Chapter 1 - Managers and Management

Chapter 1 - Managers and Management

PART 1: INTRODUCTION

CHAPTER 1 - MANAGERS AND MANAGEMENT

LEARNING OUTCOMES (PPT 1-2, 1-3)

After reading this chapter students will be able to:

1.Describe the difference between managers and operative employees.

2.Explain what is meant by the term “management.”

3.Differentiate between efficiency and effectiveness.

4.Describe the four primary processes of management.

5.Classify the three levels of managers and identify the primary responsibility of each group.

6.Summarize the essential roles performed by managers.

7.Discuss whether the manager’s job is generic.

8.Describe the four general skills necessary for becoming a successful manager.

9.Describe the value of studying management.

10.Identify the relevance of popular humanities and social science courses to management practices.

Opening Vignette

SUMMARY

Coleman Peterson, Chief Human Resource Manager and Executive Vice President of People Division, Wal-Mart

What distinguishes those organizations that succeed from those that don’t are good managers. Good managers accomplish goals through and with the efforts of others and can adapt to the ever-changing environment around them.

Coleman Peterson is responsible for all employee matters in the largest organization in the world, and does so with the respect of his bosses, his peers, and most importantly, the employees of the organization. He adds value daily to Wal-Mart by finding qualified talent and developing better trained employees. He believes there is value in consistency, wanted policies and practices to be the same for Wal-Mart employees whether they are working in Germany, Canada, Mexico or the U.S.

Peterson’s key belief is that to keep employees motivated they need to understand that the company respects them and will provide them with advancement opportunities, and that they will be given the opportunity to offer feedback.

Coleman Peterson provides a good example of what a successful manager does. Successful managers today are as diverse as the companies they manage. They manage large corporations, small businesses, etc., while holding positions at the top, in the middle, and on the line overseeing employees, and doing their work in every country on the globe.

Teaching tips

1. Make contact with 3-5 local companies or CEOs through the chamber of commerce, Kiwanis club, Better Business Bureau, etc. Try to see that the companies selected represent the variety of organizations found today: large corporations, small businesses, government agencies, hospitals, museums, schools, and such nontraditional organizations as cooperatives.

1. Choose 3-5 volunteers or 3-5 teams to visit these local companies and conduct brief 30-minute interviews with the CEOs.

1. As a class, using this chapter, brainstorm what questions, 5-7 at the most, each team or interviewer should ask.

Sample questions for discussion starters could include:

• How is change affecting your organization today?

• What is the biggest challenge your organization faces regarding change?

• What strategies do you use to implement needed changes?

• What, if anything, about your organization would you refuse to change?

• In management class we talk about the responsibility of managers who direct the work of others

and operatives who work directly on a job or task and have no responsibility for overseeing the

work of others. How would you describe the value of each of these (i.e., managers and

operatives) to your organization?

• What is the most unique or unusual responsibility or role held by a manager within your

organization?

• When you are hiring a manager, what 3-5 skills or competencies do you believe are most

critical in a candidate?

1. Have the interviewers report back to class what they learned.

1. As a class, discuss how their discoveries fit or do not fit chapter content.

I.WHO ARE MANAGERS, AND WHERE DO THEY WORK?

A.Introduction (PPT 1-4)

1.Managers work in an organization.

2.An organization is a systematic arrangement of people brought together to accomplish some specific purpose.

a)Your college or university is an organization.

B.What Three Common Characteristics Do All Organizations Share? (PPT 1-4)

1.Every organization has a purpose and is made up of people who are grouped in some fashion.

a)See Exhibit 1-1. (PPT 1-5)

b)This distinct purpose is typically expressed in terms of a goal or set of goals.

2.Second, purposes or goals can only be achieved through people.

3.Third, all organizations develop a systematic structure that defines and limits the behavior of its members.

a)Developing structure may include creating rules and regulations, giving some members supervisory control, forming teams, etc.

4.The term organization refers to an entity that has a distinct purpose, has people or members, and has a systematic structure.

C.How Are Managers Different from Operative Employees? (PPT 1-6)

1.Organizational members fit into two categories: operatives and managers.

a)Operatives work directly on a job and have no oversight responsibility of others.

b)Managers direct the activities of other people in the organization.

1)Customarily classified as top, middle, or first line, they supervise both operative employees and lower-level managers.

2)See Exhibit 1-2. (PPT 1-7)

3)Some managers also have operative responsibilities themselves.

2.The distinction between operatives and managers is that managers have employees who report directly to them.

D.What Titles Do Managers Have in Organizations? (PPT 1-8)

1.First-line managers are usually called supervisors.

a)They are responsible for directing the day-to-day activities of operative employees.

b)In your college, the department chair would be a first-line supervisor.

2.Middle managers represent levels of management between the first-line supervisor and top management.

a)They manage other managers and possibly some operative employees.

b)They are responsible for translating the goals set by top management into specific details.

3.Top managers, like Coleman Peterson, are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members.

a)Examples: Coleman Peterson, FedEx’s Fred Smith, Xerox’s Anne Mulcahy, and Cisco’s John Chambers.

