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MANAGEMENT CONCEPTS
Teacher’s name: Sir Farrukh Usman Book recommended: Robbins 7th edition Lectures compiled by: Muhammad irfan Malik (FUUAST gulshan campus)
Who is a manager? m anager? A manager is someone who works with and through other people to coordinate work activities to achieve the organizational objectives. Define management Such a process that is used to attain the objectives of an organization by efficient and effective planning, planning, organizing, leading and controlling its human, physical, informational and financial resources.
Define the terms which are underlined in the definition of management Objectives: objectives are the desired outcomes •
Efficient: getting the most output from the least amount of input
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Effective: performing activities that help in achieving the organizational goals
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Planning: the proces process s of determ determini ining ng object objective ives, s, establ establish ishing ing an overa overallll strategy to achieve the objectives and creating a set of plans to coordinate organizational work. Organizing: the process of determining what tasks to be done, who is to do them and where the decisions are made Leading: process of motivating people to achieve objectives, hiring, selecting, promoting and firing the employees.
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MANAGEMENT CONCEPTS
Controlling: it is the process of monitoring actual performance, comparing actual with the standard and taking corrective action in case of significant deviations.
What is an organization? An organization is a group of people in which the arrangement is deliberate to achieve a particular objective.
Management levels There are three levels of management Top, middle, low or first line managers
First line managers supervise the work activities of non managerial staff who are directly involved in the process of producing goods and services PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Middle managers are product, line, divisional and branch their work is to supervise first line managers. Top management takes organizational and major decisions that effect the whole orga organi niza zati tion on i.e. i.e. whic which h busi busine ness ss to ente enter, r, prod produc uctt laun launch ch and and deal deals s with with the the competition.
Management roles A manager performs the following three roles
Interpersonal roles: Involve people and other duties that are symbolic. Figurehead: manager is a symbolic head of the org. Liaison: to maint maintai ain n cont contac acts ts betw betwee een n insi inside ders rs and and outs outsid ider ers s and and with within in the the organization department. Leader: motivate employees, selects, hire promote and fire them
Inform Informati ational onal roles: roles:
Involv Involves es receiv receiving ing,, collec collectin ting g and disse dissemin minati ating ng
information Monitor: receives information observe and monitor the information Disseminator: information delivering to the members of organization and partners Spokesperson: providing information to outsiders
Decisional roles: revolves around decision making Entrepreneur: analyze environment, select opportunity and avail the opportunity. Resource Resource allocator: allocator: alloca allocates tes the human human,, physic physical, al, inform informati ationa onall and financ financial ial resources of the organization. Disturbance handler: competition handling, conflict handling among employees. Negotiator: negotiate for sales purchase etc. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Management skills: There are three types of skills Technical skills: The knowledge of or the proficiency in a particular field Human skills The ability to work well with the people both individually and in groups Conceptual skills The ability to think and conceptualize about complex and abstract (none existing) situation
System perspective Differ Different ent interre interrelat lated ed and interde interdepen penden dentt parts parts workin working g togeth together er to achiev achieve e a particular. Open system: system: system that interacts with the environment, take input and sometimes output to produce goods Close system System that does nor interact or influenced by the environment PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
What is interdependency of the departments in the organization/ The organi organiza zatio tion n depart departme ments nts are depend dependent ent on each each other. other. If the produc productio tion n depart departme ment nt is very very effici efficient ent but the market marketing ing depart departme ment nt is not compet competent ent to properly market the products and does not support the production department the organization will suffer in this scenario.
Contingency perspective A view that says the organizations are different and face different situations therefore they require different ways of management.
Universality of management A view that says management is required in all types of organizations, all sizes of organization, in all organizational areas and at all levels of organization
Management theories •
Scientific management
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General administrative approach
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Quantitative approach
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Human behavior approach
Scientific management Principles of scientific management management •
Develop a science for each element of the work
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Scientifically select and train workers
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Heartily cooperate with the subordinates
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Divide work and responsibilities equally between worker and manager PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Fredrick Taylor observed the workers for 20 years and find out the inefficiency that is why it is called the scientific management. Scientific selection means ability and job requirements should match and training means match ability and than train. Frenk and and Lill Lillia ian n capt captur ured ed the the work worker ers s and and decr decrea ease se the the work work acti activi viti ties es.. Scie Scient ntif ific ic management focuses on the efficiency of lower level
General administrative approach Fayol’s 14 principles of management Division of work: dividing a complete job into narrow and repetitive components. Authority: rights inherent in a managerial position to tell people what to do and expect them to do that. Unity of command: each employee should report to one superior there should be one boss for all subordinates. Unity of direction: there should be a single plan of action Subordinati Subordination on of individual individual interest to general general interest: interest: organizatio organizational nal objectives objectives should be the priority then the interest of individual interest. Equity: manager should be kind there should be no discriminations. Initiative: where there is more load of work on employees. Scalar chain; Authority flow should be from top to bottom. Order: people and equipment should be at right place at right time. Discipline: obedience of rules Stability of tenure of personnel: labor tenure should be stable; labor turnover rate should be low. Centralization: in an org organiz aniza ation tion wher where e decis ecisio ions ns are are made by the the top top management is called centralization. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Remunerations: wages and payment should be fair. Spirit de caught: team work
Max Weber Burea Bureaucr ucracy acy:: a form form of organ organiza izatio tion n charac character terize ized d by divisi division on of labor, labor, clearl clearly y defined hierarchy, detailed rules and regulations and impersonal relationship. Hierarchy: flow of authority should be defined who is superior Quantitative approach Use Use of quan quanti tita tativ tive e tech techniq nique ues s to impr improv ove e deci decisi sion on maki making ng,, stat statis istic tical al and and mathem mathemati atical cal techni technique ques s are called called quanti quantitat tative ive techn techniqu iques es such such as how how much much quantity should we order.
