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Management: Definitions, Roles & SkillsPrinciples of Management
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Management: DefinitionsManagement is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aim(s) viz. to create a surplus(s). . Weihrich & Koontz
Management is not an absolute; rather it is socially and culturally determined. Across all cultures and in all societies, people coming together to perform certain collective acts encounter common problems having to do with establishing direction, coordination and motivation. Culture affects how these problems are perceived and resolved. The Art of Japanese Management by R. Pascale & A. Athos .
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Management: Definition ctd.Applies to and through any kind of organizationApplies to Managers at all levelsConcerned with Doing the right things right at all times:Effectiveness: Achievement of objectives (Right Things);Efficiency: Achieving those objectives with least amount/ sacrifice of resources (Things Right); Continuous Improvement: in creating increasing surplus (at all times);Improve or die = survival of the fittestwhat gets measured, gets managed and improved e.g. Productivity= Output / Input ratioCollective, cohesive and consistent human effort towards accomplishing a common objective.
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Additionally, Managers need to factor in external environmental forces:For maximum benefit to the organizationManagement: Definition ctd.
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Management - what managers do:Fredrick Taylors path-breaking scientific approachHenri Fayols classical definition of functions, now modified to:Plan -- Organize -- Lead(Command&Coordinate) -- ControlMintzbergs map of managerial roles:Interpersonal + Informational + DecisionalKatzs interpretation of skills:Technical / Human / ConceptualManagement get things done through others:Leadership: The ability to influence a group towards achievement of goals.Motivation: The willingness to exert high level of effort towards goalsCommunication:The transference and understanding of meaningManagement: Roles & Skills
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Management: roles & skills ctd.Managerial Roles (Mintzberg)RoleDescriptionExamplesInterpersonal Figureheadsymbolic head; required to showCeremonial,face in social & legal conditions.Civic etc.LeaderMotivating & directing subordinatesproject planLiaisonNetworking outside for informationIndustry -& favoursgroup meetsInformational Monitornerve centre and interpretatorReportsDisseminatornetworking within the organizationMeetings etc.SpokespersonTransmit intent to outsiders; expertBoard Meets
Decisional EntrepreneurOpportunity finding& reactingStrategy PlanTrouble shooterHandling unexpected disturbanceContingencyResource allocatorInitiating/approving changesBudgetingNegotiatorGetting best deal for OrganizationContracts
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Managerial Skills(Katz & others)Technical Skills:Application of specialized knowledge or expertise acquired though formal training & its use.Human Skills:Ability to work with people, understand and motivate groups & individuals.Conceptual Skills:Mental ability to recognize, analyze, diagnose and think through complex situations.Skills NeededManagement: roles & skills
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Evolution of ManagementManagement, as a concept as we know it today, is associated with mass consumption leading to production of standardized goods in large volumes;Prior to the Industrial Revolution, man made devices were in use in sizeable numbers but often one of a kind and crafted rather than manufactured e.g watches and clocks. However, many of the supportive processes can be traced to early roots: logistics, scheduling e.g. boat building; automation (use of m/cs) e.g. printing; The advent of the management as a science can therefore be traced to late 18th /early 19th century.
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Elements of modern management, with a focus on man i.e. HR concepts first began to appear in the West around the same time: as a reaction to the harsh behaviour of autocratic businessmen like Henry Ford. It evolved through (labour) Welfare, Industrial Relations, Personnel Management to its current form. (Marxism was becoming a recognizable philosophy in Europe!); as a need to utilize human resource better due the adverse supply-demand situation. Employment in the industry had overtaken agricultural labour. This was aggravated in Europe, by WW I.In the 20s, Rationalization & Efficiency were the buzz-words (Taylor, Fayol etc.), calling for a scientific approach to selection and work allocation the corner-stones of modern production management: Standardization of parts and work elements resulted in ability to make work repetitive for individuals (do-ers) Evolution of Management ctd
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End of WW II brought in an era of un-sated demand, resulting in a boom for production activity more of everything was required. Quantity backed by efficiency were the guiding principles: an era of Optimization driven by suppliers choice rather than customers wants. However, some people notably Japan restarted their devastated economy with different orientation: Quality. The key was true economy of all resources with the customer as the focal point since they did not have the luxury of a surplus funded, hungry market. By the late 60s, demand tended to slow down and the growing competition gave customers greater choice quality as an important buying criterion emerged. OPEC crisis in mid-70s turned the world around on its head! Energy the prime mover of industrial world became very expensive. The demand boom faded with customers demanding quality and lower prices and better service.Evolution of Management ctd
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First inventions of mass production were linked to textile manufacturing (Spinning Jenny/ Hargreaves) which combined with use of water power (Arkwright), made a powerful social impact in the late 1700s; Watts steam engine completely revolutionized harnessing of mechanical power for production (first to use were cotton mills) and transport;
Poor Reliability of early machines led to the creation of machine tools the Lathe (Maudslay) in 1790, with which to turnout parts to closer tolerances and fit. This led to creation of interchangeable parts and the first uses were in manufacture of muskets and pistols!
