Managers as Planners and Decision

Makers

Based on slides from Dr Anne Morrisey

 Planning
By failing to A man who
prepare, does not plan
you are long ahead
will find
preparing to
trouble at the
fail
door.
 Planning
Decision making is the essence of
Management. It is what managers
do. All managers would like to
make good decisions, since they
are judged on the outcomes of
these decisions.
 Decision Making Process
Senior Managers make decisions about
organisational goals, where to locate
manufacturing facilities and what markets
to move into
Middle and Lower Level Managers make
decisions about production schedules,
product quality problems, pay rises,
employee discipline
 Decision Making Process
Identification Identification of Allocation of
weights to Development of
of a problem Decision Criteria Alternatives
criteria

Evaluation of Decision
Effectiveness

Implementation Selection of an Analysis of

of the Alternative Alternatives
alternative

This process is as relevant to personal

decisions as it is to corporate decisions
 Decision Making Process
• Problem Identification: Important but not easy.
Managers have to be cautious of not confusing
problems with symptoms of a problem
• Identifying Decision Criteria: Criteria that define
what is important or relevant in resolving a
problem
• Allocating Weights: Weigh the criteria to give
each one the correct priority in the decision
 Decision Making Process
• Developing Alternatives: Brainstorming is
sometimes used here – Creativity is important
• Analysing Alternatives: Evaluate each one by
using the criteria and weights
• Selecting an Alternative: based on the rankings
• Implementing the Alternative: communicate to
those affected and get their commitment to it
• Evaluating decision effectiveness: Has the
problem been resolved? If not, why not?
 Decision Making Process

If the people who must

implement a decision
participate in the process, then
they are more likely to support
the decision
 Managers making decision
• Decision making is
the essence of
Management
• Managers when they
plan, organise, lead
and control are
called decision
makers
 Decisions Managers May Make
• What are the organisation’s
long term objectives?
• What should the structure
of the organisation look
like?
• How do I handle employees
who appear to be low in
motivation?
• What activities in the
organisation need to be
controlled?
 Making Decisions – Rationality
Managers are assumed to make decisions
rationally – i.e. logical and consistent choices to
maximise value and decisions are usually made
in the best interests of the organisation
BUT
This is not always possible or realistic because
all the information may not be available or
managers do not have the time to assess all
alternatives
Making Decisions: Bounded Rationality

Decision making that is rational but

limited (bounded) by an individual’s
ability to process information

Because they cannot possibly analyse all

information on all alternatives, manager
satisfice rather than maximise accepting
solutions that are good enough
 Escalation of Commitment
An increased commitment to a
previous decision despite evidence
that it may have been a poor decision.
Making Decisions: The role of Intuition
Experience Based
Decisions

Values or Ethics
Affect-initiated
based Decisions
decisions

Intuition
Sub-conscious Cognitive-based
mental processing decisions

Making decisions based on experience,

feelings and accumulated judgement
Structured Problems and Programmed
Decisions
A straightforward, familiar and easily defined
problem, which leads to a programmed
decision, a repetitive decision that can be
handled using a routine approach such as:
• Procedure – a series of sequential steps (eg
purchasing)
• Rule – an explicit statement about what can or
cannot be done (eg lateness)
• Policy – Guidelines (general parameters, open
to interpretation)
 Unstructured problems and non
programmed decisions
A problem that is new or unusual and for which
information is ambiguous or incomplete, which
is solved by non programmed decision making -
a unique and nonrecurring decision that
requires a custom-made solution
Typically, Lower level managers rely on
programmed decision-making and upper levels
have to make non-programmed decisions.
 Comparing Decisions
Characteristic Programmed Decisions Nonprogrammed Decisions
Type of problem Structured Unstructured
Managerial Level Lower Levels Upper Levels
Frequency Repetitive, routine New, unusual
Information Readily available Ambiguous or incomplete
Goals Clear, specific Vague
Time frame for solution Short Relatively long
Solution relies on Procedures, rules, policies Judgement and creativity