Decision making Define the decision making A choice from two of more alternatives to solve the problem Steps in decision making •
Identi Identific ficati ation on of the proble problem: m: symp sympto toms ms of the the prob proble lem, m, when when actu actual al performance is measured with the standard, if there is deviation there is a problem. It shows symptoms. E.g. our sales are less than expected sales, It is a symptom we have to discus the cause of the problem, the causes may be: a. Weak Weak adve advert rtis isem emen entt b. Weak Weak prod produc uctt qual quality ity c. Toug Tough h com competi petiti tion on d. Pric Price e incr increa ease se
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MANAGEMENT CONCEPTS
Identification of the decision criteria: it tells when the decision is going to be taken. A decision criterion means what is relevant to the decision. E.g. for advertisement ➢
Select the firm
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What cost
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What slogan
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What timing (what should be the timing of ad)
Allocating weights to the criteria: criteria: every criterion is not important. We will give weights to the criteria. Make the list of the alternatives.
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Developing the decision alternatives: alternatives: make a list of the alternatives
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Analysis of the alternatives: carefully analyze the alternatives
Analysis of the firms for selection of advertisement
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Firms
Cost
Reliability
Slogan
Timing
A
7
2
4
1
B
3
8
5
1
C
8
7
3
1
Selection of an alternative: select the most appropriate alternative Selection of the advertisement firms
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MANAGEMENT CONCEPTS
Firms
Cost
Reliability
Slogan
Timing
Total
A
35
20
16
4
75
B
15
80
20
4
119
C
40
70
12
4
126
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Implementing an alternative : implement the alternative, make the decision,
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Evaluating results: results: evaluate the results through controlling.
Pervasiveness of decision making Decision making is involved in every managerial function. It is involved in planning, organizing, leading, controlling. Some experts say: managers are paid because they make decisions. Rational decision making To select the best alternative is rational decision making Assumptions of rational decision making ➢
The problem is cleared is unambiguous
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A single well defined goal is to be achieved
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All alternatives and consequences are known
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Preferences are cleared
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Preferences are constant and stable
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No cost or time constraints exist
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Final choice will maximize pay off
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MANAGEMENT CONCEPTS
Bounded rationality Behavior that is rational within the parameters of simplified decision making process which is limited or bounded by an individual’s ability to process information.
Intuitive decision making A subc subcon onsc scio ious us proc proces ess s of maki making ng deci decisi sion ons s on the the basi basis s of expe experie rienc nce e and and accumulated judgments
Types of problems and decisions Problems: Struct Structure ured d proble problems ms:: clear, clear, straig straight ht forwar forward, d, famili familiar, ar, simple simple and well well define defined d problems Unstru Unstructu ctured red proble problems: ms: a proble problem m that that is not not familia familiarr and and rarely rarely faced by the organizations is called unstructured problem Decisions: Program decisions: a simple, straight approach to solve the problem. Non program decision: decision that need to be defined for a specific problem.
Planning The process of determining objectives, establishing an overall strategy to achieve the objectives and creating a set of plans to coordinate organizational work, At least four four years years of plans plans should should be planed planed in advanc advance. e. The two importa important nt things things of plan planni ning ng are are goal goal and and plan plan.. Goal is the desire desired d outcom outcome e wherea whereas s plan is a docum document ent that that outlin outlines es how goals goals are going going to be achiev achieved ed includ including ing resour resource ce allocation, scheduling necessary actions to achieve organizational goals. Types of goals: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Stated: written in the chartered, MOA, financial statements. Real: actually defined by the actions of the members.
Purpose of planning; ➢
Gives directions: each member of the organization knows the rules and regulations and the goals are very clearly set
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Reduce uncertainty: one can not prevent himself from the environment, planning identifies the changes in the environment and that expected change can be tackled.
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Minimize Minimize wastage: wastage: in planning the wastage can be highlighted, planning minimizes the wastage of resources.
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Set standards used in controlling: planning supports controlling.
Types of plans on the basis of strategic plans Breadth Strategic Strategic plans: plans that apply to the entire organization organization and seek to position position the organization in terms of its environment. Operational plans: plans that specify the details that how overall goals are to be achieved. Time frame Long term: the plans which are for three or more years are long term plans. Short term: plans for one or less than one year. Specifically Specific: plans that leave no room for interpretation Directional: plans that set out general guidelines for activities Frequency of use PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Single use: plans that are created to meet the needs of a unique situation Stan Standi ding ng use: use: plan plans s that that are are used used to guid guide e the the activ activiti ities es that that are are perf perfor orme med d repeatedly, they look the whole organization.
