Principles of Management PPT Midterm

8/10/2019 Principles of Management PPT Midterm

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Courtesy : Stephen P.Robins


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Managers

and Management

PowerPoint Presentation by CharlieCook

Copyright 2004 Prentice Hall,Inc.

All rights reserved.


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1. Describe the difference between managers and

operative employees.

2. Explain what is meant by the term management.

3.

Differentiate between efficiency and effectiveness.

4.

Describe the four primary processes of

management.

5. Classify the three levels of managers and identify

the primary responsibility of each group.

Copyright 2004 Prentice Hall,Inc. All rights reserved.

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6. Summarize the essential roles performed by

managers.

7.

Discuss whether the managers job is generic.

8.

Describe the four general skills necessary for

becoming a successful manager.

9. Describe the value of studying management.

10.

Identify the relevance of popular humanities

and social science courses to management

practices.


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Organization A systematic arrangement of people brought

together to accomplish some specific purpose;applies to all organizationsfor-profit as well as

not-for-profit organizations. Where managers work (manage)

Common characteristics Goals

Structure People


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EXHIBIT 1.1


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Operatives People who work directly on a job or task and have

no responsibility for overseeing the work of others

Managers Individuals in an organization who direct the

activities of others


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EXHIBIT 1.2


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First-line managers Supervisors responsible for directing the day-to-

day activities of operative employees

Middle managers Individuals at levels of management between the

first-line manager and top management

Top managers Individuals who are responsible for making

decisions about the direction of the organizationand establishing policies that affect allorganizational members


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Management The process of getting things done, effectively and

efficiently, through and with other people

Efficiency

Means doing the thing correctly; refers to therelationship between inputs and outputs; seeks tominimize resource costs

Effectiveness

Means doing the right things; goal attainment


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EXHIBIT 1.3


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EXHIBIT 1.4

Management process:

planning, organiz ing,

leading , and con trol l ing


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Planning Includes defining goals, establishing strategy, and

developing plans to coordinate activities

Organizing Includes determining what tasks

to be done, who is to do them,how the tasks are to begrouped, who reports to

whom, and wheredecisions are to be made


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Leading Includes motivating employees, directing the

activities of others, selecting the most effectivecommunication channel, and resolving conflicts

Controlling The process of monitoring performance,

comparing it with goals, andcorrecting any significant

deviations


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Interpersonal Figurehead

Leader

Liaison

Informational Monitor

Disseminator

Spokesperson

Decisional Entrepreneur

Disturbance hander

Resource allocator

Negotiator


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EXHIBIT 1.5Source: Adapted from The Nature of Managerial Work (paperback) by H. Mintzberg, Table 2, pp.9293.Copyright 1973 Addison Wesley Longman. Reprinted by permission of Addison Wesley Longman.


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Level in the organization Do managers manage differently based on where they are

in the organization?

Profit versus not-for-profit

Is managing in a commercial enterprise different thanmanaging in a non-commercial organization?

Size of organization Does the size of an organization affect how managers

function in the organization?

Management concepts and national borders Is management the same in all economic, cultural, social

and political systems?


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EXHIBIT 1.6Source: Adapted from T. A. Mahoney, T. H. Jerdee, and S. J. Carroll,The Job(s) of Management, Industrial Relations4, No.2 (1965), p.103.


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EXHIBIT 1.7Source: Adapted from J. G. P. Paolillo, The Managers Self Assessments of Managerial Roles:Small vs. Large Firms,American Journals of Small Business, JanuaryMarch 1984, pp.6162.


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Conceptual skills

A managers mental ability to coordinate all of the

organizations interests and activities

Interpersonal skills

A managers ability to work with understand mentor and

motivate others, both individually and in groups

Technical skills

A managers ability to use the tools procedures and

techniques of a specialized field

Political skills

A managers ability to build a power base and establish the

right connections


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Behaviors related to a managerseffectiveness: Controlling the organizations environment and its

resources.

Organizing and coordinating. Handling information.

Providing for growth and development.

Motivating employees and handling conflicts.

Strategic problem solving.


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1.

Initiate and implement change

and improvement in services,

products, and systems

2.

Monitor maintain, and

improve service and product

delivery

3.

Monitor and control the use of

resources

4.

Secure effective resource

allocation for activities and

projects

5. Recruit and select personnel

6.