These were the triggers for mass production: mechanical power & interchangeable parts; leading to production moving away from homes and craft-shops to work-shops/factories. By 1900 (in the West), nearly everything was being produced by the factory system.
Evolution of Management ctd
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Division of Labour: under this principle, work could be organized/grouped into a set of specific, related tasks which were repetitive in nature. Man could be trained to perform this set of tasks only, so that efficiency of task performance was maximized. When extended throughout the organization, this took the form of Specialization - with the organization benefiting from the maximum use of specialist skills. Both economically and under supply-shortage conditions, this worked well. Much of this was an extension of trade/craft skill-groups organization (guilds) which was the hallmark of pre-industrial production.Till the end of the 30s, these fundamentals were refined, polished(e.g. Organization structures) and extended ( e.g. work-measurements) in a relentless focus on efficiency.With WW II, a further need for reliability gave birth to the principles of sampling & inspection statistical methods were introduced to regulate quality of output. Evolution of Management ctd
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Evolution of Management ctd This brought to the forefront the philosophy and practice of Total Quality as the guiding force for manufacturing later to spread into management of operations and enterprises: Central to this theme is the dominance of the Customer; Customers were any person or person receiving goods and/or services internal or external; Quality was redefined as fitness for use elevated from the narrow confines of conformance to specifications; Continuous improvement was the key to continuity and success against demands of customer and competition; importantly, everybody could contribute quality is every- bodys business;Particularly, for production, quality means best products at least cost reduced waste of all resources, spawning a host of (linked) programs to conserve time, money & effort: Just in Time, SMED/OTED; Lean manufacturing; Q-circles/Kaizen/6-sigma; 5-S, TPM, DoE;
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Principles of Management 2Management: A Systems Approach
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Systems approach to ManagementOrganization as a System receives Input, transforms it through a Process for Output and Operates in an Environment (economic, regulatory and other forces)
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Systems approach to Management ctd.
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Systems approach to Management ctd.
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Systems approach to Management ctd. Inputs: 5 Ms of ManagementInputs or the resources managers deal with are:Man: human resources, both inside and connected with an organization;Materials: goods (hard & software, processed or semi-finished) and services required to create the sellable end product;Machines: technology and expertise deployed towards the transformation process;Methods: systems, procedures and processes seamlessly put together for the transformation;Measurement: score-keeping and in-process monitoring continuously with due feedback to keep on-course on time.Money is required for generating all theses Ms managers need to acquire, deploy, generate and distribute money as a primary need for business!
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Systems approach to Management ctd. Stake: Something wagered or risked; an interest in an enterprise with contingent gain or loss Webster s dictionary
Holders who have stake in Business:Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it than from other ventures;Society: includes the State, provincial and local governments for the improvement of quality of life of its citizens;Output for Stake-holders in Business:
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Systems approach to Management ctd. Suppliers: continuity of their enterprise depends on the success of the customer enterprise;Customers: require the goods and services provided by the enterprise, better than than those from its competitors. The enterprise is, in turn, a supplier to its customers;Employees: livelihood depends on the progress and success of the employing enterprise;
There is a freedom of choice (for association) between each of these stake-holders and the enterprise in the longer term:But they sink or swim together in the shorter termLength of term definition varies with individuals!Output for Stake-holders in Business ctd.