Approaches to goal setting: Traditional approach of planning: goals are set by the top management Management by objective MBO: goals are jointly determined by subordinates and supervisors. Progress towards these goals periodically is assessed and rewards are allocated on the basis of this progress. Four elements of MBO: •
Participative decision making
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Performance feedback
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Goals specific
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Explicit time period
Characteristics of well designed plan: Measurable: Goal Goals s shou should ld be meas measur urab able le whit whithe herr the the mark market etin ing g depa depart rtme ment nt could could incr increa ease se sale sales; s; prod produc ucti tion on depa departm rtmen entt coul could d decr decrea ease se the the pric prices es and and enhanced the quality. Written: The goals and plan should be in black and white. Written plans are evidence and when you write you conceptualize more. Challenging: The plans should be challenging but achievable. Challenging goals motivate employees to achieve them. Clear as to time frame: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
The time should be clearly stated that in what period we want to achieve our goals if the time is not clear we can not measure the performance. Communicated to all organization members: The goals should be communicated to all organization members so that one can know that where we are and what we want to achieve. Defined in terms of outcomes rather than actions: Outcome is what we want to attain what to we want to get. The goals should state the outcomes rather actions.
Contingency factor in planning: Organizational level: Top level: specific plans Low level: operational plans Environment uncertainty: Directional plans Length of further commitment: If length of work is high plan should be high
Criticism on planning: Creates rigidity: Planning locks the managers Can not be done for dynamic environment: Can not be planed for an environment because the environment changes so fast Reduce creativity: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
When the managers are rigid or locked creativity is reduced.
Strategic management The The set set of deci decisi sion ons s and and actio actions ns that that dete determ rmin ine e long long run run perf perfor orma manc nce e of an organization, strategy is an action taken in response to competitors. Strategic management process •
Analyze the current mission objectives and strategies Anal Analyz yze e the the obje object ctiv ives es whet whethe herr they they are are meas measur urab able le or not not revi review ew the the strategies and mission statement
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Analyzing the environment (external analysis) Analyze the micro and macro environment
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Identifying threats and opportunities Space to enter in a market is opportunity, threats of future which the company may face in the long run.
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Analyze the organizational resources and capabilities (internal analysis) Anal Analyz yze e the the huma human, n, phys physic ical al,, fina financ ncia iall reso resour urce ces, s, afte afterr sales sales serv servic ices es activities may be our best capability
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Identifying strengths and weaknesses Streng Strength/ th/cap capabi abilit lities ies:: any uniqu unique e resour resource ce that that organi organizat zation ions s posses possess s or activities that organizations perform well and better than others Weakness: any resource that an organization needs but does not possess or activities do not performed well.
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Formulating strategies Design and make the strategies and plan
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Implementing strategies PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Implement the strategy in letter and spirit •
Evaluating strategies: Evaluate the results through controlling.
Components of a mission statement: Market: which is the market to target? Customers: who are the customers of the firm? Students, teachers, doctors Product: which need of the customer to satisfy? What will be the product? Technology: whether using the current technology or not? Self concept: which is the competitive advantage of the firm? Concerns for employees: providing benefits to employees Concerns for public image: societal marketing, green marketing Concerns for growth and stability: searching new market for growth and stability
Business strategies a. Corpor Corporate ate level level strate strategie gies s b. Busine Business ss level level strate strategie gies s c. Functi Function onal al level level strate strategie gies s
Corporate level strategies: A strategy that seeks to determine what business a company should be in or wants to be in 1. Stability: Stability: A strategy characterized by an absence of a significant change.
Work force, marker share, production PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
2. Growth: Growth: a strategy in which an organization increase its operations a. Direct expansion: growth can be achieved by different ways, new products
b.
same market, market, same product new in this strategy strategy firm wants to increase increase the sales in existing and new markets. Vertical integration: control on suppler and distributor Backward integrati int egration on: control on supplier sup plier or self suppler su ppler Forward integration inte gration : control on distributor distri butor or self distributor distr ibutor Horizontal Horizont al integration integrat ion : combining operations operati ons with competitors competito rs to reduce threats and avoid competition. Dive Divers rsif ific icat atio ion n Related Related diversific diversification ation: diversifyin diversifying g the products products related related to the main products or business Unrelated nrelated: diversifyi diversifying ng the product product which is not related related to the main products of business Defe Defens nsiv ive e stra strate tegi gies es Retrenchment: Retrenchment: downsizing or reduction or sales sales of assets assets Divestiture: ivestit ure: selling sell ing of the SBU SB U which is unprofitab unpr ofitable le Liquidat iqui dation ion : selling sell ing comple co mplete te organiz org anizati ation on • • •
a.
•
•
1. a. b. c.
Business level strategies: A strategy that determines how each SBU should compete in its industry. Cost leadership: edge on the basis of cost, leader in the market, market leader. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Differentiation: product is significantly different of the competitor Focus: in big market satisfy the smaller segment which is called niche marketing.
Five forces that determine the industry attractiveness by Michel porter 1. Thre Threat ats s of new new ent entra rant nts s Capital requirements, brand loyalty 2. Threa Threats ts of of substit substitute ute prod product ucts s Switching cost (price, time, energy) brand loyalty 3. Bargai Bargainin ning g power power of custo customer mer Numbers of customer, customer information availability or substitute 4. Bargai Bargainin ning g powe powerr of supple suppler r Supplier concentrations, availability and substitute input 5. Existi Existing ng riva rivalry lry among among firms firms Product differences, industry growth rate
What is competitive advantage? Any thing that sets a firm apart from its competitors design, service, unique strength capability, unique resources, raw material, and technology may be the competitive advantage of the firm.