Develop teams, individuals,

and self to enhance

performance

7.

Plan, allocate, and evaluate

work carried out by teams,

individuals and self

8.

Create, maintain, and enhance

effective working

relationships

9.

Seek, evaluate, and organize

information for action

10. Exchange information to solve

problems and make decisions


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EXHIBIT 1.8


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We all have a vested interest in improving theway organizations are managed. Better organizations are, in part, the result of good

management.

You will eventually either manage or bemanaged Gaining an understanding of the management

process provides the foundation for developing

management skills and insight into the behavior ofindividuals and the organizations.


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Anthropology

Economics Philosophy

Political Science Psychology

Sociology

Management


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Ancient massive construction projects Egyptian pyramids

Great Wall of China

Michelangelo the manager (High Renaissance)


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Wrote the Wealth of Nations(1776) Advocated the economic advantages that

organizations and society would reap from thedivision of labor:

Increased productivity by increasing each workersskill and dexterity (talent).

Time saved that is commonly lost in changing tasks.

The creation of labor-saving inventions and

machinery.


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Industrial revolution Machine power began to substitute for human

power

Lead to mass production of economical goods

Improved and less costly transportation systemsbecame available

Created larger markets for goods.

Larger organizations developed to serve larger

markets Created the need for formalized management

practices.


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Classical approach The term used to describe the hypotheses of the

scientific management theorists and the generaladministrative theorists.

Scientific management theorists Fredrick W. Taylor, Frank and Lillian Gilbreth, and Henry

Gantt

General administrative theorists

Henri Fayol and Max Weber


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Frederick W. Taylor The Principles of Scientific Management (1911)

Advocated the use of the scientific method to definethe one best way for a job to be done

Believed that increased efficiency could be achievedby selecting the right people for the job andtraining them to do it precisely in the one best way.

To motivate workers, he favored incentive wageplans.

Separated managerial work from operative work.


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Develop a science for each element of an individuals work,which replaces the old rule-of-thumb method.

Scientifically select and then train, teach, and develop theworker. (Previously, workers chose their own work and trainedthemselves as best they could.)

Heartily cooperate with the workers so as to ensure that allwork is done in accordance with the principles of the sciencethat has been developed.

Divide work and responsibility almost equally betweenmanagement and workers. Management takes over all work

for which it is better fitted than the workers. (Previously,almost all the work and the greater part of the responsibilitywere thrown upon the workers).


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Frank and Lillian Gilbreth Bricklaying efficiency improvements

Time and motion studies (therbligs)

Henry Gantt Incentive compensation systems

Gantt chart for scheduling work operations


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General administrative theorists Writers who developed general theories of what

managers do and what constitutes goodmanagement practice

Henri Fayol (France) Fourteen Principles of Management: Fundamental or

universal principles of management practice

Max Weber (Germany)

Bureaucracy: Ideal type of organization characterizedby division of labor, a clearly defined hierarchy,detailed rules and regulations, and impersonalrelationships


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Henri Fayol, a French industrialist, is nowrecognized as the Father of Management. Inyear 1916 Fayol wrote a book entitled

"Industrial and General Administration".

In this book, he gave the 14 Principles ofManagement. These 14 principles ofmanagement are universally accepted andused even today. According to Henri Fayol, allmanagers must follow these 14 principles.


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Division of work

Authority

Discipline

Unity of command

Unity of direction

Subordination of the

individual

Remuneration

Centralization

Scalar chain

Order

Equity

Stability of tenure of

personnel

Initiative

Esprit de corps


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EXHIBIT HM2


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Work should be divided among individuals andgroups to ensure that effort and attention are focused

on special portions of the task.

Fayol presented work specialization as the best way

to use the human resources of the organization.

Subdivision of work makes it simpler and results in

efficiency.

It also helps the individual in acquiring speed,accuracy in his performance.


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Specialization allows the individual to buildup experience, and to continuously improvehis skills. Thereby he can be moreproductive.


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The concepts of Authority and responsibility are

closely related. Authority was defined by Fayol as theright to give orders and the power to claim obedience.

Responsibility involves being accountable, and is

therefore naturally associated with authority. Whoever

assumes authority also assumes responsibility.

There should be a balance between the two i.e. they

must go hand in hand.

