Managerial effectiveness

By:
PUNEET KUMAR
 Who Are Managers?
• Manager
– Someone who works with and
through other people by
coordinating their work activities
in order to accomplish
organizational goals
 Types of Managers
• First-line Managers
– Are at the lowest level of management and
manage the work of nonmanagerial employees
• Middle Managers
– Manage the work of first-line managers
• Top Managers
– Are responsible for making organization-wide
decisions and establishing plans and goals that
affect the entire organization
Exhibit 1.1 Managerial Levels

Top
Top
Managers
Managers
Middle Managers
Middle Managers
First-Line Managers
First-Line Managers
Nonmanagerial Employees
Nonmanagerial Employees
Organization
A consciously coordinated social unit,
composed of two or more people, that
functions on a relatively continuous basis
to achieve a common goal or set of
goals.
 Definition of Management:

• Management is the process of

designing and maintaining an
environment in which individuals,
working together in groups,
efficiently accomplish selected aims
 Definitions of Effectiveness and
Efficiency
• Productivity implies effectiveness and
efficiency in individual and
organizational performance
• Effectiveness is the achievement of
objectives
• Efficiency is the achievement of the
ends with the least amount of
resources (time, money, etc.)
 Managerial Concerns

– Efficiency
• “Doing things right”
– Getting the most output for the least input

– Effectiveness
• “Doing the right things”
– Attaining organizational goals
Managers (or administrators)
Individuals who achieve goals through other people.

Managerial
ManagerialActivities
Activities
••Make
Makedecisions
decisions
••Allocate
Allocateresources
resources
••Direct
Directactivities
activitiesofofothers
otherstoto
attain
attaingoals
goals
 What Do Managers Do?
• Functional Approach
– Planning
– Organizing
– Leading
– Controlling
Planning
A process that includes defining goals,
establishing strategy, and developing
plans to coordinate activities.
Organizing
Determining what tasks are to be done,
who is to do them, how the tasks are to
be grouped, who reports to whom, and
where decisions are to be made.
Leading
A function that includes motivating
employees, directing others, selecting
the most effective communication
channels, and resolving conflicts.
Controlling
Monitoring activities to ensure they are being
accomplished as planned and correcting any
significant deviations.
 Management Functions
Planning Organizing Leading Controlling
Lead to
Defining goals, Determining Directing and Monitoring
establishing what needs motivating all activities Achieving the
strategy, and to be done, involved parties to ensure organization ’s
developing how it will and resolving that they are stated
subplans to be done, and conflicts accomplished purpose
coordinate who is to do it as planned
activities
 What Do Managers Do? (cont’d
• Mintzberg’s Management Roles Approach
– Interpersonal roles
• Figurehead, leader, liaison
– Informational roles
• Monitor, disseminator, spokesperson
– Decisional roles
• Entrepreneur, disturbance handler, resource
allocator, negotiator
 What Do Managers Do? (cont’d)
• Skills Approach
– Technical skills
– Human skills
– Conceptual skills
Technical skills
The ability to apply specialized
knowledge or expertise.

Human skills
The ability to work with, understand,
and motivate other people, both
individually and in groups.

Conceptual Skills
The mental ability to analyze and
diagnose complex situations.
 Exhibit 1.4 Skills Needed at
Different Management Levels

