PMGT_FBMD_Midterms - Planning and Organizing

Principles of Management

Midterm Coverage

Foundation of Business and Management Dynamics

Topics

• Planning–Types of Plans–Decision Making

• Organizing–Organizational Chart–Human Resource Management

PLANNING

PLANNING

• Planning is the analysis of relevant information from the present and the past and the assessment of probable future developments so that a course of action may be determined that enables the organization to meet its stated objectives.

• Planning addresses prospective changes in business objectives and the forces affecting the company.

• Its purpose is to coordinate the activities of sub-units and members within the organization’s environment.

• It results in a more effective and efficient action because the best ways for doing things are identified and it anticipates possible problems and difficulties in pursuing a course of action.

• Planning allows a manager to act with initiative and to create situations to the organization’s advantages.

• It brings rationally and order to the organization.

Reasons why there should be planning:

• Increases the chances of success by focusing on results, not activities.

• Forces analytical thinking and evolution of alternatives, thus improving decision.

• Establishes a framework for decision making consistent with top management’s objectives.

• Orients people to action, instead of reaction.• Modifies style from day-to-day managing to

future- focused managing.


• Helps avoid crises management and provides decision making flexibility

• Increases employees involvement and improve communication.

• Enables us to make most effective and economical use of manpower, equipment, facilities and money.


• Identifies areas of greatest opportunity and defines the desirable results that have greatest probability of being achieved.

• Make possible to let subordinates know what is required of them and to give them on opportunity to participate in the decision that are made.

ESSENTIAL STEP OF PLANNING

1. Statement of objectives2. Statement of problem3. Designation of planning authority4. Collection and Interpretation of data.5. Formulation and testing of tentative

plan6. Statement of final plan.

GENERAL APPROACHES TO FORMAL PLANNING

• Bottom-up approach. Formulation of plan is initiated by various units or divisions of an organization and then passed upward for aggregation at the corporate level.

• Top-down approach. Initiative is taken by the upper level executives of the organization, who formulates a unified, coordinated plan, usually with the advice of lower-level manager.

GENERAL APPROACHES TO FORMAL PLANNING

• Interactive approach. In this approach, a compromise between the bottom-up and the top-down methods, corporate executives and lower-level managers develop plan in consultation with each other, making a knowledge of specific situation.

• Dual approach. Plan is independently formulated both at the corporate and business levels. All units form plans to suit their particular situation and these plans are regularly viewed by corporate management.

Good plans have these characteristics:

• Make the plan easy to understand. It should be clearly illustrated and should provide pertinent examples

• Feature full coverage of all needed activities required to attain objectives.

• Reduce the plan to a simple series of actions• Keep the planned efforts on schedule, assigning time

periods gives vitality and practical meaning to a plan. • Keep the plan flexible to permit adjustment. It should

not be so rigid that individual initiative is stifled.

Good plans have these characteristics:

• Insure acceptance of the plan by all concerned or affected by it. Point advantages to each of the adopters.

• Fulfill a recognized need which is within the capability of the management team.

• Show clearly the respective responsibility and authority required for each group or individual, as well as the relationships among participants in the plan.

FACTORS AFFECTING PLANNING

• Conditions• Time factor• Resources available• Skills and attitudes of management• Political, social and environmental conditions.• Physical facilities• Collection and analysis of data

CLASSIFICATION AND TYPES OF PLANS

Plans classified according to time or durationLong range planningIntermediate range planningShort- range planning


Plans classified according to business function or use

• Sales plan• Production plan• Financial plan• Operation plan• Marketing plan• HR plan


• Objective or goal

• Policies • Procedures • Rules • Programs

Classification of plan according to scope

•Forecast •Strategies •Budget•Schedules•Projects


Classification of plan according to frequency of use

• Single use plan – is developed to carry out a course of action that is not to be repeated in the future.

• Standing plan – used for activities that recur regularly over a period of time.

BUSINESS PLAN

– is a written document that describes in detail how a new business is going to achieve its goals. It will lay out a written plan from a marketing, financial and operational viewpoint. Sometimes a business plan is prepared for an established business that is moving in a new direction.

(www.investopedia.com)

Analysis of industry and environment:

Assessment of macro environment:• Technology.•Government.• Social structures and population

demographics.•Global economy.•Natural environment.

Analysis of industry and environment:

• Analysis of industry environment:•Resource suppliers.•Competitors.•Customers.

