Aamir malik
paf-kiet
Saturday 30 July 2011
Wednesday 20 July 2011
Principle Of Management
INTRODUCTION TO MANAGEMENT
Management is the process of reaching organizational goals effectively and efficiently by working with and through people and the other organizational resources. OR
Management is creative problem solving. This creative problem solving is accomplished through four functions of management: planning, organizing, leading and controlling. The intended result is the use of an organization's resources in a way that accomplishes its mission and objectives.
- Manipulation of resources to achieve objective.
Resources:
(A resource is any physical or virtual entity of limited availability that needs to be consumed to obtain a benefit from it.)The organization is where resources come together. Organizations use different resources to accomplish goals. The major resources used by organizations are often described as follow:
4 Ms
Men
Material
Machine
Money
Organization: it is a deliberate arrangement of people to achieve some specific purpose.
Characteristics of an Organization:
different purpose
deliberate structure
people
Inputs
Human
Capital : machine equipments
Human skills
Technological application
Outputs
Product
Services
Satisfaction
Goal achievement
Profits
Managing Systems
Is a set of inter- related and inter- dependent part s in a manner that produces a unified whole.
· Closed system
· Open system
Closed system: system that is not influenced by or interacts with its environment.
Open system: system that is dynamic and interacts with its enviroment
Management Functions
In Management Excel, this standard definition is modified to align more closely with our teaching objectives and to communicate more clearly the content of the organizing function.
Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal. Organizing (departmentization) is establishing the internal organizational structure of the organization. The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid and unpaid positions held by family members including the owner/operators.
Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives.
Controlling is a four-step process of 1.establishing performance standards based on the firm's objectives, 2. Measuring and reporting actual performance, 3. Comparing the two, 4.and taking corrective or preventive action as necessary. Each of these functions involves creative problem solving
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Managerial Effectiveness: refers to management’s use of organizational resources in meeting organizational goals.
Managerial efficiency: is the degree to which organizational resources contributed to productivity. It is measured by the proportion of total organizational resources used during the production process.
Organizational resources not refer to raw material but also to related human effort. Inefficient means that a very small proportion of total resources contributes to productivity and efficient means that a very large proportion contributes.
Management Skills: Katz indicates that three types of skills are important for successful management performance. Technical skills, human skills and conceptual skills.
Technical Skills: involve the ability to apply specialized knowledge and expertise to work related techniques and procedures.
Human Skills: involves the ability to build cooperation within the team being led.
Conceptual skills: involve the ability to see the organization as a whole. A manger with these skills is able to understand how various functions of the organization complement one another. How the organization relates to its environment and how changes in one part of the organization affect the rest of the organization.
General Principles of Management
Noting that principles of management are flexible, not absolute, and must be usable regardless of changing and special conditions, Fayol listed fourteen, based on his experience. They are summarized in the perspective.
- Division of work. This is the specialization that economists consider necessary for efficiency in the use of labor. Fayol applies the principle to all kinds of work, managerial as well as technical.
- Authority & responsibility. Here Fayol finds authority and responsibility to be related, with the latter arising from the former. He sees authority as a combination 0of official factors, deriving from the manager’ position and personal factors.
(Responsibility
Responsibility implies a relationship. The person responsible to ensure something happens in the expected manner. In project management, this means completing all major milestones on or before their scheduled times, keeping costs and cash flow within the project budget, and delivering quality in accordance with the project standards.
Responsibility implies a relationship. The person responsible to ensure something happens in the expected manner. In project management, this means completing all major milestones on or before their scheduled times, keeping costs and cash flow within the project budget, and delivering quality in accordance with the project standards.
Authority
Authority connotes a function or title. The person authorized to make decisions as to the cost, schedule and other questions that arise throughout the course of the project execution.)
- Discipline. Seeing discipline as “respect for agreements which are directed at achieving obedience, application, energy, and the outward marks of respect. Fayol declares that discipline requires good superiors at all levels.
- Unity of command. This means that employees should receive orders from one superior only.
- Unity of direction. According to this principle, each group of actives with the same objective must have one head and one plan.
- Subordination of individual to general interest.. Fayol's line was that one employee's interests or those of one group should not prevail over the organization as a whole.
- Remuneration. Remuneration and methods of payment should be fair and afford the maximum possible satisfaction to employees and employer.
- Centralization. Without using the term “Centralization of authority.” Fayol refers to the extent to which authority is concentrated or dispersed. Individual circumstances will determine the degree that will give the best overall yield.
- Scalar chain. Fayol thinks of this as a chain of superiors from the highest to the lowest ranks, which, while not to be departed from needlessly.
- Order. Breaking this into material and social order, Fayol follows the simple wise saying of a place for everything and everything in its place. Thus policies, rules, instructions and actions should be understandable and understood. Orderliness (methods) involves steady evolutionary movement rather than wild, anxiety provoking, unpredictable movement.
- Equity. Loyalty and devotion should be brought out from personnel by a combination of kindliness and justice on the part of managers when dealing with subordinators.
- Stability of tenure. Finding unnecessary turnover to be both the cause and the effect of bad management, Fayol points out its dangers and costs.
- Initiative. Initiative is conceived of as the thinking out and execution of a plan. Since it is one of the keenest satisfactions for an intelligent man to experience.
- Esprit de corps. This is principle that “in union there is strength” as well as an extension of the principle of unity of command, emphasizing the need for teamwork and the importance of communication in obtaining it.
THE HISTORY OF MANAGEMENT
There are several ways to approach management situations and to solve related organizational problem.
MANAGEMENT THEORIES
The Classical Approach:
This approach Emphasizes organizational efficiency to increase organizational success. This was the first significant effort to develop a body of management thought. This approach is actually broken down into two categories, Scientific Management and Classical Organization Theory.
Scientific Management
Scientific management approach was developed by F.W. Taylor at the beginning of the 20th century. This theory supported the use of certain steps in scientifically studying each element of a job, selecting and training the best workers for the job arid making sure that the workers follow the prescribed method of doing the job. It provided a scientific rationale for job specialization and mass production. His assumption was that employees are motivated largely by money. To increase the output, Taylor advised managers to pay monetary incentives to efficient workers.
It grew from the pioneering work of five people: Frederick W. Taylor, Frank and Lillian Gilbreth, Henry Gantt, and Harrington Emerson.
Frederick W. Taylor (1856-1915)
�Frederick Winslow Taylor, become known as "the father of scientific management." He insisted that management itself would have to change and, further, Taylor suggested that decisions based on rules of thumb be replaced with precise procedures developed after careful study of individual situations. The essence of Taylor's scientific management can be summarized in the following principles:
- Develop a science for each element of a worker's job to replace rules of thumb. (A rule of thumb is a principle with broad application that is not intended to be strictly accurate or reliable for every situation. It is an easily learned and easily applied procedure for approximately calculating or recalling some value, or for making some determination)
- Job specialization should be a part of each job.
- Ensure the proper selection, training, and development of workers.
- Planning and scheduling of the work are essential.
- Standards with respect to methods and time for each task should be established.
- Wage incentives should be an integral part of each job.
.
Classical Organization Theory focused more on managing the total organization. Henry Fayol was the leader in this field, and he was the first to identify planning, organizing, leading, and controlling as important managerial concepts. He also expressed many other principles such as: division of labor, authority, discipline, unity of command and many others.
The Behavioral Approach: this strives to increase production by understanding the people. This approach believed that understanding the people and adapting the organization to them would result in increased production. The approach was concerned with individual attributes and behaviors in a group process. The primary catalyst for this movement was the Hawthorne Studies
Theory X and Theory Y: is part of the overall Human Relations Movement that impacted management for many years. Abraham Maslow was a leader in this area, but his famous “hierarchy of needs” is more of a motivational theory than a management theory. However, Theory X, Theory Y was very popular and tremendously influenced managers for a long time. This theory involved the assumptions a manager would make about people.
