principles-of-management-1226074505766252-8 (1)
TRANSCRIPT
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Management: Definitions,Management: Definitions,
Roles & SkillsRoles & Skills
Principles of Management
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Management: Definitions
“Management is the process of designing and maintaining an environment in which individuals,working together in groups, efficiently accomplishselected aim(s) viz. to create a surplus(s).” …. Weihrich & Koontz
“Management is not an absolute; rather it is socially and culturally determined. Across all cultures and inall societies, people coming together to performcertain collective acts encounter common problemshaving to do with establishing direction, coordinationand motivation. Culture affects how these problemsare perceived and resolved.” …The Art of Japanese
Management by R. Pascale & A. Athos .
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Management: Definition …ctd.
♦ Applies to and through any kind of organization
♦ Applies to Managers at all levels
♦ Concerned with “Doing the right things right at all times” :
1. Effectiveness: Achievement of objectives (Right Things);
2. Efficiency: Achieving those objectives with least amount/sacrifice of resources (Things Right );
3. Continuous Improvement: in creating increasing ‘surplus’(at all times);
– “Improve or die” = survival of the fittest
– “what gets measured, gets managed and improved” e.g.Productivity= Output / Input ratio
Collective, cohesive and consistent human effort towardsaccomplishing a common objective.
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Additionally, Managers need to factor in external
environmental forces:
Organization
Economic
Political Regulatory
Societal
Technological
Globalization
For maximum benefit to the organization
Management: Definition …ctd.
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Management - what managers do: Fredrick Taylor’s path-breaking “scientific approach” Henri Fayol’s classical definition of ‘functions’ , now
modified to: Plan -- Organize -- Lead(Command&Coordinate) -- Control
Mintzberg’s map of managerial ‘roles’ :
Interpersonal + Informational + Decisional Katz’s interpretation of ‘skills’ :
Technical / Human / Conceptual
Management – ‘get things done through others’:
Leadership: “The ability to influence a group towardsachievement of goals”. Motivation: “The willingness to exert high level of effort
towards goals” Communication:”The transference and understanding of
meaning”
Management: Roles & Skills
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Management: roles & skills …ctd.Managerial Roles (Mintzberg)
Role Description ExamplesInterpersonal •Figurehead symbolic head; required to show Ceremonial,
‘face’ in social & legal conditions. Civic etc.•Leader Motivating & directing subordinates project plan
•Liaison Networking outside for information Industry -& favours group meets
Informational •Monitor nerve centre and interpretator Reports•Disseminator networking within the organization Meetings etc.•Spokesperson Transmit intent to outsiders; expert Board Meets
Decisional •Entrepreneur Opportunity finding& reacting Strategy Plan•Trouble shooter Handling unexpected disturbance Contingency•Resource allocator Initiating/approving changes Budgeting•Negotiator Getting best deal for Organization Contracts
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Managerial Skills(Katz & others)
Technical Skills:
Application of specialized
knowledge or expertise
acquired though formal
training & its use.
Human Skills:
Ability to work with people,
understand and motivate
groups & individuals. Conceptual Skills:
Mental ability to recognize,
analyze, diagnose and think
through complex situations.
Skills Needed
Board
Exec.
Mgr.
Supr.
H U M A N
C o n c e p
t u a l
T e c h n i c a l
Management: roles & skills
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Evolution of Management
Management, as a concept as we know it today, isassociated with ‘mass consumption’ – leading to
production of ‘standardized’ goods in large volumes;
Prior to the “Industrial Revolution”, man made
devices were in use in sizeable numbers – but often
one of a kind and crafted rather than manufactured
e.g watches and clocks. However, many of the
supportive processes can be traced to early roots:logistics, scheduling e.g. boat building; automation
(use of m/c’s) e.g. printing;
The advent of the management as a science can
therefore be traced to late 18th /early 19th century.
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Elements of modern management, with a focus on ‘man’ i.e.HR concepts first began to appear in the West around the sametime:
as a reaction to the harsh behaviour of autocratic businessmenlike Henry Ford. It evolved through ‘(labour) Welfare’, ‘IndustrialRelations’, ‘Personnel Management’ to its current form. (Marxismwas becoming a recognizable philosophy in Europe!); as a need to utilize human resource better due the adversesupply-demand situation. Employment in the ‘industry’ hadovertaken agricultural labour. This was aggravated in Europe, byWW I.
In the 20’s, Rationalization & Efficiency were the buzz-words (Taylor, Fayol etc.), calling for a scientific approach to
selection and work allocation – the corner-stones of modernproduction management:
Standardization of parts and work elements resulted in ability
to make work repetitive for individuals (‘do-ers’)
Evolution of Management …ctd
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End of WW II brought in an era of un-sated demand, resulting in a
boom for production activity – more of everything was required.Quantity backed by efficiency were the guiding principles: an era of ‘Optimization’ driven by suppliers’ choice rather than customers’wants. However, some people – notably Japan – restarted their devastated
economy with different orientation: Quality . The key was trueeconomy of all resources with the customer as the focal point – sincethey did not have the luxury of a surplus funded, hungry market.
By the late 60’s, demand tended to slow down and the growing
competition gave customers greater choice – ‘quality’ as an important
buying criterion emerged. OPEC crisis in mid-70’s turned the world around on its head! Energy
the prime mover of industrial world became very expensive. The
demand boom faded – with customers demanding quality and lower
prices and better service.