Managers may face three different

conditions: certainty, risk and uncertainty
 Decision-making Conditions
• Certainty: A situation in which a decision
maker can make accurate decision because all
outcomes are known.
Most managerial decisions are not like this
• Risk: A situation in which the decision maker
is able to estimate the likelihood of certain
outcomes
• Uncertainty: a situation in which the decision
maker has neither certainty nor reasonable
probability estimates available.
 Decision Making Conditions - Uncertainty
The choice of alternative is influenced by the
limited amount of available information and by the
psychological orientation of the decision maker:
Maximax choice – maximising the maximum
possible payoff)
Maximin choice – maximising the minimum
possible payoff)
Minimax choice – minimising the maximum regret
See example in the core text book for an example
of each one
 Decision Making Styles
• Linear Thinking Style: A decision style
characterised by a person’s preference for using
external data and facts and processing this
information through rational, logical thinking
• Nonlinear Thinking Style: A decision style
characterised by a person’s preference for
internal sources of information and processing
this information with internal insights, feelings
and hunches
 Decision Making Errors and Biases
Overconfidence

Hindsight Immediate Gratification

Anchoring Effect
Self-Serving

Sunk Costs Selective Perception

Organisational
Culture

Randomness Confirmation

Representation Framing

Availability
Decision Making Errors and Biases
• While managers can rely on Heuristics (rule of
thumb to simplify decision making), there is
the danger of the errors and biases on the
previous slide
• Managers can avoid these biases:
– by being aware of them and then not using them
– Critically evaluating the heuristics they use to see
how appropriate they are.
 Overview of Managerial Decision
Making
Decision-Making Approach
Rationality
Bounded rationality
Intuition Decision-Making
errors and Biases

Types of Problems and Decisions

Well-structured – programmed
Unstructured - nonprogrammed Decision
Choosing best alternative
Decision- Maximising
Making Process Satisficing
Decision-Making Conditions Implementing
Certainty Evaluating
Risk
Uncertainty

Decision-Maker’s Style
Linear Thinking style
Non Linear thinking style
Managers as Leaders
 Managers as Leaders
Leader Leadership
Someone who What leaders
can influence do; the process
others and who of influencing a
has managerial group to
authority achieve goals
16-25 Copyright © 2011 Pearson
Education
 Who Are Leaders and What Is
Leadership
Although groups may have informal
leaders who emerge, those are not the
leaders we’re studying. We are
studying Leaders from a managerial
perspective
Ideally, all managers should be
16-26 leaders
Copyright © 2011 Pearson Education
 Early Leadership Theories
Early leadership theories focused
on the leader (trait theories) and
how the leader interacted with his
or her group members
(behavioural theories)
 Early Leadership Theories
Trait Theories (1920s–1930s)
Research focused on identifying personal
characteristics that differentiated leaders from
non-leaders was unsuccessful.
Later research on the leadership process identified
seven traits associated with successful leadership:
Drive, the desire to lead, honesty and integrity,
self-confidence, intelligence, job-relevant
knowledge, and extraversion.
BUT………
 Early Leadership Theories
Traits alone are not sufficient for
identifying effective leaders because this
ignores the interactions of leaders and
group members as well as situational
factors. Therefore researchers from late
1940s to mid-1960s focussed on
preferred behavioural styles that leaders
demonstrated.
16-29 Copyright © 2011 Pearson
Education
 Behavioral Theories
Leadership theories that
identify behaviours that
differentiate effective
leaders from ineffective
leaders.
Behavioral Theories (1940s – 1960s)
University of Iowa Studies (Kurt Lewin)
Identified three leadership styles:
Autocratic style: dictates work methods, makes
unilateral decisions and limits employee
participation
Democratic style: involves employees in decision
making, delegates authority and uses feedback to
coach employees.
Laissez faire style: lets the group make decisions
and complete the work in whatever way it sees fit
Democratic style of leadership was most effective, although later
studies showed mixed results
 Behavioral Theories (1940s – 1960s)
Researchers realised that to be a successful
leader, it was necessary for leaders to focus
on the task AND on the people
Behavioral Theories (1940s – 1960s)
Ohio State Studies
Identified two dimensions of leader behaviour:
Initiating structure: the role of the leader in
defining his or her role and the roles of group
members in attaining goals.
Consideration: the leader’s mutual trust and
respect for group members’ ideas and feelings.
Found that High Initiating – High consideration
leaders achieved high subordinate performance
and satisfaction, but not in all situations
 Behavioral Theories (1940s – 1960s)
University of Michigan Studies
Identified two dimensions of leader behavior:
Employee oriented: emphasising personal
relationships
Production oriented: emphasizing task
accomplishment