If a manager used Theory X he felt that his workers were lazy, lacked initiative and disliked work. They needed to be closely supervised. it is a set of essentially negative assumptions about human nature.
Theory Y referred to workers that were full of initiative, self-directed and committed to the organization. -It is a set of essentially positive assumptions about human nature.
Theory X assumptions are bad n y’s good and more successful because it reflects more satisfaction to the human needs of most organization members than are managerial activities that reflect Theory X assumptions.
Theory Z: Theory X or Y assumptions when dealing with people can be successful, depending on their situation.
Levels of Management:
The term “Levels of Management’ refers to a line of differentiation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories: -
1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers
Top Level of Management
It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. ( conceptual skills)
Middle Level of Management
The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management (human skills)
Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc (technical skills)
Quantitative Contemporary and Emerging Views of Management |
Quantitative Approach to Management:
The quantitative approach involves the use of quantitative techniques to improve decision making.How Do Today’s Managers use the quantitative approach?
The quantitative approach has contributed directly to management decision making in the areas of planning and control. For instance, when managers make budgeting, scheduling, quality control, and similar decisions, they typically rely on quantitative techniques. The availability of sophisticated computer software programs to aid in developing models, equations, and formulas has made the use of quantitative techniques somewhat less threatening for managers, although they must still be able to interpret the results.Branches in the Quantitative Management Viewpoint:
There are three main branchesmanagement science, operations management, and management information systems
Management science (or operations research
as it has been called) is an approach aimed at increasing decision effectiveness through the use of sophisticated mathematical models and statistical methods. This is NOT a term to be used synonymously with either the term “Scientific Management” described earlier featuring Taylor and others or “The Science of Management,” a term that usually refers broadly, to a deliberate, rational approach to management issues.Operations Management
is the function or field of expertise that is primarily responsible for the production and delivery of an organization’s products and services.Management information systems (MIS)
is the name often given to the field of management that focuses on designing and implementing computer-based information systems for use by managementEmerging views
: Now that you’ve got a good understanding of the evolution and past history of management theories and practices, what current concepts and practices are shaping today’s management history and changing the way that managers do their jobs?A. Globalization
. Organizational operations no longer stop at geographic borders. Managers in all types and sizes of organizations are faced with the opportunities and challenges of globalization.B. Entrepreneurship
refers to the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness. 1. Three important themes stand out in this definition: a. The pursuit of opportunities b. Innovation c. Growth 2. Entrepreneurship will continue to be important to societies around the world.C. Managing in an E-Business World.
1. E-business
(electronic business)—a comprehensive term describing the way an organization does its work by using electronic (Internet-based) linkages with key communities in order to efficiently and effectively achieve its goals.2. E-commerce
(electronic commerce) is any form of business exchange or transaction in which the parties interact electronically.D. Need for Innovation and Flexibility.
1. The constant flow of new ideas is crucial for an organization to avoid obsolescence or failure. 2. Flexibility is valuable in a context where customers/ needs may change overnight, where new competitors come and go, and where employees and their skills are shifted as need from project to project.E. Quality Management Systems.
1. Total quality managementis a philosophy of management that is driven by customer needs and expectations and focuses on continual improvement in work processes
4. The objective of TQM is to create an organization committed to continuous improvement.CORPORATE SOCIAL RESPONSIBILITY AND BUSINESS ETHICS
Business Ethics
Perhaps the most practical approach is to view ethics as a catalyst that causes managers to take socially responsible actions. The movement toward including ethics as a critical part of management education began in the 1970s, grew significantly in the 1980s, and is expected to continue growing. Hence, business ethics is a critical component of business leadership. Ethics can be defined as our concern for good behavior. We feel an obligation to consider not only our own personal well-being but also that of other human beings. This is similar to the teacingof the Golden Rule: Do unto others as you would have them do unto you. In business, ethics can be defined as the ability and willingness to reflect on values in the course of the organization's decision-making process, to determine how values and decisions affect the various stakeholder groups, and to establish how managers can use these precepts in day-to-day company operations. Ethical business leaders strive for fairness and justice within the confines of sound management practices. Many people ask why ethics is such a vital component of management practice. It has been said that it makes good business sense for managers to be ethical. Without being ethical, companies cannot be competitive at either the national or international levels.Business Ethics: can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization’s culture sets standards for determining the difference between good and bad decision making and behavior.
Code of ethics: A code of ethics is a formal statement that acts as a guide for making decisions and acting within an organization. Codes of ethics must be monitored continually to determine whether they are comprehensive and usable guidelines for making ethical business decisions. Managers should view codes of ethics as tools that must be evaluated and refined in order to more effectively encourage ethical practices.
There are two schools of thought regarding how companies should approach a definition for business ethics: the shareholder perspective and the stakeholder perspective.
Those who approach ethical decision making from a shareholder perspective focus on making decisions that are in the owners' best interest. Decisions are guided by a need to maximize return on investment for the organization’s shareholders. Individuals who approach ethics from this perspective feel that ethical business practices are ones that make the most money.
Stakeholder Perspective
The phrase corporate social responsibility is often used in discussions of business ethics. The idea behind this concept is the belief that companies should consider the needs and interests of multiple stakeholder groups, not just those with a direct financial stake in the organization’s profits and losses.
Organizations that approach business ethics from a stakeholder perspective consider how decisions impact those inside and outside the organization. Stakeholders are individuals and groups who affect or who are affected by a company’s actions and decisions. Shareholders are definitely stakeholders, but they are not the only ones who fall under the definition of stakeholder.
Stakeholders may include: employees, suppliers, customers, competitors, government agencies, the news media, community residents and others. The idea behind stakeholder based ethical decision making is to make sound business decisions that work for the good of all affected parties.
Creating an Ethical Workplace Business managers in most organizations commonly strive to encourage ethical practices not only to ensure moral conduct, but also to gain whatever business advantage there may be in having potential consumers and employees regard the company as ethical. Creating, distributing, and continually improving a company's code of ethics is one usual step managers can take to establish an ethical workplace.
Another step managers can take is to create a special office or department with the responsibility of ensuring ethical practices within the organization.Another way to promote ethics in the workplace is to provide the work force with appropriate training.
What is Ethical Behavior?
Different people have different beliefs about what constitutes ethical behavior. The law defines what is and is not legal, but the distinctions between moral right and wrong are not always so clear. In many situations lines between right and wrong are blurred. Such situations can lead to ethical dilemmas. When faced with ethical dilemmas, it’s important to consider outcomes of the decision-making process. One way of dealing with ethical dilemmas is by using the four way test to evaluate decisions. This test involves asking four questions:
1. Is my decision a truthful one?
2. Is my decision fair to everyone affected?
3. Will it build goodwill for the organization?
4. Is the decision beneficial to all parties who have a vested interest in the outcome?
When these four questions can truthfully be answered with a “yes,” it is likely that the decision is an ethical one.
Management and Business Ethics
A company’s managers play an important role in establishing its ethical tone. If managers behave as if the only thing that matters is profit, employees are likely to act in a like manner. A company’s leaders are responsible for setting standards for what is and is not acceptable employee behavior. It’s vital for managers to play an active role in creating a working environment where employees are encouraged and rewarded for acting in an ethical manner.Managers who want employees to behave ethically must exhibit ethical decision making practices themselves. They have to remember that leading by example is the first step in fostering a culture of ethical behavior in their companies. No matter what the formal policies say or what they are told to do, if employees see managers behaving unethically, they will believe that the company wants them to act in a like manner
Corporate social responsibility: is the managerial obligation to take action that protects and improves both the welfare of society as a whole and the interests of the organization. According to the concept of corporate social responsibility, a manager must strive to achieve both organizational and societal goals.
