BBPP1203
Principles of Management for Non-Business Majors
BBPP1203 PRINCIPLES OF MANAGEMENT FOR NON-BUSINESS MAJORS Shahrol Aman Ahman Azhari Ramli Nasri Nalimi Azelin Aziz Assoc Prof Dr Santhi Raghavan
Project Director:
Prof Dato’ Dr Mansor Fadzil Open University Malaysia
Module Writers:
Shahrol Aman Ahmad Azhari Ramli Nasri Nalimi Azelin Aziz Universiti Utara Malaysia Assoc Prof Dr Santhi Santhi Raghavan Open University Malaysia
Enhancer:
Norhayati Shuib Open University Malaysia
Developed by:
Centre for Instructional Design and Technology Open University Malaysia
First Edition, August 2017 Copyright © Open University Malaysia, August 2017, BBPP1203 All rights reserved. No part of this work may be reproduced in any form or by any means without the written permission of the President, Open University Malaysia (OUM).
Table of Contents
1.1 1.2
Definition of Management Who are Managers? 1.2.1 Types of Managers 1.2.2 Management Functions 1.2.3 Roles of a Manager 1.2.4 Skills of a Manager 1.3 Evolution of Management Theory 1.3.1 Classical Perspective 1.3.2 Human Perspective 1.3.3 Quantitative Management Approach 1.3.4 Contemporary Approach 1.4 Globalisation and Cross-cultural Management Summary Key Terms
2 3 3 4 6 9 11 11 16 18 19 20 22 23
2.1 2.2 2.3 2.4 2.5 2.6
25 26 29 31 33 34 34 35 35 36 38 39 39 40 40 41
Definition of Planning Effective Planning Types of Planning Advantages and Disadvantages of Planning Organisational Decision-making Decision-making Environment 2.6.1 Decision-making in Certain Conditions 2.6.2 Decision-making in Uncertain Conditions 2.6.3 Decision-making in Risky Conditions 2.7 Rational Decision-making Process 2.7.1 Limitations in Rational Decision-making 2.8 Group Decision-making 2.8.1 Brainstorming 2.8.2 Nominal Group Technique 2.8.3 Delphi Technique 2.8.4 Advantages and Disadvantages of Group Decision-making Summary Key Terms
42 43
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TABLE OF CONTENTS
3.1 3.2 3.3 3.4 3.5 3.6 3.7
Factors that Influence Organisational Structure Designing Organisational Structures Authority Centralisation and Decentralisation Work Design Mechanistics and Organic Structures Organisational Change 3.7.1 Managing Change 3.7.2 Barriers to Change 3.7.3 Overcoming the Barriers to Change Summary Key Terms
45 46 52 55 56 58 59 59 61 62 63 64
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8
Essential Functions of HRM Human Resource Planning Recruitment Selection Training and Development Performance Appraisal Compensation Employee Separation 4.8.1 Employee Termination 4.8.2 Downsizing 4.8.3 Retirement 4.8.4 Employee Turnover Summary Key Terms
66 67 68 69 71 72 74 76 76 77 77 78 78 79
5.1 5.2 5.3
81 83 85 85 86 87 89 90
Definition of Communication Types of Communication Communication Channels 5.3.1 Formal Communication 5.3.2 Informal Communication 5.4 Increasing Communication Effectiveness Summary Key Terms
TABLE OF CONTENTS
v
6.1 6.2
Approaches to Motivation Need-based Models 6.2.1 MaslowÊs Hierarchy of Needs 6.2.2 Two-factor Model 6.3 Process-based Models 6.3.1 Expectancy Theory 6.3.2 Equity Theory 6.3.3 Goal-setting Model 6.3.4 Reinforcement Model Summary Key Terms
92 93 93 95 96 97 98 98 99 100 101
7.1
Leadership Approaches 7.1.1 Leader-centred Approach 7.1.2 Follower-centred Approach 7.1.3 Interactive Approaches 7.2 Strategic Leadership Summary Key Terms
103 103 106 106 108 110 111
8.1 Definition of Controlling 8.2 Steps in the Control Process 8.3 Basic Methods of Control 8.4 Forms of Control Summary Key Terms
112 113 115 117 118 119
9.1 Differences between Teams and Groups 9.2 Advantages and Disadvantages of Teams 9.3 When is a Team Needed? 9.4 Types of Teams 9.5 Phases of Team Development Summary Key Terms
121 121 123 124 128 129 130
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TABLE OF CONTENTS
COURSE GUIDE
COURSE GUIDE
ix
COURSE GUIDE DESCRIPTION You must read this Course Guide carefully from the beginning to the end. It tells you briefly what the course is about and how you can work your way through the course material. It also suggests the amount of time you are likely to spend in order to complete the course successfully. Please keep on referring to Course Guide as you go through the course material as it will help you to clarify important study components or points that you might miss or overlook.
INTRODUCTION is one of the courses offered at Open University Malaysia (OUM). This course is worth 3 credit hours and should be covered over 8 to 15 weeks.
COURSE AUDIENCE This is a compulsory basic course for Open University Malaysia. As an open and distance learner, you should be able to learn independently and optimise the learning modes and environment available to you. Before you begin this course, please confirm the course material, the course requirements and how the course is to be conducted. As an open and distance learner, you should be acquainted with learning independently and being able to optimise the learning modes and environment available to you. Before you begin this course, please ensure that you have the right course materials, and understand the course requirements as well as how the course is conducted.
