Principles of Management Notes
Principles of Management Notes
Manager: someone who oversees and coordinates the work of other people so organizational goals can
be accomplished.
Managers may have work duties that does not relate to their management duties.
Management: coordinating and overseeing the work activities of others so their activities are completed
efficiently and effectively.
Efficiency: getting the most output from the least amount of inputs.
Effectiveness: doing those work activities that will result in achieving organizational goals.
Effectiveness is always more important than efficiency, but both are needed for a successful business.
LEVELS OF MANAGERS
1. First line managers: managers of the lowest level of management who manage nonmanagerial
employees
These managers are typically involved with producing the organizations product or serving the
organizations customers.
They have titles such as supervisor, shift manager, district manager, department manager, office
manager.
2. Middle managers: managers between the lowest and top-level managers who organize the
work of the first line managers.
They have titles such as regional managers, project leader, store manager, division manager.
3. Top managers: managers at or near the top level of the organization structure who are
responsible for making organization wide decisions and establishing the goals and plans that
affect the entire organization.
They usually have titles such as executive vice president, president, managing director, chief
operating officer, chief executive officer.
WHAT IS AN ORGANIZATION?
1. A distinct purpose typically expressed through goals the organization hopes to achieve.
2. Composed of people. It takes people to perform necessary work to accomplish organization
goals.
3. A deliberate structure within which members work.
MANAGEMENT FUNCTIONS
Planning: functions that involve setting goals, establishing strategies for achieving those goals and
developing plans to integrate and coordinate activities.
Organizing: functions that involve arranging and structuring work to accomplish the organizations goals.
Leading: function that involves working with and through people to accomplish organizational goals.
• Motivate subordinates
• Resolve conflicts
• Influence individuals or teams
• Select most effective communications channel
• Deal with employee behavior issue
Controlling: function that involves monitoring, comparing and correcting work performance.
1. Interpersonal roles: involves people and other duties that are symbolic and ceremonial.
• Figurehead: key position holders
• Leader: showing guidelines, inspiring
• Liaison: having a network with the outside world
2. Informational roles: involves collecting, receiving and disseminating information.
• Monitor: filter out bull shit and keep only accurate information.
• Disseminator: delivering information to relevant places.
• Spokesperson: represent organization to the public or to employees
3. Decisional doles: roles that revolve around decision making
• Entrepreneur: take decisions
• Disturbance handler: fix shit
• Resource allocator: divide scarce resources efficiently
• Negotiator: handle internal and external negotiations
MANAGEMENT SKILLS
1. Technical skills: job specific knowledge and techniques needed to proficiently perform work
tasks.
• Most important for first line managers.
2. Interpersonal skills: ability to work well with other people individually and in a group.
• Equally important for all levels of managers.
3. Conceptual skills: the ability to think and to conceptualize about abstract and complex
situations.
• See the organization as a whole
• Understand relationship among various sub units
• Visualize how the organization fits into the environment
• Most important for top managers
SCIENTIFIC MANAGEMENT
Scientific management: an approach that involves the scientific method to find the “one best way” for a
job to be done.
General administration theory: an approach to management that focuses on describing what managers
do and what constitutes as good management.
Principles of management: fundamental rules of management that could be applied to all organizations
and taught in schools.
• division of labor
• a clearly defined hierarchy
• detailed rules and regulations
• impersonal relationships.
These 14 principles may still not be relevant today. Most modern organizations use less bureaucracy as
it hinders employee creativity. Some form of bureaucracy is still kept, as it is needed to efficiently
allocate scarce resources.
BEHAVIORAL APPROACH (HAWTHORNE STUDIES)
Hawthorne studies: a series of studies during the 1920s and 1930s that provided new insights into
individual and group behavior.
Basically, the output of workers may change depending on the group/team they are working with and
whether or not they are being observed. Team spirit and attitude greatly influences the quality and
quantity of the output of the workers.
** customer is anyone who interacts with the product, either internal or external.
** improvement in everything means delivering times, work environments, customer care politeness,
etc.
System: a set of interrelated and interdependent parts arranged in a manner that produces a unified
whole.
