
decision
despite
evidence
that
it
may
have
been
wrong
What role does intuition play in managerial decision-making?
Managers
often
use
their
intuition
to
help
their
decision-‐making.
Intuitive
decision-‐making
a.k.a
unconscious
reasoning
refers
to
making
decisions
on
the
basis
of
experience,
feelings
and
accumulated
judgement.
There
are
five
aspects
of
intuition
à
Intuitive
decision-‐making
can
complement
both
bounded
rationality
and
rational
decision-‐making.
What types of decisions and decision-making conditions do managers face?
The
types
of
problems
managers
face
in
decision-‐making
situations
often
determine
how
a
problem
is
treated.
How do problems differ?
Structured
Problems
Unstructured
Problems
Ø Align
closely
with
the
assumptions
underlying
perfect
Ø New
or
unusual
rationality
(straightforward)
Ø Problem
is
often
unfamiliar
Ø Goal
of
decision-‐maker
is
clear
Ø Information
about
the
problem
is
Ø Problem
is
familiar
ambiguous
or
incomplete
Ø Information
about
the
problem
is
easily
defined
and
complete
E.g.
decision
to
enter
a
new
market
segment
E.g.
return
on
an
Internet
purchase
How does a manager make programmed decisions?
Programmed
or
routine
decision-‐making
is
the
most
efficient
way
to
handle
structured
problems.
Decisions
are
programmed
to
the
extent
that
they
are
repetitive
and
routine
(specific
approach
worked
out
for
handling
them).
Programmed
decisions
are:
• Relatively
simple
and
tends
to
rely
heavily
on
previous
solutions
• Once
the
problem
is
defined,
solution
is
self-‐evident
or
reduced
to
a
list
of
a
few
alternatives
• Managers
simply
do
what
others
have
done
previously
in
the
same
situation
Programmed
Decision-‐Making
Aids
Rules
Policy
Procedure
An
explicit
statement
that
tells
a
A
general
guide
that
establishes
A
series
of
interrelated
sequential
steps
that
manager
what
he/she
ought
or
parameters
for
making
decisions
can
be
used
to
respond
to
a
well-‐structured
ought
not
to
do
about
recurring
problems
problem
(policy
implementation)
How do non-programmed decisions differ from programmed decisions?
Non-‐programmed
decisions
are
unique
and
non-‐recurring
and
usually
relate
to
an
unstructured
problem.
When
a
manager
confronts
an
unstructured
problem,
a
custom-‐made
non-‐programmed
response
is
required.
− Can
cost
time
and
money
as
these
decisions
require
sound
judgment
by
top-‐level
managers
E.g.
deciding
whether
to
acquire
another
organisation
How are problems, types of decisions and organisational level integrated?
• Low-‐level
managers
pass
upwards
only
unique
and
difficult
decisions
• Middle
managers
pass
down
routine
decisions
to
their
employees
to
spend
time
on
more
problematic
issues
• Few
decisions
are
either
fully
programmed
or
fully
non-‐programmed
(mixture
of
both)
What decision-making conditions do managers face?
When
making
decisions,
managers
may
face
three
different
conditions:
è CERTAINTY
–
A
situation
in
which
a
decision-‐maker
can
make
accurate
decisions
because
all
outcomes
are
known
(ideal
situation),
e.g.
financial
manager
deciding
which
bank
to
deposit
money
à
knows
interest
rates
at
each
bank
and
thus
knows
outcomes
è RISK
–
A
situation
in
which
a
decision-‐maker
is
able
to
estimate
the
likelihood
of
certain
outcomes
(managers
have
historical
data
from
past
experience
which
lets
them
assign
probabilities
to
diff
alternatives)
è UNCERTAINTY
–
A
situation
in
which
a
decision-‐maker
has
neither
certainty
nor
reasonable
probability
estimates
available
(choice
of
alternative
is
influenced
by
psychological
orientation
of
decision-‐maker)
How do groups make decisions?
Advantages
Disadvantages
§ Group
decisions
provide
more
complete
information
§ Group
decisions
are
time
consuming
§ Diversity
of
experiences
and
perspectives
are
higher
§ May
be
subject
to
minority
domination
(group
members
§ Groups
generate
more
alternatives
are
never
really
equal)
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§ Group
decisions
increase
acceptance
of
a
solution
§ Responsibility
is
ambiguous
§ Group
decision
making
increases
legitimacy
§ Subject
to
pressure
to
conform
§ Subject
to
Groupthink
(you
had
an
opinion
contrary
to
the
consensus
views
of
the
group
but
didn’t
speak
up
and
later
found
out
that
others
though
that
way
too)
which
undermines
critical
thinking
When are groups most effective?
Effectiveness
of
groups
is
defined
in
terms
of:
v Accuracy
–
groups
decisions
are
more
accurate,
more
creative
and
achieve
a
greater
degree
of
acceptance
v Speed
–
individuals
make
decisions
more
efficiently
than
groups
(faster)
v Creativity
–
the
larger
the
group,
the
greater
the
opportunity
to
include
diverse
perspectives
v Acceptance
–
groups
achieve
a
greater
degree
of
acceptance
of
a
solution
Ideal
group
size
=
5-‐15
members
How can you improve decision-making?
Three
ways
of
making
group
decisions
more
effective
and
creative
are:
Brainstorming
An
idea-‐generating
process
that
encourages
alternatives
while
withholding
criticism
of
those
alternatives.
⇒ Generating
ideas
for
later
discussion
and
analysis
+
No
criticism
Nominal
Group
Technique
A
decision-‐making
technique
in
which
group
members
are
physically
present
but
operate
independently.
⇒ Group
members
must
be
present
but
operate
independently
(restricts
discussion)
–
write
a
list
of
problems
and
potential
solutions
then
present
it
to
the
group
⇒ Group
members
vote
on
priorities
by
rank
to
reach
final
decision
Advantage:
Group
can
meet
formally
and
does
not
restrict
independent
thinking
Electronic
Meeting
Participants
are
linked
by
a
computer,
e.g.
videoconferencing.
Issues
are
presented
to
participants
who
types
responses.
Aggregate
votes
and
individual
comments
are
displayed
on
the
projection
screen.
Advantages:
Anonymity,
honesty,
speed,
lower
costs
Disadvantages:
Lousy
typists
who
are
verbally
eloquent
(with
good
ideas)
aren’t
given
credit
What contemporary decision-making issues do managers face?
How does national culture affect manager’s decision-making?
Decision-‐making
practices
differ
across
many
cultures.
The
way
decisions
are
made
by
groups,
by
team
members,
participatively
or
autocratically
by
an
individual
manager
and
the
degree
of
risk
a
decision-‐maker
is
willing
to
take
differs
across
many
countries
and
cultures.
Examples:
Ø In
India,
only
senior-‐level
managers
make
decisions
and
they
are
likely
to
make
safe
decisions
Ø Swedish
managers
are
not
afraid
to
make
risky
decisions
and
decisions
are
pushed
down
the
ranks
Why is creativity important?
A
decision-‐maker
needs
creativity:
ability
to
produce
novel
and
useful
ideas.
It
allows
the
decision-‐maker
to
appraise
and
understand
the
problem
more
fully
and
helps
them
identify
all
viable
alternatives.
Creativity
requires:
è Expertise
–
abilities,
knowledge,
proficiencies
and
similar
expertise
in
their
field
è Creative-‐thinking
skills
–
personality
characteristics,
ability
to
use
analogies
and
talent
to
see
the
familiar
in
a
different
light
è Intrinsic
task
motivation
–
the
desire
to
work
on
something
because
its
interesting,
involving,
exciting,
satisfying
or
personally
challenging
Organisational
factors
that
can
impede
creativity
1. Expected
evaluation
–
focusing
on
how
your
work
is
going
to
be
evaluated
2. Surveillance
–
being
watched
while
you’re
working,
e.g.
calls
being
tapped
in
a
call
centre
3. External
motivators
–
emphasising
external,
tangible
rewards
4. Competition
–
facing
win-‐lose
situations
with
your
peers
5. Constrained
choices
–being
given
limits
to
how
you
can
do
your
work
CHAPTER 4: FOUNDATIONS OF PLANNING
What is planning and why do managers need to plan?
Planning
encompasses
defining
the
organisation’s
objectives
or
goals,
establishing
overall
strategy
for
achieving
those
goals
and
developing
comprehensive
hierarchy
of
plans
to
integrate
and
coordinate
activities.
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• Planning
is
often
called
the
primary
management
function
because
it
establishes
the
basis
for
all
the
other
things
managers
do,
as
they
organise,
lead
and
control
• It’s
concerned
with
ends
(what
is
to
be
done)
and
means
(how
it’s
to
be
done)
Formal
planning:
specific
goals
covering
a
specific
time
period
are
defined
and
these
are
written
down
and
made
available
to
organisational
members
There
are
4
reasons
why
managers
need
to
make
formal
plans:
1. Establishes
coordinated
effort
and
gives
direction
to
managers
and
non-‐managerial
employees
2. Reduces
uncertainty
and
clarifies
the
consequences
of
the
actions
managers
might
take
in
response
to
change
–
forces
managers
to
look
ahead
and
anticipate
change
and
consider
its
impact
and
develop
responses
3. Reduces
overlapping
and
wasteful
activities
–
minimises
waste
and
redundancy
4. Establishes
goals
or
standards
that
facilitate
control
Other
reasons
may
include
that
is
reduces
the
impact
of
change,
helps
focus
the
attention
of
employees
on
their
objectives,
allows
organisations
to
achieve
economies
of
scale
and
provides
predetermined
goals
from
which
actual
results
can
be
compared.
What are some criticisms of Formal Planning?
Critics
have
challenged
some
of
the
basic
assumptions
of
formal
planning:
1. Planning
may
create
rigidity
–
Formal
planning
can
lock
an
organisation
into
achieving
specific
goals
under
the
assumption
that
the
environment
will
not
change.
Thus
planning
can
make
organisations
inelastic
(insensitive
to
change)
and
may
discourage
employees
from
experimenting
with
new
ideas
2. Formal
plans
cant
replace
intuition
and
creativity
–
Formal
planning
can
often
reduce
an
organisation’s
vision
to
a
programmed
routine,
which
can
then
lead
to
disaster.
Planning
should
enhance
and
support
intuition
and
creativity,
not
replace
it
3. Planning
force
manager’s
attention
on
today’s
competition
and
not
on
tomorrow’s
survival
–
Formal
planning
has
a
tendency
to
focus
on
how
to
best
capitalise
existing
business
opportunities
within
the
industry
thus
managers
may
not
look
at
ways
to
re-‐create
or
reinvent
the
industry.
Managers
must
be
able
to
anticipate
future
competitors
and
be
open
to
untapped
opportunities
4. Formal
planning
reinforces
success,
which
may
lead
to
failure
–
Success
may
breed
failure
in
an
uncertain
environment.
Managers
often
get
too
attached
to
plans,
which
have
been
successful
in
the
past
–
it
is
hard
to
discard
those
plans
even
when
the
environment
has
changed.
Managers
might
assume,
so
long
as
they
are
working
to
the
plan,
it
is
satisfactory
however
this
can
lead
to
lost
opportunities
What do managers need to know about strategic management?
Strategic
management:
process
managers
use
to
form
a
vision,
analyser
their
external
and
internal
environments
and
select
the
strategies
they
will
use
to
create
value
to
stakeholders
such
as
customers,
shareholders
and
employees
Strategies:
plans
about
how
the
organisation
will
do
what
it’s
in
business
to
do,
how
will
it
compete
successfully
and
how
will
it
attract
and
satisfy
customers
in
order
to
achieve
its
goals
Why is strategic management important?
• Research
shows
a
positive
relationship
between
strategic
planning
and
performance
–better
financial
results
• Managers
can
better
cope
with
uncertainty
by
using
the
strategic
management
process
to
examine
relevant
factors
in
the
planning
of
future
actions
• Organisations
are
complex
and
diverse
therefore
the
strategic
management
process
helps
every
part
of
an
organisation
work
together
to
achieve
goals
What are the steps in the strategic management process?
Strategic
Management
Process:
A
six-‐step
process
that
encompasses
planning,
implementation
and
evaluation
STEP 1: IDENTIFYING MISSION, GOALS & STRATEGIES
Mission: statement of purpose, e.g. Facebook -‐‘To give
people power to share and make world more open and
connected’
Managers must also identify current goals and strategies
so that they have a basis for assessing whether they need
to be changed.
(Things to include in a mission statement à)
STEP 2 & 3: SWOT ANALYSIS
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Doing
an
External
Analysis:
-‐
analysing
the
(specific
and
general)
environment
(Step
2)
Managers
need
to
pinpoint:
• Opportunities
–
positive
trends
in
the
external
env
that
managers
can
exploit
• Threats
–
negative
trends
in
the
external
env
that
managers
must
counteract
From
an
external
analysis,
managers
know
what
the
competition
is
doing,
any
pending
legislation
that
might
affect
the
org.
or
the
labour
supply
in
the
location
in
which
the
org.
operates.