STUDY SCHEDULE It is a standard OUM practice that learners accumulate 40 study hours for every credit hour. As such, for a three-credit hour course, you are expected to spend 120 study hours. Table 1 gives an estimation of how the 120 study hours could be accumulated.
x
COURSE GUIDE
: Estimation of Time Accumulation of Study Hours
Briefly go through the course content and participate in initial discussions
3
Study the module
60
Attend 4 tutorial sessions
10
Online participation
12
Revision
15
Assignment(s), Test(s) and Examination(s)
20
COURSE OUTCOMES By the end of this course, you should be able to: 1.
Describe the basic concepts, functions and basic skills in management;
2.
Describe the management of an organisation including employees, and physical resources;
3.
Explain the changes in management and the current management practice of todayÊs business; and
4.
Apply the principles of management to the workplace.
COURSE SYNOPSIS This course is divided into nine topics. The synopsis for each topic is listed as follows: gives an overview of management and the roles that must be played by the manager. The management skills required at different levels of management will also be introduced. Learners will be exposed to the evolution of management thoughts that explains the thinking contributed by the main management thinkers over the years.
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xi
deliberates planning as one of the most significant functions in management. The processes involved in effective planning, forms of planning as well as the advantages and disadvantages of planning are discussed. This topic also explains decision making the process of identifying problems, generating alternative solutions, and selecting and implementing the best solutions available. Other than that, it also discusses the situations of decision making certain conditions, uncertain conditions and risky conditions and the steps involved in rational decision making. The types of limitations in the process of decision making, which are bounded rationality, common mistakes and risky environment, will also be discussed. Finally, the topic will look into the two methods to improve the quality of decisions to be made using specific rules and tests and group decision making. describes the design of an organisation. Several factors that influence the structure of an organisation such as strategies, size, environment and technology will be discussed. The types of organisations such as departmentalisation grounded on functions, products, customers, geographical location and matrix will also be clarified. This is followed by management of organisations which includes authority, chain of command, span of control, delegation, centralisation and decentralisation. Apart from that, it will also converse work design that involves work specialisation, job rotation, job enrichment and job enlargement. Finally, this topic will explain the mechanistic and organic organisational designs and several other types of new structures. This topic will also deliberate the forces of changes in organisations. The factors that can cause changes to organisations, ways to manage changes, resistance to change and tactics to overcome resistance to change will also be explained. focuses on human resource management (HRM). This topic discusses the essential functions of HRM which include human resource planning and forecasting, recruitment of potential employees, the use of different selection techniques to select employees, the types of training and development use to increase employeesÊ skills and abilities, performance appraisal, compensation strategies and employee separation. The importance of all functions will also be explained. covers communication, where the basic elements in a communication process are defined. The types of communication that are frequently used in organisations, such as verbal, non-verbal and electronic communication are also presented. Also discussed are the communication channels that cover formal and informal communication. Learners will be exposed to effective communication and also the classification of barriers to communication.
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COURSE GUIDE
explains motivation models. Two types of motivation models that will be discussed are the needs based and process based models. These include Maslow's Hierarchy of Needs Model, HerzbergÊs Two Factor Theory, McClellandÊs Needs Achievement Model, Expectancy Model, Equity Theory, Goal-setting and Reinforcement Theory. reviews leadership. This topic will discuss leadership based on three approaches which are leader-centred approach, follower-centred approach and interactive approach. The leader-centred approach focuses on the characteristics of the leaderÊs personality, behaviour of the leader and style of leadership. Under the behavioural approach, the Management Grid and the researches by the Ohio State University and Michigan University will be discussed. The follower-centred approach focuses on the variables of replacement and neutralisation of leadership. In the interactive approach, the Situation Leadership Model, Fiedler Contingency Model, and the Path-Goal and the Continuum of Leadership Behaviour will also be discussed. At the end of this topic, strategic leadership will be presented and it covers the characteristics of visionary leaders, charismatic leaders, transactional leaders and transformational leaders. covers control. This topic discusses the steps in the control process. Also discussed are the basic methods of control and five forms of control. focuses on teams. This topic starts with the differences between teams and groups, the advantages and disadvantages of teams and when teams are used. Also discussed are the types of teams that exist in an environment. Several features of teams and phases of team development will also be elaborated.
TEXT ARRANGEMENT GUIDE Before you go through this module, it is important that you note the text arrangement. Understanding the text arrangement will help you to organise your study of this course in a more objective and effective way. Generally, the text arrangement for each topic is as follows: : This section refers to what you should achieve after you have completely covered a topic. As you go through each topic, you should frequently refer to these learning outcomes. By doing this, you can continuously gauge your understanding of the topic.