Closed system: systems that do not interact with and are not influenced by environment.
feedback
ENVIRONMENT
Contingency approach: a management approach that recognizes that organizations are different, which
means they face different situations and require different ways of managing.
Basically, means that different situations call for different solutions. Some variables include:
1. Organization size.
2. Routineness of technology.
3. Environmental uncertainties.
4. Individual differences.
These are the top 4 variables. There are approximately 100+ variables.
DECISION MAKING PROCESS
Decision criteria: criteria that defines what is important or relevant to resolving a problem
1. Identify the problem, for example: you need a faster method of transport, so you want to buy a
car.
2. Identify the decision criteria, for example: price, performance, fuel mileage, reliability
3. Allocate weights to the criteria: this defines which criterions are more important than the
others, for example: reliability is more important than performance, etc.
4. Develop alternatives: find a list of things that could solve your problem, for example: Toyota
corolla, ford focus, ford fiesta, VW beetle, etc.
5. Analyze alternative: apply the criterions and weights in step 2 and 3 to the alternatives that
where found in step 4.
6. Select an alternative: select the alternative with the highest score. for example, the highest
scoring was VW beetle
7. Implement the alternative: implement the decision you have made in step 6. for example, buy
the VW beetle.
8. Evaluate decision effectiveness: see if the decision that was made has solved the issue. If not,
then what went wrong?
Rational decision making: describes choices that are logical and consistent and maximize value.
Bounded rationality: decision making that is rational but limited by an individual’s ability to process
information.
1. Rationality: we assume that all managers will assume rational decision making
2. Bounded rationality: managers make decisions rationally but are bounded by their ability to
process limited amounts of information or there are large amounts of information that is
not available. So, they instead try and achieve satisfice. However. It is important not to fall
into escalation of commitment.
3. Role of intuition: use of “gut feeling” to make a decision rather than rational thinking. This
subject is covered in more details below.
4. Evidence based management: the systematic use of the best available evidence to improve
management practices. There are 4 essential elements of evidence-based management.
• the decision makers expertise and judgement.
• External evidence that has been evaluated by the decision maker.
• Opinions, preferences and values of those who have a stake in the decision.
• Relevant organizational (internal) factors such as context, circumstances and
organizational members.
ROLE OF INTUITION
Intuitive decision making: making decision on the basis of experience, feelings and accumulated
judgement.
1. Experience based judgement: managers make decisions based on their past experiences.
2. Affect-initiated: managers make decisions based on feelings or emotions.
3. Cognitive based: managers make decisions based on skills, knowledge and training.
4. Subconscious mental processing: managers use data from subconscious mind to help them
make decisions.
5. Value or ethics based: managers make decisions based on ethical value or culture.
TYPES OF DECISIONS
This is a type of problem that occurs regularly and has a set of predetermined solutions ready at hand.
Unstructured problems: problems that are new or unusual and for which information is ambiguous or
incomplete. Basically, means shit that happens only once and no one thought about having a solution
ready before hand.
Nonprogrammed decisions: unique and non-recurring decisions that require a custom-made solution.
Differences between programmed and non-programmed decisions
One should note that most problems are not perfectly structured nor perfectly unstructured but rather
they are usually a combination of both.
1. Certainty: a situation in which a manager can make an accurate decision because all outcomes
are known.
2. Risk: a situation where the decision maker is able to estimate the likelihood of certain
outcomes.
3. Uncertainty: a situation in which a decision maker has neither certainty nor reasonable
probability estimates available. Read the book for this one. Page 84.
1. The source of information used (external data or gut feelings and intuition).
2. Whether information is processed in a linear way (rational, logical OR creative, intuitive)
Linear thinking style: decision style characterized by a person’s preference for using external data and
facts and processing this information through rational, logical thinking.
Nonlinear thinking style: decision making style characterized by a person’s preference for internal
source of information and processing the information with internal insights, feelings and hunches.
Managers must understand that different employees will have different thinking styles and must act
accordingly.
It is important to note that one thinking style is not better than the other.
Using heuristics is good at times as it makes ambiguous complex decisions easier, but heuristics may
lead to errors and biases.
1. Overconfidence bias: when decision makers think they know more than they actually do or hold
unrealistic positive views.