Doing
an
Internal
Analysis:
-‐
analysing
the
organisation’s
specific
resources
and
capabilities
(Step
3)
Managers
need
to
be
able
to
identify:
• Strengths
–
activities
the
organisation
does
well
or
any
unique
resources
it
owns
• Weaknesses
–
activities
the
organisation
doesn’t
do
well
or
resources
it
needs
but
doesn’t
possess
After
completing
a
SWOT
analysis
managers
must
be
able
to:
1. Exploit
the
organisation’s
strengths
and
external
opportunities
2. Buffer
or
protect
the
organisation
from
external
threats
3. Correct
critical
weaknesses
STEP
4:
FORMULATING
STRATEGIES
There
are
three
main
types
of
strategies
that
managers
formulate:
(pg.
99)
1. Corporate
strategy
–
strategy
that
specifies
what
businesses
a
company
is
in
or
wants
to
be
in
and
what
it
wants
to
do
with
those
businesses
(based
on
mission,
goals
and
roles
of
each
business
unit)
Resources: assets that the org uses to
develop manufacture and deliver
Types
–
growth,
stability
and
renewal
strategies
its products to customers
2. Competitive
strategy
–
strategy
that
details
how
the
org
will
Capabilities: skills and abilities in doing the
work activities needed in its business
compete
in
its
business
to
gain/maintain
a
competitive
advantage
Core Competencies: major value-creating
(strategic
management
can
better
position
their
org
to
get
a
capabilities of an organisation
competitive
advantage)
These three determine the organisation’s
competitive weapons.
Types
–
cost
leadership,
differentiation,
focus
strategies
3. Functional
strategy
–
strategy
used
by
an
org’s
various
functional
departments
to
support
competitive
strategy
Types
–
control
costs,
provide
unique
value
to
customers
STEP
5:
IMPLEMENTING
STRATEGIES
Performance
will
suffer
if
strategies
aren’t
implemented
properly.
STEP
6:
EVALUATING
RESULTS
How
effective
have
the
strategies
been
at
helping
the
organisation
reach
its
goals?
What
adjustments
are
necessary?
How do managers set goals and develop plans?
Goals
(objectives):
desired
outcomes
or
targets
à
guide
manager’s
decisions
and
form
decision
criteria
Plan:
documents
that
outline
how
goals
are
going
to
be
met
à
include
resource
allocation,
budgets,
schedules
and
other
necessary
actions
to
accomplish
the
goals
What types of goals do organisations have and how do they set those goals?
Types
of
Goals
STATED
GOALS
-‐
official
statements
of
what
an
org
says
and
what
it
wants
its
stakeholders
to
believe,
its
goals
are
• Found
in
an
organisation’s
charter,
annual
report
or
public
relations
announcements
or
in
public
statements
• Stated
goals
can
differ
across
an
org
and
even
come
into
conflict
with
one
another
• Can
be
vague
and
are
often
irrelevant
to
what
is
actually
done
REAL
GOALS
–
goals
that
an
org
actually
pursues
–
observe
what
organisational
members
are
doing
Organisational
goals
can
also
be
classified
as
strategic
or
financial.
è Financial
goals
–
related
to
financial
performance
of
the
organisation
è Strategic
goals
–
related
to
all
other
areas
of
the
organisation’s
performance
Setting
Goals
Traditional
Goal
Setting
⇒ Goals
are
set
by
top
managers
flow
down
through
the
organisation
and
become
sub-‐goals
for
each
organisational
area
(Assumption:
top
managers
know
what’s
best
because
they
see
the
‘big
picture’)
⇒ Goals
passed
down
guide
individual
employees
as
they
work
to
achieve
those
assigned
goals
Problem:
goals
can
lose
clarity
as
they
move
down
the
organisational
hierarchy
and
can
be
interpreted
in
diff.
ways
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Hassan
Means-‐End
Chain
An
integrated
network
of
goals
in
which
higher
level
goals
(ends)
are
linked
to
lower
level
goals
(means),
which
serve
as
the
means
for
their
accomplishment.
Management
By
Objectives
(MBO)
A
process
of
setting
mutually
agreed-‐upon
goals
and
using
those
goals
to
evaluate
employee
performance.
− Uses
goals
to
motivate
employees
as
well
as
set
performance
targets
Four
elements
of
MBO
programs:
1. Goal
specificity
2. Participative
decision-‐making
3. Explicit
time
frame
4. Performance
feedback
Studies
of
actual
MBO
programs
have
shown
that
they
can
increase
employee
performance
an
organisational
productivity.
Steps
in
goal
setting
1. Review
the
organisation’s
mission
and
employee’s
key
job
tasks
–
review
the
mission
statement
2. Evaluate
available
resources
3. Determine
the
goals
individually
or
with
input
from
others
–
goals
should
reflect
desired
outcome
and
should
be
congruent
with
organisational
mission,
should
be
measurable,
specific
and
include
time
frame
4. Make
sure
goals
are
well-‐written
and
then
communicate
them
to
all
who
need
to
know
5. Build
in
feedback
mechanisms
to
assess
goal
progress
–
if
goals
aren’t
being
met,
change
them
as
needed
6. Link
rewards
to
goal
attainment
What types of plans do managers use and how do they develop those plans?
Business
plans
are
plans
that
describe
business
opportunity
and
define
how
a
company
will
seize
and
exploit
that
opportunity.
A
good
business
plan
covers
6
major
areas;
executive
summary,
analysis
of
opportunity,
analysis
of
context,
description
of
business,
financial
data
and
projection
and
supporting
documentation.
Types
of
Plans
Business
plans
differ
in:
BREADTH
OF
USE
TIME
FRAME
SPECIFICITY
FREQUENCY
OF
USE
Strategic
Tactical
Long
Term
Short
term
Directional
Specific
Single
Use
Standing
Apply
to
entire
Specify
details
Plans
with
a
Plans
that
Flexible
plans
Clearly
One-‐time
plan
Ongoing
plans
organisation
of
how
overall
time
frame
cover
one
that
set
defined
and
specifically
that
provide
and
encompass
goals
are
to
of
over
3
year
or
less
general
leave
no
designed
to
guidance
for
the
be
achieved
years
guidelines
room
for
meet
the
needs
activities
organisation’s
interpretation
of
a
unique
performed
overall
goals
situation
repeatedly
Note:
Any
manager
who
engages
in
planning
must
keep
in
mind
that
they
have
to
weigh
the
flexibility
of
directional
plans
(when
there
is
high
environmental
uncertainty)
against
the
clarity
of
specific
plans.
Developing
Plans
The
process
of
developing
plans
is
influenced
by
three
contingency
factors:
v Organisational
Level
–
low-‐level
managers
usually
focus
on
tactical
planning
while
upper-‐level
managers
carry
out
strategic
planning
v Degree
of
Environmental
Uncertainty
–
high
uncertainty
à
plans
should
be
specific
but
flexible
v Length
of
future
commitments
–
plans
should
extend
far
enough
to
meet
those
commitments
made
when
the
plans
were
developed
(planning
for
too
long
or
too
short
a
time
period
is
inefficient
and
ineffective)
Approaches
to
Planning
Traditional
Approaches
to
Planning
In
the
traditional
approach,
planning
is
done
by
top-‐level
managers
who
are
assisted
by
a
formal
planning
department
–
group
of
planning
specialists
whose
sole
responsibility
is
to
help
write
the
various
organisational
plans.
Plans
created
by
top-‐level
managers
flow
down
through
the
org.
and
are
tailored
to
the
needs
at
each
level.
Problem:
Common
complaint
-‐
‘plans
are
documents
that
you
prepare
for
corporate
planning
staff
and
later
forget’
Planning
by
Organisational
Members
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Hassan
Plans
are
developed
by
organisational
members
at
various
levels
and
in
various
work
units
to
meet
their
specific
needs.
By
involving
employees
more
closely
in
planning
processes,
this
gives
them
access
to
all
the
relevant
information
–
they
see
plans
are
more
than
something
written
down
on
a
paper.
Problem:
Should
managers
provide
employees
with
financial
info?
What
ethical
and
business
risks
does
this
create?
What contemporary issues do managers face?
How can managers plan effectively in dynamic environments?
In
an
uncertain
environment,
managers
should
develop
plans
that
are
specific
but
flexible.
• Managers
need
to
stay
alert
to
env
changes
that
may
impact
implementation
and
respond
as
needed
• Even
when
the
env
is
highly
uncertain,
formal
planning
is
required
to
see
its
effect
on
org.
performance
• Make
organisational
hierarchy
flatter
to
effectively
plan
in
dynamic
environments
–
lower
org
levels
to
set
goals
and
develop
plans
How can managers use environmental scanning?
A
manager’s
analysis
of
the
external
environment
may
be
improved
by
environmental
scanning
–
screening
large
amounts
of
information
to
detect
emerging
trends.
Forms
of
environmental
scanning
include:
• Competitive
intelligence:
accurate
information
about
competitors
that
allows
managers
to
anticipate
competitors’
actions
rather
than
merely
react
to
them
• Benchmarking
–
(assisted
by
env
scanning
and
comp.
intelligence)
search
for
the
best
practices
among
competitors
or
non-‐competitors
that
lead
to
their
superior
performance
CHAPTER 5: ORGANISATIONAL STRUCTURE AND DESIGN
Organising:
the
function
of
management
that
creates
the
organisation’s
structure
Organisational
Design:
when
managers
develop
or
change
the
organisation’s
structure
Organisational
Design:
the
process
of
developing
or
changing
the
organisation’s
structure
which
involves
making
decisions
about
how
specialized
jobs
should
be,
the
rules
to
guide
employees’
behavior
and
at
what
level
decisions
are
to
be
made
What are the six key elements in organisational design?
The
six
key
elements
in
organisational
design
include:
1. Work Specialisation
Work
specialisation:
(division
of
labour)
the
degree
to
which
tasks
in
an
organisation
are
divided
into
separate
jobs
• Individual
employees
specialise
in
doing
part
of
an
activity
rather
than
the
entire
activity
to
increase
work
output
• Basic
principle
behind
production
or
assembly
line
à
products
are
manufactured
by
moving
them
down
a
line
of
workers
who
each
perform
specialised
tasks,
e.g.
water
bottle
exercise
in
lecture
• Makes
efficient
use
of
the
diversity
of
skills
à
tasks
and
rewards
are
allocated
according
to
worker
skills
• Highly-‐skilled
workers
à
higher
wages
and
therefore
financially
efficient
Earlier
view:
Work
specialisation
could
lead
to
great
increases
in
productivity
E.g.
Henry
Ford
used
division
of
labour
to
implement
assembly
lines
for
the
Model
T
Ford,
it
reduced
production
time
for
each
from
106
hours
to
6
hours
What
is
today’s
view
of
specialisation?
Most
managers
today
see
work
specialisation
as
an
important
organising
mechanism
because
it
helps
employees
be
more
efficient.
However
managers
also
have
to
recognise
its
limitations.
The
lack
of
routine
and
repetitive
nature
of
work
that
results
from
a
division
of
labour
causes:
§ Boredom
§ Low
productivity
§ High
turnover
§ Stress
§ Poor
quality
§ Fatigue
§ Increased
absenteeism
So
managers
must
think
about
how
to
design
jobs
that
allow
employees
to
focus
on
what
they
are
good
at
without
them
getting
bored
and
de-‐motivated.
2. Departmentalisation
Departmentalisation:
how
jobs
are
grouped
together
There
are
five
common
forms
of
departmentalisation:
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How
are
activities
grouped?
Economies
of
scale:
saving
in
costs
gained
by
an
increase
in
production
Functional
departmentalisation
Advantages
Disadvantages
• Can
be
used
in
all
types
of
organisations
• Poor
communication
across
functional
areas
• Achievement
of
economies
of
scale
by
placing
people
with
• Limited
view
of
organisational
goals
common
skills
and
specialisations
into
common
units
Product
departmentalisation
Advantages
Disadvantages
• Increases
accountability
for
product
performance
because
• Duplication
of
functions
all
activities
related
to
specific
products
are
under
the
• Limited
view
of
organisational
goals
direction
of
a
single
manager
(specialist)
• Closer
to
customers
• Managers
become
experts
in
their
industry
• Allows
specialisation
in
particular
products
and
services
Customer
departmentalisation
Advantages
Disadvantages
• Customer’s
needs
and
problems
can
be
met
by
specialists
• Duplication
of
functions
• Limited
view
of
organisational
goals
Assumption:
Customers
in
each
department
have
a
common
set
of
problems
and
needs
that
can
be
best
met
by
specialists
Geographic
departmentalisation
Advantages
Disadvantages
• More
effective
and
efficient
in
handling
of
specific
• Duplication
of
functions
regional
issues
that
arise
• Can
feel
isolated
from
other
organisational
areas
• Provides
flexibility
needed
to
deal
with
diverse
environments
• Serves
the
needs
of
unique
geographic
markets
better
• Improves
responsiveness
to
local
conditions
Process
departmentalisation
Advantages
Disadvantages
• More
efficient
flow
of
work
activities
• Can
only
be
used
with
certain
types
of
products
• Units
organised
around
common
skills
needed
to
complete
a
certain
process
What
is
today’s
view
of
departmentalisation?