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xiii
: This component of the module is inserted at strategic locations throughout the module. It may be inserted after one sub-section or a few subsections. It usually comes in the form of a question. When you come across this component, try to reflect on what you have already learnt thus far. By attempting to answer the question, you should be able to gauge how well you have understood the sub-section(s). Most of the time, the answers to the questions can be found directly from the module itself. : Like Self-Check, the Activity component is also placed at various locations or junctures throughout the module. This component may require you to solve questions, explore short case studies, or conduct an observation or research. It may even require you to evaluate a given scenario. When you come across an Activity, you should try to reflect on what you have gathered from the module and apply it to real situations. You should, at the same time, engage yourself in higher order thinking where you might be required to analyse, synthesise and evaluate instead of only having to recall and define. : You will find this component at the end of each topic. This component helps you to recap the whole topic. By going through the summary, you should be able to gauge your knowledge retention level. Should you find points in the summary that you do not fully understand, it would be a good idea for you to revisit the details in the module. : This component can be found at the end of each topic. You should go through this component to remind yourself of important terms or jargon used throughout the module. Should you find terms here that you are not able to explain, you should look for the terms in the module. : The References section is where a list of relevant and useful textbooks, journals, articles, electronic contents or sources can be found. The list can appear in a few locations such as in the Course Guide (at the References section), at the end of every topic or at the back of the module. You are encouraged to read or refer to the suggested sources to obtain the additional information needed and to enhance your overall understanding of the course.
PRIOR KNOWLEDGE This is an introductory course. There is no prior knowledge needed.
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COURSE GUIDE
ASSESSMENT METHOD Please refer to myINSPIRE.
TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL LIBRARY The TSDAS Digital Library has a wide range of print and online resources for the use of its learners. This comprehensive digital library, which is accessible through the OUM portal, provides access to more than 30 online databases comprising e-journals, e-theses, e-books and more. Examples of databases available are EBSCOhost, ProQuest, SpringerLink, Books247, InfoSci Books, Emerald Management Plus and Ebrary Electronic Books. As an OUM learner, you are encouraged to make full use of the resources available through this library.
Topic
1
Introduction to Management
LEARNING OUTCOMES By the end of this topic, you should be able to: 1.
Describe the meaning of management;
2.
Describe who managers are and the nature of their work;
3.
Discuss the different perspectives in management; and
4.
Explain how globalisation affects management principles and practices.
INTRODUCTION Management is an essential element in every organisation. Management means ensuring that a job is carried out well until completion by working with and through people using organisational resources. This means a manager may not necessarily need to know how to perform a specific job but he needs to act as a coordinator to ensure that the task is carried out smoothly. For example, the manager of a shoe factory may not necessarily know the details of shoemaking but he needs to ensure that all resources allocated to him, including human resources the employees under him function satisfactorily and that the objectives set by the organisation are achieved. Furthermore, the manager needs to make sure that the objectives are achieved efficiently and effectively.
2
1.1
TOPIC 1
INTRODUCTION TO MANAGEMENT
DEFINITION OF MANAGEMENT
Management is the process of overseeing and coordinating resources efficiently and effectively in line with the goals of an organisation. Effectiveness is the attainment of goals which enables the realisation of the objectives of an organisation or to put it briefly, „doing the right thing‰. A manager, who decides on an inappropriate goal, for instance, to produce a large number of multipurpose vehicles (MPV) when the demand for compact cars is soaring, is an ineffective manager. Efficiency is performing a job with minimum effort, cost and wastage or simply, „doing things right‰. Managers who are capable of minimising the cost of the resources (labour, materials and time) required to attain goals are acting efficiently. The end result of an efficient and effective management is a successful organisation. Both efficiency and effectiveness cannot be excluded from the definition of management as these are essential elements in defining management.
SELF-CHECK 1.1 Why do organisations need managers?
ACTIVITY 1.1 What is management? Discuss with your coursemates.
TOPIC 1
1.2
INTRODUCTION TO MANAGEMENT
3
WHO ARE MANAGERS?
A is an individual who is directly respo nsible for ensuring that tasks are performed by people or employees in an organisation. In the following subtopics you will be able to understand what managers do by learning about the different types of managers.
1.2.1
Types of Managers
Most organisations have a few types of managers. In a university, for example, there are the vice-chancellor, deputy vice-chancellors, deans, deputy deans, heads of departments and heads of courses or programmes. Corporate sectors, on the other hand, have presidents, vice presidents, operations managers, sales managers, finance managers, supervisors and so forth. Each manager has a different set of jobs and responsibilities but all are geared towards fulfilling a goal or set of goals. Managers at different levels utilise their time differently. Figure 1.1 shows three types of managers.
Three types of managers
4
TOPIC 1
INTRODUCTION TO MANAGEMENT
These managerial levels have many similarities. Managers at all the levels plan, organise, lead and control their employees and tasks in the organisation. Managers also spend time with their employees through conversations and discussions, provide guidance and motivation as well as attend conferences and committee meetings.
1.2.2
Management Functions
Managers are in charge of getting activities accomplished efficiently, setting and accomplishing the organisationÊs objectives through the implementation of four basic management functions, namely planning, organising, leading and controlling. In short, management refers to the process of delegating tasks to employees to be performed successfully. These functions are illustrated in Figure 1.2.
Main functions of management Adapted from Lewis et al. (2001)
TOPIC 1
INTRODUCTION TO MANAGEMENT
5
Table 1.1 explains each management function. Management Functions
Planning
Defining objectives to be achieved for a given period and what needs to be done to achieve the objectives. All management levels in an organisation need to be involved in planning. Managers need to develop objectives in line with the overall strategies of the organisation.