Organizing The process of determining what tasks to be done, which is to do them and where the decisions are made Organizational structure: Formal framework through which jobs are divided, grouped and coordinated PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Organization design: When a manager is engaged in changing structure is called organization design. Factors that affect the organizational design Work specialization: specialization: each component of the work should be done by specialized individual Departmentalization:: the basis through which jobs are grouped together Departmentalization a) Functional departmentalization: grouping of activities on the basis of functions b) c)
d) e)
performed i.e. marketing, sales, accounts, etc Product departmentalizati artment alization on: grouping groupi ng of activiti act ivities es on the basis ba sis of product pr oduct line li ne Cust Custom omer er depa depart rtme ment ntal aliz izat atio ion n: grou groupi ping ng of activ activiti ities es on the the basi basis s of custom customers ers.. Custom Customers ers can be segme segmente nted d shoes shoes compan companies ies can can divide divide customers as male and female. Process departmentalization: grouping of activities on the basis of customers and product flow. Geogra Geographi phica call depart departmen mental taliza izatio tion n: depar departme tmenta ntaliz lizati ation on on the basis basis of territory i.e. Karachi branch, Lahore branch
Chain Chain of comma command: nd: the the cont continu inuou ous s line line of auth author ority ity that that exte extend nds s from from top top organizational level to lower and classify who reports to whom a) Authority Authori ty: rights inherent inhe rent in a managerial position po sition to tell tel l people what to do and
expect them to do so b) Resp Respon onsi sibi bili lity ty: the the oblig obligat atio ion n to perfo perform rm any any assi assign gned ed duty duty is calle called d responsibility c) Unity of command: each employee should report to only one superior, there should be one boss for a single department Span of control: control: the number of employees a manager can effectively and efficiently manage is called span of control. a) Training Trainin g: trained employees require req uire less supervisi su pervision on b) Skill: Skill: if the worker is skilled the span will be wider c) Complexity Complexi ty of tasks : complex tasks tas ks require more mo re supervision supervi sion d) Simplicity Simplici ty of tasks tas ks: simple tasks widen wide n the span e) Sophistication of information system: if i f the information is not easily available
the employee will require more supervision PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
f) Environment: Environment: stable stable enviro environm nment ent wider wider span span unstab unstable le environ environme ment nt narrow narrow
span Centralization and decentralization The degree to which decision making in an organization is concentrated on a single point is celled centralization. The degree to which lower level employees are involved in decision making or actually make the decisions is called decentralization Formulization The degree to which jobs within the organization are standardized at the extent to which employee behavior is guided by rules and procedures Factors of centralization and decentralization •
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•
•
•
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Environment: Stable environment centralization unstable decentralization Nature of decision If the decision is significant it should be centralized Skills of employees Unskilled employees’ centralization, skilled employees’ decentralization Size of the company Large size centralization, geographic decentralization Autocratic Centralization Democratic Decentralization
Organizational design: Mechanistic: formulation, centralization, cross action teams, chain of command, rigid, work specialization. Organic: adoptive, not strict, jobs not highly standardized, departments are not rigid, decentralization. Factors of organizational design:
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MANAGEMENT CONCEPTS
Strategy: strategy is the means of achieving short term objectives in response to the competitor. There are three strategies: Cost minimization, innovation, imitation. Technology: Routine technology; structure is mechanistic, non routine technology; organic. Size: As the size increases its mechanistic Environmental uncertainty: If environment is stable the design is mechanistic
Leadership A pers person on who who has has foll follow ower ers s is lead leader er,, the the diff differe erenc nce e betw betwee een n a lead leader er and and a manager is that the managers are appointed in contrast the leaders normally emerge within a group. Leading is to influence people it can perform beyond the actions. All the managers should should be leader. Leader Leader is someone who influences influences people and managerial authority leadership is the process of influencing people towards the achievement of a particular objective. Characteristics of leadership Trait theory: Traits means the qualities or characteristics Drive: To exert exert high high level level of effort efforts, s, more more needs needs of achiev achievem ement ent and tireless tireless effort efforts, s, initiative. Desire to lead: Strong desire to lead and assumed great responsibility Honesty and integrity: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
A leader should be truthful, consistent in words and deeds and there should be a relationship between leaders the followers. Intelligence: The processing capability of a leader should be very should have the quality of interpreting information Self confidence: Shou Should ld be high highly ly conf confid iden ent, t, the the conf confid iden ence ce will will deve develo lop p if the the info inform rmat atio ion n or knowledge will be reliable. Job relative knowledge: Must posses the knowledge about the company, industry, and technology Behavioral theories University of Lowa state Autocratic style: a leader who centralize authority, dictate work methods and limit employee participation Democratic style: a leader who involves subordinates in decision making, delegates’ authority encourages participation in deciding work methods and goals. Lazes fair: a leader who gives a group a complete freedom to make decision and complete the work in whatever way it saw fit. For example an assignment by the teacher Ohio State a. Initiating Initiating structure: structure: the extent to which a leader was likely to define and