Top Conceptual
Managers
Skills
Middle Human
Managers Skills

Lower-level Technical
Skills
Managers

Importance
 What Is An Organization?
• An Organization Defined
– A deliberate arrangement of people to
accomplish some specific purpose
• Common Characteristics of Organizations
– Have a distinct purpose (goal)
– Are composed of people
– Have a deliberate structure
 Exhibit 1.6 The Changing Organization
Traditional New Organization
• Stable • Dynamic
• Inflexible • Flexible
• Job-focused • Skills-focused
• Work is defined by job positions • Work is defined in terms of tasks to
• Individual-oriented be done
• Permanent jobs • Team-oriented
• Command-oriented • Temporary jobs
• Managers always make decisions • Involvement-oriented
• Rule-oriented • Employees participate in decision
making
• Relatively homogeneous
workforce • Customer-oriented
• Workdays defined as 9 to 5 • Diverse workforce
• Hierarchial relationships • Workdays have no time boundaries
• Work at organizational facility • Lateral and networked relationships
during specific hours • Work anywhere, anytime
 Management: Definition
• Acc to Harold Koontz: Management is the art of
getting things done through & with an formally
organized group
• Acc to Henry Fayol: To manage is to forecast &
plan, to organize, to compound, to co-ordinate and
to control
• PODSCORB:
- Planning, Organizing, Directing, Staffing,
Controlling, Co-ordinating, Reporting & Budgeting
Features of Management
• Art as well as Science
• Management is an activity
• Management is a continuous process
• Management achieving pre-determined objectives
• Organized activities
• Management is a factor of production
• Management as a system
• Management is a discipline
Features of Management
• Management aims at maximising profit
• Management is a purposeful activity
• Management is a profession
• Universal application
• Management is getting things done
• Management is needed at all levels
 Importance of
Management
• Management meet the challenge of change
• Accomplishment of group goals
• Effective utilization of resources
• Effective functioning of business
• Resource Development
• Sound organization Structure
• Management directs the organization
• Integrates various interests
• Stability
 Importance of
Management
• Innovation
• Co-ordination and team-spirit
• Tackling problems
• A tool for Personality Development
Henry Fayol (1841-1925)
• Was a french industrialist
• Given :
– Elements of Management- Planning, Organizing,
Commanding, Co-ordination & Control
– Qualities of Manager: Physical, Mental, Moral,
General Education, Special Knowledge &
Experience
– Principles of Management
Principles of Management
• Division of work
• Authority & responsibilty
• Discipline
• Unity of command
• Unity of direction
• Subordinate of individual interest to group interest
• Remuneration of personnel
• Centralization
• Scalar Chain
Principles of Management
• Order
• Equity
• Stability of tenure of personnel
• Initiative
• Espirit De Corps
 What Is Planning?
• Planning
– Managerial function that involves:
• Defining the organization’s goals
• Establishing an overall strategy for achieving those goals
• Developing a comprehensive set of plans to integrate and
coordinate organizational work
– Types of planning
• Informal: not written down, short-term focus; specific to an
organizational unit
• Formal: written, specific, and long-term focus, involves
shared goals for the organization
 Purposes of Planning

– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for
controlling
 Planning and Performance
• The Relationship Between Planning and
Performance
– Formal planning is associated with:
• Higher profits and returns on assets
• Other positive financial results
– The quality of planning and implementation affects
performance more than the extent of planning
– The external environment can reduce the impact
of planning on performance
 How Do Managers Plan?
• Elements of Planning
– Goals (also objectives)
• Desired outcomes for individuals, groups, or entire
organizations
• Provide direction and performance evaluation criteria
– Plans
• Documents that outline how goals are to be
accomplished
• Describe how resources are to be allocated
 Steps in Planning
1. Being Aware of Opportunities
2. Establishing Objectives or Goals
3. Developing Premises
4: Determining Alternative Courses
5. Evaluating Alternative Courses
6. Selecting a Course
7. Formulating Derivative Plans
8. Quantifying Plans by Budgeting
Types of Plans
 Types of Plans
• BREADTH
• Strategic Plans
– Apply to the entire organization
– Establish the organization’s overall goals
– Seek to position the organization in terms of its
environment
– Cover extended periods of time
• Operational Plans
– Specify the details of how the overall goals are to be
achieved
– Cover short time period
 Types of Plans (cont’d)
• TIME FRAME
• Long-Term Plans
– Time frames extending beyond three years
• Short-Term Plans
– Time frames of one year or less

• SPECIFICITY
• Specific Plans
– Clearly defined and leave no room for interpretation
• Directional Plans
– Flexible plans that set out general guidelines, provide focus, yet
allow discretion in implementation
Exhibit 3.4 Specific Vs. Directional
Plans
 Types of Plans (cont’d)
• FREQUENCY OF USE
• Single-use Plan
– A one-time plan specifically designed to
meet the needs of a unique situation
• Standing Plans
– Ongoing plans that provide guidance for
activities performed repeatedly
 Types of Plans
Plans can be classified as
(1) mission or purposes,
(2) objectives or goals,
(3) strategies,
(4) policies,
(5) procedures,
(6) rules,
(7) programs, and
(8) budgets
 Types of Plans
• The mission, or purpose, identifies the basic
purpose or function or tasks of an enterprise or
agency or any part of it
• Objectives, or goals, are the ends toward which
activity is aimed
• Strategy is the determination of the basic
long‑term objectives of an enterprise and the
adoption of courses of action and allocation of
resources necessary to achieve these goals
• Policies are general statements or understandings
that guide or channel thinking in decision making
• Procedures are plans that establish a required
method of handling future activities
 Types of Plans – cont.
• Rules spell out specific required actions or
nonactions, allowing no discretion
• Programs are a complex of goals, policies,
procedures, rules, task assignments, steps to be
taken, resources to be employed, and other
elements necessary to carry out a given course
of action
• A budget is a statement of expected results
expressed in numerical terms
 Developing Plans

