Chapter 1: Managers and Managing

What is Management?

  • All managers work in organizations

  • Organizations – Collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes

  • Managers – The people responsible for supervising the use of an organization’s resources to meet its goals

  • Management – The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently

  • Resources – Include assets such as:

    • People and their skills, know-how, and experience

    • Machinery

    • Raw materials

    • Computers and information technology

    • Patents, financial capital, and loyal customers and employees

Achieving High Performance: A Manager’s Goal

  • Organizational performance – A measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals

  • Efficiency – A measure of how well or how productively resources are used to achieve a goal

  • Effectiveness – A measure of the appropriateness of the goals an organization is pursuing and the degree to which the organization achieves those goals

  • High-performing organizations are both efficient and effective (see Fig. 1.1)

Why Study Management?

  • Individuals generally learn through personal experience or the experiences of others. By studying management in school, you are exposing yourself to the lessons others have learned.

  • The economic benefits of becoming a good manager are impressive. In the United States, general managers earn a median wage of 97{,}730 with a projected growth rate in job openings of 5\%\text{ to }8\% between now and 2024.

  • Learning management principles can help you make good decisions in non-work contexts.

Four Tasks of Management (Planning, Organizing, Leading, Controlling)

  • Planning – Decide what organizational goals and courses of action to pursue

  • Organizing – Establish task and authority relationships that allow people to work together to achieve organizational goals

  • Leading – Motivate, coordinate, and energize individuals and groups to work together to achieve organizational goals

  • Controlling – Establish accurate measuring and monitoring systems to evaluate how well the organization has achieved its goals

  • (Appendix 2 reiterates these four tasks: Planning, Organizing, Controlling, and Leading with the same definitions.)

Steps in the Planning Process

  • Deciding which goals the organization will pursue

  • Deciding what strategies to adopt to attain those goals

  • Deciding how to allocate organizational resources

Example: Alcon

  • Scott Parish is the chief financial officer and chief operating officer of Alcon Entertainment.

  • Maintaining Alcon’s growth is a significant challenge in a turbulent and ever-changing entertainment business.

  • Managers like Scott Parish must help companies stay creative and create profitable content in an industry rapidly evolving amid changing consumer tastes and technology.

Organizing (1 of 2)

  • Organizing – Structuring working relationships so organizational members interact and cooperate to achieve organizational goals

  • Managers must decide how best to organize resources, particularly human resources

Organizing (2 of 2)

  • Organizational structure – A formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals

Leading

  • Leading – Articulating a clear vision and energizing and enabling organizational members so they understand the part they play in achieving organizational goals

  • Involves managers using their power, personality, influence, persuasion, and communication skills to coordinate people and groups

Controlling (1 of 2)

  • Controlling – Evaluating how well an organization is achieving its goals and taking action to maintain or improve performance

Controlling (2 of 2)

  • The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effectiveness

  • Managers must decide which goals to measure

Managerial Roles Identified (Mintzberg) – Part 1/3

  • Table 1.1 Managerial Roles Identified

  • Type: Decisional | Role: Entrepreneur | Examples: Commit organizational resources to develop innovative goods and services; decide to expand internationally to obtain new customers for the organization’s products.

  • Type: Decisional | Role: Disturbance handler | Examples: Move quickly to take corrective action to deal with unexpected problems from the external environment (e.g., a crisis like an oil spill) or internal issues (e.g., producing faulty goods).

  • Type: Decisional | Role: Resource allocator | Examples: Allocate organizational resources among tasks and departments; set budgets and salaries of middle and first-line managers.

  • Type: Decisional | Role: Negotiator | Examples: Work with suppliers, distributors, and labor unions to reach agreements about input quality and price; work with other organizations to pool resources on joint projects.

Managerial Roles Identified (Mintzberg) – Part 2/3

  • Type: Interpersonal | Role: Figurehead | Examples: Outline future organizational goals to employees; open a new headquarters; state ethical guidelines and behavioral principles.

  • Type: Interpersonal | Role: Leader | Examples: Model desired behavior; give direct commands; make decisions about human and technical resources; mobilize employee support for goals.

