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Introduction to MANAGEMENT Summary

Colin Combe

Företagsekonomi, Moment 2, Organisation 2019

ISBN: 978-0-19-964299-1 Impression: 2 2014

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Chapter 1 - Introduction to Management

Functions of management Forecasting and planning

Organising

Commanding Coordinating Control and leading

Definition: Management Management is the organisation and coordination of the activities of a business (or some other organisational setting) in order to achieve defined aims and objectives.

Forecasting and planning: Involves assessing the future and making provision for it, managers should ensure that within the organization there is unity of direction, continuity, flexibility, and precision. Planning is the process used by managers to identify and select appropriate goals and courses of action for an organization. Organising: Is about organizing so that the company has the necessary resources such as personnel, money, and materials and that they are brought together in the correct balance. Also involves managers creating structures of working relationships between employees that encourages collaboration and helps to achieve their goals. Commanding and leading: Commanding involves maintaining activity among employees by making decisions and communicating them to subordinates. Leadership involves setting a clear direction for the organisation. Coordinating: Involves the manager liaising with others in the organisation to ensure that activities occur at the right time and place and to ensure that they do not adversely affect other areas of organisational activity. Control: Requires managers to effectively assess the extent to which the organisation is achieving its goals and to initiate corrective action to improve performance if necessary.

Management roles Interpersonal Managers have interpersonal roles to coordinate and interact with employees and provide directions to the organisation. The three main roles include figurehead role, leader role and liaison role. The figurehead symbolizes the organisation, it has to be highly visible for the public and the stakeholders. For example, Richard Branson’s role in Virgin group is a figurehead role. The second role is Leader role which includes providing motivation, inspiration, and encouragement to others. The third role is liaison role which is used to link and coordinate people inside and outside the organisation to help achieve the goals. Needs very good skills in communication for this role. Informational Informational roles are associated with the tasks needed to obtain and transmit information for the management of the organisation. The three main roles are monitor, disseminator and spokesperson roles. The monitor role requires managers to analyse internal and external information and knowing which information is relevant for improving performance for the company. The second role is the disseminator role, and it refers to how managers transmit information to influence attitudes and behaviour of employees. This also requires superior communications skills; many people argue that this is the most important management skill. The third role is the spokesperson role which often includes speaking to media, industry and trade bodies, the role is similar to the previous one. It is necessary for the figurehead to act as spokespersons for the organisation. Decisional Decisional roles are associated with the methods managers use to plane strategy and utilise resources to achieve goals. One of the most important aspects of management. Includes four main roles: Entrepreneur, disturbance handler, resource allocator and negotiator role. The entrepreneur role requires managers to think in an entrepreneurial way when using resources. They need to be able to understand, process and assess risks and evaluate the expected returns on investment in all aspects of business. The disturbance handler role requires managers to navigate through various forms of disturbances affecting the organisation. Where the effects of a disturbance have an impact on the strategic aims of the organisation, the managers need to take action to mitigate the worst effects whilst maintaining a strategic direction. The resource allocator role requires managers to fairly distribute resources of the organisation. It is essential that managers take a strategic view of resources and channel them to areas that best support the tactical aims of the organisation even though it might be unpopular in certain functions. Too smooth this process it is important to provide a clear rationale for the decisions. The negotiator role requires managers to have negotiation skills to handle disturbances between managers and stakeholders.

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Levels of management

Managerial skills Conceptual skills

Human skills

Technical skills

Cultural awareness

Types of modern management Inclusive management

Managing change

Management through communication

Managing the learning organisation

Top management / upper management Middle management Operational management / lower-level management

New Public Management (NPM) A management philosophy of the 1980s that came to prominence in response to the need for reform in the public sector, advocated reform through a greater market-oriented public sector as the core philosophy

Managerial skills Conceptual / Analytical skills: Analyze and diagnose a situation to find a solution and solve the problem. Human Skills: How to understand, change, and control human behaviors. Technical skills: A deep understanding of the technology in the products or system Cultural Awareness: Being able to control people from different cultures

Types of modern management Inclusive management: Access to education and learning opportunities, information and knowledge will blur the distinction between management and work, managers build effective relationships with workers as partners in achieving organisational aims. Managing the learning organisation: Requires the formation of a culture of knowledge generation and sharing, communicate the benefits of a learning-based environment. Improves processes. Management through communication: Essential tool for a wide range of activities, skills are important, being able to communicate effectively with a broad range of people from diverse backgrounds and cultures. Influencing the behavior of others to achieve aims and objectives. Managing change: Know when to implement change, to what degree, and what outcomes can be expected, in a rapidly changing environment.