Leaders who are employee oriented are strongly

associated with high group productivity and high
job satisfaction.
 Behavioral Theories (1940s – 1960s)
The Managerial Grid
Appraises leadership styles using two dimensions:
concern for people and concern for production
Places managerial styles in five categories:
Impoverished management (1,1)
Task management (9,1)
Middle-of-the-road management (5,5)
Country club management (1,9)
Team management (9,9)

Leaders performed best with a 9,9 style (high

concern for production & high concern for people),
but no real evidence to support this in all situations
 Contingency Theories of Leadership
In this group of theories, each one
looks at defining leadership style and
the situation, and it attempts to
answer the if-then contingencies
(that is if this is the context or
situation, then this is the best
leadership style to use.
 The Fiedler Model
A leadership theory that proposed
that effective group performance
depended upon the proper match
between the leader’s style of
interacting with followers and the
degree to which the situation allows
the leader to control and influence.
 The Fiedler Model
Assumptions:
A key factor in leadership success is an individual’s
leadership style, either task oriented or relationship
oriented.
A certain leadership style should be most effective
in specific types of situations.
Leaders do not readily change leadership styles.
Matching the leader to the situation or changing
the situation to make it favorable to the leader is
required.
16-38 Copyright © 2011 Pearson Education
 The Fiedler Model
Step 1: Define the leadership styles and the
different types of situations
Situational factors in leader effectiveness:
Leader–member relations: the degree of confidence,
trust and respect employees had for their leader,
rated as either good or poor
Task structure: the degree to which job assignments
were formalised and structured rated as either high
or low
Position power: the degree of influence a leader had
over activities such as hiring, firing, discipline, salaries
etc rated as either strong or weak
 The Fiedler Model
Step 2: Identify the appropriate combinations
of style and situation
The two leadership styles were
evaluated in terms of the three
contingency variables giving rise to
eight possible situations that were
either favourable or unfavourable for
the leader.
 Findings of the Fiedler Model

Figure 16.5 from the core text book.

16-41 Copyright © 2011 Pearson Education
 The Fiedler Model
Research testing the overall validity of this
model has shown considerable evidence
in support of the model
BUT
It is considered unrealistic to assume
that a person cannot change his or her
leadership style to fit the situation
 Hersey and Blanchard’s Situational
Leadership Theory (SLT)
Argues that successful leadership is achieved by
selecting the right leadership style which is
contingent on the level of the followers’ readiness.
– Acceptance: leadership effectiveness depends on
whether followers accept or reject a leader.
– Readiness: the extent to which followers have the
ability and willingness to accomplish a specific task.
Leaders must relinquish control over and contact
with followers as they become more competent.
Hersey and Blanchard’s Situational Leadership
Theory (SLT)
Creates four specific leadership styles
incorporating Fiedler’s two leadership
dimensions:
Telling: high task–low relationship leadership
Selling: high task–high relationship leadership
Participating: low task–high relationship
leadership
Delegating: low task–low relationship leadership
Hersey and Blanchard’s Situational Leadership
Theory (SLT)
Task Oriented
Low High

Participating Selling
Leader provides both
High

Leaders and followers

directive and supportive
Relationship Oriented

share in decision
making behaviour

Delegating Telling
Leader provides little Leader tells people
direction or support what, when and where
Low

to do various tasks
 Hersey and Blanchard’s Situational
Leadership Theory (SLT)
Posits four stages for follower readiness:
• R1: followers are unable and unwilling –
Telling Style
• R2: followers are unable but willing –
Selling Style
• R3: followers are able but unwilling –
Participating style
• R4: followers are able and willing –
Delegating style
 Hersey and Blanchard’s Situational
Leadership Theory (SLT)
This model acknowledges the importance
of followers and builds on the logic that
leaders can compensate for ability and
motivational limitations in their followers.
BUT
This theory is not well supported in
practice and it should be used with
caution
 Path-Goal Theory
A leadership theory that states
that the leader’s job is to assist his
or her followers in attaining their
goals and to provide direction or
support to ensure their goals are
compatible with organisational
goals.
 Path-Goal Model
Leaders assume different leadership styles at
different times depending on the situation:
Directive leader lets subordinates know what is
expected of them
Supportive leader shows concern for the needs of
followers and is friendly
Participative leader consults with group members
Achievement oriented leader sets challenging
goals and expects followers to perform at their
highest level
 Path-Goal Theory

