Collection of people working together to achieve a common purpose
Why do we need an organisation?
Organisations provide a wayfor people to achieve goals within:
•Political systems - form organised societies
•Economic systems - societies achieve growth
•Social systems - human interaction
Omnipotent view of management
When profits (or some other measure of success) are up…..
•Management takes the credit and rewards itself with bonuses and share options
When profits (or some other measure of success) are down….
•Top management staff are often replaced, or in the case of smaller businesses they simply go out of business.
Symbolic view of management
Failure of an organisation maybe influenced by:
•Market (customer) changes
•The state of the industry
•Decisions made by previousmanagers
Managerial discretion components
Organisational culture/structure (internal)
Organisational environment (external)
• A goal-orientated process that involves the allocation of resources and the co-ordination of the talents and efforts of a group of people.
• Develop, align, and integrate purpose, people, and process.
Management is a process of achieving organisational goals through:
• Planning• Organising• Leading• Controlling
involves setting goals and deciding how best to achieve them.
focuses on allocating and arranging human and nonhuman resources so that plans can be carried out successfully.
involves influencing others to engage in the work behaviour necessary to reach organisational goals
is aimed at regulating organisational activities so that actual performance conforms to expected organisational standards and goals.
Four Functions of the Managerial Process
What do Managers Actually Do?
• Work long hours
• Work at an intense pace
• Work is fragmented and varied
• Work with many communication media (but prefer verbal)
• Work largely through interpersonal relationships
Levels of Managers
• Responsible for the performance of the whole organisation e.g. CEO, president, executive director
• In charge of relatively large departmentse.g. department head, manager
Lower (First-line) Managers
• In charge of small work groups, e.g. team leaders, supervisors, shift manager
•All levels of management have accountability
Types of Managers
Staff managers – support efforts of line workers
Functional Managers – responsible for a specific area
General manager – responsible for the overall running of an organisation
Administrators – a term often used when referring to managers of public or non-profit organisations
1. Technical Skills
2. Human Skills
3. Conceptual Skills
- are skills related to the ability to visualise the organisation as a whole, discern interrelationships between organisational parts, and understand how the organisation fits into the wider context of the industry, community, and world.
are skills associated with a manager’s ability to work well with others both as a member of a group and as a leader who gets things done through others.
are skills that reflect both an understanding of and a proficiency in a specialised field
Skills/ Management Level
Effectiveness vs. Efficiency
-Performance effectiveness is the ability to choose appropriate goals and achieve them - doing the right thing.
– Performance efficiency is the ability to make the best use of available resources in the process of achieving goals - doing things right
General belief that there is a close relationship between an organisation and its environment
• A common theme in organisation theory is that organisations must adapt to their environments if they are to maintain or increase their effectiveness
• Encompasses conditions that may have an impact on the organisation, but their relevance is not particularly clear.
• These environmental issues may be a distant concern.
e.g Exchange rates to Jim’s Mowing
Componenets of General Environment
Political – Legal Conditions
Political – Legal Conditions
• General state of the prevailing philosophy and objectives of the political party or parties running the government as well as laws and government regulations
State of the economy in terms of inflation, income levels, gross domestic product, unemployment and other indicators of economic health e.g boom/bust cycle
General state of prevailing social values on such matters as human rights, trends in education and related social institutions, as well as demographic patterns. For example:
• Values change
• Healthy lifestyle
• Aging population
General state of the development and availability of technology, including scientific advancements
Starting entirely new industries
Radically altering or virtually destroying existing industries
Stimulate industries not related to the new technology
• Is the part of the environment that is directly relevant to the organisation in achieving its goals.
• At any given moment it is the part of the environment managers are concerned with as it can positively or negatively effect the organisation’s effectiveness.
E.g oil prices to Air New Zealand
Specific Environment: Common stakeholders
• Customers can choose to purchase an organisations product or services (or not).• Without customers an organisation would cease to exist: i.e. no customers – no revenue.