Evolution of Management …ctd
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First inventions of ‘mass production’ were linked to textilemanufacturing (Spinning Jenny/ Hargreaves) – which combined withuse of water power (Arkwright), made a powerful social impact in thelate 1700s; Watt’s steam engine completely revolutionized harnessingof mechanical power for production (first to use were cotton mills) andtransport;
Poor Reliability of early machines led to the creation of machine tools –the Lathe (Maudslay) in 1790, with which to turnout parts to closer tolerances and fit. This led to creation of ‘interchangeable parts’ – andthe first uses were in manufacture of muskets and pistols!
These were the triggers for ‘mass production’: mechanical power &
interchangeable parts; leading to production moving away from homesand craft-shops to work-shops/factories.
By 1900 (in the West), nearly everything was being produced by the
factory system.
Evolution of Management …ctd
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Division of Labour: under this principle, work could be
organized/grouped into a set of specific, related tasks – which wererepetitive in nature. Man could be trained to perform this set of tasksonly, so that efficiency of task performance was maximized.
When extended throughout the organization, this took the formof ‘Specialization’ - with the organization benefiting from themaximum use of specialist skills. Both economically and under supply-shortage conditions, this worked well. Much of this was an extension of trade/craft skill-groupsorganization (guilds) which was the hallmark of pre-industrial‘production’.
Till the end of the 30’s, these fundamentals were refined,polished(e.g. Organization structures) and extended ( e.g. work-measurements) in a relentless focus on efficiency .
With WW II, a further need for reliability gave birth to theprinciples of sampling & inspection – statistical methods were
introduced to regulate quality of output .
Evolution of Management …ctd
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Evolution of Management …ctd This brought to the forefront the philosophy and practice of Total Quality as the guiding force for manufacturing – later tospread into management of operations and enterprises:
Central to this theme is the dominance of the Customer ;Customers were any person or person receiving goods and/or services – internal or external; Quality was redefined as ‘ fitness for use’ – elevated from the
narrow confines of conformance to specifications; Continuous improvement was the key to continuity andsuccess against demands of customer and competition;importantly, everybody could contribute – quality is every- body’sbusiness;
Particularly, for production, quality means best products at leastcost – reduced waste of all resources, spawning a host of (linked) programs to conserve time, money & effort:
Just – in – Time, SMED/OTED; Lean manufacturing; Q-circles/Kaizen/6-sigma;
5-S, TPM, DoE;
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Principles of ManagementPrinciples of Management
22
Management: A SystemsManagement: A Systems
ApproachApproach
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Systems approach to Management
Organization as a System receives Input, transforms it
through a Process for Output and Operates in an
Environment (economic, regulatory and other forces)
Transformation
process
input output
Feedback (Reenergizing the system)
ENVIRONMENT
System Boundary
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Systems approach to Management …ctd.
Systems Concepts♦ System Boundaries and Subsystems
> Systems often consist of numerous subsystems.
> Each subsystem has elements, interactions with
other subsystems, and objectives.> Subsystems perform specialized tasks for the
overall system.
♦ Subsystem Interfaces and Interface
Problems
Sub-System 2 Sub-System 3Sub-System 1
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Systems approach to Management …ctd.Outputs and Inputs♦
Systems produce Outputs from Inputs – i.e. theInputs are converted to Outputs.
♦ Outputs of one subsystem become inputs toanother subsystem.
♦ Outputs must adhere to standards to be usefulor acceptable to the next subsystem.
System Environment ♦ Environment consists of people, organizations
and other systems that supply data to or that
receive data from the system
♦ Managers at different levels perceive
‘Environment” differently
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Systems approach to Management …ctd.“Inputs”: 5 Ms of Management
Inputs or the resources managers deal with are: Man: human resources, both inside and connected with an
organization; Materials: goods (hard & software, processed or semi-
finished) and services required to create the sellable end
product; Machines: technology and expertise deployed towards the
transformation process; Methods: systems, procedures and processes seamlessly
put together for the transformation; Measurement: score-keeping and in-process monitoring
continuously with due feedback to keep on-course on time.
“Money” is required for generating all theses Ms –managers need to acquire, deploy, generate anddistribute money as a primary need for business!
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Systems approach to Management …ctd.
“Stake”: Something wagered or risked;
an interest in an enterprise with contingent gain or loss …Webster ‘s dictionary
“Holders” who have stake in Business:
Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it thanfrom other ventures;
Society: includes the State, provincial and local governments for the improvement of ‘quality of life’ of its citizens;
Output for “Stake-holders” in Business:
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Systems approach to Management …ctd.
Suppliers: continuity of their enterprise depends on the success of the customer enterprise;
Customers: require the goods and services provided by the enterprise, better than than those from its competitors. The enterprise is, in turn, a supplier to its customers;
Employees: livelihood depends on the progress and success of the employing enterprise;
There is a “freedom of choice” (for association) between each of these stake-holders and the enterprise in the longer term:
But they sink or swim together in the shorter term
Length of term definition varies with individuals!
Output for “Stake-holders” in Business …ctd.
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♦by the process of
Planning
+ Organizing
+ Staffing
+ Leading
+ Controlling
to accomplish certain pre-determined, (asderived from stakeholder needs) goals or
objectives
Systems approach to Management …ctd.