Organising
Determining what tasks are to be done, who will implement and coordinate them, how the tasks are to be grouped, who reports to whom as well as what decisions are to be made and by whom. The manager needs to logically and effectively organise the information, resources and workflow so that he will be able to react positively to changes in the business environment.
Leading
This involves motivating the subordinates, selecting the most effective communication channels, resolving conflicts, directing as well as guiding the actions of others in order to achieve all the objectives. The effective leader has to be visionary, sharing the vision with and motivating the employees towards realising the vision.
Controlling
The measuring of performance in all predetermined objectives, determining reasons for deviations and taking appropriate actions, where necessary. Controlling is an important function in the management process as it provides ways to ensure that the organisation moves towards achieving its objectives.
6
1.2.3
TOPIC 1
INTRODUCTION TO MANAGEMENT
Roles of a Manager
The functions of management uniquely describe the managersÊ jobs. Managers at all levels in the organisation are involved in planning, organising, leading and controlling resources. A manager does not necessarily have to know how to perform a specific job because he only acts as a coordinator to ensure the smooth running of the operations. For example, the manager of a clothes manufacturing factory does not necessarily have to know in detail the techniques of making clothes. However, he needs to ensure that each resource under his control such as capital, factory and manpower functions properly and that the objectives outlined by the organisation are met. As stated earlier, there are many ways to identify a manager. A management expert and professor, Henry Mintzberg, carried out a comprehensive analysis of managers by walking around and observing what managers do while at work. He observed that managers not only planned, organised, led and controlled but also played other important roles as detailed (Lewis et al., 2001) in Table 1.2: Management Roles
1.
Figurehead
2.
Leader
A manager must carry out ceremonial duties and represent the organisation in all matters of formality. For example, the vice-chancellor of a university must be involved in the launching of programmes to be conducted at the university; the head of the department is responsible for entertaining his clients. A manager indirectly functions as a leader. Each manager must function as a leader to motivate and encourage his subordinates. As a leader, he is also involved in directing and coordinating the activities of his subordinates to effectively achieve the goals of the unit and organisation besides resolving problems and issues.
TOPIC 1
3.
Liaison Officer
4.
Spokesperson
5.
Negotiator
INTRODUCTION TO MANAGEMENT
7
A manager conveys relevant information to individuals outside his unit or to other relevant parties outside his organisation. This role may include interactions with both parties inside and outside the organisation. Thus, a manager acts as a channel of communication between his department and those within the organisation as well as those outside the organisation. Top level managers use the liaison role to obtain help and information while the supervisor uses it to uphold the daily flow of work. Managers represent and speak on behalf of their organisation. In this role, managers are liable for conveying information about the organisation and its goals to the public. For instance, the supervisor will usually make sure that the operations manager is equipped with up-to-date information regarding the running of his production plant. Likewise, the general manager of a factory will lobby the local authorities for a new tender. No organisation is without problems. A manager is required to find a solution for each of its problems regardless of complexities. The manager needs to spend a lot of time in discussions as he plays the role of a negotiator. For example, a manager will negotiate with the trade union representative to reach an amicable agreement on the salaries.
8
6.
TOPIC 1
Initiator
INTRODUCTION TO MANAGEMENT
Two management experts, Sumantra Ghoshal and Christopher Bartlett, emphasised an additional role of a manager as an initiator of corporate actions and transformations (Dessler, 2001). In addition, an excellent manager is one who is able to initiate and cultivate the three processes that can steer his employees towards achieving change. These processes are: The manager will try to improve his unitÊs performance and when he gets a good idea, he will launch a programme to realise the idea. To meet the objective of having employees to think like an entrepreneur, the manager needs to empower, support and provide incentives for employees to attain self-direction.
A successful manager will focus on creating a favourable environment that inspires employees to shoulder additional responsibilities. He will also focus on preparing the essential training and guidance to build their selfconfidence and encourage them to learn from their mistakes. A successful manager will identify situations that might challenge the strategies of the organisation and assumptions made. In other words, the manager is capable of supporting a querying disposition such as why something is done in a certain way and whether there are alternative ways of doing it.
TOPIC 1
1.2.4
INTRODUCTION TO MANAGEMENT
9
Skills of a Manager
Managers require skills that will help them manage people and technology in order to ensure an effective and efficient understanding of their working tasks. Therefore, the third approach to understanding the tasks of managers is to analyse the skills required to carry out the tasks. Figure 1.3 shows three types of essential skills needed at each level of management. The arrow pointing upwards shows the type of skills that are increasingly needed by top-level management. The arrow pointing downwards shows the type of skills that are increasingly needed by lower-level management or line managers.
Skills required of a manager
10
TOPIC 1
INTRODUCTION TO MANAGEMENT
Let us now go through each of these skills one by one. (a) Conceptual skill refers to a managerÊs ability to view the organisation as a whole, to recognise the interactions among various subunits and to visualise how the organisation fits into its larger environment. The need for conceptual skills becomes increasingly crucial when a manager climbs higher in the management hierarchy. (b) Interpersonal skill refers to the managerÊs ability to get along with others while getting the job done. Interpersonal skills include everything from communication and listening skills to attitudes and mannerisms. Interpersonal skills are critical regardless of the level of management. However, low-level managers will be more occupied in solving technical problems while managers at the middle and higher levels will mainly be occupied with dealing directly with others. (c) Technical skill is the ability to apply procedures, techniques and specialised knowledge required for a certain task. For example, a data analyst manager needs to understand not only how to analyse data but how to store it, code it, and retrieve it because data analysts are engaged in all of these tasks. Technical skills tend to be more important for lower-level managers. This is because lower-level managers usually manage employees who use tools and techniques to produce the organisationÊs products and services.