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by the process ofPlanning + Organizing + Staffing + Leading+ Controllingto accomplish certain pre-determined, (as derived from stakeholder needs) goals or objectivesSystems approach to Management ctd. Management as a system transforms inputs:
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Inputs(Goal Oriented)Outputs(ExternalToOrgnzn.)PlanningOrganizingStaffingLeadingControllingProduct/Services,Profits, Customer & Societal satisfaction,Other Long-term GoalsMan, MachineMaterial,Method,MeasurementStake holder Feedback (reenergizing the system)EXTERNAL ENVIRONMENT(Opportunities, Constraints)StakeholdersShareholders;Society; Customers;Employees; SuppliersSystems approach to Management ctd.
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Principles of Management 3Management ProcessFirst Step: Planning
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PlanningPlanning involves selecting objectives or goals and the course of actions to achieve them:Provides the bridge to take us from where we are to where we want to go;Is a rational approach to achieving pre-selected objectives - based on innovation, knowledge and purpose;Decision making in choosing the best from alternative courses of action and is integral to planning;
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Plans as foundation of ManagementThe primacy of Planning
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Types of PlansMission / PurposeThe basic function or reason for existence of an enterprise/ organization
Case in point: Mission of Indira InstituteTo train our students to become the best business minds and entrepreneurs today, who will lead their companies successfully into the future tomorrow , locally, nationally and globally.
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Type of Plans (Contd)Objectives/ GoalsThe end towards which activity of an organization is aimed, e.g.For a Business enterprise profit, surplus creation;For a Management Institute: The number of employable/useful trainees;StrategiesDetermination of the long term objectives and adoption of a course of actionGives a frame work for linked action-plans, communicated systematically to guide thinking and actions.
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Types of Plans (contd)PoliciesPlans that are general directional statements (or understandings) that guide/help in decision making:Repeat decisions taken reflexively;Delegation of tasks without loss of control.Some discretion is permissible depending on circumstances thus encouraging initiative within limits and situational adjustments;Issues with PolicySeldom documented in writing Subject to interpretations
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Types of Plans (contd)ProceduresPlans that are chronological sequences of required actions: task-oriented in nature;Cuts across department boundaries (sub-systems) in an organization: e.g. customer complaint handling procedure;Procedures and policies are inter related: e.g. authorization for paid leavePolicy governs quota, responsible authority etc.Procedure governs application, grant and record-keeping. RulesSpecific actions or non-actions allowing no discretionCaution: rules (and procedures too) limit initiative!
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Types of Plans (contd)ProgramsAction plans (mainly non-routine or for changed activities) including, task assignments, steps to be taken, resources to be deployed etc. to achieve a (new/renewed) goal;Primary program may require supporting programs, spreading across the enterprise;Perfect coordination between supporting & primary programs essential to avoid delays, unnecessary costs and expected roll-out.Programs are a complex of (sub)goals, policies, rules and other elements necessary for the course of action e.g. obtaining ISO certification.
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Types of Plans (contd)BudgetsA statement of expected results expressed in Numerical terms e.g. financial operating budget = profit plan;Budgets enforce precision in thinking:Making a budget is planning by itself;Encourages innovation a different way to workBudgets serve for Control:Enforces discipline in execution of plans;Instills cost consciousness;Makes people (constantly) plan!
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Steps in Planning
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The Planning ProcessPlanning Period:Short range plans e.g. material procurement plan in a factoryLong range plans e.g. product development plan, plant/production facility installation;Urgent drives out the Important mismatch between short & long term plans!Planning horizon must allow for actions to run their course requiring commitments:Thus decisions today are key to good plans;Long-term plans reap benefits of good short-term plans.
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Steps in PlanningBeing aware of OpportunityConsidering, Market,Competition, Customers wants, Own strengths &weakness
Setting Goals/ObjectivesWhat to accomplish& whenObjective = Important end towards which activities are directed; therefore needs verification at the end of the plan period.
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Hierarchy of Objectives& Org. LevelsObjectives set end results they need to be supported by a hierarchy of sub-objectives, duly networked through the organization to avoid discord and wasted effort.
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Hierarchy of Objectives& Org. Levels ctd.The Organizational Objectives is deployed into the objectives of :Divisions Departments Individual objectives;The cascade principle: seamless flow;Mutual support & interlocking of goals is essentialManagers must ensure that the components of the network fit each other;Departments/divisions can be blind-sided.