Figure 16.6 from the core text book

 Path-Goal Theory
Research on the Path-Goal Theory is
generally encouraging. In summary,
the Path-Goal Theory says that a
leader should provide direction and
support as needed, ie the leader
should structure the path so the
followers can achieve goals
Contemporary Views of Leadership
Transactional Transformational
Leadership Leadership
Leaders who guide or Leaders who inspire
motivate their followers followers to transcend
in the direction of their own self-interests
established goals by for the good of the
clarifying role and task organization by
requirements. clarifying role and task
requirements.
Contemporary Views of Leadership
Transformational leaders are Charismatic
Leaders
A charismatic leader is an
enthusiastic and self-confident
leader whose personality and
actions influence people to behave
in certain ways.
Contemporary Views of Leadership
Research has shown that Transformational
leaders were evaluated as more effective, higher
performers, more promotable than their
Transactional counterparts and more
interpersonally sensitive.
Transformational leadership is also associated
with lower turnover rates, higher levels of
productivity, employee satisfaction, creativity,
goal attainment and follower well-being.
 Contemporary Views of Leadership
Team Leadership
The challenge for many managers is learning how to
become an effective team leader. This involves:
• Having patience to share information
• Being able to trust others and to give up authority
• Understanding when to intervene
• Managing the team’s external boundary
• Facilitating the team process
 Summary
Theory Premise Main Insight from research
Trait Theories Isolated the traits of effective Leader traits alone are not
1920s - 1930s leaders sufficient for identifying effective
leaders and a leader’s behaviour is
important
Behaviour Theories The identification of Predicting leadership success is
1940s - 1960s behaviours that differentiated more complex than just isolating
effective leaders from traits and preferred behaviours:
ineffective ones Situational influences became
important
Contingency Theories Defined the leadership style Effective leadership needs to reflect
1960s - 1970s and the situation combined situational factors, but need to also
need to consider social interactions
Contemporary Effective leaders are those Transformational leaders are
Theories that stimulate and inspire considered as more effective and
1980s and beyond followers to achieve higher performers than
extraordinary outcomes transactional counterparts. There is
no one best style for all situations
 Leadership Issues in the Twenty-First
Century
1. Managing Power
2. Developing Trust
3. Empowering Employees
4. Leading across Cultures
5. Understanding Gender Differences
6. Gender differences in the Arab World
7. Becoming an Effective Leader
 Managing Power
Legitimate power Expert power
The power a leader has as a The influence a leader can
result of his or her position. exert as a result of his or her
Coercive power expertise, skills, or
knowledge.
The power a leader has to
punish or control. Referent power
Reward power The power of a leader that
arises because of a person’s
The power to give positive
desirable resources or
benefits or rewards.
admired personal traits.
Most effective leaders rely on several different forms of power
to affect the behaviour and performance of their followers
16-58 Copyright © 2011 Pearson Education
 Developing Trust
Credibility (of a Leader)
The assessment of a leader’s honesty, competence,
and ability to inspire by his or her followers.
Trust
Is the belief of followers and others in the integrity,
character, and ability of a leader.
Trust in leadership is related to increases in job
performance, organizational citizenship behaviors,
job satisfaction, and organization commitment.
 Dimensions of Trust
Integrity: Honesty and truthfulness (Most critical one)
Competence: Technical and interpersonal knowledge
and skills
Consistency: Reliability, predictability, and good
judgment in handling situations
Loyalty: Willingness to protect a person, physically and
emotionally
Openness: Willingness to share ideas and information
freely
One of the biggest challenges Managers face today is
how they can gain trust?
 Empowering Employees
Empowerment involves increasing the decision-
making discretion of workers such that teams
can make key operating decisions that directly
affect their work.
Why empower employees?
Quicker responses to problems and faster
decisions
Addresses the problem of increased spans of
control in relieving managers to work on other
problems
 Becoming an Effective Leader:
Leader Training
More likely to be successful What can be taught:
with individuals who are high
Implementation skills
self-monitors than with low
self-monitors. Trust-building
Individuals with higher levels Mentoring
of motivation to lead are Situational analysis
more receptive to leadership
development opportunities
16-62 Copyright © 2011 Pearson
Education
Managers as Organisers
 Designing Organisational
Structure
Once managers are finished planning,
then Managers need to begin to “work
the plan”. The first step in doing this
involves designing an appropriate
organisational structure. This focus of
this topic is on what is involved with
designing this structure.
 Designing Organisational
Structure
Organising Organisational
Arranging and Structure
structuring work The formal
to accomplish an arrangement of
organisation’s jobs within an
goals. organisation
 Designing Organizational
Structure
Organisational Chart Organisational Design
The visual A process involving
representation of an decisions about six key
organisation’s elements:
structure. Work specialisation
Departmentalisation
Chain of command
Span of control
Centralisation and
decentralisation
Formalisation
 Purposes of Organising
Divides work to be done into specific jobs and
departments.
Assigns tasks and responsibilities associated with
individual jobs.
Coordinates diverse organisational tasks.
Clusters jobs into units.
Establishes relationships among individuals,
groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organisational resources.
 Work Specialisation
The degree to which
tasks in the
organisation are
divided into separate
jobs with each step
completed by a
different person.
 Work Specialisation
BUT
Overspecialisation can result in
human diseconomies from
boredom, fatigue, stress, poor
quality, increased absenteeism,
and higher turnover.
 Departmentalisation
The basis on which jobs are grouped together.
This can be done in a number of ways:
Functional: Grouping jobs by functions performed
Geographical: Grouping jobs on the basis of territory
Product: Grouping jobs by product line
Process: Grouping jobs on the basis of product or
customer flow
Customer: Grouping jobs by type of customer and
needs
 Departmentalisation