Authority without responsibility leads toirresponsible behavior whereas responsibility

without authority makes the person ineffective.


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The right to issue commands, along withwhich must go the balanced responsibilityfor its function.


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According to Fayol, Discipline means sincerity,obedience, respect of authority & observance of rules

and regulations of the enterprise.

This principle applies that subordinate should respect

their superiors and obey their order.

Discipline is not only required on path of subordinates

but also on the part of management.


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Employees must obey, but this is two-sided:employees will only obey orders ifmanagement play their part by providinggood leadership.


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Each worker should have only one boss with no other

conflicting lines of command.

In other words, a sub-ordinate should not receive

instructions from more than one person because -

- It undermines authority- Weakens discipline

- Creates confusion

- Delays the work

- Escaping responsibilities- Duplication of work

- Overlapping of efforts


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Each worker should have only one boss withno other conflicting lines of command.


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The entire organization should be moving towards acommon objective in a common direction.

People engaged in the same kind of activities must

have the same objectives in a single plan. This is

essential to ensure unity and coordination in the

enterprise.

Unity of command does not exist without unity of

direction but does not necessarily flows from it.


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People engaged in the same kind ofactivities must have the same objectives in asingle plan. This is essential to ensure unityand coordination in the enterprise. Unity of

command does not exist without unity ofdirection but does not necessarily flowsfrom it.


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The interests of one person should not take priorityover the interests of the organization as a whole.

In an organization, there are two types of interest, theindividual interest of the employees, and the general

interest of the organization. The individual interestshould be given less importance, while the generalinterest should be given most importance. If not, theorganization will collapse.

For example, for change of location ofplant, for change of profit sharing ratio, etc.


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Management must see that the goals of thefirms are always paramount.


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Remuneration is the price for services received. If anorganization wants efficient employees and best

performance, then it should have a good

remuneration policy. This policy should give

maximum satisfaction to both employer and

employees.

It should include both financial and non-financial

incentives (free education, insurance, medical& residential facilities).


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Payment is an important motivator althoughby analyzing a number of possibilities, Fayolpoints out that there is no such thing as aperfect system


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Centralization means concentration of authority at the top level.In other words, centralization is a situation in which top

management retains most of the decision making authority.

Decentralization means disposal of decision making authority to

all the levels of the organization. In other words, sharing authority

downwards is decentralization.

According to Fayol, Degree of centralization or decentralization

depends on no: of factors like size of business, experience of

superiors, dependability & ability of subordinates etc.

Anything which increases the role of subordinate isdecentralization & anything which decreases it is centralization.

Fayol suggested that absolute centralization or decentralization is

not feasible. An organization should strike to achieve a lot

between the two.


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This is a matter of degree depending on thecondition of the business and the quality ofits personnel.


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Scalar Chain is a line of authority. This line joins allthe members (managers and employees) from top to

bottom. Every member must know who his superior

is. He must also know who his subordinate is. Scalar

Chain is necessary for good communication. Scalar

Chain must not be broken in norm circumstances.

However, if quick action is necessary, then this chain

can be broken. This is done using "Gang Plank"


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A hierarchy is necessary for unity of direction.But lateral communication is alsofundamental, as long as superiors know thatsuch communication is taking place. Scalar

chain refers to the number of levels in thehierarchy from the ultimate authority to thelowest level in the organization. It should notbe over-stretched and consist of too-many

levels


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There should be an Order for Things and People in

the organization. Order for things is called Material Order. Order for

people is called Social Order.

Material Order refers to "a place for everything and

everything in its place."

Social Order refers to the selection of the "right man

in the right place".

There must be orderly placement of the resourcessuch as Men and Women, Money, Materials, etc.

Misplacement will lead to misuse and disorder.


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Both material order and social order arenecessary. The former minimizes lost timeand useless handling of materials. The latteris achieved through organization and

selection.


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The employees should be treated with fairness, kindness &

justice if devotion is expected of them. It implies that managers should be fair and impartial while

dealing with the subordinates.

They should give similar treatment to people of similar

position. They should not discriminate with respect to age, caste, sex,

religion, relation etc.

Equity is essential to create and maintain cordial relations

between the managers and sub-ordinate.

But equity does not mean total absence of harshness.

Fayol was of opinion that, at times force and harshness might

become necessary for the sake of equity.