structure his or her role and the roles of the followers in the search for goal attainment. b. Considera Consideration tion (friendly (friendly leader): leader): the the exte extent nt to whic which h the the lead leader er has has job job relationships characterized by mutual trust and the group members ideas and feelings University of Michigan study •
Employee oriented leaders PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Production oriented leaders
Managerial Grid
Situational theories The degree to which members have trust, respect r espect and confidence in their leader Fiedler contingency model The Fiedle Fiedlerr contin contingen gency cy model model is a leadership theo theory ry of indust industria riall and organizational psychology developed by Fred Fiedler (born Fiedler (born 1922), one of the leading scie scient ntis ists ts who who help helped ed his his field field move move from from the the rese resear arch ch of traits traits and and pers person onal al characteristics of leaders to leadership styles and behaviors. Two factors The first first manage manageme ment nt style, style, Taylorists, Taylorists, assu assume med d ther there e was was one one best best styl style e of leadership. Fiedler’s contingency model postulates that the leader’s effectiveness is based based on ‘situat ‘situation ional al contin contingen gency’ cy’ this this is a result result of intera interacti ction on of two factor factors: s: leadership style and situational favorableness (later called situational control). More than 400 studies have since investigated this relationship. Least preferred co-worker (LPC) The leadership style of the leader, thus, fixed and measured by what he calls the least preferred co-worker (LPC) scale, an instrument for measuring an individual’s leadership orientation. The LPC scale asks a leader to think of all the people with whom they have ever worked and then describe the person, with whom they have worked least well, using a series of bipolar scales of 1 to 8, such as the following: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Unfriendly
1 2 3 4 5 6 7 8 Friendly
Uncoopera Uncooperative tive 1 2 3 4 5 6 7 8 Cooperativ Cooperative e Hostile
1 2 3 4 5 6 7 8 Supportive
....
1 2 3 4 5 6 7 8 ....
Guarded
1 2 3 4 5 6 7 8 Open
The responses to these scales (usually 18-25 in total) are summed and averaged: a high LPC score suggests that the leader has a human relations orientation, orientation, while a low LPC score indicates a task orientation. orientation. Fiedler Fiedler assumes assumes that everybody' everybody's s least preferred coworker in fact is on average about equally unpleasant. But people who who are are inde indeed ed relat relatio ions nship hip motiv motivat ated ed,, tend tend to desc descri ribe be thei theirr leas leastt pref prefer erre red d cowork coworkers ers in a more more positiv positive e manne manner, r, e.g., e.g., more more pleas pleasant ant and more more effici efficient ent.. Therefore, they receive higher LPC scores. People who are task motivated, on the other hand, tend to rate their least preferred coworkers in a more negative manner. Therefore, they receive lower LPC scores. So, the Least Preferred Coworker (LPC) scale is actually not about the least preferred worker at all, instead, it is about the person who takes the test; it is about that person's motivation type. This is so, because, individuals who rate their least preferred coworker in relatively favorable light on these scales derive satisfaction out of interpersonal relationship, and those who who rate rate the the cowo cowork rker er in a rela relati tive vely ly unfa unfavo vora rabl ble e ligh lightt get get satis satisfa fact ctio ion n out out of successful task performance. This method reveals an individual's emotional reaction to people they cannot work with. Critics point out that this is not always an accurate measurement of leadership effectiveness. Situational favorableness According to Fiedler, there is no ideal leader. Both low-LPC (task-oriented) and highLPC (relationship-oriented) leaders can be effective if their leadership orientation fits the situation. The contingency theory allows for predicting the characteristics of the appropriate situations for effectiveness. Three situational components determine the favorableness of situational control: 1. Leader-Mem Leader-Member ber Relations Relations,, referring referring to the degree of mutual mutual trust, trust, respect respect and confidence between the leader and the subordinates. 2. Task Task Stru Struct ctur ure, e, refe referri rring ng to the the exte extent nt to whic which h grou group p task tasks s are are clea clearr and and structured. 3. Leader Leader Position Position Power, Power, referring referring to the power power inherent inherent in the leader's leader's position position itself. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
When there is a good leader-member relation, a highly structured task, and high leader position power, the situation is considered a "favorable situation." Fiedler found that low-LPC leaders are more effective in extremely favorable or unfavorable situations, whereas high-LPC leaders perform best in situations with intermediate favorability. Leader-situation match and mismatch Since personality is relatively stable, the contingency model suggests that improving effectiveness requires changing the situation to fit the leader. This is called "job engineering." The organization or the leader may increase or decrease task structure and positio position n power, power, also also traini training ng and group group develo developme pment nt may improv improve e leader leader-member relations. In his 1976 book Improving Improving Leadersh Leadership ip Effectivene Effectiveness: ss: the Leader Match Concept Fiedler (with Martin Chemers and Linda Maher) offers a self paced leadership training program designed to help leaders alter the favorableness of the situation, or situational control. Examples •
•
•
