Principles, Purpose,

and Nature of
Management
Learning Outcomes

1 2 3 4
Demonstrate Describe and relate the Demonstrate the Explain how
conceptual knowledge four management different levels and productivity can be
in management functions of planning, roles of management enhanced through
organizing, leading, management
and controlling
 Why Management & Principles of
Management
• Management is the art of getting things done through the efforts of other
people
• Management is a multipurpose organ that manages a business and
manages managers, and manages workers and work
• The principles of management, then, are the means by which you
manage, that is, get things done through others—individually, in groups, or
in organizations
• E.g., Principles of management are the activities that plan, organize,
and control the operations of the basic elements of [people] materials,
machines, methods, money and markets, providing direction and
coordination, and giving leadership to human efforts, to achieve the
sought objectives of the enterprise
• Principles of management are often discussed or learned using a
framework called P-O-L-C, which stands for planning, organizing, leading,
and controlling
 Is Management a Science or an Art?

Science is a systematic body of knowledge Art’ refers to “the way of doing specific Management is both a science as well as an
pertaining to an area of study and contains things; it indicates how an objective is to be art
some general truths explaining past events achieved through the personal ingenious
or phenomena and imaginative power
The science of management provides certain general
principles which can guide the managers in their
professional effort
•E.g., It is a systematized body of knowledge and uses
scientific methods for observation
The art of management consists in tackling every
situation in an effective manner
•E.g., After knowing a particular art, practice is needed
to reach the level of perfection
Functions of Management
• Planning
• The process of setting objectives and
determining what actions should be taken to
accomplish them
• Organizing
• The process of assigning tasks, allocating
resources, and coordinating work activities
• Leading
• The process of arousing people’s
enthusiasm to work hard and direct their
efforts to achieve goals
• Controlling
• The process of measuring work
performance and taking action to ensure
desired results
 Who is a Manager?
A Manager is the person responsible for planning and directing
the work of a group of individuals, monitoring their work, and
taking corrective action when necessary in the organisation

Managers may direct workers directly or they may direct

several supervisors who direct the workers

They are the individuals charged with examining the workflow,

coordinating efforts, meeting goals and providing leadership
Organization
A group of people working together to create a surplus

• In business organizations, this surplus is profit

• In nonprofit organizations, such as charitable organizations, it may be the satisfaction of needs

People working together and coordinating their actions to achieve specific

goals

• Goal: A desired future condition that the organization seeks to achieve or The end results
towards which all the activities are directed
• Different organizations may have different goals
• Profitability
• Growth
• Market Penetration
• Productivity
• Client Satisfaction
 Organization
Common Characteristics of
Organizations

Have a
Are Have a
distinct
composed of deliberate
purpose
people structure
(goal)

Management: The process of using

organizational resources to achieve
the organization’s goals efficiently
and effectively by Planning,
Organizing, Leading, and
Controlling
Efficiency and Effectiveness in Management

In successful organizations, high efficiency and high effectiveness typically go hand in hand. Poor
management (which leads to poor performance) usually involves being inefficient and ineffective or
being effective, but inefficient.
Productivity and the Dimensions of
Organizational Performance
The Roles of
Managers
(Mintzberg’s
Seminal
Work)
Levels of Management
Managerial Skills

• Technical skills are closely related

to the technical competencies or
practical craftsmanship skills
• Conceptual skills present
the knowledge or ability of a
manager for more abstract
thinking. That means he can easily
see the whole through analysis and
diagnosis of different states
• Interpersonal/Human skills are a
manager’s knowledge and ability
to work with people
Task
1. Using relevant example differentiate between roles of managers and
skills required by managers
2. Relate the skills required by management with the levels of
management
Answers
1. Roles are activities performed by managers (e.g., interpersonal roles)
and skills are competencies and resources manages need to function
(Human Skills)

2.
The Changing
Roles of
Managers
The organization viewed as an upside-
down pyramid
 Objectives of Managers
• To achieve the organizational goal,
managers pursue the following
objectives:
• Efficient use of resources
• Customer satisfaction
• Adequate return on capital
• Satisfied workforce Improved work
conditions
• Building supplier relationship
Skills Needed
at Different
Managerial
Levels
Important Managerial Skills
Universal Need for Management
Why Study • Universality of Management
Management • The reality that management is
needed
? • in all types and sizes of
organizations
• at all organizational levels
• in all organizational areas
• in all organizations, regardless
of location
Changes Facing Managers
History and
Evolution of
Management
 Early Management

• The Egyptian pyramids & the Great Wall of China are proof that projects of
tremendous scope, employing tens of thousands of people, were
completed in ancient times.
• The City of Venice in the 1400s was a major economic and trade center.
• Warehouse & inventory systems were used to keep track of
materials, human resource, and accounting systems.
• Industrial Revolution. Transition to new manufacturing processes (change
from an agrarian and handicraft economy to one dominated by industry
and machine manufacturing)
• A manager was needed in the factories.
• Substituted machine power for human labor
• Created large organizations in need of management
• 1776: Adam Smith (The pin factory): Division of labour or job
specialization enhances productivity
Adam Smith (18th Century Economist)
Job Specialization and the Division of Labor
• Observed that firms manufactured pins in one of
two different ways:
• Craft-style—each worker did all steps
• Production—each worker specialized in one
step
• Realized that job specialization resulted in much
higher efficiency and productivity
• Breaking down the total job allowed for the division
of labor in which workers became very skilled at
their specific tasks
Smith’s Job Specialization and the Division of
Labor