Teaching Notes ______

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II.WHAT IS MANAGEMENT, AND WHAT DO MANAGERS DO?

A.How Do We Define Management? (PPT 1-9)

1.Managers, regardless of title, share several common elements.

2.Management—the process of getting things done effectively and efficiently, through and with other people.

a)The term “process” in the definition represents the primary activities managers perform.

3.Effectiveness and efficiency deal with what we are doing and how we are doing it.

a)Efficiency means doing the task right and refers to the relationship between inputs and outputs.

b)Effectiveness means doing the right task, and in an organization that translates into goal attainment.

c)See Exhibit 1-3. (PPT 1-10)

4.Efficiency and effectiveness are interrelated.

a)It’s easier to be effective if one ignores efficiency.

b)Good management is concerned with both attaining goals (effectiveness) and doing so as efficiently as possible.

c)Organizations can be efficient and yet not be effective.

d)High efficiency is associated more typically with high effectiveness.

5.Poor management is most often due to both inefficiency and ineffectiveness.

B.What Are the Management Processes?

1.Henri Fayol defined the management process in terms of five management functions.

a)They plan, organize, command, coordinate, and control.

b)In the mid-1950s, two professors used the terms “planning,” “organizing,” “staffing,” “directing,” and “controlling” as the framework for the most widely sold management textbook.

2.The most popular textbooks now condense these processes to the basic four: planning, organizing, leading, and controlling.

a)See Exhibit 1-4. (PPT 1-11)

b)These processes are interrelated and interdependent.

3.Planning encompasses defining an organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. (PPT 1-12)

a)Setting goals creates a proper focus.

4.Organizing—determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made. (PPT 1-12)

5.Directing and coordinating people is the leading component of management.

a)Leading involves motivating employees, directing the activities of others, selecting the most effective communication channel, or resolving conflicts among members. (PPT 1-13)

6.Controlling. (PPT 1-13)

a)To ensure that things are going as they should, a manager must monitor the organization’s performance.

b)Actual performance must be compared with the previously set goals.

c)Any significant deviations must be addressed.

d)The monitoring, comparing, and correcting is the controlling process.

7.The process approach is clear and simple but may not accurately describe what managers do.

a)Fayol’s original applications represented observations from his experiences.

8.In the late 1960s, Henry Mintzberg provided empirical insights into the manager’s job.

Teaching Notes ______

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C.What Are Management Roles?

1.Henry Mintzberg undertook a careful study of five chief executives at work.

a)Mintzberg found that the managers he studied engaged in a large number of varied, unpatterned, and short-duration activities.

b)There was little time for reflective thinking.

c)Half of these managers’ activities lasted less than nine minutes.

2.Mintzberg provided a categorization scheme for defining what managers do on the basis of actual managers on the job—Mintzberg’s managerial roles.

3.Mintzberg concluded that managers perform ten different but highly interrelated roles.

a)These ten roles are shown in Exhibit 1-5. (PPT 1-14)

b)They are grouped under three primary headings.

c)Interpersonal relationships.

1)The transfer of information.

2)Decision making.

D.Is the Manager’s Job Universal? (PPT 1-15)

1.The importance of the managerial roles varies depending on the manager’s level in the organization.

a)The differences are of degree and emphasis but not of activity.

b)As managers move up, they do more planning and less direct overseeing of others.

1)See Exhibit 1-6. (PPT 1-16)

c)The amount of time managers give to each activity is not necessarily constant.

d)The content of the managerial activities changes with the manager’s level.

1)Top managers are concerned with designing the overall organization’s structure.

2)Lower-level managers focus on designing the jobs of individuals and work groups.

2.Profit versus Not-for-Profit.

a)The manager’s job is mostly the same in both profit and not-for-profit organizations.

b)All managers make decisions, set objectives, create workable organization structures, hire and motivate employees, secure legitimacy for their organization’s existence, and develop internal political support in order to implement programs.

c)The most important difference is measuring performance, profit, or the “bottom line.”

d)There is no such universal measure in not-for-profit organizations.

e)Making a profit for the “owners” of not-for-profit organizations is not the primary focus.

f)There are distinctions, but the two are far more alike than they are different.

3.Size of Organization.

a)Definition of small business and the part it plays in our society.

1)There is no commonly agreed-upon definition.

b)Small business—any independently owned and operated profit-seeking enterprise that has fewer than 500 employees.

c)Statistics on small business.

1)98 percent of all nonfarm businesses in the United States.

2)Employ over 60 percent of the private work force.

3)Dominate such industries as retailing and construction.

4)Will generate half of all new jobs during the next decade.

5) Where the job growth has been in recent years.

(a)Companies with fewer than 500 employees have created more than 2 million jobs annually.

(b)Small business start-ups increasing in countries such as China, Japan, Korea, Taiwan, and Great Britain.

d)Managing a small business is different from that of managing a large one.

1)See Exhibit 1-7. (PPT 1-17)

2)The small business manager’s most important role is that of spokesperson.

3) In a large organization, the manager’s most important job is deciding which organizational units get what available resources and how much of them.