Task-oriented leadership would be advisable in natural disaster, like a flood or fire. In an uncertain situation the leader-member relations are usually poor, the the task task is unst unstru ruct ctur ured ed,, and and the the posi positi tion on powe powerr is weak weak.. The The one one who who emerges as a leader to direct the group's activity usually does not know subo subord rdin inat ates es pers person onal ally ly.. The The task task-o -ori rien ente ted d lead leader er who who gets gets thin things gs accomplished proves to be the most successful. If the leader is considerate (relationship-oriented), they may waste so much time in the disaster, that things get out of control and lives are lost. Blue-collar workers generally want to know exactly what they are supposed to do. Theref Therefore ore,, their their work work environ environme ment nt is usually usually highly highly struct structure ured. d. The The leader's position power is strong if management backs their decision. Finally, even even though though the leader leader may may not be relati relations onship hip-or -orien iented ted,, leader leader-me -membe mber r relations may be extremely strong if they can gain promotions and salary increases for subordinates. Under these situations the task-oriented style of leadership is preferred over the (considerate) relationship-oriented style. The considerate (relationship-oriented) style of leadership can be appropriate in an environment where the situation is moderately favorable or certain. For exam exampl ple, e, when when (1) (1) lead leader er-m -mem embe berr rela relati tion ons s are are good good,, (2) (2) the the task task is unstructur unstructured, ed, and (3) position power is weak. weak. Situations Situations like this exist with research scientists, scientists, who do not like superiors to structure the task for them. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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They prefer to follow their own creative leads in order to solve problems. In a situation like this a considerate style of leadership is preferred over the taskoriented Hersey and Blanchard's Situational Leadership Assumptions Leaders should adapt their style to follower development style (or 'maturity'), based on how ready and willing the follower is to perform required tasks (that is, their competence and motivation). There are four leadership styles (S1 to S4) that match the development levels (D1 to D4) of the followers. The four styles suggest that leaders should put greater or less focus on the task in question and/or the relationship between the leader and the follower, depending on the development level of the follower. Style Follower development level
Low High Leadership style in R3 R2 res respons ponse e to foll follow ower er R4 development level Task / directive behavior Low Relationshi High p / supportive Low behavior
R1
High
S3 S2 participating Selling S4 Delegating
S1 Telling
S1: Telling / Directing PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Follower: R1: Low competence, low commitment / Unable and unwilling or insecure Leader: High task focus, low relationship focus When the follower cannot do the job and is unwilling or afraid to try, then the leader takes a highly directive role, telling them what to do but without a great deal of concern for the relationship. The leader may also provide a working structure, both for the job and in terms of how the person is controlled. The leader may first find out why the person is not motivated and if there are any limitations in ability. These two factors may be linked, for example where a person believes they are less capable than they should be may be in some form of denial or other coping other coping.. They follower may also lack self-confidence as a result. If the leader focused more on the relationship, the follower may become confused about what must be done and what is optional. The leader thus maintains a clear 'does this' position to ensure all required actions are clear. S2: Selling / Coaching Follow Follower: er: R2: Some Some compet competenc ence, e, variab variable le commit commitme ment nt / Unable Unable but willin willing g or motivated Leader: High task focus, high relationship r elationship focus When the follower can do the job, at least to some extent, and perhaps is overconfident about their ability in this, then 'telling' them what to do may demotivate them or lead to resistance. The leader thus needs to 'sell' another way of working, explaining and clarifying decisions. The leader thus spends time listening and advising and, where appropriate, helping the follower to gain necessary skills through coaching methods. Note: S1 and S2 are leader-driven. S3: Participating / Supporting Follow Follower: er: R3: High High compet competenc ence, e, variab variable le commit commitme ment nt / Able Able but unwilli unwilling ng or insecure Leader: Low task focus, high relationship focus When the follower can do the job, but is refusing to do it or otherwise showing insufficient commitment, the leader need not worry about showing them what to do, and instead is concerned with finding out why the person is refusing and thence persuading them to cooperate. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
There is less excuse here for followers to be reticent about their ability, and the key is very very much much arou around nd moti motiva vatio tion. n. If the the caus causes es are are foun found d then then they they can can be addressed by the leader. The leader thus spends time listening, praising praising and othe otherw rwis ise e maki making ng the the foll follow ower er feel feel good good when when they they show show the the nece necess ssar ary y commitment. S4: Delegating / Observing Follower: R4: High competence, high commitment / Able and willing or motivated Leader: Low task focus, low relationship focus When the follower can do the job and is motivated to do it, then the leader can basically leave them to it, largely trusting them to get on with the job although they also may need to keep a relatively distant eye on things to ensure everything is going to plan. Followers at this level have less need for support or frequent praise, although as with anyone, occasional recognition is always welcome. Path-Goal Theory of Leadership Description The Path-Goal Theory of Leadership was developed to describe the way that leaders encourage and support their followers in achieving the goals they have been set by making the path that they should take clear and easy. In particular, leaders: •
Clarify the path so subordinates know which way to go.
•
Remove roadblocks that are stopping them going there.
•
Increasing the rewards along the route.