Most
large
organisations
continue
to
use
departmental
groups
but
there
an
increased
focus
on
customer
responsiveness
had
led
to
more
emphasis
on
customer
departmentalisation.
Cross-‐functional
teams:
made
up
of
individuals
from
various
departments,
which
cross-‐traditional
department
lines
3. Authority and Responsibility
Authority:
rights
inherent
in
the
managerial
position
to
give
orders
and
expect
the
orders
to
be
obeyed
Ø Each
management
position
has
specific
inherent
rights,
acquired
from
the
position’s
rank
or
title
Ø Authority
is
related
to
one’s
position
within
an
organisation
(nothing
to
do
with
personal
characteristics)
When
managers
delegate
authority
they
must
allocate
responsibility.
Responsibility:
when
employees
are
given
rights,
they
also
assume
a
corresponding
obligation
perform
(held
accountable
for
their
performance)
Note:
‘No
one
should
be
held
responsible
or
accountable
for
something
over
which
they
have
no
authority’
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Hassan
Chain
of
Command:
line
of
authority
extending
from
upper
organisational
levels
to
lower
levels,
which
clarifies,
who
reports
to
whom
What
are
the
different
types
of
authority
relationships?
Line
authority:
authority
that
entitles
a
manager
to
direct
the
work
of
an
employee
(employee-‐employer
relationship
that
extends
from
the
top
of
the
organisation
to
the
lowest
level)
Staff
authority:
positions
with
some
authority
that
have
been
created
to
support,
assist,
and
advise
those
holding
authority
What
is
unity
of
command?
Unity
of
command
is
the
management
principle
that
no
person
should
report
to
more
than
one
boss.
⇒ Strict
adherence
to
unity
of
command
creates
a
degree
of
inflexibility
that
may
hinder
an
organisation’s
performance
⇒ In
order
to
improve
unity
of
command,
technology
can
be
used
to
allow
lower
level
employees
to
access
org
info
that
was
once
accessible
top
level
managers
How
does
today’s
view
of
authority
and
responsibility
differ
from
the
historical
view?
Historical
View
Current
View
Rights
inherent
in
one’s
formal
position
in
an
org
were
Exclusive
focus
on
authority
produces
a
narrow,
the
sole
source
of
influence.
Managers
were
all
unrealistic
view
of
influence.
Authority
is
but
one
powerful.
element
in
the
larger
concept
of
power.
How
do
authority
and
power
differ?
Power:
an
individual’s
capacity
to
influence
decisions
The
legitimate
power
that
comes
with
an
individual’s
position
is
the
basis
of
their
authority.
As
a
person
moves
higher
in
the
organisation’s
hierarchy
their
authority
increases
and
they
acquire
more
legitimate
power.
However
you
do
not
need
authority
to
wield
power,
e.g.
boss’
assistant
can
have
a
lot
of
power
but
no
authority
Power
in
the
workplace
v Power
and
its
consequences
have
triggered
much
debate
v Power
is
central
to
the
understanding
of
the
employment
relationship
v Power
and
authority
are
a
feature
of
certain
jobs
v Managers
have
particular
sorts
of
power
and
authority
v Power
is
uneven
across
the
employment
relationship
v Power
and
its
exercise
can
be
a
source
of
conflict
4. Span of Control
Span
of
control:
the
number
of
employees
a
manager
can
efficiently
and
effectively
supervise
è Determines
how
closely
a
manager
can
monitor
employees
è Early
management
writers
argue
that
managers
can
control
no
more
than
6
employees
others
argue
that
high-‐level
managers
have
to
deal
with
many
unstructured
problems
and
can
monitor
few
employees
è Common
strategy
for
dealing
with
economic
downturns
involves
reducing
managerial
staff
and
increasing
span
of
control
Span
of
control
is
increasingly
becoming
determined
by
contingency
variables:
∆ Experience
and
training
levels
of
employees
∆ Degree
to
which
standardised
procedures
are
in
∆ Similarity
of
employee
tasks
place
∆ Complexity
of
employee
tasks
∆ Sophistication
of
the
organisation’s
MIS
∆ Physical
proximity
of
employees
∆ Strength
of
organisation’s
value
system
∆ Preferred
managing
style
of
the
manager
5. Centralisation vs. Decentralisation
Centralisation:
degree
to
which
decision-‐making
takes
place
in
upper
levels
of
the
organisation
Decentralisation:
degree
to
which
the
lower-‐level
managers
provide
input
or
actually
make
decisions
Historical
View
Current
View
Historically
centralised
decisions
were
the
most
prominent.
Managers
choose
the
amount
of
centralisation
and
Traditional
organisation
were
structured
like
a
pyramid
with
decentralisation
that
will
allow
them
to
best
implement
their
power
and
authority
at
the
top.
decisions
to
achieve
org
goals.
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Hassan
6. Formalisation
Formalisation:
how
standardised
an
organisation’s
jobs
are
and
the
extent
to
which
employee
behaviour
is
guided
by
rules
and
procedures
è Highly
formalised
organisation
à
explicit
job
descriptions,
numerous
organisational
rules,
clearly
defined
procedures
covering
work
processes
(employees
have
little
discretion
over
what
is
done,
when
and
how),
e.g.
police
services
or
hospitals
è Lowly
formalised
organisation
à
employees
have
more
discretion
in
how
they
do
their
work
What
is
today’s
view
of
formalisation?
Formalisation
is
necessary
for
consistency
and
control.
Many
organisations
rely
on
less
strict
rules
and
standardisation
to
guide
and
regulate
employee
behaviour.
However
there
will
always
be
rules
that
are
important
for
employees
to
follow.
How is mechanistic organisation different from an organic organisation?
Mechanistic
organisation:
a
structure
that’s
high
in
specialisation,
formalisation
and
centralisation
§ Rigid
and
stable
§ Formal
hierarchy
of
authority
(chain
of
command)
–
each
person
controlled
by
one
supervisor
§ Smaller
span
of
control
at
higher
levels
in
the
organisations
§ Top
management
would
impose
rules
and
regulations
§ Work
specialisation
as
well
as
departmentalisation
E.g.
Many
government
departments
use
mechanistic
structures
to
coordinate
a
large
numbers
of
employees
and
ensure
consistent
cooperation
Organic
organisation:
a
structure
that’s
low
in
specialisation,
formalisation
and
centralisation
§ Highly
adaptive
form
that
is
loose
and
flexible
§ Loose
organisational
structure
allows
it
to
change
rapidly
§ Division
of
labour
but
jobs
that
people
do
are
not
standardised
§ Employees
tend
to
be
professionals
who
are
technically
proficient
and
trained
to
handle
diverse
problems
§ Few
formal
rules
and
little
direct
supervisions
§ Low
in
centralisation
à
professionals
can
respond
faster
as
top-‐level
managers
don’t
have
the
expertise
E.g.
Surveyors
don’t
need
to
be
given
instructions
on
how
to
locate
a
property
boundary
What contingency variables affect structural choice?
How does strategy affect structure?
Changes
in
organisational
strategy
lead
to
changes
in
an
organisation’s
structure
that
support
that
new
strategy.
è Simple
strategy
(i.e.
single
product
line)
§ Simple
or
loose
structure
§ Low
formalisation
§ Centralised
decisions
è Innovation
strategy
–
organic
structure
è Efficiency
strategy
–
mechanistic
structure
How does size affect structure?
Large
organisations
tend
to
have
more
specialisation,
departmentalisation,
centralisation
and
rules
and
regulations
than
small
organisations.
However
once
an
organisation
grows
past
a
certain
size,
size
has
less
influence
on
structure.
è Large
organisations
(over
2000
employees)
have
a
more
mechanistic
structure
How does culture affect structure?
The
stronger
an
organisation’s
culture,
the
less
need
for
rules
and
regulations
(culture
can
substitute
for
rules
and
regulations
that
formally
guide
employees).
The
weaker
an
organisation’s
culture,
the
less
effect
it
has
on
the
structure.
How does technology affect structure?
The
more
routine
the
technology,
the
more
mechanistic
the
structure
and
organisations
with
more
non-‐routine
technology
are
more
likely
to
have
organic
structures.
The
technology
that
an
organisation
uses
determines
the
appropriateness
of
its
organisational
structure.
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Hassan
How does the environment affect structure?
è Mechanistic
organisations
are
most
effective
in
stable
environments
è Organic
organisations
are
best
matched
with
dynamic
and
uncertain
environments
Mechanistic
organisations
tend
to
be
ill
equipped
to
respond
to
rapid
environmental
change.
What are some common organisational designs?
Traditional Organisational Designs
These
organisational
designs
tend
to
be
more
mechanistic
in
nature.
Simple
Structure
An
organisational
design
with
low
departmentalisation,
wide
spans
of
control,
authority
centralised
in
a
single
person
and
little
formalisation
(mostly
used
by
small
businesses).
Strengths
Weaknesses
Fast,
flexible,
inexpensive
to
maintain
and
provides
Not
appropriate
as
organisation
grows,
reliance
on
clear
accountability
one
person
is
risky
and
decision-‐making
is
slow
Functional
Structure
An
organisational
design
that
groups
similar
or
related
occupational
specialties
together.
Functional
departmentalisation
applied
to
an
entire
organisation.
(Refer
to
pg.
142
for
diagram)
Strengths
Weaknesses
Cost-‐saving
advantages
from
specialisation
Pursuit
of
functional
goals
can
cause
managers
to
lose
(economies
of
scale,
minimal
duplication
of
people
sight
of
what’s
best
for
the
overall
organisation;
and
equipment),
employees
are
grouped
with
others
functional
specialists
become
insulated
and
have
little
who
have
similar
tasks.
Employees
are
comfortable
understanding
of
what
other
units
are
doing
and
satisfied
because
they
can
talk
in
the
same
language
as
their
peers
Divisional
Structure
An
organisational
structure
made
up
of
separate
business
units
or
divisions.
Each
division
has
limited
autonomy
with
a
division
manager
who
has
authority
over
his/her
unit.
The
parent
corporation
typically
acts
as
an
external
overseer
to
coordinate
and
control
various
divisions.
(Refer
to
pg.
142
for
diagram)
Strengths
Weaknesses
Focuses
on
results
–
division
managers
are
Duplication
of
activities
and
resources
increases
costs
responsible
for
what
happens
to
their
products
and
and
reduces
efficiency
(if
each
division
has
a
services.
It
also
frees
headquarters
from
being
marketing
department
–
costly
rather
than
have
it
concerned
about
day-‐to-‐day
activities
–
focus
on
long
centralised)
term
and
strategic
planning
Matrix
Structure
A
structure
in
which
specialists
from
different
functional
departments
are
assigned
to
work
on
projects
led
by
a
project
manager
(combines
functional
and
divisional
structures).
(Refer
to
pg.
143
for
diagram)
⇒ Creates
a
dual
chain
of
command
–
employees
have
two
managers
(functional
and
project)
who
share
authority.
Both
communicate
regularly,
coordinate
work
demands
and
resolve
conflicts
together
Strengths
Weaknesses
Provides
excellent
coordination.
Increases
information
Dual
lines
of
reporting
create
conflict
and
flows
for
decision-‐making
by
creating
2
intersecting
confrontation.
Confusion
and
ambiguity
arises
and
communication
structures.
this
triggers
power
struggles.
Contemporary Organisational Designs
Managers
are
finding
that
traditional
designs
are
not
appropriate
for
today’s
increasingly
dynamic
and
complex
environment.
Organisations
need
to
be
lean,
flexible,
innovative,
that
is
more
organic.
Team
Structures
A
structure
in
which
the
entire
organisation
is
made
up
of
work
teams
that
do
the
organisation’s
work.
è Employee
empowerment
is
crucial
–
no
managerial
authority
from
top
to
bottom
è Employee
teams
design,
do
work
in
the
way
they
think
best
and
are
responsible
for
their
performance
è In
large
organisations,
team
structures
typically
complement
functional
and
divisional
structures
à
efficiency
and
flexibility
of
teams
è Employees
must
be
trained
to
work
in
teams
Advantages
Disadvantages
Employees
are
more
involved
and
empowered;
No
clear
chain
of
command;
pressure
teams
to
reduced
barriers
among
functional
areas
conform
Project
Structures
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Hassan
A
structure
in
which
employees
continuously
work
on
projects
(no
formal
departments)
–
as
one
project
is
completed,
employees
move
on
to
the
next
project.
