Introduction to Management

What is Organization? - A deliberate arrangement of people to accomplish some specific purpose - Example of organization: Institutes, schools, religious organization - 3 characteristics of an organization: An organization has a distinct purpose Composed of people Develop some deliberate structures

Introduction to management
Meaning of Management According to Theo Heimann, management has three different meanings, viz., 1. Management as a Noun : refers to a Group of Managers. 2. Management as a Process: refers to the Functions of Management i.e. Planning, Organizing, Directing, Controlling, etc. 3. Management as a Discipline: refers to the Subject of Management. Management is an individual or a group of individuals that accept responsibilities to run an organization. They Plan, Organize, Direct and Control all the essential activities of the organization
Management is the process of coordinating work activities so that they are completed efficiently and effectively with and through other people
Efficiency: Getting the most output from the least amount of inputs (doing things right) Effectiveness: Completing activities so that organizational goals are attained (doing the right things)

Features of Management The nature, main characteristics or features of management are:1. Continuous and never ending process Management is a Process. It includes four main functions, viz., Planning, Organizing, Directing and Controlling. The manager has to Plan and

organize all the activities. He had to give proper Directions to his subordinates. He also has to Control all the activities. The manager has to perform these functions continuously. Therefore, management is a continuous and never ending process. 2. Getting things done through people The managers do not do the work themselves. They get the work done through the workers. The workers should not be treated like slaves. They should not be tricked, threatened or forced to do the work. A favorable work environment should be created and maintained. 3. Result oriented science and art Management is result oriented because it gives a lot of importance to "Results". Examples of Results like, increase in market share increase in profits, etc. Management always wants to get the best results at all times. 4. Multidisciplinary in nature Management has to get the work done through people. It has to manage people. This is a very difficult job because different people have different emotions, feelings, aspirations, etc. Similarly, the same person may have different emotions at different times. So, management is a very complex job. Therefore, management uses knowledge from many different subjects such as Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is multidisciplinary in nature. 5. A group and not an individual activity Management is not an individual activity. It is a group activity. It uses group (employees) efforts to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group (consumers). Nowadays, importance is given to the team (group) and not to individuals. 6. Follows established principles or rules Management follows established principles, such as division of work, discipline, unity of command, etc. These principles help to prevent and solve the problems in the organization.

7. Aided but not replaced by computers Now a days, all managers use computers. Computers help the managers to take accurate decisions. However, computers can only help management. Computers cannot replace management. This is because management takes the final responsibility. Thus Management is aided (helped) but not replaced by computers. 8. Situational in nature Management makes plans, policies and decisions according to the situation. It changes its style according to the situation. It uses different plans, policies, decisions and styles for different situations.The manager first studies the full present situation. Then he draws conclusions about the situation. Then he makes plans, decisions, etc., which are best for the present situation. This is called Situational Management. 9. Need not be an ownership In small organizations, management and ownership are one and the same. However, in large organizations, management is separate from ownership. The managers are highly qualified professionals who are hired from outside. The owners are the shareholders of the company. 10. Both an art and science Management is result-oriented. Therefore, it is an Art. Management conducts continuous research. Thus, it is also a Science. 11. Management is all pervasive Management is necessary for running a business. It is also essential for running business, educational, charitable and religious institutions. Management is a must for all activities, and therefore, it is all pervasive. 12. Management is intangible Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realized by its results. The success or failure of management can be judged only by its results. If there is good discipline, good productivity, good profits, etc., then the management is successful and vice-versa.

13. Use a professional approach in work Managers use a professional approach for getting the work done from their subordinates. They delegate (i.e. give) authority to their subordinates. They ask their subordinates to give suggestions for improving their work. They also encourage subordinates to take the initiative. Initiative means to do the right thing at the right time without being guided or helped by the superior. 14. Management is dynamic in nature Management is dynamic in nature. That is, management is creative and innovative. An organization will survive and succeed only if it is dynamic. It must continuously bring in new and creative ideas, new products, new product features, new ads, new marketing techniques, etc.

Managers do:
The Management Functions and Management Process.

Management functions:
The set of ongoing decisions and work activities in which managers engage as they plan, organize, lead and control

ORGANISING

DIRECTING

PLANNING

STAFFING

CONTROLLING

Planning The managerial function of planning is the process of determining the organizations desired future position and deciding how best to get there. The planning process at Sears, Roebuck, for example, includes scanning the environment, deciding on appropriate goals, outlining strategies for achieving those goals, and developing tactics to execute the strategies.