Management as a system transforms inputs:
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Inputs(Goal
Oriented)
Outputs(External
ToOrgnzn.)
P l anni n g
Or g ani z i n g
S t af f i n g
L e a d i n g
C ont r ol l i n g
Product/Services,
Profits, Customer &
Societal satisfaction,
Other Long-term Goals
Man, Machine
Material,
Method,
Measurement
Stake holder Feedback (reenergizing the system)
EXTERNAL ENVIRONMENT(Opportunities, Constraints)
Stakeholders
Shareholders;
Society; Customers;
Employees; Suppliers
Systems approach to Management …ctd.
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Principles of ManagementPrinciples of Management
33
Management ProcessManagement Process
First Step: PlanningFirst Step: Planning
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PlanningPlanning
Planning involves selecting objectives orgoals and the course of actions toachieve them: Provides the bridge to take us from where
we are to where we want to go;
Is a rational approach to achieving pre-selected objectives - based on innovation,knowledge and purpose;
Decision making in choosing the best fromalternative courses of action and is integralto planning;
Pl f d ti fPl f d ti f
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Plans as foundation of Plans as foundation of
ManagementManagement
Plans
What kind of resourcesneeded?
What kind of people
& org. structureto have?
How to lead themto reach planned
goals?
How to control incase of deviationfrom plan ?
The primacy of
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Types of Plans Types of Plans
Mission / PurposeMission / Purpose The The basic functionbasic function or ‘reason foror ‘reason for
existence’ of an enterprise/ organizationexistence’ of an enterprise/ organization
Case in point:Case in point: MissionMission of Indiraof Indira
InstituteInstitute
““To train our students to become the best To train our students to become the best
business minds and entrepreneurs today,business minds and entrepreneurs today,who will lead their companies successfully who will lead their companies successfully
into the future tomorrow , locally, nationally into the future tomorrow , locally, nationally
and globally.” and globally.”
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Type of Plans (Cont’d) Type of Plans (Cont’d)
Objectives/ GoalsObjectives/ Goals The The endend towards which activity of antowards which activity of an
organization is aimed, e.g.organization is aimed, e.g. For a Business enterprise – profit, surplus creation;For a Business enterprise – profit, surplus creation; For a Management Institute: The number of For a Management Institute: The number of
employable/useful trainees;employable/useful trainees;
StrategiesStrategies Determination of the long term objectives andDetermination of the long term objectives and
adoption of a course of actionadoption of a course of action
Gives a frame work for linked action-plans,Gives a frame work for linked action-plans,communicated systematically to guide thinkingcommunicated systematically to guide thinkingand actions.and actions.
f l ( d)T f Pl ( t’d)
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Types of Plans (cont’d) Types of Plans (cont’d)
PoliciesPolicies
““Plans” that are general directional statements (orPlans” that are general directional statements (orunderstandings) that guide/help in decision making:understandings) that guide/help in decision making: Repeat decisions taken ‘reflexively’;Repeat decisions taken ‘reflexively’;
Delegation of tasks without loss of control.Delegation of tasks without loss of control.
Some discretion is permissible depending onSome discretion is permissible depending oncircumstances thus encouragingcircumstances thus encouraging initiative withininitiative within
limitslimits and situational adjustments;and situational adjustments;
Issues with “Policy”Issues with “Policy”
Seldom documented in writingSeldom documented in writing Subject to interpretationsSubject to interpretations
f l ( d)
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Types of Plans (cont’d) Types of Plans (cont’d) ProceduresProcedures
Plans that are chronological sequences of Plans that are chronological sequences of required actions: task-oriented in nature;required actions: task-oriented in nature;
Cuts across department boundaries (sub-Cuts across department boundaries (sub-systems) in an organization: e.g. customersystems) in an organization: e.g. customercomplaint handling procedure;complaint handling procedure;
Procedures and policies are inter related:Procedures and policies are inter related:e.g. authorization for paid leavee.g. authorization for paid leave PolicyPolicy governs quota, responsible authority etc.governs quota, responsible authority etc. ProcedureProcedure governs application, grant and record-keeping.governs application, grant and record-keeping.
RulesRules Specific actions or non-actions allowingSpecific actions or non-actions allowing nono
discretiondiscretion Caution:Caution: rules (and procedures too) limit initiativerules (and procedures too) limit initiative!!
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Types of Plans (cont’d) Types of Plans (cont’d) ProgramsPrograms
Action plans (mainly non-routine or for changedAction plans (mainly non-routine or for changedactivities) including, task assignments, steps toactivities) including, task assignments, steps to
be taken, resources to be deployed etc. tobe taken, resources to be deployed etc. to
achieve a (new/renewed) goal;achieve a (new/renewed) goal;
Primary program mayPrimary program may requirerequire supporting programs,supporting programs,spreading across the enterprise;spreading across the enterprise;
Perfect coordination between supporting & primaryPerfect coordination between supporting & primary
programs essential to avoid delays, unnecessary costsprograms essential to avoid delays, unnecessary costs
and expected roll-out.and expected roll-out.
Programs are a complex of (sub)goals, policies,Programs are a complex of (sub)goals, policies,
rules and other elements necessary for therules and other elements necessary for the
course of action e.g. obtaining ISO certification.course of action e.g. obtaining ISO certification.