SELF-CHECK 1.2 Describe the relationship between the levels of management and the skills required.
TOPIC 1
1.3
INTRODUCTION TO MANAGEMENT
11
EVOLUTION OF MANAGEMENT THEORY
From the start of the 19th century until the 20th century, managers and scholars formed theoretical frameworks to explain what they believed to be good practices of management. Their effort led to five different classes of perspectives on management, namely classical, behavioural (human), quantitative and contemporary. Each perspective is based on different assumptions with respect to the objectives of the organisation and human behaviour. Figure 1.4 will help you understand the chronological sequence of the perspectives.
Evolution of management theory
1.3.1
Classical Perspective
This perspective came about in the 19th century and early 20th century. It focused on the rational and scientific approaches to the study of management and on finding ways to mould an organisation to become more efficient. There are three subclasses in this perspective, namely scientific management, bureaucratic management and administrative management.
12
TOPIC 1
INTRODUCTION TO MANAGEMENT
(a) Scientific management is based on the work of an American engineer, Frederick Winslow Taylor (18561915). In his 1911 book The Principles of Scientific Management , he laid down the fundamental principles of large-scale manufacturing through assembly-line factories. It emphasised rationalisation and standardisation of work through division of labour, time and motion studies, work measurement and piece-rate wages. This approach emerged at a time when productivity was deemed critical by businessmen. Figure 1.5 shows a picture of Frederic Winslow Taylor.
Frederick Winslow Taylor
From research findings, Taylor identified five principles of management that could boost production efficiency. The five principles are: (i)
Using the scientific approach to determine best practices and not relying on rule of thumb;
(ii)
Selecting suitable employees to perform a particular task. Suitability here refers to mental and physical aspects;
(iii) Training and developing an employee so that he is able to perform a given task according to established procedures; (iv) Giving monetary incentives to ensure that employees perform a task accordingly; and (v)
Reassigning all responsibilities pertaining to planning and organising to the manager.
TOPIC 1
INTRODUCTION TO MANAGEMENT
13
(b) Max Weber (18641920), a German social theorist (refer to Figure 1.6), introduced many bureaucratic concepts. The Max Weber theory of management, sometimes called bureaucratic management theory, was built on principles outlined by Frederick Taylor in his scientific management theory. Like Taylor, Weber advocated a system based on standardised procedures and a clear chain of command. Weber stressed efficiency, as did Taylor, but also warned of the danger of emphasising technology at the expense of emotion. The bureaucratic approach strives to increase efficiency and ensure continuity of all operations in the organisation.
Max Weber
Among the components of bureaucracy are: (i)
Authority and clearly defined responsibilities;
(ii)
Positions in the organisation which are structured according to hierarchy;
(iii) Promotions based on qualifications; (iv) Records of all administrative actions and decisions to ensure continuity of organisational rules; (v)
Separation of ownership and management; and
(vi) Implementation of guidelines for all employees without bias.
14
TOPIC 1
INTRODUCTION TO MANAGEMENT
(c) Administrative management theory attempts to find a rational way to design an organisation as a whole. Henry Fayol (see Figure 1.7) defined administration and management as planning, organising, directing, coordinating and controlling. He identified 14 principles of management.
Henry Fayol (1841 1925)
The 14 principles identified by Henry Fayol are as follows: (i)
Division of labour;
(ii)
Unity of command;
(iii) Unity of direction; (iv) Subordination of individual interests to the general interests; (v)
Remuneration;
(vi) Centralisation; (vii) Scalar chain; (viii) Discipline; (ix) Order; (x)
Equity;
(xi) Stability of tenure; (xii) Initiative;
TOPIC 1
INTRODUCTION TO MANAGEMENT
15
(xiii) Esprit de corps ; and (xiv) Authority and responsibility. Mary Parker Follet (18681933) was trained in the field of philosophy and political science. Her approach focused on the involvement of employees and sharing of information among managers.
Mary Parker Follet
Chester I Barnard (18861961) introduced the informal organisation concept. An informal organisation exists within a formal organisation. He believed that organisations are not mere machineries and that informal relations could be a powerful tool and an asset to an organisation if properly managed. He also introduced the Acceptance Theory of Authority which states that employees have options when it comes to complying with the directives of the management.
Chester I Barnard
16
TOPIC 1
INTRODUCTION TO MANAGEMENT
Overall, the classical perspective towards management is very important and has given organisations a basic approach to increase productivity and garner effective support from employees.
SELF-CHECK 1.3 Explain the five principles of management identified by Frederick Winslow Taylor.
1.3.2
Human Perspective
The categories of the human perspective are human relations movement, human resource approach and social science approach. (a) Elton MayoÊs contributions came as part of the Hawthorne studies (19241932), a chain of experimentations which carefully applied the classical management theory only to disclose its weaknesses.