“One man draws out the wire, another straights it, a third
cuts it, a fourth points it, a fifth grinds it at the top for
receiving the head; to make the head requires two or three
distinct operations; to put it on, is a peculiar business, to
whiten the pins is another; it is even a trade by itself to put
them into the paper; and the important business of making
a pin is, in this manner, divided into about eighteen distinct
operations, which, in some manufactories, are all
performed by distinct hands”
The Classical Approach
• The classical approach to management is a management
approach that emphasizes organizational efficiency to
increase organizational success.
• Scientific Management
• Frederick W. Taylor
• Bureaucratic Management
• Max Weber
• Administrative Management
• Henri Fayol
Taylor’s Scientific Management
• Taylor was particularly disturbed by the lack of measured standards
for defining the workers’ tasks and systematic ‘soldering’ of
workers on the job
• He was determined to discover and enlighten managers, as well as
workers on what constituted a “fair day’s work” and a “fair day’s
pay”
• Using time, motion, and fatigue studies, Taylor, broke each job
down into its components and designed the quickest and best
methods of performing each component
• He was able to establish how much workers should do with the
equipment and materials at hand
Taylor’s Four Principles of
Scientific Management
• Scientifically study each part of a task and
develop the best method of performing the task
• Carefully select workers and train them to
perform the task by using the scientifically
developed method
• Cooperate fully with workers to ensure that they
use the proper method
• Divide work and responsibility so that
management is responsible for planning work
methods using scientific principles and workers
are responsible for executing the work
accordingly
Fayol’s Administrative Principles
• Fayol sought to develop a theory of administrative theory in
order to increase efficiency in order to make the French
economy stronger
• Focused on overall management of the corporation rather
than on individual tasks involved in carrying out a firm’s
business (overall social interactions)
• The direction and coordination of the whole organization,
which is the domain of the top manager
• Fayol identified the five functions of management:
• Planning
• Organizing
• Staffing
• Controlling
• Directing
 ACTIVITY

Dzidzor opens a dress boutique company in Accra after returning from Canada. She has employed eleven
persons in her showroom. For greater productivity, she divides the work into small tasks and each employee
is trained to perform his/her specialized job. The salespersons are allowed to close a deal with a buyer by
giving a maximum of 5% discount, whereas the decision to give any further discount rests with Dzidzor as
the final authority. Dzidzor never fails in rewarding her employees in exchange of their effort. However,
when it comes to the resolution of conflicts among her staff, Dzidzor is openly biased towards her male
employees.

• Task
• Identify and explain three Henri Fayol’s principles of management that are being applied by Dzidzor
in the management of the boutique?
• Identify and explain Henri Fayol’s principle of management that is being violated by Dzidzor in the
management of the company?
• State any one effect of the violation of the principle of management by Dzidzor as identified in 1b
above?
Weber’s Ideal Bureaucracy
• Max Weber, a German sociologist; developed a theory of authority structures … bureaucracy (Ideal
Organization)
• Bureaucracy is a form of organization characterized by division of labor, clearly defined hierarchy,
detailed rules and regulations, and impersonal relationships (everyone is treated equal).
• Task specialization (division of labor). Weber felt that task specialization promotes the timely
completion of work at the highest level of skill
• Hierarchical management structure. Weber advocated that management should be organized
into layers, with each layer being responsible for its team's performance
• Formal selection rules. In the ideal organization, Weber believed that employees should be
chosen based on their technical skills and competencies
• Efficient and uniform requirements. Employees, argued Weber, should always know exactly
what is expected of them
• Impersonal environment. Under Weber's theory, relationships between employees are to be
only professional only
• Achievement-based advancement. Weber felt that promotions within an organization should
be based solely on achievement, experience and technical qualifications
• Ideal organization?
 Human Relations Movement
The human relations movement was a natural response to some of the
issues related to scientific management and the under-socialized view of
the worker that ignored social aspects of work
The key uniting characteristics of Taylor, Weber, and Fayol were the ideas
of efficiency produced through either operational, legal, or administrative
improvements
Scientific management tended to downplay the effects of social pressures
on human interactions

The human relations movement enhanced scientific management

because it acknowledged that peoples’ attitudes, perceptions, and desires
play a role in their workplace performance
 The Hawthorne Study (Elton Mayo and Fritz
Roethlisberger)
• A series of productivity experiments conducted at Western Electric from 1924 to 1932
• The studies began when engineers at the Hawthorne Western Electric plant decided to examine the
effects of varying levels of light on worker productivity
• Researchers tested the effect that working conditions such as breaks, length of the workday, company-
provided lunches, and payment method had on productivity
• Experimental findings
• Productivity unexpectedly increased under imposed adverse working conditions.
• The effect of incentive plans was less than expected
• Research conclusion
• Mayo observed that production could be increased if management understood the role of
individual workers’ attitudes toward work and considered how group attitudes affected behavior
• Mayo theorized that social issues and attention paid by the supervisor to these issues played a
role in increasing production
 Maslow’s Hierarchy of Needs Theory
• Individuals are motivated by
unsatisfied needs. As each of these
needs is significantly satisfied, it
drives and forces the next need to
emerge
• Understanding what people need—
and how people’s needs differ—is an
important part of effective
management (e.g., some people
work primarily for money, but they
also like to go to work because they
enjoy feeling respected by others
and appreciated for their good work)
 McGregor’s Theory X and Y
• Two basic kinds of managers exist
• One type, the Theory X manager, has a negative view of employees and assumes that they are lazy,
untrustworthy and incapable of assuming responsibility
• On the other hand, the Theory Y manager assumes that employees are not only trustworthy and capable of
assuming responsibility, but also have high levels of motivation
• An important aspect of McGregor's idea was his belief that managers who hold
either set of assumptions can create self-fulfilling prophecies — that through their
behavior, these managers create situations where subordinates act in ways that
confirm the manager's original expectations
• Theory X encourages use of tight control and supervision. It implies that
employees are reluctant to organizational changes. Thus, it does not encourage
innovation
• Theory Y implies that the managers should create and encourage a work
environment which provides opportunities to employees to take initiative and self-
direction
The Modern School of Management
Core Concepts
• Dealing with complexity is at the core of modern
management theory
• Organizations, workers, environment and the
interactions between them
• It is a synthesis of several theories
• Behavioral science, mathematics, statistics,
operations/quantitative research and computing
technologies
• Management is an exercise in logic applied to situations
• Situations can be measured
The Quantitative School of Management
• Combines classical management theory and behavioral science using
statistical models and simulations. A major focus is on the process
with which decisions are made, to ensure informed results
• The quantitative perspective comprises:
• Management Science (Managers use of math and statistics for
problem solving)
• Operations Management (Managing the process of combining
materials, workers and capital to produce goods and services)
• Management Information Systems (Transforming historic,
current and projected data from internal and external sources
into useful, usable management information)
• Systems Management Theory (Transforming inputs into outputs
and receiving feedback)
 The System Approach
• The organisation represent a complex collection of various components and subsystems
working together
• A System is a set of interrelated and interdependent parts arranged in a manner that
produces a unified whole
• The system may be viewed as consisting of four basic elements- inputs, outputs,
transformation process and feedback. Inputs are processed to achieve the desired output.
• Closed systems
• Are not influenced by and do not interact with their environment (all system
input and output is internal)
• Open systems
• Dynamically interact to their environments by taking in inputs and
transforming them into outputs that are distributed into their environments
The Organization's Environment
 There is no one universally applicable set of
management principles (rules) by which to manage
organizations