Social responsiveness: is the degree of effectiveness and efficiency an organization displays in following its social responsibilities. The greater the degree of effectiveness and efficiency, the more socially responsive the organization is said to be. The socially responsive organization that is both effective and efficient meets its social responsibilities without wasting organizational resources in the process (Effectiveness means the capability of producing an effect)
Stakeholders: are all individuals and groups that are directly or indirectly affected by an organization’s decision.
Areas of Measurement. To be consistent, measurements to gauge organizational progress in reaching socially responsible objectives can be performed. The specific areas in which individual companies actually take such measurements vary, of course, depending on the specific objectives of the companies. All companies, however, probably should take such measurements in at least the following four major areas:
- Economic function: This measurement gives some indication of the economic contribution the organization is making to society.
- Quality-of-life: The measurement of quality of life should focus on whether the organization is improving or degrading the general quality of life in society.
- Social investment: The measurement of social investment deals with the degree to which the organization is investing both money and human resources to solve community social problems.
- Problem-solving: The measurement of problem solving should focus on the degree to which the organization deals with social problems.
Importance of Ethical Business Decisions
Companies and businesspeople who wish to thrive long-term must adopt sound ethical decision-making practices. Companies and people who behave in a socially responsible manner are much more likely to enjoy ultimate success than those whose actions are motivated solely by profits. Knowing the difference between right and wrong and choosing what is right is the foundation for ethical decision making. In many cases, doing the right thing often leads to the greatest financial, social, and personal rewards in the long run.Mission
The Mission Statement describes what the organization does, how it is done, and for whom. It is a very general statement, usually aligning the organization to the value it provides to the business. It should tie together the vision, strategy, goals, etc. that fall under.
Vision
The Vision Statement describes a state that the organization is striving to achieve in the future. It is very general, but it gives a sense of what the organization would be doing and how it would look if it were perfect and existed in a perfect world.
Strategies
There may be many ways to achieve your vision. A strategy is a high-level set of directives that articulate how the organization will achieve its mission and move toward its vision. A strategic plan provides guidance on the types of projects and activities that should be funded and executed over the next three to five years. Defining a strategy helps get the entire organization aligned in the same direction.
Principles
Principles provide an organization with rules of behavior, and moral and ethical statements for how it will function. Usually, the principles describe how people within the organization will act, and how they will interact with other people inside and outside the group. They provide guidance on how to deal with people and teams, especially when you encounter problems.
Internal Clients / Customers
These are the main internal groups that request and utilize the products and services your organization provides. While there may be many stakeholders (below), it is important to recognize who the clients are. They are the ones the support team should focus on. The support team should meet the client's support needs and help the client achieve their strategy, vision, mission, etc. If you do not have a description of your clients, develop a list of them as part of the Current State Assessment. Portfolio management is based on providing the most value to your clients and to the entire organization. You cannot proceed without understanding who your clients are. Some organizations, like IT, work mostly with internal clients.
External Customers and Suppliers
Other organizations, like Sales, work directly with external customers and suppliers. Just as with internal customers, it is important to identify who your external customers are so that you can be clear as to the work that is of direct benefit to them. In many organizations, external customer needs are much more important than internal client needs. You also need to know who your suppliers are so that you understand when you are doing work that impacts them as well.
Stakeholders
These are the specific people or groups who have an interest or a partial stake in the products and services an organization provides. Internal stakeholders include management, other employees, administrators, etc. External stakeholders could include suppliers, investors, community groups and government organizations. Clients / customers are stakeholders as well. However, most stakeholders are not clients or customers. If you do not have a description of your stakeholders, develop a list of them as part of the Current State Assessment. Stakeholder needs must be taken into account when managing work as a portfolio. However, stakeholder needs are not as important as client needs. You cannot proceed without sorting out which people and organizations are clients and customers and which ones are stakeholders. .
Goals
Goals are high-level statements that provide the overall context for what the organization is trying to accomplish in the next one to three years. The achievement of goals helps the organization accomplish its mission and moves the organization closer to its vision. They should be written in a way that references business benefit in terms of cost, speed, and/or quality.
Objectives
Objectives are specific statements describing what the organization is trying to achieve, usually with a one-year window. Objectives should be written at a low enough level that it is clear whether they have been achieved within the timeframe set. A well-worded objective will be Specific, Measurable, Attainable/Achievable, Realistic, and Timebound (SMART).
Products / Services
Products are tangible items that the organization produces. “Services” refer to work done for clients or stakeholders that does not result in the creation of tangible deliverables. Services provide value by fulfilling the needs of others through people contact and interaction. The support organization achieves its objectives through the creation of products and the delivery of services. Your organization may produce internal and interim work products. However, the term "product" refers to the final product delivered to a client or stakeholder. Likewise, there are many times that people within the support function help each other. However, the term "service" refers to the delivery of value to a client or stakeholder.
Roles, Responsibilities and Skills
These describe the types of people the organization needs to build the products and provide the services necessary to achieve its objectives.
- Roles refer to a person or group that performs a certain set of activities. Roles are different that titles. Roles refer specifically to the work a person is performing at any given time. Titles refer to the specific designation of each employee that recognizes their skills, years of experience and where they fit in the organization chart. For instance, a person could be filling the role of a Support Analyst, but their title could be “Programmer Analyst II”.
- Responsibilities are the specific end results that a person in a role is expected to achieve.
- Skills are the personal traits or internal knowledge that a person uses to perform the responsibilities within his or her role. There may be personal, business, technical, and professional skills required for a person to complete his/her responsibilities.
Organizational Objectives: are the targets towards which the open management system is directed. They flow from the organization’s purpose or mission.
Open system is one that is influenced by, and is constantly interacting with, its environment.
Individual objectives: are personal goals that each organization member would like to reach as a result of personal activity in the organization.
Goal integration: is compatibility between individual and organization objectives. It occurs when organizational and individual objectives are the same.
Guidelines for establishing quality objectives:
1. Let the people responsible for attaining the objectives have a voice in setting them
2. State objectives as specifically as possible
3. Pinpoint expected results
4. Set goals high enough that employees will have to strive to meet that but not so high that employees give up trying to meet them
5. Specify when goals are expected to be achieved
6. State objectives clearly and simply.
Is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
Unique features and advantage of the MBO process
The principle behind Management by Objectives (MBO) is basically to have employees have clarity or the roles and responsibilities expected for them. They then understand the objectives they must do and the over all achievement of the organization. They also help with the personal goals of each employee.Some of the important features and advantages of MBO are:
- Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
- Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
- Clarity of goals
- Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers.
- Managers can ensure that objectives of the subordinates are linked to the organisation 's objectives.
FUNDAMENTAL OF PLANNING
Planning is the process of determining how the management system will achieve its objectives. In other words, it determines how the organization can get where it wants to go.
Purpose of planning the proactive purpose of planning is to minimize risk by reducing uncertainties surrounding business conditions and clarifying the consequences of related management actions. The affirmative purpose is to increase the degree of organizational success.
Advantages of planning:
It helps managers to be future-oriented
A sound planning program enhances decision coordination
Planning emphasizes organizational objectives.
