MGT 248 EXAM 1

Management as Investment

The goal is to get the most out of resources, add the most value, or get the best return. In the case of management, employees are usually the 'resources'. What are some ways managers get the most out of these resources? Training Reallocating Empowering

The "Internal" Environment (aka Situational Context)

The internal context or environment greatly influences employee behavior... Examples Include: -Employee perceptions of psychological safety -Perceived norms of fairness -Time pressure (or other kinds of pressure) -Organizational support -Coffee??? -Culture...

Cognitive Dissonance

The mental stress or discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time, or is confronted by new information that conflicts with existing beliefs, ideas, or values When inconsistency (dissonance) is experienced, individuals tend to become psychologically uncomfortable and are motivated to attempt to reduce this dissonance

How does the External Environment affect Managers?

There are three ways that the external environment affects managers: 1.) Its impact on jobs and employment. 2.) The amount of environmental uncertainty. 3.) The nature of stakeholder relationships. As external environmental conditions change, managers face the impact of these changes on jobs and employment. Economists predict that about one quarter of the 8.4 million U.S. jobs eliminated during the most recent economic downturn won't be reinstated. Such readjustments create challenges for managers who must balance work demands with having enough people with the right skills to do the organization's work. Changes in external conditions not only affect the types of jobs available but they also affect how the jobs are created and managed. For example, many employers use flexible work arrangements and contract freelancers or temporary workers.

Dimensions of Culture

These seven dimensions shown in Exhibit 2-4: • Range from low (not typical of the culture) to high (especially typical of the culture). • Provide a composite picture of the organization's culture. • May emphasize one cultural dimension more than the others, essentially shaping the organization's personality and the way organizational members work. —Apple's focus is product innovation (innovation and risk taking). The company "lives and breathes" new product development and employees' work behaviors support that goal. —Southwest Airlines has made its employees a central part of its culture (people orientation) and shows this through the way it treats them.

Span of Control pt2

What determines how many employees I can effectively and efficiently supervise? Effective and efficient span depends on: -Employee experience and training (more they have, larger span) -Similarity of employee tasks (more similarity, larger span) -Complexity of those tasks (more complex, smaller span)

Heuristics and Cognitive Biases

When managers make decisions, they not only use their own particular style but also may use "rules of thumb" or judgmental shortcuts called heuristics to simplify their decision making. However, rules of thumb are not necessarily reliable and can lead managers into error while processing and evaluating information.

Centralization and Decentralization

Who should make decisions in my organization? When organizing, managers need to ask, "At what level are decisions made?" Centralization is the degree to which decision making takes place at upper levels of the organization. Decentralization is the degree to which lower-level managers provide input or actually make decisions. Traditionally, organizations were structured in a pyramid, with power and authority concentrated near the top. Today's organizations are more complex and responsive to dynamic changes in their environments, so many managers believe that decisions need to be made by those individuals closest to the problems. Notice, however, that decentralization doesn't imply that top-level managers no longer make decisions.

Work Specialization

Work specialization is the division of work activities into separate job tasks. At the Wilson Sporting Goods factory in Ada, Ohio, workers making NFL footballs specialize in job tasks—such as molding, stitching and sewing, and lacing—to increase work output. When first introduced, specialization almost always generated higher productivity. But at some point, the human diseconomies—boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover—exceed the economic advantages, as seen here in Exhibit 6-1. Most managers today see work specialization as an important organizing mechanism because it helps employees to be more efficient. However, managers also have to recognize its limitations. E.g., assembly line Why not just have all workers engage in all tasks? -Inefficient -Variation in task difficulty -Compensation issues When does work specialization become inefficient? Knowledge workers -Demotivating, difficult to assess High levels of specialization -Robotic movements -Boredom, fatigue, stress

sunk cost (trap)

a.) Sunk cost: Cost that has already been incurred and cannot be recovered b.) Sunk cost trap: Tendency for people to irrationally follow through on an activity that is not meeting their expectations because of the time and/or money they have already spent on it c.) Kahneman & Tversky Organisms that placed more urgency on avoiding threats than they did on maximizing opportunities were more likely to pass on their genes Prospect of loss is more powerful than promise of gain