Organizations are individually different, face different

The situations (contingency variables), and require
different ways of managing.

Contingency
Approach TCA suggests that successful organizations match their
structure to the nature of the environment

According to the contingency approach the manager’s

task is to identify which technique will be best “in a
particular situation, under particular circumstances,
and at a particular time”
 The Contingency Approach
• Managers must find a “best fit” between the demands of:
• The tasks
• The people
• The environment
• For example, where workers need to be encouraged to increase
productivity:
• A classical theorist may prescribe a work simplification scheme
• A behavioral scientist may seek to create a psychologically motivating
climate and recommend some approach like job enrichment,
• The manager trained in the contingency approach will ask, “Which
method will work best here”?
ORGANISATIONAL ENVIRONMENT
 Organisation’s Environment
• The organisation works within the framework provided by various elements
of society
• All such elements which lie outside the organisation and have the
propensity to affect the organisation are called external environment or
simply as environment
▪ General environment (Indirect forces – PESTEL framework)
▪ Task environment (Direct forces)
• Also, the organisation may create an environment internal to it which
affects the various subsystems of the organisation (i.e., the conditions and
forces within an organisation)
Organisation &
Its Environment
The External Environment

Major forces outside the organisation with potential to influence

significantly the success or failure of the organization, its product or
service

The organisation has no control over how the external environment

elements will shape up

The external environment consist General Environment

of the: Task Environment
 General Environment

• The broad conditions and trends in societies in which an organisation operates

• The set of broad dimensions and forces in an organization’s surroundings that
create its overall context
▪ International dimension
▪ Technological dimension
▪ Political-legal dimension
▪ Socio-cultural dimension
▪ Economic dimension
 The General Environment. . .(continued)

International Dimension
• The extent to which an organisations is involved in or affected by
business or activities in the global environment or other countries
• Multinational firms are clearly affected by businesses in other
countries [e.g., car and aircraft manufacturers, restaurants,
electronics firms, etc.]
• Advances in transportation and information technology have linked
all parts of the world, no matter how remote
• Virtually every organisation is affected by the international
dimension of its general environment
The General Environment. . .(continued)

Technological Dimension Economic Dimension

• Methods available for converting ▪ Overall health and vitality of
resources into products or services. the economic system in which
• Examples include: the organization operates
▪ CAD (computer-assisted design)
techniques
▪ Assembly-line techniques for car ▪ Usually influenced by
manufacturing economic growth, inflation
▪ Use of internet in all areas of interest rates and
business
▪ Integrated business software unemployment
systems
The General Environment. . .(continued)

• Socio-cultural Dimension
▪ Customs, values and demographic characteristics of the society in
which the organization functions
▪ Socio-cultural processes determine the products, services and standards
of conduct that society is likely to value
▪ Consumer tastes change over time – preferences for color, style, taste,
change from season to season. [McDonald’s response to healthier food
selections]
▪ Socio-cultural factors influence how workers feel about their jobs and
organizations
▪ Appropriate business conduct varies from culture to culture
The General Environment. . .(continued)

• Political-Legal Dimension
▪ Refers to government regulation of business and the relationship
between business and government
oThe legal system partially defines what an organization can
and cannot do
oPeriods of ‘pro-business’ and ‘anti-business’ climates can
affect how businesses operate [mergers and acquisitions may
not be possible due to worry about organizations becoming too
large and running small businesses out of business]
oPolitical stability with other countries can affect businesses
willingness to trade with those countries
 The External Environment. . .(continued)

• Task environment consists of specific organizations or groups that

influence an organization
• Specific external elements with which an organisation interfaces in the
course of conducting its business
▪ Competitors
▪ Customers
▪ Suppliers
▪ Strategic partners
▪ Regulators
The Task Environment. . . (continued)

• Competitors
▪ Other organizations that compete with our
organization for resources
▪ Most obvious resource is customer dollars
▪ Organizations compete for bank loans, property,
quality labor, technological breakthroughs, patents,
scarce raw materials
The Task Environment. . . (continued)

• Customers
▪ Whoever pays money to acquire an organization’s
products or services
▪ Customers of major organizations may include
schools, hospitals, government agencies, wholesalers,
retailers and manufacturers
▪ Customers have more discriminating tastes and new
products and services’ expectations
The Task Environment. . . (continued)

• Suppliers
▪Organizations or agents that provide resources or
inputs for the organizations

▪McDonald’s depends on Heinz for its ketchup

packets and Coca-Cola for its soft drinks
 The Task Environment. . . (continued)

• Regulators
▪ A unit that has the potential to control, legislate or otherwise
influence the organization's policies and practices
oRegulatory agencies – created by the government to protect the
public from certain business practices or to protect organizations
from one another [GSA, FDA]
oInterest groups – organized by their members to attempt to
influence organizations. No official power but use the media to
call attention to their positions (e.g., Consumer Protection
Agency, Ghana Bar Association, OccupyGhana)
The Task Environment. . . (continued)