Steps In Business Planning

1. Evaluate your personal resources and interests and the resources of the community.

2. Analyze your market.3. Choose a proper business location.4. Prepare a financial plan.5. Prepare a production plan6. Prepare an organizational plan7. Prepare a management plan8. Prepare a marketing plan.

The Importance Of Business Planning

• Planning can eliminate business risks• Planning can minimize costs of production• Planning can detect the weakness of the

business operations.

CONTINGENCY PLAN

• plans formulated to address specific possible future events that might have a significant impact on the organization.

– Crisis Management Planning – Scenario Planning

STRATEGIC PLAN

— a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage.

Parts of the Strategic Plan

• Company or corporate vision and mission;• Values• Objectives or goal;• Strategies.

Vision – articulates a desired future state; it describes,

often in bold, evocative, and succinct terms, what the management of an organization would like to achieve.

Good vision statements are meant to stretch a company by articulating some ambitious but attainable future state that will help to energize and motivate employees at all levels in the organization and unite them in a common purpose.

• A good vision can help employees make sense out of the organization’s strategy. The vision tells them what the strategy is meant to achieve.

• A good vision can also generate strategies by communicating to employees what the ultimate goal of a strategy should be and motivating them to search for and formulate strategies that help to attain that goal

Mission

• refers to the strategic statements that identify why an organization exists, its philosophy of management, and its purpose as distinguished from other similar organizations in terms of products, services, and markets.

Values - are the philosophical priorities to which managers

are committed.• Values outline how managers and employees

should conduct themselves, how they should do business, and what kind of enterprise they should build to help the organization attain its mission and vision.

• Given that they help shape behavior within an organization, values can help to determine an organization’s culture.

Objectives

- a specific result that a person or system aims to achieve within a time frame and with available resources.

• In general, objectives are more specific and easier to measure than goals.

• Objectives are basic tools that underlie all planning and strategic activities,

• They serve as the basis for creating policy and evaluating performance.

Goal

– a desired future state that an organization attempts to realize. the purpose of goals is to specify exactly what must be done so the company can attain its mission and vision.

DECISION- MAKING

DECISION- MAKING

• Decision-making may be defined as the process of defining problem and identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation.

• The manager must adapt a certain procedure deigned to determine the best option available to solve problems.

• Decision- making is regarded as “the heart” of all the management functions.

Decision- Making as a Management Responsibility

• Decision must be made at various levels in the workplace. They are also made at the various stages in the management process.

• Decision- making is responsibility of the manager. It is understandable for managers to make wrong decisions at times. The wise manager will correct them as soon as they are identified.

Decision- Making as a Management Responsibility

• Management must strive to learn how to choose a decision option as correctly as possible. Since they have that power to decide, they are responsible for whatever outcomes their decisions bring.

The Decision - Making Process

1. Diagnosing the problem;2. Analyzing the environment;3. Articulating the problem or opportunity;4. Developing viable alternatives;5. Evaluating the alternatives;6. Making a choice;7. Implementing the decision; and8. Evaluating and adapting the decision results.

ORGANIZING

ORGANIZING

• Organizing is deciding how best group organizational activities and resources.

• Basic organizing elements that manager must address are: designing jobs; grouping jobs; establishing reporting relationships between jobs; distributing authority among jobs; coordinating activities between jobs; and differentiating among jobs.

According to Edgar Schien, a prominent organizational psychologist, all organizations share four characteristics

Coordination of effortsCommon goal or purposeDivision of laborHierarchy of authority

Benefits of Organizing

• Division of work that avoids duplication, conflict, and misuse of resources, both material and human.

• Clarity of individual performance expectations and specialized tasks.

• A logical flow of work activities that can be comfortably performed by individuals or groups.

Benefits of Organizing

• Established channels of communication that enhance decision making and control.

• Coordinating mechanisms that ensure harmony among organization members engaged in diversified activities.

• Focused efforts that relate to objectives logically and efficiently.

• Appropriate authority structures with accountability to enhance planning and controlling throughout the organization.

DECISIONAL ROLES OF MANAGERS

1. Entrepreneur. Some managers do not start their own firms, but complex organization, they act as entrepreneurs by discovering new ways to use resources and technology.

2. Disturbance handler. Managers are resolving problems, which is their most stressful and challenging role.

DECISIONAL ROLES OF MANAGERS

3. Resource allocator. This requires careful proportioning of scarce resources such as time, money, material or manpower to accomplish all that is expected.

