MNG 2602 Contemporary Management Principles Notes PDF

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MNG 2602CONTEMPORARY MANAGEMENT PRINCIPLES NOTES:UNIT 1 – CHPT 3:FEATURES OF CONTEMPORARY ORGANISATIONS & NEW MANAGEMENT CHALLENGESREASONS WHY ORGANISATIONS CHANGE: Organisations are open systems  They influence their environment & vice versa  Previous century ,environment was muc...

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MNG 2602 CONTEMPORARY MANAGEMENT PRINCIPLES NOTES: UNIT 1 – CHPT 3: FEATURES OF CONTEMPORARY ORGANISATIONS & NEW MANAGEMENT CHALLENGES

REASONS WHY ORGANISATIONS CHANGE:     

Organisations are open systems They influence their environment & vice versa Previous century ,environment was much more stable and traditional form(bureaucracy) worked well Contemporary organisations function in environment characterised by major, ongoing change, hence Emergence of “new” organisation forms

FORCES THAT STIMULATE CHANGE: 1.

Globalisation & global change – global organisations has several new & sophisticated forces that influence world economy 1.1. Cheaper international transportation & communications Ex. China & Korea manufacture clothes that sell at more competitive price in other markets of the world 1.2. Org. copy & apply new product and technologies – this intensifies international completion & increases available strategic options of individual organisations in areas such a purchasing or finding markets for products & services 1.3. Markets are becoming more homogeneous because consumers are acquiring a taste for foreign products 1.4. Cost structures differ from country to country making it possible for org. to take advantage of lowercost locations for support activities or production 1.5. Cross border learning increases possibility of org. expanding their capabilities Ex. Building networks in to leading markets 1.6. Financial markets are trading 24/7 1.7. Global standards for trade &commerce, finance, products and services have emerged.

2.

Technological Advancements Managers need to appreciate & understand the power of technology & must be able to use it in the best interests of the org. where they work ex. E-commerce, internet, mobile computing

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Radical transformation of world of work Transformation of workplace – structure according to core competencies instead of product or market Autonomous work teams & strategic alliances are becoming more important Creation of integrated organisations, global networks & leaner more flexible structures (becoming more fluid) Increased power & demands of the customer Consumer’s awareness of products & services as wells as greater variety & choices according to the following criteria: Cost – most economical choice Quality – meeting & exceeding customers’ expectations Time – available as soon as possible Service – best possible service Innovation – new, not yet envisioned by customer Customisation – tailored to specific needs of each customer

5.

The growing importance of intellectual capital & learning Intellectual capital 5.1. Structural capital – accumulated knowledge & expertise of organisation, represented by its copyrights, trademarks & patents, systems and proprietary databases 5.2. Customer capital – value of established relationships with suppliers & customers 5.3. Human capital – combined skills & knowledge of employees in organisation Learning organisation Successful org. exhibit a number of distinctive features 5.4. 5.5. 5.6. 5.7. 5.8.

6.

Individual learning is continuous Employees share knowledge Organisational culture supports learning Employees are encouraged to think critically & take risks with new ideas All individuals are valued for their contributions to organisation

New roles & expectations of workers Society moves from Industrial era to Knowledge era Work force rapidly change to fit job requirements of knowledge era: INDUSTRIAL ERA Repetitive skills Depending on memory & facts Risk avoidance Focus on politics & procedures

KNOWLEDGE ERA Knowledge to deal with unexpected Being spontaneous & creative Risk taking Collaborating with people

Coping with temporariness  Actual jobs of workers in permanent state of flux – need to continuously stay on top of their game  Work groups include members from different departments and change constantly to meet changing work assignments  Organisations continually reorganise their various divisions, downside, unbundle, outsource & replace permanent employees with temporaries “The world that most manager and workers work in today is one of permanent temporariness”

CLASSICAL MODEL OF THE FORMAL ORGANISATION: According to Max Weber’s model organisations should subscribe to the following desirable characteristics: a. b. c. d. e.