Steps in the planning process
The planning process
(1) identifies the goals or objectives to be achieved,
(2) Formulates strategies to achieve them,
(4) Implements, directs, and monitors all steps in their proper
Qualifications of Planners
1. They should have considerable practical experience within their organization.
2. Planner should be capable of replacing any narrow view of the organization
3. Should have some knowledge of and interest in the social, political, technical, and economical trends.
4. Should be able to work well with others.
Duties of planners
1. Overseeing the planning process
2. Evaluating developed plans
3. Solving planning problems
Maximizing the effectiveness of the planning process
1. Top management support
2. An effective and efficient planning group
3. An implementation-focused planning direction
4. Inclusion of the right people
MAKING DECISIONS
Decision Choice made between alternative courses of action in a situation of uncertainty. Although too much uncertainty is undesirable, manageable uncertainty provides the freedom to make creative decisions.
Decision making is a process of first diverging to explore the possibilities and then converging on a solution(s).
80/20 Principle
The 80/20 Principle tells you that you should choose an option that produces 80% of outputs from 20% of inputs, and gather 80% of the data and perform 80% of the relevant analyses in the first 20% of time available.
Decision-making process
- Define and clarify the issue - does it warrant action? If so, now? Is the matter urgent, important or both.
- Gather all the facts and understand their causes.
- Think about or brainstorm possible options and solutions.
- Consider and compare the pros and cons of each option - consult if necessary - it probably will be.
- Select the best option - avoid vagueness or 'foot in both camps' compromise.
- Explain your decision to those involved and affected, and follow up to ensure proper and effective implementation
Pros and cons weighted decision-making template - example
This example weighs the pros and cons of buying a new car to replace an old car.The weighted pros and cons are purely examples - they are not in any way suggestions of how you should make such a decision. Our decision-making criteria depend on our own personal situations and preferences. And your criteria and weighting will change according to time, situation, and probably your mood too.
Use whatever scoring method you want to. The example shows low scores but you can score each item up to 10, or 20 or 100 - whatever makes sense to you personally. Or you can use an 'A/B/C' or three-star scoring method, whatever works for you.
Should I replace my old car with a new one? | |||
pros (for - advantages) | score | cons (against - disadvantages) | score |
better comfort | 3 | cost outlay will mean making sacrifices | 5 |
lower fuel costs | 3 | higher insurance | 3 |
lower servicing costs | 4 | time and hassle to choose and buy it | 2 |
better for family use | 3 | disposal or sale of old car | 2 |
better reliability | 5 | big decisions like this scare and upset me | 4 |
it'll be a load off my mind | 2 | ||
total 6 pros | 20 | total 5 cons | 16 |
Consensus decision-making Is agreement on a decision by all individuals involved in making that decision.
is a group decision making process that not only seeks the agreement of most participants, but also the resolution of minority objections.
Objectives As a decision-making process, consensus decision-making aims to be:
- Inclusive: As many stakeholders as possible should be involved in the consensus decision-making process.
- Participatory: The consensus process should actively solicit the input and participation of all decision-makers.[1]
- Cooperative: Participants in an effective consensus process should strive to reach the best possible decision for the group and all of its members, rather than opt to pursue a majority opinion, potentially to the detriment of a minority
- Solution-oriented: An effective consensus decision-making body strives to emphasize common agreement over differences and reach effective decisions using compromise and other techniques to avoid or resolve mutually-exclusive positions within the group.
- Most Logical*: This happens when a solution appears to be impossible to execute because of the lack of support and cooperation
Groups decision making is decision making in groups consisting of multiple members/entities. The challenge of group decision is taking into consideration the various opinions of the different individuals and deciding what action a group should take. There are various systems designed to solve this problem.
Formal systems
- Consensus decision-making tries to avoid "winners" and "losers". Consensus requires that a majority approve a given course of action, but that the minority agree to go along with the course of action. In other words, if the minority opposes the course of action, consensus requires that the course of action be modified to remove objectionable features.
Dictatorship: where one individual determines the course of action.
GROUP DECISION MAKING METHODS There are many methods or procedures that can be used by groups. Each is designed to improve the decision-making process in some way. Some of the more common group decision-making methods are brainstorming, dialetical inquiry, nominal group technique, and the delphi technique.
BRAINSTORMING. Brainstorming involves group members verbally suggesting ideas or alternative courses of action. The "brainstorming session" is usually relatively unstructured. The situation at hand is described in as much detail as necessary so that group members have a complete understanding of the issue or problem. The group leader or facilitator then solicits ideas from all members of the group. Usually, the group leader or facilitator will record the ideas presented on a flip chart or marker board. The "generation of alternatives" stage is clearly differentiated from the "alternative evaluation" stage, as group members are not allowed to evaluate suggestions until all ideas have been presented. Once the ideas of the group members have been exhausted, the group members then begin the process of evaluating the utility of the different suggestions presented. Brainstorming is a useful means by which to generate alternatives, but does not offer much in the way of process for the evaluation of alternatives or the selection of a proposed course of action. One of the difficulties with brainstorming is that despite the prohibition against judging ideas until all group members have had their say, some individuals are hesitant to propose ideas because they fear the judgment or ridicule of other group members. In recent years, some decision-making groups have utilized electronic brainstorming, which allows group members to propose alternatives by means of e-mail or another electronic means, such as an online posting board or discussion room. Members could conceivably offer their ideas anonymously, which should increase the likelihood that individuals will offer unique and creative ideas without fear of the harsh judgment of others.
DIALETICAL INQUIRY.
Dialetical inquiry is a group decision-making technique that focuses on ensuring full consideration of alternatives. Essentially, it involves dividing the group into opposing sides, which debate the advantages and disadvantages of proposed solutions or decisions.
NOMINAL GROUP TECHNIQUE. The nominal group technique is a structured decision making process in which group members are required to compose a comprehensive list of their ideas or proposed alternatives in writing. The group members usually record their ideas privately. Once finished, each group member is asked, in turn, to provide one item from their list until all ideas or alternatives have been publicly recorded on a flip chart or marker board. Usually, at this stage of the process verbal exchanges are limited to requests for clarification—no evaluation or criticism of listed ideas is permitted. Once all proposals are listed publicly, the group engages in a discussion of the listed alternatives, which ends in some form of ranking or rating in order of preference. As with brainstorming, the prohibition against criticizing proposals as they are presented is designed to overcome individuals' reluctance to share their ideas. Empirical research conducted on group decision making offers some evidence that the nominal group technique succeeds in generating a greater number of decision alternatives that are of relatively high quality.
DELPHI TECHNIQUE. Is a group decision making process that involves circulating questionnaires on a specific problem among group members, sharing the questionnaire results with them, and then continuing to reticulating and refine individual responses until a consensus regarding the problem is reached.
ADVANTAGES AND DISADVANTAGES OF GROUP DECISION MAKING
The effectiveness of decision-making groups can be affected by a variety of factors. Thus, it is not possible to suggest that "group decision making is always better" or "group decision making is always worse" than individual decision-making. For example, due to the increased demographic diversity in the workforce, a considerable amount of research has focused on diversity's effect on the effectiveness of group functioning. In general, this research suggests that demographic diversity can sometimes have positive or negative effects, depending on the specific situation. Demographically diverse group may have to over-come social barriers and difficulties in the early stages of group formation and this may slow down the group. However, some research indicates that diverse groups, if effectively managed, tend to generate a wider variety and higher quality of decision alternatives than demographically homogeneous groups.
Despite the fact that there are many situational factors that affect the functioning of groups, research through the years does offer some general guidance about the relative strengths and weaknesses inherent in group decision making. The following section summarizes the major pros and cons of decision making in groups.