• Strategic Partners (Allies)

▪ They are the organization and individuals with whom
the organization is to an agreement or understanding
for the benefit of the organization
▪ They influence the organization’s activities in various
ways
▪ Strategic partnerships allow companies to share
expertise they lack, spread risk and open new market
opportunities (e.g., FedEx and Amazon)
The Internal Environment

• Forces or conditions within the boundary of the organization are the

elements of the internal environment of the organization
▪ Owners
▪ Board of Directors
▪ Employees
▪ Physical Work Environment
▪ Organizational Culture
The Internal Environment ... (continued)

• Owners
▪ They are people who invested in the company and have property
rights and claims on the organization.
oSingle individual who establishes and runs a small business.
oPartners who jointly own a business.
oShareholders who own shares of stock in a corporation or other
organization.
oCompanies who own other companies which are run as wholly
owned subsidiaries by the parent companies [McDonald’s
owns bakeries that supply it with buns and have partial
ownership in other chains]
 The Internal Environment. . . (continued)

• Board of Directors
▪ Governing body elected by a corporation’s shareholder/stockholders and charged with
overseeing the general management of the firm to ensure that it is being run in a way that best
serves the stockholders’/shareholders interests
• Employees
▪ The most important element of an organization’s internal environment, who performs the tasks of
the administration
▪ Individual employees and the labor unions they join are important parts of the internal
environment
▪ If managed properly they can positively change the organization’s policy
▪ The nature of the workforce is changing in terms of gender, ethnicity, age, etc.
 The Internal Environment. . .(continued)

• Culture
▪ A set of values, beliefs, behaviors, customs and attitudes that helps the members of the
organization to understand what it stands for, how it does things and what it considers important.
▪ Plays an important part in shaping organizational behavior (employees and management).
▪ As the foundation of the organization’s internal environment, it plays a major role in shaping
managerial and employee behavior
• Physical Work Environment
▪ An important consideration for many businesses
▪ Construction supervisors may rely on wireless communication equipment to stay connected with
various work crews
▪ Facilities may be spread out among various buildings in the city, in rural or suburban areas, or in
campus-like facilities
▪ Some facilities have traditional offices on each side of a hall, some modular cubicles with partial
walls, or an even more open arrangement
Competitive Forces

• Michael E Porter proposes that managers should view the

organizational environments in terms of five competitive
forces:
▪ The threat of new entrants
▪ Competitive rivalry
▪ The threat of substitute products
▪ The power of buyers
▪ The power of suppliers
Competitive Forces. . .(continued)

• The threat of new entrants

▪ The extent to which new competitors can easily enter a market or
market segment
▪ Entrance is easier for market requiring a small amount of capital
to open. [dry cleaner, pizza, hamburger or sandwich shop, etc.]
▪ More difficult when it takes a tremendous investment in plant,
equipment and distribution systems [automobile market, etc.]
▪ The internet has reduced the costs and other barriers of entry into
many market segments, so the threat has increased for many firms
Competitive Forces. . .(continued)

• Competitive rivalry
▪ The nature of the competitive relationship between firms in the industry.
▪ Large firms, dominant in the field, engage in price wars, comparative advertising and new-
product introductions.
o Examples include Ernest Chemist and Spintex Chemists, Coke and Pepsi; Mawako and
Papaye; Kodak and Fuji
▪ Small establishments, in contrast, do not generally engage in such practices
• The threat of substitute products
▪ The extent to which alternative products or services may take the place of or diminish the need
for existing products and/or services.
▪ Personal computers (PCs) have virtually eliminated the need for calculators, typewriters and
large mainframe computers.
o Sugar
o Salt
Competitive Forces. . .(continued)

• The power of buyers

▪ The extent to which buyers of the products or services in an industry can influence the
suppliers
▪ Relatively few potential buyers for aircraft. Therefore, buyers have considerable
influence over the price they are willing to pay, the delivery date of the order, etc.
▪ Buyers have virtually no power with products that have very many willing buyers
• The power of suppliers
▪ The extent to which suppliers can influence potential buyers.
▪ The power of the supplier depends on the product being offered. The more restricted
the service or product, the more power to the supplier. [electricity providers,
telephone/internet access]
▪ Small wholesaler of vegetables has little power, since if people do not like the product,
they can easily find an alternative supplier
External Environmental
Analysis
PLANNING
& DECISION
MAKING
 Planning
• Defining the organization’s goals
The foremost and primary managerial • Establishing an overall strategy for achieving those goals
activity that involves: • Developing plans for organizational work activities

Planning is the process by which

managers establish goals and specify
how these goals are to be attained

Plans have two basic components: • Outcome or goal statements represent the end state—the targets and outcomes managers hope
outcome or goal statements and action to attain
statements • Action statements reflect the means by which organizations move forward to attain their goals

A plan therefore is a determined course

of action (i.e., why an and what action,
how and when to take action)
 Elements of Planning
Goals (also objectives)

Plans (actions)
• Documents that outline how goals are to be accomplished
• Describe how resources are to be allocated and establish activity
schedules

Time frame

Resources
The Importance of Planning
• To offset uncertainty and change
• To focus organizational activity on
a set of objectives
• To provide a coordinated,
systematic road map for future
activities
• To increase economic efficiency
and minimize redundancy
• To facilitate control by
establishing a standard for later
activity
• Provide direction
 Steps in Planning
EVALUATE AND
DEVELOP SELECTION OF
DEFINE
PREMISES: Planning ALTERNATIVES: Managers
OBJECTIVES: need to identify possible
requires making some
Determine what is to be alternatives and evaluate how
assumptions about the difficult it would be to
accomplished during the
future (all things being implement each one and how
planning period likely each one would lead to
equal or change) success