• You cannot produce or sell a product or services if you cannot obtain the raw resources first.• Suppliers’ prices, consistency of supply and services are a significant influence on any company’s activities
• Competition is rivalry among organisations with respect to customers (market share), resources, reputation, innovation and in many cases survival
• Specific government agencies and representatives, at the local and national levels, that enforce laws and regulations affecting the organisations operations
Relationship between specific environment and general environment
• Refers to the claim that the organisation stakes out for itself with respect to the range of products or services offered and markets served.
• The organisation’s niche. (e.g. BMW and Suzuki; UC and CPIT)
• The domain determines the points at which the organisation is dependent on its specific environment - change the domain and you change the specific environment
• Lack of complete information regarding what developments will occur in the external environment
Robert Owen (1771-1858)
Henry R. Towne (1844-1924)
Henry R. Towne (year)
(1844-1924) Delivered a paper calling for the establishment of the science of management and developing of management principles.
Robert Owen (year)
pioneered ideas about better treatment of workers.
• He proposed: – Limiting employment in factories to workers over age 10 – Reducing the workday to 10 and a 1/2 hours – Prohibiting night work for children.
Scientific Management Contributer
Frederick Taylor (1856-1915)
Frederick Taylor (year)
The Father of Scientific Management
• Addressed the question of howto increase productivitygiven a shortage of labour.
Classical Viewpoint: Four Principles of Scientific Management
1. Study task and work out best method.
2. Select workers with right abilities.
3. Carefully train workers and give the proper incentives
4. Support workers through careful planning
Example of Scientific Management
Bethlehem Steel Mill
Before (12.4 tonnes shovelled / $1.15 per day).• All the workers owned their own shovel.• Same shovel used for whatever job worker did.
After (47.5 tonnes shovelled / $1.85 per day).• Workers issued with correct shovel for the job.• 8-10 specialist shovels were created.• Centralised planning was introduced and each man was taught how to shovel.
Classical Viewpoint: Administrative Management
Focuses on the principles that can be used by managers to co-ordinate the internal activities of the organisation.
developed theories about management that could be taught.
• Fayol defined the major managerial functions–
Leading (Commanding and Co-ordinating)– Controlling (Control)
Classical Viewpoint: Bureaucratic Management
• Emphasises the need for organisations to operate in a rational manner rather than relying on the arbitrary whims of owners and managers.
Bureaucratic Management Contributor
Max Weber (1864-1920)
Max Weber (year)
coined the term ‘Bureaucracy’ to apply to the idea of large organisations operating on a rational basis.
Bureaucratic Viewpoint Setting (3 points)
• During this period, very large organisationscomprising thousands of employees were inexistence, but there was no managementtraining.
• Social class was the main criteria used whenselecting employees!
• There was also a high incidence of corruption,misuse of power, nepotism and discrimination against certain groups.
Major characteristics of Weber’s idea bureaucracy
• Clear division of labour.
• Well-defined hierarchy.
• Formal rules and procedures.
• Career advancement based on merit.
• Scientific management approach frustrated managers because people were found to be unpredictable and irrational.
• The viewpoint started to take into account the individuals and groups who work in organisations.
The Hawthorne effect
The possibility that individuals singled out for a study may improve their performance simply because of the added attention they receive from researchers, rather than because of any specific factors being tested.
Hawthorne studies Assessment
- Despite this the impact of the studies was immense: In contrast to the impersonal classical approach, Hawthorne studies demonstrated the importance of the job’s social aspects to productivity.
1920 Hawthorne studies (2 points)
• The Western Electric Company had adopted modern scientific management techniques -but the workers were dissatisfied and productivity decreased.
• Experiments were conducted to try and find a casual relationship between the physical environment and productivity.
Human Relations Movement
• The key to productivity at that point, appeared to be demonstrating greater concern for workers.
• Emphasis on building more collaborative and co-operative relationships between supervisors and workers.