Availability bias

refers to a situation where individuals assess the frequency, probability, or likely causes of an event based on the degree to which instances or occurrences of that event are readily available in memory What does this mean for managers? Managers are particularly susceptible to availability bias as they may view situations differently depending on their specific functional area of training Example: House M.D. TV Series Their functional background often effects their diagnoses

Anchoring and adjustment bias

refers to the tendency for individuals to rely too heavily on arbitrary numbers, irrelevant traits, or facts when making decisions Key idea: When individuals rely too heavily on the first piece of information offered (the "anchor") when making decisions Usually once the anchor is set, there is a bias toward that value. For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth. -Example: JoS A. Banks -Example: The length of the Mississippi river

Nature of the Corporation

1. Corporations are distinct legal entities which exist separate from shareholders (Shareholders have limited liability) 2. Corporations can sue and be sued 3. Raise capital through the issuance of stock/shares

Organiation

A deliberate arrangement of people brought together to accomplish a specific purpose

Toxic cultures:

Cultures that harm employees and can ultimately undermine the sustainability and survival of the firm. -Assumptions are misaligned with espoused values -General acceptability of bad behavior -Low levels of psychological safety

What is Organizational Culture?

Each of us has a unique personality that influences the way we act and interact. An organization has a personality too—we call it CULTURE. Google has created a creative and innovative culture at their headquarters in California with an android googleplex, bikes, and bringing your dog to work.

Management Roles Approach

In the late 1960s, Henry Mintzberg dispelled long-held notions that managers were reflective thinkers who carefully processed information before making decisions. His empirical study of 5 chief executives showed that managers perform ten different but highly interrelated roles. He categorized these actions around the following three general categories: 1. Interpersonal relationships: Figurehead, leader, and liaison. 2. Informational transfer: Monitor, disseminator, and spokesperson. 3. Decision-making: Entrepreneur, disturbance handler, resource allocator, and negotiator.

Common Errors

When managers make decisions, they not only use their own particular style but also may use "rules of thumb" or judgmental shortcuts called heuristics to simplify their decision making. However, rules of thumb are not necessarily reliable and can lead managers into error while processing and evaluating information. Exhibit 4-5 shows 12 common decision errors and biases: 1.) Overconfidence occurs when decision makers think they know more than they do or hold unrealistically positive views of themselves and their performance. 2.) Immediate gratification describes decision makers who want immediate rewards but want to avoid immediate costs. For these individuals, decision choices that provide quick payoffs are more appealing than those with payoffs in the future. 3.) The anchoring effect describes when decision makers fixate on initial information—such as first impressions, ideas, prices, and estimates—and then fail to adequately adjust for subsequent information. 4.) Selective perception occurs when decision makers organize and interpret events based on their biased perceptions, which influence the information they pay attention to, the problems they identify, and the alternatives they develop. 5.) Confirmation bias describes decision makers who seek out information that reaffirms their past choices and who discount information that contradicts past judgments. Such people tend to accept, at face value, information that confirms their preconceived views and are critical and skeptical of information that challenges these views. 6.) The framing bias occurs when decision makers select and highlight certain aspects of a situation while excluding others. By drawing attention to specific aspects of a situation and highlighting them, they downplay or omit other aspects, distort what they see, and create incorrect reference points. 7.) The availability bias occurs when decision makers focus on events that are the most recent and vivid in their memory. As a result, their ability to recall events objectively results in distorted judgments and probability estimates. 8.) Representation bias describes how decision makers assess the likelihood of an event based on how closely it resembles other events and then draw analogies and see identical situations where they don't necessarily exist. 9.) The randomness bias describes when decision makers try to create meaning out of random events. 10.) The sunk costs error occurs when decision makers forget that current choices can't correct the past. They incorrectly fixate on past expenditures of time, money, or effort rather than on future consequences when they assess choices. 11.) Decision makers exhibiting self-serving bias take credit for their successes and blame failures on outside factors. 12.) Finally, the hindsight bias is the tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known. Awareness of these biases helps managers to avoid their negative effects and can encourage them to ask colleagues to identify weaknesses in their decision-making style that the managers can then self-correct.

