INTRODUCTION TO MANAGEMENT

OF HEALTH SERVICES

Thus, Emphasis is placed on:

 On guiding students to acquire the skills to identify and address management problems.
Objectives of the course
 Recognize a variety of leadership and management styles and to classify one’s own style of
leadership and management.
 To understand the importance of and be able to critically appraise an organization’s mission and
goals.
 To be able to conduct a strategic analysis and elaborate a health plan, including its objectives,
strategic and operational plans and a plan for strategic control of progress.
 To understand key models and be able to use basic tools for management decision-making.
 To understand the concept of social responsibility and social responsiveness and to develop a sense
of professional ethics in management.
 To understand the key elements of organizational structure in order to select or modify
organizational design to make it effective and appropriate to function.
 To be able to conduct an environmental analysis and prepare a plan for managing the organizational
environment.
 To develop and understand organizational processes subsystems including:
 Coordination, authority, delegation, decentralization, organizational change, innovation, and
organizational development.
 To be able to manage human resources, including through
 development of skills in human resource planning,
 recruitment and selection,
 human resource development,
 supervision and performance appraisal, and
 Other aspects of personnel management.
Course outline
 Introduction to HSM
 Planning
 Planning and strategic management
 Decision making
 Organization
 Communication
 Management Information System
 Motivation and performances
 Leadership
MODULE 1
Key Definitions
 Health: - is the maximization of the biological & clinical indicators of organ function & the
maximization of physical, mental, & role functioning in everyday life.

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 Healthcare: - is the total societal effort, undertaken in the private & public sectors, focused on
pursuing health.
 Health services: - are specific activities within the larger domain of health care undertaken to
maintain or improve health or to prevent decrements of health.
 Health service organizations: - are entities that provide the organizational structure within which
the delivery of health services is made directly to consumers, whether the purpose of the services is
preventive, acute chronic, restorative or palliative.

UNIT 1:
 ORGANIZATIONS AND THE NEED FOR MANAGEMENT
Objectives:
 Define relationships between management and organization.
 Identify and discuss the management process.
 Discuss on the managerial roles, types of managers and skills required.
Definitions and concepts
 What is the experience of this class?
 Are /were you a member of any organization?
Organization
► Two or more people who work together in a structured way to achieve a specific goal or set of
goals.
► formal and informal
► In both people are kept together
 Believing there is a benefit working together to achieve a common goal.
 What does goal mean?
 Goal: The purpose that organization strives to achieve.
 GOALS are the fundamental elements of an organization. Why?
 Goal is the reason to exist, and an organization can not exist without a goal.
 An organization can have more than one goal.
 What do all organizations need to achieve goals?
To achieve goals all organizations should
 Have a method and
 Have to acquire and allocate resources.
 Thus, the need for management.

What is management?
Management
 The process of planning, organizing, staffing, leading, and controlling the work of
organization members and of using all available organizational resources to reach stated
organizational goals.
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  It is a process of reaching (predetermined) organizational goals by working with and through
people and other organizational resources (finance, equipment, information, and
information).
 It is a process of utilizing efficiently the available resource to achieve organizational goals.
 It is the practice of consciously and continually shaping organizations.
 Planning: -managers think through their goals and actions in advance.
 Organizing: -managers coordinate the human and material resource of the organization.
 Leading: - how managers direct and influence subordinates, getting others to perform essential
tasks.
 Controlling: -managers attempt to assure that the organization is moving toward its goals.
 Whether formal or informal organizations managers are BASIC. (???? Management process occurs
in a formal organizational setting)
 Who are the managers?
 Why are they basic?
 In all organizations managers are essential. Because managers are:
People responsible for directing the effort’s aimed at helping organizations achieve their goals.
People responsible for helping organization members set and reach goals.
 Definition: HSO/HS managers are people formally appointed to positions of authority in
organizations or systems who enable others to do their direct or support work effectively, who have
responsibility for resource utilization, & who are accountable for work results.

Exercise
 Discuss on the goals of the organization for which you have worked.
 What are the reasons for the existence of the organization?
 Why do we study organizations and management?

Reasons for Studying Organization & Management

1. Living in the Present:
• organizations have a role on the standard of living.
• We relay on organizations daily for food, clothing, medical care, etc.

2. Building the Future:

• Organizations work or move to the desirable future.
• New treatment for diseases, new practices, new products, new management, etc.
• Positive/Negative impact
Reasons for Studying Organization & Remembering the Past:
 Connections to past history.
 Patterns of human relationship
 People define themselves in terms of the organization they have been a part of.
 Keeping record and value own history and keeping traditions alive.
 How would history be important? Give some examples of organizations and their history.
Management as a specialty in time and human relationships
 Management deals with time
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  Time Management is to create a desirable future.
 Management is either practiced or is a reflection of a particular historical era.
 Management produces effects that emerge over time.
 Organizations, managers and other individuals deals with time.
 Management deals with human relationships
 Managers act in relationships: two-way streets. Influence on both sides
 Managers act in relationships that have spillover effects for other people.
 Better or worse Managers juggle multiple simultaneous relationships.
 Organizations, managers and other individuals think about future human relationships and about
new relationship and modify existing ones.

Managing and managers

 Managers and organizational performance
 Management is a major and PRINCIPAL activity that is responsible to make a difference how
the organization.
Is doing, affecting and affected by people.
Thus, there is a need for measuring Managers and organizational performance.
 Managerial performance measures
 How efficient and effective a manager is.
 How well a manager determines and achieves organizational objectives.
 Organizational performance: measures
 How efficient & effective an organization is.
 How well it achieves its objectives.
 Which one is the best for managers / organizations, efficiency or effectiveness?
 Effective management is the main resource of developed countries.
 Effective management is the most needed resource of developing countries.
 Efficiency: the ability to minimize the use of resources in achieving organizational objectives.
“Doing things right.”
 Effectiveness: the ability to determine appropriate objective. “Doing the right thing.”

The Management process

 Management: different definitions but common elements:
 Management is a process: a set of interrelated and interactive on-going activities and functions.
 Process: a systematic method of handling activities.
 Involves achieving goals.
 Involves achieving goals through people and utilization of other resources.
 Occurs in formal organization setting.
 Management is a process: a set of interrelated and interactive on-going activities and functions.

What does this definition imply?

Functions: Management functions
 Describes how managers do what they do.
 Basic management functions or activities that make up the management process are:
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I) Planning
 It is the process of establishing goals and a suitable course of action to achieve the goals.
 Helps to deal with the present and anticipate the future.
 Planning: -managers think through their goals and actions in advance.
 It involves what to do, how to do and when to do.
 Planning is a primary management function. Why?
 Through planning managers clearly put and outline exactly what organizations must do to be
successful.
ii) Organizing
 Organizing: -managers coordinate the human and material resource of the organization.
 Organizing creates a mechanism to put plans into action. How?
 Through Assigning the tasks developed during planning to individuals/groups within the
organization.
 It is the process of arranging and allocating work, authority and resources among organization
members to achieve goals.
 It involves establishing authority & responsibility relationships, division of work, job design,
coordination, information and feedback systems in the organization.
 Do we need different structures for different goals?
 Do we need different structures depending on the available resources?
 Organizational design:
 The process of matching an organizational structure to goals and resources.
 How do you address relationships and time in this process?
 New people to join the structure of relationship: staffing (is both technical and social
iii) Leading (directing, motivating, and communicating)
 Primarily concerned with people in the organization.
 It is the process of directing and influencing the task-related activities of group members or an
entire organization.
 The process of guiding the activities of organization members in an appropriate direction.
 Influencing, directing, actuate (activate, motivate)
 Time and relationships.
iv) Controlling
 The process of ensuring/conforming the actual activities in relation to planned activities.
 A function for which managers:
Establish standards of performance
Gather information and Measure current performance.
Compare performance with standard.
Taking corrective action
Rewarding
v) Decision Making
 Choosing between or among alternatives.
 A function is made at all levels from planning up to controlling.
 Senior managers make policy decisions and resource allocation decisions that affect the entire and
various parts of the organizations.
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  Middle- and first-level managers make decisions about allocating and utilizing resources provided
by senior management within their areas of authority and responsibility.

• . PLANNING (deciding ORGANIZING (developing

in advanc e what is to international patterns of relationships
be done) among people and other resources)

DECISION
CONTROLIN MAKING
G (Regulating (Choosing STAFFING
activities in between or among
(Acquiring,
accordance alternatives)
maintaining, and
with plans)
retaining human
resources)
DIRECTING
(Initiating work in
the organization)

 Time and relationships?

 Through time do all the established relations work?
 To be successful which function must be performed well by managers?

Types of managers and managerial roles

A. Classification by management level
 Traditional by level in the hierarchy
 First-line (or first/ low level), Supervisory mangers:
 Middle managers: Middle level
 Top/ senior managers: high level.
 Other classification
 Policy level
 Administrative or coordinating level.
 Operations level.
1. First line (or first/ low level), Supervisory managers:
 Responsible for the work of operating and do not supervise other managers.
 Direct non management employees and have authority and responsibility for overseeing a specific
type of work and a particular group of workers.
 First or lowest level of managers in the organizational hierarchy.
2. Middle managers
 Managers in the midrange of the organizational hierarchy
 They are responsible for other managers and sometimes for some operating employees.
 They report to more senior managers.
3. Top managers / senior
 Managers responsible for the overall management of the organization
 They establish operating policies and guide the organization’s interaction with its environment.
 Small in number

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List types of managers for the three levels by choosing one organization.
1. First-line managers: Supervisors, School directors, Coaches, Technical supervisor
2. Middle director: Department heads, Heads of services
3. Top managers: Executive officer, president vice president
Are there different names for a manager?
 Different names of manager include executive administrator, leader, boss, principal, chief,
supervisor, senior manager, superintendent, commissioner, overseer, officer, Coach, President,
Executive, Prime minister etc.
Attributes common to all regardless of title or level
 formally appointed to positions of authority by the organization.
 directing work efforts of others subordinates and non-subordinates.
 responsible utilization of organizational resources
 accountable to superiors for work results
 Are non-managers.
 responsible for utilization of organizational resources?
 accountable to superiors for work results?
 Senior, middle, and first level managers are responsible for very different types of activities. But all
of these activities are important and no organization can be successful unless the management work at each
level is done well and unless the work at each level is carefully integrated with that done at the other levels.
 If both are responsible,
What is the difference between managers and non managers?
The non managers are not formally appointed to positions of authority by the
organization for directing work efforts of others.

B. Functional and general manager

Classification based on scope of activities.
 Functions: Refers to a group of similar activities in an organization, such as marketing, production,
finance.
 Functional Manager: Responsible for one organizational functional area/activity e.g. finance,
human resource management
 General Manager: Responsible for all functional activities e.g. a company’s functional activities
such as production, sales, marketing, and finance.
 Is it possible to have more than one general manager in an organization?
 Do both functional and general managers perform the four management functions?
 Yes, the difference is in the scope of activities they oversee.
 The primary differentiation between levels of managers is the degree of authority and scope of
responsibility and organizational activity.
c) Management level and skills
 major resource
 primary determinant for a manager to be effective and efficient
 performance and personality traits
 Three basic types of skills are needed for successful management
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 1. Technical skill:
 the ability to use procedures, techniques and knowledge of a specialized field
 Using specialized knowledge and expertise in executing work related techniques and procedures.
 Related to things :process or physical objects
 2.Human (interpersonal) skill :
 The ability to work /get along with, understand, motivate, and lead other people as individuals.
 Builds cooperation among the team.
 Working with people: Attitude, communication.
3. Conceptual skill:
Ability to see the organization as a whole (the mental abilities of managers to visualize the complex
relationships in a workplace-among people, among departments, among various organizations…).
 A manager with this skill has the ability or better understand how various functions of the
organization complement one another
 The relationship of the organization to its environment
 How changes in one part of the organization affect the rest of the organization
 All managers use all these three types of skills in performing management work but in different mix
(degree).
 The senior manager is vitally concerned with how the service in general fits into the organization.
 In contrast the low level manager, whose primary function is to troubleshoot an entire operating
staff, may be constantly required to make decisions on the basis of technical knowledge of procedures
while rarely having time to think about the relationship of the specific service to other departments of the
organization.
Which skill is needed by all managers?
 Because the common denominator are people at all levels, an inability to work with people, not a
lack of technical skills, is the main reason some managers fail to reach their full potential.
 A manager with Human skill
 Knows weaknesses and strengths,
 Knows how feelings hurt others.
Choose
 Either people have to be controlled Vs self discipline
 Do not make wrong judgments about people without studying contents of information.
Managerial Roles
In addition to engaging in the function of management managers also perform other activities associated
with certain management positions.
Two ways to answer the question, "What do managers do?" are
 the functional approach (traditional) and
 the role approach ( depicted by Henry Mintzberg)
 Managerial functions relate to the desired outcomes of managerial action,
 Managerial roles categorize managers' actual behavior.
 Henry Mintzberg
 Concluded from his observation of managers that management is best explained in terms of roles.
 criticized the functional approach:

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 for making management appear to be simple, more orderly /Methodical /neat than it
really is.
Managers practically adopt certain patterns of behavior (roles) when feeling managerial
positions.
 The ten facts of managerial life, derived from direct observation, characterize managers as hard-
working and busy people who engage in many and varied primarily oral, interactions with others.
 Three managerial role categories (of a formal authority and status), according to Mintzberg, are
interpersonal, informational, and decisional.
1) Interpersonal Roles-
 The tree interpersonal roles managers play are as:-
 Figurehead - they engage in activities that are ceremonial and symbolic in nature; as a symbol of
legal authority, attending ceremonies, signing documents, etc.
 Liaison - role involves formal and informal contacts beyond the vertical chain of command (both
inside and with external stakeholders), to establish relationships that will help them achieve organizational
objectives. i.e. links in horizontal as well as vertical chain of communications
 Influencer - role includes motivating & leadership when they seek to inspire, and set examples
through their own behavior. I.e. managers are accountable, responsible, & motivator.
2) Informational Roles –
The three informational roles are:
a) Monitor - filter, evaluate and choose to act or react to that information.
B) Disseminator - role involves choosing to disseminate the information.
Communicating selected information to subordinates.
c) Spokesperson - represents and speaks on behalf of the organization.
Communicating selected information to outsiders.
3. Decision-Maker Roles-
 The authority granted by their organization & supported by their interpersonal & informational
roles; permits managers to play decisional roles.
 There are four decision maker roles:
 Entrepreneur /Change agent: designing and initiating changes within the organization.
Organizations are internally dynamic and continuously affected by the environment.
Unless managers act?
 Disturbance Handler-They handle both internal and external disturbances and take corrective action.
They anticipate disturbances and resolve conflicts.
 Resource allocator - managers decide who gets what based on priority setting.
 Negotiator - managers choose how to interact with their superiors, peers, and subordinates. i.e.
Negotiating with other parties representing organizational interests.
 A key message on role of managers is they have to be very versatile when it comes to dealing with
human relationship.
 When the interconnected roles are each played well, the result is synergistic.
 Being a good negotiator makes a manager a better disturbance handler.
 Playing the information roles effectively improves performance in the decisional roles because
managers have information with which to make decisions.
 Different levels of these roles are used at different levels of managers & by different individuals.
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 Senior managers engage in figure head, entrepreneur, and spokesperson roles more frequently than
do other managers.
 Middle level managers often are heavily involved in disturbance handler and resource allocation
roles, and many of them rely on their abilities to successfully play their informational roles as a key
ingredient in their work.
 First level managers may play leader, disturbance handler, and negotiator roles extensively in their
daily work.
Exercise
 Provide prominent examples of interpersonal roles that you had as a manager or have observed from
a manager.
 Provide prominent examples of informational roles that you had as a manager or have observed
from a manager.
 Provide prominent examples of decision-making roles that you had as a manager or have observed
from a manager.

UNIT 2:
 History of Management Thought- The Evolution of Management Theory
Learning Objectives:
Understand the historical context how the different management theories developed.
Distinguish the different approaches of management theory.

 Management and organizations are products of their historical and social times and places. Thus
 The need to understand the evolution of management theory in terms of how people have wrestled
with matters of relationships at particular times in history.
 Let us compare different ages
 Formal organizations existed for many centuries. such as:
 The Greek and Roman armies,
 The Roman Catholic Church,
 Period of industrial revolution,
 Early 1900’s
o Did we have similar management experience in Ethiopia and Africa?
 The Axum monument
 The Lalibela rock hewn churches are the result of systematically managed effort.
 The Adwa battle
 The Egypt’s great pyramids:
mobilized human and material resources mobilize 100,000
Have to plan, implement, coordinate, control and report.
 What is our problem then?
Our problem is in terms of documentation.
 They write; we did not. Still we do not.
 Shall we?
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 Few times if we write (rather talk), based on what?
 Two examples (Stoner) of attempts how to make organizations efficient and effective since long
before terms such as management came into common usage:
Writings of Machiavelli and Sun Tzu considered as strategists
'Machiavellian' is often used to describe cunning and manipulative opportunists.
 Machiavelli was a great believer in the virtues of a republic.
Machiavelli wrote in 1531.
 An organization is more stable if members have the right to express their differences and solve their
conflicts within it
 While one person can begin an organization, "it is lasting when it is left in the care of many and
when many desire to maintain it."
 A weak manager can follow a strong one, but not another weak one, and maintain authority.
 A manager seeking to change an established organization "should retain at least a shadow of the
ancient customs."
 The Art of War, written by the Chinese philosopher Sun Tzu more than 2,000 years ago.
It was modified and used by Mao Zedong,
 When the enemy advances, we retreat!
 When the enemy halts we harass!
 When the enemy seeks to avoid battle, we attack!
 When the enemy retreats, we pursue!
Today these rules are being used when planning a strategy to engage business competitors.
WHY STUDY MANAGEMENT THEORY?
 A theory: is a coherent group of assumptions put forth to explain the relationship between two or
more observable facts.
 Theories are perspectives with which people make sense of their world experiences.
 What will happen if we do not have theories?
Frustration
 in dealing with other people, one has always to define even the most basic assumptions.
 Thus theories:
Provide a stable focus for understanding what we experience.
Provide criteria for determining what is relevant.
Help us to communicate efficiently and thus move to more complex relationships with
other people.
Theories make it possible and challenge us to keep learning about our world.
 Theories have boundaries and everything cannot be covered by any one theory.
 Thus, there is a need for alternative theories and consideration of the consequences of adopting
alternative beliefs as theories do not work or our theories no longer seem too "fit" our experience.
 The environment is changing.
 Evolution of management theory because
it developed in bits and pieces over the years
so many people contributed to the theory and practice
 As an academic study relatively new because before 1900 it was only given in 3 universities unlike
chemistry or astronomy.
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 Management has interdisciplinary nature: with different fields history geography, psychology,
health, education and including religions etc.
 Each discipline and professionals used, interpreted, and reformulated management according to
their own perspective.
As a result with each new perspective have come new questions and assumptions,
 new research techniques ,
 different technical jargons and
 new conceptual frameworks.
AS a result:
 There is no universally accepted theory of management. i.e. there is yet no verified general theory
or set of laws for management that we can apply to all situations.
 Knowing the evolution help us to know how it was, how it is now and where it is heading.
 Despite the emerging new assumptions, later ideas have not replaced earlier ones. Instead, each new
school has tended to complement or coexist with previous ones.
 At the same time, each school has continued to evolve, and some have even merged with others.
Example: The integrative approaches:
 the systems approach,
 the contingency approach,
 The dynamic engagement approach.
Different Approaches to management theory
 SCIENTIFIC MANAGEMENT THEORY
 THE CLASSICAL PERSPECTIVE
 OPERATIONAL APPROACH
The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL
 Production-oriented field of management dedicated to improving efficiency and minimizing waste.
 Focuses on ways to improve the performance of individual workers (the only way to increase
productivity was to increase the efficiency of workers.).
 Frederick W. Taylor (1856-1915): father of the scientific management school.
 To increase efficiency by scientifically designing jobs
Major premises
 there is always one best way and has to be discovered and put in action
 workers job can be reduced to a science
 Science of shoveling: based his management system on production-line time studies.
 Analyzed and timed steel workers' movements on a series of jobs. Using time study as his base.
 Broke each job down into its components and designed the quickest and best methods of
performing each component.
 Established how much workers should be able to do with the equipment and materials at hand.
 Encouraged employers to pay more productive workers at a higher rate than others, using a
"scientifically correct" rate that would benefit both company and worker.
 Thus, workers were urged to surpass their previous performance standards to earn more pay. This is
the differential rate system.
The Management Theories:
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 Frederick W. Taylor saw workers soldiering or deliberately working beneath their potential and
designed a 4-step method to overcome this problem.
1. Breaking the job into its smallest pieces.
2. To select the most qualified employees to perform the job and train them to do it.
3. Supervisors are used to monitor the employees to be sure they are following the methods
prescribed.
4. Continue in this fashion, but only use employees who are getting the work done.
 In summary: the four principles are
Development of a true science management.
Scientific selection of workers.
Scientific education and development of workers.
Intimate, friendly cooperation between manager and labor.
According to Taylor :
 the success of these principles required "a complete mental revolution" on the part of management
and labor.
 Avoid quarrel over profits and rather try to increase production because both (labor & management)
had a common interest in increasing productivity.
The Management Theories: the scientific management school: HENRY L. GANTT (1861-1919) -
worked with Taylor
 Gantt reconsidered Taylor's incentive system.
 Abandoned the differential rate system as having too little motivational impact.
Every worker who finished a day's assigned workload would win a 50-cent bonus.
Supervisor would earn a bonus for each worker who reached the daily standard, plus an
extra bonus if all the workers reached it.
This would spur supervisors to train their workers to do a better job.
 Every worker's progress was rated publicly and recorded on individual bar charts;--in black on days
the worker made the standard, in red when he or she fell below it.
 Gantt originated the "Gantt chart”-which is a way to schedule work or a charting system for
production scheduling
“THE GILBRETHS”- Frank B. and Lillian M. Gilbreth (1868-1924 and 1878-1972)
 a husband and wife team
 Helped to find more efficient ways for workers to produce output.
 Work on fatigue and motion studies
 Focused on ways of promoting the individual worker's welfare.
They believed
 The ultimate aim of scientific management was to help workers reach their full potential as human
beings.
 Motion and fatigue were intertwined: every motion that was eliminated reduced fatigue.
 Important contribution in the field of bricklaying.
 Raise worker morale for obvious physical benefit and because it demonstrated management’s
concern for the worker.
 changed an 18-step process into a 5-step process and
 Increased productivity by about 200 percent.
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The Management Theories:
THE CLASSICAL ORGANIZATION THEORY SCHOOL
 Scientific management was concerned with increasing the productivity of the shop and the
individual worker; While
 Classical organization theory grew out of the need to find guidelines for managing such complex
organizations as factories.
 Administrative management focuses on managing the total organization.
 Focuses on managing the total organization.
 concerned with the entire range of managerial performance
 comprehensive analysis of management involves studying the management function as a whole
CLASSICAL ORGANIZATION THEORY SCHOOL: HENRI FAYOL (1841-1925)
 founder of the classical management school
 organizational functions Vs the total organization
 Taylor was basically concerned with organizational functions
 Fayol was interested in the total organization.
 Faith in scientific methods,
 Investigate managerial behavior and tried to systematize it.
 Believed that sound management practice falls into certain patterns that can be identified and
analyzed.
 From this basic insight, he drew up a blueprint for a cohesive doctrine of managers
Henry Fayol's universal approach assumes:
 That all organizations, regardless of purpose or size, require the same management process.
 And this rational process can be reduced to separate functions and principles of management.
 Fayol believed that management is a skill like any other- one that could be taught once its
underlying principles was understood. Managers are nurtured than born (natured).
 The first to identify the four management functions: planning, organizing, leading, and controlling.
 He developed guidelines for managers to follow. These guidelines form fourteen principles for
effective management.
 Fayol’s 14 Principles of management
1. Division of Labor. The more people specialize, the more efficiently they can perform their work.
 Effort and attention are focused on special portion of the task.
 Work specialization is the best way to use human resource.
 This principle is observed by the modern assembly line.
2. Authority. Managers must give orders so that they can get things done.
 Authority and responsibility should be closely related.
3. Discipline. Members in an organization need to respect the rules and agreements that govern the
organization.
 Discipline results from good leadership at all levels of the organization, judiciously enforced
penalties for the sake of promoting common efforts.
4. Unity of Command. Each employee must receive instructions from only one person.
Reporting to more than one manager, conflicts in instructions and confusion of authority
5. Unity of Direction. The entire organization should be moving toward a common objective, in a common
direction.
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6. Remuneration. Consideration of variables such as cost of living, success of the organization etc. to
determine rate of payment to both employees and employers.
7. Subordination of Individual Interest to the Common Good. In any undertaking, the interests of
employees should not take precedence over the interests of the organization as a whole.
8. Centralization. Decreasing the role of subordinates in decision making is centralization; increasing their
role is decentralization.
 Fayol believed that managers should retain final responsibility,
 But should at the same time give their subordinates enough authority to do their jobs properly.
 The problem is to find the proper degree of centralization in each case.
9. The Hierarchy. Lower line managers should always inform upper level managers.
10. Order. To increase efficiency and coordination, materials & people should be in the right place at the
right time.
 People, in particular, should be in the jobs or positions they are most suited to.
11. Equity. All employees should be treated equally.
12. Stability of Staff. Retaining productive employees should always be a high priority of management.
A high employee turnover rate undermines the efficient functioning of an organization.
13. Initiative. Subordinates should be given the freedom to conceive and carry out their plans, even though
some mistakes may result.
Encourage employees to do through self direction.
14. Espirit de Corps. Promoting harmony and team spirit among members to give the organization a sense
of unity. Even small factors should help to develop the spirit.
 For example, the use of verbal communications instead of formal, written communication whenever
possible.
• Are managers born or made?
 Before Fayol, it was generally believed that "managers are born, not made."
 Fayol insisted, management was a skill like any other--one that could be taught once its underlying
principles were understood.
CLASSICAL ORGANIZATION THEORY SCHOOL: MAX WEBER (1864-1920)
 a German sociologist
 emphasis how organizational resources are best utilized to attain goals
 He stressed the need for a bureaucratic organization marked by clear division of labor, a strictly
defined hierarchy of authority, governed by clearly defined regulations and lines of authority.
 Sought to improve the performance of organizations by making their operations predictable and
productive.
 Main efforts of organizing efforts should include
1. detailed procedures and rules
2. a clearly outlined organizational hierarchy and
3. Mainly interpersonal relationship between organizational members.
 He named the management system that contains these components to be a bureaucracy.
 Bureaucracy: he believed that in its pure form bureaucracy represented an ideal or completely
rational form of organization.
 Do people do the way Weber wanted it?
 Many did not do what Weber wanted.
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Main concepts
 A consistent system of abstract rules
 any goal-oriented organization consisting of thousands of individuals would require the carefully
controlled regulation of its activities,
 a continuous organization of official functions bound by rules
 a system of rules ensures a rational approach to organization a degree of uniformity and
coordination
The rationale for rules is
 Manager can use them to eliminate uncertainty in the performance of tasks due to differences
between various individuals.
 A set of rules and regulations helps in providing the continuity and stability an organization needs.
Positions arranged in a hierarchy:
 The need for a strictly defined hierarchy governed by clearly defined regulations and lines of
authority.
 The lower one is under the control of the higher office.
 Authority of a supervisor based upon expert knowledge
 Authority decreases/ diminishes with succeeding level below thus resulting chain of command.
Specialization and division of labor
 Activities and objectives were rationally thought out and divisions of labor were explicitly spelled
out.
 Tasks necessary to accomplish goals are divided into highly specialized jobs.
Rationale
 Job holders
 became experts in their jobs
 Are responsible for their performance
 THUS: Manager knows the exact limits of each sphere of competence in order to avoid interfering
in spheres of others
 technical competence
 Technical competence should be emphasized for employment and that performance evaluations
should be made entirely on the basis of merit. Thus promotions on the basis of seniority and achievement.
Impersonal relationships:
 emotional attachments have to be avoided in decision making
 Many think of bureaucracies as vast, impersonal organizations that put impersonal efficiency ahead
of human needs.
 But: Weber's model of bureaucratic management clearly advanced the formation of huge
corporations such as Ford.
 Although bureaucracy has been successful for many companies,
 General Electric and Xerox have become "bureaucracy busters," why?
 throwing away the organization chart and
 Replacing it with ever-changing constellations of teams, projects, and alliances with the goal of
unleashing employee creativity.
The Management Theories: THE BEHAVIORAL SCHOOL:

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 Successful management depends largely on managers’ ability to understand and work with people
who have a variety of backgrounds, needs, perceptions and aspirations.
 The behavioral school emerged from the human relations movement which is an effort to make
managers more sensitive to their employees’ needs
 The classical approach did not achieve the needed efficiency and workplace harmony; people did
not always follow predicted or expected patterns of behavior.
 Thus: The behavioral approach to management emphasizes increasing productivity through
understanding of people and adapts the organization to them (the “people side” of their organization).
THE HUMAN RELATIONS MOVEMENT
 Describe the ways in which managers interact with their employees.
 The human relations movement arose due to historical influences
 Threat of unionization
 THE HAWTHORNE studies
 Philosophy of industrial Humanism
THE HAWTHORNE studies/experiments.
 The human relations movement grew out of a famous series of studies conducted at the Western
Electric Company from 1924 to 1933, near Chicago.
 The influence of different working conditions (temperature, working hours, etc.) on productivity.
 The Hawthorne Studies began as an attempt to investigate the relationship between the level of
lighting in the workplace and worker productivity.
 The results
When the test group's lighting was improved or lighting conditions were made worse, productivity
tended to increase.
the control group's output also rose even though it experienced no changes in illumination
1) Subjects enjoy working in the test room
2) The new supervisory relationship during the study allowed the workers to be free to work with out
fear. Sympathetic supervision had further reinforced their motivation.
3) They know they are part of an important undertaking and subjects become friendly because they
had been singled out for special attention, both the test and the control groups had developed a
group pride that motivated them to improve their work performance.
4) special relationship with the controls
 Conclusion:
 The researchers concluded that employees would work harder if they believed
 management was concerned about their welfare and
 Supervisors paid special attention to them. This phenomenon was subsequently labeled the Hawthorne
Effect.
 Informal work groups-the social environment of employees have a positive influence on
productivity.
 Associations and friendships with co-workers influenced by their shared antagonism toward their
bosses, giving meaning to their working lives and provided some protection from management.
 Group pressure was a stronger influencer of productivity than management demands.
 To Mayo, then, the concept of "social man“

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 "Social man"-motivated by social needs, wanting rewarding on-the-job relationships, and
responding more to work-group pressures than to management control-was necessary to complement the
old concept of "rational man" motivated by personal economic needs.
MARY PARKER FOLLETT (1868-1933)
 One of the contributors of the classical school theory
 Introduced many new elements especially in the area of human relations and organizational
structure.
 Thus initiated and gave insight for the emerging behavioral and management science schools.
 Follett was convinced that no one could become a whole person except as a member of a group;
human beings grew through their relationships with others in organizations.
Believing in relationships
 Management "the art of getting things done through people."
 Address coordination and the power of the group, where individuals could combine their diverse
talents into something bigger.
Advice:-
 How to establish and maintain coordination with in the organization by addressing human element
and communication
 Do not consider coordination through close supervision. Rather Coordination can be attained easily
through direct horizontal and person communication
 When coordination problem exists it can be solved with speaking peer workers
 Coordination should be major for planning process & maintaining coordination should be a
continuing process
 Continuing because existence of coordination today does not mean for tomorrow
 Like Taylor
 labor and management shared a common purpose
 But the artificial distinction between managers and subordinates obscured this natural partnership.
 Strong belief in the power of the group, where individuals could combine their diverse talents into
something bigger.
 OTHER CONTRIBUTION
Follett's "holistic" model
 Management meant more than just what was happening inside a particular organization.
Rather management must take into account not just individuals and groups, but the effects of such
environmental factors as politics, economics, and biology.
 The model paved the way for management theory to include a broader set of relationships, some
inside the organization and some across the organization's borders.
• CHESTER I. BARNARD (1886-1961)
 The Functions of the Executive.
 Used his work experience and his extensive reading in sociology and philosophy to formulate
theories about organizations.
Major elements of his views
 A.
1. People come together in formal organizations to achieve ends they cannot accomplish working alone.
2. But as they pursue the organization's goals, they must also satisfy their individual needs.
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Thus his central thesis: An organization operate efficiently and survive only when
 The organization’s goals are kept in balance with the aims and needs of the individuals working for
it.
 B. Principle how workers can work in stable and mutually beneficial relationships over time.
 In formal organizations to meet their personal goals people form informal groups such as cliques.
 For its survival, an organization must use these informal groups effectively, even if they sometimes
work at purposes that run counter to management’s objectives.
 Recognition of the importance and universality of this "informal organization" was a major
contribution to management thought.
C.
 individual and organizations purposes could be kept in balance if managers understood an
employee's zone of indifference:
 What the employee would do without questioning the manager's authority.
 The more activities fell within an employee's zone of indifference (what the employee would
accept), the smoother and more cooperative an organization would be.
 Executives had a duty
 To instill a sense of moral purpose in their employees.
 To learn to think beyond their narrow self-interest and make an ethical commitment to society.
 D. role of the individual worker as "the basic strategic factor in organization.
E.
 organization is the cooperative enterprise of individuals, working together as groups
 He set the stage for the development of a great deal of current thinking.
 Today companies are increasingly using teams as the building blocks of the organization. Because
 Today companies are increasingly using teams as the building blocks of the organization. Because
 Teams generally are self-managing, supervisory roles are limited.
 Management provides direction by giving each team a common purpose and holds the teams
accountable for measurable performance goals.
F. Acceptance of authority
 Organizational chart
 the source of authority is not determined by a decree (Order) from the formal organization
 But by weather or not authority is accepted by those existing under the authority.
 Authority exists and exact obedience only if it is accepted.
Authority is accepted
1. If an individual understand the order being communicated
2. If an individual believes the order is consistent with the purpose of the organization
3. If an individual sees the order is compatible with his/her personal interests
4. If an individual is physically and mentally able to comply with order.
According to Bernard To increase acceptance of authority managers follow certain guidelines:
 formal channels of communication used by the manager and are familiar to all members
 each member has a formal organizational channel to receive orders
 line of communication is direct between manager and employee
 the chain of command is used to issue orders
 manager possesses adequate communication skill
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 managers use formal communication lines only for organizational purposes
 a command is authenticated as coming from a manager
Theories of Management: THE MANAGEMENT SCIENCE SCHOOL
 Management science focuses specifically on using scientific methods and mathematical techniques
to the development of mathematical models.
 These models help organizations to try out various activities with the use of a computer.
 Modeling can help managers locate the best way to do things
History:
World War II, Great Britain and then USA.
Formation of Operational Research (OR)
Team to solve complex problems in Warfare using leading scientists.
The teams used computers to perform the thousands of calculations involved in mathematical
modeling.
After the war
Complicated industrial and transportation and communication technologies brought problems that
could not be solved easily by conventional/usual means.
Thus OR specialists to help managers come up with answers to these new problems.
 OR procedures were formalized into the management science school.
 The management science school gained popularity through two postwar phenomena.
 The development of high-speed computers and of communications among computers provided the
means for tackling complex and large-scale organizational problems.
 Robert McNamara implemented a management science approach at Ford Motor Company in the
1950s and 1960s, Where "crunching the numbers" is the central way that management decisions are
reached and justified; a mixed team of specialists analyze the problem and propose a course of action to
management (see below).

 1.Observe the system

 2. Based on the observation the team constructs a mathematical model that shows, in symbolic
terms, all relevant factors bearing on the problem and how they are interrelated. And consequences of
chaining the system can be predicted
 3. deducing/assuming/reasoning: use the model to deduce how the system will behave under
conditions that have not been observed but could be observed if the changes were made
 By changing the values of the variables in the model (such as increasing the cost of raw materials)
and analyzing the different equations of the model with a computer, the team can determine the effects of
each change.
 4. Testing: test the model by performing an experiment on the actual system to see if the effects of
change predicted using the model actually occur when the changes are made.
 Eventually, the management science team presents management with an objective basis for making
a decision.
 Importance
 Management science forecasts the future based on the past and present
 Managers can now deal with the "what if the future looks like this?” questions that previous
management theories could not handle.
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 Limitations
 Mathematical modeling tends to ignore relationships
 Emphasis on only the aspects of the organization that can be captured in numbers, missing the
importance of people and relationships.

INTEGRATING THE MANAGEMENT THEORIES

THE SYSTEM APPROACH
 A system is a number of interdependent parts functioning as a whole for some purpose.
 The main premise /assertion/idea/basis of system theory is:
 To understand fully the operation of an entity it must be viewed as a system.
 The activity/modification of any segment of an organization affects, in varying degrees, the activity
of every other segment. i.e. interrelatedness
 each part has a role that helps the whole to function
 To modern management the importance is
 Analysis is based on research data
 Addressees interrelatedness and interdisciplinary among components of organization.
 Because System theory integrates various specialized fields so as the system as whole can be better
understood.
 Systems approach to management views
 The organization as a unified, purposeful system composed of interrelated parts. THUS
 Systems oriented managers make decisions only after they have identified the impact of these
decisions on other departments and on the entire organization.
 SUBSYSTEMS
 Are the parts that make up the whole of a system
 Interdependent subsystems such as production, finance, and human resources etc.
 Each system in turn may be a subsystem of a still larger whole.
 Thus a department is a subsystem of a plant, which may be a subsystem of a company, which in
turn may be a subsystem of a conglomerate or an industry, which again is a subsystem of the national
economy, which is a subsystem of the world system.
 Interdependent subsystems such as production, finance, and human resources work toward synergy.
 SYNERGY: as separate departments within an organization cooperate and interact, they become
more productive than if each were to act in isolation.
 Types of systems
1. OPEN SYSTEM: constantly interacting with the environment.
2. Closed system: not influenced and not interact with the environment.
 All organizations interact with their environment, but the extent to which they do so varies.
 SYSTEM BOUNDARY. Each system has a boundary that separates it from its environment.
 In a closed system, the system boundary is rigid;
 In an open system, the boundary is more flexible.
 What are interrelated parts of a management system?
 Management system composed of interrelated parts:
 Organizational input
 organizational process
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 organizational output
 Flow.
 A system has flows of information, materials, and energy (including human energy). These
 enter the system from the environment as inputs (material or human resources),
 undergo transformation processes within the system (operations that alter them: technological and
managerial processes),
 exit the system as outputs (products or services),
 Feedback: reactions from the environment.
Feedback is the key to system controls.
 With the systems approach managers
 cannot function confined to organization chart
 must mesh/connect their department with the whole organization /employees and departments
 Have to communicate also with other organizations as well.
 System theory does
 Emphasize the dynamic and interrelated nature of organizations and the management task.
 provides a framework to plan actions and anticipate both immediate and far reaching consequences
 allows to understand unanticipated consequences as they develop
 Entropy is the process that leads to decline.
INTEGRATING THE MANAGEMENT THEORIES: THE CONTINGENCY APPR0ACH
The answer to any really engrossing question in economics is: "It depends”. The task of the economist,
is to specify upon what it depends, and in what ways.
The Contingency Appr0ach/The Situational Approach
 Why methods highly effective in one situation failed to work in other situations?
Results differ because situations differ; a technique that works in one case will not
necessarily work in all cases.
 The contingency approach emphasized that
What managers do in practice depends or is contingent upon a given set of
circumstances situation. ’’if-then’’ relationship. If this situational variable exist this is
what the manager will do.
 Example- experienced/skilled versus inexperienced workers
The premise is
 Although there is probably no one best way to solve a management problem in any one
organization, there probably is one best way to solve any given management problem in any one
organization.
 What are the challenges / problems in implementing the contingency approach?
 perceiving organizational situation as they exist
 to Identify which technique will,
 under particular circumstances,
 At particular time, best contribute to the attainment of management goals.
 Then how does the contingency approach represent an important turn in modern management
theory?
 It portrays/ describes each set of organizational relationships in its unique circumstances.
 Unique situation
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 The contingency approach provides a framework for integrating the knowledge of management
thought.
 HOW?
 It allows the use of management practices using traditional, behavioural, and systems viewpoints
independently or in combination to deal with various circumstances.
 It calls for fitting the structure of the organization to various possible or chance events.
INTEGRATING THE MANAGEMENT THEORIES
THE DYNAMIC ENGAGEMENT APPROCH
 The dynamic engagement approach recognizes that an organization's environment is changing fast.
 Dynamic
 opposite of static
 continuous change, growth, and activity
 Engagement
 the opposite of detachment
 Intense involvement with others.
 AN ERA OF DYNAMIC ENGAGEMENT. WHY? (The need to have new ways of thinking
about relationships and time.)
1. Boundaries between cultures and nations are blurred and
2. New communications technology makes the world a "global village,"
3. The scope of international and intercultural relationships is rapidly expanding.
4. The pace of organizational activity picks up fast
 Six different themes
new organizational environments
ethics and social responsibility
globalization and management
inventing and reinventing organizations
cultures and multiculturalism
Quality
 NEW ORGANIZATIONAL ENVIRONMENTS
 According to The dynamic engagement approach
 An organization's environment is not composed of a set of fixed, impersonal forces.
 Is a complex, dynamic web of people interacting with each other?
 Thus in addition to their own concerns,
Understand what is important to other managers both within their and at other
organizations.
The theory of competitive strategy,
 Managers can influence conditions in an industry when they interact as rivals, buyers, suppliers.
ETHICS AND SOCIAL RESPONSIBILITY
 Important ethical concepts
Focus on values and excellence
values that guide people in their organizations,
the organization culture that embodies those values,
And the values held by people outside the organization.
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 Managers must exercise moral courage by placing the value of excellence at the top of
their agendas.
 WHAT DOES SOCIAL RESPONSIBILITY IMPLIE?
 GLOBALIZATION AND MANAGEMENT
Easy connection even to the remotest corners
managers are global citizens
A "borderless" world where managers treat all customers as "equidistant" from their
organizations.

INVENTING AND REINVENTING ORGANIZATIONS

 Search for ways to unleash the creative potential of employees and themselves
 Issues for managers to rethink about the traditional standard organization structures
 "Liberation management" challenges the kinds of rigid organization structures that inhibit people's
creativity.
 CULTURES AND MULTICULTURALISM
 Various perspectives and values that people of different cultural backgrounds bring to ones
organizations are not only a fact of life but a significant source of contributions.
 QUALITY
 Total Quality Management (TQM): to provide products and services that is responsible to strong
customer and competitive standards.
INVENTING AND REINVENTING ORGANIZATIONS
 QM emphasizes achieving customer satisfaction by providing high quality goods and services.
 Reengineering the organization redesigns the processes that are crucial to customer satisfaction.

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UNIT 3: ORGANIZATIONS AND
ENVIRONMENTS
Why concern for environments?
 Organizations are neither self sufficient or self contained
 Dependent for input and out put
 External environment: All elements outside an organization that are relevant to its operation
 It includes the direct-action and the indirect -action elements.
 i) Direct-action elements: directly influence an organization’s activities.
 Individuals/groups
 Examples: stakeholders.
• Stakeholders in are those persons who are directly or indirectly affected by an organization’s
decisions and actions.
 The definition of stakeholders may be narrow or broad, direct or indirect.
 Stakeholders:
 External and internal stakeholders.
 External stakeholders: groups or individuals in an external organization’s environment. who are
affected: -
o Community;
o Patients and clients;
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 o Labor and Professional Associations
o Government;
o Financial institutions;
o Media, and
o Competitors etc

.
Internal stakeholders: groups or individuals that are not strictly part of an organization’s environment but
part of the organization itself.
Examples:
 Employees,
 Shareholders,
 Boards of directors
2. Indirect-action elements: do not affect the organization directly but they influence the organizational
activities indirectly.
 Social variables: demographics, lifestyles
 Technological variables: new developments in products, processes and materials.
 Economic variables: national income, per capita income, employment, etc.
 Political variables: policies, laws and regulations
 External scanning helps identify the outside environment and trends.

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UNIT 4:
PLANNING AND STRATEGIC MANAGEMENT
(The Basics of Planning)
Plan is
 A specific action proposed to help organization achieve objectives.
 A statement of recommended action.
 Why do managers want or need to plan?
 Managers need to plan in order to cope with an uncertain environment.
 Three types of uncertainty are:
 State uncertainty ("What will happen?"),
 effect uncertainty ("What will happen to our organization?"), and
 Response uncertainty ("What will be the outcome of our decisions?").
 To cope with environmental uncertainty, organizations can respond as defenders, prospectors,
analyzers, or reactors.
GOAL

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 Is the purpose that an organization strives to achieve.
 Goals are clearer statement of the mission specifying the accomplishments to be achieved if the
mission is to become real.
Importance of goals
 Provide a sense of direction
 Focus our efforts
 Guide our plans and decisions
 Help us evaluate our progress
OBJECTIVES
 The objectives are clearer statements of the specific activities required to achieve the goals, starting
from the current status.
 Are those ends and desired results to be accomplished by the organization.
 Objectives have been called the single most important feature of the planning process.
 Well-written objectives spell out in measurable terms what should be accomplished and when it is
to be accomplished.
Good objectives help managers by
 serving as targets,
 acting as measuring sticks,
 encouraging commitment, and
 Strengthening motivation.
Objective setting begins at the top of the organization and filters down. Objectives should be:
a) specific and measurable,
b) realistic,
c) focused on key result areas,
d) cover a specific time period,
 Resources must also be identified that will be needed for the reaching of these objectives.
 Strategic, tactical and operational plans will be needed to achieve the associated objectives.
 Strategy
 Is the broad program for defining and achieving objectives of an organization.
 Is the action taken to achieve long-term goals or objectives.
 Tactics
 Are the courses of action associated with reaching short-term goals.
 Operational plans are
 The day-to-day actions that support tactical goals.
 Policies and procedures are
 The ongoing or standing plans that are used to address recurring activities.
 A rule is a very specific guide to behavior.
 Goals
 Are broad statements. There is one goal for a service.
 Aims:
 Number of aims related to the goal. Specific to a particular problem.
 Objective:

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 For each aim number of objectives.
 Target:
 Planning
 Planning has been labeled as the primary management function because it sets the stage for all
other aspects of management.
 It is the process of establishing goals and suitable course of action for achieving these goals.
 Is the orderly process for giving organizational direction or preparing for change and coping with
uncertainty by formulating future courses of action.
 Deciding what to do and how to do it before action is required.
 Is determining how the organization can get where it wants to go.
 Planning is the action you take today to prepare for tomorrow. It is a roadmap to where you intend
to go.
 There may of course be detours, slow-downs, or problems along the way, but generally planning
defines the direction you intend to go.
Attributes of planning
 Futuristic
 anticipate the future
 what is required and
 how it will be accomplished
 Decision making
 Determine what is to be done, when, where, how, and for what purpose.
 Choosing among the alternatives.
 Resource allocation.
 Continuous and dynamic Why?
 Because planned activities are affected by internal and external factors. And
 Need for environment scanning and adaptive changes.
 Taproot for the other elements of management process
 Purposes of planning
 fundamental
 Protective
 Affirmative
 Fundamental: reach the objectives of the organization
 Protective: to minimize risk by reducing uncertainties surrounding the organization and outline
management action.
 Affirmative (confirmatory / positive): to Increase the degree of organizational success
 Advantages of planning
 Future oriented managers
 Decision coordination (consider tomorrow)
 Emphasis on organizational objective
Disadvantage
Types of plans: two types
 Strategic plan:
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 designed to meet an organization’s broad goals and focus on environmental assessment and
addresses objective and strategy
 Operational plans:
 Contain details for carrying out or implementing, those plans in day-to-day activities.
 derived from and in harmony with strategic planning and establish sub-objectives along with
operational programmes policies and procedures in major units of the organization such as departments
 Midlevel: short term operational planning and design and implementation of programmes policies in
their area of responsibility.

 First line managers: plan in relation to specific operations or activities e.g. scheduling work activity
and allocating resource.
Differences between strategic and operational plans
 Time horizon: long time (5 years) versus short time (1 years or shorter even as short as weeks).
 Scope: wide range of goals versus narrow range operations.
 Degree of detail: simplistic and general versus detail and specific activities.
 Plan development: operational by lower level.
 Gathering facts: operational is difficult?
Important concepts
 Mission statement
 All organizations must have an explicitly stated or implicit mission generally consisting: a statement
that identifies in broad terms the purposes for which the organization exists
 The mission statement for the organization is:
 a general overall goal it strives toward.
 Broad organizational goal based on planning premises that justifies its existence.
 A statement of purpose and function.
The mission specifies
 The unique aim of the organization and what differentiate it from other.
 Who are we? What are we? Why do we exist? Who is our constituency?
 Reflects the philosophy of the organization and its role in the delivery.
Mission statement
 future oriented
 Portray organization as it will be, as if it already exists.
 Must focus on one common purpose.
 Must be specific to the organization, not generic.
 must be a short statement,
 A clearly written organizational mission statement tends to serve as a useful focus for the planning
process.
 Determined by the highest body.
 It is a relatively permanent part of an organization’s identity and
 Can do much to unify and motivate members of an organization.
 It should be written and communicated to all share-holders.
 An example mission statement:

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 "By providing quality education, we empower individuals to become caring, competent, responsible
citizens who value education as a lifelong process."