Human Relations Movement: Example of theory
Douglas McGregor developed the ‘Theory X/Theory Y’ dichotomy.
• Theory X managers tend to assume workers:are lazy, need to be coerced, have little ambition.
• Theory Y managers tend to assume workers:like work, capable of self control, creative and innovative
• Theory X
managers tend to assume workers:are lazy, need to be coerced, have little ambition.
• Theory Y
managers tend to assume workers:like work, capable of self control, creative and innovative
Behavioural Science Approach (6)
The most studied areas of behaviour are:
• Job satisfaction.
• Interpersonal behaviour.
• Group dynamics
• This was a movement back to a rational, scientific approach, and was adopted because of the need to solve complex problems in business.
• This approach focuses on the use of Mathematics, Statistics, and Information Systems to assist and support managerial decision making and thereby enhancing organisational effectiveness.
is an approach aimed at increasing decision effectiveness through the use of sophisticated mathematical models and statistical methods.– (e.g. Trend analysis, forecasts, what if)
• Operations management
is the function or field of expertise that is primarily responsible for managing the production and delivery of an organisation’s products and services.– (e.g. Inventory management, production planning)
• Management information systems
the field of management that focuses on designing and implementing computer based information systems for use by management.
Contemporary Viewpoint (Modern approaches)
This viewpoint grew from recognising that no one model or universally theory fits all organisations.
• People and situations are complex and variable, and can change over time.
• Variancesmust be taken into account.
Modern approaches: Systems Theory (main elements)
Modern approaches: Systems Theory Inputs
various resources including human, material, financial, equipment and informational, required to produce goods and services.
Modern approaches: Systems Theory Transformation processes -
the organisation’s managerial and technological abilities used to convert inputs into outputs.
Modern approaches: Systems Theory Outputs
products, services and other outcomes produced by the organisation.
information about results and organisational status within the environment.
Modern approaches: Contingency Theory
• Classical theorists attempted to find ‘the one best way’ or set of universal principles for managers.
• Unfortunately things are not so simple.
• Consequently, Contingency Theory began to develop.
The individuals (or groups) recognition of right and wrong actions, and moral obligations to society, beyond straightforward legal consideration.
• Social Responsibility
Ethical behaviour at an organisational level.
• Corporate social responsibility
an obligation of the organisation to act in ways that serve both its own interests and the interests of its many stakeholders
Designed to improve the quality of life
Who are the Stakeholders?
• Anti-freeloader argument
• Capacity argument
• Enlightened self-interest argument
indicates that since businesses benefit from a better society, they should bear part of the costs by actively working to bring about solutions to social problems.
states that the private sector, because of its considerable economic and human resources, must make up for recent government cutbacks in social programs.
enlightened selfinterest argument
holds that businesses exist at society’s pleasure and that, for their own legitimacy and survival, businesses should meet the expectations of the public regarding social responsibility
Perspectives on Social Responsibility (2)
• Management’s only responsibility is to maximise profits.
• Management must be concerned for the broader social welfare, not just profits.
What is organisational social responsibility?
Criteria for evaluating corporate social performance. This asks whether the following have been met in an organisation:
- discretionary responsibility met?
- ethical responsibility met?
- legal responsibility met?
- economic responsibility met?
Hand of Management
• managers act to serve society and company
• Can act beyond legal and economic obligations
Hand of Government
• interests of society best served by the law
• Regulations, not managerial decisions
make profits and obey the law.
Customers (free market focus) will eventually prevail
The social responsibility argument
(against and for)
How do organisations and Government work together in society?
How Government influences organisations:
Common examples of government regulation of business affairs
• Employment law
• Occupational safety and health
• Consumer protection
• Environmental protection
How organisations influence Government:
Personal contacts and networks
Public relations campaigns
Political action committees.
Does Social Responsibility Pay?
No real evidence.
However, Rosebeth Moss Kanter’s share market study showed that ethical companies did perform better on US stock market.