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In running a business a combination ofkindliness and justice is needed. Treatingemployees well is important to achieveequity.


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Employees work better if job security and career progress are

assured to them. An insecure tenure and a high rate of

employee turnover will affect the organization adversely

According to Fayol. Time is required for an employee to get

used to a new work & succeed to doing it well but if he is

removed before that he will not be able to render worthwhile

services.

As a result, the time, effort and money spent on training the

worker will go waste.

Stability of job creates team spirit and a sense of

belongingness among workers which ultimately increase the

quality as well as quantity of work.


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Employees work better if job security andcareer progress are assured to them. Aninsecure tenure and a high rate of employeeturnover will affect the organization

adversely.


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Management should encourage initiative. That is,they should encourage the employees to suggest

ideas, experiences& new method of work.

It helps in developing an atmosphere of trust and

understanding

It creates eagerness to initiate actions without being

asked to do so.


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Allowing all personnel to show theirinitiative in some way is a source of strengthfor the organization. Even though it maywell involve a sacrifice of personal vanity

on the part of many managers.


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Management must foster the morale of its employees.He further suggests that: real talent is needed to

coordinate effort, encourage keenness, use each

persons abilities, and reward each ones merit

without arousing possible jealousies and disturbing

harmonious relations.

Here Fayol emphasizes the need for building and

maintaining of harmony among the work force , teamwork and sound interpersonal relationships.


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Management must foster the morale of itsemployees. He further suggests that: realtalent is needed to coordinate effort,encourage keenness, use each persons

abilities, and reward each ones merit withoutarousing possible jealousies and disturbingharmonious relations.


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Division of Labor Authority Hierarchy

Formal Selection

Formal Rules and Regulations

Impersonality

Career Orientation


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EXHIBIT HM3


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Robert Owen Claimed that a concern for employees was

profitable for management and would relievehuman misery.

Hugo Munsterberg Created the field of industrial psychologythe

scientific study of individuals at work to maximizetheir productivity and adjustment.


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Mary Parker Follett Recognized that organizations could be viewed

from the perspective of individual and groupbehavior.

Chester Barnard Saw organizations as social systems that require

human cooperation.

Expressed his views in his book The Functions ofthe Executive(1938).


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A series of studies done during the 1920sand 1930s that provided new insights intogroup norms and behaviors Hawthorne effect

Social norms or standards of the group are the keydeterminants of individual work behavior.

Changed the prevalent view of the time thatpeople were no different than machines.


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Based on a belief in the importance ofemployee satisfactiona satisfied worker wasbelieved to be a productive worker.

Advocates were concerned with making

management practices more humane. Dale Carnegie

Abraham Maslow

Douglas McGregor


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Operations research (management science) Evolved out of the development of mathematical

and statistical solutions to military problems duringWorld War II.

Involves the use of statistics, optimization models,information models, and computer simulations toimprove management decision making for planningand control.


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Management theory jungle (Harold Koontz) The diversity of approaches to the study of

managementfunctions, quantitative emphasis,human relations approacheseach offer somethingto management theory, but many are onlymanagerial tools.

Planning, leading, and controlling activitiesare circular and continuous functions ofmanagement.


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Defines a system as a set of interrelated andinterdependent parts arranged in a mannerthat produces a unified whole Closed system :a system that is not influenced by

and does not interact with its environment Open system:a system that dynamically interacts

with its environment

Stakeholders:any group that is affected byorganizational decisions and policies


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EXHIBIT HM4


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The situational approach to management thatreplaces more simplistic systems andintegrates much of management theory

Four popular contingency variables Organization size Routineness of task technology

Environmental uncertainty

Individual differences


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8 Key Result Areas Where Managers Must

- Kotelnikov 2008


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Pursue Clear Objectives - Kotelnikov, 2008

Marketing

In order for a business to create a customer, there needs to bea market.

Innovation

New ideas are required by a business in order to create ademand for a product.

Human organizationFinancial resourcesPhysical resources

According to Drucker, 2007 the above three Key Result Areasare interlinked and all businesses depend on them. These areknown as the factors of production.


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Productivity

Resources must be used productively and the productivitymust grow in order for the business to survive.

Social responsibility

A business exists in a society therefore it has certainobligations towards the community and is responsible for itsimpact on the environment.