IDENTIFY TRACKING AND

RESOURCES: EVALUATION
Managers must IMPLEMENT THE TASKS: It is very
determine the resources PLAN/TASKS important that managers
needed to implement the can track the progress of
plan the plan
 Breadth
• Establish the organization’s overall goals (high-level goals,
Strategic mission, vision)
• Seek to position the organization in terms of its
plans environment
• Cover extended periods of time

• Specify the details of how the overall goals are to be

Operational achieved
• Cover a short time period
plans • Who, what, when, and how much - regarding daily or
weekly tasks
 Time Frame
• Long-term plans
• Time frame extending
beyond three years

• Short-term plans
• Time frame of one year
or less
 Specificity
• Specific plans
• Plans that are clearly defined and leave
no room for manuevering

• Directional plans
• Flexible plans that set out general
guidelines and provide focus yet allow
discretion in implementation
 Frequency of Use
• A one-time plan specifically designed
Single-use to meet the need of a unique situation.
plan

• Ongoing plans that provide guidance

Standing for activities performed repeatedly.
plans
 Goals and objectives are a critical component of
management, both in terms of planning and in terms of the
larger planning-organizing-leading-controlling (P-O-LC)
framework

Outcome statements that define what an

Goals organization is trying to accomplish, both
programmatically and organizationally
Goals and
Objectives Very precise, time-based, measurable
Objectives actions that support the completion of a
goal

The actual metrics used to gauge

Measures
performance on objectives
 Types of Goal Setting Technique
Traditional goal setting (Flawed
approach)
• Goals are set at the top level of the
organization and then broken into
sub-goals for each level of the
organization
• Traditional goal setting assumes that
top managers know what is best
because of their ability to see the
“big picture”
• Employees are to work to meet the
goals for their area of responsibility
 Management by Objectives (MBO)
• MBO is a systematic and organized approach
that allows management to focus on
Types of achievable goals and to attain the best
possible results from available resources
Goals • MBO aims to increase organizational
performance by aligning the subordinate
Setting objectives throughout the organization with
the overall goals that management has set
Technique • Ideally, employees get strong input to
identify their objectives, timelines for
completion, etc.
• MBO includes ongoing tracking and
feedback in the process to reach objectives
 The MBO Process

Collaboratively setting
Setting organization-
Determining team- and individual-level goals
wide goals derived
department-level goals that are aligned with
from corporate strategy
corporate strategy

Successful
Developing an action Periodically reviewing achievements are
plan and executing the performance and rewarded by
plan revising goals performance-based
rewards
 SMART Goals

By setting goals, you are providing SMART goals guide and facilitate SMART goals are:
yourself with a target to aim for goal setting
Specific: Well-defined, clear, and unambiguous
Measurable: With specific criteria that measure
your progress toward the accomplishment of the
goal
Achievable: Attainable and not impossible to
achieve
Realistic: Within reach, realistic, and relevant to
the organization
Timely: With a clearly defined timeline, including
a starting date and a target date. The purpose is to
create urgency.
 The Balance Scorecard
A framework designed to translate an organization’s
mission and vision statements and overall business
strategy into

• Specific, quantifiable goals and objectives

• To monitor the organization’s performance in terms of achieving these
goals

The Balanced Scorecard is a comprehensive approach

that analyzes an organization’s overall performance in
four ways:

• Customers
• Learning and growth
• Internal processes
• Financial performance
 Contingency Factors in Planning
• Manager’s 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
 Planning in Dynamic Environments
• Develop plans that are specific but
flexible
• Understand that planning is an ongoing
process
• Change plans when conditions warrant
alterations
• Persistence in planning eventually pays
off
• Flatten the organizational hierarchy to
foster the development of planning
skills at all organizational levels
Decision- The cognitive process In the decision-making

Making resulting in the selection

of a course of inaction or
action among several
process, an uncertainty
will be lower, and doubt
related to alternatives will
available alternatives or make a good choice

Precisely, decision making Further, decision making

relates to the study of shows an option that is
discovery and selection of taken care of where the
various alternatives which manager could simply
depends on values and narrow down on two
choice of a decision maker factors:

Excellent match of goals,

Highest possibility of
desires, lifestyle with
success
values
The Decision-Making Process
Types of Decision-Making
The
Organizing
Process
 Organization
• The Organization is a SYSTEM of consciously
coordinated activities or forces of two or more persons
towards a goal
• Organizing
• Arranging and structuring work to accomplish an organization’s
goals
• The process of identifying and grouping the activities required
to attain the objectives, delegating authority, creating
responsibilities and establishing relationship for people to work
effectively
• The process by which a framework of positions is welded
together in the office for the pursuit of the goals or objectives
Functions of Organization

• Dividing work among the personnel

• Formulating standard practices
• Transmitting decisions downward, upward, and crossways
• Assuring more efficient use of the organization’s resources
• Providing a sense of direction for each of the organization’s
functional areas
• The provision for co-ordination:
• Horizontally (on the same or similar organizational level)
• Vertically (for example, corporate headquarters, division, and
department) in the organization structure
Figure 1. Organizing viewed in relationship
with the other management functions
 Principles of Organization
• Principle of Objective
▪ The objective of the organization should be in clear terms. It should be to the point and precise
in nature
• Principle of Unity of Command
▪ In order to avoid conflict and miscommunication each employee should report to one person
• Principle of Definition:
▪ The responsibilities and the duties must be clearly defined for everyone
• Principle of Span of Control
▪ It is the maximum number of persons that a supervisor can effectively supervise in order to get
the things done
• Principle of Chain of Authority
▪ Clear line of authority running through the organization
• Principle of Flexibility
▪ The organizational structure should be flexible enough in order to incorporate necessary changes
• Principles of Division of Work
 Fundamental forms of structure
Informal Organisation
Formal Organisation
The invisible network of interpersonal relationships that shape
how people actually connect with one another to carry out their
An officially defined set of relationships, responsibilities, and activities
connections that exist across an organization
It is emergent, meaning that it is formed through the common
The organization is system of consciously coordinated conversations and relationships that often naturally occur as people
activities or forces of two or more persons interact with one another in their day-to-day relationships
 • Key to the organising process • An organistation’s
is the organisation's structure must reflect:
structure • Objectives and plans,
Organising & because activities arise
from them
Organisational • Organisational structure
• It is how job tasks are
Structure formally divided,
grouped, and
• The authority available
to an enterprise's
coordinated towards the management
realization of
organization goals • The environment