STRATEGIC MANAGEMENT AND IMPLEMENTATION

Strategic Management: Planning for Long-Term Success
Strategy: the broad programme for defining and achieving organizational objectives; the organization
response to its environment overtime.
STRATEGIC MANAGEMENT AND
• Strategic planning is determining how an organization pursues long term goals with available
resources
• Strategic planning is the process of clarifying an organization’s mission, and then identifying goals,
strategies, and resources needed to achieve that mission. Thus
• Strategic planning can be used to determine mission, vision, values, goals, objectives, roles and
responsibilities, timelines, etc.
• Thus Strategic planning is a management tool whose end result should
 Help an organization do a better job. And
 enable the organization to achieve a superior competitive edge
• What do we mean when we say to cope with changing environment?
 It means Strategic planning enable managers to answer such questions:
 What is the organization’s position in the environment? E.g. market?
 What does the organization want its position to be?
 What trends and changes are occurring in the environment/ market?
 What are the best alternatives to help achieve goals?
• When well prepared strategic planning determines
 not only where an organization is going or how it's going to get there
 But also it'll know if it got there or not.
The process is:
• strategic because
 it involves preparing the best way to respond to the organization's environment
• a disciplined effort because
 It calls for a certain order and pattern to keep it focused and productive.
• The process raises questions that helps planners
 examine experience,
 test assumptions,
 gather and incorporate information about the present, and anticipate the future
• Strategic Thinking and Strategic Management
• Strategic planning is only useful if it supports strategic thinking and leads to strategic management.
• Strategic management
 is the ongoing process of ensuring a competitively superior fit between the organization and its
ever-changing environment
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 sets the stage for virtually all managerial activity
 Effectively merges strategic planning, implementation, and control.
 WHAT DO WE MEAN WHEN WE SAY BEING STRATEGIC?
• Being strategic means
 being clear about the organization's objectives,
 being aware of the organization's resources, and
 Addressing both and being responsive to a dynamic environment.
OR
• producing fundamental decisions and actions that shape and guide
 what an organization is, what it does, and why it does it, with a focus on the future.
• Strategic thinking
 the ability to look ahead and spot key organization/ environment interdependencies
 Is necessary for successful strategic management and planning.
• Who has to
 do strategic planning and
 Think strategically?
• Strategic planning is an important function of top-management
• But should be done with the participation of all stakeholders.
 Why is planning an important function of top-management?
• If for all, why do managers need to think strategically?
• Managers at all levels need
 to think strategically and
 to be familiar with the strategic management process
• There are three reasons for this:
1. Farsightedness is encouraged,
2. The rationale behind top-level decisions becomes more apparent,
3. Strategy formulation and implementation are becoming more decentralized.
• Strategic thinking,
• Needs answering the question "Are we doing the right thing?" using three key requirements about
strategic thinking:
• The requirements about strategic thinking:
1. A definite purpose be in mind;
2. An understanding of the environment,
 particularly of the forces that affect or impede the fulfillment of that purpose;
3. Creativity in developing effective responses to those forces.
• Are Strategic Planning and Long-Range Planning, the same?
• Long-range planning is
 The development of a plan for accomplishing a goal over a period of several years.
 The assumption: current knowledge about future conditions is sufficiently reliable to ensure the
plan's reliability over the duration of its implementation.
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• Strategic planning assumes
 That an organization must be responsive to a dynamic, changing environment.
 The assumption: the environment is indeed changeable, often in unpredictable ways.
 Perspectives that can help managers think strategically are
 synergy,
 Porter's model of competitive strategies,
 the concept of business ecosystems, and
 e-commerce strategic approach
 Synergy is the 1 + 1 = 3 effect because it focuses on situations where the whole is greater than the
sum of its parts.
 Managers are challenged to achieve four types of synergy:
 market synergy: different services
 cost synergy: same channel reduce cost like space
 technological synergy: Transfer
 Management synergy. Different skill
 Competitive Scope: Broad or Narrow Target
 Porter's generic competitive model help
 to think strategically
 to see when changes affect the organization
 To create a profitable organization-environment "fit."
• strategies model, four strategies:
(1) Cost leadership,
(2) Differentiation,
(3) Cost focus, and
(4) Focused differentiation.
• (1) cost leadership strategy
 low cost and price
 high priority in increasing productivity
• (2) Differentiation.
 the ability to provide unique and superior value to buyer in terms of product quality special features
or after sale service
 products are unique and
 must be perceived by the customers
 explains why buyers willingly pay more for branded products
 Role of advertising and promotion?
• (3) Cost focus strategy
 attempt to gain competitive edge by narrow or regional market with strict control
 (4) Focused differentiation strategy
 attempts to achieve a competitive edge by providing superior quality to a limited audience

• Role of Contingency approach?

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 C. Business Ecosystems (cooperation between businesses) Model
• Needed for more Strategic Cooperation
• Contrary to the traditional assumption that
 strategy automatically equates to competition;
The business ecosystems model emphasizes that organizations need to be as good at cooperating as they
are at competing
Thus
• By balancing competition and cooperation, competitors can co-evolve into a dominant economic
community (or business ecosystem).
 The Internet technology made managers scrambling
 To create successful e-commerce strategies.
 to have Genuine Strategic Thinking
1. Recognize strategies to be associated with, e.g.
 resolving major issues,
 developing new products or methods of delivery,
 servicing additional or smaller groups of customers, or
 Mergers/collaborations for survival or efficiency.
2. Strategies should focus on structural changes as much as possible. These changes are more likely to
direct and sustain changes in the organization.
3. Strategies deal with the question, “How do we position ourselves if the future changes, and if it is not
what we expected?”
STRATEGIC MANAGEMENT AND IMPLEMENTATION… Contingency …
4. Use a brainstorming technique to collect all ideas from planning members.
5. During strategy development, continue to ask,
 “Is this really a strategic activity? Will it influence change in the organization?”
6. Reconsider strategies that have worked or haven’t in the past.
7. Ensure strategies don’t conflict with each other, i.e., that implementing one strategy will directly impair
implementation of another.
Benefits of Strategic Planning
Strategic planning serves a variety of purposes in organization, including to:
• 1. Clearly define the purpose of the organization and to establish realistic goals and objectives
consistent with that mission in a defined time frame within the organization’s capacity for implementation.
• 2. Communicate those goals and objectives to the organization’s constituents.
• 3. Develop a sense of ownership of the plan.
• 4. Ensure the most effective use is made of the organization’s resources by focusing the resources
on the key priorities.
• 5. Provide a base from which progress can be measured and establish a mechanism for informed
change when needed.
• 6. Bring together of everyone’s best and most reasoned efforts have important value in building a
consensus about where an organization is going.
• 7. Provides clearer focus of organization, producing more efficiency and effectiveness
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• 8. Bridges staff and higher bodies such as board of directors
• 9. Builds strong teams in the board and the staff
Benefits of strategic planning
 Benefit for organization
• Enable The Organization to Achieve a Superior competitive edge.
 Benefits For the manager
 By helping the manager to answer questions about the organization’s
 current position
 Desired future position
 trends and changes
 best alternatives
• Identify or update the strategic “philosophy”.
 This includes identifying or updating the organization’s
 mission,
 vision and/or
 Values statements.
• Some planners prefer to identify/update the mission, vision and values statements before conducting
the strategic analysis. Others prefer to identify/update these items after the strategic analysis.
• Is formulation of a strategy the same thing as implementation of the strategy?
• Formulation of a strategy isn’t the same thing as implementation of the strategy.
• One is a vision- the other is a detailed execution of a plan to achieve that vision.
• Creating a Vision
 To begin the process of strategic planning, visioning comes first.
 Vision statements are usually
 a compelling description of how the organization will or should operate at some point in the future
and of how customers or clients are benefiting from the organization’s products and services
• When visioning the change, ask "What is our preferred future?"
o Understand environment of the organization.
o Describe what you want to see in the future.
o Be positive and inspiring.
o Do not assume that the system will have the same framework as it does today.
o Be open to dramatic modifications to current organization, methodology, teaching techniques,
facilities, etc.
o Key Components for Your Vision
 Incorporate Your Beliefs
• Your vision must be encompassed by your beliefs.
• Your beliefs must meet your organizational goals as well as community goals.
• Your beliefs are a statement of your values.
• Your beliefs are a public/visible declaration of your expected outcomes.
• Your beliefs must be precise and practical.

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• Your beliefs will guide the actions of all involved.
• Your beliefs reflect the knowledge, philosophy, and actions of all.
• Your beliefs are a key component of strategic planning.
• Benefits of Visioning
• Visioning:
• Breaks the manager out of boundary thinking.
• Provides continuity of actions.
• Identifies direction and purpose.
• Alerts stakeholders to needed change.
• Promotes interest and commitment.
• Encourages openness to unique and creative solutions.
• Encourages and builds confidence.
• Builds loyalty through involvement (ownership).
• Results in efficiency and productivity.
• Vision Killers
• Tradition
• Fear of ridicule
• anxiety/contentment of some stakeholders
• Fatigued leaders
• Short-term thinking
• Developing a Mission Statement
• Mission statements are brief written descriptions of the purpose of the organization.
• Mission statements vary in nature from very brief to quite comprehensive, and including having a
specific purpose statement that is part of the overall mission statement.
• The vision statement includes vivid (bright vibrant Colorful)
• Stunning description of the organization as it effectively carries out its operations.
• Developing a Values Statement
• Values represent the core priorities in the organization’s culture, including what drives members’
priorities and how they truly act in the organization, etc.
• Values statements list the overall priorities in how the organization will operate. Some people focus
the values statement on moral values.
• Moral values are values that suggest overall priorities in how people ought to act in the world,
• For example, integrity, honesty, respect, etc.
• Other people include operational values which suggest overall priorities for the organization, for
example, to expand market share, increase efficiency, etc.
• Some people would claim that these operational values are really strategic goals.
STRATEGIC MANAGEMENT AND IMPLEMENTATION
DEVELOPING STRATEGIES TO ADDRESS STRATEGIC ISSUES AND REACH GOALS
• Formulate strategy through environment scan
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• Why environmental analysis? Because organization can be successful if well suited to the
environment and
• Strategy reflect organizational environment.
• Strategic issues and goals are usually identified after doing an environmental scan
• One of the most frequent reasons for ineffective strategic planning is failure to think strategically.
Main reasons include
 reluctance during strategic analysis to include
 assessment of the external environment of the organization
 And feedback from stakeholders.
As a result,
• Planners end up looking only at what the organization is internally doing. Thus
 unable to observe weaknesses to avoid oncoming threats and
 Using strengths to take advantage of new opportunities.
Environment analysis
• Is the study of the environment where the organization exists to pinpoint factors that significantly
influence its operations?
• List e.g. Of SWOT PAGE 133
• An environmental scan is conducted to collect data to answer questions about the present and future
of the organization.
Environmental scan
• Develops a common perception.
• Identifies strengths, weaknesses, trends and conditions.
• Draws on internal and external information.
• Is a key on-going process for internal and external honesty and openness to changing conditions.
To get a realistic picture, an organization must be
 Honest in its analysis of where it stands in the environment/ marketplace.
 Tools for developing organizational strategy
 Critical question analysis
• Where the organization wants to go
• Where the organization is going
• The environment it exists
• What can be done better to achieve objectives in the future
• Strategists formulate the organization's grand strategy after conducting a SWOT analysis.
• The organization's key capabilities and appropriate place (niche) in the marketplace become
apparent
 when the organization's strengths (S) and weaknesses (W) are cross-referenced with
 Environmental opportunities (O) and threats (T).
 Threats would prevent the reaching of goals; opportunities would assist in reaching those goals.
 Tools for Environmental Scanning

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• There are many approaches to environmental scanning, including:
• Surveys
• Questionnaires
• Focus Groups
• Open Forums
• Information from customers, vendors, reports, journal articles, conferences, associations, and so-
on.
• identify issues by addressing questions such as:
a) “What external changes could effect the organization?” Consider
• changing demographics of stakeholders, including number, values, resources, power, etc.;
• changing rules and regulations; expectations and resources from customers etc.;
• expected shifts in needs for products and services; and
• What other current or new organizations provide similar services?
b) “What could be the effects of these changes in terms of threats or opportunities?”
c) “What changes must we make to address the threats?”
D) “What strengths can we build on to take advantage of the opportunities?”
 Event outcome, event timing, and time series forecasts help strategic planners anticipate and prepare
for future environmental circumstances.
 Forecasting techniques that can be used by managers are
• informed judgment,
• scenario analysis,
• surveys, and
• Trend analysis.
 Each technique has its own limitations, so forecasts need to be crosschecked against one another.
 The implementation of a strategic plan is dependent on
• leadership,
• necessary modifications in the organizational structure,
• adequate human resources, and
• Appropriate information and control systems.
 Organizations may use a variety of (grand) strategies depending on
• the development and
• Condition of the company.
 Some of these would include
 growth strategies,
 integration strategies,
 diversification strategies,
 retrenchment strategies, and
 Stability strategies.
 Portfolios strategies help identify what business and what product lines the company pursues.
 Competitive strategies help identify how the company differentiates itself and its products from
others in the same field.
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 Various departments within a company may also pursue certain strategies at a functional level such
as: marketing, production, human resources, financial, and research & development.
 THE FORMAL PLANNING PROCESS
Step 1: goal formulation (what do we want?)
Review/understand organization’s mission
Translate mission into concrete terms
Step 2: identification of current objectives and strategy (What are we now doing to get what we want?)
Study the day-today activities (if there are no explicit objectives and strategies).
Step 3: environmental analysis (what is out there that needs doing?)
• Assess the direct-action and indirect-action elements of the environment.
Step 4: Resource analysis (what are we able to do better or worse than anyone else?)
• Based on the existing goals and strategy
• Identify the organization’s competitive advantages and disadvantages
• Strengths and weaknesses of the organization
• Includes assessment of existing infra-structure/resources and additional resource needs
Step 5: Identification of strategic opportunities and threats (what can we do that needs doing?)
• Situations that are favoring and problems existing or predicted
• Analysis of the environment and resources
Step 6: Determination of the extent of required strategic change (will continuing to do what we are doing
now take us where we want to go?)
• Performance gaps (objectives established in the goal formation versus the results likely to be
achieved)
Step 7: Strategic decision-making (this is what we will do to get what we want.)
• Identify, select and evaluate alternatives

Step 8: Strategy implementation (do it.)

• Incorporate into daily operations of the organization
Step 9: Measurement and control progress (check frequently to make sure we are doing it right.)
• Check progress at periodic intervals
• Measure success

MATCHING STRUCTURE AND STRATEGY

The seven- S model (Waterman)
Seven key factors that can adversely affect successful change in an organization are.
• Structure: structural changes that may be specific
• Strategy:
• Systems: procedures (formal or informal) that allow the organization to function.
• Style: pattern of substantive and symbolic actions undertaken by top managers.
• Staff: should be nurtured, developed, guarded and allocated mentor for talented.
Mentor- is someone who develops another person through tutoring, coaching, and guidance.
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STRATEGIC MANAGEMENT AND IMPLEMENTATION DEVELOPING
• Skills: specific activities for which the organization is known and does the best.
• Superordiante goals: guiding concepts, values, and aspirations

OPERATIONALIZING STRATEGY
• Strategies set goals
• Operational plan provides detailed plan that incorporates strategy in to daily activities
Operational plans: two types
• Single-use plan
• Standing plan
Single-use plan:
• Detailed courses of action that will not be repeated
In the same form in the future.
• Non repetitive in most instances.
• Focus on relatively unique situation
Program: A single use plan
• Covers relatively large set of activities
• It outlines:
Major steps required to reach objectives
Responsibility by unit or members for each step
 Order and timing for each step
Projects: Smaller, separate portions of programs
• Limited in scope
• Contain distinct directives concerning time and assignment
Budgets: Financial resources allocated for certain activities in a given time
Standing plan:
An established set of decisions used to deal with recurring organizational activities
• Pre-established
• Single decision or sets of decisions for effectively guiding those activities
Importance save time as similar situations are handled in predetermined consistent manner
Policy: A standing plan that establish general guideline for decision-making
• Facilitates channeling of management thinking toward taking action consistent with reaching
organizational goals
• Sets up boundaries for decisions telling managers which decisions can be made and which can not.
Good policies are
Well thought, in harmony with objectives/purpose
Flexibility: in normal and abnormal situations
Communicated, understood and accepted
Clear
Rules:
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• Standing plans that detail specific actions to be taken in a given situation
• Help to respond to specific situations
• Specific, mandatory action??
• Room for interpretation??
Procedures: a standing plan that contains detailed guidelines for handling organizational actions that occur
regularly.
• Unlike policy : specific
Standard-operating methods
Detailed set of instructions for performing a task
Powerful tools for implementing strategy
Increases employees commitment
• Management by Objectives
It is a concept that suggests that planning and resource allocation should be based primarily on the
identified supportable goals of the organization, rather than the unpredictable/unreliable influences that
may take control of an organization’s decision making.
MBO,
• An approach to planning and controlling based on measurable and jointly set objectives.
Consists of four steps:
(1) Setting objectives jointly.
• All individuals in an organization are assigned a specialized set of objectives that they try to reach
in during specified operation period
• Objectives are set mutually and agreed upon by both
(2) Developing action plans,
(3) Periodically re-evaluating objectives and plans and monitoring performance,
Performance review how close are workers in attaining goals
(4) Conducting annual performance appraisals.
Reward based on how close employees attain stated objectives.
Advantage
1. Continually emphasize what should be done
2. Increase commitment
Disadvantage
• Increase paper work for communicating objectives, performance evaluation.
Important factor necessary
• appropriate goals to have appropriate objectives
Approach to planning
• Individual-committee
• Systematic-ad hoc
Developmental-incremental
• Refers the degree of autonomy surrounding the planning process inside and outside the
organization.
Developmental approach
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• Settings or environments with fewer constraints, and restrictions.
• It is characterized by bold, new, innovative and nontraditional approach.
• Organizational rigidity is minimal
Incremental planning
• Is less bold less innovative and traditional.
• It is due to internal and external restriction or limited managerial autonomy.
• It may occur in conducive setting but managerial perspective is characterized by:
• a limiting mind set emphasis on short term goals,
• narrow assumption and
• Desire to avoid risk.
It involves marginal not major change in direction, thrust, and strategy.
Proactive approach
• Proactive planning is overt systematic, formalized and anticipatory.
• It involves not only anticipating the future but also interfering and influencing environment.
• Making things happen and shaping events in the best interest of the organization.
Reactive approach
• Reactive planning is planning done on the rebound in response to events.
• It is non systematic and not anticipatory.
• These managers are followers.
• Act and respond because of the actions of others e.g. competitors ,rather than others react

UNIT 5: Decision Making and Creative

Problem Solving
 Decision making is a major part of management because
 When planning, organizing, staffing, leading, and controlling, managers make decisions on a
daily basis.
 It requires choosing among alternative courses of action.
 Decisions must be made at many levels in an organization from executive decisions on the
goals to the day to day repetitive operations performed by lower level managers.
 Decision is a choice made from two or more alternatives.
 many decisions are made in order to solve problems
 Problem:
 The difference between actual and desired states of affairs
 Gap where one is and wants to be
 The definition put managers in a better position to create more effective and efficient solutions. i.e.
problem solving
 Depending on the situation, problems can be resolved , solved, or dissolved
 soften
 Satisfies
 Optimize
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 idealize
Decision Making and Creative Problem Solving…
 Can it be an opportunity?
 Problem solving:
 Conscious process of closing the gap between actual and desired situations.
 Creativity:
 The reorganization of experience into new configuration.
 It is a function of knowledge imagination and evaluation
 more knowledge: more ideas, patterns, combination
 Knowledge must lead to imagination of new ideas and then the idea must be evaluated and
developed into usable idea.
 Identify problem
 Is problem finding an easy task?
 The problem finding process emanates from:
 Deviation from past experience. E.g. Community image of physicians
 Deviation from a set of plans. E.g. medical care and non-medical services in a hospital
 Other people. E.g. community, media people
 The performance of competitors. E.g. private/non-governmental

 Pitfalls of managers in problem identification

 False expectation: e.g. tuberculosis can be controlled by establishing TB- sanitariums
 False association of events: e.g. improved medical care improves health status
 False self-perception and social image: e.g. quality health services are provided by referral
hospitals; “we are the best type of attitude”.
 Decision makers have
 to cope with accelerating change,
 to deal with complexity, uncertainty,
 the need for flexible thinking,
 During decision making and problem solving
 Need to cope with accelerating change,
 face the challenges of dealing with
– complexity,
– uncertainty,
– the need for flexible thinking, and
– Decision traps.
 Factors contributing to decision complexity are
 risk and uncertainty,
 long-term implications,
 interdisciplinary input,
 pooled decision making, and
 Value judgments.
 Managers must learn to assess the degree of certainty in a situation—whether
 Conditions are certain, risky, or uncertain.
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 Confidence in one's decisions decreases as uncertainty increases.
 Conditions of certainty exist when there is no doubt about the factual basis of a particular decision
and its outcome can be predicted accurately.
 Solid factual basis allows accurate prediction of decision’s outcome.
 A condition of risk exists when a decision is made on the basis of incomplete but on reliable and
factual information.
 Managers can respond to a condition of risk: by calculating objective or subjective probabilities.
– objective probabilities: derived mathematically from reliable historical data
– Subjective probabilities. Are based from experience and judgment.
 A condition of uncertainty exists when little or no reliable factual information is available. Can use
probabilities
 Difficult and rewarding decision based on educated guess rather than on factual data.
 One of the major reasons, managers’ need to plan is in order to cope with an uncertain
environment.
 Three types of uncertainty:
• State uncertainty ("What will happen?"),
• effect uncertainty ("What will happen to our organization?"), and
• Response uncertainty ("What will be the outcome of our decisions?").
 DECISION TRAPS
 Three types of decision traps that can hamper the quality of decisions.
– Framing error
 Occurs when people let labels and frames of reference sway their interpretations.
 How information presented affect interpretation
 The tendency to evaluate positively presented information favourably and negatively presented
information favourably.
 Advertising.
– Escalation of commitment
 Get locked into losing propositions for fear of quitting and looking bad.
– Overconfidence
 Tends to grow with the difficulty of the task. may be the need for courage for difficult situation
 Once I am in tendency.
 Over confidence on individual, team success
 Expose to unreasonable risk.
 The formal decision making process may be described in 7 steps:
– Defining the problem or opportunity
– Identifying limiting factors
– Developing potential alternatives
– Analyzing the alternatives
– Selecting the best alternative
– Implementing the decision
– Establishing a control and evaluation system
 Limiting factors help rule out many possible choices. Time and resources are usually major limiting
factors to possible decisions.
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 Alternatives are the potential solutions that can be identified after considering the limiting factors.
 Analysing the alternatives identifies the consequences, the pros and cons, the advantages and
disadvantages for each possible choice.
 Selecting the best alternative is making the choice that offers the most advantages and the fewest
disadvantages.
 Implementing the decision requires taking action to get results. This includes
– communicating the decision to appropriate personnel
– & putting plans, programs, and procedures into effect.
 Establishing a control and evaluation system provides a feedback mechanism for tracking the
implementation of the decision, and allows for modifications or adjustments to be made as necessary
 Types of decisions
• Ends-means
 Ends: Objectives/outputs
 Means: Strategies/operational Programs/activities
• Administrative-operational
 Administrative decisions made by senior managers
 “Policy decisions”
 Resource allocation and utilization
 Operational decisions made by mid-level and first-line managers
 Day-to-day activities E.g. personnel deployment, purchases, specific work assignments
 Programmed decisions.
• Elements of some decisions which are similar and made so often
• Repetitive and routine
• Includes procedures rules and manuals. E.g. patient admission, scheduling, inventory and supply
ordering
 Non-programmed decisions
– Are unique and non-routine and may have unclear implications for the organization, requiring
creative problem solving because they are unfamiliar, Unique and non-routine. E.g. decision to expand, add
or closes services.
 The above three types of decisions are not mutually exclusive
 Factors influencing decision making process.
 The internal environment superiors, colleagues, subordinates, and organizational system
 The external environment such as customers.
 The manager’s personal style often influences their choice of one of three decision-making
approaches:
 A. Rational/ Logical (the 7-step decision model described earlier)
 B. Intuitive (gut-level decisions or hunches),
 C. Predisposed (tendency to re-use previous decisions, regardless of new information)
 A number of other factors need to be considered as part of the decision making process. Some of
these include:

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– Being able to set priorities, timing, avoiding tunnel vision or narrow thinking, being able to "let-go"
of previous decisions if necessary, and the ability to be creative and innovative in problem solving
("thinking outside the box").
 A number of models have been developed to assist with the decision making process. Since
decisions often involve multiple constituents, some of the group models are:
– Brainstorming, Nominal Group Technique and Delphi Technique.
 Managers who may be ultimately responsible for the outcome of a decision should be aware of the
advantages and disadvantages of these group processes.
 Several quantitative tools are available to assist managers with decision making. Some of these are:
Decision Trees, Payback Analysis, and Simulations.
 Managers must ultimately establish a functional and effective system for making mission critical
decisions and for making the more routine day to day decisions that keep the organization running.
 Helpful environment includes:
– Providing adequate time for decisions to be made
– Having self-confidence
– Encouraging others to make decisions
– Learning from past decisions
– Recognizing the differing nature of decisions
– Recognizing the importance of quality information
– Making the tough decisions
– Knowing when to hold-off
– Being ready to try (new) things
– Knowing when to ask for help
 Problem solving
 Problem-solving is not usually an easy task for a manager
 It takes much time of the senior and mid-level managers
 The outcome of problem-solving affects allocation and utilization of resources
 The creative problem-solving process consists of four steps:
– (1) identifying the problem,
– (2) generating alternative solutions,
– (3) selecting a solution, and
– (4) Implementing and evaluating the solution.
 (1) Identifying the problem
– Problem analysis: problem recognition and definition includes data collection and evaluation
 Experience and knowledge of manager
 Sensitivity: the ability to identify and interpret information cues
 Perception of their meaning
 Ordered and systematic thinking about facts
 Knowing which question to ask
 Recognizing limits
 2. Making assumptions
 Structural assumptions:
– Problem lies within or outside the responsibility of the manager
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– Additional resources to the solve the problem are available
– The problem is caused by other departments
– Uncontrollable internal or external factors such as job design, technology
 Personal assumptions:
– Are unique to the manager:
– Biases of the manager, willingness to deal with risk and uncertainty
 Problem assumptions:
– Perceived relative importance of the problem
– Urgency of solution and change
 Assumptions about political implications
– Repercussions from actions and inaction
– The degree to which superiors will accept solutions
 Problem-solver attributes
– Knowledge, experience and judgment
– Perception personality
– Values and philosophy
– The situation
– Urgency of results, time pressure
– Magnitude, importance
– Structure, uncertainty, risk
– Cost-benefit
– Environment
 Direct-action
 Indirect-action
 Before deciding a manager should assess:
– The impact on responsibility
– Whether it affects other departments
– Need for information by higher authorities
– Implications on budget
– Extent of responsibility and authority
 Problems to bring other people into virtually every aspect of the decision-making process?
 Managers may choose to bring other people into virtually every aspect of the decision-making
process. However, when a group rather than an individual is responsible for making the decision, personal
accountability is lost.
 Dispersed accountability is undesirable in some key decision situations. Group-aided decision
making has both advantages and disadvantages.
– Because group performance does not always exceed individual performance,
– A contingency approach to group-aided decision making is advisable.
 How to increase creativity?
– Creativity requires the proper combination of knowledge, imagination, and evaluation to reorganize
experience into new configurations.