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Hierarchy of Objectives& Org. Levels ctd.While setting Objectives, ideally, Top Management should get information / buy-in from lower levels to set realistic goals for a good result.
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Key Result Areas (KRA)Are areas in which performance is essential for the success of an enterprise Examples of generic KRAs:Market share Return on Investment (ROI)Service levelCustomer satisfactionPeter Drucker recommends: Market standing, innovation, productivity, physical & financial resource, profitability, managerial performance & development, worker performance & attitude and public responsibility.
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Management By Objectives (MBO)A comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of organizations and individual objectives:Set-out by Peter Drucker in 1954;Integrated to personal performance appraisal by Douglas McGregor in 1957;Has formed the basis for many theories on motivation;Has been criticized for introducing a short-term focus and undesirable behaviour;Currently viewed as a way of managing not a specific tool.
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MBO (contd) Managing the MBO way involves:Identifying clearly defined KRAsSetting verifiable measurement of KRAsFacilitating self-direction, accountability & commitment by subordinatesMotivation of subordinates to achieve and exceed set targetsEmphasis on performance rather than on personality
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Guidelines for setting ObjectivesClear & VerifiableClarity scores over precision approximately right over accurately wrong!Expressed in Quantitative termsFigures Percentage Time frame (by which date) Should cover main deliverables of the job/ function Challenging yet reasonable: S.M.A.R.T
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Guidelines for setting Objectives (Contd)Identification of assumptions underlying the objectivesConsistency of:objectives with those of superiors, Organization & other departments Short time action-plans with Long-term objectivesInclusion of personal growth, development and improvement targetsEnsuring availability of and access to needed resources Documentation and communication of objectives to concerned persons
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Benefits of MBO
Result oriented planning of goals, resources, organizationSetting of standards for ControlDecentralization of Management and clarification of Organizational roles & responsibilities:Accountabilty & commitment of employeesEnables timely corrective actions (as required)
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Weaknesses of MBO Emphasis on: short term at the expense of long termResults over ProcessIndividual over collective effortFailure to grasp and deploy the concept of seamless cascadeDifficulty in setting agreed, harmonized goalsDanger of inflexibility
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Planning Premises & StrategiesSetting Goals/ObjectivesWhat to accomplish& whenPlanning premisesInternal & externalenvironmentIdentifyingalternativesComparing & choosing analternativeDecisionmakingStrategic Planning ProcessStrategy = determination of the purpose / the basic long-term objectives; the adoption of courses of action and allocation of resources required to achieve the aims.
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Planning Premises & Strategies ctd.The Strategic Planning Process
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Planning PremisesPorters Five Forces : an Model for analysis of theExternals environment.
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Planning Premises: forecast of demandEstimate of future demand is made by qualitative methods, time-series methods and/or causal methods:Qualitative relies on judgement of experts to translate to quantities;Time-series statistically interpolate demand on historical data;Causal method seek co-relation on cause and effect basis between two (or more) variables to quantify demand;However, all forecasting methods are limited by:Handling of un-quantifiable factors e.g. national prideUnrealistic assumptions fuelled by a desire to succeedExcessive data required (often unobtainable) to make accurate forecastsUncertainty with environmental changes: Technology, Govt. Policy, International alignments, New materials/sources, Climate etc.Coping with uncertainties require:Sensitivity analysis & What if scenarios (trust instinct!);Planning for contingencies with defined cut-in milestones.
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Generic Strategy Ultimate competitive position: - position w.r.t major Customers - K.S.Fs of Competitors - leveraging of suppliers Competitive Advantage
Cost Leadership: To continually work reducing the cost prices of products. Supplier Q-C-D has very high priority.
Differentiation:To constantly offer innovativeand unique solutions. Supplier technology & quality has focus.
Customization:To offer required services in the required manner is the focus. Speed and flexibility important.
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Generic Strategy: BCG MatrixRed: Marketing Perspective; Blue: Financial Perspective
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Planning Premises & Strategies ctd.Decision Making = is the core of the planning process; a plan does not come into being unless a decision i.e. certain commitments of resources, managerial time and money are made and risks are taken.Caution: A Plan is not intentions and should not suffer from Analysis Paralysis.