Behavioral processes and characteristics pervade each of these activities. Perception, for instance, plays a major role in environmental scanning, and creativity and motivation influence how managers set goals, strategies, and tactics for their organization. Purposes of Planning. Planning is important and serves many significant purposes. 1. Planning gives direction to the organization. 2. Planning reduces the impact of change. 3. Planning establishes a coordinated effort. 4. Planning reduces uncertainty. 5. Planning reduces overlapping and wasteful activities. 6. Planning establishes objectives or standards that are used in controlling. Organizing The managerial function of organizing is the process of designing jobs, grouping jobs into manageable units, and establishing patterns of authority among jobs and groups of jobs. This process designs the basic structure, or framework, of the organization. For large organizations like Sears, the structure can be extensive and complicated. As noted earlier, the processes and characteristics of the organization itself are a major theme of organizational behavior. Leading is the process of motivating members of the organization to work together toward the organizations goals. A manger must hire and train employees. Major components of leading include motivating employees, managing group dynamics, and leadership per se, all of Which are closely related to major areas of organizational behavior. Controlling A final managerial function, controlling, is the process of monitoring and correcting the actions of the organization and its people to keep them headed toward their goals. A manger has to control costs, inventory, and so on. Again, behavioral processes and characteristics play an important role in carrying out this function. Performance evaluation and reward systems for example, are all aspects of controlling. These are the important functions of management in which perform manager.

Principles of Management :

The 14 Management Principles from Henri Fayol (1841-1925) are: Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. Authority. The right to issue commands, along with which must go the balanced responsibility for its function. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. Unity of Command. Each worker should have only one boss with no other conflicting lines of command. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be overstretched and consist of too-many levels. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection. Equity. In running a business a combination of kindliness and justice is needed. Treating employees well is important to achieve equity.

 Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of personal vanity on the part of many managers. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: real talent is needed to coordinate effort, encourage keenness, use each persons abilities, and reward each ones merit without arousing possible jealousies and disturbing harmonious relations. WHO IS MANAGER?
Old definition: They are organizational members who told others what to do and how to do it New definition: Someone who work with and through other people by coordinating their work activities in order to accomplish organizational goal. Coordinating work of a departmental group Supervising a single person Coordinating people from several different departments

A manager is someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. It is not about personal achievement but helping others do their job. Managers may also have additional work duties not related to coordinating the work of others. MANAGERIAL ROLES AND SKILLS In addition to the five basic managerial functions defined by the process approach, a number of ancillary roles can be identified (depending on the position and responsibilities of individual managers) that are necessary to perform the functions. These roles take the form of interpersonal roles, information roles, and decision maker roles. Managerial roles: As part of their interpersonal roles, managers are generally expected to act as figureheads and leaders for their units or organizations, which entail performing ceremonial duties or entertaining associates. Managers also act

as liaisons, working with peers in other departments or contacts outside of the organization. The liaison role requires managers to have contact with peers, customers, executives, and others. As part of their information role, managers monitor the business environment and gather information that affects their departments. In addition to gathering information, managers also distribute it among their employees. Managers play the information role by acting as spokespersons by providing information about the company to the public. Furthermore, toplevel managers often must interact with the government, consumer groups, industry associations, and other organizations. As part of the decision maker role, managers constantly oversee and observe their units, resolving problems and disturbances, and developing a big picture of the department and its place in the organization. Likewise, managers must be negotiators to help secure resources for their team or group and to elicit cooperation from other groups or individuals inside and outside the company. As decision makers, managers also allocate resources, determining how to distribute limited resources within specific units to achieve maximum effectiveness. This role also involves entrepreneurial skills, because managers must generate ideas about improving their units' performance. Skills of managers To succeed in their various roles, managers must possess a combination of skills from three broad groups: technical, conceptual, and relationship. Technical skills refer to knowledge of processes, tools, and techniques particular to a company or industry. For instance, sales managers who have never worked as field representatives might lack knowledge that would be important in setting sales goals and compensations systems. Conceptual skills allow managers to view each unit as part of the entire organization, and the company as part of a larger industry. Conceptual skills are particularly important for developing long-range goals and solving problems.

Finally, relationship skills are those that the manager uses to communicate effectively and work with others. Effective managers at all levels typically possess an advanced set of relationship skills, particularly in management structures that stress communication and cooperation (e.g., matrix). Classification of managers Top level: In general, managers at the top of the management pyramid require a higher degree of conceptual skills. In fact, as managers assume more responsibility and become less involved with day-to-day activities, technical knowledge becomes secondary. Middle level: Middle managers, on the other hand, usually must possess a roughly equal amount of conceptual and technical knowledge. Bottom level: Finally, line managers near the bottom of the pyramid depend primarily on technical, rather than conceptual, skills. MANAGING A SYSTEMS
Another way to look at managers job System: A set of interrelated and interdependent parts arranged in a manner that produces aunified whole Closed System: Systems that are not influenced by or not interact with their environment Open System: Dynamically interact with their environment ORGANIZATION IS AN OPEN SYSTEM

INPUTS

TRANSFORMATION

OUTPUTS

- Invest capital
services - Human resource - raw material

- Employees work activities

- Products and -financial results

- Management activities - Technology and operation -technological information methods FEEDBACK

- information

CONTINGENCY PERSPECTIVE

OMNIPOTENT OR SYMBOLIC? The traditional view of managers is that they have virtually unlimited control over the organization and its purpose, functions and operations and therefore that they alone are responsible for all its successes and failures. This can be called the omnipotent view of management. There is a second, and growing, point of view that suggests that much of the successes and failures of organizations is determined by external factors that cannot be controlled by managers. This is the symbolic view of management. Most likely a combination of both points of view provides the best explanation of management power and control.

