Principles of Management

Chapter 1
Modern Management: Skills for success

Management — The process of reaching organizational goals by working with and through
people and other organizational resources.

Management Functions — Activities that make up the management process. The four
basic management activities are planning, organizing, influencing , and controlling.

1. Planning — involves choosing tasks that must be performed to attain organizational

goals , outlining how the tasks must be performed, and indicating when they should be
performed. Focuses on attaining goals.
2. Organizing — organizing creates a mechanism to put plans into action.
3. Influencing — this function also commonly referred to as motivating, leading, directing,
or actuating — is concerned primarily with people within organizations. The ultimate
purpose of influencing is to increase productivity.
4. Controlling — is the management function for which managers:
1) Gather information that measures recent performance within organization.
2) Compare present performance to reestablished performance standards.
3) From this comparison, determine if the organization should be modified to meet
reestablished standards.
Managers continually gather information, make their comparisons, and then try to
find new ways of improving production through organizational modification.

Organizational Resources — All assets available for activation during the production
process; they include:
1. Human resources — are the people who work for an organization.
2. Monetary resources — are amounts of money that managers use to purchase goods and
services for the organization.
3. Raw material resources — used directly in the manufacturing of products (ex: rubber is
a raw material that Goodyear would purchase with its monetary resources and use
directly in manufacturing tires)
4. Capital resources — are machines or equipment used during the manufacturing process.

Managerial Effectiveness — Refers to the management's use of organizational resources in

meeting organizational goals. The closer the organization comes to achieving its goals, the
more effective its managers are considered to be.

Managerial Efficiency — The proportion of total organizational resources used during the
production process. The higher this proportion, the more efficient the manager. The more
resources wasted or unused during this production process (also the human effort), the more
inefficient the manager.
Universality of Management — means that the principles of management are applicable to
all types of organizations and organizational levels.

Career — is a sequence of work-related positions occupied by a person over the course of a

lifetime. As people accumulate successful experiences in one position, they generally
develop abilities and attitudes that qualify them to hold more advanced positions.
Careers are generally viewed as evolving through a series of stages. These evolutionary
stages: exploration, establishment, maintenance, and decline.

Exploration Stage — Is the first stage in career evolution; it occurs at the beginning of a
career, when the individual is typically 15-25 years of age, and is characterized by self-
analysis and the exploration of different types of available jobs. (исследование)

Establishment Stage — Is the second stage of career evolution; individuals of about 25-45
years of age typically start to become more productive, or higher performers. (основывать)

Maintenance Stage — Is the third stage in career evolution; individuals of about 45-65
years of age show either Increased performance (career growth), stabilized performance
(career maintenance), or decreased performance (career stagnation). (поддерживать)

Decline Stage — The fourth and last stage in career evolution; it occurs near retirement age,
when individuals of about 65 years of age show declining productivity. (отклонять)

Special career issues:

- Women managers (lack the social contacts, families, households, sexual harassment)
- Dual career couples (flexibility, organization, difficult have it «all») career, handing
home job-oriented issues, negotiating child care, scheduled shared activities, limit social
lives, mutual career advancement.

Management Skill —Is the ability to carry out the process of reaching organizational goals
by working with and through the people and other organizational resources.

Technical Skill — Skills involving the ability to apply specialized knowledge and expertise
to work-related techniques and procedures.
Human Skills — Skills involving the ability to build cooperation with the team being led.
Conceptual Skills — Skills involving the ability to see the organization as a whole.

Task-related Activities — Are management efforts aimed at carrying out critical

management related duties in organizations. Short term planning, clarifying objectives of
jobs in organizations and monitoring operations and performance.
People-related Activities — Are management efforts aimed at managing people in
organizations. Providing support and encouragement to others, recognition for achievements
and contributions, developing skill and confidence, consulting and solve problems.
Change-related Activities — Are management efforts aimed at modifying organizational
components. Monitoring organization’s external environment, proposing new strategies and
vision, innovative thinking and taking risks to promote needed change.

Law of the situation — indicates that managers must continually analyze the unique
circumstances within their organizations and apply management concepts to fit their
circumstances.