• Who is to do what
• Structure is the pattern of tasks and who is
relationships among responsible for what
positions in the results
organisation and among
members of the
organisation
Organisational
Chart
• Organizational chart
• A diagram that visually
conveys an organization’s
internal structure by
detailing the roles,
responsibilities, and
relationships between
individuals within an entity
• Division of work &
supervisory
relationships
• Communication
channels & major
subunits
• Levels of management
 Organisational Design

When managers develop or change the Organisational design

structure, they are engaged in
The process of setting up organizational
organisational design
structures to address the needs of an
organization and account for the complexity
involved in accomplishing business objectives
• People rely on structures to know what work
they should do, how their work supports or
relies on other employees, and how these
work activities fulfill the purpose of the
organization itself
 The Structure and Process of
Organizing
Organizational design
• Process of creating structures that accomplish mission
and objectives
• A problem-solving activity that should be approached
from a contingency perspective
• The organizational design therefore involves decisions
about six key elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization
• Formalization
 Work
Specialization
• The degree to which tasks in an
organization are subdivided into separate
jobs and each job undertaken by
individual consequently leading to
specialization

• When used to extreme, human

diseconomies from work specialization—
boredom, fatigue, stress, poor quality,
increased absenteeism, and higher
turnover—more than offset the economic
advantages

• Job enlargement and enrichment

 • Grouping people and jobs into work units or formal teams
• Functional departmentalization
• Group jobs by functions performed
• Product departmentalization
• Group jobs by product line. In this approach, each major
product area is placed under the authority of a manager
who is responsible for everything having to do with that
product line
• Geographical departmentalization
Departmentalization • Group jobs based on territory or geography, such as the
Western Ghana, Africa, Asia regions
• Process departmentalization
• Group jobs/activities by the production processes
• Customer departmentalization
• Group jobs based on customers who have common needs
or problems that can best be met by having specialists for
each
Common Forms of
Departmentalization
 Chain of command
The continuous line of authority that extends from upper
organizational levels to the lowest levels and clarifies who
reports to whom
• Authority
• It is the legal right that managers/supervisors to
make orders and supervise employees
• Managers do their tasks and make decisions by their
legal authority
• Responsibility
• Employees must follow their supervisors who made
the orders and require to do what they need to do
• Accountability
• The need to report and justify work to superiors
 Chain of command
• Line Authority
• The authority of a manager over his
immediate subordinates. Subordinates
are required to implement the
orders/decisions made by the
manager
• Functional Authority
• That person is allowed to make
orders/decisions to employees from
different departments because of
his/her specialization and not as a
direct manager
• Staff Authority
• Persons in a staff position normally
have little or no direct authority in
their own right but act as an extension
of their superior. The basic function of
staff personnel is to advise and assist
line personnel
 Span of Control

The number of
employees who can be
Width of span is
effectively and
affected by:
efficiently supervised by
a manager

Skills and abilities of the Employee Physical proximity of Characteristics of the

manager characteristics subordinates work being done

Similarity of tasks Complexity of tasks Standardization of tasks

Contrasting
Spans of
Control
 Centralization: The Decentralization: When
degree to which decision an organization relegates
making is concentrated at decision making to
upper levels in the managers who are closest
organization to the action

Centralization
This is common in
organizations in which top
managers make all the
Delegation Employee Empowerment
decisions and lower-level
employees simply carry out
those orders

The process distributing

and entrusting work to
Increasing the decision-
other persons. The manager
making authority (power)
assigns responsibility,
of employees
grants authority to act, and
creates accountability
 Formalization
• The degree to which jobs within the
organization are standardized and the
extent to which employee behavior is
guided by rules and procedures
• The organization can be highly
formalized
• Jobs offer little discretion over
what is to be done
• Low formalization means fewer
constraints on how employees do their
work
Mechanistic vs Organic Organisations Designs
(Consequence of Org. Design)
• Management decisions and actions about
these six key elements result in:
• Mechanistic organisations
• Organic organisations
• Two kinds of structures that can be seen as
anchors on a continuum
 Mechanistic vs Organic Organizations
(Consequence of Org. Design)
• Mechanistic organization is hierarchical and bureaucratic
• Highly centralized authority
• Formalized procedures and practices
• Specialized functions
• Highly vertical organizational structure, or a “tall” structure, due to the presence of many
levels of management

• Organic organizations have a low degree of formality,

specialization and standardization, and their decision
making is decentralized
• Relies on the ability of people to self-organize and make decisions without much
direction such that they can adapt quickly to changing circumstances
• Horizontal/flat organizational structure: only a few levels of organizational hierarchy
 Takeaway 4: Organizational Designs
Mechanistic Designs Organic Designs

• Predictable goals • Adaptable goals

• Centralized authority • Decentralized authority
• Many rules and procedures • Few rules and procedures
• Narrow spans of control • Wide spans of control
• Specialized tasks • Shared tasks
• Few teams and task forces • Many teams and task
• Formal and impersonal forces
means of coordination • Informal and personal
means of coordination
Flat vs Tall Structures
 Traditional Organisational Designs

Simple structure

• Low departmentalization, wide spans of control, authority centralized in a single person, and little
formalization
• Mostly used by small businesses in which the owner and manager are one and the same

Functional structure

• An organisational structure that groups similar or related occupational specialties together

• It is the functional approach to departmentalization applied to the entire organization

Divisional Structure

• The divisional structure is an organisational structure that consists of separate business units or
divisions
• In this structure, each unit or division has relatively limited autonomy, with a division manager
responsible for performance over his or her unit
 Managers in contemporary organisations often
find that traditional hierarchical designs are not
appropriate for the increasingly dynamic and
Contemporary complex environments they face