4) The entrepreneurial role is least important to managers in large firms.

5)A small business manager is more likely to be a generalist.

6) The large firm’s manager’s job is more structured and formal than in small firms.

7) Planning is less carefully orchestrated in the small business.

8)The small business organizational design will be less complex and structured.

9) Control in the small business will rely more on direct observation.

e)We see differences in degree and emphasis, but not in activities.

4.Management concepts and national borders.

a)Studies that have compared managerial practices between countries have not generally supported the universality of management concepts.

1)In Chapter 2, we will examine some specific differences between countries.

b)Most of the concepts we will be discussing primarily apply to the United States, Canada, Great Britain, Australia, and other English-speaking democracies.

c)Concepts may need to be modified when working with India, China, Chile, or other countries whose economic, political, social, or cultural environments differ greatly from that of the so-called free-market democracies.

5.Making decisions and dealing with change.

a)Managers make decisions and are agents of change.

1)Almost everything managers do requires them to make decisions.

2)The best managers are the ones who can identify critical problems, assimilate the appropriate data, make sense of the information, and decide the best course of action to take for resolving the problem.

b)Successful managers acknowledge the rapid changes around them and are flexible.

1)Successful managers recognize the potential effect of technological improvements on a work unit’s performance.

2) They also realize that people often resist change.

c)Managers need to be in a position to “sell” the benefits of the change while simultaneously helping their employees deal with the uncertainty and anxiety that changes may bring.

d)We'll look at how managers act as agents of change in greater detail in Chapter 7.

Teaching Notes ______

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E.What Skills and Competencies Do Successful Managers Possess?

1.In the 1970s, management researcher Robert L. Katz found that managers must possess four critical management skills.

2.Management skills—those abilities or behaviors that are crucial to success in a managerial position.

a)Two levels—general skills and specific skills.

3.General Skills (PPT 1-18)

a)Conceptual skills refer to the mental ability to analyze and diagnose complex situations.

1)They help managers see how things fit together and facilitate making good decisions.

2) Interpersonal skills encompass the ability to work with, understand, mentor, and motivate other people, both individually and in groups.

b)Technical skills are abilities to apply specialized knowledge or expertise.

1)Top-level managers—these abilities are related to knowledge of the industry and a general understanding of the organization’s processes and products.

2) Middle and lower-level managers—these abilities are related to the specialized knowledge required in the areas with which they work.

c)Political skills are related to the ability to enhance one’s position, build a power base, and establish the right connections.

1)Managers with good political skills tend to be better at getting resources, receive higher evaluations, and get more promotions.

Teaching Notes ______

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4.Specific Skills. (PPT 1-19)

a)Research has also identified six sets of behaviors that explain a little bit more than 50 percent of a manager’s effectiveness.

1)Controlling the organization’s environment and its resources.

2)Organizing and coordinating.

3)Handling information.

4)Providing for growth and development.

5)Motivating employees and handling conflicts.

6)Strategic problem solving.

5.Management Competencies.

a)The most recent approach to defining the manager’s job.

b)These are defined as a cluster of related knowledge, skills, and attitudes related to effective managerial performance.

c)One of the most comprehensive competency studies has come out of the United Kingdom.

1)The management charter initiative (MCI).

2) Based on an analysis of what effective managers should be able to do, the MCI sets generic standards of management competence.

3)There are two sets of standards.

(a)Management I is for first-level managers.

(b)Management II is for middle managers.

(c)Standards for top management are under development.

4)Exhibit 1-8 lists standards for middle management. (PPT 1-20)

(a)For each area of competence, there is a related set of specific elements that define effectiveness in that area.

d)The MCI standards are attracting global interest.

Teaching Notes ______

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III.HOW MUCH IMPORTANCE DOES THE MARKETPLACE PUT ON MANAGERS?

A.Introduction (PPT 1-21)

1.Good managers can turn straw to gold.

2.Managers tend to be more highly paid than operatives.

a)As a manager’s authority and responsibility expand, so typically does his or her pay.

b)Large retail firms such as Best Buy and Bed, Bath and Beyond pay their managers considerably more than their non-managers as a measure of the importance placed on effective management skills.

3.However, not all managers make six-figure incomes.

4.What could you expect to earn as a manager?

a)It depends on level in the organization, education and experience, the type of business, comparable pay standards in the community, and managerial effectiveness.

b)Most first-line supervisors earn between $30,000 and $55,000 a year.

c)Middle managers often start near $45,000 and top out at around $120,000.

d)Senior managers in large corporations can earn $1 million a year or more.

e)In 2002 the average cash compensation (salary plus annual bonus) for executives at the largest U.S. corporations was well over $25 million.

f)In many cases, this compensation was also enhanced by other means, such as stock options.

g)The top 15 of these individuals (CEOs from Tenet Healthcare, Tyco International, Qualcomm, and Activision) averaged more than $35 million in total compensation (including their stock options).

h)Management compensation reflects the market forces of supply and demand.

i)Some controversy surrounds the large dollar amounts paid to these executives (see Ethical Dilemma in Management).