Contingency Factors in Planning

– Degree of environmental uncertainty
• Stable environment: specific plans
• Dynamic environment: specific but flexible plans
– Length of future commitments
• Current plans affecting future commitments
must be sufficiently long-term to meet the
commitments
 Approaches to
Establishing Goals
• Traditional Goal Setting
– Broad goals are set at the top of the
organization
– Goals are then broken into subgoals for each
organizational level
– Goals are intended to direct, guide, and
constrain from above
Approaches to Establishing
Goals (cont’d)
• Management By Objectives (MBO)
– Specific performance goals are jointly determined by
employees and managers
– Progress toward accomplishing goals is periodically reviewed
– Rewards are allocated on the basis of progress toward the
goals
– Key elements of MBO:
• Goal specificity, participative decision making, an explicit
performance/evaluation period, feedback
Steps in a Typical MBO Program

Jointly Set Objectives Develop Action Plans Review Objectives and Give Rewards for
to Achieve Objectives Provide Feedback Achieved Objectives

Overall objectives Managers and

and strategies of employees work on
organization action plans together

Objectives allocated to Action plans

divisional and implemented
departmental units

Specific objectives
collaboratively set
with employees
 Does MBO Work?
• Reason for MBO Success
– Top management commitment and
involvement
• Potential Problems with MBO Programs
– Not as effective in dynamic environments
that require constant resetting of goals
– Overemphasis on individual accomplishment
may create problems with teamwork
 Benefits of Management by Objectives
Clear goals:
• Motivate
• Improve managing through results-
oriented planning
• Clarify organizational roles, structures
and the delegation of authority
• Encourage personal commitment to their
own and organizational goals.
• Facilitate effective controlling, measuring
results, and leading to corrective actions
 Failures of Management
by Objectives
• List some failures and limitations of
MBO
• What would you do to overcome the
failures?
 Criticisms of Planning
– Planning may create rigidity
– Plans cannot be developed for dynamic
environments
– Formal plans cannot replace intuition and
creativity
– Planning focuses managers’ attention on today’s
competition, not tomorrow’s survival
– Formal planning reinforces today’s success, which
may lead to tomorrow’s failure
 Organizational Strategy
• Strategic Management
– The set of managerial decisions
and actions that determines the
long-run performance of an
organization
 The Strategic Management Process
External Analysis
• opportunities

• threats

Identify the

organization's Formulate Implement Evaluate

SWOT Analysis
current mission, goals, Strategies Strategies Results
and strategies

Internal Analysis
• strengths

• weaknesses
 Strategic Management Process
• Step 1: Identify the Organization’s Current Mission,
Objectives, and Strategies
– Mission: the firm’s reason for being
• The scope of its products and services
– Goals: the foundation for further planning
• Measurable performance targets
• Step 2: Conduct an Internal Analysis
– Assessing organizational resources, capabilities, activities, and culture:
• Strengths (core competencies) create value for the customer and
strengthen the competitive position of the firm
• Weaknesses (things done poorly or not at all) can place the firm at a
competitive disadvantage
 Strategic Management Process
(cont’d)

• Step 3: Conduct an External Analysis

– The environmental scanning of specific and general
environments
• Focuses on identifying opportunities and threats

• Steps 2 and 3 combined are called a SWOT analysis.

(Strengths, Weaknesses, Opportunities, and Threats)
 Strategic Management Process
(cont’d)

• Step 4: Formulate Strategies

– Develop and evaluate strategic alternatives
– Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
– Match organizational strengths to environmental
opportunities
– Correct weaknesses and guard against threats
 Strategic Management Process
(cont’d)
• Step 5: Implement Strategies
– Implementation: effectively fitting organizational
structure and activities to the environment
– The environment dictates the chosen strategy;
effective strategy implementation requires an
organizational structure matched to its requirements
• Step 6: Evaluate Results
– How effective have strategies been?
– What adjustments, if any, are necessary?
 Levels of Organizational Strategy

Corporate Multibusiness
Level Corporation

Business Strategic Strategic Strategic

Level Business Unit 1 Business Unit 2 Business Unit 3

Functional Research and Manufacturing Marketing Human Finance

Level Development Resources
Types of Organizational Strategies
• Corporate-level Strategy
– The company’s grand strategy for the entire
organization and its strategic business units
• Types of Grand Strategies
– Growth: expansion into new products and markets
– Stability: maintenance of the status quo
– Retrenchment: addresses organizational weaknesses
that are leading to performance declines
– Combination: simultaneous pursuit of two or more of
the strategies above
 Corporate-Level Strategies
• Growth Strategy
– Seeking to increase the organization’s business by
expansion into new products and markets
• Stability Strategy
– A strategy that seeks to maintain the status quo to
deal with the uncertainty of a dynamic environment,
when the industry is experiencing slow- or no-
growth conditions, or if the owners of the firm
elect not to grow for personal reasons
Corporate-Level Strategies (cont’d)