The omnipotent view of management says that managers are directly responsible for the success or failure of an organization. 1. This view of managers as omnipotent is consistent with the stereotypical picture of the take-charge executive who can overcome any obstacle in carrying out the organizations objectives. 2. When organizations perform poorly, someone must be held accountable. According to this view, that someone has been management. The symbolic view of management takes the view that much of an organizations success or failure is due to external forces outside managers control. 1. What managers do affect greatly are symbolic outcomes.

2. Organizational results are influenced by factors outside the control of managers: economy, market changes, governmental policies, competitors actions, the state of the particular industry, the control of proprietary technology, and decisions made by previous manager in the organization. 3. The managers role is seen as creating meaning out of randomness, confusion, and ambiguity. 4. According to the symbolic view, the actual part that management plays in the success or failure of an organization is minimal. Carnality suggests a synthesis. In reality, managers are neither helpless nor all powerful. Instead, its more logical to look at the manager operating within constraints imposed by the organizations culture and environment.

Management History And Future

Two pre-twentieth century events played a particularly significant role in promoting study of Management 1. Adam Smith Publish a classical economics doctrine The Wealth of Nations Argued the economic of advantages that organization and society would gain from division of labor (breakdown of jobs into narrow and repetitive task) 2. The Industrial Revolution The advent of machine power, mass production and efficient transportation These required managerial skills. Why? The need to assign tasks, direct daily activities, coordinates tasks, forecast demand, etc.

MANAGEMENT THEORIES
(A) Scientific Management Define as the use of scientific method to determine the one best way for a job to be done Contribution to this theory were made by Federick W. Taylor, Frank and Lillian Gilbreth Federick W. Taylor Known as the Father of scientific management. Take it easy on the job. Put the right person on the job with correct tool and equipment, had the worker follow his instructions exactly, and motivated the worker with an economic incentive of a significantly higher daily wage. Frank and Lillian Gilbreth Work arrangements to eliminate wasteful hand and body motions Also experimented with the design and use of the proper tools and equipment for optimizing work performance

(B) General Administrative Theorists

Two most prominent theorists behind the general administrative approach were Henri Fayol and Max Weber Henri Fayol stated the 14 principles of management the fundamental rules of management could be taught in schools and applied in all organizational situation

(division of work, authority, discipline, unity of command, etc) Max Weber described an ideal type of organization called a bureaucracy a form or organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulation and interpersonal relationships.

(C) Quantitative Approach

Define as the use of quantitative techniques to improve decision making Evolved out of the development mathematical and statistical solution to military problem during World War II This approach to management involves application of statistics, optimization models, information models and computer simulation method For instance, when managers make budgeting, scheduling, quality control and similar decisions, they typically rely on quantitative method

(D) Organizational Behavior

Defines as the field of study concerned with actions (behavior) of people at work This research as contributed to human resource management, motivation, leadership, trust, teamwork and conflict management The early advocates: Robert Owen, Hugo Munsterberg, Mary Parker Follet, and Chester Barnard

Hawthorne Studies:
Most important contribution to the developing organizational behavior A series of studies during the 20s and 30s that provided new insights in individual and group behavior

CURRENT TRENDS AND ISSUES

1. Globalization
Managers around the world faced with the opportunities and challenges of operating on a global market

2. Workforce Diversity A workforce thats more heterogeneous in terms of gender, race ethnicity, age and
other characteristics that reflect differences.

3. Entrepreneurship
Effort to pursue opportunities Through Innovation transforming, changing, revolutionizing, introducing new products Growth

4. Managing e-Business World

E-business (Electronic Business) the way organization does its work by using

electronic linkages E-commerce any form of business exchange or transaction in which the parties interact electronically

5. Quality management
Total Quality Management: philosophy of management driven by customer needs and expectations and focuses on continual improvement in work processes TQM is a departure from earlier management theories that were based on the belief that low costs were the only road to increase productivity

Organizational Environment and culture in management discretion The components and complexities of an organizations culture and the external /internal environment and how these may constrain managers. Managers are also responsible for improving stakeholder involvement in decisions making and actions taking. Managers must be aware that organizational culture and organizational environments will influence both the way an organization is managed as well as its effectiveness. How can an understanding of organizational culture and the external environment help the manager? MANAGEMENT DISCRETION: Manager's freedom of judgments and decision making. An employee with limited management discretion or responsibilities.