ADVANTAGES. Group decision-making, ideally, takes advantage of the diverse strengths and expertise of its members. By tapping the unique qualities of group members, it is possible that the group can generate a greater number of alternatives that are of higher quality than the individual. If a greater number of higher quality alternatives are generated, then it is likely that the group will eventually reach a superior problem solution than the individual. Group decision-making may also lead to a greater collective understanding of the eventual course of action chosen, since it is possible that many affected by the decision implementation actually had input into the decision. This may promote a sense of "ownership" of the decision, which is likely to contribute to a greater acceptance of the course of action selected and greater commitment on the part of the affected individuals to make the course of action successful.
DISADVANTAGES.
There are many potential disadvantages to group decision-making. Groups are generally slower to arrive at decisions than individuals, so sometimes it is difficult to utilize them in situations where decisions must be made very quickly. One of the most often cited problems is groupthink. Irving Janis, in his 1972 book Victims of Groupthink, defined the phenomenon as the "deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressure." Groupthink occurs when individuals in a group feel pressure to conform to what seems to be the dominant view in the group. Dissenting views of the majority opinion are suppressed and alternative courses of action are not fully explored.
Research suggests that certain characteristics of groups contribute to groupthink. In the first place, if the group does not have an agreed upon process for developing and evaluating alternatives, it is possible that an incomplete set of alternatives will be considered and that different courses of action will not be fully explored. Many of the formal decision-making processes (e.g., nominal group technique and brain-storming) are designed, in part, to reduce the potential for groupthink by ensuring that group members offer and consider a large number of decision alternatives. Secondly, if a powerful leader dominates the group, other group members may quickly conform to the dominant view. Additionally, if the group is under stress and/or time pressure, groupthink may occur. Finally, studies suggest that highly cohesive groups are more susceptible to groupthink.
Group polarization is another potential disadvantage of group decision-making. This is the tendency of the group to converge on more extreme solutions to a problem. The "risky shift" phenomenon is an example of polarization; it occurs when the group decision is a riskier one than any of the group members would have made individually. This may result because individuals in a group sometimes do not feel as much responsibility and accountability for the actions of the group as they would if they were making the decision alone.
Decision-making in groups is a fact of organizational life for many individuals. Because so many individuals spend at least some of their work time in decision-making groups, groups are the subjects of hundreds of research studies each year. Despite this, there is still much to learn about the development and functioning of groups. Research is likely to continue to focus on identifying processes that will make group decision-making more efficient and effective. It is also likely to examine how the internal characteristics of groups (demographic and cognitive diversity) and the external possibilities faced by groups affect their functioning.
STRATEGIC PLANNING
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats )
Strategic management is the process by which a firm manages the formulation and implementation of its strategy.
Strategy formulation
Is the process of determining appropriate courses of action for achieving organizational objectives and there by accomplishing organizational purpose. Strategy development tools include critical question question analysis, SWOT analysis, business portfolio analysis, and porter’s Model for industry analysis.
Strategy formulation tools:
Special tools they can use to assist them in formulating strategies include the following:
Critical question analysis
SWOT ANALYSIS
Business portfolio analysis
Porter’s Model for industry analysis.
SWOT analys is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.
· Strengths: attributes of the person or company that are helpful to achieving the objective(s).
· Weaknesses: attributes of the person or company that are harmful to achieving the objective(s).
· Opportunities: external conditions that are helpful to achieving the objective(s).
· Threats: external conditions which could do damage to the objective(s).
· Business Portfolio Analysis?
Business portfolio analysis as an organizational strategy formulation technique is based on the philosophy that organizations should develop strategy much as they handle investment portfolios. Just as sound financial investments should be supported and unsound ones discarded, sound organizational activities should be emphasized and unsound ones deemphasized.2
Two business portfolio tools are the BCG growth-share Matrix and the GE Multifactor Portfolio Matrix
The BCG-SHAREMatrix: the first step in BCG growth share Matrix is identifying the organization’s strategic business unit (SBUs).
Strategic Business Units (SBUs)
The first step in using the BCG Growth-Share Matrix is identifying the organization’s strategic business units (SBUs). A strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Exactly what constitutes an SBU varies from organization to organization. In larger organizations, an SBU could be a company division, a single product, or a complete product line. In smaller organizations, it might be the entire company.1 Although SBUs vary drastically in form, they have some common characteristics. All SBUs are a single business (or collection of businesses), have their own competitors and a manager accountable for operations, and can be independently planned for.
After SBUs identified for a particular organization, the next step in using the BCG Matrix is to categorize each SBU as being within one of the following four matrix quadrants
BCG Positions and Strategy
There are four alternative positions for any business - the BCG Chart has four quadrants called:
§ Question Marks
§ Stars
§ Cash Cows
§ Dogs
§
- Question Marks: The business unit has low market share compared to competitors, however it is doing business in high-growth market. Most of the new businesses start in this quadrant
- Stars: The business has high market share compared to competitors and it is doing business in high-growth market. This business is a market leader. Successful Question Marks will grow their business and capture more market share and will hopefully become Stars (move from the Question Marks quadrant to the Stars quadrant).
- Cash Cows: The market is not very attractive – low market growth rate, however the business has high market share compared to competitors. This business generates a lot of cash and helps the organization invest in other businesses. Since the market does not attract new players, this business does not need substantial investments to keep the market share. Cash Cows have to protect and keep the market share and maximize cash flow. Maintain the strong market position and defend your market share. Take advantage of sales volume and leverage the size of operations. Support other businesses.
- . Dogs: This business has low market share and operates in low-growth market. It is unlikely that this business is very profitable – more likely this business is a loser. Such a business needs consideration and new strategy development
Porter’s Model of Industry Analysis:
Porter's model outlines the primary forces that determine competitiveness within an industry and illustrates how those forces are related.
The model suggests that in order to develop effective organizational strategies, managers must understand and react to those external forces within an industry that determine an organization's level of competitiveness within an industry.
Strategy evaluation
Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy. In corporate strategy, Johnson and Scholes present a model in which strategic options are evaluated against three key success criteria:- Suitability (would it work? Does it make economic sense?
- Would the organization obtain economies of scale, economies of scope or experience economy?
- Would it be suitable in terms of environment and capabilities?)
· Feasibility (can it be made to work? Feasibility is concerned with whether the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information.)
- Acceptability (will they work it?)
- Return deals with the benefits expected by the stakeholders (financial and non-financial). For example, shareholders would expect the increase of their wealth, employees would expect improvement in their careers and customers would expect better value for money.
- Risk deals with the probability and consequences of failure of a strate`gy (financial and non-financial).
- Stakeholder reactions deal with anticipating the likely reaction of stakeholders. Shareholders could oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their jobs, customers could have concerns over a merger with regards to quality and support.
ORGANIZATIONAL STRUCTURE
Organizational design - is the process by which managers select and manage various dimensions and components of organizational structure and culture so that an organization can achieve its goals. Organizational structure - is the formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve an organization's goals. OR
An organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim.
Your task as a manager is to create an organizational structure and culture that:
- Encourages employees to work hard and to develop supportive work attitudes
- Allows people and groups to cooperate and work together effectively.
The way a structure or culture is designed or evolves over time affects the way people and groups behave within the organization. Once an organization decides how it wants its members to behave, what attitudes it wants to encourage, and what it wants its members to accomplish, it can then design its structure and encourage the development of the cultural values and norm to obtain these desired attitudes, behaviors, and goals.
How does an organization determine which attitudes and behaviors are encouraging
An organization bases these design decisions on the contingencies it faces (a contingency is any event that might possibly occur and thus must be taken into account in planning). The three major contingencies that determine what kind of structure and culture an organization designs:
- Organization's environment
- Technology an organization uses
- Organization's strategy
Types of organizational structures
Functional structure - groups people together because they hold similar positions in an organization, perform a similar set of tasks, or use the same kind of skills. is the most common type of organizational management. The organization is grouped by areas of specialty within different functional areas (e.g., finance, marketing, and engineering). Some refer to a functional area as a "silo." Communication generally occurs within a single department. If information or project work is needed from another department, a request is transmitted up to the department head, who communicates the request to the other department head. Otherwise, communication stays within the department. Team members complete project work in addition to normal department work.The main advantage of this type of organization is that each employee has only one boss, thus simplifying the chain of command[1].