Leaders can take a strong or limited approach in these. In clarifying the path, they may be directive or give vague hints. In removing roadblocks, they may scour the path or help the follower move the bigger blocks. In increasing rewards, they may give occasional encouragement or pave the way with gold. This variation in approach will depend on the situation, including the follower's capability and motivation, as well as the difficulty of the job and other contextual factors. House and Mitchell (1974) describe four styles of leadership: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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Supportive leadership Consid Consideri ering ng the needs needs of the follow follower, er, showin showing g conce concern rn for their their welfar welfare e and creating a friendly working environment. This includes increasing the follower's self-esteem and making the job more interesting. This approach is best when the work is stressful, boring or hazardous. Directive leadership Telling followers what needs to be done and giving appropriate guidance along the way. This includes giving them schedules of specific work to be done at specific times. Rewards may also be increased as needed and role ambiguity decreased (by telling them what they should be doing). This may be used when the task is unstructured and complex and the follower is inexpe inexperie rience nced. d. This This increa increases ses the follow follower' er's s sense sense of securi security ty and contro controll and hence is appropriate to the situation. Participative leadership Consulting with followers and taking their ideas into account when making decisions and taking particular actions. This approach is best when the followers are expert and their advice is both needed and they expect to be able to give it. Achievement-oriented leadership: Sett Settin ing g chal challe leng ngin ing g goal goals, s, both both in work work and and in selfself-im impr prov ovem emen entt (and (and ofte often n together). High standards are demonstrated and expected. The leader shows faith in the capabilities of the follower to succeed. This approach is best when the task is complex. Contingency factors: • • • •
Environmental Work group Formal authority Task and structure
Follower’s personal trait • • •
Locus of control Perceived ability Experience
Leadership power: PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
An essent essential ial part part of leader leadershi ship p or manag managem ement ent is to influe influence nce the people people you manage so that they do what you want them to do. The influence of a leader will depend on a variety of factors including their personality and of those around them. For the purposes of this article we will refer to the people that the leader is managing or leading as followers. The influence of a leader over his followers is often referred to as power. Below we will explore the different types of power a leader may have.
Reward Power
This type of influence is created when the leader is able to offer a reward to his foll follow ower ers s for for comp complet letin ing g task tasks/ s/be beha havi ving ng in a cert certai ain n mann manner er.. Rewa Reward rds s in the the workplace can take a variety of forms from chocolates, gift vouchers and holidays to promotions, commission and pay rises. This reward will only be effective if ; •
Firstly - the reward appeals to the followers. As you are aware there is no point offering chocolate as a reward to somebody that likes crisps. This is because they will not view chocolate as a reward, so there is no incentive to complete the task.
•
Secondly – the followers have to believe that the leader will give them (or arrange for them to receive) the reward promised once the task is completed by them.
Thirdly – the reward should be proportionate to the task the follower has to complete. For example it would be disproportionate to reward an employee with a promotion for making a cup of tea. Similarly a follower would feel undervalued, if rewarded with a £5 gift voucher after they spent six months doing their managers job without a pay rise. •
This type of power needs to be used carefully to prevent followers becoming accust accustom omed ed to reward rewards s and refusi refusing ng to comple complete te routine routine tasks without without a PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
reward. Generally rewards should not be offered, to follower employees to complete duties which are a normal part of their role. This is because as an employee they are under a contractual obligation to complete these tasks and they are already rewarded for this through their salary. •
The other reason why rewards should be offered carefully is that frequent use can reduce the impact or influence that offering a reward initially had on the follower. Followers will soon tire of the reward especially if the reward is small for example chocolates or flowers.
Coercive Power
This is the opposite of reward power because this power is based on the leader having control over what happens if followers do not act as required. If followers do not undertake the action required, the leader will impose a penalty. Penalties take a variety of forms including withdrawal of privileges, job losses, verbal abuse, and delayed or loss of promotion. In all cases the leader will need to choose the penalty carefully to prevent breaking the law or being the subject of an employment tribunal. •
Coercive power requires followers to believe that the leader has the ability to impose the stated penalty. Also the penalty has to be something that the followers do not want to have imposed on them. For example a penalty results in coffee being banned is unlikely to influence a tea drinker.
•
Finally (just as the reward in reward power should be proportional to the action taken by the follower), the penalty should be proportionate to the action not completed by the follower. For example it would be disproportionate to fire an employee follower the first time they do not return from their lunch break at the stated time. Similarly it is disproportionate to reduce the wages of an employee follower that hasn’t completed their duties over a six month period by £20 when their monthly pay is i s £1000. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Coercive powers should be used carefully; overuse can lead to unhappy employee followers. Unhappy followers can be negative or unmotivated; they may resign or adopt a “work to rule” attitude. Work to rule is where employees refuse to undertake any duties (or adopt working practices) that are not stated in their contract.
Legitimate Power
This is the power that a leader has when the followers believe that the leader has “a right right”” to inst instru ruct ct them them and and that that they they have have an obli obliga gati tion on to foll follow ow inst instru ruct ctio ions ns.. Sometimes legitimacy power is created by the leader’s job title (such as captain, doctor, doctor, or area manager), manager), combined combined with the follower’s follower’s belief that the job title gives the leader the right to give them orders. Referent Power
This is created when the followers believe that the leader possess qualities that they admire and would like to possess. The followers identify with their leader and attempt to copy their leader. As referent power is dependant on how the follower views the personality of their leader, a leader will not have referent power over every follower they lead. Some leaders will have referent power over just a few, whilst others such as Gandhi have lead millions through their personality and charisma. Expert Power
As the title suggests a leader has expert power when the followers believe that the leader has “expert” knowledge or skills that are relevant to the job or tasks they have to complete. Often an experienced member of the team or staff in an organization can have expert power even though they are not a supervisor or manager.
