978-1305502215 Chapter 1 Part 1

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CHAPTER 1

THE WORLD OF INNOVATIVE MANAGEMENT

CHAPTER OUTLINE

New Manager Self-Test: Are You Ready to Be a Manager?

I. Management Competencies for Today’s World

II. The Basic Functions of Management

III. Organizational Performance

IV. Management Skills

A. When Skills Fail

V. What Is a Manager’s Job Really Like?

A. Making the Leap: Becoming a New Manager

B. Manager Activities

C. Manager Roles

VI. Managing in Small Businesses and Nonprofit Organizations

VII. Innovative Management Thinking for a Changing World

New Manager Self-Test: Are You a New-Style or an Old-Style Manager?

VIII. Management and Organization

IX. Classical Perspective

A. Scientific Management

B. Bureaucratic Organizations

C. Administrative Principles

X. Humanistic Perspective

A. Early Advocates

B. Human Relations Movement

C. Human Resources Perspective

New Manager Self-Test: What’s Your Mach?

D. Behavioral Sciences Approach

XI. Management Science

XII. Recent Historical Trends

A. Systems Thinking

B. Contingency View

C. Total Quality Management

XIII. Innovative Management Thinking for a Changing World

A. Contemporary Management Tools

XIV. Managing the Technology-Driven Workplace

A. Social Media Programs

B. Customer Relationship Management

The World of Innovative Management •

ANNOTATED LEARNING OUTCOMES

After studying this chapter, students should be able to:

1. Describe five management competencies that are becoming crucial in today’s fast–

paced and rapidly changing world.

2. Explain the difference between efficiency and effectiveness and their importance for

organizational performance.

3. Describe technical, human, and conceptual skills and their relevance for managers.

Conceptual skill is the cognitive ability to see the organization as a whole and the

relationships among its parts. It involves knowing where one’s team fits into the total

4. Summarize the personal challenges involved in becoming a new manager.

Becoming a new manager requires a profound transformation in the way a person thinks

5. Define 10 roles that managers perform in organizations.

Informational roles include the functions used to maintain and develop an information

network.

Interpersonal roles refer to relationships with others and are related to human skills.

Decisional roles come into play when managers must make choices.

6. Explain the unique characteristics of the manager’s role in small businesses and

nonprofit organizations.

7. Identify and explain major developments in the history of management thought.

8. Describe the major components of the classical, humanistic management

perspectives, as well as management science and its current uses.

The thrust of the classical perspective was to make organizations efficient operating

processes. Major components include the:

a. Human relations movement, which recognized and directly responded to social

The World of Innovative Management •

b. Operations management, specializing in the physical production of goods and

services, which includes methods such as forecasting, inventory modeling, linear

and nonlinear programming, queuing theory, scheduling, simulation, and break-

even analysis.

c. Information technology, the most recent subfield, which is often reflected in

management information systems designed to provide relevant information to

managers in a timely and cost-effective manner, such as intranets, extranets, and

various management software programs.

9. Explain the major concepts of systems thinking, the contingency view, and total

quality management.

Systems thinking is the ability to see both the distinct elements of a system or situation

10. Name contemporary management tools and some reasons that management trends

change over time.

Current popular management tools include benchmarking, strategic planning, mission

11. Describe the management changes brought about by a technology-driven workplace,

including the role of social media programs, customer relationship management

(CRM), and supply chain management.

Social media is used by managers to generate awareness about a company’s products and

The World of Innovative Management •

manage large amounts of customer data. Supply chain management usually involves

sophisticated electronic technology in managing the sequence of suppliers and purchases,

from obtaining raw materials to distributing finished goods to customers.

LECTURE OUTLINE

NEW MANAGER SELF-TEST: ARE YOU READY TO BE A MANAGER?

In a world of rapid change, unexpected events, and uncertainty, organizations need

managers who can build networks and pull people together toward common goals. This

exercise helps students determine whether their priorities align with the demands placed

on today’s managers.

I. MANAGEMENT COMPETENCIES FOR TODAY’S WORLD Exhibit 1.1

Management is the attainment of organizational goals in an effective and efficient

manner through planning, organizing, leading, and controlling organizational resources.

There are two important ideas in this definition: (1) the four functions of planning,

organizing, leading, and controlling, and (2) the attainment of organizational goals in an

efficient and effective manner.