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– The domains of creativity may be divided into art, discovery (the most relevant to management),
and humour.
– Contrary to myth, researchers have found a weak link between creativity and nonconformity.
– A fun and energizing workplace climate can tap every employee's creativity. By consciously
overcoming ten mental locks, we can become more creative.
General environmental picture:
Health Service Organizations
 Turbulent and hostile
 Rapidly changing
 Greater uncertainty
 Greater risk
 Fast technological advancement
 Increased demand of quality and quantity services
 Increased demand for accountability
 Increasing cost
 Competition
 Government and media pressure, etc
 Approach: - Health Services marketing: an environmental link.
 Definition: The analysis, planning, implementation and control of carefully controlled programs
designed to promote voluntary exchanges of values with target markets.
 Idea relatively new in HSOs
 An integral part of strategic planning.
 Meets the needs of patients and medical staff; fulfill organizational mission.
 It is a voluntary exchange of something of value
 Consumer – gets service  locate and choose
 Provider – gets fee create and make available
 Needs
– Designing of HSOs based on needs and desires
– Effective pricing
– Better communication
– Improved distribution
 Mechanisms
– Identify needs wants and desires of targets (know customers and constituents)
– Creation of new or alignment of existing services/products
 Marketing audit
 Definition: systematic evaluation of the HSO’s marketing situation, includes:
– Environmental surveillance – markets and needs
– Evaluation of present services in relation to the needs
– Modification of exchange facilitators - to be consistent with strengths and weaknesses
 Target market: examples of factors influencing
– Patients
– Health personnel
– Government
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– Regulations
 Service mix: includes services and programs
– Can be expanded
– Reduced
– Realigned
– Specialized
 Classification of specific target markets
• By type of care needed
 Acute: short term
 Chronic: long term
 Rehabilitative
• By specific service
 Medical and Surgical
 Obstetric and gynecology, Oncology

UNIT 6: Organizing Principles and Organizing Process

Objectives
Organizing Principles
Organizational design structure chart
Different perspectives of Organizational structure
Types of Organizational structure
Chain of command
Span of management
Authority
Delegation
Future trends
 Organizing Principles
Organizing Function:
 Next step after planning.
 A key issue in accomplishing the goals identified in the planning process: structuring the work of
the organization.
 The purpose is
To make the best use of the organization's resources to achieve organizational goals.
to make the organization a stable place for employees
Organizing
 deciding what work needs to be done,
 Deals with formal assignment of tasks and authority and coordination. and
 Arranging them into a decision-making framework. What is the decision-making framework?
 The organizing function deals with all those activities that result in the formal assignment of tasks
and authority and a coordination of effort.
 The supervisor staffs the work unit, trains employees, secures resources, and empowers the work
group into a productive team.
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 The steps in the organizing process include
 (1) review plans,
 (2) list all tasks to be accomplished,
 (3) divide tasks into groups one person can accomplish - a job,
 (4) group related jobs together in a logical and efficient manner,
Organizing Principles Organizing Process…
 (5) assign work to individuals,
 (6) delegate authority to establish relationships between jobs and groups of jobs
Thus
 Organizing is not only
 deciding what work to be done, or
 Dealing with formal assignment of tasks and authority and coordination. BUT
 Arranging them into a decision-making framework.
 What is the decision-making framework?
 Organizational structure
 What is organization?
Organization/ s
 A pattern of relationship through which people pursue to achieve common goals.
 Are groups of people, with ideas and resources, working toward common goals.
Characteristics of organizations:
 Whatever their purpose, all organizations have four characteristics:
(1) Coordination of effort
(2) Common goal or purpose
(3) Division of labor, and
(4) Hierarchy of authority.
 If even one of these characteristics is absent, does an organization exist?
Classification of organizations
By intended purpose.
 business, to make profit in a socially acceptable manner
 nonprofit service, : benefit for clients
 Mutual-benefit, associations, parties, etc.
 Commonweal. Nonprofit organizations. To all members of a given population.
 What is the difference between organizational design and structure?
 Which comes first after planning?
 Organizational Design
Organizing Principles Organizing Process……
 The determination of the organizational structure that is most appropriate for the strategy, people,
technology and tasks of the organization.
 Matching goals, strategic plan, capabilities with environment.
Organizational Structure
 The way, in which an organization’s activities are divided, organized and coordinated.
 Is the formal decision-making framework by which job tasks are divided, grouped, and
coordinated?
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 Why formal?
 It is the official organizational structure conceived and built by top management.
 Formalization is an important aspect of structure. And
 It is the extent to which the units of the organization are explicitly defined and
 Its policies, procedures, and goals are clearly stated.
 Organization charts?
 The formal organization can be seen and represented in chart form.
 An organization chart
 Displays the organizational structure and shows job titles, lines of authority, and relationships
between departments.
 Is helpful for managers as it is an organizational blue print for deploying human resource.
Dimensions of Organization charts
 Representing the organization's structural skeleton, organization charts have dimensions
representing
 vertical hierarchy and
 Horizontal specialization.
 Vertical hierarchy is the chain of command.
 Horizontal specialization involves the division of labor.
 Why do we need an organizational structure?
 Problems of unclear or lack of an organizational structure?
A clear organizational structure
 clarifies the work environment,
 creates a coordinated environment,
 achieves a unity of direction, and
 establishes a chain of command unclear or lack of an organizational structure or
 Without an organizational framework and lines of reporting, there would be
 frustration,
 loss of productivity, and
 limited ability to pursue a strategy
 Can different organizations have similar organizational structure?
 Why the need for different organizational structure?
 Environment and Strategy
 Approaches and theories of organization
 Traditional and modern views of organizations.
A. General perspective
 Traditionalists such as Fayol, Taylor, and Weber subscribed
 to closed-system thinking and
 Ignored the impact of environmental forces.
 Early management writers proposed tightly controlled authoritarian organizations.
 Max Weber, applied the label bureaucracy to his
 Formula for the most rationally efficient type of organization.
 When bureaucratic characteristics, which are present in all organizations, are carried to an extreme,
efficiency gives way to inefficiency.
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 Chester I. Barnard's acceptance theory of authority and growing environmental complexity and
uncertainty questioned traditional organization theory.
Modern organization theorists tend to prefer
 open-system thinking because
It realistically incorporates organizations' environmental dependency.
 Believe to be useful in explaining the necessity of creating flexible and adaptable organizations
rather than rigid.
B. Primary goal of organization
 Economic efficiency
 Survival in an environment of uncertainty
C. Assumption about environment
 Predictable
 Generally uncertain
D. Assumption about organization
 All, goal directed variables are known and controllable.
 Uncertainty can be eliminated through planning and controlling.
 The organization system has more variables than can be comprehended at one time.
 Variables often are subject to influences that can not be controlled or predicted.
The environmental approach
 Considers the organizational environment for organizational design
 developed by Tom Burns and G. M. Stalker in
Their study of electronics firms in the United Kingdom. 1961
There are two organizational systems Mechanistic and Organic
 The mechanistic structure
Is the traditional or classical design, common in medium- and large-size organizations?
Mechanistic organizations:
 are rigid in that they consist of very clearly delineated jobs,
 have a well-defined hierarchical structure, and
 Rely heavily on the formal chain of command for control.
 Are Bureaucratic organizations a form of mechanistic structures? Why?
 Bureaucratic organizations, with their emphasis on formalization, are the primary form of
mechanistic structures.
 According to Max Weber, bureaucracy is a form of organization characterized by :
 A rational, goal-directed hierarchy,
 impersonal decision making,
 formal controls, and
 subdivision into managerial positions
 Specialization of labour.
 Bureaucracies are driven by a top-down or command and control approach in which managers
 Provide considerable direction and
 Have considerable control over others.
Organic structure:
Characterized by informality, working in groups and open communication
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 more flexible,
 more adaptable to a participative form of management, and
 Less concerned with a clearly defined structure.
 The organic organization is open to the environment in order to capitalize upon new opportunities.
The mechanistic structure
 Bureaucratic organizations are tall consisting of hierarchies with many levels of management.
 In a tall structure, people become relatively confined to their own area of specialization.
 functional division of labour Organic organizations
 Have a flat structure with only one or two levels of management.
 Flat organizations
 Emphasize a decentralized approach to management that encourage high employee involvement in
decisions.
 The purpose of this structure is to create independent small businesses or enterprises that can
rapidly respond to customers' needs or changes in the business environment.
 The manager has a more personal relationship with employees.
 a non-bureaucratic organization
 referred participative-democratic
 Management and employees interact in a friendly environment
 Characterized by mutual confidence and trust.
 Which one is preferable approach?
 Mechanistic or
 Organic organization? Why?
Mechanistic organizations are best suited to
 repetitive operations and
 stable environments,
Organic organizations are best suited to an
 uncertain task and
 A changing environment.
 Contingency organization?
 Contingency organization
 the most appropriate organization structure for each situation depends upon
 technology,
 organizational size,
 goals and strategy,
 environmental stability, and
 characteristics of the employees
 Future trends
 Future trends are for more organizational structures designed
 to maximize responsiveness to customer needs,
 a flattening of hierarchies within organizations,
 downsizing and re-engineering of companies,
 decentralization of decision-making and authority, and
 Increased accountability.
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 Difference between formal and informal organizations?
 Formal and informal organizations differ somewhat in their approaches.
 Informal organizations put more emphasis on people and relationships.

 Formal organizations emphasize position within the structure.
 Both systems have their advantages and disadvantages.
 For example some of the advantages of informal organizations are providing
 Stability in the workplace and providing useful communications channels.
 Some of the disadvantages are resistance to change and initiation of rumours.
TYPES OF ORGANIZATIONAL STRUCTURES
 When managers create or change an organization’s structure they are engaging in organizational
design.
 Designing an organization involves choosing an organizational structure that enables to achieve
goals.
Organization design is the creation of an organization's structure,
 The overall layout of departments, positions and interrelationships
 creates the means to achieve the goals, objectives and mission of the organization
 Why the need for change in organizational design?
 No competitive environment is static.
Thus factors such as
 Competition,
 the global
 economy,
 customer needs,
 Government regulation etc. introduces the need for change.
 Objectives of the design include
 responding to change,
 integrating new elements as needed,
 coordinating the components, and
 encouraging flexibility Basically the design choices are
a) Tight, vertical mechanistic structures; or
b) Flexible, horizontal, organic structures.
 Much of the
 Trend today is toward more flexible decision making at lower levels in the organization.
 A “Learning Organization” that is responsive to change.
 Selecting a structure
 Selecting a structure for the organization can be guided by the contingency factors of
 strategy,
 environment,
 size,
 age and technology
If the strategic goals of different organization are
 innovation,
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 flexibility
 differentiation
 Efficiency
 Stability
 cost control

Which ones need mechanistic or organic design?

 The strategic goals of the organization will affect the best choice of structure.
 Example
Innovation, flexibility and differentiation are better supported by organic design.
Efficiency, stability and cost control are better supported by a tight mechanistic design.
 The condition of the environment—stable or unstable—may affect the choice of structure.
 The size may preclude an informal structure.
 With age, organizations tend to become more inflexible and mechanistic.
 Many organizational design changes are being driven by technology changes, forcing organizations
to change or perish.
Organization design is the creation of an organization's structure,
 functional,
 divisional,
 Matrix.
Steps of organizing
 Reviewing plans and goals
 Determining work activities
 Classifying and grouping activities
 Assigning work and delegating authority
 Designing a hierarchy of relationships

FUNCTIONAL STEPS IN ORGANIZING

 The four building blocks
 Division of work
 Departmentalization
 Hierarchy
 Coordination
Sequence?
 chain of command
 work is divided,
 Coordination,
 departments created
 span of control
 The nature and scope of the work needed to accomplish the organization's objectives is needed to
determine work classification and work unit design.
 Division of work / Division of labour/ work specialization
 Is the degree to which tasks in an organization are divided into separate jobs.
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 is breaking of a complex task into components

 Individuals are responsible for a limited set of activities instead of the entire task.
 Work process requirements and employee skill level determine the degree of specialization
 Placing capable people in each job ties directly with productivity improvement.
 In order to maximize productivity, supervisors match employee skill level with task requirements
 Creates simplified tasks
 Fosters specialization
 Opportunity for utilizing talents and interests
Job specialization may create:
 Boredom and
 Alienation (unfriendliness isolation distancing division)
Workflow analysis
Supervisors should perform workflow analysis
 To examine how work creates or adds value to the ongoing processes in an organization.
 Workflow analysis
 Looks at how work moves from the customer or the demand source through the organization to the
point at which the work leaves the organization as a product or service to meet customer demand.
 Thus, workflow analysis can
 Be used to tighten the connection between employees' work and customers' needs.
 help to make major performance breakthroughs throughout business process reengineering (BPR),
Business Process Reengineering (BPR),
 A fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in costs, quality, service, and speed.
 Uses workflow analysis to identify jobs that can be eliminated or recombined to improve
organizational performance.
 Departmentalization
 Once work activities are divided in to jobs or
 jobs have been classified through work specialization,
 They are grouped so those common tasks can be coordinated and can be similarly and logically
connected.
 It is the basis on which work or individuals are grouped into manageable units.
An organization chart shows the formal relationships
 Each single box in an organizational chart represents departments
 Number and type of departments vary in each organization and
 There are five traditional methods for grouping work activities.
 The five basic departmentalization formats, each with its own combination of advantages and
disadvantages.
 functional
 product-service,
 geographic location,
 customer classification, and
 work flow process departmentalization
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 Departmentalization by function
 Functional departmentalization is the most common approach
 Organizes by the functions to be performed.
 Advantage
 This type of grouping helps to obtain efficiencies from consolidating similar specialties and people
with common skills, knowledge and orientations together in common units. Departmentalization by
product-service,
 Assembles all functions needed to make and market a particular product are placed under one
executive.
 E.g. major department stores are structured around product groups such as women's clothing, men's
clothing, and children's clothing.
 Departmentalization by geographical regions
 Groups jobs on the basis of territory or geography. For example domestic sales departmentalized by
regions such as Northeast, Southeast, Midwest, Southwest, and Northwest.
 Departmentalization by process
 Group’s jobs on the basis of product or customer flow.
 Each process requires particular skills and offers a basis for homogeneous categorizing of work
activities.
 A patient preparing for an operation would first engage in preliminary diagnostic tests, then go
through the admitting process, undergo a procedure in surgery, receive post operative care, be discharged
or out-patient follow.
 These services are each administered by different departments.
Departmentalization by customer
 Groups jobs on the basis of a common set of needs or problems of specific customers.
 An organization may group its work according to whether it is serving private sector, public sector,
government, or not-for-profit organizations.
 Current departmentalization trend
 Current departmentalization trend
 Is to structure work according to customer, using cross-functional teams.
 Cross-functional team
 Is chosen from different functions to work together across various departments to interdependently
create new products or services.
 For example, a cross-functional team consisting of managers from accounting, finance, and
marketing is created to prepare a technology plan

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3. Hierarchy: What are concepts behind hierarchy? How do we establish Hierarchy?
Hierarchy
Concept is how many could be effectively handled
 A pattern of multiple levels of an organizational structure
 At the top the senior-ranking manager
 Bottom - low-ranking managers located at various levels
Which comes first; Chain of command or span of control?
Span of management control (span of control or span of management)
 The number of people/departments directly reporting to a given manager.
After work is divided, departments created and span of control chosen decide on chain of command.
Chain of command
 The plan that specifies who reports to whom
 Fundamental feature of an organization
The result of the two decisions lead to a pattern: hierarchy
 Span of management control: Does it have an effect
 on working relationships and
 on the speed of decision making? How?
Span of management control: Effects
A. Determines the working relationships in a department
 Too wide: Create flat hierarchies (fewer management levels between the top and the bottom)
 Implications:
 Overburdened manager,
 Little guidance or control of employee
 Overlooking or ignore serious errors

B. the span can affect the speed of decision making

 Too narrow: Create tall hierarchies (many levels between the highest and lowest managers)

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 Implications:
 Managers are underutilized
 In-efficient
 Affects the speed of decisions (delay) in this changing environment
FINALLL

Future trend:
 Downsizing:
A version of organizational restructuring which results in decreasing the size of the organization
 a move towards flatter organizational hierarchies
 To increase the speed of decision making and productivity
Coordination
 The integration of activities of separate parts of an organization for accomplishing the
organizational goals.
 Integration: the degree to which various departments work in a unified manner
 What is the effect of lack of coordination?
The degree of coordination depends on
Nature of task
Degree of interdependence of people in the various units
 When do organizations need a high degree of coordination?
Coordination
High degree of coordination is needed:
 When communication between units is important
 For non-routine and unpredictable works
 When organizations are challenged with unstable environment
 When there is high interdependence between units
 When the organization has set high performance objectives
 For highly specialized task such as coordination among different organizations
 Differentiation and division of work related to coordination
 Differentiation: differences in attitude and working styles, arising naturally among members of
different departments that can complicate the coordination
Coordination
 Division work : role how individuals perceive the organization, their role and how they relate
 Differentiation
may complicate coordination and
Can lead to conflict among units and individuals.
 Examples of differentiation
Development of individuals worker’s perspective on the goals of the organization ’we
are the best”.
Differences of departments in formality.
E.g. Specific Vs general standard.
 Approaches to achieving effective coordination
 Using basic management techniques
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 Specify relationships (managerial hierarchy or chain of command)
Set rules and procedures
Management By Walking Around (MBWA)
Boundary-spanning To increase coordination potential
A job in which an individual acts as a liaison between departments or organizations
those are in frequent contact
Vertical information system
Lateral relationships:
Example: direct contact, committee, task force, etc.
 Improve communication among departments
 Reducing the need for coordination
When the need for coordination is very high and the methods mentioned above fail,
actions such as:
 Providing slack (additional) resources
 Creating independent units to decrease reliance on other departments
Organization Design
 Designing an organization involves choosing an organizational structure that will enable the
company to most effectively achieve its goals.
 Organization design is the creation of an organization's structure
 functional,
 divisional, and/or
 Matrix.
 Organizational structure can be discussed in terms of a continuum with five markers.
 At one end of the continuum is mechanistic representing a functional structure, and moving toward
divisional, matrix, team- and finally organic in design.
Functional organizations
Functions or divisions arrange traditional organizations (functional structure).
 The structure is based on functions.
 Based on functions and specialized functions
 Mainly used by smaller organizations
 Most logical and basic form of departmentalization
 A form of departmentalization in which individuals engaged in one functional activity, such as
marketing or finance grouped into one unit. Or
 Where formal departments staffed by personnel with easily recognized responsibilities such as
production, human resources etc.
Product/market/service organization
 The organization of a company into divisions that bring together those involved with a certain type
of product or market.
 Division: is large organization department that resembles separate business.
 There are different patterns:
 Division by product
 Division by geography
 Division by customer
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In a divisional organization,
 divisions operate as relatively autonomous businesses under the larger corporate umbrella.
 divisions may be unrelated such as in a conglomerate organization
 may even compete.
 divisional structures are made up of self-contained strategic business units that each produces a
single product.
 For example, General Motors' divisions include
 Chevrolet, Oldsmobile, Pontiac, and Cadillac.
 Divisional structure is closer to functional structure with particular divisions being self-contained
business units often producing a single product or group of products.
 A central headquarters, focusing or results, coordinates and controls the activities, and provides
support services between divisions.
 Functional departments accomplish division goals.
 Weakness is the tendency to duplicate activities among divisions.
Matrix organization
Also called “multiple command system
In a matrix organization, teams are formed and team members report to two or more managers.
 An organizational structure in which employee reports to both a functional or division manager and
to a project or group manager, commonly for one-of-a-kind projects
 Two types of structure existing simultaneously. Two chains of command
 Functional or divisional: vertical
 Project or business: horizontal
 By superimposing a project structure upon the functional structure, a matrix organization is
formed that allows the organization to take advantage of new opportunities.
This structure assigns specialists from different functional departments to work on one or more
projects being led by project managers.
The matrix concept facilitates working on concurrent projects by creating a dual chain of
command, the project (program, systems, or product) manager and the functional manager.
 Project managers
 have authority over activities geared toward achieving organizational goals while
 Functional managers
Have authority over promotion decisions and performance reviews.
 Matrix structures utilize functional and divisional chains of command simultaneously in the same
part of the organization.
 The matrix structure falls in the middle, combining
the advantages of functional specialization
With the focus and accountability of the divisional structure.
 It is useful and being used
to develop a new product,
to ensure the continuing success of a product to which several departments directly
contribute, and

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 to solve a difficult problem by assigning specialists from different functional
departments to work on one or more projects. Example an organization with a contract
with other.
 Developing interest in other’s work
 Cost saving (unnecessary duplication is avoided)
 Understanding increases laterally and vertically.
 Matrix organizations are particularly appealing to firms that want to speed up the decision-making
process.
Problems of matrix organization
 May not allow long-term working relationships to develop.
 Using multiple managers for one employee may result in confusion as to manager evaluation and
accountability.
 Thus, the matrix system may elevate the conflict between product and functional interests.
Organizational Culture and Change
 Organizational Culture is a dynamic system of shared values, beliefs, philosophies, experiences,
habits, expectations, norms, and behaviours that give an organization its distinctive character.
 The culture helps
guide the activities of the organization,
provide an unwritten code of behaviour,
provide a shared sense of identity
 Seven culture shaping factors are:
Key organizational processes,
Dominant coalition,
employees,
formal organizational arrangements,
social system,
technology, and
external environment
 The corporate culture may be manifested in various ways such as
 statements of principle,
 stories,
 slogans,
 heroes,
 ceremonies,
 Symbols, climate, and the physical environment.
 Some aspects of the culture may be
 guided or created by managers, or
 influenced by employees and
 other significant power groups within the organization
Managers may influence the culture
 by defining company mission and goals,
 identifying core values,
 determining levels of autonomy,
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  structuring the workplace,
 developing reward systems, and
 creating socialization opportunities that reinforce the culture.
Culture contributes to the effectiveness of the organization.
 If it does not, it may signal the need for change.
 Influences for change can be either internal or external to the organization.
 internal sources
 a change in managers
 employees
 Technology.
 external sources
 Political, technological or economic.
 Depending on the nature of the change, it may be threatening to many in the organization.
 Change may be of a
 strategic nature,
 structural,
 process-oriented or,
 People centred.
Rapid, revolutionary change is particularly threatening
 Most organizations try to mitigate the unsettling effects of change by planning for it on an ongoing
basis, rather than just reacting to crises that arise.
Preparing for change: A nine-step process:
1. Recognizing the need for change
2. Developing goals
3. Selecting a change agent
4. Diagnosing the problem
5. Selecting the intervention method
6. Developing a plan
7. Planning for implementation
8. Implementing the plan
9. Following up and evaluating
 Strategies that assist in promoting change within an organization:
developing mutual trust,
establishing an environment of organizational learning and
Remaining adaptable.
 The basic problem is that change efforts fail because people resist change!
 Reasons for resistance are:
loss of security,
fear of economic loss,
loss of power and control,
old habits,
selective perception, and
weaknesses in the proposed change
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 Aggravating factors are:
faulty thinking,
inadequate process,
lack of resources,
lack of time
poor timing, and
A resistant culture.
 Techniques for overcoming resistance to change
 invited participation,
 open communication,
 giving advance warning,
 maintaining sensitivity, and
 Offering security in the face of change.
 Change in an individual is usually enabled by a change in skills, knowledge, or attitude.
 Two approaches to this are: -
the “three step approach” (unfreezing, change, freezing) and
“Force-field analysis” (overcoming the status quo by weakening the forces of
resistance).
 Organizational development is the system of maintaining a climate where adaptability to change
can be a constant through the use of diagnostic and change strategies.
 Management of change is critical importance to most organizations in the information age.
Informal organizational structures:
 The undocumented and officially unrecognized relationships between members of an organization
that inevitably emerge out of the personal and group needs of employees. Informal
 Unrelated to the organization’s formal authority structure, the informal organization is the network,
of social interactions among its employees.
 The personal and social relationships that arise spontaneously as people associate with one another
in the work environment.
 The informal organizations can pressure group members to conform to the expectations of the
informal group that conflict with those of the formal organization.
 This can result in the generation of false information or rumours and resistance to change desired by
management.
 The informal organization can make the formal organization more effective by providing
support to management,
stability to the environment, and
Useful communication channels.