2. Immediate gratification bias: wanting immediate gain and avoiding long-term costs.
3. Anchoring effect: fixating on initial information and disregarding subsequent information.
4. Selective perception bias: When decision makers selectively organize and interpret events
based on their biased perceptions
5. Confirmation bias: Decision makers who seek out information that reaffirms their past choices
and discounts information that contradicts past judgments
6. Framing: when decision makers select and highlight certain aspects of a situation while
excluding others
7. Availability: when decision makers tend to remember events that are the most recent and vivid
in their memory. The result? It distorts their ability to recall events in an objective manner and
results in distorted judgments and probability estimates.
8. Representation: When decision makers assess the likelihood of an event based on how closely it
resembles other events or sets of events
9. Randomness: actions of decision makers who try to create meaning out of random events.
10. Sunk cost: occurs when decision makers forget that current choices can’t correct the past. They
incorrectly fixate on past expenditures of time, money, or effort in assessing choices rather than
on future consequences
11. Self-serving: Decision makers who are quick to take credit for their successes and to blame
failure on outside factors
12. Hindsight: 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.
The process may also be affected by biases and errors exhibited by a manager.
the following things are considered “guidelines” for making good decisions.
1. Understand cultural differences: consider culture, religion and type of people when making a
decision.
2. Create standards for good decision making: good decisions do the following
• are forward looking
• use all available information
• consider all available and viable options
• do not create conflicts of interests.
3. Know when its time to quit: if a decision seems bad, don’t stick with it ajaira.
4. Use an effective decision-making process: effective decision-making process has the following 6
characteristics
• It focuses on what’s important.
• Its logical and consistent.
• It acknowledges both subjective and objective thinking and blends analytical with
intuitive thinking.
• It only requires as much information as necessary.
• Encourages and guides gathering of relevant information and informed opinions.
• Straightforward, reliable and easy to use.
5. Develop ability to think clearly: basically, means to practice making decisions.
DESIGN THINKING
Design thinking is a relatively new way of making decisions. It basically means thinking outside the box.
Here, you don’t take alternatives and then choose the best one, but rather think of something of
creative solutions to existing problems. Best example would be Apples way of thinking on how to make a
product.
Big data: vast amounts of quantifiable information that can be analyzed by highly sophisticated data
processing.
Basically, gather a lot of information about your customers and use it to see how you can make an
increase in revenue or sales.
However, data must be collected with a goal in mind, because collecting data is expensive.
Example of big data is googles algorithms and AI. Google monitors your personal searches and shit and
then displays advertisements based on your activity, so your more likely to be interested and buy
something.
OMNIPOTENT VS SYMBOLIC
Omnipotent view: the view that managers are directly responsible for an organizations success or
failure.
Symbolic view: the view that much of an organizations success or failure is due to external forces
outside of the managers control.
In reality, neither of these views are correct but rather a mixture of the two (as with all things in life) are
more commonly seen in actual organizations.
External environment: those factors and forces outside the organization that affect its performance.
1. Jobs and employment: if economy is bad, managers must fire employees. Or if demand for
product/services are high and beyond organization capabilities, managers may choose to hire
freelances.
2. Environmental uncertainties***: the degree of change and complexity in an organizations
environment. This topic is discussed in more detail below***
3. Managing stakeholder relationships: stakeholders is anyone who will be influenced by the
organizations decisions. this may include but is not limited to:
• Employees
• Customers
• Social and political groups
• Competitors
• Trade and industry associations
• Governments
• Media
• Suppliers
• Communities
• Shareholders
• Unions
It is important for managers to be aware of how their decisions are affecting stakeholders as
whether stakeholders are happy or not may directly impact organization performance. Also,
its kind of the “right” thing to do.
ENVIRONMENTAL UNCERTAINTIES***
The degree of change and environmental uncertainties may be combined to give 4 different situations.
ORGANIZATIONAL CULTURE
Organizational culture: the shared values, principles, traditions and ways of doing things that influence
the way organizational members act and that distinguish the organization from other organizations.
Strong cultures: organizational cultures in which the key values are intensely held and widely shared.