II. THE BASIC FUNCTIONS OF MANAGEMENT

According to Peter Drucker, management involves five tasks: (1) set objectives, (2)

organize, (3) motivate and communicate, (4) measure, and (5) develop people. Exhibit 1.2

The four basic management functions are: Exhibit 1.3

A. Planning

Planning is the management function concerned with identifying goals for future

organizational performance and deciding on the tasks and use of resources needed

to attain them. It defines where the organization wants to be in the future and

how to get there.

B. Organizing

Organizing is the management function concerned with assigning tasks, grouping

tasks into departments, delegating authority, and allocating resources across the

organization. Organizing follows planning and reflects how the organization tries

to accomplish the plan.

C. Leading

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Leading is the management function that involves the use of influence to motivate

employees to achieve the organization’s goals. It involves motivating entire

departments and divisions as well as those individuals working immediately with

the manager.

D. Controlling

Controlling is the management function concerned with monitoring employees’

activities, keeping the organization on track toward its goals, and making

corrections as needed. Trends toward employment and trust of employees have

led many companies to place less emphasis on top-down control and more

emphasis on training employees to monitor and correct themselves. However, the

ultimate responsibility for control still rests with managers.

III. ORGANIZATIONAL PERFORMANCE

An organization is a social entity that is goal directed and deliberately structured. Social

entity means two or more people. Goal directed means the organization is designed to

achieve some outcome or goal such as make a profit. Deliberately structured means

tasks are divided, and responsibility for their performance is assigned to organization

members.

The manager’s responsibility is to coordinate resources in an effective and efficient

manner to accomplish the organization’s goals. Organizational effectiveness is the

degree to which the organization achieves a stated goal, or succeeds in accomplishing

what it tries to do. Organizational efficiency refers to the amount of resources used to

achieve an organizational goal. It is based on the how much raw material, money, and

people are necessary for producing a given volume of output. All managers have to pay

attention to costs, but severe cost cutting to improve efficiency can sometimes hurt

organizational effectiveness.

The ultimate responsibility of managers is to achieve high performance, which is the

organization’s ability to attain its goals by using resources in an efficient and effective

manner.

Discussion Question #4: Think about the highly publicized safety problems at General

Motors (GM). One observer said that a goal of efficiency had taken precedence over a

goal of quality within this company. Do you think managers can improve both efficiency

and effectiveness simultaneously? Discuss. How do you think GM’s leaders should

respond to the safety situation?

NOTES__________________________________________________________________

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IV. MANAGEMENT SKILLS Exhibits 1.4, 1.5

A. When Skills Fail Exhibit 1.6

1. During turbulent times, managers must use all their skills and competencies to

benefit the organization and its stakeholders.

2. Many companies falter because managers fail to listen to customers,

misinterpret signals from the market, or can’t build a cohesive team.

3. The number one reason for manager failure is ineffective communication

skills and practices. Especially in times of uncertainty or crisis, if managers do

not communicate effectively, including listening to employees and customers

and showing genuine care and concern, organizational performance and

reputation suffer.

Discussion Question #1: How do you feel about having management responsibilities in

today’s world, characterized by uncertainty, ambiguity, and sudden changes or threats

from the environment? Describe some skills and qualities that you think are important to

managers working in these conditions.

NOTES__________________________________________________________________

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V. WHAT IS A MANAGER’S JOB REALLY LIKE?

A. Making the Leap: Becoming a New Manager Exhibit 1.7

Becoming a manager involves a profound transformation in the way people think

of themselves, called personal identity, that includes letting go of deeply held

attitudes and learning new ways of thinking. Specific aspects of this

transformation include changing one’s identity:

1. from a specialist who performs specific tasks to a generalist who

coordinates diverse tasks;

2. from things done through one’s own efforts to getting things done through

other people;

3. from an individual actor to a team and network builder motivator and

organizer; and

4. from working relatively independently to working in a highly

interdependent manner.

Most new managers are unprepared for the variety of activities managers

routinely perform.

B. Manager Activities

1. Adventures in Multitasking

Managerial activity is characterized by variety, fragmentation, and brevity.

The average time spent on any one activity is less than nine minutes, and

managers must be able to shift gears quickly.