Artifacts: Organizational Language

Words used to address people, describe clients, etc. -E.g., Zappos refers to employees as 'partners' Leaders use phrases and metaphors as cultural symbols -e.g.. General Electric's "grocery store" - Jack Welch Common phrases -E.g., Google's hyper-rationality; "the data suggests"

Middle Managers (functional or divisional)

-Found between the lowest and top levels of the organization. -Often responsible for translating the goals set by top managers into specific details that lower-level managers will see get done. -Middle managers fall between the lowest and highest levels of the organization. They often manage other managers and sometimes nonmanagerial employees, and are responsible for translating the goals set by top managers into specific detailed tasks that lower-level managers oversee. Titles include: agency head, unit chief, division manager, or project leader.

First-Line Managers

-Responsible for directing the day-to-day activities of nonmanagerial employees. -First-line managers are responsible for directing the day-to-day activities of nonmanagerial employees. Titles include: supervisor, shift manager, or unit coordinator.

Top Managers

-Responsible for making decisions about the direction of the organization and defining policies and values that affect all organizational members. -Top managers are those at or near the top of an organization who make decisions about the direction of the organization and establish policies and philosophies that affect all organizational members. Titles include: president, vice president, chancellor, managing director, or chief executive officer.

Team Leaders

-Responsible for managing and facilitating the activities of work team. -Becoming more common for organizations using employee work teams. -Team leaders are a special category of lower-level managers that have become more common as organizations have moved to using employee work teams to do work. They typically report to a first-line manager.

What is Management?

-The process of getting things done effectively and efficiently, with and through people. -Principles of management are the means by which you actually get things done through others—individually, in groups, or in organizations. -Effectiveness: Doing the right things -Efficiency: Doing things right -Management is similar to investment. The goal is to get the most out of resources, add the most value, or get the best return. In the case of management employees are usually the 'resources'

Culture is:

1. Culture is perceived. It's not something that can be physically touched or seen, but employees perceive it on the basis of what they experience within the organization. 2. Culture is descriptive. It's concerned with how members perceive or describe the culture, not with whether they like it. 3. Culture is shared. Even though individuals may have different backgrounds or work at different organizational levels, they tend to describe the organization's culture in similar terms.

How Organizational Culture Affects Managers

1.) Effect on what managers do -Must be aware of own behavior --Managers act as a sense-making device for employees --Behavioral modeling -Effect on how managers make decisions --Planning --Organizing --Leading --Controlling Organizational culture affects managers in two primary ways: 1.) Through its effect on what employees do and how they behave, and 2.) Through its effect on what managers do as they plan, organize, lead, and control. Ambrosia Humphrey, vice-president of talent at Hootsunite, describes how the power of organizational culture affects her as a manager. She says that a top priority for her is to nurture and nourish the company's culture by continually creating employee experiences that reflect transparency, one of the company's important values.

Moving to a Divisional Structure

Advantages: -Allows top management to focus on higher-level goals -Focuses on results -Accountability Disadvantages: -Duplication of resources and activities -Higher costs -Reduces efficiency

Efficiency and Effectiveness

As illustrated here, while efficiency is concerned with the means of getting things done, effectiveness is concerned with the ends, or attainment of organizational goals. The concepts are different, but interrelated. It's easier to be effective if you ignore efficiency. Poor management is often due to both inefficiency and ineffectiveness OR effectiveness achieved without regard for efficiency. Good management is concerned with both attaining goals (effectiveness) and doing so as efficiently as possible.

Components of the External Environment (6)

As shown here in Exhibit 2-1, the external environment includes six components: -The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages. -The demographic component includes trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. -The technological component focuses on scientific and industrial innovations. -The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior. -The political/legal component looks at federal, state, and local laws, as well as other countries' laws and global laws. It also includes a country's political conditions and stability. -The global component encompasses issues associated with globalization and a world economy.