è Employees
take
their
specific
skills,
abilities
and
experiences
to
other
projects
è Employees
work
in
project
structures
performed
by
employee
teams
è Managers
serve
as
facilitators,
mentors
and
coaches
Advantages
Disadvantages
Fluid,
flexible
design
that
can
respond
to
Complexity
of
assigning
people
to
projects;
tasks
and
environmental
changes;
faster
decision
making,
personality
conflicts
eliminate
organisational
obstacles,
ensure
teams
have
the
resources
they
need
Boundaryless
Structure
A
structure
that
is
not
defined
or
limited
to
artificial
horizontal,
vertical
or
external
boundaries;
includes
virtual
and
network
types
of
organisations.
Types
of
Boundaries:
§ Internal
boundaries
–
horizontal
ones
imposed
by
work
specialisation
and
departmentalisation
and
vertical
ones
that
separate
employees
into
organisational
levels
and
hierarchies
§ External
boundaries
-‐
the
boundaries
that
separate
the
organisation
from
its
customers,
suppliers
and
other
stakeholders
Virtual
organisation:
consists
of
small
core
or
full-‐time
employees
and
outside
specialists
temporarily
hired
as
needed
to
work
on
projects
Network
organisation:
uses
its
own
employees
to
do
some
work
activities
and
networks
of
outside
suppliers
to
provide
other
needed
product
components
or
work
processes
Advantages
Disadvantages
Highly
flexible
and
responsive;
utilises
talent
wherever
Lack
of
control;
communication
difficulties
its
found
What are today’s organisational design challenges?
Organisations
are
making
greater
use
of
contingent
workers
–
temporary,
freelance
or
contract
workers
whose
employment
is
contingent
upon
the
demand
for
their
services.
How can managers design efficient and effective flexible work arrangements?
New
technologies
are
changing
how
work
is
done,
presenting
a
range
of
opportunities
and
challenges
for
managers
and
employees.
As
organisations
adapt
to
these
new
realities,
more
organisations
are
adopting
flexible
working
arrangements
such
as
telecommuting,
compressed
workweeks,
flexitime
and
job
sharing.
What
is
involved
in
telecommuting?
Telecommuting:
work
arrangement
in
which
employees
work
at
home
and
are
linked
to
the
workplace
by
computer
• Many
organisations
use
telecommuting
to
minimise
costs
for
office
building
equipment,
parking
spaces,
reducing
employee
commuting
trips
and
to
attract
more
employees
Challenges
introduced
by
telecommuting:
• Employees
may
waste
time
surfing
the
internet
or
playing
online
games
instead
of
work,
ignore
clients
or
miss
the
camaraderie
and
social
exchanges
at
work
• Ensuring
company
information
is
safe
and
secure
when
employees
are
working
from
home
• How
will
managers
‘manage’
employees
at
home?
How
can
organisations
use
compressed
work
weeks,
flexitime
and
job
sharing?
Compressed
work
week:
employees
work
longer
hours
per
day
but
fewer
days
per
week
(four
10hr
days
–
common)
Flexitime:
scheduling
system
in
which
employees
are
required
to
work
a
specific
number
of
hours
per
week
but
are
free
to
vary
those
hours
within
certain
limits
Job
Sharing:
practice
of
having
two
or
more
people
split
a
full-‐time
job
(usually
used
during
economic
downturn
–
helps
avoid
employee
layoffs)
How do global differences affect organisational structure?
When
designing
or
changing
structure,
managers
may
need
to
think
about
the
cultural
implications
of
certain
design
elements.
E.g.
one
study
showed
formalisation
may
be
more
important
in
less
economically
developed
countries
than
in
more
economically
developed
countries.
How do you build a learning organisation?
Learning
organisation:
organisation
that
has
developed
the
capacity
to
continuously
learn,
adapt
and
change
In
a
learning
organisation:
• Employees
practising
knowledge
management
by
continually
acquiring
and
sharing
new
knowledge
and
are
willing
to
apply
that
knowledge
in
making
decisions
or
performing
their
work
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Hassan
• Its
critical
for
members
to
share
information
and
collaborate
on
work
activities
throughout
the
entire
org,
through
eliminating
and
minimising
the
existing
structural
and
physical
boundaries
• Because
of
need
to
collaborate
à
employees
work
in
teams
on
whatever
activities
need
to
be
done
• Employees
must
engage
in
knowledge
management
by
sharing
information
openly
in
a
timely
manner
and
as
accurately
as
possible
• Strong
and
committed
leadership
is
required
à
must
create
a
shared
vision
for
organisation’s
future
• Organisational
culture
is
important
à
in
a
learning
org,
employees
feel
free
to
communicate
openly,
share,
experiment
and
learn
without
fear
of
criticism
or
punishment
‘Structure
is
simple
a
means
to
an
end’
CHAPTER 6: MANAGING HUMAN RESOURCES
What is the Human Resource Management process and what influences it?
Human
Resource
Management:
the
management
function
concerned
with
attracting,
training,
motivating
and
retaining
competent
employees
involves
having
the
right
number
of
people
in
the
right
place
at
the
right
time
If
you
want
a
successful
organisation,
you
need
to
find
the
right
people.
If
people
aren’t
managed
properly,
they
are
left
unhappy
and
are
not
motivated
to
‘go
the
extra
mile’
and
the
organisation
loses
competent
staff.
Human Resource Management Process
The
eight
activities
shown
in
the
diagram
below,
if
properly
executed
will
staff
an
organisation
with
competent
high-‐
performing
employees
who
are
capable
of
sustaining
their
performance
level
over
the
long
term.
Identification
and
selection
of
1. Strategic
Human
Resource
Working
out
what
kind
of
people
the
Competent
Employees
Planning
organisation
needs
in
order
to
achieve
(Employee
Planning)
its
strategic
goals
2. Recruitment
&
Selection
Finding
and
hiring
the
people
required
3. Downsizing
Eliminating
staff
that
are
not
needed
Adapted
and
competent
employees
4. Orientation
Introduction
to
workplace
environment
with
up-‐to-‐date
skills,
knowledge
and
nature
of
job/position
and
abilities
5. Training
&
Development
Employee
training
and
managing
workplace
health
and
safety
Competent
and
high-‐performing
6. Performance
&
Identifying
performance
goals
and
employees
who
are
capable
of
Management
performance
problems
if
necessary
sustaining
high
performance
over
the
7. Compensation
&
Benefits
Provide
rewards
based
on
employee
long
term
performance
(performance
appraisal)
8. Safety
&
Health
Managing
workplace
health
and
safety
FUNCTIONS
OF
THE
HRM
PROCESS:
o Ensuring
that
competent
employees
are
identified
and
selected
o Providing
employees
with
up-‐to-‐date
knowledge
and
skills
to
do
their
jobs
o Ensuring
that
the
organisation
retains
competent
and
high-‐performing
employees
What is the legal environment of HRM? – Laws that influence employment relationships
HRM
laws
work
to
ensure
that
work
conditions
are:
Ø Fair
and
equitable
Ø Safe
and
healthy
Ø Non-‐discriminatory
Ø Protective
of
individual
needs
These
regulations
have
helped
reduce
employment
discrimination
and
unfair
employment
practices
however
have
also
reduced
management’s
discretion
over
HR
decisions.
What
are
the
primary
laws
affecting
HRM
in
Australia?
Act
Description
Crimes
Act
1914
Criminal
penalties
for
actions
such
as
theft,
bribery,
fraud,
etc.
Disability
Discrimination
Act
1992
Eliminated
discrimination
against
persons
with
disability
in
employment
areas
Equal
Employment
Opportunity
Promotes
equal
employment
for
a
range
of
groups
including
Indigenous
Australians,
migrants,
(Commonwealth
Authorities)
Act
1987
people
with
disability,
etc.
Equal
Opportunity
For
Women
in
the
Promotes
principles
that
employment
for
women
should
be
based
on
merit
and
eliminates
Workplace
1999
discrimination
against
women
in
relation
to
employment
Fair
Work
Act
2009
and
Fair
Work
Provides
processes
for
making
workplace
agreements,
addressing
workplace
disputes.
Specifies
Amendment
Bill
2012
minimum
terms
and
conditions
for
employment
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Work
Health
and
Safety
2010
Promotes
improvements
in
work
health
and
safety
practices
to
minimise
risk
arising
from
work
Privacy
Act
1988
Handling
of
personal
information
by
government
agencies,
private
sector
organisations
and
health
service
providers
Sex
Discrimination
Act
1984
Eliminates
discrimination
against
persons
on
the
grounds
of
sex,
marital
status,
pregnancy
or
potential
pregnancy
Superannuation
Guarantee
Establishes
superannuation
entitlements
for
a
majority
of
Australian
workers
(Administration)
Act
1992
How do managers identify and select competent employees?
What is employment planning?
Employment
Planning:
the
process
by
which
managers
ensure
they
have
the
right
numbers
and
kinds
of
people
in
the
right
places
at
the
right
time,
people
who
are
capable
of
effectively
and
efficiently
completing
those
tasks
that
will
help
the
organisation
to
achieve
its
overall
goals
The
organisation’s
mission
and
goals
are
translated
into
HR
Terms
to
ensure
people
are
able
to
fulfil
the
needs
associate
with
the
mission
and
goals.
The
process
involves
two
steps:
1. Assess
current
and
future
HR
needs
2. Develop
a
plan
to
meet
these
needs
How
does
the
organisation
conduct
employee
assessment?
∆ Human
Resource
Inventory:
a
report
reviewing
the
status
of
an
organisation’s
current
human
resources.
It
details
important
employee
information
such
as;
name,
education
and
training,
skills,
capabilities
and
languages
spoken.
∆ Job
Analysis:
an
assessment
that
defines
jobs
and
the
behaviours
necessary
to
perform
them
∆ Job
Description:
a
written
statement
that
describes
a
job
àportrays
job
content,
environment
and
employment
conditions
∆ Job
specification:
a
written
statement
of
the
minimum
qualifications
that
a
person
must
possess
to
perform
a
given
job
successfully
These
documents
help
managers
assess
employees
during
the
hiring
process.
How
are
future
employee
needs
determined?
Future
human
resource
needs
are
determined
by
the
organisation’s
strategic
direction.
è Managers
can
estimate
future
revenues
and
then
predict
the
number
and
mix
of
people
needed
to
reach
that
revenue
à
demand
for
HR
is
derived
from
demand
for
the
organisation’s
products
or
services
è After
they
have
assessed
both
current
capabilities
and
future
needs,
managers
are
able
to
estimate
where
the
demand
for
human
resources
meets
supply
− Demand
>
Supply
à
managers
plan
to
address
shortages
− Supply
>
Demand
à
managers
decide
how
to
correct
staffing
levels
by
reducing
workforce
How does a manager reduce their workforce?
Downsizing
has
become
a
relevant
strategy
for
meeting
the
demands
of
a
dynamic
environment.
What
are
downsizing
options?
OPTION
DESCRIPTION
Reduced
Work
Week
Having
employees
work
fewer
hours
per
week,
share
jobs
or
perform
their
jobs
on
a
part-‐time
basis
Job
Sharing
Having
two
employees,
typically
two
part-‐timers,
share
one
full-‐time
job
Transfers
Moving
employees
either
laterally
or
downwards;
usually
does
not
reduce
costs
but
can
reduce
intra-‐
organisational
supply-‐demand
imbalances
Attrition
Not
replacing
staff
who
retire
or
resign
Early
Retirement
Providing
incentives
to
older
and
more
senior
employees
to
retire
before
their
intended
retirement
date
Redundancies
Eliminating
positions
and
paying
the
staff
who
held
them
a
redundancy
package
to
cover
the
costs
of
unpaid
leave,
training
or
re-‐skilling
for
a
new
job
and
living
costs
while
searching
for
a
new
position
Firing
Permanently
terminating
a
person’s
employment
How do organisations recruit employees?
Recruitment:
locating,
identifying
and
attracting
capable
applicants
This
involves
searching
for
and
obtaining
a
pool
of
potential
candidates
with
appropriate
knowledge
and
skills
demanded
by
the
organisation
to
perform
certain
tasks
(you
want
the
widest
pool).
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How do managers select job applicants?
Selection
process:
screening
job
applicants
to
ensure
that
the
most
appropriate
candidates
are
hired
Any
selection
decision
can
result
in
4
outcomes.
2
outcomes
indicate
correct
decisions
and
2
outcomes
indicate
errors.
⇒ Reject errors (accept people who perform
poorly in their job) can lead to à organisation being charged of employment discrimination
⇒ Acceptance errors (reject employees who would have performed the job well) can lead to à cost of training
employees, cost of forgone profits, cost of severance and costs of additional recruiting
The major intent of selection activity is to reduce the probability of making reject or accept errors. We do this by
using selection procedures that are both reliable and valid.