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Decision MakingDecision making is a rational choice process, bounded by:Limitations: time, information and logic;Behaviour: Risk averseness and biases.A key step in the process is to identify those limiting factors, road-blocks to each effective (right thing) alternative then finding a solution with least sacrifice of resources (thing right):Factors: quantitative, qualitative/intangible;Finding solutions: marginal analyses benefits with incremental inputs; cost-effectiveness assessment of benefits over costs.
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Decision Makingctd.How to selectAmongst the Alternatives ?
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Decision Makingctd.Decision making takes place under varying degrees of uncertain conditions and risks. Techniques used to aid the process are:Risk analysis: every decision is based on interactions amongst different factors/variables each of which have their own probabilities (towards success). Analysis of these probabilities yield a risk profile for each alternative path. In the absence of defined probabilities, estimates can be used.Decision trees: the outcome (measure pre-decided e.g. cost or time) of every step in the decision is charted and a course selected on the most favourable outcome. Very much like making a trip, navigating by using a road-map (refer example in W & K, Management a global perspective/10th edn. Pg. 209)
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Decision Makingctd.Flow Charts: as a process-guide to taking a decision and helps as a check-list of key variables, the sequence in which they fall and the interrelations. Key to making a choice or re-examining the path taken are also indicated as risk-reduction devices.(refer example in W & K, Management a global perspective/10th edn. Figure 8-5)Decision Support Systems: a wide variety of (proprietary) computer based programs are available for managers to use their time more effectively for decision making of semi-structured tasks by providing alternative evaluations. They focus on the process of decision making, taking data provide by the management information systems in enterprises.
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Principles of Management 4Management Process:Organizing for results
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Nature of OrganizingOrganizing may be broadly defined as:The identification and classification of required activities;The grouping of those activities towards attaining their set objectives;The assignment of those groupings to a responsible manager, duly empowered;The provision for coordination among, within and across the groups in the organization.Organization structures are designed to:Clarify tasks & responsibilities,Remove obstacles,Furnish decision making & communication network Support attainment of enterprise objectives
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Nature of Organizing ctd.The Business Organization Model: Value Chain (Porter,1985)The margin reflects the reward for the risks run by the company.All activities together need to generate value greater than the sum of its costs.
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Nature of Organizing ctd.Inbound Logistics: relate to receiving, storing and disseminating inputs;
Operations: associated with transformation of inputs into final product form;
Outbound Logistics: relate to collecting, storing and physically distributing the products to buyers;
Marketing & Sales: relate to advertising, Promotion, sales, distribution-channel selection & management and Pricing;
Service: associated with enhancement or maintenance of product value over life; The Value Chain: Primary Activities
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Nature of Organizing ctd.Procurement: relates to the function of purchasing inputs used across the firms primary and support activities;
Technology Development: relates to know-how, processes & procedures, technology embodied in the product design and delivery. Most activities have their own sub-set of technology;
Human Resource Management: directed at recruiting, training, developing and compensating all personnel;
Firm Infrastructure: associated with serving and supporting the firm as a whole, with the company as its customer eg. Finance & accounting, Quality;
The Value Chain: Support Activities
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Nature of Organizing ctd.Most practicing mangers would translate this value chain to imply an organization as: a formalized, intentional structure of roles and positions Thus formal organization implies the intentional structure of roles in an enterprise.However, in an enterprise informal organization will form, not necessarily bad and is: a network of personal and social relations not established or required by formal organizations but arising spontaneously as people associate with each other.
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Nature of Organizing ctd.The building block of an organization is the Department: a group charged with independent task & responsibility.#
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Nature of Organizing ctd.DepartmentationGrouping activities & people into departments makes it conceptually possible to expand organizations to an infinite degree.Different patterns have been successfully used to group activities:By simple nos. is a simple method works well for the lowest levels where work is routine, uniform and non-specialized; time-grouping is an extension of this method where shift-working is required;By enterprise functions embodies what enterprises typically do e.g. Production, Engineering, Sales etc. This method, defined by F.W.Taylor, is arguably the most prevalent method still used.