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Types of Plans (cont’d) Types of Plans (cont’d)
BudgetsBudgets A statement of expected results expressed inA statement of expected results expressed in
““Numerical terms”Numerical terms” e.g. financial operatinge.g. financial operating
budget = “profit plan”;budget = “profit plan”;
Budgets enforce precision in thinking:Budgets enforce precision in thinking: Making a budget is ‘planning’ by itself;Making a budget is ‘planning’ by itself;
Encourages innovation – a “different” way to workEncourages innovation – a “different” way to work
Budgets serve for ‘Control’:Budgets serve for ‘Control’:
Enforces discipline in execution of plans;Enforces discipline in execution of plans; Instills cost consciousness;Instills cost consciousness;
Makes people (constantly) plan!Makes people (constantly) plan!
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Steps in PlanningSteps in Planning
Being aware of challenges
Market, Customer’s
wants, Competition,Own strengths& weakness
Setting Goals/Objectives
What to accomplish
& when
Planning premises
Internal & external
Environment/conditions
Identifyingalternatives
Comparing &choosing analternative
Decision
making
Budgeting(Numberizing Plans)
e.g., Sales budget
Operational Expensebudget,
FormulatingSupporting
plans
e.g., plan to buy
Equipment, recruit & trainEmployees, develop product
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The Planning Process The Planning Process Planning Period:Planning Period:
Short range plans e.g. material procurement plan in aShort range plans e.g. material procurement plan in afactoryfactory
Long range plans e.g. product development plan,Long range plans e.g. product development plan,plant/production facility installation;plant/production facility installation;
““Urgent” drives out the “Important” – mismatch betweenUrgent” drives out the “Important” – mismatch between
short & long term plans!short & long term plans! Planning horizon must allow for actions to run theirPlanning horizon must allow for actions to run their
course – requiring ‘commitments’:course – requiring ‘commitments’: Thus “decisions today” are key to good plans; Thus “decisions today” are key to good plans;
Long-term plans reap benefits of good short-term plans.Long-term plans reap benefits of good short-term plans.
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Steps in PlanningSteps in Planning
Being aware of Opportunity
Considering, Market,
Competition, Customer’swants, Own strengths&weakness
Setting Goals/Objectives
What to accomplish
& when
bjective = Important end towards which activitiesare directed; therefore needs verification at the enof the plan period.
Hi h f Obj ti & OHierarchy of Objectives& Org
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Hierarchy of Objectives& Org.Hierarchy of Objectives& Org.
LevelsLevels
Mission
OverallObjectives &Key result areas.
Divisional objectives
Departmental objectives
Individual objectives
Board of Directors
CEO
DivisionHead
Product X
DivisionHead
Product Y
Sales & MktgDept
Production Dept
Sales Manager A Sales Manager B
Objectives set end results – they need to be supportedby a hierarchy of sub-objectives, duly networked
through the organization to avoid discord and wastedeffort.
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The Organizational Objectives is The Organizational Objectives isdeployeddeployed into the objectives of :into the objectives of : DivisionsDivisions DepartmentsDepartments IndividualIndividual
objectives;objectives;
The ‘cascade’ principle: seamless flow; The ‘cascade’ principle: seamless flow; Mutual support & interlocking of goals isMutual support & interlocking of goals is
essentialessential
Managers must ensure that the componentsManagers must ensure that the componentsof the network fit each other;of the network fit each other;
Departments/divisions can be ‘blind-sided’.Departments/divisions can be ‘blind-sided’.
Hierarchy of Objectives& Org. Levels …Hierarchy of Objectives& Org. Levels …
ctd.ctd.
Hi h f Obj ti & O L lHi h f Obj ti & O L l
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Hierarchy of Objectives& Org. LevelsHierarchy of Objectives& Org. Levels
…ctd.…ctd.
Mission
OverallObjectives &Key result areas.
Divisional objectives
Departmental objectives
Individual objectives
While setting Objectives, ideally, Top Managementshould get information / ‘buy-in’ from lower levels to
set realistic goals for a good result.
Top-downApproach
Bottom-upResponse:The result
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Key Result Areas (KRA)Key Result Areas (KRA) Are areas in which performance is essential forAre areas in which performance is essential for
the success of an enterprisethe success of an enterprise Examples of ‘generic KRA’s:Examples of ‘generic KRA’s:
Market shareMarket share
Return on Investment (ROI)Return on Investment (ROI)
Service levelService level
Customer satisfactionCustomer satisfaction
Peter Drucker recommends: Market standing,Peter Drucker recommends: Market standing,
innovation, productivity, physical & financialinnovation, productivity, physical & financialresource, profitability, managerial performanceresource, profitability, managerial performance
& development, worker performance & attitude& development, worker performance & attitude
and public responsibility.and public responsibility.
Management By ObjectivesManagement By Objectives
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Management By ObjectivesManagement By Objectives(MBO)(MBO)
A comprehensive managerial system that integrates manyA comprehensive managerial system that integrates many
key managerial activities in a systematic manner and that iskey managerial activities in a systematic manner and that is
consciously directed towards the effective and efficientconsciously directed towards the effective and efficient
achievement of organizations’ and individual objectives:achievement of organizations’ and individual objectives:
Set-out bySet-out by Peter Drucker Peter Drucker in 1954;in 1954;
Integrated to personal performance appraisal byIntegrated to personal performance appraisal by Douglas McGregor Douglas McGregor
in 1957;in 1957; Has formed the basis for many theories on motivation;Has formed the basis for many theories on motivation;
Has been criticized for introducing a short-term focus andHas been criticized for introducing a short-term focus and
undesirable behaviour;undesirable behaviour;
Currently viewed as a ‘way of managing’ – not a specific tool.Currently viewed as a ‘way of managing’ – not a specific tool.