• Retrenchment Strategy
– Reduces the company’s activities or
operations
– Retrenchment strategies include:
• Cost reductions
• Closing underperforming units
• Closing entire product lines or services
Corporate-Level Strategies (cont’d)

• Combination Strategy
– Simultaneous pursuit by the
organization of two or more of
growth, stability, and
retrenchment strategies
 Business-Level Strategy
• Business-Level Strategy
– A strategy that seeks to determine how
an organization should compete in each
unit within the organization to create a
competitive advantage
– Competitive advantage
• An organization’s distinctive competitive edge that is
sourced and sustained in its core competencies
Forces in an Industry Analysis
(Five Forces Model Given by:
Porter

New
Entrants

Threat of
New Entrants
Bargaining
Power of
Intensity of Buyers
Rivalry Among
Suppliers Current Buyers
Competitors
Bargaining
Power of
Suppliers
Threat of
Substitutes

Substitutes
 Five Competitive Forces

• Threat of New Entrants

– The ease or difficulty with which new
competitors can enter an industry
• Threat of Substitutes
– The extent to which switching costs and brand
loyalty affect the likelihood of customers
adopting substitute products and services
• Bargaining Power of Buyers
– The degree to which buyers have the market
strength to hold sway over and influence
competitors in an industry
 Five Competitive Forces (cont’d)
• Bargaining Power of Suppliers
– The relative number of buyers to suppliers and
threats from substitutes and new entrants
affect the buyer-supplier relationship
• Current Rivalry
– Intensity among rivals increases when industry
growth rates slow, demand falls, and product
prices descend
 Functional-Level Strategy
• Functional-level strategies support the
business-level strategy
– i.e., Marketing, human resources, research
and development, and finance all support
the business-level strategy
– Problems occur when employees or
customers don’t understand a company’s
strategy
 Benchmarking
• The search for the best practices
among competitors and noncompetitors
that lead to their superior
performance
• By analyzing and copying these
practices, firms can improve their
performance
 Decision Making
• Decision making is defined as the
selection of a course of action from
among alternatives
 Decision Making Process
1. Identification of a problem
2. Identification of decision criteria
3. Allocation of weights to criteria
4. Development of alternatives
5. Analysis of alternatives
6. Selection of an alternative
7. Implementation of the alternative
8. Evaluating decision effectiveness
 Limited, or "Bounded,"
Rationality
• Limitations of information, time, and
certainty limit rationality, even
though a manager tries earnestly to
be completely rational
• Satisficing is picking a course of
action that is satisfactory or good
enough under the circumstances
 Development of Alternatives and the
Limiting Factor
• A limiting factor is something that stands
in the way of accomplishing a desired
objective
• The principle of the limiting factor: By
recognizing and overcoming those factors
that stand critically in the way of a goal,
the best alternative course of action can
be selected
 Simon’s model of decision
making
• Contribution of Herbert Simon
• The decision making process can be
broken into series of three sequential
steps:
1. Intelligent activity
2. Design activity
3. Choice activity
Intelligent activity refers to the initial phase of
searching the environment for conditions calling for
decisions.

Design activity refers to the phase of inventing,

developing, and analyzing possible course of action to
take place.

Choice activity refers to the final phase of actual choice

selecting a particular course of action from those
available.
 Marginal Analysis
• Marginal analysis is to compare
additional revenues and the
additional cost arising from
increasing output
 Cost Effectiveness
Analysis
• Cost effectiveness analysis seeks
the best ratio of benefit and cost
 Selecting an Alternative: Three
Approaches
When selecting from among
alternatives, managers can use:
1. Experience,
2. Experimentation, and
3. Research and analysis.
 Programmed And Nonprogrammed
Decisions

• Programmed decisions are used for

structured or routine work
• Nonprogrammed decisions are used
for unstructured, novel, and ill‑defined
situations of a nonrecurring nature
 Creativity and Innovation
• Creativity refers to the ability and
power to develop new ideas
• Innovation means the use of new
ideas
 The Creative Process
• The creative process is seldom simple
and linear
• It generally consists of four overlapping
and interacting phases:
1. Unconscious scanning
2. Intuition
3. Insight
4. Logical formulation or verification
 Rules for Brainstorming
1. No ideas are criticized
2. The more radical the ideas are, the
better
3. The quantity of idea production is
stressed
4. The improvement of ideas by others
is encouraged