Testing Selection Devices
RELIABLITY: the degree to which a selection device measures the same thing consistently, e.g. for a reliable test,
individual scores should remain fairly stable over time
• To be effective predictors, selection devices must possess an acceptable level of consistency
VALIDITY: the proven relationship between a selection device and some relevant criterion, e.g. rejecting someone
confined to a wheelchair applying for a job as a fire-‐fighter is valid but not when applying for an office job
Selection Techniques
Managers can use a number of selection devices to reduce reject and accept errors. Two of the more common are:
v Performance simulation tests
− Selection devices based on actual job behaviours à includes work sampling (mini replica of job) and
assessment centres (simulating real problems one may face on the job)
− Advantages -‐ simulation content is identical to job content + they are valid predictors
v Interviews
− Most universal selection device, along with the application form
− However all kinds of potential bias can creep into interviews if they are not well structured, e.g.
negative information is given unduly high weight
− To make interviews more valid and reliable, interviewers often present applicants with a ‘situation’
that involves role playing and see how they may deal with it
Retaining new employees
Providing only details of positive aspects of a job may lead to satisfaction problems later.
Realistic Job Preview (RJP)
A preview of a job that provides both positive and negative information about the job and the company.
• This will increase employee satisfaction and reduce turnover (rate at which employees leave the workforce and
are replaced) à applicants hold lower and more realistic expectations of the jobs and can better cope with
problems
How are employees provided with needed skills and knowledge?
Orientation
Orientation: Introducing new employees to the job and the organisation.
The major goal of orientation is to familiarise employees with their job, their work unit and the whole organisation.
Ø Job orientation – duties and responsibilities are clarified and how performance will be evaluated
Ø Work unit orientation – introduce colleagues, identify goals and work unit’s contribution towards goals
Ø Organisation orientation – identifies organisational goals, history, procedures, rules, policies and history
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Employee Training
Employee
Training:
A
learning
experience
that
seeks
a
relatively
permanent
change
in
employees
by
improving
their
ability
to
perform
on
the
job.
It
involves
changing
skills,
knowledge,
attitudes
or
behaviour.
Determining
training
needs
typically
What
involves
answering
What deficiencies, if
questions.
behaviours any do job
What tasks
Is there a are holders have in
What are the must be
Typical
Training
Methods
need for organisation' completed necessary
for each job
terms of skills,
knowledge or
employee s strategic to achieve
Most
training
takes
place
on
the
job
training? goals? organisation
holder to abilities required
complete to exhibit the
because
it
is
simple
and
costs
less
al goals? his or her essential and
duties? necessary job
however
on-‐the-‐job
training
can
disrupt
behaviours?
the
workplace
and
increase
errors
made.
Some
skill
training
is
too
complex
to
learn
on
the
job
and
must
be
taken
outside
the
work
setting.
Mentoring:
is
one
way
organisations
can
help
new
employees
settle
into
the
organisation.
• A
new
staff
member
is
paired
with
and
experienced
colleague
• Valuable
in
overcoming
workplace
discrimination
How
can
managers
ensure
that
training
is
working?
Training
programs
are
evaluated
in
terms
of
how
much
the
employees
learnt,
how
well
they
are
using
their
new
skills
on
the
job
and
whether
the
training
program
achieved
its
desired
results.
How do organisations provide a safe working environment?
Organisations have a legal, moral and business obligation to provide safe and healthy working environments
through:
Training programs Builds awareness of managerial and employee responsibilities
Workplace Health and Safety Audits Identifies organisational policies and practices that don’t comply with
legislative requirements, strategies to improve WHS & trends in
workplace injuries or accidents
Consultation with employee groups, unions, Develops safer policies and practices
consultants and government agencies
Effective mentoring of productivity, absenteeism, Helps identify opportunities to further improve WHS and provide
accident/injury rates and workers compensation feedback about the impact of them
claims
Work Health & Safety Act: legal requirement for organisations to provide a healthy and safe workplace and to
minimise the risk of accident/injury/disease to anyone involved in work processes
Ensuring WHS depends on establishing attitudes and behaviours that minimise accidents and injuries. It is the
responsibility of BOTH the employer and employee to maintain workplace health and safety. Examples of hazards
include; excessive heat or cold, noise, electrocution, tripping, slipping, falling, driving long distances before work.
How do organisations retain competent high-performing employees?
What is a Performance Management System?
Performance management system: a system that establishes performance standards that are used to evaluate
employee performance
The formal means of assessing the work of employees is
through a systematic performance appraisal process:
è Written essay – manager writes an evaluation of employee
performance
è Critical incidents – specific behaviours are decided, what
they did was effective or ineffective?
è Graphic rating scales – set of performance factors –
quantity or quality of work, job knowledge, loyalty,
honesty, attendance and initiative à then rated on an
incremental
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è BARS
–
behaviourally
anchored
rating
scales
à
rates
employees
according
to
items
on
numerical
scale
è 360
degree
appraisal
–
seeks
performance
feedback
from
such
sources
as
the
person
being
rated,
bosses,
peers,
team
members,
customers
and
suppliers
è Multiperson
–
compares
one
person’s
performance
with
one
or
more
individuals
è MBO
–
management
by
objectives
What happens if an employee’s performance is not up to par?
DISCIPLINE:
actions
taken
by
a
manager
to
enforce
an
organisation’s
standards
and
regulations
⇒ Discipline
problems
arise
when
employees
do
not
meet
their
performance
goals
due
to
lack
of
desire
to
the
job
(problem
not
to
do
with
abilities)
EMPLOYEE
COUNSELLING:
a
process
designed
to
help
employees
overcome
performance-‐related
problems
⇒ Attempts
to
uncover
why
employees
have
lost
the
desire
to
work
productively
⇒ Try
to
fix
problem
(may
be
personal)
à
to
avoid
costs
of
rehiring,
selecting
recruiting,
etc.
How are employees compensated?
v Compensation
Administration:
the
process
of
determining
a
cost-‐effective
pay
structure
attracts
and
retains
employees
and
provides
an
incentive
for
them
to
work
hard,
and
ensure
that
pay
levels
will
be
perceived
as
fair
v Skill-‐based
Pay:
a
pay
system
that
rewards
employees
for
the
job
skills
they
demonstrate
v Variable
Pay:
a
pay
system
in
which
an
individual’s
compensation
is
contingent
on
performance,
e.g.
real-‐estate
agents
à
receiving
commission
v Employee
Benefits:
non-‐financial
rewards
designed
to
enrich
employee’s
lives,
e.g.
paid
leave,
life
and
disability
insurance,
retirement
programs
and
health
insurance
What contemporary HRM issues face managers?
Globalisation
Competing on a global basis brings new challenges to HRM.
International HRM
» Addresses the complexity that results from recruiting,
selecting, developing and maintaining a diverse
workforce on a global scale
Will you standardise pay or use their local wage rates?
Workforce Diversity
Recruitment activities widen the recruiting net:
• Consider non-‐traditional recruitment methods/sources,
e.g. women’s jobs networks, over 50’s club
• Avoid discrimination in selection
• Encourage a better match between the minority individual and the organisation’s culture
• Increase diversity awareness with current staff
• Provide a smooth transition and customised orientation
Downsizing
Downsizing: the planned elimination of jobs in an organisation
Many organisations help laid-‐off employees by providing them
with services such as psychological counselling, support groups,
severance pay and extended health insurance.
⇒ Managers can often feel stressed when telling someone
they have been laid off
Layoff-‐survivor Sickness (Survivor syndrome): A set of
attitudes, perceptions and behaviours of employees who survive
layoffs, e.g. guilt, fear of change, etc.
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Tips
for
managing
downsizing:
Sexual Harassment
Sexual
harassment:
unwelcome
conduct
of
a
sexual
nature
which
makes
a
person
feel
offended,
humiliated
and/or
intimidated
where
that
reaction
is
reasonable
in
the
circumstances
Why
is
it
an
issue?
§ Under
the
Sex
Discrimination
Act
1984,
employers
have
a
legal
liability
to
protect
staff
à
all
reasonable
steps
must
be
taken
to
prevent
it
§ Lawsuits
can
be
costly
§ Sexual
harassment
creates
an
unpleasant
and
unproductive
work
environment
(costs
millions
due
to
absenteeism
and
low
productivity)
How
to
prevent
it?
Provide
harassment-‐training
programs
–
group
discussions,
role-‐play
situations
and
coaching
sessions.
Career Development
Career:
the
sequence
of
work
positions
held
by
a
person
during
his/her
lifetime
Boundaryless
career
–
idea
of
increased
personal
responsibility
for
one’s
career
Career
planning:
the
process
of
matching
career
goals
and
individual
capabilities
with
opportunities
for
achieving
those
goals
The
shift
to
employee-‐manager
careers
has
many
implications
for
organisations:
1. Organisations
need
to
adopt
a
more
collaborative
approach
to
career
planning
(help
employees
plan
their
careers
à
will
help
encourage
staff
to
pursue
career
goals
within
the
organisation
2. Allow
employees
to
develop
themselves
elsewhere
à
can
bring
fresh
perspectives
back
to
the
org
3. Organisations
need
to
consider
non-‐traditional
sources
of
employee
skills,
e.g.
working
for
not-‐for-‐profit
org
CHAPTER 7: MANAGING CHANGE AND INNOVATION
What is change and how do managers deal with it?
Organisational Change: any alteration of an organisation’s
people, structure or technology
è Structural change involves alterations in degree of
centralisation, etc. (refer to table à)
è Technological change involves modifications in the way work is done or the methods and equipment used à
helps staff to develop new skills and knowledge, e.g. Nike SKU.
è Changing people refers to changes in employee attitudes, expectations, perceptions and behaviours. Change in
people in order to create a workforce that’s committed to quality and continuous improvement of quality of
products – requires proper employee education and training, performance evaluation and reward system that
supports and encourages improvements
Why do organisations need to change?
What external forces create a need to change? What internal forces create a need to change?
Marketplace Trends in consumer behaviour Strategy New strategies à changes such as job
Technology • Internet changed à how products are redesign
sold, how to complete work, how to Employee E.g. Increased job dissatisfaction can lead
access information Attitudes to increased absenteeism, strikes and
• Human labour replaced by capital resignations à changes in organisational
equipment (changed assembly lines) polices and practices
Govt Laws & E.g. GST introduced à businesses alter Workforce Changes in terms of age, education,
Regulation financial management practices in order Composition gender and nationality, etc.
to track GST sales and pay amount to ATO E.g. Stable org with managers in positions
Economy Economic growth or decline, e.g. GFC for years may need more ambitious
Labour E.g. Skill shortages à employer employees
Market associations lobby govt to raise retirement
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age,
boost
skilled
migration,
etc.
Who initiated organisational change?
Organisational change requires a catalyst.
Change agents: People who act as change catalysts and assure the responsibility for managing the change process
è Outside consultants à act as change agents for major system-‐wide changes +
provide advice and assistance à provide an objective perspective however may
not understand organisation’s history, culture, procedures and personnel
è Internal managers à more thoughtful because they must live with the
consequences of their actions
How does organisational change happen?
CALM WATERS (metaphor of change)
Likens organisational change to a large ship making a predictable trip
across a calm sea and experiencing an occasional storm.
The three-‐step change process
1. UNFREEZING the status quo by:
» Increase driving forces which direct behaviour away from the status quo
» Decrease restraining (blocking) forces which hinder movement from existing equilibrium state
2. CHANGING (implement change)
3. REFREEZING to make the change permanent
Example: You aim to lose weight (change). You must increase your driving forces (desire to lose weight, having
healthy foods around the house) and decrease the restraining forces such as having junk food around the house.
WHITE-‐WATER RAPIDS
Likens organisational change to a small raft navigating a raging river.
Example: Nielsen Media Research looks at TV ratings – “A company in change in an industry in change.”
How do organisations implement planned changes?
Organisational Development (OD): efforts that assist org members with a planned
change by focusing on their attitudes and values
ü Constructively changing the attitudes and values of organisational members
ü Relies on employee participation to foster an environment of open
communication and trust
ü OD attempts to involve org members in changes that will affect their jobs and seeks their input about how
the change is affecting them
Organisational Development Activities (Efforts)
Survey feedback A method of assessing employee’s attitudes towards and perceptions of a change.
Data collection (change agent) used to fix problems.
Process consultation Outside consultants help managers perceive, understand and act on organisational
process elements such as workflow, informal intra-‐unit relationships and formal
communication channels
Team-‐building Activity that helps work groups set goals, develop positive interpersonal
relationships, clarify roles/responsibilities for each member à trust and openness
Intergroup-‐development Activities that attempt to make several work groups more cohesive. It attempts to
achieve the same results among different work groups
Why do people resist organisational change?
§ Failure to see the need for change – desire to maintain equilibrium, don’t see difference between past, current
and future situations – they apply existing approaches and expect them to successful like before
§ Uncertainty about adopting new methods – uncertain they have the skills, knowledge, ability to make the
change, uncertainty about outcomes of change
§ Concerns over personal loss – loss of status, money, authority, friendships, personal convenience or other
benefits
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§ Fear
of
losing
something
already
possessed
–
the
more
people
have
invested
in
the
current
system,
more
resistance
to
change
§ A
belief
that
the
change
is
not
in
the
best
interests
of
the
organisation
§ Limited
tolerance
for
change
–
people
can
only
change
so
much
before
they
are
‘burned
out’
from
previous
efforts
Note:
People
often
revert
back
to
their
old
habits
even
after
the
change
has
been
implemented
What reaction do employees have to
organisational change? - Stress
What is stress?