Geographical Departmentalisation – Group jobs according to Geographic Location

 Departmentalisation
Product Departmentalisation – Group jobs by product line
 Departmentalisation
Process Departmentalisation – Group jobs by product

Customer Departmentalisation - Grouping jobs by type of customer and needs

 Departmentalisation
Cross Functional Teams are work
teams composed of individuals
from various functional specialities
In this sort of departmentalisation,
people usually work in teams from
various functional specialities.
 Chain of Command
The continuous line of authority that
extends from upper levels of an
organisation to the lowest levels of
the organisation and clarifies:
Whom do I report to?
Whom do I go to if I have a problem?
 Chain of Command
Authority
The rights inherent in a managerial position to tell people
what to do and to expect them to do it.

Responsibility
The obligation or expectation to perform.

Unity of Command
The concept that a person should have one boss and
should report only to that person. Without this, conflicting
demands from multiple bosses may create problems
 Span of Control
The number of employees who can be
effectively and efficiently supervised by a
manager.
The traditional view was that managers
could not directly supervise more than five
or six people. However, today’s view is
that there is no magic number.
 Span of Control
Many factors influence the number of employees that a
manager can efficiently and effectively manage

Skills and abilities of the Physical proximity of subordinates

manager Standardization of tasks
Employee characteristics Sophistication of the organization’s
Characteristics of the work being information system
done Strength of the organization’s
Similarity and complexity of tasks culture
Preferred style of the manager
Contrasting Spans of Control
 Organisational Structure
Centralisation
The degree to which decision making is
concentrated at upper levels in the organisation.
A centralised organisations is one in which top managers
make all the decisions and lower-level employees simply
carry out those orders.
Decentralisation
Organisations in which decision making is pushed
down to the managers who are closest to the
action.
Employee Empowerment
Increasing the decision-making authority (power)
of employees.
Centralisation or Decentralisation
More Centralisation
Environment is stable.
Lower-level managers are not as capable or experienced at
making decisions as upper-level managers.
Lower-level managers do not want to have a say in
decisions.
Decisions are relatively minor.
Organisation is facing a crisis or the risk of company failure.
Company is large.
Effective implementation of company strategies depends on
managers retaining say over what happens.
Centralisation or Decentralisation
More Decentralisation
Environment is complex, uncertain.
Lower-level managers are capable and experienced at making
decisions.
Lower-level managers want a voice in decisions.
Decisions are significant.
Corporate culture is open to allowing managers to have a say
in what happens.
Company is geographically dispersed.
Effective implementation of company strategies depends on
managers having involvement and flexibility to make
decisions.
 Formalisation
The degree to which jobs within the
organisation are standardised and the
extent to which employee behavior is
guided by rules and procedures.
Highly formalised jobs offer little discretion
over what is to be done.
Low formalisation means fewer constraints
on how employees do their work
Mechanistic and Organic Structures