Is the Manager's Job Universal? (ii) Size of the Organization

As we see in this figure, managerial roles in small and large businesses differ. For the purposes of our discussion, a small business is an independent business having fewer than 500 employees that doesn't necessarily engage in any new or innovative practices and has relatively little impact on its industry. The most important role of a small business manager is that of spokesperson, performing externally in meeting with customers, arranging financing with bankers, searching for new opportunities, and stimulating change. The actions of a manager in a large organization, however, are directed internally, deciding which organizational units get which and how much of the available resources. A small business manager is more likely to be a generalist in a less formal, less structured, and less complex environment than his counterpart in a large organization. Again, as with organizational level, we see differences in degree and emphasis but not in the activities that managers do. Managers in both small and large organizations perform essentially the same activities, but how they go about those activities and the proportion of time they spend on each are different.

Moving from a Simple to a Functional Structure

As your organization grows, it likely makes sense to begin grouping activities Functional versus Simple -A functional structure is basically functional departmentalization applied to the entire organization -Simple structures can still departmentalize, but it is not characteristic of its structure Functional structures often have managers running each functional area

How do Authority and Power differ?

Authority refers to a right whose legitimacy is based on an authority figure's position in the organization; it goes with the job. -Authority (almost) always involves some level power Early management writers assumed that the rights inherent in one's position in an organization were the sole source of influence and that the higher a manager's position in the organization, the more influence he or she had. Today, however, management recognizes that you don't have to be a manager to have power. Authority and power are often considered the same thing, but they're not. Authority is a right and its legitimacy is based on an authority figure's position in the organization. Power, on the other hand, refers to an individual's capacity to influence decisions.

Confirmation Bias

Confirmation bias describes decision makers who seek out information that reaffirms their past choices and who discount information that contradicts past judgments. -People experiencing this bias tend to accept, at face value, information that confirms their preconceived views and are critical and skeptical of information that challenges these views. Example: elections, controversial issues, etc. Search for info that puts favored candidate/party in positive light Opposite for opposing candidate

Underlying Assumptions:

Culture is best uncovered by... -Observing how individuals interact and the choices they make -Inquiring into people's beliefs and perceptions regarding what is right and acceptable behavior -Basic assumptions manifest themselves in a variety of ways. Sometimes they're reflected in the espoused values and in artifacts, sometimes not.

Departmentalization

Departmentalization refers to how jobs/tasks/activities are grouped together. -Five common forms of departmentalization -No one best way; rather it depends on the particular needs and goals of the organization Early management writers argued that common work activities needed to be grouped together to get them done in a coordinated and integrated way. How jobs are grouped together is called departmentalization. There are five common forms of departmentalization (as seen in Exhibit 6-2), although an organization may use its own unique method. Functional departmentalization, or grouping activities by function—such as engineering, accounting, information systems, and human resources—is one of the most popular ways of organizing the workplace. Its major advantage is that it achieves economies of scale by placing people with common skills and specializations into common units. Product departmentalization groups employees based on a corporation's major product areas. Each product is under the authority of a senior manager who is a specialist in, and is responsible for, everything related to his or her product line. The advantage of product grouping is that it increases accountability for product performance because all activities related to a specific product are under the direction of a single manager. 3. Employees can also be grouped by the type of customer an organization seeks to reach. For example, the sales activities in an office supply firm can be divided into three departments that serve retail, wholesale, and government customers, respectively. The assumption underlying customer departmentalization is that customers in each department have a common set of problems and needs that can best be met by specialists. 4. Another way to departmentalize is on the basis of geography or territory, which is called geographic departmentalization. The sales function might have western, southern, midwestern, and eastern regions. 5. Process departmentalization groups activities on the basis of work or customer flow. Examples of process departmentalization can be found in many states' motor vehicle offices and in health care clinics. Units are organized around common skills needed to complete a certain process. It is interesting to note that some companies, such as Black & Decker, organize their divisions along functional lines, their manufacturing units around processes, their sales around geographic regions, and their sales regions around customer groupings. Still other organizations use cross-functional teams, which are teams comprised of individuals from various departments who tackle complex tasks in which diverse skills are needed. Note also that today's competitive environment has refocused the attention of management on its customers, so many organizations are placing greater emphasis on customer departmentalization.