Elton Mayo (18801949)
TOPIC 1
INTRODUCTION TO MANAGEMENT
17
Three experiments were conducted and the results of all the experiments contradicted expected outcomes. In the first experiment, the brightness of lighting served as a physical situation. It was assumed that higher levels of brightness would facilitate higher output for the employees. Interestingly, it was found that when the lighting was brightened or dimmed, production output continued to increase. This meant that there were other factors that might have caused the increase in productivity. It was the same for the second and third experiments where other physical situations were chosen. The results could not clearly explain the causes for the increase in production. In conclusion, the Hawthorne research showed that the productivity of employees increased because they received special treatment from management. The human relationship had a connection to the increase in output. (b) The human resource approach stressed that employee productivity will increase when employeesÊ satisfaction regarding basic requirements are met. This approach is likened to a dairy farm whereby satisfied cows produce more milk. From the managementÊs point of view, satisfied employees will increase their work performance. This approach combined work structure with motivation theories. Among the main motivators of this approach were Abraham Maslow and Douglas McGregor. (c) The social science approach developed the theories of human behaviour based on the scientific and learning methods. It was derived from the fields of sociology, psychology, anthropology, economics and other disciplines in order to understand the behaviour of employees and their interactions in the organisation. This approach can be widely seen in most organisations. The economic and sociological aspects have significantly influenced how managers probe further into the organisationÊs strategy and structure. Psychology has influenced the managementÊs approach through motivation, communication, leadership and personnel management.
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1.3.3
TOPIC 1
INTRODUCTION TO MANAGEMENT
Quantitative Management Approach
This theory which began in the era of World War II is concerned with applying quantitative management tools focusing on decision-making, economic effectiveness, mathematical models and the use of computers. The three main concepts of this approach are the management of science, management of operations and management of information systems. (a) It is also called Operations Research and it is the approach that increases decision effectiveness by using specified statistical methods and mathematical models. For example, motor manufacturers such as Toyota use realistic computer simulations to study collision damage to cars. These simulations give them precise information and avoid the costs of „crashing‰ many test cars. (b) Operations management techniques are generally concerned with helping the organisation produce its products or services more efficiently and can be applied to a wide range of problems. It can be used to deal with decisions involving plant layout, plant location, inventory control and distribution of finished goods. For example, linear programming (which involves computing simultaneous solutions to a set of linear equations) helps airlines plan their flight schedules. (c) It helps managers design information systems that provide information about events occurring within the organisation as well as the external environment, information that is vital for effective decision-making.
TOPIC 1
1.3.4
INTRODUCTION TO MANAGEMENT
19
Contemporary Approach
Contemporary viewpoint is a school of thought which includes major ideas regarding management or organisation. It emerged in the 1950s. The two main theories under this perspective are the systems and contingency theories. (a) It is an approach based on the idea that organisations are subsystems which operate in segments to achieve a common target or goal. The five components of a system are: (i)
Equipment, people, finance or information sources that are used to produce products or services;
(ii)
The use of production technology to transform input into output;
(iii) (iv) (v)
Comprises products and services of an organisation; – Responses and information given that will influence the selection of input used in the next process cycle; and
Includes social, political and economic influences.
A system can be either closed or open but most approaches treat an organisation as an open system. An open system interacts with its environment by way of inputs, throughputs and outputs. The following are some terms which are associated with systems theory: (i)
A system that interacts with the external environment in order to survive;
(ii)
A system that does not interact with the external environment in order to survive and often fails;
20
(iii)
TOPIC 1
INTRODUCTION TO MANAGEMENT
The tendency for a system to become obsolete;
(iv)
Individuals, groups and organisations that can achieve more if they cooperate compared to working independently; and
(v)
Sections of a system that are interdependent.
(b) A contingency approach to management is based on the theory that management effectiveness is contingent or dependent upon the interplay between the application of management behaviours and specific situations. In other words, the way a manager manages should change depending on the circumstances.
1.4
GLOBALISATION AND CROSS-CULTURAL MANAGEMENT
Nowadays, organisations are becoming more global. As a result, cross-cultural management is no longer a „nice to have‰ but rather it is a „must have‰. Globalisation is a popular issue in the business world today. Much attention is given to the rise in imports and exports as organisations continue to grow through the global marketplace. Understanding the global economy underlines highly significant managerial and business level applications that offer useful business insights to modern-day managers. The simplicity of modern globalisation is often attributed to rapid technological advances. From a managerial standpoint, the global workplace involves a significant amount of diversity management. As a manager, this means developing a globally minded perspective that offers itself well to specific geographical needs, values and customs in which the business operates. Developing this global skill set will be a powerful and significant managerial skill for todayÊs managers.
Multinational companies have to deal with cross-cultural issues either as a result of having divisions located in other countries or because the people whom they hired speak English as a second language. The cultural mix within departments, in project teams and even through the ranks of management creates an entirely new set of challenges for organisations. The impact of cultural differences on teamwork, communication, conflict resolution, support for authority and problem-solving is profound and often confusing. Even simple things like brainstorming or holding a working lunch have a wider impact than originally envisaged. The traditional strategies used by management to manage culturally-
TOPIC 1
INTRODUCTION TO MANAGEMENT
21
diverse workforce are proving to be inadequate and may not be able to solve the problems of cross-cultural diversity in the era of globalisation. To achieve organisational goals and avoid potential risks, managers should be culturally sensitive and promote creativity and motivation through flexible leadership. IKEA is an example of a growing multinational company which has expanded its business into different markets. IKEA pays close attention to the cultures of the countries that it has expanded into especially when considering its employees in the foreign markets. It is also manifested in the way it chooses to hire its diverse workforce (refer to Figure 1.11). Its intention is to bring its values to wherever it opens up stores and this requires a fundamental understanding of the different cross-cultural theories. „Being an IKEA manager overseas is not just running the stores and distribution systems smoothly. Managers must be able to explain to employees and managers why things are to be done that way and win peopleÊs hearts and minds to the ÂIKEA-WayÊ. They are expected to be ambassadors and must educate their nonSwedish co-workers through patience, common understanding and example. It is not always easy to transmit IKEAÊs egalitarian management style‰.