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Chapter 2 - Management Theory Competing values framework (figure 2.1) Four different opposites to each other It's about how the company must prioritize resources, the vertical axis is how the company needs to build in flexibility to be able to cope with change but at the same time have control in order to be able to carry out activities in an optimal way. The horizontal axis is about whether the manager should focus on the internal or external environment. What determines which of them to focus on is the company's longterm goals.

Rational goal models of management Scientific management Scientific management is a science-based approach to optimising output in a production. It was first presented in 1911 by Fredrick Taylor. The underlying principle behind scientific management was that tasks would be completed more efficiently if each worker knew exactly what had to be done within a specific timeframe. Henry Ford was an adapter of this theory. The method has been criticised for creating discontent among staff when carrying out the same task all the time. The theory ignored the complexity of the human condition and the staffs decreasing morale as a consequence. Five principles: • The use of scientific methods to determine the “one best way” to complete a task. • The selection of the best person to undertake the task depending on physical and mental capabilities. • The provision of training and development for workers to enable them to follow clearly defined procedures. • The provision of financial rewards as incentives for adhering to prescribed methods. • Shifting the responsibility for planning and organizing work schedules from the worker to the manager.

Definition: Scientific management Science-based approach to optimising output in a production process

Time and motion studies The science of timing each action that contributes to the completion of a work task over a set period of time. 1. Break down each action into components. 2. Find better ways to perform it. 3. Reorganise each action to be more efficient.

Internal process model Bureaucracy Bureaucracy means that the underpinning authority controls the majority of the activities in the company. The model focuses on the importance of producing documents that record information. The administration forms a major part in such organisations. Bureaucracy is an organisation system tightly controlled through the application of strict rules, regulations, and procedures. The major flaws with it are: slow communication due to hierarchy structure, lack of innovation, inability to quickly changes to the environment, inefficiencies caused by documentations.

Definition: Bureaucracy An organisational system tightly controlled through the application of strict rules, regulations, and procedures.

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Administrative management (Fayol) Principles that guide activities through an organization: Technical (Production) Commercial (sales) Financial (optimal use of capital) Security (Protection of buildings and people) Accounting (stocktaking, balance sheet, costs, and statistics) Managerial (Planning, organizing, commanding etc.)

Human relations theory The human relations system of management places emphasis on social processes in the Definition: Human workplace. This theory focuses on human conditions in the working environment rather than relations just efficiency like the science management. System of management that places emphasis on social processes in the workplace. Open systems

A systems approach considers relationships inside and outside the organisation. Systems theory considers the input, transformation, and output. Open system is a system that interacts with the environment in which it exists. The Open System model can be seen as a natural extension of the human relations approach where greater emphasis on human and social aspects of work formed the dominant paradigm of thinking.

Definition: Open system A system that interacts with the environment which it exists.

The transformational process

1. Input - acquire external resources 2. Transformation - Inputs are processed into products and services 3. Output . Finished products are released into the environment

Contingency theory – Open/Shut Managers need to create and shape the organisation based on their understanding of the environment in which they operate in. Contingency theory applies management principles and process according to the particular characteristics of each situation as the external environment technology, structure and so on.

Definition: Contingencies Key factors that reflect the situation of an organisation.

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Chapter 3 - Planning Formulate plans

The planning process First - formulation of plans where the goals are identified as well as the means by which these goals are to be achieved. Second - Implementation of said plans Third - Evaluation of progress, compare expected progress to actual progress. Fourth - Evaluate what went wrong and take corrective action.

Review plans Evaluate and take corrective action

Planning The planning process

Implement plans

Control Compare outcomes with set targets

Definition Goal - specified position the organisation seeks to attain Objective - Clearly defined and measurable outcome to be achieved within a specified timeframe

Goals and objectives for organisations (SMART) S - Specifik, key aspects of performance that can be measured M - Measurable, key aspects of performance that can be quantified A - Achievable, outcome that is capable of being met R- Rewarded, specified rewards for achieving goals T - Timely, timeframe set for achieving goals

Definition Short term - from one day to six months Medium term - from six months to one year Long term - One year or more

Types of plans Operational plans Clearly defined plans that detail hoe the goals are to be achieved. These plans are concerned with short term goals, day-to-day operations. Usually feature activities that form the basis of the transformation process. Business level plans Medium term plans, usually not as detailed as operational plans which leaves room for flexibility, features strategic aspects to help achieve the aims of the organisation. Ex. Increase sales by 4%. Strategic plans Long term plans that usually stretch over a couple of years. Focuses on the long term aims of the organisation, how resources are to be relocated to achieve these aims and what the future of the organisation looks. Ex. To be market leading in our field within 6 years.