  • Type: Interpersonal | Role: Liaison | Examples: Coordinate work of managers in different departments; establish alliances with other organizations to share resources; reach agreements on inputs and prices; pool resources for joint projects.

Managerial Roles Identified (Mintzberg) – Part 3/3

  • Type: Informational | Role: Monitor | Examples: Evaluate the performance of managers; watch for external/internal changes affecting the organization; take corrective action.

  • Type: Informational | Role: Disseminator | Examples: Inform employees about changes in the environment; communicate the organization’s vision and purpose.

  • Type: Informational | Role: Spokesperson | Examples: Launch national campaigns; inform the public about the organization’s future intentions.

Levels and Skills of Managers (1 of 2)

  • Department – A group of managers and employees who work together and possess similar skills or use the same knowledge, tools, or techniques

  • Examples: manufacturing, accounting, engineering, sales departments

Levels of Management (Figure 1.3)

  • CEO / Top managers

  • Middle managers

  • First-line managers

Levels of Management (1 of 2) Details

  • First-line managers – Responsible for daily supervision of nonmanagerial employees

  • Middle managers – Supervises first-line managers; responsible for finding the best way to use resources to achieve organizational goals

Levels of Management (2 of 2) Details

  • Top managers – Responsible for the performance of all departments; establish organizational goals; decide how different departments should interact; monitor how well middle managers use resources to achieve goals

Time Allocation Across the Four Managerial Tasks (Figure 1.4)

  • Relative amount of time managers spend on planning, organizing, leading, and controlling varies by managerial level

  • Note: First-line managers show the greatest importance in leading; middle managers emphasize planning more; top managers focus on planning, organizing, leading, and controlling in that order; first-line managers have the least emphasis on controlling

Managerial Skills

  • Conceptual skills – The ability to analyze and diagnose a situation and distinguish between cause and effect

  • Human skills – The ability to understand, lead, and work with people

  • Technical skills – Job-specific skills required to perform a particular type of work at a high level

Core Competency

  • Core competency – A specific set of departmental skills, abilities, knowledge and experience that allows an organization to outperform its competitors

  • Serves as a source of competitive advantage

Restructuring and Outsourcing

  • Restructuring – Downsizing an organization by eliminating jobs of large numbers of managers and nonmanagerial employees

  • Outsourcing – Contracting with another company (often in a low-cost country) to perform a work activity the company previously performed itself

Empowerment

  • Empowerment – Giving employees more authority and responsibility over how they perform their work activities

Challenges for Management in a Global Environment

  • Building a competitive advantage

  • Maintaining ethical and socially responsible standards

  • Managing a diverse workforce

  • Utilizing IT and e-commerce

  • Practicing global crisis management

Building Competitive Advantage

  • Competitive advantage – Ability of one organization to outperform others because it produces desired goods or services more efficiently and effectively than its competitors

  • Innovation – The process of creating new or improved goods and services or developing better ways to produce or provide them

Building Blocks of Competitive Advantage (Fig. 1.6)

  • Elements include:

    • Efficiency

    • Quality

    • Innovation

    • Responsiveness to customers

Example: Alcon (Expansion into Music Production)

  • Entertainment companies like Alcon are seeking to produce content more economically amid tighter margins and smaller audiences

  • One strategy: expanding into music production to support film/TV production

  • Producing music in-house reduces costs and provides maximum flexibility to use music as desired

Turnaround Management

  • Turnaround management – Creation of a new vision for a struggling company using a new approach to planning and organizing to better use resources, enabling survival and eventual prosperity

Maintaining Ethical and Socially Responsible Standards

  • Managers face pressure to maximize resource use

  • Excessive pressure may push managers toward unethical or illegal behavior

Managing a Diverse Workforce

  • HRM procedures must be legal, fair, and non-discriminatory to build a highly trained and motivated workforce

Practicing Global Crisis Management

  • Create teams to enable rapid decision making and communication

  • Establish the organizational chain of command and reporting relationships for fast response

  • Recruit and select leaders and team members appropriately

  • Develop bargaining and negotiating strategies to manage conflicts that arise

Video: PODS

  • Question: How do PODS employees use planning, organizing, leading, and controlling to manage 140,000 containers in service?