Stress:
the
adverse
reaction
people
have
to
excessive
pressure
placed
on
them
from
extraordinary
demands,
constraints
or
opportunities
⇒ It’s
not
always
bad.
Functional
stress
can
be
positive,
e.g.
stress
helps
stage
performer
perform
their
best
⇒ You
feel
stressed
when
you
are
faced
with
constraints
(prevents
you
from
doing
what
you
desire),
demands
(loss
of
something
desired)
and
opportunities,
E.g.
Good
performance
review
à
promotion,
bad
performance
review
à
keeps
you
from
getting
a
promotion,
extremely
poor
performance
review
à
lead
you
to
being
fired
What are the symptoms of stress? à refer to table à
What causes stress?
Stressors:
factors
that
cause
stress
Task
demands
• Job
design
(autonomy,
task
variety,
degree
of
automation)
(Factors
related
• Working
conditions,
e.g.
overcrowded,
noisy,
hot/cold
to
an
• Physical
work
layout
Job-‐related
factors
stressors:
five
employee’s
job)
• More
interdependence
between
employee
tasks
and
the
tasks
categories
of
organisational
of
others
=
more
stress,
likewise
autonomy
lessens
stress
stressors
Role
demands
Role
ambiguity:
when
role
expectations
are
not
clearly
understood
Personal
factors
stressors:
Role
conflicts:
work
expectations
that
are
hard
to
satisfy
Employees
may
bring
their
Role
overload:
having
more
work
to
accomplish
than
time
permits
personal
problems
to
work.
Interpersonal
Pressures
created
by
other
employees,
e.g.
lack
of
social
support
demands
from
colleagues,
poor
interpersonal
relationships
Employees’
personalities
have
an
effect
on
their
susceptibility
to
Organisation
• Excessive
rules
structure
stress.
• Lack
of
opportunity
to
participate
in
decisions
Organisational
Supervisory
style
of
organisational
managers,
e.g.
some
managers
Type
A
Personality
leadership
create
a
culture
characterised
by
tension,
fear
and
anxiety
People
who
have
a
chronic
sense
of
urgency
and
an
excessive
competitive
drive
Type
B
Personality
People
who
are
relaxed
and
easy-‐going
and
accept
change
easily
How can stress be reduced?
Managers
want
to
reduce
stress
that
results
in
dysfunctional
work
behaviour
by:
v Controlling
certain
organisational
factors
⇒ Employee
selection
–
make
sure
employee
abilities
match
job
requirements
(make
realistic
job
descriptions)
⇒
Improve
communication
and
implement
performance
management
(identify
clear
goals
and
allocate
roles
and
responsibilities,
reduce
ambiguity
through
feedback)
⇒ Job
redesign,
e.g.
if
employee
bored
à
redesign
to
increase
challenge
or
to
reduce
workload
v Implementing
Employee
Assistance
Programs
(EAPs)
⇒ Programs
designed
to
identify
and
help
to
resolve
work
and
personal
problems
which
affect
employee
wellbeing
and
performance,
e.g.
can
offer
counselling
services,
mediation
and
training
⇒ Results
in
greater
job
satisfaction,
higher
morale,
improves
employer’s
reputation
and
reduced
sick
leave
v Implementing
Wellness
Programs
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⇒ Programs
designed
to
keep
employees
healthy
–
focus
on
smoking
cessation,
weight
control,
etc.
⇒ Help
reduce
absenteeism
and
turnover
(rate
at
which
employees
leave)
by
preventing
health
problems
How can managers encourage innovation in an organisation?
Innovation:
channelling
creativity
to
develop
new
products
or
ways
of
working
How can a manager foster innovation?
INNOVATION
VARIABLES
(that
affect/foster
innovation)
STRUCTURAL
VARIABLES
CULTURAL
VARIABLES
HUMAN
RESOURCE
VARIABLES
• Organic
structures
• Acceptance
of
ambiguity
• High
commitment
to
training
• Abundant
resources
• Tolerance
of
the
impractical
and
development
• High
inter-‐unit
• Lower
external
controls
(rules,
etc.)
• High
job
security
communication
or
cross-‐ • Tolerance
of
risks
• Creative
people
functional
teams
• Tolerance
of
conflict
• Support
new
ideas
• Minimal
time
pressure
• Focus
on
ends
• Overcome
resistance
• Work
and
non-‐work
support
• Open-‐system
focus
(closely
monitor
environment
• Idea
champions
and
respond
to
changes)
• Provide
positive
feedback
(encouragement)
ORGANISATIONAL CULTURE
What is organisational culture?
Organisational
Culture:
the
shared
values,
principles,
traditions
and
ways
of
doing
things
that
influence
the
way
organisational
members
act
è Organisational
culture
acts
as
a
form
of
a
control
system
to
promote
behaviours
that
the
organisation
wants
and
to
discourage
the
behaviours
that
it
doesn’t
want
Culture
is:
» Perceived
» Descriptive
» Shared
Strong
culture:
key
values
are
deeply
held
and
widely
shared
(employees
are
committed
to
those
values)
Cultural
influence
can
have
a
strong
influence
on
behaviour
in
an
organisation.
For
example,
there
may
be
many
unspoken
values
in
a
company
such
as:
⇒ Look
busy
even
if
you’re
not
⇒ We
make
our
product
only
as
good
as
our
competition
forces
us
to
How can culture be assessed?
There
are
seven
dimensions
that
describe
an
organisation’s
culture.
In
many
organisation’s
one
cultural
dimension
is
emphasises
more
than
others,
e.g.
Ernst
&
Young
are
very
people
orientated
and
take
good
care
of
their
employees.
Strong vs. Weak Cultures
Managerial Decisions Affected by Organisational Culture
PLANNING
• The degree of risk that plans should contain
• Whether plans should be developed by individuals or teams
• The degree of environmental scanning in which management will engage
ORGANISING
• How much autonomy should be designed into employees’ jobs
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• Whether
tasks
should
be
done
by
individuals
or
in
teams
• The
degree
to
which
department
managers
interact
with
each
other
LEADING
• The
degree
to
which
managers
are
concerned
with
increasing
employee
job
satisfaction
• What
leadership
styles
are
important
• Whether
all
disagreements
–
even
constructive
ones
–
should
be
eliminated
CONTROLLING
• Whether
to
impose
external
controls
or
to
allow
employees
to
control
their
own
actions
• What
criteria
should
be
emphasised
in
employee
performance
evaluations
• What
repercussions
will
occur
from
exceeding
one’s
budget
Where does culture come from?
An
organisation’s
culture
usually
reflects
the
vision
or
mission
of
the
organisation’s
founders.
An
organisation’s
culture
results
from
the
interaction
between:
1. The
founders’
biases
and
assumptions
2. What
the
first
employees
learn
subsequently
from
their
own
experiences
How do employees learn the culture?
Employees
‘learn’
an
organisation’s
culture
in
a
number
of
ways:
è Stories
–
narrative
of
significant
events
or
people
è Rituals
–
repetitive
sequences
of
activities
that
express
and
reinforce
the
important
values
and
goals
of
the
organisation
è Material
symbol
or
artefacts
–
communicate
an
organisation’s
personality,
e.g.
formal
/casual
(uniforms?),
the
kind
f
behaviours
that
are
expected
è Language
–
unique
terms,
jargon
How is culture maintained?
How can managers use organisational culture to change the way an organisation deals with its
environment?
Key variables shaping customer responsive cultures
Customer-‐responsive
cultures
have
several
variables:
(check
table
below)
v Employee
types
–
outgoing
and
friendly
v Employee
freedom
to
meet
customer-‐service
requirements
–
no
rigid
rules,
procedures
and
regulations
v Employees
empowerment
–
decision
discretion
(do
whatever
is
necessary
to
please
the
customer)
v Listening
skills
–
able
to
listen
to
and
understand
customers
v Organisational
citizenship
behaviour
–
take
initiative,
even
when
its
outside
their
normal
job
requirements,
to
satisfy
a
customer’s
needs
Managerial Actions that are needed
To
make
their
organisation’s
culture
more
customer
responsive,
managers
can
influence:
ü Selection
–
hire
people
with
confidence,
drive
and
maturity
ü Training
− Training
programs
for
new
and
current
employees
− Focus
on
improving
product
knowledge,
active
listening,
showing
patience
and
displaying
emotions
ü Organising
–
create
a
flatter
organisation
(creating
fewer
levels
of
management)
to
give
employees
control
over
the
service
encounter
Empowerment
à
define
the
range
of
actions
that
employees
can
take
− Shaping
a
customer-‐responsive
culture
independently
without
a
manager’s
distribution
ü Leadership
–
leaders
who
convey
a
customer-‐focused
vision
and
demonstrate
commitment
to
customers
ü Evaluation
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Evaluate
employee
performance
on
effort,
commitment,
teamwork,
friendliness
and
ability
to
solve
−
customer
problems
− Do
not
simply
evaluate
measurable
outcomes
ü Rewards
–
reward
good
service:
− Employees
who
have
demonstrated
extraordinary
effort
to
please
customers
− Employees
who
have
been
singled
out
by
customers
for
‘going
the
extra
mile
Current Organisational Culture Issues Facing Managers
Creating an organisational culture that embraces sustainability
Seven
qualities
of
culture
that
support
sustainability:
o Deeply
ingrained
values
–
values
related
to
sustainability
are
deeply
ingrained
in
org
culture
o Strategic
positioning
–
sustainability
is
part
of
the
business’
strategy
o Top
management
support
–
top
management
assert
influence
to
stress
importance
of
sustainability
o Systematic
alignment
–
organisational
structures
and
processes
support
sustainability
o Metrics
–
measuring,
using
and
publicly
disclosing
key
indicators
o Holistic
integration
–building
partnerships
(internal/external)
based
on
collaboration
not
competition
o Stakeholder
engagement
–
stakeholders
are
engaged
in
environmental
dialogue
Creating an ethical culture
The
content
and
strength
of
an
organisational
culture
influence
its
ethical
climate
and
the
ethical
behaviour
of
its
members.
è An
org
culture
will
influence
high
ethical
standards
is
one
that
is
high
in
risk
tolerance,
low
in
aggressiveness
and
focuses
on
means
as
well
as
outcomes
Creating a customer-responsive culture
Many
organisations
failed
because
their
employees
failed
to
please
their
customers.
Management
needs
to
create
a
customer-‐responsive
culture,
where
employees
are:
− Friendly
and
courteous
− Prompt
in
responding
to
customer
needs
− Accessible
− Willing
to
what’s
necessary
to
please
the
− Knowledgeable
customer
Creating an Innovative Culture
Characteristics
of
an
innovative
culture:
∆ Challenge
and
involvement
–
Are
employees
involved
and
committed
to
the
goals
of
the
organisation?
∆ Freedom
–
Can
employees
independently
define
their
work
and
exercise
discretion?
∆ Trust
and
openness
–
Are
employees
supportive
and
respectful
of
each
other?
∆ Idea
time
–
Do
individuals
have
time
to
elaborate
on
new
ideas
before
taking
action?
∆ Playfulness/humour
–
Is
the
workplace
spontaneous
and
fun?
∆ Conflict
resolution
–
Do
individuals
resolve
issues
based
on
the
good
of
the
org
or
their
personal
interest?
∆ Debates
–
Are
employees
allows
to
express
their
opinions
and
put
forth
their
ideas?
∆ Risk
taking
–
Do
managers
tolerate
uncertainty
and
are
employees
rewarded
for
taking
risks?
Spirituality and Organisational Culture
Five
cultural
characteristics
are
evident
in
spiritual
organisations:
1. Strong
sense
of
purpose
–
meaningful
purpose
other
than
to
generate
profits
2. Focus
on
individual
development
–
recognise
the
worth
and
value
of
individuals,
employees
learn
3. Mutual
trust,
honesty
and
openness
–
managers
are
not
afraid
to
admit
to
their
mistakes
4. Employees
empowerment
–
managers
trust
employees
to
make
thoughtful
decisions
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5. Tolerance
of
employee
expression
–
allow
people
to
be
themselves
(express
feelings
without
fear,
guilt)
There
is
no
right
organisational
culture
however
a
culture
that
promote
flexibility
and
willingness
to
change
will
become
even
more
critical
to
organisational
success
in
the
years
to
come.
CHAPTER 9: UNDERSTANDING GROUPS AND MANAGING WORK TEAMS
What is a group?