Strong culture: Weak culture:
It is important to note that once a culture has been established, it must be maintained. This is done by:
• Hiring people who will mix well the organization culture and values
• The top managers behavior matching the values of the organization.
1. Stories: stories about significants like the founding of the organization or past mistakes.
2. Rituals: eg, people at KAZI IT end the day with a hug (kinda creepy imo)
3. Material artifacts and symbols: this includes things like the layout of the office, how people
dress, how senior/junior employees interact, etc.
4. Language: querky slogans, inuendoes or organization specific jargon. Like knowing inside jokes
and stuff.
EFFECTS OF CULTURE ON DECISIONS
an organizations culture, especially strong ones, influence and constain how managers take decisions.
read the table below.
Workplace spirituality: a culture where organizational values promote a sense of purpose through
meaningful work that takes place in the context of the community.
Basically, make people feel like they are actually doing something meaningful and they have a purpose
in life.
TYPES OF ORGANIZATIONS
Multinational corporation(MNC): a broad term that refers to any and all types of international
companies that maintain operations in multiple countries.
Multidomestic corporations: an MNC that decentralizes management and other decisions to the local
country.
Global company: an MNC that centralizes management and other decisions in the home country.
Transnational or borderless organization: an MNC in which artificial geographic borders are eliminated
Organizations may use many approaches to go international. The list below is in order of least expensive
[1] to most expensive [7]
1. Global sourcing: purchasing labor and material from around the world, where its cheapest.
2. Exporting: making products domestically and selling them abroad
3. Importing: an organization gives another organization the right to make or sell its products using
its technology or product specifications
4. Franchising: an organization gives another organization the right to use its name and operating
methods
5. Strategic alliance: a partnership between an organization and foreign company partner(s) in
which both share resources and knowledge in developing new products or building production
facilities
6. Joint venture: a specific type of strategic alliance in which the partners agree to form a separate,
independent organization for some business purpose
7. Foreign subsidiary: directly investing in a foreign country by setting up a separate and
independent production facility or office
DIFFICULTIES OF GLOBALIZATION
Workplace diversity: the ways in which people are in an organization are different from and similar to
one another.
Surface level diversity: easily perceived differences that may trigger certain stereotypes, but that do not
necessarily reflect the way people think or feel. Examples are gender, age, ethnicity, etc.
BENEFITS OF DIVERSITY
1. People management
• Better use of employee talents
• Increased quality of team problem solving efforts
• Ability to attract and retain employees of diverse backgrounds
2. Organizational performance
• Reduced costs associated with high turnover, absenteeism, lawsuits
• Enhanced problem-solving abilities
• Improved system flexibility
3. Strategic
• Increased understanding of the marketplace, so more diverse consumer base
• Potential to improve sales growth and increase market share
• Potential source of competitive advantage
• It’s the ethical thing to do
TYPES OF DIVERSITY
The following are the types of diversity that can be/should be observed in the workplace:
1. Age
2. Gender
3. Race and ethnicity
4. Disabilities/abilities
5. Religion
6. LGBT
7. Others
• Different socioeconomic backgrounds
• Physical attractiveness
• Obese/skinny
• Job seniority
• Intellectual abilities
The following are the challenges that need to be overcome when managing a diverse group of workers;
glass ceiling: an invisible barrier that separates women and minorities from the top management
positions.
DIVERSITY INITIATIVES
There are 5 ways to make the work place more diversity friendly:
1. legal aspects of workplace diversity: make it a legal requirement to pay minorities equal wages
as others and also get the same benefits as others.
2. top management commitment to diversity: the top management must be open minded and
willing to accept minorities into the organization. They must motivate their subordinates to
accept minorities.
3. mentoring: a process whereby an experienced organizational member (a mentor) provides
advice and guidance to a less experienced member (a protégé). More experienced workers
should give advice to new workers who are just entering the field. They should not only advise
about work related topics but also how to deal with minorities and how to deal with being a
minority yourself.
4. diversity skills training: specialized training to educate employees about the importance of
diversity and teach them skills for working in a diverse workplace. Basically means, teach people
to not be racist and be more open minded.
5. employee resource groups: groups made up of employees connected by some common
dimension of diversity