4. Negotiator. Negotiating extends to internal and external managerial activities such as negotiating materials or supplies process and terms, wages and conditions of employment, sales and union contracts.

The Activities of Real Manager

THE MANAGEMENT HIERARCHY

Management Classification

• Top management. Most companies appoint one person as the CEO. Top management also includes a few highly selected executive who share the huge work load for the CEO, the corporate treasurer, the chief financial officer (CEO), and few other specialists. In big companies, it may include executive vice presidents or division presidents who are responsible for strategic decisions. These people are responsible for the overall direction of the firm and its relations with its various policies.


• Middle management. This has wide variety of positions in many strata like plant managers, accounting managers, public relations officers, department heads, or regional sales managers. They supervise sub-units of an organization or they may direct the activities of other managers. They are involved in specific operations within the organization.


• Supervisory management. They are called ‘first-line managers’ or supervisors. They are the operational, non-management personnel. They may be the supervisors who spend most of their time with employees. Their duties consists technical control of operations, direct to communication with employees, and resolution of immediate problems associated with specific tasks.

FUNCTIONAL AND GENERAL MANAGERS

• Functional Management – a horizontal division of management which is based on expertise and specialization

• Line managers - are concerned with primary organizational activities such as marketing and production. Departments are in-turn defined according to functional line duties such as production control, receiving, sales, shipping and customer service.

FUNCTIONAL AND GENERAL MANAGERS

• General managers - usually oversee collective operations that include several functional managers. These generalists are plant managers, also top management group. They need different skills. Those who specialize in functional areas tend to focus their energy on technical aspects of their jobs.

Managerial Skills

MANAGEMENT STYLES

• Autocratic Style - characterized by the manager making all decisions and issuing orders for the completion of work without the input of subordinates. Managers ask their subordinates for suggestions prior to making decisions but retain final decision-making power.

MANAGEMENT STYLES

• Free-rein style - is characterized by the manager allowing subordinates to make most decisions. Managers serve as advisers.

NATURE OF ORGANIZATION STRUCTURE

• Organization structure is the formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational goals. They are typically created by management for specific purpose.

Organization structure elements are:

• The assignment of tasks and responsibilities that define the job of individuals and units.

• The clustering of individual positions into units and of units into departments and larger units to form an organization’s hierarchy.

Organization structure elements are: • The various mechanisms required to

facilitate vertical (to-to-bottom) coordination, such as the number of individuals reporting to any given managerial position and the degree of delegation of authority.

• The various mechanisms needed to foster horizontal (across departments) coordination, such as task forces and interdepartmental teams.

• Organizational Design – is the process of developing an organization structure.

• Organization chart - aids in visualizing the structure.

• Chain of Command - the unbroken line of authority that ultimately links and individual with the top organizational position through a managerial position at each successive layer in between.

JOB DESIGN

- the specification of task activities associated with a particular job

Importance of Job Design:• Task activities need to be grouped in reasonably

logical ways; • The way the jobs are configured, or designed,

has the important influence on employee motivation to perform well.

Approaches to Job design:

• Job simplification is the process of designing jobs so that job holders have only a small number of narrow activities to perform.

Job rotation is the practice of shifting workers through a set of jobs in a planned sequence. It has the advantage of cross-training workers, so that there is a maximum flexibility in job assignments. It alleviates monotony and boredom.

Job enlargement is the allocation of a wider variety of similar tasks to a job in order to make it more challenging. It is the process of upgrading the job task mix in order to increase significantly the potential for growth, achievement, responsibility and recognition. It broadens the job score, the number of different tasks as employee performs in a particular job.

DIVISION OF WORK

• The fundamental force in industrialization that describes how organizational work is to be accomplished.

• This involves designing tasks and clarifying performance expectations.

• Organizations divide their labor into specialized tasks to improve productivity.

• Specialization - is the planned division of work into individual tasks that can be repeated efficiently.

• Work Simplification - the process of planning the works and breaking it down to most common elements

• Standardization - is the process of making work uniform through repeated use of similar methods, machines, and materials to achieve similar and predictable results over time.

HORIZONTAL AND VERTICAL JOB SPECIALIZATION

• Horizontal job specialization is the result of dividing complicated tasks into simpler jobs or operations, reducing the scope of tasks.

• Vertical job specialization results from delegating responsibilities for tasks and decisions to subordinates. Depth of job becomes narrower as subordinates assume decision-making burden previously shouldered by the superior. There is a downward re-assignment of tasks and authority.