DELEGATION
Future trends
Future trends are for more organizational structures:
 designed to maximize responsiveness to customer needs,
 a flattening of hierarchies within organizations,
 downsizing and re-engineering of companies,
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  decentralization of decision-making and authority,
 And increased accountability.
Learning organizations
 Learning organizations as those capable of turning new ideas into improved performance.
 Five skills required to do this are
(1) Solving problems,
(2) Experimenting,
(3) Learning from organizational experience and history,
(4) Learning from others, and
(5) Transferring and implementing knowledge for improved performance.
 Boundaryless organizations are not defined or limited by horizontal, vertical, or external boundaries
imposed by a predetermined structure.
 They share many of the characteristics of flat organizations, with a strong emphasis on teams.
Cross-functional teams dissolve horizontal barriers and enable the organization to respond quickly to
environmental changes and to spearhead innovation.
 Boundary less organizations can form relationships (joint ventures, intellectual property,
distribution channels, or financial resources) with customers, suppliers, and/or competitors.
Telecommuting, strategic alliances and customer-organization linkages break down external barriers,
streamlining work activities. Jack Welch, former CEO of General Electric, to facilitate interactions with
customers and suppliers, first used this un-structure.
 A boundaryless environment is required by learning organizations to facilitate team collaboration
and the sharing of information. When an organization develops the continuous capacity to adapt and
survive in an increasingly competitive environment because all members take an active role in identifying
and resolving work-related issues, it has developed a learning culture.
 A learning organization is one that is able to adapt and respond to change. This design empowers
employees because they acquire and share knowledge and apply this learning to decision-making. They are
pooling collective intelligence and stimulating creative thought to improve performance. Supervisors
facilitate learning by sharing and aligning the organization's vision for the future and sustaining a sense of
community and strong culture.

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 Because there is no one criterion for organizational effectiveness, for-profit as well as nonprofit
organizations need to satisfy different effectiveness criteria in the near, intermediate, and distant future.
 Effective organizations are effective, efficient, and satisfying in the near term. They are adaptive
and developing in the intermediate term. Ultimately, in the long term, effective organizations survive.
 The management of organizational decline has only recently received the attention it deserves.
 Decline is often attributable to managerial complacency.
 The characteristics of decline are interlocking dilemmas that foster organizational self-destruction.
 To avoid decline as much as possible, or at least lessen its frequency, organizations should adopt
preventive safeguards that counteract complacency. Continuous improvement is the primary tool for
fighting decline.
 Downsizing tends to yield disappointing results. Among the ethical alternatives to layoffs are
redeployment and work sharing.
Organizational culture
 Organizational culture is the "social glue" binding people together through shared symbols,
language, stories, and practices.
 Organizational cultures can commonly be characterized as
 collective, emotionally charged,
 Historically based, inherently symbolic, dynamic, and inherently fuzzy (or ambiguous).
 Diverse outsiders are transformed into accepted insiders through the process of organizational
socialization.
 Orientations and stories are powerful and lasting socialization techniques. Systematic observation
can reveal symptoms of a weak organizational culture.
Organizing in the Twenty-First Century
 Contingency organization design has grown in popularity as environmental complexity has
increased.
 The idea behind contingency design is structuring the organization to fit situational demands.
 Consequently, contingency advocates contend that there is no one best organizational setup for all
situations. Diagnosing the degree of environmental uncertainty is an important first step in contingency
design.
 Field studies have validated the assumption that organization structure should vary according to the
situation.
 Burns and Stalker discovered that:
 mechanistic (rigid) organizations are effective when the environment is relatively stable and that
 Organic (flexible) organizations are best when unstable conditions prevail.
 Lawrence and Lorsch found that:
 Differentiation (division of labor) and integration (cooperation among specialists) increased in
successful organizations as environmental complexity increased.
 Today's organizations tend to suffer from excessive differentiation and inadequate integration.
 There are five basic departmentalization formats, each with its own combination of advantages and
disadvantages.
departmentalization
 Functional departmentalization is the most common approach.
 The others are
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 product-service,
geographic location,
customer classification, and
Work flow process departmentalization.
 In actual practice, these pure types of departmentalization usually are combined in various ways.
 Design variables available to organizers are
 span of control,
 decentralization,
 line and staff, and
 Matrix.
 As organizers have come to realize that situational factors dictate how many people a manager can
directly supervise; the notion of an ideal span of control has become obsolete.
 Decentralization, the delegation of decision authority to lower-level managers, has been praised as
being democratic and criticized for reducing top management's control.
 Strategic business units foster a high degree of decentralization.
 Line and staff organization helps balance specialization and unity of command.
 Functional authority serves to make line and staff organizations more organic by giving staff
specialists temporary and limited line authority.
 Matrix organizations are highly organic because they combine vertical and horizontal lines of
authority to achieve coordinated control over complex projects.
DELEGATION
 Delegation of authority, although generally resisted for a variety of reasons, is crucial to
Decentralization.
 Effective delegation permits managers to tackle higher-priority duties while helping train and
develop lower-level managers.
 Although delegation varies in degree, it never means abdicating primary responsibility. Successful
delegation requires plenty of initiative from lower-level managers.
 Many factors, with global competition leading the way, are forcing management to reshape the
traditional pyramid bureaucracy.
 These new organizations are characterized by fewer layers, extensive use of teams, and manageably
small subunits.
 Three emerging organizational configurations are the
Hourglass organization,
the cluster organization, and
Virtual organizations.
 Each has its own potentials and pitfalls.
VERY IMPORTANT: -
To organize effectively, managers need to master a number of concepts including
authority,
power,
delegation,
span of control, and centralization /decentralization

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Types of Organizational Structures:
Organization Design
 Designing an organization involves choosing an organizational structure that will enable the
company to most effectively achieve its goals.
 Organization design is the creation of an organization's structure, traditionally functional, divisional,
and/or matrix.
Functional Organization
 Structure based on functions
 A form of departmentalization in which individuals engaged in one functional activity, such as
marketing or finance is grouped into one unit.
 Mainly used by smaller organizations
 Functions or divisions arrange traditional organizations
 Most logical and basic form of departmentalization
 Based on functions and specialized functions
 In a functional organization, authority is determined by the relationships between group functions
and activities.
 Functional structures group similar or related occupational specialties or processes together under
the familiar headings of finance, manufacturing, marketing, accounts receivable, research, surgery, and
photo finishing.
 However, the organization risks losing sight of its overall interests as different departments pursue
their own goals.
 The structure is based on functions.
 Mainly used by smaller organizations
 Most logical and basic form of departmentalization
 Based on functions and specialized functions
Advantages
Efficient use of specialized resources
Supervision is easier
Mobilizing specialized skills is easier
Disadvantages
Difficult when the organization grows
Determination of accountability is often difficult
Product/Market Organization
 Groups the organization of a company into divisions that bring together those involved with a
certain type of product or market.
 Division: large organization department that resembles separate business.
 There are three patterns:
 Division by product
 Division by geography
 Division by customer
Departmentalization
 After reviewing the plans, usually the first step in the organizing process is departmentalization.

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 Once jobs have been classified through work specialization, they are grouped so those common
tasks can be coordinated.
 Departmentalization is the basis on which work or individuals are grouped into manageable units.
There are five traditional methods for grouping work activities.
1. Departmentalization by function organizes by the functions to be performed. The functions reflect the
nature of the business. The advantage of this type of grouping is obtaining efficiencies from consolidating
similar specialties and people with common skills, knowledge and orientations together in common units.
2. Departmentalization by product assembles all functions needed to make and market a particular product
are placed under one executive. For instance, major department stores are structured around product groups
such as home accessories, appliances, women's clothing, men's clothing, and children's clothing.
3· Departmentalization by geographical regions groups jobs on the basis of territory or geography. For
example, Merck, a major pharmaceutical company, has its domestic sales departmentalized by regions such
as Northeast, Southeast, Midwest, Southwest, and Northwest.
4. Departmentalization by process groups jobs on the basis of product or customer flow. Each process
requires particular skills and offers a basis for homogeneous categorizing of work activities. A patient
preparing for an operation would first engage in preliminary diagnostic tests, then go through the admitting
process, undergo a procedure in surgery, receive post operative care, be discharged and perhaps receive
out-patient attention. These services are each administered by different departments.
5. Departmentalization by customer groups jobs on the basis of a common set of needs or problems of
specific customers. For instance, a plumbing firm may group its work according to whether it is serving
private sector, public sector, government, or not-for-profit organizations. A current departmentalization
trend is to structure work according to customer, using cross-functional teams. This group is chosen from
different functions to work together across various departments to interdependently create new products or
services. For example, a cross-functional team consisting of managers from accounting, finance, and
marketing is created to prepare a technology plan.
Product service departmentalization/product market
 In a divisional organization, corporate divisions operate as relatively autonomous businesses under
the larger corporate umbrella.
 In a conglomerate organization, divisions may be unrelated. Divisional structures are made up of
self-contained strategic business units that each produces a single product. For example, General Motors'
divisions include Chevrolet, Oldsmobile, Pontiac, and Cadillac. A central headquarters, focusing or results,
coordinates and controls the activities, and provides support services between divisions. Functional
departments accomplish division goals. A weakness however, is the tendency to duplicate activities among
divisions.

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 Matrix Organization
 An organizational structure in which employee reports to both a functional or division manager and
to a project or group manager
 Employees have two bosses (two chains of command)
 Functional or divisional: vertical
 Project or business (people from various divisions): horizontal
 Sometimes called “multiple command system”
 Attempts to combine the benefits of both types of designs while avoiding their drawbacks.
 Has two types of structure existing simultaneously
 Understanding increases laterally and vertically
 Developing interest in other’s work
 Cost saving (unnecessary duplication is avoided)
 In a matrix organization, teams are formed and team members report to two or more managers.
 Matrix structures utilize functional and divisional chains of command simultaneously in the same
part of the organization, commonly for one-of-a-kind projects.
 It is used
to develop a new product,
to ensure the continuing success of a product to which several departments directly
contribute, and
To solve a difficult problem.
 By superimposing a project structure upon the functional structure, a matrix organization is formed
that allows the organization to take advantage of new opportunities.
 This structure assigns specialists from different functional departments to work on one or more
projects being led by project managers.
 The matrix concept facilitates working on concurrent projects by creating a dual chain of command,
the project (program, systems, or product) manager and the functional manager.

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 Project managers have authority over activities geared toward achieving organizational goals while
functional managers have authority over promotion decisions and performance reviews.
 An example is an aerospace firm with a contract from NASA.
Matrix organizations are particularly appealing to firms that want to speed up the decision-making process.
Problems can be the matrix organization:
 May not allow long-term working relationships to develop.
 Using multiple managers for one employee may result in confusion as to manager evaluation and
accountability.
 Thus, the matrix system may elevate the conflict between product and functional interests.
Factors for Organizational Revolution
 Wallace identified four major factors:
 The technology revolution
 Competition and profit squeeze
 Structured markets
 Inflation of wage
 Material costs
 Production efficiency
 The high cost of marketing
 The unpredictability of customer demands
 High income
 Wide range of choices available
 Shifting tastes

THE INFORMAL ORGANIZATIONS

 Informal organizational structures: the undocumented and officially unrecognized relationships
between members of an organization that inevitably emerge out of the personal and group needs of
employees.
 Formal and informal organizations
 Informal: Unrelated to the organization’s formal authority structure, the informal organization is
 The network, of social interactions among its employees.
 The personal and social relationships that arise spontaneously as people associate with one another in
the work environment.
 The informal organizations can pressure group members to conform to the expectations of the
informal group that conflict with those of the formal organization.

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 This can result in the generation of false information or rumours and resistance to change desired by
management.
 The informal organization can make the formal organization more effective by providing
 support to management,
 stability to the environment, and
 Useful communication channels.
 Formal and informal organizations differ somewhat in their approaches.
 Informal organizations put more emphasis on people and relationships.
 Formal organizations emphasize position within the structure.
 Both systems have their advantages and disadvantages.
 For example some of the advantages of informal organizations are
 providing stability in the workplace and
 Providing useful communications channels.
Some of the disadvantages are
 resistance to change and
 Initiation of rumors.

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Unit 7:
Authority, Power and Delegation
Organization structures are dependent upon the employees whose activities they guide.
Managers rely upon power and authority to ensure that employees get things done.
AUTHORITY
Authority is the legitimate power of a manager to direct subordinates to take action within the scope of the
manager's position.
The organizational structure provides the framework for the formal distribution of authority.
 Formalization
 Is the degree to which tasks are standardized and rules and regulations govern employee
behaviour.
 Influences the amount of judgment an employee has over his or her job.
In an organization
 with high degrees of formalization, job descriptions and policies provide clear direction.
 where formalization is low, employees have a great deal of freedom in deciding how they conduct
their work.
 Within the same organization, different departments may have different degrees of formalization.
Forms of Authority
Three forms of authority
 line authority,
 staff authority, and
 Team authority.
1. Line authority
 Authority flows in a direct chain of command from the top of the organization to the bottom.
 Chain of command;

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 It helps employees know to whom they are accountable, and whom to go to with a problem.
 Unity of command; within the chain states that each person in an organization should take orders
from and reports to only one person.
 This helps prevent conflicting demands being placed on employees by more than one boss.
Span of control;
 The actual number of employees depends on the amount of complexity and the level of
specialization.
 A wide span of control is possible with better-trained, more experienced, and committed employees.
2. Staff authority is more limited authority to advice.
 It is authority that is based on expertise and
 Which usually involves advising line managers?
 Staff members are advisers and counsellors
 who aid line departments in making decisions
 But do not have the authority to make final decisions.
3. Team authority
 Is granted to committees or work teams involved in an organization's daily operations.
 Work teams
 are groups of operating employees empowered to plan and organize their own work and
 to perform that work with a minimum of supervision.
Team-Based structures
 Organize separate functions into a group based on one overall objective.
 Empowered employees create their own schedules, design their own processes, and are held
responsible for outcomes.
 This facilitates efficiencies in work process, and the ability to detect and react to changes in the
environment.
 Cross-functionally training team members allows any member to perform a variety of problem-
solving tasks.
 Teamwork is an imperative in a flat, boundaryless organizational structure.
 Boundary less organizational
 Boundaryless organizations are not defined or limited by horizontal, vertical, or external boundaries
imposed by a predetermined structure.
 They share many of the characteristics of flat organizations, with a strong emphasis on teams.
 Cross-functional teams dissolve horizontal barriers and enable the organization to respond quickly
to environmental changes and to spearhead innovation.
 Boundary less organizations can form relationships (joint ventures, intellectual property,
distribution channels, or financial resources) with customers, suppliers, and/or competitors.
 A boundary less environment is required by learning organization to facilitate team collaboration
and the sharing of information.
 When an organization develops the continuous capacity to adapt and survive in an increasingly
competitive environment
 Because all members take an active role in identifying and resolving work-related issues, it has
developed a learning culture.
 A learning organization is one that is able to adapt and respond to change.
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 Empowers employees to acquire and share knowledge and apply this learning to decision-making.
Self-managed teams
 Are responsible for producing an entire product, a component, or an ongoing service.
 Members are cross-trained on the different tasks assigned to the team.
 Teams are trained in technical, administrative, and interpersonal skills.
Problem-solving teams
 Used when organizations decide to make improvements in the quality of a product or service.
 Do these teams affect an organization's structure?
 Problem-solving teams do not affect an organization's structure because they exist for only a
limited period.
 Special-purpose teams
 consist of members who span functional or organizational boundaries and whose purpose is to
examine complex issues such as
 introducing new technology, improving the quality of work process, or encouraging cooperation
between labour and management in a unionized setting
 POWER
What does it mean?
Is it different from authority?
In addition to authority,
 Supervisors have more personal sources of power to draw upon for getting things done.
 It is by exercising this power that organizations get things accomplished.
Power
 Is the ability to exert influence in the organization beyond authority, which is derived from position.
 The Manager's personal power include:
 job knowledge,
 personal influence,
 interpersonal skills,
 ability to get results,
 empathetic ability,
 persuasive ability, and
 Physical strength.
Six sources of power:
 Legitimate power
 Is a result of the position a person holds in the organization hierarchy.
 This position power is broader than the ability to reward and punish, as members need to accept the
authority of the position.

 Coercive power
 Is the threat of sanctions.
 Is dependent on fear and includes, but is not limited to the ability to dismiss, assign undesirable
work, or restriction of movement.
Reward power

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 Results in people doing what is asked because they desire positive benefits or rewards.
 Rewards can be anything a person values (praise, raises, and promotions).
 Expert power comes from expertise, skill, or knowledge.
 Referent power
 Refers to a person who has desirable resources or personal traits.
 Results in admiration and the desire to emulate.
 Information power is
 Based upon the persuasiveness or content of a communication and is independent of the
influencing individual.
 In most instances, supervisors do not need to offer incentives or threaten retribution to get
employees to do what they request.
 They influence employees because the employees want to follow.
 This power to influence comes from the employee granting authority to the supervisor.
 DELEGATION
 What is delegation?
 State the reasons to do it.
 It is impractical for the supervisor to handle all of the work of the department directly.
 In order
 to meet the organization's goals,
 focus on objectives, and
 ensure that all work is accomplished, mangers must delegate authority
 Authority by extension, a part, is delegated and used in the name of a manager.
 Delegation is the downward transfer of formal authority from superior to subordinate.
 The employee is empowered to act for the manager, while the supervisor remains accountable for
the outcome.
 Gives up the authority to make decisions that are best made by subordinates.
 This means that the supervisor allows subordinates the freedom to make mistakes and learn from
them.
 This gives employees the concrete skills, experience, and the resulting confidence to develop
themselves for higher positions.
 Delegation provides better managers and a higher degree of efficiency. Thus, collective effort,
resulting in the organization's growth, is dependent on delegation of authority.
 Delegation of authority is a person-to-person relationship requiring trust, commitment, and
contracting between the manager and the employee.
 The manager assists in developing employees in order to strengthen the organization.
 The manager does not supervise subordinates' decision-making, but allows them the opportunity to
develop their own skills.
A manager has to know that
 The best way for employees to learn is by telling them how to solve a problem.
This results in those subordinates becoming dependent on the supervisor.
 The manager allows employees the opportunity to achieve and be credited for it
 An organization's most valuable resource is its people.
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 By empowering employees who perform delegated jobs with the authority to manage those jobs,
supervisors free themselves to manage more effectively.
 Successfully training future supervisors means delegating authority.
Responsibility and Accountability
 When an employee is given responsibility for a job, he or she must also be given the degree of
authority necessary to carry it out.
 Thus, for effective delegation, the authority granted to an employee must equal the assigned
responsibility.
 Responsibility
 Is the obligation to do assigned tasks.
 The individual employee is responsible for being proficient at his or her job.
 The manager is responsible for what employees do or fail to do, as well as for the resources under
their control.
 Thus, responsibility is an integral part of a supervisor's authority.
Responsibilities fall into two categories:
 individual and
 Organizational.
Employees
 Have individual responsibilities to be proficient in their job.
 Are responsible for their actions.
 Nobody gives or delegates individual responsibilities. Employees assume them when they accept a
position in the organization.
 Organizational responsibilities refer to collective organizational accountability and include how
well departments perform their work.
 When someone is responsible for something, he or she is liable, or accountable to a superior, for the
outcome.
 Thus, accountability flows upward in the organization. All are held accountable for their personal,
individual conduct.
 Accountability is answering for the result of one's actions or omissions. It is the reckoning, wherein
one answers for his or her actions and accepts the consequences, good or bad.
 Accountability establishes reasons, motives and importance for actions in the eyes of managers and
employees.
 Is the final act in the establishment of one's credibility.
 Results in rewards for good performance, as well as discipline for poor performance.
 The Delegation Process
 The delegation process has five phases: (1) preparing, (2) planning, (3) discussing, (4) auditing, and
(5) appreciating.
 The first step in delegating is to identify what should and should not be delegated.
 The supervisor should delegate any task that a subordinate performs better.
 Tasks least critical to the performance of the supervisor's job can be delegated.
 Any task that provides valuable experience for subordinates should be delegated.
 Also, the supervisor can delegate the tasks that he or she dislikes the most.
 But, the supervisor should not delegate any task that would violate a confidence.
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 Preparing includes establishing the objectives of the delegation, specifying the task that needs to be
accomplished, and deciding who should accomplish it.
 Planning is meeting with the chosen subordinate to describe the task and to ask the subordinate to
devise a plan of action.
Andrew Carnegie,
 "The secret of success is not in doing your own work but in recognizing the right man to do it."
 Trust between the supervisor and employee that both will fulfil the commitment is most important.
Discussing includes
 reviewing the objectives of the task
 the subordinate's plan of action,
 any potential obstacles, and
 Ways to avoid or deal with these obstacles.
 The supervisor should clarify and solicit feedback as to the employee's understanding.
 The employee should know exactly what is expected and how the task will be evaluated.
 Auditing is monitoring the progress of the delegation and making adjustments in response to
unforeseen problems.
 Appreciating is accepting the completed task and acknowledging the subordinate's efforts.
 Barriers to Delegation
 Belief that only you can do the job right.
 Lack of confidence and trust in subordinates.
 Low self-confidence.
 Fear of being called lazy.
 Vague job definition.
 Fear of competition from subordinates.
 Reluctance to take risks that depend on others.
 Organizing
 The structuring of a coordinated system of authority relationships and task responsibilities.
 Contingency Design
 The process of determining the degree of environmental uncertainty and adapting the organization
and its sub units to the situation.
 How much environmental uncertainty is there?
 What combination of structural characteristics is most appropriate?
 There is no single best organization design

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 The Burns and Stalker Model
 Mechanistic organizations are rigid in design, rely on formal communications, and have strong
bureaucratic qualities best suited to operating in relatively stable and certain environments.
 Organic organizations have flexible structures, participative communication patterns and are
successful in adapting to change in unstable and uncertain environments.
 Joan Woodward’s
 When task complexity is either high or low, organizations with organic structures are more
effective.
 When task complexity is moderate, organizations with mechanistic structures are more effective.
 The Lawrence and Lorsch Model
 The relationship of two opposing structural forces and environmental complexity.
 Differentiation: the tendency of specialists to think and act in restricted ways.
 Integration: the collaboration among specialists needed to achieve a common purpose.
 A dynamic equilibrium between differentiation and integration is necessary for a successful
organization.
 Both differentiation and integration increase as environmental complexity increases. *** Fig.
Differentiation and Integration: Opposing Organizational Factors

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 Basic Structural Formats

 Work Flow Process Departments in Reengineered Organizations

 Creating horizontal organizations that emphasize speedy work flow between two points:
 Identifying customer needs
 Satisfying customer needs
Contingency Design: Alternatives
 Span of Control (Management)
 The number of people who report to a manager.
 Narrow spans of control foster tall organizations with many organizational/managerial layers.
 Flat organizations have wider spans of control.
 Is There an Ideal Span of Control?
 The right span of control efficiently balances too little and too much supervision.
Narrow and Wide Spans of Control

 The Contingency Approach to Spans of Control

 Both overly narrow and overly wide spans of control are counterproductive.
 Situational factors dictate the width of spans of
 control.