How to Manage anchoring effects

Dropping effective anchors -Zone of possible agreement (ZOPA) -Frame anchor as flexible Defuse other party's anchor -Quickly diffuse anchor -Propose and justify counteroffer

How Organizational Culture Affects Employees

Effects employees' attitudes, perceptions, and behavior -Culture provides a sense of identity to members and increases their commitment to the organization -Culture is a sense-making device for organization members -Culture reinforces the values of the organization -Culture serves as a control for shaping behavior

External Environment

Factors, forces, situations, and events outside the organization that affect its performance.

Is the Manager's Job Universal? (i) Level in the Organization

First we'll examine how a manager's level in the organization impacts the role. Although a supervisor and the CEO of a company may not do exactly the same things, it doesn't mean that their jobs are inherently different. The differences are of degree and emphasis but not of activity. That is, the decisions of a top manager will have greater ramifications than those of a middle manager due to the content of the decision. All managers regardless of level, make decisions and plan, lead, organize, and control. But the amount of time a manager gives to each activity is not necessarily constant. Also, the content of the managerial activities also changes with the manager's level. The figure illustrates this variability.

Framing Bias

Framing bias refers to the tendency of decision makers to be influenced by the way a situation or problem is presented 90% fat free sounds healthy 10% fat not so much! I will receive a 3% commission payment on your investment of $100,000 I will receive a $3,000 commission payment on your investment of $100,000

Sunk cost trap EX

Hal Arkes and Catehrine Blumer created an experiment in 1985 which demonstrated your tendency to go fuzzy when sunk costs come along. They asked subjects to assume they had spent $100 on a ticket for a ski trip in Michigan, but soon after found a better ski trip in Wisconsin for $50 and bought a ticket for this trip too. They then asked the people in the study to imagine they learned the two trips overlapped and the tickets couldn't be refunded or resold. Which one do you think they chose, the $100 good vacation, or the $50 great one? Over half of the people in the study went with the more expensive trip. It may not have promised to be as fun, but the loss seemed greater. That's the fallacy at work, because the money is gone no matter what. You can't get it back. The fallacy prevents you from realizing the best choice is to do whatever promises the better experience in the future, not which negates the feeling of loss in the past.

Four Functions Approach (history)

Henri Fayol was a French mining engineer. Developed one of the first theories of management During the early 1900s, Fayol developed the 5 functions (now 4) of management, and a series of 14 principles of management These functions and principles still influence management practices today.

Management Roles Approach (history)

Henry Mintzberg 1968 performed a study of 5 CEOs for several weeks He captured data through a technique called 'structured observation' The purpose of his study was to identify the various roles of management, and to determine what makes some managers more effective than others.

Artifacts: Organizational Stories

High above the lobby is a freestanding "fan." It doesn't actually rotate of it's own accord, but the story goes that a mischievous VP once crawled into the recess and rigged up a chain and motor to the fan. He wanted to see how long it took for employees to notice the slowly articulating arms. He was laughing for over two weeks until others caught on. a.) Social prescriptions of desired behavior b.) Most effective stories: --Describe real people --Assumed to be true --Known throughout the organization

Models of Organizational Design

How an organization is structured depends on contingency variables such as strategy, size, technology, and environment. Let's take a look at the two generic organization structure models shown here. The mechanistic organization (or bureaucracy) - Rigid and tightly controlled structure that combines traditional aspects of all six elements of organization structure. Combines traditional aspects of all six elements of organization structure: high specialization, rigid departmentalization, clear chain of command, narrow spans of control leading to taller structure, centralization, and high formalization. In contrast, the organic organization - Highly adaptive and flexible structure, which allows it to change rapidly as required. Collaboration (both vertical and horizontal), adaptable duties, few rules, informal communication, decentralized decision authority, and wider spans of control leading to flatter structures.

Span of Control

How many employees can I efficiently and effectively supervise? Traditional view: typically no more than 6 employees -But, managerial level may change this... -As managers rise in the organization, problems become less structured, and so managers need a smaller span of control Contemporary view: span of control is increasing -Save time in decision-making, money, etc. Next comes the question of how many employees a manager efficiently and effectively can supervise. Increasingly, contingency variables are influencing this span. For example, the more training and experience employees have, the less direct supervision they need. Other contingency variables include similarity of employee tasks, the complexity of those tasks, the physical proximity of employees, the degree to which standardized procedures are in place, the sophistication of the organization's management information system, the strength of the organization's value system, and the manager's preferred managing style.

