CH.

7 MANAGEMENT AND LEADERSHIP

1. Managers’ Roles are Evolving

Managers must practice the art of getting things done through organizational
resources, which include workers, financial resources, information, and equipment
→ new type of management. Managers do no longer have to act like a ‘boss’
→ guide, train, support, motivate, and coach employees rather than tell them
what to do
→ emphasize teamwork and cooperation rather than discipline and order
giving

Role: communicating strategy, helping employees prioritize projects, facilitating

cooperation, and ensuring that processes and systems aligned with company goals

A demanded manager: a skilled communicator and team player as well as a planner,

organizer, motivator, and leader

2. The Four Functions of Management

Management is the process used to accomplish organizational goals through

planning, organizing, leading, and controlling people and other organizational
resources.

The four main tasks of modern managers:

1. Planning: A management function that includes anticipating trends and determining the
best strategies and tactics to achieve organizational goals and objectives
- major objectives is to please customers
- have planning teams to help monitor the environment, find business
opportunities, and watch for challenges
→ key management function because the other functions depends on it4

2. Organizing: A management function that includes designing the structure of the

organization and creating conditions and systems in which everyone and everything
work together to achieve the organization’s goals and objectives.
- please customers at a profit → remain flexible and adaptable

3. Leading: Creating a vision for the organization and guiding, training, coaching, and
motivating others to work effectively to achieve the organization’s goals and objectives.
- trend: empower employees, giving them freedom to become self-directed and
self-motivated
- used to be directing, which is true in smaller firms, unlike for larger firms, workers
and often know how to do their jobs better than the manager does

4. Controlling: A management function that involves establishing clear standards to

determine whether or not an organization is progressing toward its goals and
objectives, rewarding people for doing a good job, and taking corrective action if they
are not

⇒ 4 functions of management is the heart of management

3. Planning

Executives find planning to be their most valuable tool, a vision is more than a goal

vision An encompassing explanation of why the organization exists and where it’s
trying to head.

Top management usually sets the vision for the organization → mission statement
mission statement An outline of the fundamental purposes of an organization
→ The organization’s self-concept.
→ Its philosophy.
→ Long-term survival needs.
→ Customer needs.
→ Social responsibility.
→ Nature of the product or service.
⇒ becomes the foundation for setting specific goals and objective

Goals The broad, long-term accomplishments an organization wishes to attain

→ is often a team process (btw workers and managers)

objectives Specific, short-term statements detailing how to achieve the

organization’s goals.

Steps to plan, answer fundamental questions

1. What is the situation now? (use questions from SWOT analysis)
SWOT analysis A planning tool used to analyze an organization’s strengths,
weaknesses, opportunities, and threats (both internal and external)
2. How can we get to our goal from here? - most important part
takes four forms: strategic, tactical, operational, and contingency

Strategic planning The process of determining the major goals of the organization
and the policies and strategies for obtaining and using resources to achieve those
goals.
- done by top management
→ which customers to serve, when to serve them, what products or
services to sell, and the geographic areas in which to compete.
policies are broad guides to action and strategies determine the best
way to use resources.
- become more difficult as changes are occurring so fast that plans may soon
be obsolete
- top management should listen to employees – might be the best strategic
insights, ignore them and they might leave (e.g Disney & Pixar)
- going to be more flexible and responsive to market changes by combining
with algorithm, computers and AI

Tactical planning: the process of developing detailed, short-term statements about

what is to be done, who is to do it and how it is to be done.
- done by managers or teams of managers at lower levels
- involves setting annual budgets and deciding on other details and activities
necessary to meet the strategic objectives.
Operational planning: process of setting work standards and schedules necessary
to implement the firm’s tactical objectives.
focuses on specific supervisors, managers and individual employees (e.g
specific dates, quality specifications)

Contingency planning: The process of preparing alternative courses of action that

may be used if the primary plans don’t achieve the organization’s objectives.
- better adapt to market changes
- Crisis planning - a part of contingency planning, anticipates sudden
changes in the environment (e.g cities, business plan for terrorist attacks)
- leaders of market-based companies set directions instead of creating
detailed strategic plans

Decision Making: Finding the Best Alternative

decision making Choosing among two or more alternatives. → the heart of all the
management functions

The rational decision-making model 6 Ds to make logical, intelligent, and

well-founded decisions

1) Define the situation: What is the current status of the business and market?
2) Describe and collect needed information
3) Develop alternatives: Make more than one plan
4) Decide which alternative is best: How can you reach all demand?
5) Do what is indicated: Starting to put your plans into action.
6) Determine if you made the right decision: Do a follow up

→ Managers don’t always go through this six-step process but rather making
decisions on the spot

problem solving The process of solving the everyday problems that occur. Problem
solving is less formal than decision making and usually calls for quicker action
→ call for a lot of judgment
- Problem-solving teams are two or more workers assigned to solve a specific
problem
- techniques are
(1) brainstorming Coming up with as many solutions to a problem as possible
in a short period of time with no censoring of ideas.
(2) PMI Listing of all the pluses for a solution in one column and the minuses
in another, and the implications stand in the third column.
4. Organizing: Creating a Unified System

→ allocating resources, assigning tasks, and establishing procedures.

First, top management

develops strategic
planning.

Second, the middle

management is
responsible for tactical
planning and controlling.

Third, the supervisory

management is directly
responsible for
supervising workers and
evaluating their daily
performance.