Public perception of a company’s social responsibility is sometimes linked to its philanthropy. (corporate)
• Although there may be no direct relationship between social responsibility and financial performance, research points to a number of firms scoring highly on both social responsibility and success.
• O’Toole (1985) calls these organisations ‘vanguard’ corporations.
• They try to satisfy all their stakeholders.
• They are committed to higher purpose.
• They value continuous learning.
• They aim high.
An individual (or groups) recognition of right and wrong actions, and moral obligations to society, beyond straightforward legal consideration.
Ethical behaviour at an organisational level.
Legal requirements tend to be ______(forbidding acts), whereas morality tends to be ________ (encouraging acts)
Laws are the legal embodiment of ethical behaviours. Thus laws can lag behind morality
Legal requirements tend to be negative(forbidding acts), whereas morality tends to be positive (encouraging acts)
Law versus Morality
LaRue Hosmer (1991) drew three conclusions regarding the relationship between legal requirements and moral judgement
Some laws have no moral content(e.g. driving on the left side of the road)
Some laws are morally unjust(e.g. laws that re-enforce discrimination)
Some moral standards have no legal basis(e.g. telling a lie to your children)
Ethical Behaviour and Economic Trade-Offs
Alternative Views of Ethical Behaviour-Theorists
(in the test)
Andrew Carnegie (Classical School, 1835-1919)
Milton Friedman (‘Laissez-Faire’, 1912-2006)
Milton Friedman (‘Laissez-Faire’, 1912-2006)
A firm should use all its resources to increase profits, as long as it stays within the rules of the game.
A manager’s job is not to decide on who should benefit from social responsibility —their job is to make the best economic decisions and society as a whole will benefit from this.
Other Views of Ethical Behaviour (4)
Andrew Carnegie (Classical School, 1835-1919)
Two basic premises:
1. The Charity Principle
The more fortunate should help the less fortunate, but this should not be dictated by Government policy (Paternalism).
2. The Stewardship Principle
Holders of wealth are stewards/caretakers of their property — they have a duty to increase its value for the benefit of society as a whole.
Types of Management Ethics
Managerial ethics fit into three types:
• Immoral Management.
• Moral Management.
• Amoral Management.
both lacks ethical principles and is actively opposed to ethical behaviour, all in the pursuit of profit.
strives to follow ethical principles in making a profit.
stance ignores or is oblivious to ethical considerations.
managers do not include ethical concerns in their decision-making, actions, or behaviour, because they think that general ethical standards are more appropriate to other areas of life than to business.
managers are insensitive to the moral implications of their decision-making, actions, and behaviour.
An environment where opportunities for success are limited
• Extreme dependency of one organisation on another
Can create pressures for bribes and payoffs
Internal Situational Factors (3) Examples?
• Pressure for higher performance
Induces individuals to take shortcuts
-Releasing unsafe products
• Poor internal financial performance
Falling profits or indebtedness may influence unethical acts
• Labour dissatisfaction
Anger can replace logical behaviour
-Theft of materials, intellectual property or simply time
Factors influencing ethical behaviour on 3 types of individuals and examples
Manager as a person; e.g. family, personal standards and needs
Employing organisation; e.g. policies and codes of conduct
External environment; e.g. values of society
What should managers do?
• Managers need to assess their values and to protect themselves.
• When seeking employment, managers may research organisations to determine what issues may arise.
Personal Ethical Guidelines
(6 points) (in the test)
• Obey the law.
• Tell the truth.
• Show respect for all people.
• Stick to the golden rule: “Do unto others as you would have them do unto you”
• Above all, do not harm.
• Always act when you have responsibility.
Personal Ethical Guidelines
• Seek expertise and support from a wide network of people whom they trust.
• Take internal actions to bring about change.
• Take internal actions to protect themselves before they become scapegoats for actions explicitly condoned by higher management e.g. if faced with an instruction to take action considered unethical, get the instruction in writing.