Profit requirements

Profit is essential for a business to succeed. It is one of themain reasons behind the existence of a business and withoutit there would be no way of covering the risk of potentiallosses, financing future projects and most importantly noneof the other above areas would exist without profit.


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Cascading of organizational goals andobjectives.

Specific objectives for each member.

Participative decision making.

Explicit time period.

Performance evaluation and feedback.


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Specific

Measurable

Achievable

Realistic

Time-related

Management by Objectives also

introduced the SMART method for

checking the validity of the objectives.


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Copyright 2010 PearsonEducation, Inc. Publishing as

Prentice Hall 688

Managersas

Decision Makers


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6.1 The Decision-Making Process.

Define decision.

Describe the eight steps in the decision-making process.

6.2 Managers Making Decisions.

Discuss the assumptions of rational decision making.

Describe the concepts of bounded rationality, satisficing,and escalation of commitment.

Explain intuitive decision making.

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6.3 Types Of Decisions and Decision-MakingConditions.

Explain the two types of problems and decisions.

Contrast the three decision making conditions.

Explain maximax, maximin, and minimax decision choiceapproaches.

6.4 Decision-Making Styles

Describe two decision-making styles.

Discuss the twelve decision-making biases.

Explain the managerial decision-making model.



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6.5 Effective Decision Making In TodaysWorld.

Explain how managers can make effectivedecisions in todays world.

List the six characteristics of an effective decisionmaking process.

List the five habits of highly reliable organizations.



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Decision Making a choice from two or more alternatives.

The Decision-Making Process

Identifying a problem and decision criteria andallocating weights to the criteria.

Developing, analyzing, and selecting an alternativethat can resolve the problem.

Implementing the selected alternative. Evaluating the decisions effectiveness.



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You are driving along in your car on a wild,

stormy night, it's raining heavily, when suddenly

you pass by a bus stop, and you see three

people waiting for a bus

An old lady who looks as if she is about to die.

An old friend who once saved your life.

The perfect partner you have been dreaming about.

Which one would you choose to offer a ride to,

knowing very well that there could only be one

passenger in your car?

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This is a moral/ethical dilemma that was once

actually used as part of a job application.

* You could pick up the old lady, because she is

going to die, and thus you should save her first;

* or you could take the old friend because he

once saved your life, and this would be the

perfect chance to pay him back.

* However, you may never be able to find your

perfect mate again.



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The candidate who was hired (out of 200 applicants)

had no trouble coming up with his answer. Guess

what was his answer?

He simply answered:

"I would give the car keys to my Old friend and let

him take the lady to the hospital. I would stay behind

and wait for the bus with the partner of my dreams."

Sometimes, we gain more if we are able to give up

our stubborn thought limitations. Never forget to

"Think Outside of the Box."



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Interviewer (to a student girl candidate) - What is

one morning you woke up & found that you were

pregnant.

Girl - I will be very excited and take an off, to

celebrate with my husband.

Normally an unmarried girl will be shocked to

hear this, but she managed it well.

Why I should think it in the wrong way, she said

later when asked



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Problem

A discrepancy between an existing and desiredstate of affairs.

Characteristics of Problems

A problem becomes a problem when a managerbecomes aware of it.

There is pressure to solve the problem.

The manager must have the authority, information,or resources needed to solve the problem.



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Decision criteria are factors that are important(relevant) to resolving the problem such as:

Costs that will be incurred (investments required)

Risks likely to be encountered (chance of failure)

Outcomes that are desired (growth of the firm)



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Step 3: Allocating Weights to the

Criteria Decision criteria are not of equalimportance:

Assigning a weight to each item places theitems in the correct priority order of theirimportance in the decision-making process.


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Identifying viable alternatives

Alternatives are listed (without evaluation) that canresolve the problem.



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Step 5: Analyzing Alternatives

Appraising each alternatives strengths andweaknesses

An alternatives appraisal is based on its abilityto resolve the issues identified in steps 2 and 3.


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Choosing the best alternative

The alternative with the highest total weight ischosen.



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Step 7: Implementing the

Alternative

Putting the chosen alternative into action.

Conveying the decision to and gaining

commitment from those who will carry out thedecision.


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The soundness of the decision is judged byits outcomes.

How effectively was the problem resolved byoutcomes resulting from the chosen alternatives?