There are three levels of management

top management Highest level of management, consisting of the president and

other key company executives who develop strategic plans
- the CEO is often also the president of the firm and is responsible for all
top-level decisions.
- CEO introduces change into the org → COO puts those changes into effect
(structuring work, controlling operations, and rewarding people)
many companies today are eliminating the COO function as a
cost-cutting measure → assign that to the CEO (with CFO assistance)
- CFO’s role - obtaining funds, planning budgets, collecting funds, etc.
- CIO or CKO gets the right information to other managers → make correct
decisions → more important than ever in the age of technology

middle management The level of management that includes general managers,

division managers, and branch and plant managers who are responsible for tactical
planning and controlling
- many firms have eliminated some middle managers through downsizing and
give their remaining managers more employees to supervise
- still important tho

Supervisory management Managers who are directly responsible for supervising

workers and evaluating their daily performance
→ first-line managers (or supervisors) cuz they’re the first level above
workers.

The employees do not have managerial possibilities. They are called

“non-supervisory”
Tasks and Skills at Different Levels of Management

The further up the managerial ladder a person moves, the less important his or her
original job skills become
At the top of the ladder, the need is for people who are visionaries, planners,
organizers, coordinators, communicators, morale builders, and motivators.

A manager must have three types of skills.

1. Technical skills Skills that involve the ability to perform tasks in a specific
discipline or department.

2. Human relations skills Skills that involve communication and motivation; they
enable managers to work through and with people
→ more difficult with language differences btw managers and workers
→ associated with leadership—coaching, morale building, delegating, training
and development, and supportiveness.

3. Conceptual skills Skills that involve the ability to picture the organization as a
whole and the relationship among its various parts.
→ needed in planning, organizing, controlling, systems development, problem
analysis, decision making, coordinating, and delegating

⇒ Different
skills are
needed at
different
level

Staffing: Getting and Keeping the Right People

staffing A management function that includes hiring, motivating, and retaining the
best people available to accomplish the company’s objectives.
→ becomes increasingly important in high-tech areas
- a firm with innovative and creative workers can go from start-up to major
competitor in just a few years
- worker’s needs: treated well, fair pay, work-life balance
→ all managers need to cooperate with human resource management
5. Leading: Providing Continuous Vision and Values

managers strive to produce order and stability, whereas leaders embrace and
manage change → being good at one doesn't mean good at the other
→ good leaders motivate workers and create the environment for them to
motivate themselves. Management is carrying out the leader’s vision.

Leaders must therefore

1. Communicate a vision and rally others around that vision: by win their trust
2. Establish corporate values: concern for all stakeholders, their values =
business goals (required in a leader - 1st honesty, 2nd forward-looking)
3. Promote corporate ethics.
4. Embrace change: does business more effectively and efficiently
5. Stress accountability and responsibility - transparency is key
transparency The presentation of a company’s facts and figures in a way
that is clear and apparent to all stakeholders.
⇒ All organizations need leaders, and all employees can help lead

Leadership Styles

Autocratic Leadership style that involves making managerial decisions without

consulting others
→ effective in emergency situations/ with new, unskilled workers

Participative (democratic) Managers and employees collaborate to make

decisions.
employees participation may not always increase effectiveness, but instead
increase job satisfaction
values traits such as flexibility, good listening skills, and empathy

Free-rein Managers set the objectives but leave employees the freedom to
accomplish them.
the most successful leadership style when managers supervise doctors,
professors, engineers, or other professionals
needed traits: warmth, friendliness, and understanding

⇒ leaders rarely fit into just 1 of the types but rather a continuum along which
employee participation varies
⇒ best leadership type depends on the goals and the values of the firm
⇒ a truly successful leader has the ability to adopt the leadership style most
appropriate to the situation and the employees

Empowering Workers

it’s used to be about directing, but still work for today as in fast-food restaurants
and small retail establishments where employees are unskilled (at first)

→ progressive leaders, such as those in some high-tech firms and Internet

companies, empower employees to make decisions on their own
Empowerment giving employees the authority and responsibility to respond quickly
to requests of customers.
→ managers are often reluctant to give up their decision-making power and
resist empowerment
→ manager’s role is less than a boss and more like a coach

Enabling is to give workers the education and tools they need to make decisions.

Managing Knowledge

“Knowledge is power.” Empowering employees means giving them knowledge

Knowledge management tries to find the right information, keeps the information
in an readily accessible place and makes the information known to everyone in the
firm.
- 1st step - determining what knowledge is most important
- tries to keep people from reinventing the wheel (it’s important to know
what’s not working)

6. Controlling: Making Sure it Works

→ provides the feedback that lets managers and workers adjust to deviations from
plans and to changes in the environment that have affected performance

5 steps

1. Establish clear performance standards (ties planning to control function. No

standards, no control)
2. Monitor and record actual performances (or results)
3. Compare results against standards and plans (this is why the standards need to
be clear, otherwise you can’t record or compare the employees performances with
them)
4. Communicate results to the employees (they have to know if they’re doing good
or bad)
5. If needed, take corrective action. (and provide positive and negative feedback)

⇒ standards must be specific, attainable, measurable

A Key Criterion for Measurement: Customer Satisfaction

financial used to be the measurements of success (profits, ROI) → now, expanding

to pleasing external and internal customers
external customers Dealers, who buy products to sell to others, and ultimate
customers (or end users), who buy products for their own personal use
Internal customers Individuals and units within the firm that receive
services from other individuals or units