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  Wide spans of control are appropriate for departments where many
workers work close together and do the same job.
 Narrow spans of control are best suited for departments where the
work is complex and/or the workers are widely dispersed.

 Situational Determinants of Span of Control

Centralization and Decentralization

 Issue of Contingency Design Alternatives
 Centralization. Decreasing the role of subordinates in decision making
 Decentralization increasing their role in decision making.
 Fayol believed that
 managers should retain final responsibility, but
 Should at the same time give their subordinates enough authority to do their jobs properly.
 The problem is to find the proper degree of centralization in each case.
 Centralization is the retention of decision-making authority by top management.
 Is the degree to which decision-making is concentrated in top management's hands.
 Considerable authority and accountability at the top of the hierarchy.
 Decentralization
 The sharing of decision-making authority by management with lower-level employees.
 is the extent to which decision-making authority is pushed down the organization structure and
shared with many lower-level employees.
 Passing down of authority and accountability in an organizational hierarchy.

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 The Need for Balance
 The challenge is to balance the need for responsiveness to changing conditions (decentralization)
with the need to create low-cost shared resources (centralization).
Factors in Centralization/Decentralization

 Decentralization Through Strategic Business

 Strategic business units (SBU) are organizational subunits that:
 Serve a specific market outside the parent organization.
 Face outside competitors.
 Are in a position of controlling their own destiny.
 Are profit centers, with their effectiveness measured in terms of profit and loss.
Centralized organizations
 Have more levels of management with narrow spans of control.
 Employees are not free to make decisions.
Decentralized organizations
 Have fewer levels of management with wide spans of control.
 Giving employees more freedom of action.
The current trend is toward broadening decentralization.
 As competition intensifies the need for organizations to be responsive increases.
 This has made employees, usually those at the lower levels, who are closest to customers extremely
important.
 They are an excellent source of knowledge and implement changes that directly impact
performance.
 Giving this group more input into certain decision-making activities can result in increased
organization performance.
Advantages of decentralization
 Decreases burden of top managers

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  Decisions are made closer to where the activity is taking place
 Initiative, morale and training are better at lower levels
 More flexibility and response to environmental changes
Limitation
Total decentralization leads to
 loss of coordination and
 loss of leadership at the top
Factors influencing degree of decentralization
Environmental pressure: availability of materials, competitive pressures, etc.
The size of the organization and its growth rate
Culture, management preferences, etc.
Learning Organization
 An organization that is skilled at creating, acquiring, and transferring knowledge, and at modifying
its behavior to reflect new knowledge and insights.
 Stages of Organization Learning
 Cognition (learning new concepts)
 Behavior (developing new skills and abilities)
 Performance (actually getting something done)
 Five Critical Learning Skills
 Solving problems.
 Experimenting.
 Learning from organizational experience/history.
 Learning from others.
 Transferring and implementing.
Organizational Effectiveness
 Effectiveness
 A measure of whether or not organizational objectives are accomplished.
 Efficiency
 A measure of the relationship between inputs and outputs for the organization.
 No Silver Bullet
 There is no single approach to the evaluation of effectiveness that is appropriate in all circumstances
or for all organizational types.
 The Time Dimension of Organizational Effectiveness Involves:
 Meeting organizational objectives and prevailing societal expectations in the near future.
 Adapting to environmental demands and developing as a learning organization in the intermediate
future.
 Surviving as an effective organization into the distant future.
Fig: The time dimension of organizational effectiveness

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Organizational Decline
 The weakening of an organization by resource or demand restrictions and/or mismanagement.
 Sources of decline
 Mismanagement (complacency)
 Unsteady economic growth
 Resource shortages
 Global competition
 Reactions to decline
 Downsizing, demassing, reengineering
Fig: Complacency can lead to organizational decline

 Characteristics of Organizational Decline

 Exit of leaders from the organization.
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 Control that suppresses participation and morale.
 Preference for short-term thinking and risk
avoidance.
 Intense conflict, preventing teamwork.
 Strong resistance to change.
Downsizing: An Ethical Perspective
 Downsizing: the planned elimination of positions or jobs
 Does downsizing work?
 Ways of making layoffs a last resort are:
 Redeployment
 Work sharing
 Voluntary early retirement
 Early warning of facility closings
 Helping layoff survivors

The Changing Shape of Organizations

 Characteristics of New Organizations
 Fewer organizational layers
 More teams
 Smallness within bigness
 New Organizational Configurations
 Hourglass organization: a three-layer structure with constricted middle (management) layer.
 Cluster organization: collaborative structure in which teams are the primary unit.
 Virtual organizations: internet-linked networks of value-adding subcontractors.
Reshaping the Traditional Pyramid Organization

Motivating Job Performance

Major issues
 Theories of Motivation
 Individual Motivation and Job Performance
 Ways of improving motivation and
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  Reward
 Motivation is the psychological process that gives behavior purpose and direction.
Theories of Motivation
 Maslow’s needs hierarchy theory
 Herzberg’s two-factor theory
 Expectancy theory
 Goal-setting theory
Individual Motivation and Job Performance

 Maslow’s Needs Hierarchy Theory

 People have needs, and when one need is relatively fulfilled, other emerges in predictable sequence
to take its place.
 Maslow’s hierarchy of needs:
 Physiological needs: food, water, sleep, and sex.
 Safety needs /Security needs: safety from the ailments, threat and enemies.
 Love and belongingness needs/ social needs: desire for love, affection, and belonging.
 Esteem needs: self-perception as a worthwhile person.
 Self-actualization: becoming all that one can become.
Figure 13.2: -Maslow’s Hierarchy of Needs Theory

 Self-Actualizing Managers
 Have warmth, closeness, and sympathy.
 Recognizes and shares negative information and feelings.
 Exhibit trust, openness, and candor.
 Do not achieve goals by power, deception, or manipulation.
 Do not project own feelings, motivations, or blame onto others.
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  Do not limit horizons; uses and develops body, mind, and senses.
 Are not rationalistic; can think in unconventional ways.
 Are not conforming; regulates behavior from within.
 Relevance of Maslow’s Theory for Managers
 A fulfilled need does not motivate an individual.
 Effective managers can anticipate emerging needs based on individual need profiles and provide
opportunities for fulfillment.
 The esteem level of needs satisfied by jobs and recognition provides managers with the greatest
opportunity to motivate better performance.
 Herzberg’s Two-Factor Theory
 A theory of motivation based on job satisfaction.
 A satisfied employee is motivated from within to work harder.
 A dissatisfied worker is not self-motivated to work.
 Conclusion: Enriched jobs are the key to self-motivation.
 Dissatisfiers - factors associated with the job context or work environment.
 Satisfiers: factors associated with the nature of the task itself (job content).

 Implications of Herzberg’s Theory

 Satisfaction is not the opposite of dissatisfaction.
 There is a need to think carefully about what motivates employees.
 Meaningful, interesting, and challenging (enriched) work is needed to satisfy and motivate
employees.
 Problems with Herzberg’s theory
 Assumption of job performance improving with satisfaction not strong support.

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 One person’s dissatisfier is another person’s satisfier.
Expectancy Theory (Vroom)
A model that assumes motivational strength is determined by perceived probabilities of success.
 Expectancy: one’s subjective belief or expectation that one thing will lead to another.
 A basic expectancy model: One’s motivational strength increases as one’s perceived effort-
performance and performance-reward probabilities increase the likelihood of obtaining a valued reward.
A Basic Expectancy Model

 Relevance of Expectancy Theory to Managers:

 Employee expectations can be influenced by managerial actions and organizational
experience.
 Training increases employee confidence in their efforts to perform.
 Listening provides managers with insights into employees’ perceived performance-reward
probabilities.
Goal-Setting Theory
 Goal setting: the process of improving performance with objectives, deadlines, or quality
standards.
 A General Goal-Setting Model
 Properly conceived goals trigger a motivational process that improves performance.
 Personal Ownership of Challenging Goals
 Characteristics of effective goals:
 Specificity makes goals measurable.
 Difficulty makes goals challenging.
 Participation gives personal ownership of the goal.
 How Do Goals Actually Motivate?
 Goals are exercises in selective perception.
 Goals encourage effort to achieve something specific.
 Goals encourage persistent effort.
 Goals foster creation of strategies and action plans.
 Practical Implications of Goal-Setting Theory:
 The developed ability to effectively set goals can be transferred readily to any performance
environments.
Motivation through Job Design
 Job Design
 The delineation of task responsibilities as dictated by organizational strategy, technology, and
structure.
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 Strategy One: Fitting People to Jobs
 Improving the motivation of routine-task personnel
 Realistic job previews: honest explanations of what a job actually entails.
 Job rotation: moving people from one specialized job to another.
 Limited exposure: Using incentive such as contingent time off (CTO) to motivate performance.
 Motivation Through Job Design
 Strategy Two: Fitting Jobs to People
 Job enlargement: combining two or more specialized tasks (horizontal loading) to increase
motivation.
 Job enrichment: redesigning a job to increase its motivating potential by introducing planning and
decision-making responsibility (vertical loading).
 Five Core Dimensions of Work
 Skill variety: the variety of activities required in carrying out the work.
 Task identity: the completion of a “whole” and identifiable piece of work.
 Task significance: how substantial an impact the job has on the lives of other people.
 Autonomy: the freedom, independence, and discretion that one has to do the job.
 Job feedback: how much performance feedback the job provides to the worker.
Motivation through Rewards
 Extrinsic Rewards
 Payoffs granted to the individual by other rewards.
 Money, employee benefits, promotions, recognition, status symbols, and praise.
 Intrinsic Rewards
 Self-granted and internally experienced payoffs.
 Sense of accomplishment, self-esteem, and self-actualization.
 Improving Performance with Extrinsic Rewards
 Rewards must satisfy individual needs.
 Employees must believe effort will lead to reward.
 Rewards must be equitable.
 Rewards must be linked to performance.
 Rewards must be equitable.
 Personal and Social Equity
 Reward received Vs effort expended
 I am under paid
 Fair what I deserve
 Over paid
 We have same job but
 I get less than him/her
 Fair and what we deserve
 I got more than him/her
 Personal effort/reward ratio
 Others effort/reward ratio
 The lower effort/reward ratio motivation will be?
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Motivation through Employee Participation
 Quality Control (QC) Circles
 Voluntary problem-solving groups of five to ten employees from the same work area who meets
regularly to discuss quality improvement and ways to reduce costs.
 Assume responsibility for recommending, implementing, and evaluating solutions to quality
problems.
 Voluntary participation taps into the creative potential of every employee.
 Participative Management
 The process of empowering employees to assume greater control of the workplace.
 Setting goals
 Making decisions
 Solving problems
 Designing and implementing organizational changes
 Three approaches to participation
 Quality control circles
 Open-book management
 Self-managed teams
Open-Book Management (OBM)
 Sharing an organization’s major issues such as key financial data and statements with all employees
and
 Providing the education that will enable to understand how the company makes money and how
their action affects its success and bottom line.
 Benefits of OBM:
 Displays a high degree of trust in employees.
 Creates strong commitment to employee training.
 Teaches patience when waiting for results.
 The Four S.T.E.P. Approach to Open-Book Management
 Share information
 Teach employees
 Empower for to make change decision
 Pay fair share like incentive bonus
The STEP approach to Open-Book Management (OBM)
Step 1: Exposure to financial data.
Step 2: Training employees in the business model.
Step 3: Empowering employees to make decisions.
Step 4: Sharing in profits, bonuses, and incentive compensation.
 Motivation through Employee Participation Self-Managed Teams (Autonomous Work Groups)
 High performance teams (with assigned membership) that assume traditional managerial duties such
as staffing and planning as part of their normal work routine.
 Self-management fosters creativity, motivation, and productivity.
 Motivation through Employee Participation
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 Vertically Loaded Jobs
 Team members’ jobs become vertically loaded when nonmanagerial team members assume duties
traditionally performed by managers.
 The concept is new to the workplace and is not widespread.
 Managerial Resistance
 Traditional authoritarian supervisors view autonomous teams as a threat to their authority and job
security.
Research insight: what do self-managed teams manage?

Keys to Successful Employee Participation Programs

 Building Employee Support for Participation
 A profit-sharing or gain-sharing plan.
 A long-term employment relationship with good job security.
 A concerted effort to build and maintain group cohesiveness.
 Protection of individual employee’s rights.
Other Motivation Techniques for a Diverse Workforce
 Flexible Work Schedules
 Flextime: a work schedule that allows employees to choose their own arrival and departure times
within specified limits.
 Benefits
 Better employee-supervisor relations.
 Reduced absenteeism.
 Selective positive impact on job performance (improves productivity for some jobs, but not for
others).

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Other Motivation Techniques for a Diverse Workforce
 Flexible 2 hour arrival range 7-11 am
 Fixed 6 ½ core time
 Flexible 2 hour departure range 3:30-5:30 pm
 Alternative Work Schedules
 Compressed workweeks: 40 or more hours in less than five days.
 Permanent part-time: work weeks with fewer than 40 hours.
 Job sharing: complementary scheduling that allows two or more part-timers to share a single full-
time job.
Other Motivation Techniques for a Diverse Workforce
 Family Support Services
 In developed countries
 Family Medical Leave Act (FMLA)
 Requires employers to provide up to 12 weeks of unpaid leave per year for family events.
 Covers only employers with 50 or more employees.
 Employees must exhaust sick and vacation leave first.
 Other services
 On-site child and elder care facilities
 Emergency child care
Other Motivation Techniques for a Diverse Workforce
 Wellness Programs
 Employer-provided programs to help employees cope with stress and burnout.
 Sabbaticals
 Giving long-term employees extended periods of paid time off to refresh themselves and bolster
their motivation and loyalty.
 Group Dynamics and Teamwork
Group Dynamics and Teamwork
Major issues
 cohesiveness, roles, norms,
 Stages of group development.
 Organizational politics.
 Groupthink and conformity.
 Virtual teams.
 Team effectiveness.

Fundamental Group Dynamics

 What Is a Group?
 Two or more freely interacting individuals who share a common identity and purpose.
 Types of Groups
 Informal groups: a collection of people seeking friendship and acceptance that satisfies esteem
needs.
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 Formal groups: a collection of people created to do something productive that contributes to the
success of the larger organization.
 What Does It Take to Make a Group
 Two or more people
 Free interaction among members
 Common identity
 Common purpose
 Attraction to Groups
 Attractiveness of the group
 Cohesiveness of the group
 Roles
 Socially determined ways of behaving in specific positions.
 A set of expectations concerning what a person must, must not, or may do in a position.
 The actual behavior of a person who occupies the position.

 Norms
 The standards (degrees of acceptability and unacceptability) for conduct that help individuals judge
what is right or good or bad in a given social setting.
 Norms are culturally derived and vary from one culture to another.
 Norms are usually unwritten, yet have a strong influence on individual behavior.
 Norms go above and beyond formal rules and written policies.

 Reasons that groups enforce norms

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 To facilitate the survival of the group.
 To simplify or clarify role expectations.
 To help group members avoid embarrassing situations.
 To express key group values and enhance the group’s unique identity.
 Ostracism
 Rejection by the group for violation of its norms.
Group Development
 Characteristics of a Mature Group
 Members are aware of each other’s assets and liabilities.
 Individual differences are accepted.
 The group’s authority and interpersonal relationships are recognized.
 Group decisions are made through rational discussion.
 Conflict is over group issues, not emotional issues.
 Members are aware of the group’s processes and their own roles in them.
 Six Stages of Group Development
 Stage 1: Orientation
 Uncertainty about most everything is high.
 Stage 2: Conflict and change
 Subgroups struggle for control; roles are undefined.
 Stage 3: Cohesion
 Consensus on leadership, structure, and procedures is reached.
 Stage 4: Delusion
 Members misperceive that the group has reached maturity.

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 Stage 5: Disillusion
 Subgroups form; disenchantment, diminished cohesiveness and commitment to the group.
 Stage 6: Acceptance
 A trusted and influential group member steps forward and moves the group from conflict to
cohesion so that it becomes highly effective and efficient.
 Member expectations are more realistic.

Organizational Politics
 What Does Organizational Politics Involve?
 The pursuit of self-interest at work in the face of real or imagined opposition.
 Effects of Organizational Politics
 Hinders organizational and individual effectiveness.
 Is an irritant to employees.
 Can have significant ethical implications.

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 Research on Organizational Politics
 The perception that the higher the level of management, the greater amount of politics.
 The larger the organization, the greater the politics.
 Staff personnel are more political than line managers.
 Marketing people are the most political; production people were considered the least political.
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 employees can believe that organizational politics
 Helps advance one’s career. Or
 Detracts from organizational goals.

 Political Tactics
 Posturing: taking credit for others work.
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 Empire building: gaining control over human and material resources.
 Making the supervisor look good: engaging in “apple polishing.”
 Exchanging reciprocal political favors by making someone look good or covering up their mistakes.
 Political Tactics
 Creating power and loyalty cliques: facing superiors as a cohesive (Unified solid organized) group
rather than alone.
 Engaging in destructive group competition: sabotaging the work of others through character
assassination.

 Antidotes to Political Behavior

 Strive for a climate of openness and trust.

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  Measure performance results rather than personalities.
 Encourage top management to refrain from political behaviors.
 Strive to integrate individual and organizational goals through meaningful work and career
planning.
 Practice job rotation to encourage broader perspectives and understanding of the problems of others.
Conformity and Groupthink
 Conformity
 Complying with the role expectations and norms perceived by the majority to be appropriate in a
particular situation.
 Following the Immoral Majority

 There is a tendency for individuals to go along with the group (blind

conformity) when faced with overwhelming opposition by the group.
 Groupthink
 A mode of thinking (blind conformity) that people engage in when
they are deeply involved in a cohesive in-group,
 When the members’ strivings for unanimity (unity) override their
motivation to realistically appraise alternative courses of action.
 Symptoms of Groupthink
 Excessive optimism
 An assumption of inherent morality
 Suppression of dissent
 A desperate quest for unanimity
 Preventing Groupthink
 Avoid using of groups as rubberstamps.
 Urge each group member to think independently.
 Bring in outside experts for fresh perspectives.
 Assign someone the role of devil’s advocate.
 Take time to consider possible effects and consequences of alternative courses of action.
Team, Teamwork, and Trust
 Cross-Functional Teams
 Task groups that are staffed with a mix of specialists focused on a common objective.
 May or may not be self-managed.
 Membership is assigned, not voluntary.
 Challenge is getting specialists to be boundary spanners.
 Virtual Teams
 Task groups with members who are physically dispersed yet linked electronically to accomplish a
common goal.
 Face-to-face contact is minimal or nonexistent.
 Primary forms of communication are electronic interchanges (e-mail, voice mail, web-based project
software, and videoconferences).
 What Makes Workplace Teams Effective?
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  Innovative ideas
 Goals accomplished
 Adaptability to change
 High person/team commitment
 Being rated highly by upper management
A Model of Team Effectiveness

Source: Reprinted from JOURNAL OF PRODUCT INNOVATION MANAGEMENT, 7, Hans J.

Thamhain, "Managing Technologically Innovative Team Efforts toward New Product Success,” pp. 5-18,
Copyright l990, with permission from Elsevier Science.

 Trust: A Key to Team Effectiveness

 Trust: a belief in the integrity, character, or ability of others.
 The primary responsibility for creating a climate of trust falls on the manager.
 Trust is the key to establishing productive interpersonal relationships.
 Trust encourages self-control, reduces the need for direct supervision, and expands
managerial control.

Trust and Effective Group Interaction

Change, Conflict, and Negotiation

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 Major issues
 types of organizational change
 reasons for why employees resist changes
 Organization development (OD).
 Conflict resolution techniques.
 elements of effective negotiation

Change: Organizational Perspectives

 Types of Organizational Change
 Anticipatory changes: planned changes based on expected situations.
 Reactive changes: changes made in response to unexpected situations.
 Incremental changes: subsystem adjustments required to keep the organization on course.
 Strategic changes: altering the overall shape or direction of the organization.

 Tuning
 The most common, least intense and least risky type of change.
 Also known as preventive maintenance and kaizen (continuous improvement).
 Key is to actively anticipate and avoid problems rather than waiting for something to go wrong.

 Adaptation
 Incremental changes that are in reaction to external problems, events, or pressures.

 Reorientation

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 Change that is anticipatory and strategic in scope and causes the organization to be significantly
redirected.
 Also called “frame bending”.

 Re-Creation
 Intense and risky decisive change that reinvents the organization.
 Also called “frame breaking”
Individual Reactions to Change

 How People Respond to Changes They Like

 Three-stage process
 Attitude morale desire to make the change work
 Unrealistic optimism It will solve our problem
 Reality shock it will be difficult
 Constructive direction any way it is possible
 Need for management action
 How People Respond to Changes They Fear and Dislike
 Stages
 Getting off on the wrong track dump idea
 Laughing it off it will not go anywhere
 Growing self-doubt let us try it
 Buying in
 Constructive direction
Why Do Employees Resist Change?
 Surprise
 Unannounced significant changes threaten employees’ sense of balance in the workplace.
 Inertia
 Employees have a desire to maintain a safe, secure, and predictable status quo.
 Misunderstanding and lack of skills
 Without introductory or remedial training, change may be perceived negatively.
 Emotional Side Effects
 Forced acceptance of change can create a sense of powerlessness, anger, and passive resistance to
change.
 Lack of Trust
 Promises of improvement mean nothing if employees do not trust management.
 Fear of Failure
 Employees are intimidated by change and doubt their abilities to meet new challenges.
 Personality Conflicts
 Managers who are disliked by their managers are poor conduits for change.
 Poor Timing
 Other events can conspire to create resentment about a particular change.

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Overcoming Resistance to Change
 Strategies for Overcoming Resistance to Change
 Education and communication
 Participation and involvement
 Facilitation and support
 Negotiation and agreement
 Manipulation and co-optation
 Explicit and implicit coercion
Making Change Happen
 Two Approaches to Organization Change
 Organization Development (OD)
 Formal top-down approach
 Grassroots Change
 An unofficial and informal bottom-up approach

Planned Change through Organization Development (OD)

 Organization development (OD)
 Planned change programs intended to help people and organizations function more effectively.
 Applying behavioral science principles, methods, and theories to create and cope with change.

 Objectives of OD
 Deepen sense of organizational purpose.
 Strengthen interpersonal trust.
 Encourage problem solving rather than avoidance.
 Develop a satisfying work experience.
 Supplement formal authority with knowledge and skill-based authority.
 Increase personal responsibility for planning and implementing.
 Encourage willingness to change.

 The OD Process
 Unfreezing, change, refreezing
 Unfreezing: neutralizing resistance by preparing people for change.
 Refreezing: systematically following a change program for lasting results.
Unofficial and Informal Grassroots Change
 Tempered Radicals
 People who quietly try to change the dominant organizational culture in line with their convictions.
 Guidelines for tempered radicals
 Think small for big results.
 Be authentic.
 Translate.
 Don’t go it alone.

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Managing Conflict
 Dealing with the Two Faces of Conflict
 Competitive conflict: parties are pursuing directly opposite (win-lose) goals.
 Cooperative conflict: a mutually reinforcing experience (win-win) that serves the best interests of
both parties.
 Conflict trigger: any factor that increases the chances of conflict.

 Types of Conflict Triggers

 Ambiguous or overlapping jurisdictions.
 Competition for scarce resources.
 Communication breakdowns.
 Time pressure.
 Unreasonable standards, rule, policies, or procedures.
 Personality clashes.
 Status differentials.
 Unrealized expectations.

 Resolving Conflict: Conflict Resolution Techniques

 Problem solving
 Super ordinate goals
 Compromise
 Forcing
 Smoothing

Negotiating
 Negotiation
 A decision-making process among interdependent parties with different preferences.
 Common Types of Negotiation
 Two-party negotiation (e.g., buyer and seller)
 Third party negotiation (e.g., agents and arbitrators)
 Elements of Negotiation
 Adopting a win-win attitude
 Understanding that mutual beneficial agreement addresses the both parties’ interests.
 Knowing your BTNA (best alternative to a negotiated agreement)
 Your “bottom line” for accepting or rejecting offers.
 Identifying the Bargaining Zone
 Negotiation is useless if both parties involved have no common ground on which to maneuver
during bargaining.
 Added Value Negotiating (AVN)
 A practical five-step win-win process involving development of multiple deals.
 Clarify subjective and objective interests; seeking common ground.
 Identify options and their marketplace values.