Advantages Of A Functional Structure
Coordination Advantages
- Easy communication among specialists - People grouped together according to similarities in their positions can easily communicate and share information with each other.
- Quick decisions - People who approach problems from the same perspective can often make decisions more quickly and effectively than can people whose perspectives differ.
- Learning - Makes it easier for people to learn from one another's experiences. Thus a functional structure helps employees improve their skills and abilities and thereby enhances individual and organizational performance.
Motivation Advantages
- Facilitates performance evaluation for supervisor - Supervisors are in a good position to monitor individual performance, reward high performance, and discourage social loafing. Functional supervisors find monitoring easy because they usually possess high levels of skill in the particular function.
- Facilitates performance evaluation for peers - Allows group members to monitor and control one another's behavior and performance levels.
- Creates teamwork - Can also lead to the development of norms, values, and group cohesiveness that promote high performance.
- Creates a career ladder - Functional managers and supervisors are typically workers who have been promoted because of their superior performance.
Disadvantages Of A Functional Structure
- Serving needs of all products - When the range of products or services that a company produces increases, the various functions can have difficulty efficiently servicing the needs of the wide range of products. Imagine the coordination problems that would arise, for example, if a company started to make cars, then went into computers, and then went into clothing but used the same sales force to sell all three products. Most salespeople would not be able to learn enough about all three products to provide good customer service.
- Coordination - As organizations attract customer with different needs, they may find it hard to service these different needs by using a single set of functions.
Divisional Structures: Product, Market, And Geographic
Also called a "product structure", the divisional structure groups each organizational function into divisions. Each division within a divisional structure contains all the necessary resources and functions within it. Divisions can be categorized from different points of view. There can be made a distinction on geographical basis (a US division and an EU division) or on product/service basis (different products for different customers: households or companies).
Product Structure
Market Structure - Group functions into divisions that can be open to the needs of particular types of customers.
Geographic Structure
An organization facing the problem of controlling its activities on a national or international level is likely to use a geographic structure and group functions into regional divisions to service customers in different geographic areas.
Each geographic division has access to a full set of the functions it needs to provide its goods and services.
Advantages Of A Divisional Structure
Coordination Advantages
- Quality products and customer service - Functions are able to focus their activities on a specific kind of good, service, or customer. This narrow focus helps a division to create high-quality products and provide high-quality customer service.
- Facilitates communication - between functions improve decision making, thereby increasing performance.
- Customized management and problem solving - A geographic structure puts managers closer to the scene of operations than are managers at central headquarters. Regional managers are well positioned to be responsive to local situations such as the needs of regional customers and to fluctuations in resources. Thus regional divisions are often able to find solutions to region-specific problems and to use available resources more effectively than are managers at corporate headquarters.
- Facilitates teamwork - People are sometimes able to group their skills and knowledge and brainstorm new ideas for products or improved customer service.
- Facilitates decision making - As divisions develop a common identity and approach to solving problems, their cohesiveness in- creases, and the result is improved decision making.
Motivation Advantages
- Clear connection between performance and reward - A divisional structure makes it relatively easy for organizations to evaluate and reward the performance of individual divisions and their managers and to assign rewards in a way that is closely linked to their performance. Corporate managers can also evaluate one regional operation against another and thus share ideas between regions and find ways to improve performance.
- Customized service - regional managers and employees are close to their customers and may develop personal relationships with them-relationships that may give those managers and employees extra incentive to perform well.
- Identification with division - employees' close identification with their division can increase their commitment, loyalty, and job satisfaction.
Disadvantages Of A Divisional Structure
High operating and managing costs - because each division has its own set of functions, operating costs- the costs associated with managing an organization-increase. The number of managers in an organization, for example, increases, because each division has its own set of sales managers, manufacturing managers, and so on. There is also a completely new level of management, the corporate level, to pay for.
Poor communication between divisions - Divisional structures normally have more managers and more levels of management than functional structures have, communications problems can arise as various managers at various levels in various divisions attempt to coordinate their activities.
Conflicts among divisions - divisions may start to compete for organizational resources and may start to pursue divisional goals and objectives at the expense of organizational ones.
Matrix Structure
The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. People with similar skills are pooled for work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a project manager while working on that project. Therefore, each engineer may have to work under several managers to get their job done..
(An example would be a company that produces two products, "product a" and "product b". Using the matrix structure, this company would organize functions within the company as follows: "product a" sales department, "product a" customer service department, "product a" accounting, "product b" sales department, "product b" customer service department, "product b" accounting department.)
Coordination Advantages
- Facilitates rapid product development
- Maximizes communication and cooperation between team members
- Facilitates innovation and creativity
- Facilitates face-to-face problem solving (through teams)
- Provides a work setting in which managers with different functional expertise can cooperate to solve non-programmed decision-making problems.
- Facilitates frequent changes of membership in product teams
Motivation Advantages
The matrix structure provides a work setting in which such employees are given the freedom and autonomy to take responsibility for their work activities.
Disadvantages of a Matrix Structure
- Increase role conflict and role ambiguity - Two bosses making conflicting demands on a two-boss employee cause role conflict. Reporting relationships in the matrix makes employees vulnerable to role ambiguity.
- High levels of work stress - Conflict and ambiguity can increase feelings of stress. Difficulty employees have in demonstrating their personal contributions to team performance because they move so often from one team to another.
- Limited opportunities for promotion - because most movement is lateral, from team to team, not vertical to upper management positions.
The extent of these problems explains why matrix structures are used only by companies that depend on rapid product development for their survival and that manufacture products designed to meet specific customer needs. Matrix structures are especially common in high-tech and biotechnology companies.
Decentralizing Authority
To reduce the communication and decision-making problems that accompany a hierarchy's growth, organizations may prefer decentralization to centralization, choosing to distribute authority to managers at all levels of the hierarchy and giving them responsibility for making decisions.
Authority is said to be centralized when only managers at the top of an organization can make important decisions.
Authority is decentralized when managers throughout the hierarchy are allowed to make significant decisions.
HUMAN RESOURCE MANAGEMNT.
________________________________________________________________________
Definition of Human Resource and Human Resource Management:
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“Human Resource means People or employees of an organization”
“Human Resource Department exist to help people and organization to reach their goals, by facing some internal and external challenges”
“Human resource management works to ensure that employees are able to meet the organization's goals”.
“Human resource management is responsible for how people are treated in organizations. It is responsible for bringing people into the organization, helping them perform their work, compensating them for their labors, and solving problems that arise"
Functions Of Human Resource department:
1) Human resource planning
2) Recruitment
3) Selection
4) Orientation
5) Training
6) Placement
7) Staffing
8) Development
9) Performance appraisals,
10) Compensation and benefits,
11) Employee and labor relations,
12) Union-management relations
13) Safety and health,
14) Management survey
Explanations:
Human Resource Planning: As an organization becomes large, attempts are made to estimate its future HR needs through an activity called, human resource planning.
Recruitment Process of head hunting or of finding and attracting capable applicants to apply for employment
Selection: Screening and Short listing of the candidates for any vacant post.
Orientation: Introductory stage in the process of new employee adjustment, and a part of his or her continuous socialization process in the organization.