Organisational
Designs
In response to marketplace demands to be
lean, flexible, and innovative, managers are
developing creative ways to structure and
organise work and to make their organisations
more responsive to the needs of customers,
employees, and other organisational
constituents
 Team structure

• The entire organisation is made up of work

groups or teams that perform the
organization’s work

Contemporary The matrix structure

Organizational • Defeats Fayol’s principle of unity of command

Designs
Boundaryless organization

• The organisation seeks to eliminate the chain

of command, places no limits on spans of
control, and replaces departments with
empowered teams
 Project Teams
To provide greater integration of a wide range of functional
activities
• Attention has been given, therefore, to the creation of groupings based on project
teams and matrix organization
• Members of staff from different departments or sections are assigned to the team for
the duration of a particular project

A project team is more likely to be effective when it has

• A clear objective,
• A well-defined task,
• A definite end-result to be achieved, and
• The composition of the team is chosen with care

When a task is completed the project team is disbanded or

members of the unit are reassigned to a new task
 The Matrix Structure
• The matrix structure
• An organisational structure that
assigns specialists from different
functional departments to work
on one or more projects led by
project managers
• Once a project is completed, the
specialists return to their
functional departments
• Another unique aspect of this
design is that it creates a dual
chain of command, which
explicitly violates the classical
Organising principle of unity of
command
 Boundaryless
Organizations
Organizations :

• That actively removes boundaries to

innovation, meaning it has less hierarchy and
functional separation and is more integrated
• Which the hierarchy and chain of command are
minimized
• Where rigidly structured departments are
eliminated

Implemented to reduce barriers

between people and constituencies
 • Virtual organisation • Factors in Design
• A network of independent Considerations
individuals or firms that join • Personnel distributed
together, often temporarily, geographically
Contemporary to produce a service or • Electronically connected
Issues in product • Differences in expertise
and function
Organisations A collection of
• Culturally diverse
geographically distributed,
functionally and/or • Flexible work schedule
culturally diverse • Horizontally arranged with
aggregations of individuals little emphasis on
that is linked by electronic command-and-control
forms of communication authority

• Assembled and disassembled

according to needs
 • Design decisions are influenced by:
• Overall strategy of the organization
• Organizational design follows strategy
• E.g., cost control = higher centralization/mechanistic
• Size of the organization
• Firms change from organic to mechanistic
Factors organizations as they grow in size with increased
specialization, departmentalization, centralization,
Influencing and rules and regulations
Design Decisions • Technology use by the organization
(Contingencies) • Firms adapt their structure to the technology they
use
• Routine technology = mechanistic organizations
• Non-routine technology = organic organizations
• Degree of environmental uncertainty
• Dynamic environments require organic structures;
mechanistic structures need stable environments
 Conclusion
No matter what structural design
managers choose for their organization
•The structure should help employees work
in the most efficient and effective way
possible to meet the organization’s goals
•After all, structure is simply a means to an
end
LEADING
 Leadership
• Leadership • Effective leadership helps
• A social (interpersonal) influence individuals and groups achieve their
relationship between two or goals by focusing on the group’s:
more persons who depend on • Maintenance needs (the need
each other to attain certain for individuals to fit and work
mutual goals in a group situation together by having, for example,
shared norms)
• The essence of leadership is
• Task needs (the need for the
followership group to make progress toward
• It is the willingness of people to attaining the goal that brought
follow a person that makes that them together)
person a leader
 Leaders' vs Managers
“Leadership” and “managership” are different

Definition

• POLC vs Social influence between two or more people with a goal

Process to position

• Appointment (Manager) vs A relationship that revolves around the followers’ acceptance or

rejection of the leader

Formal Vs Formal/Informal

• There can be leaders of completely unorganized groups, but there can be managers only of
organized groups

Thus, it can be said that a manager is necessarily a leader, but a leader

may not be a manager
 Qualities of Leadership
Ability to use power

• Legitimate power: This power is granted through the organizational hierarchy

• Reward power: Reward power is the power to give or withhold rewards
• Coercive power: This type of power is the power to force compliance
• Expert power: Expert power is derived from expertise

Fundamental understanding of people

The ability to inspire followers to apply their full capabilities

The ability to develop a climate conducive to arousing

motivation
 Importance of Leadership
in Management

Initiates Providing Creating Coordination Effective Inspiration &

action guidance confidence planning motivation
 Approaches to Leadership
• Based on the view that leaders are born, not made
• Also, the first organized approach to studying leadership was to analyze the
personality traits of successful leaders
• It was thought that leadership traits might include intelligence, assertiveness,
above average height, good vocabulary, attractiveness, self- confidence, and
similar attributes
• In recent studies, the following key leadership traits have been identified:
• Drive (including achievement, motivation, ambition, energy, initiative and
tenacity)
Trait Theory of • Leadership motivation (the aspiration to lead)
• Honesty and integrity
Leadership (“Great • Self-confidence (including emotional stability)

man Theory”) • Cognitive ability, and an understanding of the business

• Creativity, flexibility and charisma (the impact of these factors is, however, less
clear)
 Behavioural Approaches to Leadership
• The results of the trait studies were • Behaviors, contrary to traits, could be
inconclusive observed
• Traits are only a part of the story • It was thus decided to examine the
• Traits only account for part of why behaviors of successful (again, by
someone becomes a leader and why they whatever means success was measured)
are (or are not) effective leaders leaders
• Traits, among other things, were hard to • During the late 1940s, two major
measure (e.g., how do we measure traits research programs were launched to
such as honesty, integrity, loyalty, or explore leadership from a behavioral
diligence?)
perspective
• This limitations lead to the rise of the • The Ohio State University
behavioral approach to leadership leadership study
• With behaviors, researchers could rely on
empirical evidence • University of Michigan leadership
study
• Leaders can be trained not born
The Ohio State University Leadership Study
A systematic series of studies to identify leader behaviors associated with effective group
performance