If the problem was not resolved, what went wrong?



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Rationality Managers make consistent, value-maximizing

choices with specified constraints.

Assumptions are that decision makers:

Are perfectly rational, fully objective, and logical.

Have carefully defined the problem and identified allviable alternatives.

Have a clear and specific goal

Will select the alternative that maximizes outcomes inthe organizations interests rather than in theirpersonal interests.



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Bounded Rationality

Managers make decisions rationally, but are limited(bounded) by their ability to process information.

Assumptions are that decision makers:

Will not seek out or have knowledge of all alternatives Will satisficechoose the first alternative encountered that

satisfactorily solves the problemrather than maximize theoutcome of their decision by considering all alternatives andchoosing the best.

Influence on decision making

Escalation of commitment: an increased commitment to aprevious decision despite evidence that it may have beenwrong.



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Structured Problems Involve goals that are clear.

Are familiar (have occurred before).

Are easily and completely definedinformationabout the problem is available and complete.

Programmed Decision

A repetitive decision that can be handled by aroutine approach.



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Procedure A series of interrelated steps that a manager can

use to respond (applying a policy) to a structuredproblem.

Rule An explicit statement that limits what a manager or

employee can or cannot do.

Policy A general guideline for making a decision about a

structured problem.



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Unstructured Problems Problems that are new or unusual and for which

information is ambiguous or incomplete.

Problems that will require custom-made solutions.

Nonprogrammed Decisions

Decisions that are unique and nonrecurring.

Decisions that generate unique responses.



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Certainty A situation in which a manager can make an

accurate decision because the outcome of everyalternative choice is known.

Risk A situation in which the manager is able to estimate

the likelihood (probability) of outcomes that resultfrom the choice of particular alternatives.



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decision

Decision-making process

problem

decision criteria

rational decision making

bounded rationality

satisficing

escalation of commitment

intuitive decision making

structured problems

programmed decision

procedure

rule

policy

unstructured problems

nonprogrammed decisions

certainty

risk

uncertainty

directive style

analytic style

conceptual style

behavioral style

heuristics

business performance

management (BPM)

software



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7.1 The What And Why Of Planning

Define planning.

Describe the purposes of planning.

Explain what studies have shown about the relationshipbetween planning and performance.

7.2 Goals And Plans

Define goals and plans.

Describe the types of goals organizations might have.

Describe each of the different types of plans.



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7.3 Setting Goals and Developing Plans Discuss how traditional goal setting and MBO work.

Describe well written goals and explain hw to set them.

Discuss the contingency factors that affect planning.

Describe the approaches to planning.

7.4 Contemporary Issues in Planning

Explain the criticisms of planning.

Describe how managers can effectively plan in todaysdynamic environment.



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Planning A primary managerial activity that involves:

Defining the organizations goals

Establishing an overall strategy for achieving thosegoals

Developing plans for organizational work activities

Formal planning

Specific goals covering a specific time period

Written and shared with organizational members



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Purposes of Planning Provides direction

Reduces uncertainty

Minimizes waste and redundancy

Sets the standards for controlling



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The Relationship Between Planning andPerformance

Formal planning is associated with:

Higher profits and returns on assets.

Positive financial results.

The quality of planning and implementation affectsperformance more than the extent of planning.

The external environment can reduce the impact of

planning on performance. Formal planning must be used for several years before

planning begins to affect performance.Copyright 2010 Pearson


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Elements of Planning Goals (also Objectives)

Desired outcomes for individuals, groups, or entireorganizations

Provide direction and evaluation performance criteria

Plans

Documents that outline how goals are to beaccomplished

Describe how resources are to be allocated andestablish activity schedules



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Financial Goals Are related to the expected internal financial

performance of the organization.

Strategic Goals

Are related to the performance of the firm relativeto factors in its external environment (e.g.,competitors).

Stated Goals versus Real Goals Broadly-worded official statements of the

organization (intended for public consumption) thatmay be irrelevant to its real goals (what actuallygoes on in the organization).



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Strategic Plans Apply to the entire organization.

Establish the organizations overall goals.

Seek to position the organization in terms of its

environment. Cover extended periods of time.

Operational Plans

Specify the details of how the overall goals are to beachieved.

Cover a short time period.