Group:
Two
or
more
interacting
and
interdependent
individuals
who
come
together
to
achieve
specific
goals
v Formal
groups:
-‐
defined
by
organisation’s
structure
and
have
designated
work
assignments
and
specific
tasks
directed
at
accomplishing
organisational
goals
v Informal
groups:
-‐
social
groups
that
occur
naturally
in
the
workplace
(form
around
friendships)
What are the stages of group development?
1. Forming Stage
⇒ The first stage of group development in which
people join the group and then define the
group’s purpose, structure and leadership
2. Storming Stage
⇒ The second stage of group development, which
is characterised by intragroup conflict (what
needs to be done? who will lead?)
3. Norming stage
⇒ The third stage of group development, which is
characterised by close relationships and
cohesiveness – have set common expectations
of member behaviour
4. Performing stage
⇒ The fourth stage of group development, when the group is fully functional and works on the group task
5. Adjourning stage
⇒ The final stage of group development for temporary groups, during which groups prepare to disband
Note: Some groups don’t get past the storming or norming stage. Groups don’t always proceed sequentially.
What are the major concepts of behaviour?
What are roles?
Roles: behaviour patterns expected of someone who occupies a given position
in a social unit
o Individuals can have multiple roles
o Employees determine roles by reading job descriptions, getting
suggestions from bossed and watching what other colleagues do
Role Conflict: when an individual is confronted by divergent role expectations
How do norms and conformity affect group behaviour?
Norms: standards or expectations that are accepted and shared by a group’s
members (they dictate output levels, absenteeism rates, punctuality, tardiness, amount of socialisation
allows on the job)
Norms focus on:
Ø Dress – norms dictate type of clothing to be worn, e.g. employees teased for dressing too formally/casually
Ø Loyalty – expression of commitment to the organisation, e.g. if unhappy, keep job searches secret
Ø Effort and performance – how hard to work, what level of output, when to look busy, when you can goof off
Group norms can press us towards conformity. Desire for group acceptance à susceptible to conformity pressures
What is status and why is it important?
Status: A prestige position/ rank within a group, conferred by characteristics -‐ age, education, skill or experience
Status is a significant motivator with behavioural consequences when individuals see a disparity between what they
perceive status to be and what others perceive it to be.
Does group size affect behaviour?
∆ Large groups – good for gaining diverse input
∆ Small groups – typically faster at implementation
∆ Social loafing – the tendency for individuals to spend less effort when working collectively than when work
individually (efficiency is reduced when individuals think their contributions can’t be measured)
As groups get larger à contribution of individual members lessens (individual productivity declines)
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Are cohesive groups more effective?
Group
cohesiveness:
the
degree
to
which
group
members
are
attracted
to
one
another
and
share
the
group’s
goals
The
stronger
the
member’s
desire
to
stay
in
the
group
and
the
more
that
the
group’s
goals
align
with
each
individual’s
goals,
the
greater
the
group
cohesiveness.
The
effectiveness
of
group
cohesiveness
depends
on:
• The
degree
to
which
group
attitudes
align
with
its
formal
organisational
goals
(favourable
attitude
=
effective,
unfavourable
attitude
=
productivity
decreases,
ineffective)
Groups and Decision Making
1. Group
members
may
be
unequal
2. Ambiguous
responsibility
3. Groupthink
–
desire
for
conformity
in
group
results
in
irrational,
unchallenged
decision-‐making
outcome
How are groups turned into effective teams?
Are work groups and work teams the same?
No,
they
are
different.
Key
difference
is:
» Work
group
members
work
independently
but
help
each
other
to
do
that
» Work
team
members
work
collectively
towards
common
goals
and
fulfil
their
tasks
through
joint
effort
Why do many organisations now utilise work teams?
There
are
a
number
of
potential
benefits
to
working
in
teams:
Ø Increased
efficiency
(use
of
complementary
skills)
Ø Increased
responsiveness
to
customer
needs
Ø Enhanced
creativity
and
innovation
Ø Opportunities
for
learning
Ø Greater
sense
of
belonging
Ø Positive
synergy
and
mutual
accountability
Note:
However
not
all
work
teams
will
possess
these
characteristics.
Managers
should
look
for
teams
with
them.
What makes a team effective?
CONTEXT
COMPOSITION
WORK
DESIGN
PROCESS
Adequate
Resources
Abilities
of
Members
Autonomy
Social
Loafing
A
team
relies
on
resources
(timely
info,
Team
require
people
with
technical
Minimise
social
loafing.
Make
proper
equipment,
encouragement,
expertise,
problem-‐solving
and
decision-‐ members
individually
and
jointly
adequate
staffing
and
admin.
assistance)
making
skills
as
well
as
interpersonal
accountable
for
team’s
purpose,
outside
the
group
to
sustain
it.
skills.
It
needs
a
mix
of
these
skills.
goals
and
approach.
Leadership
&
Structure
Personality
Skill
Variety
Specific
goals
You
need
this,
to
agree
on
who
is
to
do
People
who
are
conscientious,
agreeable
Specific
goals
facilitate
clear
what
or
ensure
that
all
members
and
open
to
new
experiences
tend
to
communication
and
help
contribute
equally
in
sharing
workload.
lead
to
high
levels
of
team
performance.
maintain
focus
on
getting
results.
Climate
of
Trust
Allocating
roles
Task
Identity
Team
Efficiency
Must
trust
each
other
and
leader
to
Ensure
roles
are
filled
according
to
the
When
teams
believe
in
facilitate
cooperation
and
reduce
need
suitability
of
an
individual’s
strengths
to
themselves
and
their
success.
to
monitor
each
others’
activities
those
roles.
Look
at
diagram
below.
Confidence
is
key.
Performance
Evaluation
&
Reward
Team
Member
Preferences
Task
Conflict
Levels
Systems
Must
be
considered
as
some
people
may
Significance
Relationship
conflict
is
Team
members
should
be
accountable
have
been
forced
to
join
dysfunctional
however
task
individually
and
jointly.
Team
members
conflict
can
be
functional.
should
be
rewarded
group-‐based
Size
of
teams
Common
purpose
appraisals
or
profit-‐sharing
5-‐9
people
are
most
effective
Common
purpose
provides
Member
flexibility
direction,
momentum
and
Diversity
commitment
for
team
members
How can a manager shape team behaviour?
Selection
à Select
people
with
the
interpersonal
skills
and
ability
to
work
effectively
in
teams
Training
à
Employees
can
be
trained
in
the
behaviours
necessary
to
be
a
team
player
such
as,
team
problem
solving,
communications,
negotiations,
conflict
resolution
and
coaching
skills.
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Rewards
à
An
organisation’s
reward
system
should
recognise
appropriate
team
behaviours
and
encourage
cooperate
efforts
not
competitive
ones.
What current issues do managers face in managing
teams?
What’s involved with managing global teams?
Challenges
in
managing
global
teams
include:
• Diverse
cultural
characteristics
in
team
structure
especially
in
conformity,
status,
social
loafing
and
cohesiveness
and
in
team
processes
with
communication
and
managing
conflict
When are teams not the answer?
Managers need to know when teams are not the
answer, by asking:
ü Can the work be done better by more than one
person? (task complexity is a good indicator)
ü Does the work create a common purpose or set of goals for the members of the team that is more than the sum
of individual goals?
ü The amount of interdependence among team members when their success relies on yours, e.g. soccer player
Teams are not the answer when:
o Team work takes more time and often more resources than does individual work
o Team require managers to communicate more, manager conflicts and run meetings
o The benefits of using team need to exceed the costs
CHAPTER 12: COMMUNICATION & INTERPERSONAL SKILLS
Why do managers need to communicate effectively?
Everything a manager does involves communicating. Managers require effective communication skills for ethical
communication.
⇒ Ethical communication: communication that provides the clearest, correct and comprehensive information
⇒ Unethical communication: distorts the truth or manipulates audiences.
How does the communication process work?
Communication: transfer of understanding and meaning from one person to another
The communication process:
1. The sender creates a message by encoding a
thought
2. The encoded message is affected by 4
conditions: skills, knowledge, attitudes and
sociocultural system
3. The message is the actual physical product
that the sender creates to convey their
purpose (this is affected by the code or group
of symbols we use to transfer meaning, e.g.
texting short words)
4. The channel is the medium through which the message travels (selected by the sender depending on which
communication channel is suitable for the purpose, whether formal or informal)
5. Media richness is the capacity for different communication media to facilitate shared meaning and is
determined by characteristics such as whether the channel is personal or impersonal and how fast you can
receive a response, e.g. face-‐to-‐face communication is one of the richest communication media
6. The receiver (person to whom message is directed) decode the message to understand it (this is affected by
their knowledge, attitudes, cultural background and ability to decode a message)
7. The receiver’s response provides feedback about how successful we have been in transferring our message
originally
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8. Any
part
of
the
communication
can
be
affected
by
noise
(any
factor
that
interferes
with
or
disrupts
the
communication
process)
What barriers prevent effective communication and how they can be overcome?
BARRIER
DESCRIPTION
Filtering
E.g.
A
manager
tells
his
boss
what
he
feels
that
the
boss
wants
to
hear
à
preventing
an
information
overload
Selective
Perception
E.g.
An
interviewer
who
expects
female
employees
to
put
their
career
in
front
of
their
family
is
likely
to
see
that
tendency
in
female
applications,
regardless
of
whether
they
do
so
or
not
Information
Overload
When
people
experience
this,
they
select
out,
ignore,
pass
over
or
forget
information.
This
results
in
lost
information
and
less
effective
communication.
Emotions
Influences
how
the
receiver
interprets
the
message
(e.g.
if
you
are
happy
or
upset,
you
react
differently)
Language
Some
groups
can
develop
their
own
jargon
which
may
be
difficult
to
understand
for
others
(the
receiver)
Gender
Preventing
gender
differences
from
communication
barriers
requires
acceptance,
understanding
and
commitment
National
Culture
Cultural
differences
may
affect
methods
of
communication
and
interpretation
of
messages
Are written communications more effective than verbal ones?
Written
Communications
Oral
Communications
§ Memos,
letters,
email,
newsletter,
etc.
§ Allow
receivers
to
respond
rapidly
to
what
they
§ Tangible,
verifiable
and
more
permanent
think
and
hear
§ Recorded
and
available
for
later
reference
§ Presents
feedback
evidence
that
the
message
§ More
likely
to
be
well
thought
out,
logical,
clear
has
been
received
and
understood
§ Time
consuming,
loss
of
verbal
intonation
and
nonverbal
cues
such
as
body
language
§ Lack
of
immediate
response/feedback
How do nonverbal cues affect communication?
Body
language:
nonverbal
communication
cues
such
as
facial
expressions,
gestures
and
other
body
movements
Verbal
intonation:
an
emphasis
given
to
words
or
phrases
that
conveys
meaning
Is the grapevine an effective way to communicate
Grapevine:
an
unofficial
channel
of
communication
⇒ Information
is
spread
quickly
by
word-‐of-‐mouth,
bad
information
travels
faster
however
if
untrue
causes
confusion
and
distress
How is technology affecting managerial communication?
Networked
Communication
Application
Description
Advantages
Electronic
Data
Interchange
Interorganisational
telecommunications
Eliminates
printing
and
handling
of
documents,
network
that
transmits
information
about
efficient
(data
put
into
system
once)
transactions
from
one
organisation’s
computer
to
another
Email
Instantaneous
transmission
of
messages
on
Fast,
cheap,
retrievable
at
receiver’s
convenience,
computers
that
are
linked
together
can
send
message
to
many
people
at
the
same
time
and
send
documents
as
attachments
Extranet
Organisational
communication
network
that
Facilitates
communication
with
linked
outsider
uses
internet
technology
to
link
employees
such
as
customers
and
vendors
with
outsiders
Fax
Machines
Transmit
documents
containing
both
text
and
Easily
and
quickly
transmit
information
best
graphics
over
ordinary
telephone
lines
viewed
in
printed
form
(e.g.
documents
requiring
signatures)
Instant
Messaging
Interactive,
real
time
communication
takes
Fast,
cheap
and
instantaneous
so
no
need
to
wait
place
among
computer
users
who
are
logged
fro
colleagues
to
receive
and
read
the
email
on
to
the
computer
network
at
the
same
time
Intranet
Organisational
communication
network
that
Allows
employees
to:
share
information,
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uses
internet
technology
but
is
accessible
but
collaborate
on
documents
and
projects,
view
only
to
organisational
employees
company
policy
manuals
and
employees
specific
materials
from
different
locations
Teleconferencing
Group
meetings
facilitated
via
telephone
or
Cheap,
instantaneous,
facilitates
real-‐time
email
group
communications
software
interaction
Videoconferencing
or
web
conferencing
Simultaneous
conferencing
over
video
or
Brings
group
members
together
from
several
computer
screens
locations
Voice
mail
Digitises
a
spoken
message,
transmits
it
over
Transmits
information
without
receiver
being
the
network
and
stores
the
message
on
a
disk
physically
present,
message
can
be
saved,
deleted
for
the
receiver
to
retrieve
later;
can
also
be
or
re-‐routed
converted
into
email
or
SMS
Knowledge
management:
cultivating
a
learning
culture
in
which
organisational
members
systematically
gather
knowledge,
share
it
with
others
in
the
organisation
so
as
to
achieve
better
performance.