THE ENVIRONMENT: The impact of the external environment on a managers actions and behaviors cannot be overemphasized. There are forces in the environment that play a major role in shaping managers endeavors The environment is defined as outside institutions and forces outside the organization that potentially affect an organizations performance. Types of Environment: 1) External Environment 2) Internal Environment External Environment Major forces outside the organization with potential to influence significantly a product or services likely success is called its external environment. Types of external environments: The insights derived from systems theory have helped to highlight the importance of a managed interaction between an organization and its

external environment. Two major divisions have been made in the external environment: 1) The Mega Environment 2) The Task Environment The Mega Environment: The mega-environment, or general environment as it is sometimes called, is that segment of the external environment that reflects the broad conditions and trends in the societies within which an organization operates. Major Elements of the Mega Environment 1. The technological element of the mega-environment reflects the current state of knowledge regarding the production of products and services. a. Technology is a particular state of knowledge. It is not things. A computer, for instance, is an artifact or an example of technology and is not technology itself. b. Research indicates that technology tends to evolve through periods of incremental change punctuated by technological breakthroughs that either enhance or destroy the competence of firms in an industry. c. Numerous publications (such as Business Week, Forbes, etc.) and on-line services (such as LEXIS/NEXIS) provide information regarding technological and other environmental elements. d. 2. The economic element of the mega-environment encompasses the systems of producing, distributing, and consuming wealth. a. In a capitalist economy, economic activity is governed by market forces and the means of production are privately owned by individuals, either directly or through corporations. b. In a socialist economy, the means of production are owned by the state and economic activity is coordinated by state plan. c. In practice, countries tend to have hybrid economies, incorporating elements of capitalism and socialism. d. Organizations are influenced in any given economic system by a variety of economic conditions over which they have little control, such as inflation and interest

rates. 3. The legal-political element of the mega-environment includes the legal and governmental systems within which an organization must function. a. Organizations must operate within the general legal framework of the countries in which they do business. b. Organizations are subject to an increase in lawsuits filed by customers or employees. c. The political issues which affect organizations include those which influence the extent of government regulation. 4. The socio-cultural element of the mega-environment includes the attitudes, values, norms, beliefs, behaviors, and associated demographic trends that are characteristic of a given geographic area. a. The sociocultural element is of particular importance to multinational corporations. b. Sociocultural trends can result in important shifts in demand for products. 5. The international element of the mega-environment includes the developments in countries outside an organizations home country that have the potential impact to the organization. International factors far beyond the direct influence of a particular organization can have profound effects on its ability to operate successfully. a. Fluctuations of the dollar against foreign currencies influence the ability of an organization to compete in international markets. b. Free-trade agreement, such as the NAFTA, GATT can affect an organization either positively or negatively. 2 The Task Environment The task environment is that segment of the external environment made up of specific outside elements (usually organizations) with which an organization interfaces in the course of conducting its business. The task environment depends on the products and services the organization offers and the locations where it conducts business. The organization may be more successful in affecting its task environment than it is its mega-environment.

Elements of the Task Environment: 1. An organizations customers and clients are those individuals and organizations that purchase its products and/or services. It is becoming increasingly important to stay in touch with customers needs. 2. An organizations competitors are other organizations that either offers of have a high potential of offering rival products or services. a. Organization needs to keep abreast of who their competitors are and what they are doing. b. Ways to track what competitors are doing include obtaining information from commercial data bases, specialty trade publications, news clippingsbr> from local newspaper, help-wanted ads, published market research reports, business reports, trade shows, public filings, advertisements, and personal contacts. 3. An organizations suppliers are those individual organizations that supply the resources (such as raw materials, products, or services) the organization needs to conduct its operations. 4. An organizations labor supply consists of those individuals who are potentially employable by the organization. a. Organization may have to shift their location if labor supplies dry up in some areas and increase in others. 5. Various government agencies provide services and monitor compliance with laws and regulations at local (e.g., consumer affairs), state or regional (e.g., health department), and national (e.g., CBR) levels. Organizations Relationships with Stakeholders: 1. Stakeholders are any constituencies in the organizations external environment that are affected by, or have a vested interest in, the organizations decisions and actions 2. Stakeholder relationship management is important for two reasons: a. It can lead to improved predictability of environmental changes, more successful innovation, greater degrees of trust, and greater organizational flexibility to reduce the impact of change. b. It is the right thing to do, because organizations are dependent on external

stakeholders as sources of inputs and outlets for outputs and should be considered when making and implementing decisions. 3. Stakeholder relationships are managed using four steps: a. Identify external stakeholders b. Determine the specific interests of each stakeholder group c. Decide how critical these interests are to the organization d. Determine what specific approach managers should use to manage each relationship. THE ORGANIZATIONS CULTURE: Just as individuals have a personality, so, too, do organizations. We refer to an organizations personality as its culture. Organizational culture is a system of shared meaning and beliefs within an organization that determines, in large degree, how employees act. This definition implies several things. 1. Culture is a perception that exists in the organization, not in the individual. 2. Organizational culture is a descriptive term. It describes rather than evaluates. 3. Seven dimensions of an organizations culture have been proposed: a. Innovation and risk taking (the degree to which employees are encouraged to be innovative and take risks) b. Attention to detail (the degree to which employees are expected to exhibit precision, analysis, and attention to detail) c. Outcome orientation (the degree to which managers focus on results or outcomes rather than on the techniques and processes used to achieve those outcomes) d. People orientation (the degree to which management decisions take into consideration the effect on people within the organization) e. Team orientation (the degree to which work activities are organized around teams rather than individuals) f. Aggressiveness (the degree to which people are aggressive and competitive rather