Major objectives of orientation are to (1) gain employee commitment, (2) reduce his or her anxiety, (3) help him or her understand organization's expectations, and (4) convey what he or she can expect from the job and the organization. Placement: Activities, transfer, promotion, demotion, lay off, and even termination of workforce.
Staffing: Selecting and training individuals for specific job functions, and charging them with the associated responsibilities. Positions can be filled either by recruitment of new employees or by development of existing employees.
Training: Organized activity aimed at conveying information and/or instructions to improve the employees’ performance or to help him or her get a required level of knowledge or skill.
Development: Process of periodically adding improvements to the existing employees according to meet the internal or external environmental changes.
Appraisal: Evaluation of the employees means, matching objectives with the outcomes of the employees to find out level of their performance.
Compensation: Sum of direct benefits (such as salary, allowances, bonus, commission) and indirect benefits (such as insurance, pension plans, vacations) that an employee receives from an employer.
Employee relations: To ensure harmonious environment within the organization. Management surveys: To make sure whether their employees are satisfied with their management or not.
THE PUPOSE OF HUMAN RESOURCE MANAGEMENT:
Is to improve the productive contribution of people to the organization in ways that are strategically, ethically, and socially responsible.
THE SERIVE ROLE OF A HUMAN RESOURCE MANAGEMENT:
HR department exist to assist the organization, its managers, and its employees. HR is a service department. As a member of a service department; HR managers do not have authority to manage other departments. Instead they have following authorities:
· Staff authority
· Line authority
· Functional authority
Line authority: Power to give orders to subordinates. Or the authority to direct the operations of the departments that make or distribute an organization’s products or service. Line managers are responsible for attaining the organization's goals as efficiently as possible. Production and sales managers typically exercise line authority Staff authority: It contrasts with Staff Authority, which is the authority to advise but not command others. Means indirectly control other mangers.
Functional Authority: Is the right given to specialists to make the final decision in specified circumstances.
Dual responsibilities: The use of line, staff, and functional authority results in a dual responsibility for human resource management. Both line and HR managers are responsible for employee productivity and the quality of work life.
HUMAN RESOURCE PLANNING
Human resource planning has traditionally been used by organizations to ensure that the right person is in the right job at the right time.
Implementation of Human Resource Plans: When the internal supply of workers exceeds the firm’s demands, an HR surplus exists. Most employers respond to a surplus with a hiring freeze. This freeze stops the HR department from filling openings with external supplies. Instead, present employees are assigned. Voluntary departure, called ATTRITION.
HR Shortage
If the internal supply can not fulfill the organization’s needs, an HR shortage exists. Planners have little flexibility in the short run and must rely on the external staffing process to find new employees.
Leadership
Leadership
any behavior that influence the actions and attitudes of others to achieve certain results.
Integrated Skills
Managerial Leadership: Leading others, implementing change, performance coaching, evaluating and supporting others, conducting meetings, handling people problems, motivating, delegating and more.
Teamwork: Creating effective, conflict-free work groups, communicating, discussing and implementing ideas, creating more open, cooperative and active work groups
Coaching: Improving the performance of others
Influencing: Influencing others for greater interpersonal and organizational success
Effective Leadership & Power
Power as a Source of Leadership Influence
Your capacity to influence others is dependent on the power you have. Without some form of power will not be able to have any influence over others.
There are five potential sources of power:
- Positional authority
- Reward power (the carrot)
- Coercive power (the stick)
- Power stemming from expertise
- Interpersonal power
It is important for you as a leader to be clear about your positional authority. This includes a solid working knowledge of relevant laws, awards and industrial agreements. This knowledge provides the parameters within which you can exercise command and control. There is no doubt that positional authority is a legitimate and prevalent form of influence within organizations.
Leaders also use rewards to shape the attitudes and behaviors of staff. The use of financial rewards to shape behavior is largely the province of an organizations HR staff. However, all leaders can make use of non-financial reward systems to shape the behavior of their staff. The use of positive rewards to encourage desired behaviors is one of the simplest yet most powerful forms of power a leader can apply.
The use of coercive power –: (the opposing magnetic intensity that must be applied to a magnetized material to remove the residual magnetism) that is negative consequences following undesirable or unacceptable behavior has been shown to be effective in reducing the instances of such behavior.
Expertise is also a source of power. People will put more weight on your words when they believe you know what you are talking about. Early levels of leadership typically involve leading staff who have the same professional function as their leader – accountants leading accountants, teachers leading teachers or engineers leading engineers.
Interpersonal power refers to your ability to influence others' behavior simply because of the relationship they have with you.
Personal Characteristics of Effective Leaders
Leadership Skills List:
. Integrity• Vision/strategy
• Communication
• Relationships
• Persuasion
• Adaptability
• Teamwork
• Coaching and Development
• Decision-making
• Planning
Integrity means honesty and more. It refers to having strong internal guiding principles that one does not compromise. It means treating others as you would wish to be treated
Vision/strategy
A leader must have a clear idea where his or her organization and unit are going beyond this month’s results or this year’s budget. Where is it going in the long term? Even tactical leaders must be clear about this and need to refer frequently to the vision, mission, and values of the organization in their communications with others. Vision is another example of an essential leadership quality.
Communication
The chief complaint of employees in nearly every organization of all types, whether large or small from any industry segment, is “lack of communication.” Communication in the context of leadership refers to both interpersonal communications between the leader and followers and the overall flow of needed information throughout the organization.
Leaders need to learn to be proficient in both the communication that informs and seeks out information (gives them a voice) and the communication that connects interpersonally with others. Communication is another example leadership skill that must be refined by all leaders.
Relationships
Networking (the art of social “schmoozing”) is also a relationship skill. Relationships develop from good interpersonal and group communication skills but relationship skills also go deeper.
A leader who likes dealing with people issues, who can initiate and deepen relationships with others, has a great leadership advantage. This is a leader who can build a team and achieve impressive results.
This kind of leadership is based on personal power (the right kind of power), not position power. Relationship-building is an example of an essential leadership quality.
Persuasion
The ability to influence others and cause them to move in a particular direction is a highly important skill in leadership. In fact, leadership is often defined as the ability to persuade or influence others to do something they might not have done without the leader’s persuasion.
Your ability to be persuasive is directly related to how much people trust you and how good your communication and relationships are. Persuasion (also called influence) is a good example of an essential leadership skill.
Adaptability
Adaptability and flexibility in not being bound by a plan are important success factors in leadership today. The leader must move easily from one set of circumstances (the plan) to the next (the plan is not going as expected) and take them all in stride, even when the circumstances are unexpected.
The good leader has to embrace change and see it as opportunity. The leadership skill of adaptability is another example of a critical skill.
Teamwork
No one person can do it all. That’s why a team, comprised of others with different skill sets, is essential. A leader must know how to build and nurture such a team. A good leader knows when to be a leader and when to be a follower.
The best leaders are good followers when that's what is needed. Building teamwork is another essential leadership skill example.
Coaching and Development
Developing others is an important role for a leader. Encouraging others to expand their capabilities and take on additional assignments is part of the leader’s responsibility. Leaders who feel threatened by the capabilities of others are challenged in this area. Coaching and development are essential skills all leaders must cultivate.
Decision-making
A leader must be able to go through information, understand what’s relevant, make a well-considered decision, and take action based on that decision. Making decisions too quickly or too slowly will slow down your leadership effectiveness. Confidence is another example of an essential leadership quality.Planning
Planning involves making certain assumptions about the future and taking actions in the present to positively influence that future. To plan means to focus more strategically. Plans are important for guidance and focus, but plans can seldom be cast in stone. Planning is an excellent and necessary example
Transformational leadership: leadership approach that is defined as leadership that creates valuable and positive change in the followers with the end goal of developing followers into leaders. A transformational leader focuses on "transforming" others to help each other, to look out for each other, to be encouraging and harmonious, and to look out for the organization as a whole.