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MBO (cont’d)MBO (cont’d)
Managing the MBO way involves:Managing the MBO way involves: Identifying clearly defined KRA’sIdentifying clearly defined KRA’s
Setting verifiable measurement of KRA’sSetting verifiable measurement of KRA’s
Facilitating self-direction, accountability &Facilitating self-direction, accountability &
commitment by subordinatescommitment by subordinates
Motivation of subordinates to achieve andMotivation of subordinates to achieve and
exceed set targetsexceed set targets
Emphasis on performance rather than onEmphasis on performance rather than onpersonalitypersonality
Guidelines for settingGuidelines for setting
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Guidelines for settingGuidelines for settingObjectivesObjectives
Clear & VerifiableClear & Verifiable Clarity scores over precision – ‘approximately rightClarity scores over precision – ‘approximately right
over accurately wrong’!over accurately wrong’!
Expressed in Quantitative termsExpressed in Quantitative terms FiguresFigures
PercentagePercentage
Time frame (by which date) Time frame (by which date)
Should cover main ‘deliverables’ of the job/ functionShould cover main ‘deliverables’ of the job/ function
Challenging yet reasonable: “S.M.A.R.T”Challenging yet reasonable: “S.M.A.R.T”
Guidelines for setting ObjectivesGuidelines for setting Objectives
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Guidelines for setting ObjectivesGuidelines for setting Objectives
(Cont’d)(Cont’d) Identification of assumptions underlying theIdentification of assumptions underlying the
objectivesobjectives Consistency of:Consistency of:
objectives with those of superiors, Organization &objectives with those of superiors, Organization &other departmentsother departments
Short time action-plans with Long-term objectivesShort time action-plans with Long-term objectives
Inclusion of personal growth, development andInclusion of personal growth, development andimprovement targetsimprovement targets
Ensuring availability of and access to neededEnsuring availability of and access to neededresourcesresources
Documentation and communication of Documentation and communication of objectives to concerned personsobjectives to concerned persons
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Benefits of MBOBenefits of MBO
Result oriented planning of goals, resources,Result oriented planning of goals, resources,
organizationorganization
Setting of standards for ControlSetting of standards for Control
Decentralization of Management andDecentralization of Management and
clarification of Organizational roles &clarification of Organizational roles &
responsibilities:responsibilities:
Accountabilty & commitment of employeesAccountabilty & commitment of employees
Enables timely corrective actions (as required)Enables timely corrective actions (as required)
W k f MBO
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Weaknesses of MBOWeaknesses of MBO Emphasis on:Emphasis on:
short term at the expense of long termshort term at the expense of long term
““Results” over “Process”Results” over “Process”
Individual over collective effortIndividual over collective effort
Failure to grasp and deploy the concept of Failure to grasp and deploy the concept of
“seamless cascade”“seamless cascade”
Difficulty in setting agreed, harmonizedDifficulty in setting agreed, harmonized
goalsgoals
Danger of inflexibilityDanger of inflexibility
ann ng rem sesann ng rem ses
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ann ng rem sesann ng rem sesStrategiesStrategies
Setting Goals/Objectives
What to accomplish
& when
Planning premises
Internal & externalenvironment
Identifyingalternatives
Comparing &choosing analternative
Decision
making
Strategic Planning ProcessStrategic Planning Process
trategy trategy = determination of the purpose / the basic long-teobjectives; the adoption of courses of action andallocation of resources required to achieve the ai
Planning Premises & StrategiesPlanning Premises & Strategies
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Planning Premises & StrategiesPlanning Premises & Strategies…ctd.
Stakeholder
Wishes &Shareholderdemands
ManagementOrientation
EnterpriseProfile
Purpose &Major objectives
of enterprise
CurrentExternalsituation
Currentresourcesituation
ForecastExternalsituation
ExternalOpportunity& Threat
InternalStrengths &Weakness
Key success factors &Alternative Strategies
Strategicchoice
The Strategic Planning Process
Pl i P iPl i P i
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Planning PremisesPlanning Premises
Porter’s Five Forces : anModel for analysis of the
Externals environment.
Planning Premises: forecast ofPlanning Premises: forecast of
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Planning Premises: forecast of Planning Premises: forecast of
demanddemand Estimate of Estimate of future demand future demand is made byis made by
qualitative methods, time-series methodsqualitative methods, time-series methodsand/or causal methods:and/or causal methods: QualitativeQualitative relies on judgement of experts torelies on judgement of experts to
translate to quantities;translate to quantities; Time-seriesTime-series statistically interpolate demand onstatistically interpolate demand on
historical data;historical data; Causal method Causal method seek co-relation on cause andseek co-relation on cause and
effect basis between two (or more) variables toeffect basis between two (or more) variables toquantify demand;quantify demand;
However, all forecasting methods are limited by:However, all forecasting methods are limited by: Handling of un-quantifiable factors e.g. national prideHandling of un-quantifiable factors e.g. national pride Unrealistic assumptions fuelled by a desire to succeedUnrealistic assumptions fuelled by a desire to succeed Excessive data required (often unobtainable) to makeExcessive data required (often unobtainable) to make
accurate forecastsaccurate forecasts Uncertainty with environmental changes: Technology,Uncertainty with environmental changes: Technology,
G i St tG i St t
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Generic StrategyGeneric Strategy
Relationship
B’marking Partnering
Company
Customer
Competitor Supplier
Ultimate competitive position:- position w.r.t major Customers
- K.S.Fs of Competitors
- leveraging of suppliers
CompetitiveCompetitive
Advantage Advantage
1. Cost Leadership: To continually work reducing
the cost prices of products.Supplier Q-C-D has very high
priority.