2. Life on Speed Dial

a. Managers perform a great deal of work at an unrelenting pace, requiring

great energy. Most top executive routinely work at least 12 hours a day

and spend 50 percent or more of their time traveling.

b. Calendars are often booked months in advance, but unexpected

disturbances erupt every day.

c. Majority of executives’ meetings and other contacts are ad hoc, and even

scheduled meetings are typically surrounded by other events such as quick

phone calls, scanning of e-mail, or spontaneous encounters.

d. Technology, such as e-mail, text messaging, cell phones, and laptops,

intensifies the pace.

3. Where Does a Manager Find the Time?

a. Time is a manager’s most valuable resource, and one characteristic that

identifies successful managers is that they know how to use time

effectively to accomplish the important things first and the less important

things later.

b. Time management refers to using techniques that enable you to get more

done in less time and with better results, be more relaxed, and have more

time to enjoy your work and your life.

c. Learning to manage their time effectively is one of the greatest challenges

that new managers face.

C. Manager Roles Exhibit 1.8

1. A role is a set of expectations for a manager’s behavior. Managers’ activities

can be organized into ten roles. The ten roles are divided into three

categories: informational, interpersonal, and decisional.

2. Informational roles include the functions used to maintain and develop an

information network.

The World of Innovative Management •

a. The monitor role involves seeking current information from many sources.

b. The disseminator role is the opposite of the monitor role. In the

disseminator role, the manager transmits information to others, both inside

and outside the organization.

c. The spokesperson role involves transmitting information to outsiders by

such means as speeches and reports.

3. Interpersonal roles refer to relationships with others and are related to human

skills.

a. The figurehead role involves the handling of ceremonial and symbolic

functions for the organization.

b. The leader role encompasses the relationship with subordinates, including

motivation, communication, and influence.

c. The liaison role is the development of information sources both inside and

outside the organization.

4. Decisional roles come into play when managers must make choices. These

roles often require both conceptual and human skills.

a. The entrepreneur role involves the initiation of change. Managers seek

ways to solve problems or improve operations.

b. The disturbance handler role involves resolving conflicts among

subordinates, between managers, or between departments.

c. The resource allocator role pertains to allocating resources in order to

attain desired outcomes.

d. The negotiator role involves representing the team or department’s

interests during negotiation of budgets, union contracts, and purchases.

VI. MANAGING IN SMALL BUSINESSES AND NONPROFIT ORGANIZATIONS

Small businesses are growing in importance. Hundreds of small businesses open every

month, but the environment for small business today is highly complicated.

Small business managers tend to emphasize different roles from those emphasized by

managers in large corporations. They see their most important role as that of

spokesperson in promoting their business to the outside world. The entrepreneur role is

also critical in small businesses because managers have to be innovative and help their

organizations develop new ideas to remain competitive.

Nonprofit organizations also represent a major application of management talent. The

functions of planning, organizing, leading, and controlling apply just as in other

organizations. Managers in nonprofit organizations direct their efforts toward generating

some kind of social impact.

Financial resources for nonprofit organizations typically come from government

appropriations, grants, and donations rather than from the sale of products or services to

customers. In nonprofits, services are typically provided to nonpaying clients, and a

The World of Innovative Management •

major problem for many nonprofit organizations is securing a steady stream of funds to

continue operating.

In addition, because nonprofit organizations do not have a conventional bottom line,

managers often struggle with the question of what constitutes results and effectiveness.

The metrics of success in nonprofits are much more ambiguous. Managers have to

measure intangibles, which also makes it more difficult to gauge the performance of

employees and managers.

An added complication is that managers often depend on volunteers and donors who

cannot be supervised and controlled in the same way that a business manager deals with

employees.

NOTES__________________________________________________________________

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VII. INNOVATIVE MANAGEMENT THINKING FOR A CHANGING WORLD

The rest of this chapter provides a historical overview of the ideas, theories, and

management philosophies that have contributed to making the workplace what it is today.

The final section of the chapter looks at some recent trends and current approaches that

build on this foundation of management understanding. This foundation illustrates that

the value of studying management lies not in learning current facts and research, but in

developing a perspective that will facilitate the broad, long-term view needed for

management success.

NEW MANAGER SELF-TEST: ARE YOU A NEW-STYLE OR AN OLD-STYLE

MANAGER?

Management philosophies and styles change over time to meet new needs. This exercise

helps students determine their primary management styles as either Theory X (old style)

or Theory Y (new style).