SPAN OF CONTROL

• Span of control is the number of persons who report to a supervisor.

• it is influential in determining the complexity of individual manager’s jobs

• the span of control determines the shape, or configuration of the organization; the fewer the number of people reporting to a supervisor, the larger the number of managers required.

SPAN OF CONTROL

• Span of control is the number of persons who report to a supervisor.

• it is influential in determining the complexity of individual manager’s jobs

• the span of control determines the shape, or configuration of the organization; the fewer the number of people reporting to a supervisor, the larger the number of managers required.

Narrow Span of Control

Wide Span of Control

BUREAUCRATIC STRUCTURES

• Bureaucracy - is a form of organization in which activities are rationally defined, division of work is unambiguous, and managerial authority is explicitly vested in individuals according to skills and responsibilities prescribed by the organizations.

Five characteristics of modern bureaucracies are:

1. Fixed and official jurisdictions of authority2. Firmly established rational chain of

command3. Quantified and thoroughly documented

information4. Supposition of expertise5. Management is technically scientific.

FORMAL ORGANIZATIONS VS. INFORMAL ORGANIZATIONS

• Formal organizations begins with the preplanned patterns of authority and influence- the planned ‘authority’ of superior over subordinates. It is the allocation of functions among departments and the policies, standards, procedures that help define the scope of each person’s activities.

FORMAL ORGANIZATIONS VS. INFORMAL ORGANIZATIONS

• Informal organizations are concerned with the employees sense of belonging to an organization or with their alienation from the purposes of that organization. They are shadow organizations that evolve though personal interactions, sentiments and social activities of individuals. They are not written down, they do not have job titles or formal descriptions of authority, yet they are more influential structures.

DEPARTMENTALIZATION

• Departmentalization is the horizontal grouping of work activities based on expertise, products, markets, customers, or projects to enhance planning, leading and controlling.

• It is the clustering of individuals into units and of units into departments and larger units in order to facilitate achieving organizational goals.

Four approaches to departmentalization

• Functional organization


• Product Organization


• Geographical organization


• Customer organization

TYPES OF FORMAL ORGANIZATION

• Line organization


• Line and staff organization


• Functional organization

DELEGATION

• This involves the partial distribution of authority to subordinates for making decisions or performing tasks.

Reasons for delegating authority

• Managerial overload• Need for expertise• Proximity of tasks• Behavioral needs

HUMAN RESOURCE MANAGEMENT


• Focuses on the recruitment of, management of, and provides direction for the people who work in the organization.

• It refers to activities undertaken to attract, develop, and maintain an effective workforce within an organization. This consists of three parts.


• Compensation, hiring, safety and wellness, benefits, and all that encompasses employee administration fall under HRM.

• All managers are human resource managers, expected to pay attention to the development and satisfaction of subordinates. They may use surveys, career planning, performance appraisal, and compensation to encourage lifelong commitment to the company.


• Employees are viewed as assets, giving company a competitive assets.

• Human resource management is a matching process, integrating the organization’s goals with employees’ needs.

HUMAN RESOURCE PLANNING

- this consists of forecasting future needs for employees in different jobs, forecasting the availability of such employees, and then taking steps to match supply and demand. It includes the set of organizational activities directed at attracting, developing, and maintaining effective workforce. Systematic planning of this type results in improved efficiency and effectiveness throughout the organization.

STAFFING

• includes the set of activities aimed at attracting and selecting individuals for positions in a way that will facilitate the achievement of organizational goals.

Recruitment

- is the process of finding and attempting to attract job candidates who are capable of effectively filling job vacancies.

Internal recruitmentExternal recruitment

Selection

• is the process of choosing the best among applicants, through series of written examinations, interviews, medical examination and training. In the selection process, employees are attempting to determine the skills, abilities and other attributes needed to perform a particular job

JOB ANALYSIS

- is a systematized procedure for collecting and recording information about job. Job analysis information is used in many human resource activities.

Parts of job analysis are job title, job description and job specification.

HOW TO CONDUCT AN EFFECTIVE INTERVIEW

Before the Interview1. Determining the job requirements. 2. Prepare a written interview guide. 3. Review the candidate’s application

form, resume or bio-data.


During the Interview1. Establish rapport. 2. Avoid conveying the response you

seek. 3. Listen and take notes4. Ask only job-relevant questions.


