Key Terms

Management, Leadership and Decision Making

authority

Authority is defined as institutionalised and legal power inherent in a job, func­tion, or position that enables the job holder to successfully carry out his/her respon­sibilities.

Autocratic Leadership

A leadership style in which leaders dictate without consultation of subordinates.

Blake Muton Grid

The Blake Mouton grid was created by Robert Blake and Jane Mouton in 1964.

It’s a way of determining a person’s leadership style, based on their concern for people, and their concern for production

communication

Business communication is communication that is intended to help a business achieve a fundamental goal, through information sharing between employees as well as people outside the company. It includes the process of creating, sharing, listening and understanding messages between different groups of people

consultation

Taking into account the views of employees further down the hierarchy

The action or process of formally consulting or discussing.

Meeting with an expert in order to seek advice

Decentralisation

In a decentralised structure, decision-making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations

Decision Trees

A decision tree is a mathematical model used to help managers make decisions.

-A decision tree uses estimates and probabilities to calculate likely outcomes.
-A decision tree helps to decide whether the net gain from a decision is worthwhile.

Delegation

Delegation involves the assignment to others of the authority for particular functions, tasks, and decisions.

Democratic Leadership

Style involving consulting with subordinates and evaluating their opinions before making a decision.

Directing

Direction is telling people what to do and seeing that they do it to the best of their ability. It includes making assignments, corresponding procedures, seeing that mistakes are corrected, providing on-the-job instructions and, of course, issuing orders

Empowerment

Empowerment is giving employees the power to do their job.

The concept of empowerment is closely linked to motivation and customer service. Employees need to feel that their actions count – and empowerment is about making this happen.

Ethics

Business ethics is the system of acceptable business behaviours and principles that are applied in the commercial world

Expected Value

The expected value (EV) is an anticipated average value for an investment at some point in the future. Investors use expected value to estimate the worthiness of investments, often in relation to their relative riskiness.

Used in decision trees, formula: Outcome A + Outcome B = total expected value

hunch

the use of intuition as a key part of decision making

Laissez-faire leadership

A hands off approach to management

leadership

The process and methods of influencing others to take desired actions

Management

Management is the administration of an organization, whether it is a business, a non-profit organization, or a government body. It is the art and science of managing resources of the business.

Market Conditions

Market conditions relate to the attractiveness (or otherwise) of the overall market in which a business operates.

Market conditions tend to affect all businesses in an industry, although their ability to take advantage or, or respond to changes in market conditions will vary. Two key indicators of market conditions are:

Economic Growth (GDP)
Market Demand

Net Gains

Used in Decision trees
Net gains = total expected value - cost of option

Non-programmed decision making

Non-programmed decisions are unique. They are often ill-structured, one-shot decisions. Traditionally they have been handled by techniques such as judgment, intuition, and creativity. Used for unexpected and unique issues.

opportunity cost

The cost of a decision as measured by the benefits foregone of the next best alternative

Paternalistic leadership

A managerial approach where there is a dominant figure that decides what is best for employees.

planning

The business plan sets out how the owners/managers of a business intend to realise its objectives. Without such a plan a business is likely to drift

the cognitive process of thinking about what you will do in the event of something happening

pressure groups

A pressure group is an organisation with shared aims which seeks to influence policy through political means, without seeking political office itself

probability

a measure of how likely it is that some event will occur; a number expressing the ratio of favorable cases to the whole number of cases possible

Programmed Decisions

Programmed decisions are those that are traditionally made using standard operating procedures or other well-defined methods. These are routines that deal with frequently occurring situations, such as requests for leaves of absence by employees

risk

The probability or chance that hoped-for outcomes will not occur

Scientific decision making

All business decisions involve some uncertainty. However businesses and managers increasingly want to reduce that uncertainty and risk by applying logic to decision-making, supported by relevant data.

Scientific decision-making involves the use of:

-Data mining and big data to source relevant data to inform decisions
-Application of software logic and predictive models to analyse scenarios
-Forecasts to consider the possible implications of business decisions

Social Responsibility

Corporate social responsibility is where businesses address social and environmental considerations as part of their normal business activities

Stakeholder engagement

Stakeholder engagement is the process by which an organiation involves people who may be affected by the decisions it makes or can influence the implementation of its decisions. They may support or oppose the decisions, be influential in the organization or within the community in which it operates, hold relevant official positions or be affected in the long term.s

Stakeholder Mapping

To manage its stakeholders well, a business effectively to make choices. It is very difficult to meet the needs of every stakeholder group and most decisions will end up being “win-lose”: i.e. supporting one stakeholder means another misses out.

How should a business respond to variations in stakeholder power and influence? The matrix (stakeholder map) below provides some guidance on the approach often taken:

Tannenbaum and Schmidt Continuum

Tannenbaum and Schmidt devised their continuum that illustrates a range of potential leadership and management styles

Tannenbaum and Schmidt Continuum of Leadership
The Tannenbaum and Schmidt Continuum recognises that the chosen leadership style depends on a variety of factors, including the leader's personality, the perceived qualities of subordinates.
It also allows for "situational" factors such as the need for urgency in leadership and decision-making.
The continuum represents a range of action related to the:
– Degree of authority used by the leader or manager
– Area of freedom available to non-managers

Theory X

McGregor’s Theory X that states that employees generally have little ambition, avoid responsibilities, and are mostly extrinsically motivated.

Theory Y

Theory Y that states that employees are intrinsically motivated, enjoy their job, and want to work to better themselves without a direct reward in return.

Uncertainty

The unpredictable and uncontrollable events that affect business decisions and actions
e.g.Will a business achieve its break-even output?