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Departmentation ctd.By territory or geography is very common when the geographical spread is wide. It was a device introduced to speed up management in similar units for easy and swift communication e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc.By Customer/Account orientation reflecting the primary interest in nature of markets/business/customer e.g. Banks: Institutional banking, Small Savings etc.By Process groups encountered primarily in specialized/ manufacturing operations where processes are vital e.g. Advertising: Copy-writing, Creative etc.; Manufacturing: Steel Melting, Wire-drawing etc.By Product Lines has evolved with enterprises becoming multi-line with function needing adaptation/integration to suit specific products e.g. Tata Motors: Passenger Vehicles / Commercial vehicles
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Departmentation ctd.By grid control in essence combining the functional and the product-line patterns to best effect. Functional excellence is not subjugated to Operational ease. In projects, this serves to bring together the diversity of skills required into one team. The Strategic Business Unit: companies today are organizing themselves as companies within a company to allow for maximum flexibility and freedom of operations, especially when the products/businesses are unconnected e.g. General Electric. Generally, SBUs have:Their own Missions, Goals and Strategies;Distinct and definable set of competitors;Deploy and manage resources in key areas;A reasonable size.
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C.E.OFinanceQual. HRM BU 1 BU 2 I.R.MRecr. T&DG/H.RPlant 1G/H.RInd.Sin.I.S.ODepartmentation ctd.Example of Grid Control & S.B.Us
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The purpose of organizing is to make human cooperation effective and is limited by:the number of persons a manager can supervise effectively and efficiently; while the total number is dictated by the quantum of work/ nature of task/spread etc. Thus the two dimensions, Level (depth) and Span of control (width) are interrelated .The reason for creating Levels of organization is the limitation in the span of control. Effective span is influenced by: Training/skill of subordinates and personal contact required;Clarity of delegation of authority;Clarity of plans, use of objective standards and communication techniques;Rate of change;Maturity and experience of the manager and organization.
Nature of Organizing ctd.
Span-of-Management
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Levels, per se, are not desireable:They are expensive as they increase, both infrastructure costs and staffing tends to increase;Real work is accomplished at the gemba (Japanese: workplace) where the actual value-addition/transformation takes place. The contribution of levels on top are not directly co- relatable, thus best avoided;Communication become complicated omissions, filterations and misinterpretations lead to wasted and misdirected effort;Planning and control become tortuous, requiring complicated coordination and alignment between levels.Studies reveal that between 8 to 10 people at higher levels and upto 15 at lower levels is a good span. Increasingly, enterprises are attempting to cut back levels to 5 or less. Span-of-Management ctd.
There are many types of plans. Short term , Long term depending on time frameMission of Indira is To train our students to become the best business minds and entrepreneurs today who will lead their companies successfully into the future tomorrow, locally, nationally and globally
Strategy - Infosys acquiring an IT firm in Australia to increase business opportunities.Hindustan Lever opting for contract manufacturing of Wheel detergent to keep costs down to compete with Nirma
Promotions from within the company, Policy of recruiting only IIM graduates.Procedures for responding to a Sales querySetting up educational institute, Setting up a new factory, Setting up a businessCould be in Financial terms such as Sales figures, Profit, Expense figures, Capital expenditure etc..Also could be in terms of No. of units produced, Man hours , consumption of raw material or any other numerically measurable term
Being aware of the opportunity- Though not exactly part a part of Planning process, it is the starting point. Setting realistic objectives depends on this awarenessTime frame for product development of a new generation of air craft will be 6 to 8 years. That for a new soap will be 1 to 2 yearsObjectives specify expected results and when. Objectives drive all other plans. Major objectives control objective of subordinate departments. Hierarchy of objectivesTraditional appraisal was based on personality traits and objectives were generally vague(Sales, Profit, Cost , Quantity of production, Number of hours of work or Training..) ( % Profit margin, % cost reduction, % increase in Sales, % Reduction in machine down time hours , % increase in production)
Goals should be challenging (stretch) and achievable (realistic). This presents problems
Excessive emphasis on numerical goals encourages unethical behaviour ( Over promising which Org cannot deliver)
Production manager neglecting plant maintenance to achieve cost reduction. But there will be more breakdowns in future. Short term at odds with Long term
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