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 Design alternative deal packages that foster a creative agreement.
 Select a mutually acceptable deal that is most feasible for both parties.
 Perfect the deal by hammering out unresolved details Negotiating useless 250 and 500
 Negotiating necessary 250 and 500
 BTNA 400 and 475 Bargaining Zone
 Negotiating unnecessary 475

 Communicating in the Internet Age

Major issues
 Communication process.
 Media richness and media selection.
 communication strategies
 Grapevine and nonverbal communication.
 Upward communication.
 Barriers to communication.
 improving communication skills

The World of Communication (average daily number of messages sent and received by office
workers)

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The Communication Process
 Communication
 The interpersonal transfer of information and understanding from one person to another.
 A linked social process of sender, encoding, medium, decoding, receiver, and feedback.
The Basic Communication Process

 Encoding
 Translating internal thought patterns into a language or code the intended receiver of the message
will likely understand and/or pay attention to.
 Choice of words, gestures, or other symbols for encoding depends on the nature of the message.
 Technical or no technical
 Emotional or factual
 Visual or auditory
 Cultural diversity can create encoding challenges.
 Selecting a Medium

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  Face-to-face conversations
 Telephone calls
 E-mails
 Memorandums
 Letters
 Computer reports
 Photographs
 Bulletin boards
 Meetings
 Organizational publications
 News releases
 Press conferences
 Advertising
A Contingency Approach
Media richness: a given medium’s capacity to convey information and promote learning.
Characteristics of rich mediums
 Provide simultaneous multiple information cues.
 Facilitate immediate feedback.
 Have a personal focus.
 Characteristics of lean mediums
 Convey limited information (few cues).
 Provide no immediate feedback.
 Are impersonal.
Decoding
 Successful decoding depends on the receiver having
 A willingness to receive the message.
 Knowledge of the language and terminology used in the message.
 An understanding of the sender’s purpose and background situation.
Feedback
 The choice factors for the form to provide feedback are the same factors governing the encoding
process.
 Feedback affects the form and content of follow-up communication.
 Effective feedback is timely, relevant, and personal.
Noise
 Noise: any interference with the normal flow of communication.
 Understanding decreases as noise increases.
 Dealing with noise
o Make messages more understandable.
o Minimize and neutralize sources of interference.
Dynamics of Organizational Communication
 Communication Strategies
 Spray & Pray
 Impersonal and one-way communications (lectures).
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Grapevine Patterns

 Tell & Sell

 A restricted set of messages with explanations for their importance and relevance.
 Underscore & Explore
 Information and issues that are keys to organizational success are discussed and explained.
 Communication Strategies
 Identify & Reply
 Responding to employee concerns about
prior organizational communications.
 Withhold & Uphold
 Telling employees only what they need to
know when you think they need to know it.
 Seeking a middle-ground communication
strategy
 Avoid Spray & Pray and Withhold & Uphold.
 Use Tell & Sell and Identify & Reply.
 Use Underscore & Explore as much as possible.
 Communication Strategies
 Merging communication strategies and media
richness
 Managers need to select the richest medium possible when employing
 Tell & Sell, Identify & Reply, and Underscore
& Explore strategies.
The Grapevine
 The unofficial and informal communication
system in an organization
 Managerial Attitudes Toward the Grapevine
 Managers have predominately negative feelings
about the grapevine.
 The grapevine is more prevalent at lower-levels
of the managerial hierarchy.
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  The grapevine appears to be more influential in
Larger organizations.

 Coping
with the Grapevine
-The grapevine cannot be extinguished.
-Attempts to stifle the grapevine as likely to stimulate it instead.
-Monitoring and officially correcting grapevine
information is perhaps the best strategy for coping with the grapevine.
 Nonverbal Communication
 Body Language
 Nonverbal communication based on facial expressions, posture, and appearance.
 Types of Body Language
 Facial
 Gestural
 Postural
 Receiving Nonverbal Communication
 Awareness of nonverbal cues can give insight into deep-seated emotions.
 Giving Nonverbal Feedback
 Nonverbal feedback from authority figures significantly affects employee behavior.
 Positive feedback builds good interpersonal relations
 Sensitivity and cross-cultural training can reduce nonverbal errors when working with
individuals from other cultures.
Upward Communication
 The process of encouraging employees to share their feelings and ideas with management.
 Options for improving upward communication
 Formal grievance procedures
 Employee attitude and opinion surveys
 Suggestion systems
 Open-door policy
 Informal meetings
 Internet chat rooms
 Exit interviews
Communication Problems and Promises in the Internet Age
 Barriers to Communication
 Process barriers
 Sender barrier
 Encoding barrier
 Medium barrier
 Decoding barrier
 Receiver barrier
 Feedback barrier
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 Physical barriers
 Devices and distance
 Barriers to Communication
 Semantic Barriers
 Misinterpretation of the meaning of words and phrases by individuals.
 Specialized occupational languages can create communication problems with outsiders.
 Psychosocial Barriers
 Differing backgrounds, perceptions, values, biases, needs, and expectations of individuals can block
communications.
 Sexist and Racist Communication
 Progressive and ethical managers are weeding sexist and racist language out of their vocabularies
and correspondence to eliminate the demeaning of women and racial minorities.
 Communicating in the Online Workplace
 Getting a handle on e-mail
 Put short messages in the subject line.
 Be sparing with graphics and attachments.
 Hello! Can we talk cell phone?
 Advantages are mobility and convenience.
 Disadvantages are distracted drivers and disturbing calls in public places, and the risk of disclosing
private information.
 Video conferences
o A live television exchange between people in different locations.
o Desire to reduce costly and possibly dangerous travel time is driving this technology.
 Telecommuting
o Sending work to and from one’s office via a computer modem while working at home.
Becoming a Better Communicator
 Effective Listening
 Tolerate silence; keep listening.
 Ask stimulating, open-ended questions.
 Encourage the speaker with attentive eye contact, alert posture, and verbal encouragers.
 Paraphrase what you have just heard.
 Show emotion to show your sympathy with speaker.
 Know your biases and prejudices.
 Avoid premature judgments.
 Summarize by reiterating what the speaker said.
 Effective Writing
1. Keep words simple.
2. Don’t sacrifice communication to rules of composition.
3. Write concisely.
4. Be specific.
 Running Meetings
 Prepare ahead of time.
 Have a reason for the meeting.
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  Distribute an agenda.
 Give participants at least a day’s notice.
 Limit attendance and designate a leader.
 Have a specific start and end time.
 Encourage participation but keep to the agenda.
 Use visual aids.
 Follow up.
Table7.1

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Table 7.1

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  Forecasting
 Forecasts
 Predictions, projections, or estimates of future situations.
 Types of Forecasts
 Event outcome forecasts: predictions of the outcome (effects) of highly probable future
events.
 Event timing forecasts: predictions of when a given event will occur.
 Time series forecasts: estimates of future values in a statistical sequence (e.g., sales
forecast).
 Forecasting
 Forecasts
 Predictions, projections, or estimates of future situations.
 Types of Forecasts
 Event outcome forecasts: predictions of the outcome (effects) of highly probable future events.
Event timing forecasts: predictions of when a given event will occur.
 Time series forecasts: estimates of future values in a statistical sequence (e.g., sales forecast).
Forecasting Techniques
 Informed judgment
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 Forecasts relying on intuitive judgments that are based on how well informed the forecaster is.
 Scenario analysis
 Preparing written descriptions of alternative but equally likely future situations.
 Longitudinal scenarios: describing how the future situations will evolve from the present.
 Cross-sectional scenarios: describing future situations at a given point in time.

 Surveys
 A forecasting technique involving face-to-face interviews and mail or e-mail questionnaires.
 Problems with surveys
 Construction of the survey instrument.
 Cost of administration.
 Errors in data collection and interpretation.
 Trend Analysis
 The hypothetical extension of a past series of events into the future.
UNIT 8: Organization Control

 Quality Improvement
 Control:
 Taking preventive or corrective action to keep things on track.
 Checking, testing, regulation, verification, or adjustment.
 Objectives are yardsticks for measuring actual performance.
 Purpose of the control function
 Get the job done despite environmental, organizational, and behavioral obstacles and
uncertainties.
Types of Controls
 Feed forward Control:
 The active anticipation and prevention of problems, rather than passive reaction.
 monitor inputs
 Concurrent Control:
 Monitoring and adjusting ongoing activities and processes.

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 Feedback Control monitor outputs/products:
 Checking a completed activity and learning from mistakes.
Crisis Management
 Organizational Crisis
 A low-probability, high impact event that threatens the viability of the organization and is
characterized by ambiguity of cause, effect, and means of resolution, and as well as by belief that
decisions must be made swiftly.
 Crisis Management
 Anticipating and preparing for events that could damage the organization.
 Two Biggest Mistakes Regarding Organizational Crises are:
 Ignoring early warning signs of an impending disaster.
 Denying the existence of a problem when disaster actually strikes.
 Developing a Crisis Management Program:
 Conduct a crisis audit seeking out trouble spots and vulnerabilities.
 Formulate contingency plans that specify early warning signals, actions to be taken, and
consequences of those actions.
 Create crisis management teams with specific skills to deal with a crisis.
 Perfect the program through serious practice and rehearsals.
 Causes of organizational crisis:
 Extortions
 Kidnapping
 Bribery
 Terrorist attack
 Security breach
 Sexual harassment
 Bomb inning
 Homicide
 National disaster that kills HQ or key stakeholders etc.
The Quality Challenge
 Defining Quality:
 “Conformance to requirements”.
 A subjective response by customers to the adequacy of product or service quality in meeting their
expectations/needs/requirements.
Five Types of Product Quality
 Transcendent Quality
 Inherent value or innate excellence apparent to the individual.
 Product-Based Quality
 The presence or absence of a given product attribute.
 User-Based Quality
 Quality of the product is determined by its ability to meet the user’s expectations.
 Manufacturing-Based Quality
 How well the product conforms to its design specification or blueprint.
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 Value-Based Quality
 How much value each customer separately attributes to the product in calculating their personal
cost-benefit ratio.

Unique Challenges for Service Providers

 Strategic Service Challenge
 To anticipate and exceed customer’s expectations.
 Distinctive service characteristics
 Customers participate directly in the production process.
 Services are consumed immediately and cannot be stored.
 Services are provided where and when the customer desires.
 Services tend to be labor intensive.
 Services are intangible.
 Defining Service Quality:
 Five service quality dimensions
 Reliability (most important)
 Assurance
 Tangibles
 Empathy
 Responsiveness
Total Quality Management (TQM)
 Creating an organizational culture committed to the continuous improvement of skills, teamwork,
processes, product and service quality, and customer satisfaction.
 Four Principles of TQM
 Do it right the first time.
 Be customer-centered.
 Make continuous improvement a way of life.
 Build teamwork and empowerment.
 Do It Right the First Time
 Designing and building quality into the product.
 Be Customer-Centered
 Satisfying the customer’s needs by anticipating, listening, and responding.

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Seven Basic TQM Tools

 Internal customers: anyone in the organization who cannot do a good job unless you do a good job.
 Make Continuous Improvement a Way of Life
 Kaizen: a Japanese word meaning continuous improvement (quality is an endless journey).
 A gain in one area does not mean loss in another.
 Venues for continuous improvement
 Improved and more consistent product and service quality.
 Faster cycle times.
 Greater flexibility.
 Lower costs and less waste.
 Build Teamwork and Empowerment
 Teamwork
 Suggestion systems.
 QC circles and self-managed teams.
 Team work and cross-functional teams.

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 Empowerment
 Adequate training
 Access to information and tools
 Involvement in key decisions
 Fair rewards for results

The Seven Basic TQM Process Improvement Tools

 Flow Chart
 A graphic display of a sequence of activities and decisions.
 Cause-and-Effect Analysis
 The fishbone diagram helps visualize important cause-and-effect relationships.
 Pareto Analysis (80/20 Analysis)
 A bar chart indicating which problem needs the most attention.
The Seven Basic TQM Process Improvement Tools
 Control Chart
 Visual aid showing acceptable and unacceptable variations from the norm for repetitive operations.

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 Histogram
 A bar chart indicating deviations from a standard bell-shaped curve.
 Scatter Diagram
 A diagram that plots relationships between two variables.
 Run Chart
 A trend chart for tracking a variable over time.
 Deming Management
 The application of W. Edwards Deming‘s ideas to revitalize productive systems to make them more
responsive to the customer, more democratic, and less wasteful organizations.
 Essentially the opposite of scientific management.
 Principles of Deming Management
 Quality improvement drives the entire economy.
 The customer always comes first.
 Don’t blame the person, fix the system.
 Plan-do-check-act (PDCA cycle).
 Does everyone Benefits from Improved Quality?
 Better quality goods/services
 Lower costs and Low wastage
 High productivity
 High market share low price and high quality
 Improved prospect
 Increased employment more jobs
 Deming Management
 Deming’s 14 Points
 Constant purpose
 New philosophy
 Give up on quality by inspection
 Avoid the constant search for lowest-cost suppliers
 Seek continuous improvement
 Train everybody
 Provide real leadership
 Drive fear out of the workplace
 Promote teamwork
 Avoid slogans and targets
 Get rid of numerical quotas
 Remove barriers that stifle pride in workmanship
 Education and self-improvement are key
 “The transformation is everyone’s job”
 Quality control:
 The Japanese have made it an art
 The real management question is: how good is good enough?

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 Human Resource Management
Human Resource Strategy: A People-Centered Approach
 Human Resource Management (HRM)
 The proactive acquisition, retention, and development of human resources necessary for
organizational success.
 HRM has moved from a support staff function (personnel) to a more strategic role in organizations.
 Human Capital
 All present and future workforce participants who need to develop to their full potential as valuable
assets to organizations.
 Human Resource Management
 desired result
the right number of appropriately skilled people in the right jobs at the right time
 People-Centered Organizations Enjoy a Competitive Advantage
 People-centered practices
 Protection of job security.
 Rigorous hiring process.
 Employee empowerment.
 Compensation linked to performance.
 Comprehensive training.
 Reduction of status differences.
 Sharing of key information.
 Recruitment and Selection
 “Getting the right people on the bus.”
 Recruiting for diversity
 Goal is to generate a pool of qualified applicants through many different sources that are
demographically representative of the population at large.
 Networking appears to be the most successful job-hunting method.
 Search methods for candidates?
 Ways of finding jobs?
 The Selection Process :
A People-Centered Approach
 The PROCEED model
 The Selection Process: An Overview
 Steps in the PROCEED model
 Prepare
 Review
 Organize
 Conduct
 Evaluate
 Exchange
 Decide
1. Prepare
Identify superior performers
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Job description for the position
Skill for the job
Interview question
2. Review questions
Legality and fairness
3. Organize interview team and method
4. Conduct data from candidate
Evaluate match job and candidate
6. Share with the team
7. Decide
 Job analysis
 The process of identifying basic task and skill requirements for a specific job by studying superior
performers.
 Job description
 A concise document that outlines the role expectations and skill requirements for a specific
job.
 Equal Employment Opportunity (EEO)
 EEO and Title VII of the Civil Rights Act of 1964
 In virtually all aspects of employment, it is unlawful to discriminate on the basis of race,
color, sex, religion, age, national origin, disability, or veteran status.
 Affirmative Action
 A plan for actively seeking out, employing, and developing the talents of those groups
traditionally discriminated against in employment.
 From Affirmative Action to Managing Diversity
 The objective is to develop an appreciation of interpersonal differences and to create a dominant
heterogeneous culture.
 Accommodating The Needs of People with Disabilities
 Americans with Disabilities Act of 1990 (ADA)
 Requires employers to make reasonable accommodations to the needs of present and future
employees with physical and mental disabilities.
ADA Policy Guidelines for Employers
 Audit the workplace to eliminate barriers and bias.
 Train all managers in ADA compliance and all employees to be sensitive to others with disabilities.
 Do not hire anyone who cannot safely perform the basic duties of a particular job with reasonable
accommodation.
Recruitment and Selection
 Employment Selection Tests
 Any procedures used in the employment decision process such as
 Pencil-and-paper tests
 Unscored application forms
 Informal and formal interviews
 Performance tests
 Physical, education, or experience requirements
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 Tests must be unbiased, statistically valid, and reliable predictors of job success.
Recruitment and Selection
 Effective Interviewing
 Interviews are the most common selection tool.
 Shortcomings of unstructured interviews
 Highly susceptible to distortion and bias.
 Highly susceptible to legal attack.
 Legally indefensible if contested.
 Apparent but no real validity.
 Not totally job-related and possibly invasive of privacy.
 Highly inconsistent in application as selection tool.
 Subject to interviewer bias (e.g., cultural bias).
 No feedback about selection errors.
Recruitment and Selection
 Effective Interviewing
 Structured interviews: a set of job-related questions with standardized answers.
 Question types used in structured Interviews
 Situational
 Job knowledge
 Job sample simulation
 Worker requirements
 Behavioral Interviewing
 Asking detailed questions about specific behavior in past job-related situations.
Performance Appraisal
 Performance Appraisal
 Evaluating individual job performance as basis for making objective personnel decisions.
 Making Performance Appraisals Legally Defensible
 Use job analysis to develop the appraisal system.
 Check that the appraisal system is behavior-oriented, not trait-oriented.
 Have evaluators follow specific written instructions when conducting appraisals.
 Sexual Harassment
Contemporary Human Resource Challenges and Problems
 Discouraging Sexual Harassment
 Sexual harassment: unwanted attention that creates an offensive or intimidating work environment.
 Unwanted physical contact
 Gestures, displays, joking, and language
 It is the manager’s job to be aware of and to correct cases of harassment. Ignorance of such activity
is not a valid legal defense.
 Discouraging Sexual Harassment
 What can the victim do?
 Live with it
 Fight back

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 Complain to higher-ups
 Find another job
 Sue their employer
 Discouraging Sexual Harassment
 What can the organization do?
 Top-management commitment to eliminate sexual harassment.
 Issue a clear sexual harassment policy statement.
 Provide appropriate awareness training.
 Establish a grievance procedure for reporting incidents of harassment.
 Controlling Drug and Alcohol Abuse
 Alcoholism: a disease in which alcohol disrupts one’s normal life.
 Drug abuse costs employers $100 billion each year.
 Referral and Rehabilitation
 How to assist an abusing employee
 Don’t accuse the employee; offer help after the employee self-admits the problem.
 Don’t “play doctor.”
 Refer the employee for rehabilitation.


 Consensus Building
 All value their independence.
 No one accomplishes much alone.
 Group Decision Making
 A great deal of time is spent in meetings formulating problems, arriving at solutions, and
determining the means for implementation.
 Thus, the need it is important to know
 when decisions should be made with groups, and
 When individuals should make them.
If there is one expert and can solve the problem, an individual should make the decision. Individual
decisions can be made quickly, and responsibility can be clearly assigned.
 However, if there isn’t an expert, a group decision should be made
 Groups can identify more alternatives than an individual.
 diversity of experience and perspectives to a decision process

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 If the people affected by a solution take part in its creation, they are likely to facilitate
implementation and contribute to its success. Thus, group decisions are more accurate, creative, and readily
accepted.
 Group decision making can be ineffective.
 The assigning of responsibility is not clear unlike an individual decision.
 In a group process,
 Individual responsibility is diluted.
 decision takes more time
 . Members differ in rank, experience and knowledge, and
 A minority may dominate the group.
 Social pressures can create groupthink, which undermines critical thinking and harms the quality of
the decision.
 Groupthink is a type of thinking that leads to poor decisions.
 groupthink as a model of thinking that people engage in when they are deeply involved in a
cohesive in-group, when the members’ striving for unanimity override their motivation to realistically
appraise alternative courses of action
Groupthink refers to a deterioration of mental efficiency, reality testing and moral judgment that results
from in-group processes.
 Group Conflict
 Some conflict is necessary for a group to perform effectively.
 Conflict, the perceived incompatible differences that result in interference or opposition, is natural
and inevitable in any group.
 Conflicts inevitably arise.
 The supervisor wants functional conflict to support group goals, rather than dysfunctional
conflict, which prevents a group from achieving its goals.

 It is important to remember that not all conflict is dysfunctional.

 Do supervisors want to stimulate conflict to increase the group’s performance or to address several
questions (Are subordinates afraid to question you? Do subordinates always answer “Yes”? Are
subordinates afraid to admit ignorance and uncertainties to you? Is there a lack of new ideas?)
 The goal is to create an environment where conflict is healthy, regarding the methods for achieving
goals.
 The supervisor manages group conflict by helping to identify the source of conflict and the issues
and parties involved.
 He or she must stem the tide of disruptions and help generate options.
 Conflict can be stimulated by bringing in outsiders, restructuring the organization, appointing a
devil’s advocate, changing the organization’s culture, and using communication.
 The supervisor must choose the conflict resolution tool that is best suited for the situation and the
supervisor’s ability to use a method.
 Avoidance, or just withdrawing from suppressing conflict is preferred when the conflict is trivial,
or emotions are running.

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 Accommodation, placing another’s needs above one’s own, is a viable option when the issue under
dispute isn’t more important to one group than another. This helps create harmony and build ‘credits’ for a
later time when an issue may be more important.
 Forcing, satisfying one’s own needs at the expense of another’s, works well when a quick
resolution is needed, or when an unpopular action needs to be taken.
 Compromise requires each party to give something of value. This strategy is best when there are
equal parties involved such as labour management contract negotiations
 Collaboration, a win-win solution, occurs when all parties seek to satisfy their interests. It is
possible when there are few time constraints, when the parties involved want a win-win solution, and when
the issue is too important to compromise.
 Collaboration is the preferred method for resolving conflict since the parties in the conflict can
satisfy their own needs while simultaneously meeting the needs of the other members, a win-win solution.
All members are viewed as people who can amplify each other’s abilities. In other words, participants
collaborate with others in the expectation that the benefits will outweigh the costs.
 This method works successfully if both parties are interested in resolving the conflict and the parties
in conflict are able to communicate actively and easily.
 Techniques for Improving Group Participation
 Is the use of participating groups the same as democratic decision-making
 One person with one vote and the majority rules.
 Voting tends to polarize the group’s members into winners and losers. Having people feel like
losers produces problems in decision implementation that are not present when consensus is reached.
 Consensus is a form of participative decision making in which the entire team is consulted and all
members accept a decision, a win-win situation for the group.
 Group participation depends on free association and social facilitation.
 Free association is a process of producing ideas in rapid succession with a minimum of inhibiting
or restraining action. The supervisor presents the original stimulus word or idea to the group. The free
association it produces stimulates a chain reaction of additional ideas.
 Social facilitation is a process in which the productivity of each individual is increased by the
stimulation provided by other group members.
 Increasingly, organizations are recognizing that collaborative relationships - those defined by
mutual learning and shared creation - are at the core of innovation. Ideas are not just exchanged; they are
jointly discussed, debated and created. There is no one best technique for improving group participation
since situation and decision-makers differ greatly. The supervisor should choose the technique that best fits
the situation and the group membership.
Brainstorming,
 developed by Alexander F. Osborn
 Is one of the oldest and best-known techniques to use social facilitation to stimulate creative
problem solving.
 The manager promotes an atmosphere conducive to free association and encourages freewheeling,
uninhibited thinking.
 Brainstorming encourages unrestrained and spontaneous participation by group members.
 Quantity of ideas is important.