Controlling PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
Controlling as a management function involves following steps: 1. Establishment of standards- Standards are the plans or the targets which
have to be achieved in the course of business function. They can also be called as the criterions for judging the performance. Standards generally are classified into twoa. Measurable Measurable or tangibl tangible e - Those standar standards ds which can can be measure measured d and expressed are called as measurable standards. They can be in form of cost, output, expenditure, time, profit, etc. b. Non-me Non-measu asurab rable le or intang intangibl iblee- There are standard standards s which which cannot cannot be meas measur ured ed mone moneta taril rily. y. For For exam exampl plee- perf perfor orma manc nce e of a mana manage ger, r, deviat deviation ion of worker workers, s, their their attitud attitudes es toward towards s a concer concern. n. These These are called as intangible standards. Controlling becomes easy through establishment of these standards because controlling is exercised on the basis of these standards. 2. Measurement of performance- The second major step in controlling is to
measu measure re the perfor performan mance. ce. Findin Finding g out deviat deviation ions s become becomes s easy easy through through measuring the actual performance. Performance levels are sometimes easy to measure and sometimes difficult. Measurement of tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative measu measurem rement ent becom becomes es diffic difficult ult when when perfor performan mance ce of manag manager er has has to be measured. Performance of a manager cannot be measured in quantities. It can be measured only bya. Attit Attitud ude e of the the work worker ers, s, b. Thei Theirr mor moral ale e to to wor work, k, c. The develo developm pment ent in the attitude attitudes s regard regarding ing the physic physical al environm environment ent,, and d. Their communica communication tion with the superiors. superiors. PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
It is also also someti sometimes mes done done throug through h variou various s report reports s like like weekly weekly,, monthl monthly, y, quarterly, yearly reports. 3. Comparison of actual and standard performance- Comparison of actual
performance with the planned targets is very important. Deviation can be defined as the gap between actual performance and the planned targets. The manager has to find out two things here- extent of deviation and cause of deviation. Extent of deviation means that the manager has to find out whether the deviation is positive or negative or whether the actual performance is in conformity with the planned performance. The managers have to exercise control by exception. He has to find out those deviations which are critical and important for business. Minor deviations have to be ignored. Major deviations like like repl replac acem emen entt of mach machin iner ery, y, appo appoin intm tmen entt of work worker ers, s, qual quality ity of raw raw material, rate of profits, etc. should be looked upon consciously. Therefore it is said, “If a manager controls everything, he ends up controlling nothing.” For example, if stationery charges increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly production decreases continuously, it is called as major deviation. Once the deviation is identified, a manager has to think about various cause which has led to deviation. The causes can bea. Erro Errone neou ous s pla plann nnin ing, g, b. Co-o Co-ord rdin inat atio ion n loos loosen ens, s, c. Implem Implement entati ation on of plans plans is defec defectiv tive, e, and d. Supervisio Supervision n and communica communication tion is is ineffecti ineffective, ve, etc. etc.
4. Taking Taking remedial remedial actionsactions- Once the causes and extent of deviations are
known, the manager has to detect those errors and take remedial measures for it. There are two alternatives herePREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
a. Taking Taking corrective corrective measur measures es for deviations deviations which which have have occurred; occurred; and b. After taking taking the correcti corrective ve measures measures,, if the actual actual performance performance is not not in conformity with plans, the manager can revise the targets. It is here the controlling process comes to an end. Follow up is an important step because it is only through taking corrective measures, a manager can exercise controlling. Types of control (on the basis of activities): Feed Feed forw forwar ard: d: when when corr correc ecti tive ve meas measur ures es are are befo before re the the star startt of acti activi vity ty.. E.g. E.g. McDonalds train workers how to grow potatoes, it minimizes the wastage. Concurrent: when the activity is in progress and the worker doing his work and he is being controlled Feedback: controlling measures are taken after the activity performed. E.g. income statement Qualities of good control system: The management of any organization must develop a control system tailored to its organization's goals and resources. Effective control systems share several common characteristics. These characteristics are as follows: •
A focus on critical points. For example, controls are applied where failure cannot be tolerated or where costs cannot exceed a certain amount. The critical points include all the areas of an organization's operations that directly affect the success of its i ts key operations.
•
Integration into established processes. Controls must function harmoniously within these processes and should not bottleneck operations.
•
Acceptance by employees. Employee involvement in the design of controls can increase acceptance.
•
Availa Availabil bility ity of inform informati ation on when when needed needed.. Dead Deadlin lines es,, time time need needed ed to complete the project, costs associated with the project, and priority needs are
PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
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MANAGEMENT CONCEPTS
apparent in these criteria. Costs are frequently attributed to time shortcomings or failures. •
Economic feasibility. Effective control systems answer questions such as, “How much does it cost?” “What will it save?” or “What are the returns on the investment?” In short, comparison of the costs to the benefits ensures that the benefits of controls outweigh the costs.
•
Accuracy. Effective control systems provide factual information that's useful, reliable, valid, and consistent.
•
Comprehensibility. Controls must be simple and easy to understand.
PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL URDU UNIVERSITY