than easygoing and cooperative) g. Stability (the degree to which organizational activities emphasize maintaining the status quo in contrast to growth) Employees learn an organizations culture in different ways. 1. Organizational stories are one way that employees learn the culture. These stories typically involve a narrative of significant events or people. 2. Rituals are repetitive sequences of activities that express and reinforce the key values of the organization, what goals are most important, which people are important. Strong VS Weak Culture Strong Cultures Value are intensely held and widely shared Greater influence on employees Weak Cultures Value are not intensely held and not shared Less influence on employees Whether organization culture is strong or weak depends on: (a) Size of organization (b) How long is the establishment (c) How much is the turnover of employees and profit for the organization (d) The intensity of which culture was originated Culture Affects Managers Culture constraint what manager do and cannot do, so culture is important Constraints are not written down Example: Look busy even if you are not If you take the risk and fail, you pay for it Before you make a decision run it by your boss The management process (POLC) is influence by organization culture Example cultures: Asian, European/Americans, Japanese Example organization cultures: Jaya Jusco, Hewitt, Northern Telecom, KFC, FIM

Social Responsibility And Management Ethics

WHAT IS SOCIAL RESPONSIBILITY? Before the 1960s, few people questioned the role of business organizations in social responsibility. However, times have changed. Now its important to get an understanding of what social responsibility is. A. opposing views of what social responsibility is. 1. The classical view is the view that managements only social responsibility is to maximize profits. a. Milton Friedman is the most outspoken advocate of this view. b. He argues that managers primary responsibility is to operate the business in the best interests of the stockholdersthe true owners of the organization. 2. The socioeconomic view is the view that managements social responsibility goes well beyond the making of profits to include protecting and improving societys welfare. a. The argument behind this view is that corporations are not independent entities responsible only to stockholders. b. Also, modern organizations are no longer just economic institutions. B. major arguments for social responsibility a. Public expectations b. Long-run profits c. Ethical obligation d. Public image e. Better environment f. Discouragement of further government regulation

g. Balance of responsibility and power h. Stockholder interests i. Possession of resources j. Superiority of prevention over cures C. There are six major arguments against social responsibility. These include: a. Violation of profit maximization b. Dilution of purpose c. Costs d. Too much power e. Lack of skills f. Lack of accountability 1. Social responsibility is an obligation, beyond that required by the law and economics, for a firm to pursue long-term goals that are good for society. 2. Social obligation is the obligation of a business to meet its economic and legal responsibilities. 3. Social responsiveness is the capacity of a firm to adapt to changing societal conditions. SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE. The question of whether socially responsible activities lower a companys economic performance has been addressed in numerous studies. A. The majority of studies found a positive relationship between corporate social involvement and economic performance, but some caution is necessary because of methodological questions associated with trying to measure social responsibility and economic performance.

MANAGERIAL ETHICS. Ethics refers to the rules and principles that define right and wrong conduct. There are ethical dimensions to managerial decisions and actions. Four Views of Ethics. 1. The utilitarian view of ethics states that ethical decisions are made solely on the basis of their outcomes or consequences. 2. The rights view of ethics says that ethical decisions are concerned with respecting and protecting individual liberties and privileges such as the rights of privacy, freedom of conscience, free speech, life and safety, and due process. 3. The theory of justice view of ethics states that decision makers seek to impose and enforce rules fairly and impartially. 4. Finally, the integrative social contracts theory proposes that ethical decisions should be based on empirical (what is) and normative (what should be) factors. This view is based on the integration of two contractsthe general social contract and a more specific contract among members of a specific community that might be affected by a decision. Toward Improving Ethical Behavior What can be done to improve ethical behavior? There are a number of things organizations can do to cultivate ethical behavior among members. Eight suggestions will be explored. 1. The selection process for bringing new employees into organizations should be viewed as an opportunity to learn about an individuals level of moral development, personal values, ego strength, and locus of control. 2. A code of ethics is a formal statement of an organizations primary values and the ethical rules it expects employees to follow. Also, decision rules can be developed to guide managers in handling ethical dilemmas in decision making. Top managements leadership and commitment to ethical behavior is extremely important because its the top managers who set the cultural tone. 4. Employees job goals should be tangible and realistic, because when goals are clear and realistic, they reduce ambiguity and motivate rather than punish. Job goals are usually a key issue in performance appraisal.