Entrepreneurial leadership: have some specific leadership attributes. Entrepreneurial leadership is leadership that is based on the attitude that the leader is self-employed. Leaders of this type:
· take initiative and act as if they are playing a critical role in the organization rather than a mostly important one and energize their people,
· demonstrate entrepreneurial creativity, search continuously for new opportunities and pursue them,
· take risk, venture into new areas and provide strategic direction and inspiration to their people,
· take responsibility for the failures of their team, learn from these failures and use them as a step to ultimate success and strategic achievement
The situational approach to leadership:
Is a relatively modern view of leadership that suggests that successful leadership requires a unique combination of leaders, followers, and leadership situation?
This interaction is commonly expressed in formula FORM:
SL = F(l,f,s) where SL is successful leadership, f stands for function of, and L,F,S are, respectively, the leader the follower, and the situation. Translated, this formula that successful leadership is a function of a leader, follower, and situation that are appropriate for one another.
MOTIVATION
Motivation = Desire x Commitment
Overall, the basic perspective on motivation looks something like this: In other words, you have certain needs or wants (these terms will be used interchangeably), and this causes you to do certain things (behavior), which satisfy those needs (satisfaction), and this can then change which needs/wants are primary (either intensifying certain ones, or allowing you to move on to other ones).
Many theories put forward a hierarchy of needs, in which the needs at the bottom are the most urgent and need to be satisfied before attention can be paid to the others.
Maslow hierarchy of needs:
Each of us is motivated by needs. Our most basic needs are inborn, having evolved over tens of thousands of years. Abraham Maslow's Hierarchy of Needs helps to explain how these needs motivate us all.
Maslow's Hierarchy of Needs states that we must satisfy each need in turn, starting with the first, which deals with the most obvious needs for survival itself.
Maslow's hierarchy of need categories is the most famous example:
self-actualization |
esteem |
belongingness |
safety |
physiological |
Specific examples of these types are given below, in both the work and home context. (Some of the instances, like "education" are actually satisfiers of the need.)
Maslow’s hierarchy of needs
. Biological and Physiological needs - air, food, drink, shelter, warmth, love, sleep, etc.
2. Safety needs - protection from elements, security, order, law, limits, stability, etc.
3. Belongingness and Love needs - work group, family, affection, relationships, etc.
4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.
5. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal growth and peak experiences.
Two Factor theory (Herzberg)
The two-factor theory (also known as Herzberg's motivation-hygiene theory) states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction. It was developed by Frederick Herzberg, a psychologist, who theorized that job satisfaction and job dissatisfaction act independently of each other.
According to Herzberg, two kinds of factors affect motivation, and they do it in different ways:
- Hygiene factors. These are factors whose absence motivates, but whose presence has no apparent effect. They are things that when you take them away, people become dissatisfied a and act to get them back. A very good example is heroin to a heroin addict. Long term addicts do not shoot up to get high; they shoot up to stop being sick -- to get normal. Other examples include decent working conditions, security, pay, benefits (like health insurance), company policies, interpersonal relationships. In general, these are extrinsic items low in the Maslow/Alderfer hierarchy. such as company policies, supervisory practices, or wages/salary
- motivators. These are factors whose presence motivates. Their absence does not cause any particular dissatisfaction, it just fails to motivate. Examples are all the things at the top of the Maslow hierarchy, and the intrinsic motivators. such as recognition, achievement, or personal growth.
Essentially, hygiene factors are needed to ensure an employee is not dissatisfied, determine dissatisfaction, Motivation factors are needed to motivate an employee to higher performance, determine satisfaction.
· Intrinsic motivators: Achievement, responsibility and competence. motivators that come from the actual performance of the task or job -- the intrinsic interest of the work.
· Extrinsic: pay, promotion, feedback, working conditions -- things that come from a person's environment, controlled by others.
Equity Theory
Equity theory suggests that individuals engage in social comparison by comparing their efforts and rewards with those of relevant others. The perception of individuals about the fairness of their rewards relative to others influences their level of motivation. Equity exists when individuals perceive that the ratio of efforts to rewards is the same for them as it is for others to whom they compare themselves. Inequity exists when individuals perceive that the ratio of efforts to rewards is different (usually negatively so) for them than it is for others to whom they compare themselves.
EX. Suppose employee A gets a 20% raise and employee B gets a 10% raise. Will both be motivated as a result? Will A be twice as motivated? Will be B be negatively motivated?
Equity theory says that it is not the actual reward that motivates, but the perception, and the perception is based not on the reward in isolation, but in comparison with the efforts that went into getting it, and the rewards and efforts of others. If everyone got a 5% raise, B is likely to feel quite pleased with her raise, even if she worked harder than everyone else. But if A got an even higher raise, B perceives that she worked just as hard as A, she will be unhappy. In other words, people's motivation results from a ratio of ratios: a person compares the ratio of reward to effort with the comparable ratio of reward to effort that they think others are getting.
Strategies for motivating organization members.
Managerial communication: communicate well with organization members.
Theory X – Theory Y: If a manager used Theory X he felt that his workers were lazy, lacked initiative and disliked work. They needed to be closely supervised. it is a set of essentially negative assumptions about human nature.
Theory Y referred to workers that were full of initiative, self-directed and committed to the organization. -It is a set of essentially positive assumptions about human nature.
Job design: Job enrichment ( vertical loading)
is an attempt to motivate employees by giving them the opportunity to use the range of their abilities. Is the process of including motivators into job situation. Job enrichment adds new sources of job satisfaction by increasing the level of responsibility of the employee. Adding these elements to jobs is sometimes called VERTICAL LOADING.
Jon enlargement: (horizontal loading)
job is increased (and appropriate training provided) to add greater variety to activities, thus reducing monotony. It is a horizontal restructuring method in that the job is enlarged by adding related tasks.
Job rotation: technique in which employees are moved between two or more jobs in a planned manner. The objective is to expose the employees to different experiences and wider variety of skills to enhance job satisfaction and to cross-train them.
Flex Time: is a program that allows workers to complete their jobs within a workweek of a normal number of hours that they schedule themselves.Behavior modification: is a program that focuses on managing human activity by controlling the consequences (cost) of performing that activity. Behavior modification assumes that observable and measurable behaviors are good targets for change. All behavior follows a set of consistent rules. Methods can be developed for defining, observing, and measuring behaviors, as well as designing effective interventions. Behavior modification techniques never fail. Rather, they are either applied inefficiently or inconsistently, which leads to less than desired change. All behavior is maintained, changed, or shaped by the consequences of that behavior. Behavior that is rewarded tends to be repeated, while that which is punished tend to be eliminated. It is reward that are generally emphasized because they are most effective than punishment in influencing behavior.
Reinforcers are consequences that strengthen behavior. Punishments are consequences that weaken behavior.
To manage behavior through consequences, use this multi-step process:
- The problem must be defined, usually by count or description.
- Design a way to change the behavior.
- Identify an effective reinforcer.
- Apply the reinforcer consistently to shape or change behavior.
Monetary incentives:
The purpose of monetary incentives is to reward associates for excellent job performance through money. Monetary incentives include profit sharing, project bonuses, stock options and warrants, scheduled bonuses (e.g., Christmas and performance-linked), and additional paid vacation time. Traditionally, these have helped maintain a positive motivational environment for associates .
Nonmonetary incentives: The purpose of non-monetary incentives is to reward associates for excellent job performance through opportunities. Non-monetary incentives include flexible work hours, training, pleasant work environment, and sabbaticals.
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