IKEAÊs diverse employees http://fortune.com/2016/03/10/ikea-corporate-culture-bes http://fortune.com/2016/03/ 10/ikea-corporate-culture-best-companies t-companies
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TOPIC 1
INTRODUCTION TO MANAGEMENT
ACTIVITY 1.2 A university professor told her students, „The purpose of a management course is to teach students about management, not to teach them to be managers.‰ Do you agree or disagree with this statement? Discuss.
SELF-CHECK 1.4 Explain how the teaching of management could prepare future managers to deal with workforce diversity.
Management is the art of directing other people to perform the work by emphasising the aspects of effectiveness and efficiency in implementation. Effectiveness is achieving the objectives that enable the realisation of an organisationÊs objective or doing the job the right way. Efficiency is implementing the work with minimum ability, cost and wastage or doing things right. Managers are known for their management functions which can be grouped into planning, organising, leading and controlling. A manager plays several roles in an organisation which include figurehead, leader, liaison officer, spokesperson, negotiator, idea initiator, capability developer and motivator for transformation. Management skills are crucial to ensure the success of a manager. They are conceptual, interpersonal and technical skills. Managers are divided into three types, namely top management, middle management and lower management. Management evolved in tandem with the beginning of human civilisations in Egypt, China and Babylon.
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INTRODUCTION TO MANAGEMENT
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The management methods in the olden days are quite different from those of today. Modern management significantly expanded with the emergence of the Industrial Revolution in Europe. Generally, there are two well-known systems pertaining to the trend or management of mindsets, namely the rational system and the social system.
Administrative management
Human resource approach
Bureaucratic management
Initiator
Classical perspective
Leader
Contemporary approach
Liaison officer
Effectiveness
Negotiator
Efficiency
Quantitative management approach
Figurehead
Scientific management
Globalisation
Social science approach
Human perspective
Spokesperson
Human relations movement
Topic
2
Planning and Decisionmaking
LEARNING OUTCOMES By the end of this this topic, topic, you should be able able to: 1.
Describe the meaning of planning;
2.
Explain the processes involved in effective planning;
3.
Identify the types of planning;
4.
Compare the advantages and disadvantages of planning;
5.
Explain what decision-making is about;
6.
Identify the types of environment for decision-making;
7.
Discuss the processes involved in making rational decisions; and
8.
Explain group decision-making.
INTRODUCTION Planning is one of the basic functions of management. According to C. W. Roney (Certo, 2000), planning is generally done for two purposes. Firstly, it is done as a protection for the organisation. This means that a manager can forecast the effects of each of the suggestions or alternative actions of the plan that will be carried out. Secondly, planning is done to increase the affirmative levels of the organisation. For example, when an organisation opens a new branch, it is not a matter of coincidence but the result of detailed planning.
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PLANNING AND DECISION- MAKING
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Planning requires managers to be responsive to environmental situations facing their organisation and to forecast future conditions as well as being good decision makers. In the following subtopics, we will discuss the definitions of planning, how to make effective plans, types of planning as well as the advantages and disadvantages of planning.
2.1
DEFINITION OF PLANNING
Before we discuss organisational planning, it is appropriate to first analyse the definition of planning. The following are several definitions of planning which have been proposed by Western management intellectuals: (a)
Planning means determining the objectives that are desired to be achieved and deciding on the actions that are needed to be taken in order to achieve the objectives (Lewis et al., 2001);
(b)
Planning is a proposal of actions that need to be made by an organisation to achieve its objectives (Certo, 2000); and
(c)
Planning is a process to determine the objectives that an organisation desires to achieve in the future, including the actions that need to be taken in order to achieve them (Rue & Byars, 2000).
In summary, planning is the determination of the courses of action to accomplish the desired goals. This includes not only knowing how to allocate employee resources and delegate responsibilities but also setting realistic timelines and standards for accomplishment.
SELF-CHECK 2.1 Define planning.
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2.2
TOPIC 2
PLANNING AND DECISION- MAKING
EFFECTIVE PLANNING
According to Williams (2000), effective planning involves five main processes as shown in Figure 2.1.
Effective planning processes
(a) The first step in planning is to determine the objectives to be achieved. A good objective should have the S.M.A.R.T. features specific, measurable, attainable, realistic and timely. Refer to Figure 2.2 for a description of the features.
S.M.A.R.T. objective
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PLANNING AND DECISION- MAKING
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(b) After determining the objectives, the next step that needs to be taken is to inculcate a sense of commitment in each employee towards achieving the objectives. Table 2.2 explains the four ways to establish commitment in an organisationÊs employees. Methods of Establishing Employee Commitment
1.