An organisational design An organisational design

that is rigid and tightly that is highly adaptive and
controlled flexible
High specialisation Cross-functional teams
Rigid departmentalisation Cross-hierarchical teams
Clear chain of command Free flow of information
Narrow spans of control Wide spans of control
Centralisation
Decentralisation
High formalisation
Low formalisation
 Contingency Factors
Strategy and Structure
Achievement of strategic goals is facilitated by
changes in organisational structure that
accommodate and support change.
Organisational structure follows strategy.
EXAMPLE
For organisations that want to pursue innovations
Organic structure works well
For companies that want to tightly control costs
Mechanistic structure works best
 Contingency Factors
Size and Structure
As an organisation grows larger, its
structure tends to change from organic to
mechanistic with increased
specialisation, departmentalisation,
centralisation, and rules and regulations.
 Contingency Factors
Technology and Structure
Organisations adapt their structures to their
technology.
Woodward’s classification of firms based on the
complexity of the technology employed:
Unit production of single units or small batches
Mass production of large batches of output
Process production in continuous process of outputs
Routine technology = mechanistic organisations
Non-routine technology = organic organisations
Woodward’s Findings on Technology, Structure
and Effectiveness
Structural Characteristics Unit Production Mass Production Process Production
Vertical Differentiation Low Moderate High

Horizontal Differentiation Low High Low

Formalisation Low High Low

Most effective structure Organic Mechanistic Organic

Other studies have shown that organisations adapt their

structures to their technology depending on how routine
their technology is for transforming inputs into outputs.
In general - the more routine the technology, the more
mechanistic the structure; the less routine, the more
organic the structure can be.
 Contingency Factors
Environmental Uncertainty and Structure
Mechanistic organisational structures tend to
be most effective in stable and simple
environments.
The flexibility of organic organisational
structures is better suited for dynamic and
complex environments.
Today the trend is for organisations to be
more organic
Common Organisational Designs
Three traditional organisational designs.
Simple structure
Functional structure
Divisional structure

Three contemporary organisational designs.

Team Structures
Matrix and Project Structures
The Boundaryless Organisation
 Traditional Designs
Simple structure
Low departmentalization, wide spans of control,
centralized authority, little formalization.
However, organisations do not stay simple for long
and become more bureaucratic. At this point,
managers choose a different structure

Bureaucratic
Committed to the particulars of organisational
procedures
 Traditional Designs
Functional structure
Departmentalisation by function
Operations, finance, marketing, human resources,
and product research and development
Divisional structure
Composed of separate business units or divisions
with limited autonomy under the coordination
and control of the parent corporation.
Contemporary Organisational Designs

Managers are finding that traditional

designs are not appropriate for
today’s increasingly dynamic and
complex environment. Instead,
organisations need to be flexible, lean
and innovative – that is they need to
be more organic
Contemporary Organisational Designs
Team structures
The entire organisation is made up of work groups or
self-managed teams of empowered employees.
Matrix and project structures
Specialists from different functional departments are
assigned to work on projects led by project managers.
Matrix and project participants have two managers.
In project structures, employees work continuously on
projects; moving on to another project as each project is
completed.
Contemporary Organisational Designs
Boundaryless Organization
A flexible and unstructured organisational design
that is intended to break down external barriers
between the organisation and its customers and
suppliers.
Removes internal (horizontal) boundaries:
Eliminates the chain of command
Has limitless spans of control
Uses empowered teams rather than departments
Eliminates external boundaries:
Uses virtual, network, and modular organisational
structures to get closer to stakeholders.
 Removing External Boundaries
Virtual Organisation
An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work on
opportunities that arise.
Network Organisation
A small core organization that outsources its major business
functions (e.g., manufacturing) in order to concentrate on
what it does best.
Modular Organisation
A manufacturing organization that uses outside suppliers to
provide product components for its final assembly operations.
Strengths and Weaknesses of Traditional
Organisational Designs
 Strengths and Weaknesses of Contemporary
Organisational Designs
Team Structure
What is it? A structure in which the entire organization is made
up of work groups or teams.
Advantages: Employees are more involved and empowered.
Reduced barriers among functional areas.
Disadvantages: No clear chain of command. Pressure on teams to
perform.
Matrix-Project Structure
What is it? A structure that assigns specialists from different
functional areas to work on projects but who return
to their areas when the project is completed.
Advantages: Fluid and flexible design that can respond to
environmental changes. Faster decision making.
Disadvantages: Complexity of assigning people to projects. Task and
personality conflicts.
Strengths and Weaknesses of Contemporary
Organisational Designs
Boundaryless Structure
What is it? A structure that is not defined by or limited to
artificial horizontal, vertical, or external
boundaries; includes virtual and network types of
organizations.
Advantages: Highly flexible and responsive. Draws on talent
wherever it’s found.
Disadvantages: Lack of control. Communication difficulties.
 Today’s Challenges: Keeping
Employees Connected
Earlier organisational design concepts were
developed assuming:
predictable and constant work tasks
full time jobs
jobs continued indefinitely
work done at an employer’s place of business, and
under a manager’s supervision.
A major structural design challenge for managers is
finding a way to keep widely dispersed and mobile
employees connected to the organisation.
Today’s Challenges: Building a Learning
Organisation
An organisation that has developed the capacity to
continuously learn, adapt, and change through the
practice of knowledge management by employees.
Characteristics of a learning organisation:
An open team-based organisation design that empowers
employees.
Extensive and open information sharing.
Leadership that provides a shared vision of the
organization’s future.
A strong culture of shared values, trust, openness, and a
sense of community.
Managers as Controllers
 Managers as Controllers
Once a manager has finished planning,
organising and leading, they must then
monitor these activities to make sure they
are being done as planned and correct
any significant deviations. This process is
called controlling. It is the final link in the
Management process and is just as
important as the other managerial
functions.
 What Is Control?
Controlling
The process of monitoring activities to ensure
that they are being accomplished as planned
and of correcting any significant deviations.
The Purpose of Control
To ensure that activities are completed in ways
that lead to accomplishment of organisational
goals.
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 Why Is Control Important?
As the final link in management functions:
Planning
Controls let managers know whether their goals and
plans are on target and what future actions to take.
Empowering employees
Control systems provide managers with information
and feedback on employee performance.
Protecting the workplace
Controls enhance physical security and help minimise
workplace disruptions.
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 The Planning–Controlling Link