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Long-Term Plans Plans with time frames extending beyond three

years

Short-Term Plans

Plans with time frames of one year or less Specific Plans

Plans that are clearly defined and leave no room forinterpretation

Directional Plans Flexible plans that set out general guidelines and

provide focus, yet allow discretion inimplementation



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Single-Use Plan A one-time plan specifically designed to meet the

need of a unique situation.

Standing Plans

Ongoing plans that provide guidance for activitiesperformed repeatedly.



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Traditional Goal Setting Broad goals are set at the top of the organization.

Goals are then broken into sub-goals for eachorganizational level.

Assumes that top management knows best

because they can see the big picture. Goals are intended to direct, guide, and constrain

from above.

Goals lose clarity and focus as lower-level

managers attempt to interpret and define the goalsfor their areas of responsibility.



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Setting Goals and Developing Plans


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Maintaining the Hierarchy of Goals MeansEnds Chain

The integrated network of goals that results fromestablishing a clearly-defined hierarchy of

organizational goals. Achievement of lower-level goals is the means by

which to reach higher-level goals (ends).



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Management By Objectives (MBO) Specific performance goals are jointly determined

by employees and managers.

Progress toward accomplishing goals isperiodically reviewed.

Rewards are allocated on the basis of progresstowards the goals.

Key elements of MBO:

Goal specificity, participative decision making, an

explicit performance/evaluation period, feedback



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1. The organizations overall objectives and strategiesare

formulated.

2. Major objectives are allocated among divisional and

departmental units.

3. Unit managers

collaboratively set specific objectives

for their

units with their managers.

4. Specific objectives are collaboratively set with all department

members.

5. Action plans

, defining how objectives are to be achieved, are

specified and agreed upon by managers and employees.

6. The action plans are

implemented

.

7. Progress toward objectives is

periodically reviewed

, and

feedbackis provided.

8. Successful achievement of objectives is reinforced by

performance based rewards.


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Reason for MBO Success Top management commitment and involvement

Potential Problems with MBO Programs

Not as effective in dynamic environments thatrequire constant resetting of goals.

Overemphasis on individual accomplishment maycreate problems with teamwork.

Allowing the MBO program to become an annualpaperwork shuffle.



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Written in terms of

outcomes, not actions Focuses on the ends, not

the means.

Measurable and

quantifiable Specifically defines how

the outcome is to bemeasured and how muchis expected.

Clear as to time frame How long before

measuringaccomplishment.

Challenging yet

attainable Low goals do not

motivate.

High goals motivate ifthey can be achieved.

Written down

Focuses, defines, andmakes goals visible.

Communicated to all

necessaryorganizationalmembers

Puts everybody on the

same page.


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1.

Review the organizations mission statement.

Do goals reflect the mission?

2.

Evaluate available resources.

Are resources sufficient to accomplish the mission?

3.

Determine goals individually or with others.

Are goals specific, measurable, and timely?

4. Write down the goals and communicate them.

Is everybody on the same page?

5. Review results and whether goals are being met.

What changes are needed in mission, resources, or goals?



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Contingency Factors in a Managers Planning Managers level in the organization

Strategic plans at higher levels

Operational plans at lower levels

Degree of environmental uncertainty

Stable environment: specific plans

Dynamic environment: specific but flexible plans

Length of future commitments Commitment Concept:current plans affecting future

commitments must be sufficiently long-term to meetthose commitments. Copyright 2010 Pearson


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Criticisms of Planning

Planning may create rigidity.

Plans cannot be developed for dynamicenvironments.

Formal plans cannot replace intuition and creativity.

Planning focuses managers attention on todayscompetition not tomorrows survival.

Formal planning reinforces todays success, whichmay lead to tomorrows failure.

Just planning isnt enough.Copyright 2010 Pearson


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Effective Planning in Dynamic Environments Develop plans that are specific but flexible.

Understand that planning is an ongoing process.

Change plans when conditions warrant. Persistence in planning eventually pay off.

Flatten the organizational hierarchy to foster thedevelopment of planning skills at all organizational

levels.



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l i di ti l l


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planning

goals

plans

stated goals

real goals

framing strategic plans

operational plans

long-term plans

short-term plans specific plans

directional plans

single-use plan

standing plans

traditional goal setting

means-ends chain

management byobjectives (MBO)

mission

commitment concept

formal planningdepartment