Formalization

How standardized should my employees jobs be, and how strictly should I enforce desired behavior? Formalization refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. -Depends on context (employee experience, external environment, etc.) Formalization refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. In highly formalized organizations, there are explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes. Although some formalization is necessary for consistency and control, today many organizations rely less on strict rules and standardization to guide and regulate employee behavior than they did in the past. Employees are given the latitude, for example, to accommodate a customer dropping off a roll of film to develop a half-hour after the store's cutoff time. With low formalization, the employee could calculate that she can develop the film before store closing and thus, demonstrate good customer service and bring in revenue. Of course, there will always be organizational rules that are important for employees to follow—and these rules should be explained so employees understand why it's important to adhere to them.

Traditional Organizational Structures

In making structural decisions, managers can choose either a traditional or contemporary design. Within traditional organizational design, there are three structures: simple, functional, and divisional, all of which tend to be mechanistic in nature. Here in Exhibit 6-9 we see a summary of the strengths and weaknesses of each. Since most companies start as entrepreneurial ventures, they use a simple structure, which is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization. The simple structure is most widely used in smaller businesses and it's fast, flexible, inexpensive to maintain, and has clear accountability. However, as an organization grows, there are few policies to guide operations, which creates information overload at the top and slows decision making. As more employees are added, most small businesses tend to become more specialized and formalized. Rules and regulations are introduced, work becomes specialized, departments are created, levels of management are added, and the organization becomes increasingly bureaucratic. Two of the most popular bureaucratic design options grew out of functional and product departmentalization. They are called the functional and divisional structures.

loss aversion example

Kahneman and Tversky also conducted an experiment to demonstrate loss aversion. Imagine you go see a movie which costs $10 for a ticket. When you open your wallet or purse you realize you've lost a $10 bill. Would you still buy a ticket? You probably would. Only 12 percent of subjects said they wouldn't. Now, imagine you go to see the movie and pay $10 for a ticket, but right before you hand it over to get inside you realize you've lost it. Would you go back and buy another ticket? Maybe, but it would hurt a lot more. In the experiment, 54 percent of people said they would not. The situation is the exact same. You lose $10 and then must pay $10 to see the movie, but the second scenario feels different. It seems as if the money was assigned to a specific purpose and then lost, and loss sucks. This is why Farmville is so addictive people have lost their jobs over it.

Chain of Command and Line of Authority

Managers need to clarify who reports to whom, which is known as the chain of command—that is, the line of authority extending from upper to lower organizational levels. Authority -Delegated downward -Related to one's position Responsibility When organizing work, managers need to clarify who reports to whom, which is known as the chain of command—that is, the line of authority extending from upper to lower organizational levels. Authority refers to the rights inherent in a managerial position to give orders and expect those orders to be obeyed. Authority is a major concept discussed by the early management writers, who viewed it as the glue that held an organization together. Each management position had specific inherent rights associated with the position's rank or title. When managers delegate authority, they must allocate commensurate responsibility. That is, when employees are given rights they also assume a corresponding obligation to perform and be held accountable for their performance. Early management writers distinguished between two forms of authority: line authority and staff authority. Line authority entitles a manager to direct the work of an employee according to the chain of command, which is shown here in Exhibit 6-3. In the chain of command, every manager is subject to the direction of his or her superior. Sometimes the term "line" is used to differentiate line managers from staff managers. In this context, line refers to managers whose organizational function contributes directly to the achievement of organizational objectives. Whether a manager's function is classified as line or staff depends on the organization's objectives.

Four Functions Approach

Managers perform certain activities, tasks, or functions as they direct and oversee others' work. This approach was first proposed by French Industrialist Henri Fayol. He said managers engaged in five management activities: plan, organize, command, coordinate, and control (POCCC). His choice of these five functions was based on his own observations of the mining industry, not from a formal survey. Today, those management functions have been condensed to the following four: 1. Planning includes defining goals, establishing strategy, and developing plans to coordinate activities. 2. Organizing includes determining which tasks need to be done and by whom, how tasks are to be grouped, who reports to whom, and who will make decisions. 3. Leading includes motivating employees, selecting the most effective communication channel, and resolving conflicts. 4. Controlling includes monitoring performance, comparing it with goals, and correcting any significant deviations.