Figure 17.1 on page 421 of the core text book

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 The Control Process

Remember
Hoshin?

Figure 17.2 on page 422 of the core text book

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 Step 1: Measuring
How and What We Measure
Sources of Information Control Criteria (What)
(How) Employees
Personal observation Satisfaction
Turnover
Statistical reports
Absenteeism
Oral reports
Budgets
Written reports Costs
Output
Sales
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 Common Sources of Information for
Measuring Performance

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 Step 2: Comparing
Determining the degree of variation between actual
performance and the standard.
Significance of variation is determined by:
The acceptable range of variation from the standard
(forecast or budget).
The size (large or small) and direction (over or under) of the
variation from the standard (forecast or budget).

Range of variation: The acceptable parameters of

variance between actual performance and a
standard.
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 Defining the Acceptable Range of
Variation

Figure
17-111
17.4 on page 424 of core text book
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 Step 3: Taking Managerial Action
“Doing nothing”
– Only if deviation is judged to be insignificant.
Correcting actual (current) performance
– Immediate corrective action to correct the problem at
once.
– Basic corrective action to locate and to correct the
source of the deviation.
Revising the standard
– Examining the standard to ascertain whether or not the
standard is realistic, fair, and achievable.
– Upholding the validity of the standard.
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– Resetting goals that were initially set too low or too high.
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 Managerial Decisions in the Control
Process

Figure
17-113 17.6© 2011
Copyright on Pearson
pageEducation
425 from core text book
 Controlling for Organisational
Performance
What Is Performance?
The end result of an activity.
What Is Organisational
Performance?
The accumulated end results
of all of the organisation’s
work processes and activities.
Designing strategies, work
processes, and work activities
Coordinating the work of
employees

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Education
 Organisational Performance
Measures
Organisational Productivity
Productivity: the overall output of goods
and/or services divided by the inputs needed to
generate that output.
Output: sales revenues
Inputs: costs of resources (materials, labour expense,
and facilities)
Ultimately, productivity is a measure of how
efficiently employees do their work.
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 Organisational Performance
Measures
Organisational Effectiveness
Measuring how appropriate organisational
goals are and how well the organisation is
achieving its goals.
This is the bottom-line for managers.
It is what guides managerial decisions in
designing strategies and work activities and in
coordinating the work of employees.