2. Differentiation: To constantly offer
innovativeand unique solutions.
Suppliertechnology & quality has
focus.
3. Customization: To offer required services in
therequired manner is theLean Management
Generic Strategy: BCG MatrixGeneric Strategy: BCG Matrix
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Generic Strategy: BCG MatrixGeneric Strategy: BCG MatrixRed: Marketing PerspectiveRed: Marketing Perspective; Blue: Financial Perspective; Blue: Financial Perspective
Cash Source
Cash
Use
Hi
Hi Lo
Lo
Marke
tGro
wthrate
Relative Market Share
Hi
Hi Lo
Lo
STAR
“Hold”
???
“Build”
Cash Cow
“Harvest”
DOGS
“Divest”
P ann ng Prem ses & Strateg esann ng rem ses trateg es
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P ann ng Prem ses & Strateg esann ng rem ses trateg es …ctd.
ecision Making = is the core of the planning process; a pla
does not come into being unless a ‘decision’ i.e. certaincommitments of resources, managerial time and moneyare made and risks are taken.aution: A “Plan” is not intentions and should not suffer fro
“Analysis Paralysis”.
Comparing &choosing analternative
Decision
making
Budgeting( Numberizing Plans)
Say, Sales budgetOperational Expense
budget,Capital expenditurebudget
FormulatingSupporting
plans
Say, plan to buyEquipment, recruit & train
Employees, develop productetc
Deployment (MBO etc.)
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Decision making is a ‘rational choice’Decision making is a ‘rational choice’
process, bounded by:process, bounded by: Limitations: time, information and ‘logic’;Limitations: time, information and ‘logic’;
Behaviour: Risk averseness and biases.Behaviour: Risk averseness and biases.
A key step in the process is to identifyA key step in the process is to identify
those limiting factors, ‘road-blocks’ to eachthose limiting factors, ‘road-blocks’ to each
effective (‘right thing’) alternative – theneffective (‘right thing’) alternative – then
finding a ‘solution’ with least sacrifice of finding a ‘solution’ with least sacrifice of
resources (‘thing right’):resources (‘thing right’): Factors: quantitative, qualitative/intangible;Factors: quantitative, qualitative/intangible;
Finding solutions:Finding solutions: marginal analyses – benefits with incremental inputs;marginal analyses – benefits with incremental inputs;
cost-effectiveness – assessment of benefits over costs.cost-effectiveness – assessment of benefits over costs.
Decision MakingDecision Making
D i i M ki tdDecision Making ctd
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Decision Making…ctd.Decision Making…ctd.
How to select Amongst the
Alternatives ?
“Experience”: good teacher and useful when
routine/repeat situations arise under similarcircumstances. Without due analysis of theconditions, mistakes tend to repeat or a poorfit results.
“Research & analysis”: the approach is in at firs
understanding the problem (‘half the solution’!then finding relations between various factorswhich hinder or foster goal attainment. This isstructured, analytical approach quantitative orotherwise.
“Experimentation”: arguably, the best techniquto use, particularly when either experience orrationale is lacking/limited. However is expensiand ‘success/failures’ are magnified, results arsubject to interpretational errors.
Decision Making ctdDecision Making ctd
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Decision Making…ctd.Decision Making…ctd. Decision making takes place under varyingDecision making takes place under varying
degrees of uncertain conditions and risks.degrees of uncertain conditions and risks.
Techniques used to aid the process are: Techniques used to aid the process are: Risk analysis:Risk analysis: every decision is based on interactionsevery decision is based on interactions
amongst different factors/variables – each of whichamongst different factors/variables – each of which
have their own probabilities (towards ‘success’).have their own probabilities (towards ‘success’).
Analysis of these probabilities yield a risk profile forAnalysis of these probabilities yield a risk profile foreach alternative path. In the absence of definedeach alternative path. In the absence of defined
probabilities, estimates can be used.probabilities, estimates can be used.
Decision trees:Decision trees: the outcome (measure pre-decidedthe outcome (measure pre-decided
e.g. cost or time) of every step in the decision ise.g. cost or time) of every step in the decision ischarted and a course selected on the most favourablecharted and a course selected on the most favourable
outcome. Very much like making a trip, navigating byoutcome. Very much like making a trip, navigating by
using a road-mapusing a road-map (refer example in W & K, “Management –(refer example in W & K, “Management –
a global perspective/10a global perspective/10thth edn. Pg. 209)edn. Pg. 209)
Decision Making ctdDecision Making ctd
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Decision Making…ctd.Decision Making…ctd.
Flow Charts:Flow Charts: as a process-guide to taking a decision andas a process-guide to taking a decision and
helps as a check-list of key variables, the sequence inhelps as a check-list of key variables, the sequence in
which they fall and the interrelations. Key to making awhich they fall and the interrelations. Key to making a
choice or re-examining the path taken are also indicatedchoice or re-examining the path taken are also indicated
as risk-reduction devices.as risk-reduction devices.