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 Members are encouraged to generate alternatives without the threat of criticism. All responses are
recorded for later discussion and analysis.
 In a team meeting, a supervisor can use the brainstorming process to encourage open, honest
communication and the free flow of ideas. For example, the supervisor might say:
 For example, the supervisor might say:
 1. This is a safe zone. Anything said here will not be held against you.
2. No personal accusations allowed. We cannot change someone else's personality, but we can affect his or
her behaviour.
3. Give any idea expressed here a fair hearing.
4. We are here to improve our work, so focus on the work. If there is anything I'm doing that is keeping you
from your work, I want to know about it. If there are any resources that you need to do your job better, tell
me. Look at the person sitting next to you and say, "It would help me in my job if you . . ."
 Many meetings are stifled by politics and unequal participation. Hours can be wasted without
reaching firm decisions or creating bold new strategies. In 1958, a research study at Yale University
showed that
 A group of individuals working alone collectively produced more unique ideas than they produced
working together.
 Nominal group is a group of people working independently rather than interacting with each other.
 Nominal Group Technique (NGT)
 limits discussion among present, independently operating members who gather and
 Are presented with a problem.
 They individually write down ideas.
 In turn, each member presents one idea to the group.
 once all ideas are presented and recorded
 A brief discussion clarifies issues. Then,
 Each member independently ranks the ideas.
 The idea with the highest ranking is the chosen solution.
 Technology: help reshape and revitalize the meeting process.
 NGT can be used in an electronic meeting, faster than a face to face meeting
 Allowing meeting participants to contribute equally and anonymously.
 Up to fifty people can participate
 Issues are presented and responses are typed.
 Individual comments and aggregate responses are posted on a projection screen.
Delphi technique
 is a form of group decision-making in which members never meet face to face and
 equal participation is structured by the use of written questionnaires
 For a problem identified members anonymously provide their solutions through structured
questionnaire.
 Each member receives a copy of the results and is again asked for solutions.
 The process continues until consensus is reached.
Synectics: utilizes a carefully selected creativity team and an experienced leader

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 Whose task it is to structure situations that force participants to deviate from their usual modes of
thinking.
 It focuses on the act of mentally taking things apart and putting them back together as a means of
furnishing new insights.
 The term synectics comes from the Greek word synectikos, which means "bringing forth together"
or "bringing different things into unified connection.
 Synectic theory uses trigger mechanisms to catalyze new thoughts.
 Empathizing
Is one of the synectic triggers
 It involves putting oneself in place of the subject.
 In order to arrive at creative solutions, existing thought patterns are inverted, transposed,
distorted, and modified by role-playing and fantasy exercises
Disciplining
 The control function provides supervisors with opportunities to improve systems on a continuous
basis.
 An emphasis on coaching and counselling can prevent discipline problems.
Poor performance due to
 low ability or inadequate training,
 learning problems,
 drug and alcohol dependency,
 physical or mental illness,
 marginal health, or disability
 Respond much better to coaching and counselling than to punitive measures.
 Disciplinary action is it necessary?
 Disciplinary action as a behavioural control technique is necessary when self-discipline breaks
down.
 Effective discipline can eliminate ineffective employee behaviour.
 An employee should be disciplined when he or she chooses to break the rules or is not willing to
perform the job to standards.
 Discipline is corrective actions taken by a supervisor when an employee does not abide by
organizational rules and standards.
 Disciplinary Problems
Common categories of disciplinary Problems
 are attendance,
 poor performance,
 Misconduct.
 Attendance problems include unexcused absence, chronic absenteeism, unexcused or excessive
tardiness (Lateness slowness lethargy), and leaving without permission.
 Poor performance includes failure to complete work assignments, producing substandard products
or services, and failure to meet established production requirements.
 Misconduct includes theft, falsifying employment application, wilfully damaging organizational
property, and falsifying work records.

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 On-the-job Problem Behaviours
 Intoxication
 Insubordination
 Fighting
 Gambling
 Carelessness
 Sexual harassment
 Failure to use safety devices
 Failure to report injuries
 Sleeping
 Possession of narcotics or alcohol
 Possession of weapons
 Progressive Discipline
 Disciplinary treatment where the organization attempts to correct the employee's behaviour by
imposing increasingly severe penalties for each infraction.
 The usual steps are:
 1. Verbal warning
2. Written warning
3. Suspension, without pay
4. Termination of employment
 Employees accept fair, equitable, and consistent discipline.
 Positive, progressive, hot stove approaches work best.
 The hot stove rule is a set of principals that guide effective disciplining
The hot stove rule
 Immediacy.
The more quickly the discipline follows the offence, the more likely the discipline will be associated with
the offence
 Warning.
Disciplinary action will be interpreted
as fair when employees receive clear warnings that a given violation
will lead to a known discipline.
 Consistency.
 Fair treatment demands that disciplinary action be consistent.
 Impersonal nature.
 Penalties should be connected to the behaviour (violation) and not to the personality (person) of the
violator.
 Discipline Discussion
 1. Explain specifically what you have observed and why the behaviour cannot continue.
 2. Request and listen actively to the employee's reasons for the behaviour.
 3. Ask the employee for ideas on changing the problem behaviour and offer your help.

 4. Come to an agreement on specific action steps to be taken by each party.

 5. Schedule a follow up meeting to check whether the problem has been resolved.
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 6. Document the meeting, noting date, content action steps agreed upon, and timetables for
implementing them.
 If, after two or three discussions, the employee's behaviour has not changed, he or she should be
asked to decide if he or she wants to quit or return to the job and abide by the organizational rules and
standards.
 The steps: Discipline Without Punishment approach are:
 Step 1.
 Identify the performance problem.
 Establish exactly what the performance expectation is and
 Specifically how the employee is failing to meet it.
 Step 2. Analyze the problem.
 Determine the impact of the problem.
 How is the performance problem adversely affecting the quality and quantity of the work, other
employees, customers, and the organization as a whole?
 Identify the consequences that the individual will face if the employee decides not to correct the
situation.
 Determine the appropriate action step
 Step 3. Discuss discipline with the employee. Gain the employee's agreement to solve the problem.
Discuss alternative solutions and decide on specific action the employee will take. Communicate positive
expectations or change.
 Step 4. Document the problem. Describe the problem using facts and specifics. Describe the history
of the problem. Describe the discussion to include the employee's agreement to change.
 Step 5.
 Follow up. Determine if the problem has been solved. Reinforce improvement. Take required action
if the problem has not been solved.
 Appeal of Disciplinary Action
 Ensure that policies and procedures are administered uniformly and followed judiciously by treating
employees fairly and consistently.
 Employees may disagree with the supervisor and submit grievances.
 Grievances are an informal approach to resolving conflicts.
 Grievance subject matter might include
 Wages, hours of work, working conditions, performance evaluations, merit raises, job assignments,
reprimands, rules, regulations, and policies.
 The Grievance Procedure
Is a conflict resolution method available to employees.
Grievance Procedure steps
 Informal Step
 Orally present facts to supervisor.
 Formal Step
 Put grievance in writing to next level of management, if supervisor does not satisfactorily resolve
grievance.
Four Realities of Managing Today

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 1. The only certainty today is change.
2. Speed, teamwork, and flexibility are the orders of the day.
3. Managers at all levels need to stay close to the customer.
4. Without continuous improvement and lifelong learning, there can be no true economic progress.
Working with and Through Others
 Shortcomings of “derailed” managers
 Problems with interpersonal relationships
 Failure to meet business objectives
 Failure to build and lead a team
 Inability to change and adapt during a transition
Making the Most of Limited Resources
 We live in a world of scarcity.
 There is a lopsided use of resources.
 Our planet is becoming increasingly crowded.
 Over 80% of the world’s population lives in poor and less-developed countries.
 Managers are responsible for the efficient and effective use of the basic factors of production–land,
labor, and capital.
Coping with a Changing Environment
 Five Major Sources of Change for Today’s Managers******Table

Ethical Problems in the Workplace

 Lying to supervisors
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 Lying on reports or falsifying records
 Stealing and theft
 Sexual harassment
 Abusing drugs or alcohol
 Conflict of interest
Learning to Manage
 How Do Managers Learn to Manage?
 By attending the school of “hard knocks”
 Making a big mistake.
 Being overstretched by a difficult assignment.
 Feeling threatened.
 Being stuck in an impasse or dilemma.
 Suffering an injustice at work.
 Losing out to someone else.
 Being personally attacked.

1. Globalization
2. Environmentalism
3. An ethical reawakening
4. The Internet and the e-business revolution
5. The evolution of product quality ****Table

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How Managers Learn to Manage

How Can Future

Managers Learn to Manage?
 Future managers can learn by
 Integrating management theory (i.e., formal training and education) and managerial practice (e.g.,
work-study and internships).
 Observing role models.
 Learning from experiences in the school of hard knocks.
Figure 1.7
Acquiring the Ability to Manage by Merging Theory and Practice

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Entrepreneurship
 Entrepreneurship
 The process by which individuals–either on their own or inside organizations–pursue opportunities
without regard to the resources they currently control.
 Entrepreneur’s Dilemma
 Either grow with the company or have the courage to step aside and turn control over to
professional managers with the requisite administrative skills.
***Table 1.4

Entrepreneurship
 Traits of Entrepreneurs
 Focus is on envisioned futures.
 Emphasize external/market dimensions.
 Display a medium-to-high tolerance for ambiguity.
 Exhibit moderate-to-high risk-taking behavior.
 Obtain motivation from a need to achieve.
 Possess technical knowledge and experience in the innovative area.
 Myths About Older Workers
 Are not less productive.
 Do not incur higher benefits costs.
 Do not have higher absenteeism.
 Do not have more accidents at work.
 Are not less willing to learn.
 Are not inflexible about the hours they are willing to work.

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 A New Social Contract between Employer and Employee
 New Social Contract
 Assumption that employer-employee relationship will be a shorter-term one based on convenience
and mutual benefit, rather than for life.
 Employees are expected to manage their own careers to increase their long-
term value.
 Employers are expected to provide the means necessary for continual
workforce development.
Managing Diversity
 Managing Diversity
 The process of creating an organizational culture
that provides all employees,
including women and
minorities, with assistance
and opportunities to help
them realize their full potential.
 More than EEO
 The moral necessity and commitment in going beyond EEO and affirmative
action to
create flexible organizations that encompass and value diversity.
Promoting Innovation through Intrapreneurship
 Intrapreneur
 An employee who takes personal responsibility for pushing an innovative idea through a large
organization.
 Fostering Intrapreneurship
 Focus on results on teamwork.
 Reward innovation and risk taking.
 Tolerate and learn mistakes.
 Remain flexible and change-oriented.
***Table 4.2

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Contrasting Attitudes toward International Operations
 Ethnocentric Attitude
 The view that assumes the home country’s personnel and ways of doing things are best.
 Polycentric Attitude
 The view that assumes local managers in host countries know best how to run their own operations.
 Geocentric
 A world-oriented view that draws upon the best talent from around the world. ***Table 4.2

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 . ***Table 4.2

The Ethical Dimension

of Management
 Altruism
 The unselfish devotion to the interests of others.
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 Ethics
 The study of moral obligation involving the distinction between right and wrong.
 Business Ethics
 The study of the complex business practices and behaviors that give rise to ethical issues in
organizations.
 Ethical Advocate
 An ethics specialist who plays a role in top-management’s decision-making.
 Code of Ethics
 Requirements for an effective code
 Must describe specific events.
 Firmly supported ethics in 1990.
 Whistle-Blowing
 The reporting of perceived unethical matters.

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Succeeding in Your Organization
 Succeeding in Your Organization
 Career perspective is a proactive strategy that involves a global view of career progress or growth
over time.
 A perspective on employment today involves the realization that most persons will have a number
of jobs over their lifetime.
 Today managers must plan and monitor their careers being ready to seek and take advantage of new
opportunities.
 Some rules for career success:
 Do not rely on conventional career paths of the
Past
 Watch for opportunities
 Move toward small entrepreneurial organizations,
Away from large bureaucratic ones
 Lead, not just manage
 Pursue lifelong learning
 Increase your competitive drive
 Take chances and seek opportunities.

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 UNIT 9:
Health Information System (HIS/HMIS)
(MPH class, DCH, MF, AAU. By Dr Habtamu)
HIS
Definition.
HIS is a set of components & procedures organized with the objective of generating information for the
health care management decisions at all levels of the health system.
Purpose.
 HIS
• to monitor the health status and health services of a nation
• to improve public health care leadership & management decisions at all levels
 By making available timely and relevant information required for rational and effective decision
making HIS enhances implementation of policy
 HIS enhances appropriate decision making for patient/ client care
HIS Vs HMIS
Management Information system (MIS) including HMIS is defined as:
 A system designed to produce information to be presented to the management to assist in
decision-making and to enable it to ascertain the progress made by the organization in the achievement
of its major objectives (WHO 1971)
 MIS focuses on routine activities & provides operational information
 Concentrates on the “in-house activities”.
Fig 1. Data for action cycle

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 Fig 1. Data for action cycle
Decision making and action
Assessment
Application

Data
KNOWLEDGE

Analysis
Understanding

INFORMATION

Information is usually presented as Indicators

Indicator is
 Warning light that comes on when something is wrong and Prompts you to take action.
 Markers of a given situation.
 Indicators show us the speeds and the final status we have achieved.
 Use of Indicators
 In planning as baseline/status at point
 To assess our activities while we are undertaking them.
• When the situation changes, the indicator changes
 Indicators are instruments of evaluation.
• but defined before the start of activities
Classification of indicators
 Indicators compare b/n an actual situation (numerator) and a standard (denominator).
 Broadly there are 2 types of standards or denominators:
 Total of the target group where the intervention is mentioned for;
 Indicator expressed as a coverage, or rate.
 Reduction of IMR to 85/1000LB by 2004/5 (SDPRP)
 Baseline situation that existed at the start where indicator is expressed as a change or
• Reduce U5MR by 2/3 b/n 1990 and 2015,MDG
Types of indicators:
 Input indictors (the inputs into the process)
 Process indicators (Are we doing a good job?”. They cover the area of efficiency and quality of
work done).
 Output indicators (Are we achieving the production we wanted to achieve?” They cover the area
of productivity)
 Outcome
 Answers ‘‘are we achieving the effect in the community we wanted to achieve?”
 Covers the area of effectiveness.
 Measures changes in the beneficiaries.
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 Measure of intermediate effects: (behavior change, attitude change)
 Impact answers ‘‘Did we bring about better quality of life/ or health status’’
 Measures of long-term effect (eg disease reduction, health status)

Sources and means of generating the different types of indicators

MIS Community -based
Input process Output Outcome

Impact
Factor= Health intervention HI+ External factors

What’s a Good Indicator?

 Measurable: The indicator must be able to be measured.
 Appropriate: Does the indicator measure what you intend?
 Sensitive: Is the indicator sensitive to your intervention? Will it change quickly enough to be
meaningful?
 Specific: Is the indicator specific to what you want to measure?
 Repeatable: Can the measurement be repeated with equivalent results?
 Comparable: Do others use it? Can it be used to compare with other regions/countries?
 Simple: Easy to understand (Compound indicators are difficult.)
 Timely: Must have current information to make good decisions for action.
Considerations in selecting indicators for MIS
 Do you need it ALL the time?
 Do you need it in ALL facilities?
 Can you generate it well?
 Can you consider alternatives or special studies?
 Register review, Chart review
Survey etc
Components of NHIS
 Routine reporting subsystems
 Diseases, other medical conditions;
 Vital statistics
 Special reporting subsystem
• for disease surveillance
• for programmes
 Surveys.
 Management subsystems
 human resources, finances, essential medicines, public health supplies, transport and logistics,
infrastructure and documentation
Process of HMIS

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The implementation of NHIS involves;
 Data collection
 Transmission,
 Processing
 Analysis and
 Reporting as well as
 Decision-making
Guiding principles for strengthening NHIS
Guiding principles proposed by WHO for strengthening NHIS:
• Accuracy: Data should be accurate and standardized for comparative purpose
• Timeliness: Health data should be produced, submitted, processed and used within a reasonable
time.
 3. Comprehensiveness: Essential health indicators should include key aspects of the health system.
 4.Representativeness: Statistics reported should be representative of the situation in individual
countries and should be as complete as possible
 5. Relevance: Information collected should reflect the needs of the country
 6. Complementarity: Information collected through different subsystems should complement one
another.
 7.Ownership: Ownership should be fostered among all potential users of the information
What determines performance of HMIS?
HIS Part II
HIS/HMIS in Ethiopia
Major sources of information
Routine reporting (HMIS)
Through HMIS structure
Through numerous parallel program- specific reporting formats
HSDP

Sources of information
 Epidemiological surveillance information (IDSR)
 Sentinel reporting, (Polio, HIV…)
 Special Surveys, (E.g. HIV- BSS)
 Census and DHS (by CSA)
 Administrative information systems (included in the HMIS of the SNNPR and partly in the annual
report)
Features of HMIS in Ethiopia
• Data coming from the HMIS may not be helpful to the management decision-making due to;
• Poor quality of data
• Deficiency of data set in providing the needed management support.
Features of HMIS in Ethiopia
• Data that are needed for key decisions are missed
• The information system is “Data driven” than “Action driven”,
• Unnecessarily huge and redundant, (with multitudes of indicators and reporting overburden)
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• The report is usually incomplete,
• Inaccurate and inconsistent
• Untimely, and outdated.
• Weak institutional capacity,
• Lack of HMIS strategy
• Deficiency in skills and knowledge of HIS/HMIS
• Lack of an implementation guideline,
• The generated information is not used to the optimum,
• Lack of timely feedback
• Lack of baseline data to compare progress
• Enabling environment, especially at facility level
Features of HMIS in Ethiopia
HSDP II indicators (125), for monitoring at national level
Category of indicators No
 Input 2
 Process 7
 Output 17
Total 26
Health related indicators in MDG
► Prevalence of underweight children (under 5yrs age)
► Proportion of population below minimum level of dietary energy consumption
► Under five mortality rate
► Infant mortality rate
► Proportion of 1yr old children immunized against measles
► Maternal mortality ratio
► Proportion of births attended by skilled health personnel
Health and related indicators in PRSDP
► IMR
► U5MR
► MMR
► Access to health services
► EPI coverage
► Per capita health service utilization
► Share of health budget
► HIV prevalence
► Access to safe drinking water
► Malaria prevalence
► Tuberculosis prevention and control services coverage
► CPR
Suggested reforms issues
► Use of a unified HMIS
► Integrating the HSDP reporting system
► Harmonize with indicators of SDPRS and MDG.
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► Addressing the needs of various programs
► Addressing the workload that the producers can afford
2. Redefine indicators
► Cover only the most useful ones
► Ensure relevance to all level (demonstrable practical use)
► Focus on the information for use at the frontline level.
► Minimize indicators & shift part of the HMIS to sentinel surveillance or small surveys
HMIS reform issues
3. Match information needs, staffing pattern and service package with technical and technological
capability of the levels involved.
HMIS reforms issues
4. Develop/apply national HMIS guideline
• To define and guide consistency in use of indicators
• Consider all levels of the system
• Considering the changing pattern of service/referral system,
HMIS reforms issues
5. Involve regions and health facilities in the HMIS reform process
HMIS reform issues contd.
6. Interrelated actions
• Ensure availability of minimum list of equipment, supplies and reagents to provide the service
and to produce the standard data
2. Capacity building (HRH, (technological support etc).
3. Availability of budget for use flexibly & based on changing situations and evidences from HMIS
HMIS reform
4. Regular and meaningful feedback at all levels
5. A system to support the HMIS by OR.
6. M/E mechanism of the HMIS itself

References
1. Design and implementation of HIS, Ed, Theo Lippeveld, Rainer Sauer born, Claude Bodart, WHO,
2000
2. WHO, HFA series no 9; 1982
3. Yetnayet Asfaw, (MD, MPH), August 2001. Working document for strengthening the National
Monitoring and evaluation systems in support of the implementation of HSDP (draft proposal).
4. Bruce B. Campbell, 1997, HMIS in lower income countries. An analysis of system design,
implementation & utilization in Ghana and Nepal
5. Ethiopian health sector development programme 1997/98 to 2001/02. Report of the mid term review
mission (8th of March, 2001)

AAU, DCH Prepared by Dr Mesfin Addisse, June 2005. 145

 6. Priority interventions for strengthening national health information systems, WHO regional office for
AFRICA, AFR/RC54/12 RV.1, 2004
7. Tigray health profile for 1994, and 1995.
8. Health information System (HMIS), a reference guideline for health workers in the SNNPR RHB, ZHD,
Hospitals, WHOf, HC, HS, and Health posts. June 2002 (1994 EC), Awassa, Ethiopia.
9. Health component planning and monitoring especially HMIS, Work plan, Jaap koot public health
consultants, Amsterdam and Habtamu Argaw,Public health Advisor, Sustainable poverty alleviation for
Kafa- sheka (SPAK-S), April 2000.)
10. Validation of the HMIS data, in the Baseline survey on health status, health services utilization and
health related KABP, in Kafa zone, by Habtamu Argaw, June 2001.
11. Ethiopian health sector development programme. Final evaluation of HSDP I. March 2003.
12. HMIS team, PPD, FMOH, July, 2004 HIS/HMIS, Situation assessment, and directions for reform in
Ethiopia.

AAU, DCH Prepared by Dr Mesfin Addisse, June 2005. 146

 HSDP of Ethiopia as Foundation to the Implementation of Macroeconomic and Health
Federal Ministry of Health, Ethiopia, (internet)
Geneva, 28-30 October, 2003

Country Background
Federal Government (9 Regional States & 2 City Councils.
Decentralization to Regional states and to District level since 2002/03.
Budget allocation based on block grant and federal Gov’t subsidy using federal council approved
formula.

Geography, Population, Economy, Health & Education

•Land Area: 1.1 million Sq. Kms.
•Total Population: 70.0 Million (live roughly in 5,000 UDA & 10,000 rural villages).
•85% of the population lives in rural areas. 8of the •Per capital Income: USD100 (2001/02). Per capital •
Primary education enrollment ratio: 59% 59%
•Male= 67% Female = 50% (Gross). Male= 67% Female = 50% (Gross).
Health Status, Health delivery System and Available Facilities
•Infant Mortality Rate: 97/1,000.
•Maternal Mortality Rate: 871/100,000.
•Life expectancy: 54 Years.
•Potential Health coverage: 61% (2002/03).
•Four-tier health delivery system with PHCU 1st level, district & Zonal hospitals 2nd level, & Regional &
Central referral hospitals as 3rd. .
•Facilities: 115 Hosp. 412 HCs, 2452 HSs, 1311 HPs.

, 1Health Care Financing (in 2002)

•Government Health Budget =USD122.1 Million. •Health Budget As total Gov’t budget = 7.3%. .
•Gov’t Health Budget as total GDP = 1.42%.2%.
•Gov’t health expenditure per capita =USD1.56. =USD1
•National Health expenditure per capita based on two rounds of NHA = USD USD4.09 in 1995/96 and
USD5.60 in 1999/00.
•Willingness to pay study (2001) show households on average spends 3% of their income on health. But
the lowest income quartile pays 9% and the richest 2%.

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 Health Policy
•Democratization and decentralization of the health care delivery.
• Development of the preventive, promotive & curative components of the health care.
•Assurance of accessibility of health care for all segments of the population.
• Promoting the participation of the private sector and NGOs in the health care delivery.

Health Sector Development Programme (HSDP)

•The country follows a 20-year plan with a rolling five year programme called HSDP.
•HSDP is the major component of SDPRP of the country and linked to macroeconomic framework. Main
focus is to achieving MDGs.
•The 1st covered 1997/98 to 2002; fully evaluated.
• The 2nd was designed to cover 3 years (2003- 2005), under implementation.
•Major focus for both is attacking poverty related diseases: HIV/AIDS, Malaria, Tuberculosis, Child
Survival and programmes aimed at the reduction of Maternal Mortality. •Preparation is progressing for the
3rd phase to cover 2006-2010. t• All three phases are the product of wider consultation amongst major
stakeholders (Govt. Donors.etc). ).

HSDP planning, implementation, monitoring and evaluation

•Ownership of HSDP rests with the Government.
•HSDP facilitates bottom-up planning and extensive participation by major stakeholders.
•It is a SWAP-based, a one planning and a one budget comprehensive planning for the whole sector.
•It is the base for expanding and strengthening partnership among stakeholders in terms of planning,
implementation, reporting, monitoring and evaluation.
•It ensures greater say and control over regional health resources, currently extending to district.

Partnership of HSDP
•Three levels of partnership:
•1st, between the Central Government and (FMOH) and the Regional States (RHBs).
•2nd, between the Central Government and health Donor Partners. •3rd, between the Central/Regional, NGOs
and the private sector.

Governance of HSDP
•Existing two levels and a plan to expand to the third level:
•At Central level, CJSC (8 members, 2 government seats, 6 seats held by Donor partners on the basis of
regional representation
•HPN-Government consultative forum as a technical arm of CJSC.
•RJSC and expected expansion to DJSC.
•All follow more or less similar formula for representation, but appropriate to local condition.

Preparation for the implementation of Macroeconomic and Health

•MH is a welcome initiative to Ethiopia because it is in line with our development objectives and strategies.
• We consider MH as a tool for accelerated implementation of HSDP.
• MH is already enjoying top level Government support including MOFED.
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•A unit for MH is created under the appropriate Dept. of FMOH.
• A multi-sectoral steering Committee for MH is in the making.
•WHO/HQ has introduced the report of CMH in the HSDPI evaluation and ARM2003 forum for 250
participants.
•FMOH, WHO/AFRO & Columbia University closely worked on the POA, & has been endorsed by
FMOH.
•FMOH and AFRO closely following the recruitment of a consultant for a wide range of analytical works.

Completed analytical works as a foundation for Macroeconomic and health

•A National Health Care Financing Reform awaiting legal backing for launching.
• The HCF Reform constitutes special consideration of the hospital autonomy.
•Development of a “Minimum Health Service Package”, 85% already completed. Package”, 85% already
completed.
• Produced 16 Health Extension Packages for the training and implementation of HEP programme.
•Piloting of HEP is progressing in five Regional states.
• Two rounds of NHAs.
•A study on willingness and ability to pay. A study on willingness
•“Drug revolving Fund initiative” with the aim of covering all Government Hospitals and 50% of the
Health Centers by 2006.
• A fully-costed project proposal (draft) on “accelerated expansion of PHC facilities in rural Ethiopia”
aimed at achieving universal PHC coverage by 2008 (2004-2008).

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