5. If an organization wants it employees to uphold high ethical standards, it must include this dimension in its appraisal process. Performance appraisals should be comprehensive and not just focus on economic outcomes. 6. Ethics training should be used to help teach ethical problem solving and to present simulations of ethical situations that might arise. If it does nothing else, ethics training should increase awareness of ethical issues 7. Independent social audits evaluate decisions and management practices in terms of the organizations code of ethics and can be used to deter unethical behavior. 8. Finally, organizations can provide formal protective mechanisms so that employees with ethical dilemmas can do something about them without fear of reprisal.

Managing in an E-Business World

Those days are long, gone! Now, everywhere you look, organizations (small to large, all types, global and domestic, and in all industries) are becoming ebusinesses. Todays managers must manage in an e-business world! In fact, as a student, our learning may increasingly be taking place in an electronic environment. What do we know about this e-business world? E-business (electronic business) It is a comprehensive term describing the way and organization does its work by using electronic (Internet-based) linkages with its key constituencies (employees, managers, customers, suppliers, and partners) in order to efficiently and effectively achieve its goals. Its more than ecommerce, although e-business can include e-commerce. E-commerce (electronic commerce) It is any form of business exchange or transaction in which the parties interact electronically.6 Firms such as Dell (computers), Varsity books and PC Flowers and Gifts (flowers and other gifts) are engaged in e-commerce because they sell products over the Internet. Although e-commerce applications will continue to grow in volume, they are only one part of an e-business. Not every organization

is or needs to be a total e-business. There are three categories of e-business involvement. The first type is what were going to call an e-business enhanced organization, a traditional organization that sets up e-business capabilities, usually e-commerce, while maintaining its traditional structure. Many Fortune 500 type organizations are evolving into e-business using this approach. They use the Internet to enhance (not to replace) their traditional ways of doing business. For instance, Sears, a traditional bricks-and-mortar retailer with thousands of physical stores worldwide started an Internet division whose goal is to make Sears the definitive online source for the home. Although Sears Internet division, Sears.com, represents a radical departure for an organization founded in 1886 as a catalog-sales company, its intended to expand, not replace, the companys main source of revenue. Managing in an e-world, whether as an e-business enhanced, e-business enabled, or total e-business organization requires new insights and perspectives. To help you acquire these, weve included Managing in an E-Business World boxes in a number of chapters.

Globalization Management is no longer constrained by national borders. BMW, a German firm, builds cars I south Carolina. McDonalds, a U.S. firm, sells hamburgers in China. Toyota, a Japanese firm, makes cars in Kentucky. Australias leading real estate company, Lend Lease Corporation, built the Blue water shopping complex in Kent, England, and has contracts with Coca-Cola to build all the soft0drink makers bottling plants in Southeast Asia. Swiss company ABB Ltd. has constructed power generating plants in Malaysia, South Korea, China, and Indonesia. The world has definitely become a global village! Managers in organizations of all sizes and types around the world are faced with the opportunities and challenges of operating in a global market.

CONTEMPORARY ISSUES IN MANAGEMENT In the 1990s, two different types of senior manager began to emerge in response to the general trend toward specialization and downsizing: The specializing generalist and the generalizing specialist. Because of the stock market crash in 1987, companies in the 1990s sought upper-level specializing generalist managers, that is, general managers who specialized in one area, corporate restructuring and cost cutting, in particular. These managers focused largely on implementing policies that led to reducing costs, such as closing plants and laying off workers. Entrepreneurs who launch multiple businesses sometimes are referred to specializing generalists. Entrepreneurs often learn an array of general business skills because they perform a variety of tasks during the company start-up phase. Alternatively, generalizing specialist managers generalize an area of expertise across the various management functions. For example, a senior manager with a marketing background might generalize the marketing management approach across an entire company. As a consequence, for example, such a manager might allocate funds only for research projects that have a proven potential market. Moreover, with the globalization of many industries in the 1980s and 1990s, managers increasingly must possess a global perspective as well as the skills to work with managers and employees from other countries. More and more managers must be able to collaborate with companies from other countries when U.S. companies form multinational alliances with other companies. Consequently, managers must be able to perform their five basic functionsplanning, organizing, staffing, leading, and controllingin multinational settings. Economic globalization makes skills such as influence, negotiation, and conflict resolution indispensable. Other contemporary issues in management include productivity, quality, innovation, and ethics, some of which also stem from globalization. Since other countries such as Japan have surpassed the United States in productivity, managers of companies of all sizes must address the problem of productivity in order to remain competitive.