(refer example in W & K, “Management – a global perspective/10(refer example in W & K, “Management – a global perspective/10thth edn. Figure 8-5)edn. Figure 8-5)
Decision Support Systems:Decision Support Systems: a wide variety of (proprietary)a wide variety of (proprietary)
computer based programs are available for managers tocomputer based programs are available for managers to
use their time more effectively for decision making of use their time more effectively for decision making of
semi-structured tasks – by providing alternativesemi-structured tasks – by providing alternative
evaluations. They focus on the process of decisionevaluations. They focus on the process of decision
making, taking data provide by the managementmaking, taking data provide by the management
information systems in enterprises.information systems in enterprises.
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Principles of Management4
Management Process:
Organizing for results
Nature of OrganizingNature of Organizing
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Nature of OrganizingNature of Organizing OrganizingOrganizing may be broadly defined as:may be broadly defined as:
1.1. The identification and classification of required The identification and classification of requiredactivities;activities;
2.2. The grouping of those activities towards The grouping of those activities towards
attaining their set objectives;attaining their set objectives;
3.3.
The assignment of those groupings to a The assignment of those groupings to a
responsible manager, duly empowered;responsible manager, duly empowered;
4.4. The provision for coordination among, within The provision for coordination among, within
and across the groups in the organization.and across the groups in the organization.
Organization structuresOrganization structures
are designed to:are designed to:
Clarify tasks & responsibilities,Clarify tasks & responsibilities,
Remove obstacles,Remove obstacles,
Furnish decision making & communicationFurnish decision making & communication
networknetwork
Nature of Organizing …ctd.Nature of Organizing …ctd.
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Nature of Organizing …ctd.Nature of Organizing …ctd.The Business Organization Model: “ValueChain” (Porter,1985)
M a r g i n
M a r g i n
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound Logistics
OperationsOutbound Logistics
Marketing& Sales
Service
S u p
p o r t A c t i v i t i e s
Primary Activities
argin reflects the reward for the risks run by the company.
All activities together need to generate ‘value’ greater
Nature of Organizing …ctd.Nature of Organizing …ctd.
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Nature of Organizing …ctd.Nature of Organizing …ctd.
Inbound Logistics: relate to receiving, storingand disseminating inputs;
Operations: associated with transformation of inputs into final product form;
Outbound Logistics: relate to collecting,storing and physically distributing theproducts to buyers;
Marketing & Sales: relate to advertising,Promotion, sales, distribution-channelselection & management and Pricing;
Service: associated with enhancement or
The Value Chain: “Primary Activities”
Nature of Organizing …ctd.Nature of Organizing …ctd.
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Nature of Organizing …ctd.g g
Procurement: relates to the function of purchasing inputs used across the firm’sprimary and support activities;
Technology Development: relates to know-how,processes & procedures, ‘technology’embodied in the product design and delivery.Most activities have their own sub-set of technology;
Human Resource Management: directed atrecruiting, training, developing andcompensating all personnel;
The Value Chain: “Support Activities”
N t f O i i tdNature of Organizing ctd
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Most practicing mangers would translate thisMost practicing mangers would translate this
“value chain” to imply an organization as:“value chain” to imply an organization as:““ a formalized, intentional structure of roles and a formalized, intentional structure of roles and positions” positions” Thus ‘formal organization’ implies the intentional Thus ‘formal organization’ implies the intentional
structure of roles in an enterprise.structure of roles in an enterprise.
However, in an enterprise ‘informal organization’ willHowever, in an enterprise ‘informal organization’ willform, not necessarily bad and is:form, not necessarily bad and is:
““ a network of personal and social relations not a network of personal and social relations not established or required by formal organizationsestablished or required by formal organizations
but arising spontaneously as people associatebut arising spontaneously as people associatewith each other”.with each other”.
Nature of Organizing …ctd.Nature of Organizing …ctd.
N t f O i i tdNature of Organizing ctd
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Nature of Organizing …ctd.Nature of Organizing …ctd.
Hierarchical levels
Span of contro
The building block of an organizationis the Department: a group charged
with independent task & responsibili
##
#
#
#
# Office Bridge Team
$ $ $
$ Car pool
Nature of Organizing …ctd.Nature of Organizing …ctd.
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Grouping activities & people intoGrouping activities & people into departmentsdepartments
makes it conceptually possible to expandmakes it conceptually possible to expandorganizations to an infinite degree.organizations to an infinite degree.
Different patterns have been successfully usedDifferent patterns have been successfully used
to group activities:to group activities: By simple nos. is a simple method – works well for theBy simple nos. is a simple method – works well for the
lowest levels where work is routine, uniform and non-lowest levels where work is routine, uniform and non-
specialized; time-grouping is an extension of thisspecialized; time-grouping is an extension of this
method where shift-working is required;method where shift-working is required;
By enterpriseBy enterprise functionsfunctions – embodies what enterprises– embodies what enterprisestypically do e.g. Production, Engineering, Sales etc.typically do e.g. Production, Engineering, Sales etc.