VIII. MANAGEMENT AND ORGANIZATION Exhibit 1.9

An historical perspective on management provides a context or environment in which to

interpret current opportunities and problems. Studying management history is a way to

achieve strategic thinking, see the big picture, and improve conceptual skills. The first

step is to explain the social, political, and economic forces that have influenced

organizations and the practice of management.

The World of Innovative Management •

IX. CLASSICAL PERSPECTIVE

The classical perspective emerged during the nineteenth and twentieth centuries, and

emphasized a rational, scientific approach to the study of management. The factory

system of the 1800s faced challenges that earlier organizations had not encountered.

Problems arose in tooling plants, organizing managerial structure, training non-English

speaking employees, scheduling complex manufacturing operations, and resolving

strikes. These new problems and the development of large complex, organizations

demanded a new perspective on coordination and control. The classical perspective

contains three subfields, each with a slightly different emphasis—scientific management,

bureaucratic organizations, and administrative principles.

A. Scientific Management Exhibit 1.10

1. Frederick W. Taylor (1856–1915) developed scientific management, a

subfield of the classical perspective, that emphasizes scientific changes in

management to improve labor productivity. However, because scientific

management ignored the social context and workers’ needs, it led to increased

conflict and clashes between management and employees.

a. Taylor suggested that decisions based on rules of thumb and tradition

should be replaced with precise work procedures developed after careful

study of individual situations. In 1898, Taylor used the unloading of iron

from rail cars and reloading finished steel to calculate the correct

movements and tools needed to increase productivity. Taylor worked out

an incentive system that paid each man $1.85 a day instead of $1.15, and

productivity shot up overnight.

2. Although Taylor is known as the father of scientific management, Henri

Gantt, an associate of Taylor’s, developed the Gantt chart—a bar graph that

measures planned and completed work along each stage of production by time

elapsed.

3. Frank B. and Lillian M. Gilbreth pioneered time and motion study, which

stressed efficiency and the best way to do work. Although Gilbreth is known

for work with bricklayers, his work had great impact on medical surgery by

drastically reducing the time that patients spent on the operating table. Lillian

M. Gilbreth (1878–1972) was more interested in the human aspect of work.

She was a pioneer in the field of industrial psychology and made substantial

contributions to human resource management.

4. Scientific management that began with Taylor dramatically increased

productivity across all industries, and it is still important today. To use this

approach, managers should develop standard methods for doing each job,

select workers with appropriate abilities, train workers in the standard

methods, support workers and eliminate interruptions, and provide wage

incentives. However, because scientific management ignores the social

The World of Innovative Management •

context and workers’ needs, it can lead to increased conflict and clashes

between managers and employees.

B. Bureaucratic Organizations Exhibit 1.11

1. The bureaucratic organizations approach is a subfield within the classical

perspective that looked at the organization as a whole. Max Weber (1864–

1920) introduced management on an impersonal, rational basis through clearly

defined authority and responsibility, formal recordkeeping, and separation of

management and ownership.

a. Weber’s idea of organization was the bureaucracy: a system that

incorporated division of labor, hierarchy, rules and procedures, written

decisions, promotion based on technical qualifications, and separation of

ownership and management. In a bureaucracy, managers do not depend

on personality for successfully giving orders, but rather on the legal power

invested in their managerial positions.

2. The term bureaucracy has taken a negative meaning in today’s organizations

and is associated with endless rules and red tape; however, ideally everyone

gets equal treatment, and everyone knows what the rules are. For example,

UPS has been successful because of its bureaucracy of rules and regulations, a

well-defined division of labor, and technical qualifications as a primary hiring

criterion.

C. Administrative Principles

1. The administrative principles approach focused on the total organization

rather than the individual worker. Henri Fayol (1841–1925) identified 14

principles of that include the following four.

a. Unity of command. Each employee should have only one boss.

b. Division of work. Specialized employees produce more with the same

effort.

c. Unity of direction. Similar activities should be grouped under one

manager.

d. Scalar chain. A chain of authority extends from the top of an

organization.

Fayol felt that these principles could be applied in any organizational setting. He also

identified five basic functions or elements of management: planning, organizing,

commanding, coordinating, and controlling.

X. HUMANISTIC PERSPECTIVE

The humanistic perspective on management emphasizes the importance of

understanding human behaviors, needs, and attitudes in the workplace, and social

interactions and group processes. Subfields within the humanistic perspective