International competition also has caused renewed concern for quality, forcing managers of a variety of companies, such as automobile, computer, and electronics manufactures, to strive for greater quality. In addition, innovation became a key issue in management in the 1990s in response to a host of factors, including changes in the economy, various industries, consumer preferences, and international relations. Finally, because of the growing demand from customers and workers that companies act in a socially responsible manner, managers must make sure that a company's actions and policies are ethical, particularly in the areas of the environment and human rights. Environmental uncertainty The management of external environmental uncertainty is critical for the success of global corporations. The major sources of uncertainty in the external environment are the number of different forces that firms have to manage, the degree to which the external environment is changing, the resources available in the environment, and business continuity management of Global Information Systems (GIS).

Challenges face by managers: perspective, any number of critical issues might be discussed, but we focus on four major challenges that affect organizational behavior. They are outlined below. Challenge 1: The Changing Social and Cultural Environment Forces in the social and cultural environment are those that are due to changes in the way people live and workchanges in values, attitudes, and beliefs brought about by changes in a nations culture and the characteristics of its people. National culture is the set of values or beliefs that a society considers important and the norms of behavior that are approved or sanctioned in that society. Organizations must be responsive to the changes that take place in a society for this affects all aspects of their operations. Developing Organizational Ethics and Well-Being Recently, huge ethical scandals have plagued hundreds of U.S. companies. Ethics is now taking center stage in Corporate America. Organizational ethics are the beliefs, moral rules, and values, which guide managers and staff to behave so as to enhance the well-being of the individuals and groups

within the organization, the organization itself, and the community. Unethical organization behavior will damage the companys reputation and cost the company the goodwill of customers and employees. These losses could result in the economic and financial ruin of the organization. Organizations and their managers must establish an ethical code that describes acceptable behaviors and create a system of rewards and punishments to enforce ethical codes. To some organizations, being socially responsible means performing any action, as long as it is legal. Developing a code of ethics helps organizations protect their reputation and maintain the goodwill of their customers and employees. The challenge is to create an organization whose members resist the temptation to behave in illegal and unethical ways that promote their own interests at the expense of the organization or promote the organizations interests at the expense of the organization or of people and groups outside the organization. An Increasingly Diverse Work Force A second social and cultural challenge is to understand how the diversity of a workforce affects organizational behavior. Diversity refers to differences in age, gender, race, ethnicity, religion, socioeconomic background, and capabilities/disabilities. The numbers of minorities and women being hired by organizations is increasing; U.S. diversity is also increasing. Diversity is an important issue because the demographic composition of employees has changed drastically as more minorities and female employees enter the workforce. To be successful, organizations need diverse employees as a resource to improve performance. Experience has shown that the quality of decision making in terms of diverse employees is richer and broader. Work, promotions, and rewards must be allocated in a fair and equitable manner. Managers must interact with employees who differ widely on a number of characteristics, while avoiding conflict and mistrust among the team members. There is a need to develop minority and female employees for top management positions to increase the organizations ability to manage diverse teams. There is a challenge to be sensitive to the needs of different kinds of employees and to try to develop flexible employment approaches to increase their well being. Examples include: 1. New benefits packages customized to the needs of different employees. 2. Flextime. 3. Job sharing. 4. Designing jobs and buildings to accommodate handicapped employees and customers.

5. Creating management programs designed to provide constructive feedback to employees about their personal styles of dealing with minority employees. 6. Establishing mentoring relationships to support minority employees. 7. Establishing informal networks among minority employees to provide social support. Challenge 2: The Evolving Global Environment Managers must understand how cultural differences influence organizational behavior in different countries. Management functions become more complex as the organizations activities expand globally, and coordination of decision-making and organizational issues becomes a necessity. Managers must understand the requirements of foreign markets and how cultural differences impact organizational issues such as compensation packages, evaluation, and promotion policies. Two important challenges facing global organizations are to appreciate the differences between countries and then to benefit from this knowledge to improve an organizations behaviors and procedures. Understanding Global Differences Companies must learn about many different kinds of factors when they operate globally. 1. There are problems related to understanding organizational behavior in different global settings. Organizational behavior becomes especially complex at a global level because the attitudes, aspirations, and values of the work force differ from country to country. 2. Problems of coordinating the activities of an organization to match its environment become much more complex as an organizations activities expand across the globe. 3. In many cases, global organizations locate in a particular country abroad because this allows them to operate more effectively, but in doing so, also has major effects on their home operations. Global Learning Global learning is the process of acquiring and learning the skills, knowledge, and organizational behaviors and procedures that have helped companies abroad become major global competitors. To respond to the global challenge, more and more companies are rotating their employees to their overseas operations so they can learn firsthand the problems and opportunities that lie abroad. Expatriate employees are those who live and work for companies located abroad. These employees assist their organizations by:

1. Learning about the sources of low-cost inputs and the best places to assemble their products throughout the world. 2. Expatriate managers in functions such as research and development, manufacturing, and sales can take advantage of their presence in a foreign country to learn the skills. Challenge 3: Advancing Information Technology One kind of technology that is posing a major challenge for organizations today is information technology. Information technology (IT) consists of the many different kinds of computer and communications hardware and software, and the skills designers, programmers, managers, and technicians bring to them. IT is used to acquire, define, input, arrange, organize, manipulate, store, and transmit facts, data, and information to create knowledge and promote organizational learning. Organizational learning occurs when members can manage information and knowledge to achieve a better fit between the organization and its environment. Two important effects include (a) those behaviors that increase effectiveness by helping an organization improve the quality of its products and lower its costs; (b) those behaviors that increase effectiveness by promoting creativity and organizational learning and innovation. IT and Organizational Effectiveness The Internet and the growth of intranets, a network of information technology inside an organization that links its members, have dramatically changed organizational behavior and procedures. IT allows for the easy exchange of know-how and facilitates problem solving. IT has allowed organizations to become much more responsive to the needs of their customers. Integrating and connecting a companys employees through electronic means is becoming increasingly important to global organizations. IT, Creativity, and Organizational Learning Creativity is the generation of novel and useful ideas. One of the outcomes of creativity is innovation, an organizations ability to make new or improved goods and services or improvements in the way they are produced. Innovation is an activity that requires the constant updating of knowledge and the constant search for new ideas and technological developments that can be used to improve a product over time. Typically, innovation takes place in small groups or teams. Virtual teams may also be used to stimulate creativity.

Decision-Making taken By Manager

The Decision Making Process DECISION: A choice from 2 or more alternatives Whats a decision making process? A set of 8 steps that begins with identifying problem and decision criteria and allocating weights to those criteria. Steps in decision-making process Step 1: Identifying problem Whats a problem? Discrepancy between an existing and a desired state of affairs Problem identification include: (a) Makesure its a problem and not just a symptom of problem (b) Problem identification is subjective (c) Before a problem can be determined, a manager must be aware of any discrepancies (d) Discrepancies can be found by comparing current result with some standard (e) Pressure must be exerted on the manager to correct the discrepancy (f) Managers arent likely to characterize some discrepancy as a problem if they perceive that they dont have the authority, information, or other resources needed to act on it Step 2: Identifying decision criteria Whats a decision criteria? Criteria define whats relevant in a decision. Include criteria such as price, product model and manufacturer, standard features, optional equipment, service warranties, repair record, and service support after purchase

Step 3: Allocating weights to criteria How do you weight criteria? A simple approach is to give the most important criteria a weight of 10 and then assign weights to the rest against the standard. (Exhibit 6.2)

Step 4: Developing alternatives Needs to identify viable alternatives for resolving the problems Step 5: Analyzing alternatives (Personal Judgments) Compare the advantages and the disadvantages in order to get the strength and weaknesses of each alternative. The weighting of the criteria significantly changes the ranking of lternatives in our Example Step 6: Selecting an alternative The act of selecting the best alternatives from among those identified and assessed is critical If criteria weights have been used, the decision maker simply selects the alternatives with the highest score from step 5 Step 7: Implementing the alternatives Implementation involves conveying the decision to those that affected by it and getting their commitment to do it. The chosen alternative must be implemented Step 8: Evaluating decision effectiveness The last step involves appraising the outcome of the decision to see if the problem has

been resolved. The manager as a decision maker

(a) Rational decision making Describes choices that are consistent and value maximizing within specified constraints. A decision-maker that was perfectly rational would be fully objective and logical. (b) Bounded rationality Behavior that is rational within the parameter of a simplified decisionmaking process, which is limited (or bounded) by an individuals ability to process info. The reason is that, they cant possibly analyze all info. On all alternatives, manager are satisfies rather than maximize.

Why do managers plan? Purpose of planning (a) Give directions (b) Reduces the impact of change (c) Minimizes waste and redundancy (d) Set the standards used in controlling (e) Reduces uncertainty (f) Establishes a coordinate effort

How do managers plan?

Planning is the basis for all the other functions that managers perform. Planning involves 2 main elements: (a) Goals Desired outcomes for individuals, groups or entire organization. Goals are objectives

 Provide direction for all management decisions and form the criterion against which actual work accomplishments can be measured (b) Plans Documents that outline how goals are going to be met including resource allocations, schedules and other necessary actions to accomplish the goals. As a conclusion, Planning = Goals + Plans Types of goals - In every organization, they have multiple goals/objectives (a) Stated goals Official statements of what an organization says, and what it wants its various stakeholders to believe its goals are. (b) Real goals Goals that an organization actually pursues, as defined by the actions of its members.

Types of plans (a) Strategic plans

Plans that apply to the entire organization, establish the organizations overall goals, and seek to position the organization.

Long-term plans

Plans with a time frame beyond 3 years

Directional plans Plans that are flexible and that set out general guidelines Single-use plan A one-time plan specifically designed to meet the needs of
a unique situation

(b) Operational plans Plans that specify the details of how the overall goals
are to be achieved.

Short term plans

Plans covering one year or less

Specific plans
Plans that are clearly defined and easy to understand

Standing plans
Ongoing plans that provide guidance for activities performed repeatedly