Start Simple

Most companies start out using a simple structure -Low departmentalization -Wide spans of control -Authority centralized in a single person -Little formalization Some tips for your company/department -Departmentalize if it makes sense to Probably don't want multiple levels of management -But you may want some "department heads" -You can decide how much authority they have over others -You decide how formalized you want your org/dept to be

Is the Manager's Job Universal?

National Borders Management concepts are not easily transferable across other countries, particularly non-Western countries such as India, China, Chile, etc. Example: Management in China Confucian values of respect Traditionality Implications? The most important difference between the two is how performance is measured. Profit, or the "bottom line," is an unambiguous measure of a business organization's effectiveness. Not-for-profit organizations don't have such a universal measure, making performance measurement more difficult. But even not-for-profit organizations need to make money to continue operating. If management concepts were transferable across countries, they would apply universally in all parts of the world. However, research shows that while concepts transfer easily among many English-speaking countries, management concepts will likely need to be modified when dealing with India, China, Chile, or other countries with economic, political, social, or cultural environments that differ from those of the so-called free-market democracies.

How Are Managers Different from Nonmanagerial Employees?

Nonmanagerial Employees -Work directly on tasks -Not responsible for overseeing others' work Managers -Direct and oversee the activities of others -May have work duties not related to overseeing others

Types of Decisions pt 2

Nonprogrammed decisions (require conscious thinking) Unique and nonrecurring decisions that requires custom-made decisions Business example: McDonald's decided to offer healthier alternatives Business example: Entering a new market Business example: Engaging in a merger There was a disruption in the routine that required conscious thinking to identify an appropriate solution Examples of nonprogrammed decisions include deciding whether to acquire another organization or to sell off an unprofitable division. Such decisions are unique and nonrecurring so when a manager confronts an unstructured problem, no cut-and-dried solution is available. The creation of a new organizational strategy is a nonprogrammed decision. It is different from previous organizational decisions because the issue is new, a different set of environmental factors exists, and other conditions have changed.

Artifacts (physical structures)

Oakley, Inc.'s innovative, protective and competitive corporate culture is apparent in its building design and workspace. The building looks like a vault to protect its cherished product designs (eyewear, footwear, apparel and watches).

What is Organizational Design and Structure?

Organizational structure refers to how work is coordinated between individuals and teams within an organization When managers develop or change the organization's structure, they're engaging in organizational design Organizational structure: Explains reporting relationships (who reports to whom) Describes formal and informal communication channels Sets the foundation for the type of decision-making used

Elements of Organizational Structure

Organizing is the management function that creates the organization's structure. When managers develop or change the organization's structure, they're engaging in organization design, which is the process of making decisions about how specialized jobs should be, the rules to guide employees' behaviors, and the level at which decisions will be made. Organizing and organizational structure have undergone much change in the 80 years since the basic concepts of organization design were formulated by management writers such as Henri Fayol and Max Weber. Let's now look at the six basic elements of organizational structure: -Work specialization -Departmentalization -Authority and responsibility -Span of control -Centralization versus decentralization -Formalization

Power vs Authority

Power refers to an individual's ability to influence decisions. Power does not necessitate authority -Three-dimensional concept -E.g., administrative assistants, secretaries, etc. Cone analogy of power 1.) Move up 2.) Move in Exhibit 6-5 depicts the difference between authority and power. The boxes in Part A portray authority. Each horizontal grouping represents a functional area in which the authority applies. The influence one holds in the organization is defined by the vertical dimension in the structure. The higher one is in the organization, the greater one's authority. Power, on the other hand, is a three-dimensional concept (as shown by the cone in Part B of Exhibit 6-5). It includes not only the functional and hierarchical dimensions but also a third dimension called centrality. Power is made up of both one's vertical position and one's distance from the organization's power core or center. If the cone in Exhibit 6-5 were an organization, the center of the cone would be the power core. The closer one is to the power core, the more influence one has on decisions. In fact, the existence of a power core is the only difference between A and B in Exhibit 6-5. The top of the cone corresponds to the top of the hierarchy, the middle of the cone to the middle of the hierarchy, and so on. Similarly, the functional groups in A become wedges in the cone. Each wedge represents a functional area. The cone analogy acknowledges two facts: The higher one moves in an organization (an increase in authority), the closer one moves to the power core; and It's not necessary to have authority to wield power because one can move horizontally inward toward the power core without moving up. For instance, as gatekeepers for their bosses, assistants often are powerful in a company even though they have little authority.