Communities
of
practice:
groups
of
people
who
share
a
common
interest,
a
set
of
problems
or
a
passion
about
a
topic,
and
who
interact
to
develop
their
knowledge
and
expertise
in
that
area
Ø Receiving
information
from
multiple
communication
channels
can
cause
information
overload
What interpersonal skills do managers need?
Active
Listening:
Listening
for
full
meaning
without
making
premature
judgements
or
interpretations
Active
listening
requires:
» Intensity
–
active
listener
concentrates
intensely
on
what
the
speaker
is
saying
» Empathy
–
put
yourself
in
the
speaker’s
shoes
» Acceptance
–
listen
objectively
without
judging
the
content
» Willingness
to
take
responsibility
for
completeness
Active
listening
techniques
include
listening
for
feeling
and
content
and
asking
questions
to
ensue
understanding.
Why are performance feedback skills important?
Feedback
POSITIVE
FEEDBACK
–
what
people
wish
to
hear
• More
readily
and
accurately
perceived
than
negative
feedback
and
almost
always
accepted
NEGATIVE
FEEDBACK
–
often
meets
resistance
• Most
likely
to
be
accepted
when
it
comes
from
a
credible
source
(supported
by
evidence)
or
if
its
objective
How do you give effective feedback?
1. Focus
on
specific
behaviours
–
describe
specific
actions
you
want
them
to
change
or
repeat
2. Keep
feedback
impersonal
–
feedback
should
be
descriptive
rather
than
judgemental
or
evaluative
3. Keep
feedback
goal
orientated
–
if
you
have
to
say
something
negative,
direct
it
towards
receiver’s
goals
4. Make
feedback
well
timed
–
make
it
very
soon
after
behaviour
occurs
5. Ensure
understanding
–
ask
receiver
to
rephrase
your
words
to
do
this
6. Direct
negative
feedback
towards
behaviour
that
the
receiver
can
control
What are delegation skills?
Delegation:
assigning
authority
to
another
person
to
carry
out
specific
activities
o In
participative
decision
making,
authority
is
shared
o With
delegation,
employees
make
decisions
on
their
own
Managers
must
consider
how
much
authority
should
managers
delegate?
Should
authority
be
centralised,
delegating
only
the
minimal
amount
to
complete
delegated
duties?
What
contingency
factors
should
be
considered
in
determining
the
degree
to
which
authority
is
delegated?
Effective
delegation
pushes
authority
down
vertically
through
ranks
of
an
organisation.
HOW
DO
YOU
DELEGATE
EFFECTIVELY?
è Clarify
the
assignment
–
what’s
being
delegated,
expected
results,
time
frame,
performance
expectations
è Specify
employees’
range
of
discretion
–
specify
the
limits,
parameters
of
the
tasks
to
be
completed
or
how
far
they
can
go
without
further
approval
è Allow
employees
to
participate
–
allow
employees
to
be
held
accountable
for
the
tasks
to
participate
in
that
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decision
however
too
much
participation
can
mean
employees
will
be
less
effective
–
try
to
expand
authority
è Inform
others
that
delegation
has
occurred
–
failure
to
inform
others
can
lead
to
conflict
è Establish
feedback
controls
–
you
should
expect
and
accept
some
mistakes
by
your
employees
as
long
as
the
costs
aren’t
excessive,
identify
controls
early,
set
progress
dates,
agree
on
due
dates/deadlines
What are negotiation skills?
Negotiation:
A
process
in
which
two
or
more
parties
who
have
different
preferences
must
make
a
joint
decision
and
come
to
an
agreement
HOW
DO
BARGAINING
STRATEGIES
DIFFER?
v Distributive
Bargaining:
negotiation
under
zero-‐sum
conditions,
in
which
any
gain
by
one
party
involves
a
loss
to
the
other
party,
e.g.
you
see
a
user
car
sale
on
a
newspaper
ad
and
negotiate
price
with
the
seller,
every
dollar
you
save
is
every
dollar
the
seller
has
lost
Determining
the
bargaining
zone
Resistance
point:
refers
to
the
lowest
possible
outcome
You
should
try
and
get
your
opponent
to
agree
to
your
specific
target
point
or
to
get
as
close
to
it
as
possible.
v Integrative
Bargaining:
negotiation
in
which
there
is
at
least
one
settlement
that
involves
no
loss
to
either
party
(a
win-‐win
situation)
Integrative
bargaining
is
preferable
to
distributive
bargaining
however
require
conditions
such
as
openness
with
information
and
frankness
between
parties,
sensitive
by
each
party
of
the
other’s
needs,
trust
and
flexibility.
HOW
DO
YOU
DEVELOP
EFFECTIVE
NEGOTIATION
SKILLS?
§ Research
the
individual
with
whom
you
will
be
§ Pay
little
attention
to
initial
offers
negotiating
§ Emphasise
win-‐win
solutions
§ Begin
with
a
positive
overture
(perhaps
a
§ Create
an
open
and
trusting
climate
small
concession)
§ If
needed,
be
open
to
accepting
third-‐party
§ Address
problems,
not
personalities
assistance
How do you manage conflict?
Conflict:
perceived
incompatible
differences
resulting
in
some
form
of
interference
or
opposition
Three
different
views
of
conflict
have
evolved:
1. Traditional–
the
view
that
al
conflict
is
bad
and
must
be
avoided
2. Human
Relations–
the
view
that
conflict
is
natural
and
inevitable
and
has
the
potential
to
be
a
positive
force
3. Interactionist–
the
view
that
some
conflict
is
necessary
for
an
organisation
to
perform
effectively
Types
of
Conflict
Ø Functional
conflicts
–
conflict
that’s
constructive
and
supports
an
organisation’s
goals
Ø Dysfunctional
conflicts
–
conflict
that’s
destructive
and
prevents
an
organisation
from
achieving
its
goals
o Task
conflict
–
conflict
that
related
to
the
content
and
goals
of
the
work
(low
level
of
task
conflict
is
functional)
o Relationship
conflict
–
conflict
that
focuses
on
interpersonal
relationships
(mostly
dysfunctional)
o Process
conflict
–
conflict
that
refers
to
how
to
work
gets
done
(low
levels
of
process
conflict
can
be
functional)
Note:
Some
conflicts
are
unmanageable.
HOW
DOES
A
MANAGER
STIMULATE
CONFLICT?
• Managers
convey
message
to
employees
• Bring
outsiders
with
different
views
• Structural
variables
• Appoint
devil’s
advocate
(purposely
presents
argument
against
those
proposed
by
majority)
Contemporary Issues
Social
Media
Blurring
the
lines
between
public
and
private
life
v Ethical
concerns
v Organisational
policies
failing
to
keep
abreast
of
changing
technology
v Humour
and
the
workplace
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CHAPTER 13: FOUNDATIONS OF CONTROL
What is control and why is it important?
Control:
the
management
function
that
involves
monitoring
activities
to
ensure
that
they’re
being
accomplished
as
planned
and
correcting
any
significant
deviations
The
effectiveness
of
a
control
system
is
determined
by
how
well
it
facilitates
goal
achievement.
Why is control important?
Because
it
is
the
only
way
managers
know
whether
organisational
goals
are
being
met
and
if
not,
reasons
why.
» It
is
also
essential
for
protecting
the
organisation
and
its
assets,
as
it
organisations
can
often
face
threats
from
natural
disasters,
financial
pressures,
scandals,
violence,
etc.
Comprehensive
controls
and
back-‐up
plans
help
protect
the
organisational
assets.
What is the control process?
A three-‐step process of:
1. Measuring actual performance
2. Comparing actual performance against a standard
3. Taking managerial action to correct deviations or
to address inadequate stand
What takes place as managers control?
What is measuring?
How do managers measure?
The first step in control is measuring. Four common
sources of information frequently used to measure
actual performance are:
o Personal observation – first hand, intimate
knowledge of actual activity
o Oral reports – conference meetings, telephone calls, one-‐to-‐one conversations
o Statistical reports – graphs, bar charts, numerical displays used to assess performance
o Written reports – slower and more formal
Management by walking around: When manager is out in the work area interacting with employees
What do managers measure?
What managers measures is critical to the control process.
§ Most jobs and activities can be expressed in tangible and measurable terms
§ Comprehensive control systems need to recognise the diversity of activities among managers
§ When a performance indicator cannot be stated in quantifiable terms, managers should look for and use
subjective measures
Measures may include things like, absenteeism rates, turnover, employee satisfaction, keeping costs within the
budget, quantity of goods manufacture per day, etc.
How do managers compare performance to planned goals?
Range of Variation: The acceptable parameters of variance between actual performance and a standard
⇒ Deviations outside this range need attention
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What managerial action can be taken?
How
do
you
correct
actual
performance?
Manager
can
correct
unsatisfactory
work
through
training
programs,
disciplinary
action
and
changes
in
compensation
practices.
Manager
must
make
decision
whether
to
take:
v Immediate
Corrective
Action:
addresses
problems
at
once
to
get
performance
back
on
track
v Basic
Corrective
Action:
looks
at
how
and
why
performance
deviated
before
correcting
the
source
of
deviation
How
do
you
revise
the
standard?
Variance
may
be
as
a
result
of
an
unrealistic
standard
–
too
high
or
too
low
a
goal.
This
means
the
standard
needs
corrective
action
not
the
performance.
è If
standards
are
consistently
unmet
à
goals
are
too
high
à
make
them
more
achievable,
e.g.
students
getting
lower
grades
saying
grading
was
too
harsh
What should managers control?
When does control take place?
1. Feedforward
control:
control
that
takes
place
before
a
work
activity
is
done
(time
consuming)
− E.g.
setting
water
temperature
before
walking
into
shower
(opening
tap)
2. Concurrent
control:
control
that
takes
place
while
a
work
activity
is
in
progress
− E.g.
walking
into
the
shower
and
changing
the
water
temperature
3. Feedback
Control:
control
that
takes
place
after
a
work
activity
is
done
(indicates
effectiveness
of
planning)
− E.g.
being
burnt
with
hot
water
and
adjusting
the
temperature
so
problem
doesn’t
reoccur
How is an organisation’s information controlled?
Managers
deal
with
information
controls
in
2
ways:
1. As
a
tool
to
help
them
control
other
organisational
activities
2. As
an
organisational
area
they
need
to
control
How is an organisation’s information controlled?
Most
information
tools
used
by
managers
come
from
the
organisation’s
MIS.
Management
Information
System
(MIS):
a
system
used
to
provide
management
with
needed
information
on
a
regular
basis.
MIS
collects
data
and
turns
it
into
relevant
information
for
managers
to
use.
It
is
important
that
managers
have
secure
controls
to
protect
this
information
such
as
data
encryption,
firewalls
and
data
backups.
Financial Controls
Traditional
financial
measures
include:
∆ Ratio
analysis
–
liquidity,
profitability,
leverage
and
activity
ratios
∆ Budget
analysis
–
used
for
planning
and
controlling
What is the balanced scorecard approach to control?
Balanced
scorecard:
a
performance
measurement
tool
that
looks
at
more
than
just
the
financial
perspective
Traditionally
it
looks
at
four
areas
contributing
to
a
company’s
performance:
o Financial
o Internal
processes
o Customer
o People/innovation/growth
assets
Now
many
organisations
include
criteria
related
to
the
environment
and/or
the
community.
What contemporary control issues do managers confront?
Do controls need to be adjusted for cultural differences?
Adjusting
controls
• Global
companies
may
also
use
information
technology
to
control
work
activities
− Technologically
advanced
countries
such
as
Australia,
Japan,
U.K,
U.S.A
and
Canada
use
indirect
control
devices
that
include
computer-‐related
reports
and
analyses
− Less
technologically
advanced
nations
use
controls
à
direct
supervision
and
highly
centralised
decision-‐making
• Different
corrective
actions
are
appropriate
in
different
countries
depending
on
their
laws
What challenges do managers face in controlling the workplace?
Controlling
the
use
of
workplace
technology
Why
do
managers
monitor
what
employees
are
doing?
» Employees
are
hired
to
work,
not
surf
the
web
» Concerns
about
racial
or
sexual
harassment
in
the
workplace
» Ensure
that
confidential
company
information
is
not
being
leaked
Downloaded by Amit Chakladar ([email protected])
lOMoARcPSD|4118297
Nowshin
Hassan
»Employers
can
tap
your
phone,
read
your
email,
monitor
your
work
by
computer,
store
and
review
computer
files,
track
your
whereabouts
in
a
company
vehicle,
etc.
» Ethics
of
monitoring
Controlling
the
employee
theft
Employee
Theft:
any
unauthorised
taking
of
company
property
by
employees
for
their
personal
use
Downloaded by Amit Chakladar ([email protected])
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