Determining objectives by cooperating with all members of the organisation
Usually when a decision has been made through the cooperation between management and employees, it will create a sense of ownership towards the decision made and employees will develop a sense of commitment to ensure the success of its implementation. This method is the best approach to increase the commitment of employees.
2.
Setting reasonable objectives
The objective has to be reasonable so that employees will be motivated to perform their tasks until the planned objective is achieved. Objectives that are unrealistic with high targets are difficult to achieve and will demotivate employees while objectives that are too low will bore them.
3.
Announcing the objectives to members in the organisation
Generally, when an objective is publicly known, the employees will be embarrassed if they fail to achieve it. Hence, everyone (managers and employees) will work harder to ensure that the planned objective is achieved.
4.
Getting support from top management
To facilitate work operations, it is essential to have the support of top management. This support can be in the form of money, opinion, advice and/or others. With the support, all dealings will be made easier and this will indirectly motivate employees to achieve the objectives.
(c) Action plans will be prepared after members of the organisation have identified their commitment towards achieving the set objectives. The action plan will explain the steps to be taken to implement the tasks, the individuals who will be involved as well as the resources and time needed to achieve the objectives.
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TOPIC 2
PLANNING AND DECISION- MAKING
(d) Monitoring the progress aims to determine whether the plans are working well or otherwise. Two methods to monitor progress are: (i) Long-term objectives are actual objectives that need to be achieved while short-term objectives are formed for the purpose of motivating the organisationÊs members temporarily while they work towards the attainment of the long-term objectives. For example, the long-term objective of Organisation A is to generate a net profit of RM10,000 for the year 2017. The short-term objective that has been determined is to increase the net profit in the account every month throughout the year 2017. If the net profit increases every month, it will motivate the employees to continue generating more profits until it reaches the targeted of RM10,000 by December 2017. (ii) Frequent performance feedback enables employees and managers to monitor their progress levels. Feedback also ensures that managers do not divert from the original objectives and identifies the mistakes made so that corrective actions can be undertaken. (e) Good planning is planning that has flexibility or elasticity. Sometimes, after the initial implementation the manager realises that the objectives are difficult to achieve. In such cases, action must be taken to modify the plan. Such flexibility in planning is important because if there are any problems related to the planning or implementation process, it will not damage the overall planning and maybe only a portion of the plan needs to be improvised.
SELF-CHECK 2.2 1.
What do you see as the main difference between effective and ineffective planning?
2.
Explain the criteria of a good objective.
TOPIC 2
2.3
PLANNING AND DECISION- MAKING
29
TYPES OF PLANNING
Dessler (2001) categorised planning into three main dimensions planning based on format, organisational hierarchy and frequency of use. Figure 2.3 summarises the types of planning based on these dimensions.
Types of planning
Let us now go through each of these dimensions. (a) Planning differs from the aspect of format, that is, the way it is presented.
If planning is written in the form of statements regarding what needs to be achieved and how it is to be achieved, it is called . Financial statements planning is called stated quantitatively using financial terms.
as the plan is
refers to planning that explains what needs to be achieved and how to achieve it in the form of charts.
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PLANNING AND DECISION- MAKING
(b) Please refer to Figure 2.4 to understand the hierarchy dimension.
Hierarchy of managers
(c) Planning is also different from the aspect of frequency of use as described in the following: (i)
Planning that is only used once is known as one-time usage planning. It is prepared to fulfil specific purposes such as the opening of a new branch.
(ii)
Planning that is repeatedly used is known as standing plans. The plan is used to manage situations that frequently arise in an organisation such as dealing with employee disciplinary problems. There are three types of standing plans:
Policy is the general guidelines or principles which are used to manage a situation.
Procedure refers to the action or process that must be followed if a certain situation arises. It is more specific compared to policy.
Regulations are the specific guidelines when an action is being taken. Regulations are generally more specific than procedures.
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SELF-CHECK 2.3 1.
What impact do organisational levels have on managerial planning activities?
2.
What are the key differences between strategic, tactical and operational plans?
2.4
ADVANTAGES AND DISADVANTAGES OF PLANNING
Even though planning provides certain advantages, it also has its disadvantages. By understanding the advantages and disadvantages of planning, a manager will be able to assess the quality of the planning implementation. Tables 2.2 and 2.3 summarise the advantages and disadvantages of planning. Advantages of Planning
Generates intensive effort
Employees will be more diligent if there is a plan stating the objectives and work strategies. Work performance can be further improved because they are aware of the direction directi on and goal in which they need to move towards.
Continuous effort
Planning involves a specific time frame. Managers who engage in planning know that the objectives can only be achieved when the time comes. Hence, intensive efforts will continue until the planned objectives are successfully achieved. Thus, the managers and the employees will work more enthusiastically throughout the duration to achieve the objectives.
Unity of direction
With planning, employees will know the objectives which need to be achieved including the strategies that must be followed. Indirectly, all members of the organisation know the direction and will move towards that same direction or objective.
Establishes work strategy
When a senior manager sets an objective to be achieved, automatically the managers at the middle and lower level will question the ways to achieve the targeted objective. In order to achieve it, senior managers will establish strategies which will serve as guidelines in determining the activities that need to be implemented.