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 Organisational Performance
Measures
Industry and Company Rankings
Rankings are determined by specific performance measures, which are different
for each list

Profits Revenues per dollar of

Return on revenue equity
Return on shareholders’ Corporate Culture Audits
equity Compensation and benefits
Growth in profits surveys
Revenues per employee Customer satisfaction
surveys
Revenues per dollar of
assets
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 When to measure performance
Managers can implement controls:
Before an activity begins – Feed forward
control
During the time an activity is going on –
Concurrent control
After an activity has been completed –
Feedback control
Feed-forward, Concurrent, and Feedback Controls
Feedforward Control
A control that prevents anticipated problems
before actual occurrences of the problem.
Building in quality through design
Requiring suppliers conform to ISO 9002
Concurrent Control
A control that takes place while the monitored
activity is in progress.
Direct supervision: management by walking around

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Feed-forward, Concurrent, and Feedback Controls
Feedback Control
A control that takes place after an activity is
done.
Corrective action is after-the-fact, when the
problem has already occurred.
Advantages of feedback controls:
Provide managers with information on the
effectiveness of their planning efforts.
Enhance employee motivation by providing them
with information on how well they are doing.
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 Types of Control - Overview

Figure 17.8 on page 428 from the core text book

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 Financial Controls
Every business Traditional Controls
Ratio analysis
wants to earn a
– Liquidity
profit. To achieve – Leverage
this goal, – Activity
– Profitability
managers need Budget Analysis
financial controls. – Quantitative standards
– Deviations

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Education
 Financial Controls
Budgets are planning and control tools. They
can be used to indicate which work activity are
important and how much resources should be
allocated to the activity.
They can also be used for control, as they
provide a quantitative standard against which
to measure and compare resource
consumption.
 Popular Financial Ratios
Objective Ratio Calculation Meaning

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 Financial Controls

Managing Earnings
“Timing” income and expenses to enhance
current financial results, which gives an
unrealistic picture of the organisation’s
financial performance.
New laws and regulations require
companies to clarify their financial
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information.
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 Balanced Scorecard
Is a measurement tool that uses goals set by
managers in four areas to measure a company’s
performance:
Financial
Customer
Internal processes
People/innovation/growth assets
Is intended to emphasise that all of these areas
are important to an organisation’s success and
that there should be a balance among them.
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 Information Controls
Managers deal with information controls in
two ways:
As a tool to help managers control other
organisational activities.
Managers need the right information at the
right time and in the right amount.
As an organisational area that managers need
to control.
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 Information Controls

Managers need the right

information at the right time and in
the right amount to monitor and
measure organisational activities
and performance. Information is
important
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 Management Information System
(MIS)
A system used to provide management
with needed information on a regular
basis.
Data: an unorganized collection of raw,
unanalyzed facts (e.g., unsorted list of customer
names).
Information: data that has been analysed and
organised such that it has value and relevance to
managers.
 Benchmarking of Best Practices
Benchmarking Benchmarks
The search for best The standards of
practice among excellence against
competitors or non- which to compare
competitors that and measure
lead to their Benchmarking can be used to
superior identify specific performance
gaps and potential areas of
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 Cross-Cultural Issues
The use of technology is helping to
increase direct corporate control of local
operations.
Legal constraints on corrective actions in
foreign countries can inhibit what a
manager can do.
There is a difficulty with the comparability
of data collected from operations in
different countries.
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 Workplace Concerns
Workplace privacy versus workplace monitoring
E-mail, telephone, computer, and Internet usage
Productivity, harassment, security, confidentiality,
intellectual property protection
Employee theft
The unauthorised taking of company property by
employees for their personal use.
Workplace violence
Anger, rage, and violence in the workplace is affecting
employee productivity.
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 Controlling Employee Theft
Employee theft is the unauthorised
taking of company property by
employees for their personal use.
Research has shown that up to 85% of all
organisational theft is committed by
employees not outsiders.

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 Workplace Violence
Workplace violence can range from physical
abuse to bullying to harassment.
The sort of factors that research has shown
contribute to violence include:
The pressure of working in a 24/7 environment
Rapid and unpredictable change
Authoritarian leadership
Unresolved grievances
Hazardous work environment
Faulty or unsafe equipment
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 Customer Interactions
There is a very clear link between planning and
controlling in customer service. A company that has
customer service as one of its goals can see whether it is
achieving this goal by examining how satisfied customers
are with their service.
Service profit chain
Is the service sequence from employees to customers to
profit.
Service capability
Affects service value which impacts on customer satisfaction that,
in turn, leads to customer loyalty in the form of repeat business
(profit).
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 Corporate Governance
The system used to govern a corporation so
that the interests of the corporate owners are
protected.
Changes in the role of boards of directors
Increased scrutiny of financial reporting More
disclosure and transparency of corporate
financial information
Certification of financial results by senior
management
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