Highlights — appear throughout the text to focus the attention or important contemporary
management themes: global management, business or corporate ethics, diversity in
organizations, management in various industries, and information technology.
The Global Arena — Modern managers are faced with many challenges involving global
business.
Ethics and Social Responsibility — Modern managers face the challenge of developing and
maintaining social responsibility and ethical practices that are appropriate for their
particular organizations.
Diversity Counts — Modern managers constantly face the challenge of handling situations
involving diversity in organizations. Diversity is defined as differences in people such as
gender, age, ethnicity, nationality, ability.
Across Industries — Managers apply management principles daily in many different
industries across the world. How managers react to the varied situations that confront them.
Information Today — Recently developed technology surrounding the development of the
Internet has significantly impacted how modern managers receive, analyze, store and
disseminate information.

How the Pros Do It

One of the most powerful ways to learn how to manage is to see how practicing managers
apply their skill when faced with various organizational challenges.
Chapter 6
Principles of planning

General Characteristics of Planning:

• Defining Planning
• Purposes of Planning
• Planning: Advantages and Potential Disadvantages
• Primacy of Planning

Planning — is the process of determining how the organization can get where it wants to
go, and what it will do to accomplish its objectives.

Purposes:
• Protective — minimize risk by reducing the uncertainties surroundings business
conditions and clarifying the consequences of related management actions.
• Affirmative — increase the degree of organizational success.
• Coordination
• Fundamental

Advantages:
• Helps managers to be future-oriented (look beyond their everyday problems to project
what situations may confront them in the future).
• Push managers to coordinate their decisions (no decisions should be made today without
some idea of how it will affect a decision to be made tomorrow).
• Emphasizes organizational objectives (managers are continually reminded of exactly what
their organization is trying to accomplish).
Disadvantages:
• Planning function is not well executed
• Take up too much managerial time

Planning as the foundation for organizing, influencing and controlling.

Steps in the Planning Process:

1. State organizational objectives. Before the planning, focuses on how management

system will reach organizational objectives, a clear statement of those objectives is
necessary before the planning can begin.

2. List alternative ways of reaching objectives. Manager should list as many available
alternatives as possible for reaching those objectives.
3. Develop premises in which to base each alternative. Any alternative used to reach
organizational goals is determined by the premises, or assumptions on which the
alternative is based.
4. Choose the best one alternative for reaching objectives. An evaluation of alternatives
must include an evaluation of the premises on which the alternative is based.
5. Develop plans to pursue the chosen alternative. After the alternative has been chosen,
manager begins to develop strategic and tactical plans.
6. Put the plans into action. Once plans that furnish the organization with both long-
range and short-range direction have been developed, they must be implemented.

Subsystem — is a system created as a part of the overall management system.

Organizational Objectives: Planning’s Foundation

Organizational Objectives — are the targets toward which the open management system is
directed.
The Organizational Purpose — is what the organization exists to do, given a particular
group of customers and customer needs.

Summary of organizational objectives for businesses:

1. Profit is the motivating force for managers
2. Service to customers justifies the existence of the business
3. Managers have Social Responsibilities

Key areas to set management system objectives:

1. Market standing
2. Innovation
3. Productivity
4. Physical and financial resources
5. Profitability
6. Managerial performance and development
7. Worker performance and attitude
8. Public Responsibility

Short-term objectives — targets to be achieved in one year or less.

Intermediate-term objectives — targets to be achieved in one to five years.
Long-term objectives — targets to be achieved in five or seven years.

Principle of the objective — the necessity of predetermining appropriate organizational

objectives has lead to the development of management guideline.

Hierarchy of objectives — the overall organizational objective and the sub-objectives

assigned to the various people or units of the organization.
Sub optimization — is a condition wherein sub objectives are conflicting or not directly
aimed at accomplishing the overall organizational objective.

Guidelines for Establishing Quality Objectives

1. Let those responsible for attaining objectives have voice in setting them
2. State objectives as specifically as possible
3. Relate objectives to specific actions whenever necessary
4. Pinpoint expected results
5. Set goals high enough that employees have to strive to meet them
6. Specify when goals are expected to be achieved
7. Set objectives only in relation to other organizational objectives
8. State objectives clearly and simply

MBO (Managers by objectives) — some managers find organizational objectives such as

an important and fundamental part of management approach based exclusively on them.