Their results identified two major sets of leader Consideration

behaviors: Initiating structure
Consideration is the “relationship-oriented” behavior of a leader. It is instrumental in creating and
maintaining good relationships (that is, addressing the group’s maintenance needs) with
organizational members

Initiating structure involves “task-oriented” leader behaviors. It is instrumental in the efficient use of
resources to attain organizational goals

Mixed results on satisfaction and performance

 University of Michigan Leadership Study
• The Michigan researchers attempted to identify behavioral elements
that differentiated effective from ineffective leaders
• The two types of leader behavior that stand out in these studies are:
• Job centered (production oriented)
• Job-centered behaviors are devoted to supervisory functions, such as planning,
scheduling, coordinating work activities, and providing the resources needed for task
performance
• Employee member centered (employee oriented)
• Employee-member centered behaviors include consideration and support for
organizational members
• When leaders demonstrate people-oriented behaviors, employees
tend to be more satisfied and react more positively. However, when
leaders are task-oriented, productivity tends to be a bit higher
 The Managerial Grid
• A method for classifying styles of
leadership compatible with many of the
ideas from the Ohio State and Michigan
studies
• In their classification scheme:
• Concern for results (production)
emphasizes output, cost
effectiveness, and (in for-profit
organizations) a concern for profits
• Concern for people involves
promoting working relationships and
paying attention to issues of
importance to group members
• The Leadership Grid demonstrates that
any combination of these two leader
concerns is possible, and five styles of
leadership
 Limitations of the
Behavioural Approach
• Behavioral approaches, similar to trait approaches, fell
out of favor because they neglected the environment in
which behaviors are demonstrated
• The hope of the researchers was that the identified
behaviors would predict leadership under all
circumstances, but it is unrealistic to expect that a given
set of behaviors would work under all circumstances
Situational (Contingency) Approaches to Leadership

Two major leader behaviors, initiating structure and consideration, did not
always lead to equally positive outcomes

Researchers started following a Contingency' would indicate, this model is

based on the idea that rather than having a
contingency approach to leadership single leadership style for all circumstances,

The qualities, characteristics, and skills required in a leader are determined

to a large extent by the demands of the situation in which he is to function
as a leader
 Fiedler’s Contingency Model
• Underlying Traits
• Organizations attempting to • Least Preferred Coworker (LPC)
achieve group effectiveness • LPC score reflects a leader’s underlying
through leadership must disposition toward others
assess the leader according (pleasant/unpleasant, friendly/unfriendly)
to: • A high LPC score suggests that the leader has
a "human relations orientation“
• An underlying trait, • A low LPC score indicates a "task orientation“
• Assess the situation faced by • Leaders who are indeed relationship motivated,
the leader, tend to describe their least preferred coworkers
• Construct a proper match in a more positive manner
between the two • Leaders who are task motivated, on the other
hand, tend to rate their least preferred coworkers
in a more negative manner
 Fiedler’s Contingency Model
• Situational favorableness is the degree
to which leaders have control and
influence and therefore feel that they
can determine the outcomes of a
group interaction
• In unfavorable” situations, a low LPC
leader—one who has feelings of dislike
for coworkers who are difficult to work
with—would be successful
• When situational favorableness is
medium, a high LPC leader—one who
can personally like coworkers who are
difficult to work with—is more likely to
succeed
Fiedler’s Contingency Model
 Kenneth Blanchard and Paul Hersey’s Situational
Leadership Theory (SLT)
• Leaders must use different
leadership styles depending
on their followers’
development level (employee
readiness)
• Employee readiness (defined
as a combination of their
competence and commitment
levels)
• Leaders must deploy
appropriate directive and
supportive behaviors based on
their followers’ readiness
 Path-Goal Theory of Leadership
• The leader’s main job is to make sure that • According to the path-goal theory, the
all three of these conditions exist challenge facing leaders is basically
• Their effort will lead to high twofold:
performance • First, they must analyze situations,
• Their high performance will be and
rewarded • Second, identify the most appropriate
• The rewards they will receive are leadership style
valuable to them
• Depending on the situation, leaders
• Thus, leaders will create satisfied and high- assume different leadership styles at
performing employees by making sure that different times:
employee effort leads to performance, and
their performance is rewarded • Directive leader
• The leader removes roadblocks along the • Supportive leader
way and creates an environment that • Participative leader
subordinates find motivational
• Achievement oriented leader
Path-Goal Theory of Leadership
 Transformational & Transactional Leadership
Transactional leadership styles are
A transformational leader goes beyond more concerned with maintaining
managing day-to-day operations and
crafts strategies for taking his company,
the normal flow of operations – this
department or work team to the next style is best described as “keeping
level of performance and success the ship afloat”

Charisma (idealized influence) • Contingent rewards

• Task oriented and instrumental
Inspirational motivation (articulating an
appealing vision)
• Active management by
exception
Intellectual stimulation (questioning
assumptions and challenging the status quo)
• Processes and control, and
requires a strict management
Individualized consideration (focus on the structure
development of the follower)
 Leader–member exchange (LMX)
• Leadership resides in the quality of the • The goal of LMX theory is to explain the
exchange relationship developed effects of leadership on members,
between leaders and their followers teams, and organizations
• High quality exchanges are characterized • Leaders form strong trust, emotional, and
by trust, liking, and mutual respect, and respect-based relationships with some
the nature of the relationship quality has members of a team, but not with others
implications for job-related well-being and • Leaders do not treat each subordinate the
effectiveness of employees same
• Low-quality LMX relationships, the leader • The work-related attitudes and behaviors of
and the member have lower levels of those subordinates depend on how they
trust, liking, and respect toward each are treated by their leader
other
• These relationships do not have to involve
actively disliking each other, but the leader
and member do not go beyond their formal
job descriptions in their exchange
Charismatic Leadership
Cross-Cultural Leadership
• Universal Elements of Effective Leadership
• Vision and foresight
• Providing encouragement
• Trustworthiness
• Dynamism
• Positiveness
• Proactiveness