Types of Decisions

Programmed decisions (automated response) Repetitive decisions that can be handled using a routine approach Example: Which road to take to work Example: What to eat, what to wear, etc. Business example: Customer complaints The automated response we use to make these decisions is called a decision rule Decisions can be divided into two categories, just as problems can. Programmed, or routine, decision making is the most efficient way to handle structured problems. For example, what does a manager do if an auto mechanic damages a customer's rim while changing a tire? Because the company probably has a standardized method for handling this type of problem, it's considered a programmed decision, which tends to rely heavily on previous solutions—such as replacing the rim at the company's expense. Managers can use three guides for making programmed decisions: Procedures Rules Policies A procedure is a series of interrelated sequential steps that a manager can use when responding to a well-structured problem. A rule is an explicit statement that tells a manager what can or cannot be done. A policy is a guideline for making decisions.

confirmation Bias pt2

Seek information that can falsify your beliefs -Helps you avoid the confirmation bias as you seek new information Challenge your own assumptions -Play Devil's Advocate with own ideas -Imagine yourself holding opposing view Avoid conveying your beliefs and intentions when asking questions to your teammates, consumers, employees -Helps you prevent the confirmation bias in others

Values

Shared principles, standards and goals. -Even though culture may not be immediately observable, identifying a set of values that might be used to describe an organization's culture helps us identify, measure, and manage culture more effectively

Corporate Governance

Shareholders: Own the firm Top Management Team (TMT): Make decisions involving the firm's direction, purpose, etc. Board of Directors: Act in the interest of the owners/monitor TMT

Bounded Rationality

Since most decisions that managers make don't fit the assumptions of perfect rationality, a more realistic approach to describing how managers make decisions is the concept of bounded rationality. This means that managers make decisions rationally but are limited (or bounded) by their ability to process information. Because they can't possibly analyze all information on all alternatives, managers satisfice, rather than maximize. That is, they accept solutions that are "good enough." Remember that decision making is also influenced by the organization's culture, internal politics, power considerations, and escalation of commitment, which is an increased commitment to a previous decision despite evidence that it may have been wrong.

Line and Staff Authority

Staff and Line refer to different types of functions (i.e., grouping of tasks). -A line function provides direct value to the organization (e.g., production, sales, etc.) -A staff function provides indirect value (support) to the organization (e.g., HR, public relations, etc.) Line authority -Total right to direct and control those that report to them Staff authority -Right to advise line managers As organizations get larger and more complex, line managers find that they do not have the time, expertise, or resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advise, and generally reduce some of their informational burdens. For example, if a hospital administrator cannot effectively purchase all the supplies the hospital needs, the administrator creates a purchasing department, which is a staff department. Exhibit 6-4, seen here, illustrates how line and staff authority relate.

Strength of Culture

Strong cultures: Cultures in which the key values are deeply held and widely shared. -A strong culture is one that is shared by organizational members (aligned values) -The stronger a company's culture, the more likely it is to affect the way employees think and behave. Strong cultures can: -Substitute for formal rules and regulations -Create predictability, orderliness, and consistency -A strong culture can improve or hinder performance The more employees accept the organization's key values and the greater their commitment to those values, the stronger the culture is. Most organizations have moderate to strong cultures; that is, there is relatively high agreement on what's important, what defines "good" employee behavior, what it takes to get ahead, and so forth. The stronger a culture becomes, the more it affects what employees do and the way managers plan, organize, lead, and control.