The business plan The business plan has to contain a number of key components: • • • • • • • • • •

Executive summary Business profile Product/service/market analysis Marketing plan Legal and risk management plan Operating plan Management and personnel plan Finance plan The action plan Appendices

Advantages of planning Control & action Planning sets the standards for performance and allows managers to to determine whether or not current practices are good or not, and if not they can take appropriate action. It allows managers to see which goals and objectives are achievable and not. Helps with innovation and creativity and can be a source of competitive advantage. Risk Planning helps mitigate uncertainty and therefore also helps mitigate risk. By planning for future events managers can have more control if something unexpected happens. Resource allocation By planning managers can easily allocate resources accordingly and mitigate waste and uncertainty.

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Contingency planning The world in which organisations operate can be unpredictable and therefore contingencies have to be put in place to deal with situations that may affect the business. Contingency constitutes a “plan B for when plan A fails”. For example many of the companies in the world trade center during 9/11 had a contingency plan which was a reason that they could recover quickly from the attack.

Definition Contingency Something that might happen

Scenario planning In order to lower the risk for the company many managers develop scenario plans with likely events that could affect the company. Ex the Brexit scenario. The scenario planning should be part of a wider process that helps managers to make decisions that will protect the organisation from negative influences of the external environment. Scenario planning is linked with forecasting. A core element of scenario planning is to identify key drivers of the industry, which could be technology, human resources, economy, legislation etc.

Definition Scenario Imagined sequence of future events

Scenario planning process

Succession planning Succession planning refers to a process undertaken by managers that ensures each role within the organisation is filled at all times. Succession planning usually comes in four steps. The company needs to identify critical roles for the business, which could be leadership roles or engineering skills. Analyse why the role is critical. Then the actual design of the succession plan, ex timeline and personnel. Last evaluate and monitor how the plan is going.

Management skills in the planning process

Stages for succession planning

Organisational skills Effective planning requires managers to coordinate activities between individuals or Definition groups internally and externally. Requires coordination and communication. Organisational skills - ability Organise resources and controlling activities to achieve specified outcomes. to coordinate resources and activities. Technical skills Technical skills - Knowledge Managers at the operational and business levels often requires technical skills in or practical skills in specialised order to fully understand the competencies and proficiencies required to achieve activities. targets. May include knowledge or practical skills in specialised activities. Analytical skills - Ability to separate a whole into its Analytical skills Analytical skills are often developed through experience but are very difficult to be component parts for study and interpretation. taught. Analytical skills refer to the process of going through a wide range of Conceptual skills - Problem information and make sense of it. solving by understanding complex environments. Conceptual skills Communications skills Understanding of the organisation as a whole and the relationship between its Ability to connect with people divisions and departments and how they fit into the wider business environment. through various media to achieve aims and objectives, to Communications skills motivate and lead. One of the most important skills of management. Plans need to be implemented effectively and part of that process is to communicate the reasons for the plan to the coworkers.

Limitations of planning The limitations includes Bias, Over-reliance and Costs. Bias can limit the planning, where the managers former experiences can play a part in the planning in a negative way. The second one is over-reliance, that the managers rely on that the planning has covered every potential scenario and can get caught off guard when something unexpected happens, can give a false sense of security. The third one is costs, complex planning is a huge expense, both in time and money. Even after planning, costs of evaluating and monitoring can be a high cost.

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Chapter 4 - Organising Authority Powers to command or control others. There are three different authorities, line, staff and functional authority. - Line authority is the most common one, managers have the authority to issue orders to workers at the operational and business level. - Staff authority consists of those who have the right to support, advise and assist those in line authority, supports the effectiveness in those in line authority. Usually only used in larger organisations. - Functional authority gives certain staff members in designated areas of expertise the power to initiate actions or stop actions from taking place without referring to a higher authority. With the purpose to make decisions more quick and efficient in the company.

Chain of command A chain command is built into an organisation to allow authority to be passed down from the top. A general principle is that each worker should report to only one manager.

Definition - Formalisation The level to which an organisation sets formal rules, procedures and regulations for work tasks and activities. Definition - Authority Power to command or control others.

Definition - Chain of command Line of authority that extends from top to bottom in an organisation.

Span of control The span of control in an organisation refers to the number of employees that any manager is responsible for. The span of control needs to be linked to the managers ability to lead. It is important to find the right balance between span of control, it cannot be too wide because one manager cannot efficiently help to many employees at the same time but on the other hand, a short span of c...