Division of labour Hierarchy of authority Rules & procedures Impersonality Employee selection & promotion

STENGHTS & WEAKNESSES OF BUREAUCRACY STRENGHTS predictability resilience impartiality expertise through specialisation

WEAKNESSES rigid rules & red tape protection of authority slow decision-making incompatibility with changing technology

DUE TO RAPID ENVIROMENTAL CHANGE, THE VERY STRENGHTS OF WEBER’S MODEL BECAME ITS WEAKNESSES

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Organisations operating in turbulent environments have to respond to increased competition in terms of customer’s service, continuous improvements & greater diversity. These organisations ,the strengths of predictability & stability of bureaucracy turned into weaknesses TQM developed in 1980’s contrasted with the quest for specialisation (a feature of bureaucracy). Strict division between departments made it difficult to implement quality initiatives, which depend on cooperation between functions & departments New information technology changed information channels , moving away from chain of command International competition & expanding global markets demand more effective ways to manage internal operations than those provided by specialised ‘international’ managers

THE NEW ORGANISATION MODEL FEATURES OF THE NEW EMERGING ORGANISATION a. b. c. d. e.

Global – global business environment is more complex than domestic and managers operating in international marketplace have to deal with a much broader set of environmental forces Networked, internally & externally - the interdependence between individuals, groups and subunits within the contemporary organisation Flat & lean – Employing fewer people & improving turnover in sales, organisations improve productivity significantly Flexible – response the changes in the environment ,changing customer needs, intense competition, and needs of the diverse workforces Diverse – Organisations are becoming more heterogeneous in terms of race, gender & ethnicity

Differences between traditional & ‘new ’organisations DIMENSION Critical Tasks Relationships Information Flow Decision-making Systems & Processes Levels Boundaries Competitive Style Management Style Culture Mind set Workforce Strategic Focus

TRADITIONAL physical hierarchical vertical top-down inflexible many (tall structure) fixed vertical integration autocratic compliance ethnocentric homogeneous efficiency

NEW mental (knowledge) lateral horizontal & vertical where information resides flexible few (flat structure) permeable networked participative commitment & results global diverse innovation

Challenges faced by Managers of the new organisation FEATURES GLOBAL

MANAGEMENT CHALLENGES  develop & use global strategic skills to manage change & transition

NETWORKED, INTERNALLY & EXTERNALLY

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FLAT & LEAN

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FLEXIBLE DIVERSE

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manage cultural diversity design & function in flexible organisational structures work with others & in teams communicate effectively learn & transfer knowledge in an organisation individual must develop their skills as team members & team leaders team structures & processes must have developed for each kind of team in the organisation networks outside organisations involve forming alliances with customers, suppliers & competitors & a organisation must develop systems to manage information flows with the organisations with which it forms alliances managers must develop negotiating skills, to enable them to negotiate winwin situations for all involved in flat structures organisation must provide alternative incentive systems and new concepts of career planning that involve more horizontal & vertical movement more frequent & effective communication between senior & junior managers multi-tasking flexible labour practices managers will need to shift their philosophy from treating everyone alike to recognising differences & responding to those differences in ways that will ensure employee retention & greater productivity training in diversity developing listening skills

KEY CONCEPTS  Bureaucracy. This is a system of administration marked by rules and regulations, red tape and proliferation.  Customer capital. This is the value of relationships that an organisation builds with its customers reflected in their loyalty to the organisation and/or its products.  Diversity. This is the state of being different.  Globalisation. This is the economic and social interaction process whereby different countries work together to create a global economy.  Global organisation. This is an organisation that operates in many countries as an integrated unit.  Flat structure. This is an organisational structure that has fewer levels of management.  Human capital. This is the health, knowledge, motivation, and skills of employees; the attainment of this is an end in itself.  Intellectual capital. This is the collective knowledge (whether or not documented) of the individuals in an organisation or society.  International organisation. This is a body that operates in many countries but keeps the operations in each country separated.  Information technology revolution. This is a term that describes the economic, social and technological trends that occurred because of major technological advances in the world.  Open system. This is a system that interacts with its environment.  Structural capital. This refers to the competitive intelligence, formulas, information systems, patents, policies, processes, and so on, that result from the products or systems the organisation has created over time.  Synergy. This occurs when many elements or subsystems work together to create an outcome that is of more value than the total of what the individual input is.  System. This is a set of interrelated parts designed to achieve a singular purpose to stay in balance.  System boundary. This is a border that separates a system from its environment. ++++END++++ UNIT 2 – CHPT 5:

MANAGING ORGANISATIONAL CHANGE & INDIVIDUAL STRESS FORCES OF CHANGE:

INTERNAL change in strategy poor performance pressure to grow workforce problems implementation of new technology lack of innovation power & politics changes in top management

FORCES OF CHANGE

EXTERNAL MARKET ENVIROMENT consumer competitors suppliers intermediaries MACRO ENVIROMENT political economical social technological international ecological

DIMENSIONS OF CHANGE: 1 PROCESS – a) planned: planned & implemented by managers to adapt or prepare for change in the environment b) reactive: when organisations react to change in their environments 2 SCOPE – a) revolutionary: major, radical, strategic, transformational & rapid change b) incremental: process whereby individual & other parts of the organisation deal incrementally with one problem at a time

3 SOURCE – a) top down: b) bottom up: 4 PACING – a) punctuated: Evolves through relatively long periods of stability interrupted by relatively short bursts of fundamental change b) continuous: a pattern of uninterrupted adjustments in work processes & social practices driven by organisational instability & cumulative reactions to daily events

ORGANISATIONAL BARRIERS

INERTIA – the resistance to change because forces for & against change are equally strong therefore the organisation remains the same

RESISTANCE TO CHANGE

INDIVIDUAL BARRIERS

INDIVIDUAL BARRIERS  perceived threat to interest  Misunderstanding  Lack of trust  Low tolerance for change  Ethical convictions

SITUATIONAL FACTORS THAT INFLUENCE THE STRATEGIS CHOICES OF MANAGERS WHEN PLANNING A CHANGE EFFORT: When managers make strategic choices they anticipate change efforts. Situational factors could influence such choices: 1. 2. 3. 4.

Anticipated strength of resistance to change Position of change initiator in terms of power when compared to the resistors Anticipated need of change of the initiator for information and commitment from others to help design and implement the change Stakes involved in the implementation of a change of effort in terms of the potential short-terms risks to the performance of the organisation and its survival

APPROACHES TO CHANGE: LEWIN’S CHANGE MODEL 1.

UNFREEZING – in order for an organisation to change , the forces of inertia (equilibrium) need to be destabilised (‘unfreeze’) before the old behaviour will be unlearned & discarded Quasi-stationary equilibrium = an equilibrium supported by a field of driving & restraining forces causing inertia

2.

CHANGE – requires groups and individuals to move towards a more acceptable set of behaviours. Involves interventions to bring about change in behaviour, attitudes and values through changes in processes, systems and structures.

3.

REFREEZE – seeks to establish new quasi-equilibrium to ensure that new behaviours do not regress to the previous behaviours. Often requires changes in organisational structures, norms, policies & practices.

KOTTER’S 8 STEP PROCESS OF SUCCESSFUL CHANGE 1. 2. 3. 4. 5. 6. 7. 8.

CREATE A SENSE OF URGENCY FORM A GUIDING TEAM CREATE A CLEAR VISION OF THE OUTCOME COMMUNICATE THE VISION EMPOWER OTHERS TO ACT PRODUCE SHORT-TERM WINS CONSOLIDATE IMPROVEMENTS CREATE NEW CULTURE

AREAS OF CHANGE/WHERE CAN CHANGE HAPPEN:

STRATEGIC CHANGE – aligning organisations resources (internal environment) with threats & opportunities caused by changes in the external environment STRUCTURAL CHANGE – restructuring, departmentalisation, linking mechanisms, alignment of design & systems TECHNOLOGICAL CHANGE – change in use of information technology, advanced equipment & change in processes/sequences because of new technology CHANGING PEOPLE – activate other resources, change in abilities & skills of employees, training programmes, transparency KEY CONCEPTS Continuous change. This is a process where there is a pattern of uninterrupted adjustments in work processes and social practices driven by organisation instability and increasing reactions to daily events.  Incremental change. This is a process whereby individual and other parts of the organisation deal incrementally with one problem at a time.  Macro-environment. This is a setting that comprises several sub environments, including the technological, economic, social, political, ecological and international environments, from which can emanate numerous external sources of change.  Market environment. This is a setting that comprises consumers, competitors, suppliers of resources and intermediates from which can emanate numerous external sources of change.  Organisational inertia. This is when organisations resist change because the forces for and against change is equally strong and therefore the organisation remains in the same position.  Planned change. This is change that managers plan and implement to adapt to or prepare for change in the environment.  Punctuated change. This is change that makes an organisation to develop through relatively long periods of stability interrupted by relatively short bursts of fundamental change.  Quasi-stationary equilibrium. This is an equilibrium supported by a field of driving and restraining forces causing inertia.  Reactive change. This is change that takes place when organisations react to change in their environments.  Revolutionary change. This is change that involves major, radical, strategic, transformational and rapid change. (Managing work stress is not examinable for this module) ++++END++++

UNIT 3 – CHPT 5:

CORPORATE CULTURE WHAT IS ORGANISATIONAL CULTURE – (3 DEFINITIONS): 3 definitions: ACHUA & LUSSIER – “The beliefs & assumptions of people on the way things are done as well as their attitudes and norms in doing so” EDGAR SCHEIN – “a pattern of basic assumptions” External adaptation tasks – developing consensus on the mission, functions and tasks, the goals and resources of the organisation, the criteria for measuring results and the corrective actions (strategies) used if goals are not met. Internal integration tasks – include the language and conceptual system, group boundaries and criteria for inclusion, allocating status, power and authority, intimacy, friendship and love, allocating rewards & punishments and the concepts for managing ideology and religion BURNES – legitimises & prohibits forms of action Yardstick for expected norms All members How you behave LEVEL OF CULTURE: ARTEFACTS – first level (tip of iceberg) visible aspects of organisation what one observes & feel when entering the organisation includes permanent archives of company records, statements of philosophy and annual reports VALUES –

second level (part of iceberg just below the water surface) Goals, ideals, norms, standards, moral principles other premises which the organisation chooses to promote

ASSUMPTIONS – third level (mass of the iceberg) taken-for-granted assumptions core of organisations culture based on historical and cultural influences difficult to identify & explain TYPES OF CULTURES IN AN ORGANISATION -

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NATIONAL & REGIONAL CULTURES differ in terms of attitudes towards work, authority & equality. Variables that influence the development of a national culture include history, religion and even climate. INDUSTRY CULTURES forms within an organisational field, which is community of organisations that interact frequently with one another. Organisations operating in the same organisational field function in a social system of expectations, taken-for-granted ways of doing things, status & legitimacy, which exert powerful influence on organisations and actors in them. ORGANISATIONAL SUB-CULTURES form based on occupational shared assumptions and sub-group histories. Many of the major cultural differences & similarities in organisations are occupational. Occupational groups within organisations may develop strong sub-cultures based on the work they do. May also forms groups are geographically isolated for the rest of the organisation. Professional or Functional sub-cultures form can create problems for the effective functioning of an organisations.

ELEMENTS OF CULTURE SYMBOL = represents an idea, process or physical entity to communicate meaning or to convey specific meaning STORIES = reflects core beliefs & assumptions held by organisational members How stories are told to newcomers relate to specific strengths, weaknesses, successes & failures, often reflect the prevailing culture. LANGUAGE = creates unique terms to refer to various items & aspects of the organisation and only members of organisation understand these terms. Newcomers are often overwhelmed when confronted by organisation-specific abbreviations & terminology. RITUALS = set of actions performed mainly for their symbolic value often underpin the central values of organisation Organisational members assimilate the culture by observing which rituals play key roles in organisation & what behaviour the rituals encourage or discourage. DIFFERENT TYPES OF CULTURE 1. 2. 3. 4.

CHARLES HANDY = typifies culture in terms of norms, values and beliefs that reflect in different structures & systems of an organisation DEAL & KENNEDY = link culture to risk 7 feedback characteristics of the specific market in which the organisation functions QUINN & McGrath = use various variables, such as leadership style, authority and the goal and risk orientation of...