After the Interview• Write a short report right after the

interview, scoring the candidate on the characteristics required for functioning effectively in the job. Note summaries of responses, document ratings, so that you will have good data to help you with your selection decision.

SELECTION DEVICES

• Application form is a device used for collecting information about an applicant’s education, previous job experience, and other background characteristics.

SELECTION DEVICES

• An interview serves as two-way communication channel that allows both the organization and the applicant to collect information that would otherwise be difficult to obtain.

SELECTION DEVICES

• A written test designed to measure a particular attitude such as intelligence or aptitude is the paper-and-pencil test or written examination. The tests include intelligence test, aptitude and ability tests, and personality or psychological tests and inventories.

SELECTION DEVICES

• The assessment center was developed by psychologist to select individuals with high potential for managerial careers. They present a series of managerial situations to groups of applicants over, say, a two-or-three day-period. Basket simulation is one technique where the applicant plays the role of a manger who must decide how to respond to ten memoranda in his ‘in-basket’ within a two-hour period. A panel observes applicant’s decision, assess interpersonal, communication and problem-solving skills.

TRAINING AND DEVELOPMENT

• Training and development represent planned effort by organization to facilitate employees’ learning of job-related behaviors.

• Training usually refers to teaching lower-level or technical employees how to do their present jobs, whereas development refers to teaching managers and professionals the skills needed for both present and future jobs.

Forms of Trainings

• On-the-Job Training• Orientation training • Classroom training• Programmed and computer-assisted

instruction• Conferences and case discussion

groups

PERFORMANCE APPRAISAL

• Performance appraisal is the process of observing and evaluating an employee’s performance, recording the assessment, and providing feedback to the employee.

• Skillful managers give feedback and recognition concerning the acceptable elements of the employee’s performance.

PERFORMANCE APPRAISAL

• They also describe performance areas that need improvement.

• Performance appraisal can also reward high performers through merit pay, recognition, and other rewards.

• Performance Appraisal Interview - is a formal review of an employee’s performance conducted between the superior and the subordinate.

Suggested steps to increase its effectiveness are

Raters or supervisors should be knowledgeable about the subordinate’s job and performance levels.

Raters should welcome employee participation during the interview rather than ‘tell and sell’ their views by lecturing to subordinates.


A contingency approach to feedback based on the characteristics of the subordinates, the job, and his performance level is useful. For example, for non- routine jobs, high performance need feedback that is given at flexible time intervals and focused on development. For routine jobs, satisfactory performers need non-frequent feedback focused on deviations from acceptable performance. Newer employees need more frequent feedback.


Training is needed to help supervisors devise interview strategies for different situations. This includes observation and rating of performance.

COMPENSATION

• Compensation refers to all monetary payments and all goods or commodities used in lieu of money to reward employees.

• A compensation package may include the basic pay, allowances, benefits and incentives.

• An effective approach is a merit pay system rather than a system based on seniority.

Wage vs. Salary

• Wages are an employee compensation based on the number of hours worked or amount of output produced.

• Salary is employee compensation calculated on a weekly, monthly, or annual basis

Compensation policy is based on five factors:

1. Salaries and wages paid by other companies in the area that compete for the same personnel

2. governmental legislation3. cost of living4. the ability of the company to pay;5. the worker’s productivity

Job evaluation

- is employed which involves the process of determining the value of jobs within an organization through an examination of job content.

Employee benefits- are rewards provided indirectly to employees,

consisting primarily of services like insurances, reimbursement of employees’ expenses, such as tuition fee costs, gasoline and transportation expenses.

• These may also include employee’s rewards such as pension plans, insurance, sick-leave pay, and tuition reimbursement given at all or part of the expense of the company.

EMPLOYEE MOVEMENT

Promotion - is an upward movement in an organization to a position of greater authority and responsibility and a higher salary.

• Promotions can be based on performance, but companies with labor unions prefer to base them on seniority, the length of time an employee has worked at the company or in a particular job or department.

EMPLOYEE MOVEMENT

Transfer - is a horizontal movement in an organization at about the same wage and level.

• This may involve shifting workers into new, more interesting jobs or into departments where workers’ skills are required.

EMPLOYEE MOVEMENT

Separation - can be due to resignation, retirement, layoff or termination.

End of Midterm Coverage

PMGT_FBMD_Midterms - Planning and Organizing

Documents

corporate management

formulation of plan

corporate level

coordinated plan

plan easy

business objectives

course of action

corporate executives