The MBO strategy:

1. All individuals are assigned a specialized set of objectives
2. Performance reviews are conducted periodically
3. Rewards are given to individuals

The MBO process:

1. Review organizational objectives
2. Set worker objectives
3. Monitor progress
4. Evaluate performance
5. Give rewards

Factors Necessary for a Successful MBO Program

1. Top management must be committed and set appropriate objectives
2. Managers and subordinates must develop and agree on individual’s goals
3. Employee performance should be evaluated against established objectives
4. Management must follow through on employee performance evaluations

Advantages:
1. Continually emphasize how to achieve organizational goals
2. Secures employee commitment to attaining goals

Disadvantages:
1. Development of objectives can be time consuming
2. Increase the volume of paperwork in an organization
Most managers find MBO programs beneficial

Qualifications of Planners
Primary qualifications:
1. Considerable practical experience within organization
2. Know how all parts of the organization function and interrelate
3. Define trends and determine how organization reacts to trends
4. Ability to work well with others
Evaluation of Planners
Objective Indicators
Guidelines for evaluating the planners’ performance:
1. Organizational plan is in writing
2. Plan is the result of all elements of management team working together
3. Plan defines present and possible future business of the organization
4. Plan specifically mentions organizational objectives
5. Plan identifies opportunities and suggests how to take advantage of them
6. Plan emphasizes both internal and external environments
7. Plan describes the attainment of objectives in operational terms
8. Plan includes both long- and short-term recommendations

Chapter 9
Plans and Planning Tools

Plan — a specific action proposed to help the organization achieve its objectives.
Developing logical plans and taking the steps necessary to put the plans into action.

Dimensions of Plans:

1. Repetitiveness — is the extent to which the plan is used over and over again. (Plan
used only once/Plan used many times)
2. Time — length of time the plan covers. Strategic plans cover long periods of time and
tactical plans cover short periods of time. (Long-term/Short-term)
3. Scope — portion of the total management system at which the plan is aimed. Master
plan (cover the entire open management system: the organizational environment, inputs,
outputs, process). Other plans cover only a portion of the management system. (Entire/
Small part of the system)
4. Level — level of the organization at which the plan is aimed. Top-level plans are
designed for the organization’s top management, whereas middle and lower plans are
designed for middle and lower management. (Upper level/Lower level)

Standing Plans — are used over and over again because they focus on organizational
situations that occur repeatedly.
• Policy — is a standing plan that furnishes broad guidelines for taking actions consistent
with reaching organizational objectives.
• Procedure — is a standing plan that outlines a series of related actions that must be taken
to accomplish a particular task.
• Rule — standing plan that designates specific required action.
Single-Use Plans — are used only once (or at most several times), because they focus on
unique or rare situations within organization.

• Programs — is a single-use plan designed to carry out a special project within the
organization
• Budgets — single-use financial plan that covers a specific length of time. It details how
funds will be spent on labor, raw materials, capital goods, information systems, marketing
etc.

Why Plans Fail?

1. Corporate planning is not integrated into the total management system.

2. There’s a lack of understanding of the different steps of the planning process.
3. Management at different levels in the organization has not has not properly engaged in
or contributed to planning activities.
4. Responsibility for planning is wrongly vested solely in the planning department.
5. Management expects that plans developed will be realized with little effort.
6. In starting formal planning, too much is attempted at once.
7. Management fails to operate by the plan.
8. Financial projections are confused with planning.
9. Inadequate inputs are used in planning.
10. Management fails to grasp the overall planning process.

Input planning — the development of proposed action that will furnish sufficient and
appropriate organizational resources for reaching established organizational objectives.

Plant Facilities Planning — involves determining the type of buildings and equipment an
organization needs to reach its objectives. A major part of this determination is called Site
Selection — deciding where a plant facility should be located.
• Profit (Market Location, Competition)
• Operating Costs (Suppliers, Utilities, Wages, Taxes)
• Investment Costs (Land/Development)
• Others (Transportation, Laws, Labor, Unionization, Living Conditions, Community
Relations)

Human Resource Planning — involves reflecting on organizational objectives to

determine overall human resource needs; comparing these needs to the existing human
resource inventory to determine net human resource needs; and finally seeking appropriate
organization members to meet the net human resource needs.

1. What types of people does the organization need to reach its objectives?
2. How many of each type are needed?
3. What steps should the organization take to recruit and select such people?
4. Can present employees be further trained to fill future needed positions?
5. At what rate are employees being lost to other organizations?