Appendix 1: Efficiency, Effectiveness, and Performance (Fig. 1.1)

  • Low efficiency / high effectiveness: Right goals, poor resource use; product desired but too expensive

  • Low efficiency / low effectiveness: Wrong goals and poor resource use; low-quality product not wanted

  • High efficiency / high effectiveness: Right goals and good resource use; product desired at right quality and price

  • High efficiency / low effectiveness: High-quality product not desired despite good resource use

Appendix 2: Four Tasks of Management (Recap)

  • Planning – Choose goals and courses of action to achieve them

  • Organizing – Establish task and authority relationships for coordinated effort

  • Controlling – Establish accurate measuring and monitoring systems to evaluate goal achievement

Appendix 3: Levels and Skills of Managers (2 of 2)

  • The graphic shows the relative importance of planning, organizing, leading, and controlling

  • Importance varies by hierarchy level:

    • First-line managers: greatest emphasis on leading; somewhat less on leading than first-line but more on planning

    • Middle managers: great responsibility in planning; less in leading

    • Top managers: greatest emphasis on planning; followed by organizing, leading, and then controlling

    • First-line managers: least emphasis on controlling

Concise version:

Management involves the planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently. Organizations are collections of people working together for common goals, and managers supervise resource use. High organizational performance means managers are both efficient (using resources productively) and effective (achieving appropriate goals).

Studying management offers economic benefits, with general managers earning a median wage of 97{,}730 and a projected job growth rate of 5\%\text{ to }8\% by 2024, and helps in making good decisions in various contexts.

Four Tasks of Management

  • Planning: Deciding goals and courses of action.

  • Organizing: Structuring relationships for collective work.

  • Leading: Motivating and energizing individuals and groups.

  • Controlling: Evaluating performance and taking corrective action.

These tasks are interdependent, with specific steps in the planning process including deciding goals, strategies, and resource allocation. Managers like Scott Parish at Alcon exemplify the challenge of maintaining growth and creativity in dynamic industries.

Organizing involves establishing an organizational structure, which is a formal system of task and reporting relationships. Leading requires managers to articulate a clear vision and use influence to coordinate people, while controlling measures goal achievement to regulate efficiency and effectiveness.

Managerial Roles (Mintzberg)

Managers fulfill various roles categorized as:

  • Decisional (e.g., Entrepreneur, Disturbance handler, Resource allocator, Negotiator)

  • Interpersonal (e.g., Figurehead, Leader, Liaison)

  • Informational (e.g., Monitor, Disseminator, Spokesperson)

Levels and Skills of Managers

Managers exist at different levels:

  • First-line managers: Daily supervision of nonmanagerial employees.

  • Middle managers: Supervise first-line managers and optimize resource use.

  • Top managers: Responsible for all departments, set overall goals, and monitor middle managers.

The time managers spend on the four tasks varies by level, with first-line managers emphasizing leading, middle managers planning, and top managers focusing on planning, organizing, leading, and controlling respectively.

Key managerial skills include:

  • Conceptual skills: Analyzing situations and understanding cause/effect.

  • Human skills: Leading and working with people.

  • Technical skills: Job-specific expertise.

Core Concepts and Challenges

A core competency is a unique set of skills allowing an organization to outperform competitors. Modern management faces trends like restructuring (downsizing), outsourcing (contracting work externally), and empowerment (giving employees more authority).

Global challenges for management include:

  • Building competitive advantage (achieving higher efficiency, quality, innovation, and responsiveness to customers).

  • Maintaining ethical and socially responsible standards.

  • Managing a diverse workforce legally and fairly.

  • Utilizing IT and e-commerce.

  • Practicing global crisis management (e.g., rapid decision-making, establishing clear command).

Turnaround management involves creating new visions and approaches for struggling companies. High-performing organizations are both efficient and effective; a product desired by customers (effective) at the right quality and price (efficient) represents optimal performance.