This method, defined by F.W.Taylor, is arguably the This method, defined by F.W.Taylor, is arguably the
most prevalent method still used.most prevalent method still used.
g gg g“Departmentation”“Departmentation”
““Departmentation” ctdDepartmentation” ctd
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By territory or geography – is very common when theBy territory or geography – is very common when the
geographical spread is wide. It was a device introduced to speedgeographical spread is wide. It was a device introduced to speed
up management in similar units for easy and swift communicationup management in similar units for easy and swift communication
e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc.e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc. By Customer/Account orientation – reflecting the primary interestBy Customer/Account orientation – reflecting the primary interest
in nature of markets/business/customer e.g. Banks: Institutionalin nature of markets/business/customer e.g. Banks: Institutional
banking, Small Savings etc.banking, Small Savings etc.
By Process groups – encountered primarily in specialized/By Process groups – encountered primarily in specialized/
manufacturing operations where processes are vital e.g.manufacturing operations where processes are vital e.g.Advertising: Copy-writing, Creative etc.; Manufacturing: SteelAdvertising: Copy-writing, Creative etc.; Manufacturing: Steel
Melting, Wire-drawing etc.Melting, Wire-drawing etc.
By Product Lines – has evolved with enterprises becoming “multi-By Product Lines – has evolved with enterprises becoming “multi-
line” with ‘function’ needing adaptation/integration to suit specificline” with ‘function’ needing adaptation/integration to suit specific
products e.g. Tata Motors: Passenger Vehicles / Commercialproducts e.g. Tata Motors: Passenger Vehicles / Commercialvehiclesvehicles
Departmentation …ctd.Departmentation …ctd.
““Departmentation” ctdDepartmentation” ctd
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By ‘grid’ control – in essence combining theBy ‘grid’ control – in essence combining the
‘functional’ and the ‘product-line’ patterns to best‘functional’ and the ‘product-line’ patterns to best
effect. Functional excellence is not subjugated toeffect. Functional excellence is not subjugated toOperational ease.Operational ease. In ‘projects’, thisIn ‘projects’, this
serves to bring together the diversity of skillsserves to bring together the diversity of skills
required into one team.required into one team.
The The
SS
trategictrategic
BB
usinessusiness
UU
nit: companies today arenit: companies today are
organizing themselves asorganizing themselves as ‘companies within a‘companies within a
company’ company’ to allow for maximum flexibility andto allow for maximum flexibility and
freedom of operations, especially when thefreedom of operations, especially when the
products/businesses are unconnected e.g. Generalproducts/businesses are unconnected e.g. General
Electric. Generally, SBU’s have:Electric. Generally, SBU’s have: Their own Missions, Goals and Strategies; Their own Missions, Goals and Strategies;
Distinct and definable set of competitors;Distinct and definable set of competitors;
Deploy and manage resources in key areas;Deploy and manage resources in key areas;
A reasonable ‘size’.A reasonable ‘size’.
Departmentation …ctd.Departmentation …ctd.
“Departmentation” ctd
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C.E.O
Finance Qual. HRM BU 1 BU 2
I.R.M
Recr.
T&D
G/H.R
Plant 1
G/H.R
Ind.
Sin.
I.S.O
Departmentation …ctd.Example of “Grid Control” & S.B.U’s
Nature of Organizing …ctd.Nature of Organizing …ctd.
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The purpose of organizing is to make human The purpose of organizing is to make humancooperation effective and is limited by:cooperation effective and is limited by: the number of persons a manager can ‘supervise’the number of persons a manager can ‘supervise’
effectively and efficiently;effectively and efficiently; while the total number is dictated by the quantum of while the total number is dictated by the quantum of
work/ nature of task/spread etc. Thus the twowork/ nature of task/spread etc. Thus the twodimensions, “Level” (depth) and “Span of control”dimensions, “Level” (depth) and “Span of control”(width) are interrelated .(width) are interrelated .
The reason for creating Levels of organization is the The reason for creating Levels of organization is thelimitation in the span of control. “Effective span” islimitation in the span of control. “Effective span” is
influenced by:influenced by: Training/skill of subordinates and personal contact Training/skill of subordinates and personal contact
required;required; Clarity of delegation of authority;Clarity of delegation of authority; Clarity of plans, use of objective standards andClarity of plans, use of objective standards and
communication techniques;communication techniques;
g gg g
Span-of-ManagementSpan-of-Management
Span-of-Management ctdSpan-of-Management ctd
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Levels,Levels, per se, per se, are not desireable:are not desireable:
They are expensive – as they increase, both They are expensive – as they increase, bothinfrastructure costs and staffing tends to increase;infrastructure costs and staffing tends to increase;
Real work is accomplished at the ‘gemba’ (Real work is accomplished at the ‘gemba’ ( Japanese: Japanese:
workplaceworkplace) where the actual value-) where the actual value-
addition/transformation takes place. The contribution of addition/transformation takes place. The contribution of
levels on top are not directly co- relatable, thus bestlevels on top are not directly co- relatable, thus best
avoided;avoided;
Communication become complicated – omissions,Communication become complicated – omissions,
filterations and misinterpretations lead to wasted andfilterations and misinterpretations lead to wasted and
misdirected effort;misdirected effort; Planning and control become tortuous, requiringPlanning and control become tortuous, requiring
complicated coordination and alignment between levels.complicated coordination and alignment between levels.
Studies reveal that between 8 to 10 people at ‘higher’Studies reveal that between 8 to 10 people at ‘higher’
Span-of-Management …ctd.Span of Management …ctd.