Lesson3_Management

Lesson 3

The Management Function

Overview

1. Planning

3. Control

2. Organization

Mapa

GALERÍA

Versus

Testionios

CAP. 12 HITT, pp. 381-390

CAP. 1 HITT, pp. 119-137

CAP. 4 HITT, pp. 95-109

Equipo

Proceso

Cifras

Overview: content of the management function

Planning

Organising

Controlling

1.

Planning

What is Planning?

• Planning is defining the organization’s goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities.
• It’s concerned with both ends (what) and means (how).
• When we use the term planning, we mean formal planning. In formal planning, specific goals covering a specific time period are defined. These goals are written and shared with organizational members to reduce ambiguity and create a common understanding about what needs to be done. Finally, specific plans exist for achieving these goals.

• Goals (objectives) : desired outcomes or targets.
• Plans : documents that outline how goals are going to be met.

Types of Plans

The Planning Process

1. Analyzing the Firm’s External Environment

6. Monitoring Outcomes

2. Assessing the firm’s internal resources and capabilities

5. Implementing Plans

3. Setting Objectives-Goals

4. Developing Action Plans

Traditional goal-setting: top-down approach and problems of definition

• Objectives should be well stated and useful
• Objectives should be SMART

Specific

Measurable

Agreed

Realistic

Time Bound

Developing Action Plans: Sequence and Timing Developing Action Plans: Sequence and Timing

Info

Gantt Chart

Team

Department

date

Task

2.

Organising

• Organizing is arranging and structuring the work to accomplish organizational goals.
• It’s an important process during which managers design an organization’s structure.
• Structure can be shown visually in an organizational chart (see next slide).
• When managers create or change the structure, they’re engaged in organizational design, a process that involves decisions about six key elements: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.

Key concepts

• Organising – arranging and structuring work to accomplish an organization’s goals.
• Organizational Structure – the formal arrangement of jobs within an organization.
• Organizational chart – the visual representation of an organization’s structure.
• Organizational Design – creation or modification of the organizational structure

Organisational chart = organigram

how to create a chart in word

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Organizational Design

INFO

Formalization

Differentiation

Centralization vs Decentralization

• Chain of command
• Span of control

• Work specialisation

• Departamentalisation

Differentiation: work specialization

Dividing work activities into separate job tasks.

• Advantages: Early proponents of work specialization believed it could lead to great increases in productivity.
• Disadvantages: Overspecialization can result in human diseconomies such as boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.

Formalization

Chain of command

Formalization refers to how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures.

• In highly formalized organizations, there are explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes. Employees have little discretion over what’s done, when it’s done, and how it’s done.
• Where formalization is low, employees have more discretion in how they do their work.

Span of control

Chain of Command

• It´s the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom.
• Managers need to consider it when organizing work because it helps employees with questions such as: “Who do I report to?” or “Who do I go to if I have a problem?”
• To understand the chain of command, you have to understand three other important concepts: authority, responsibility, and unity of command.

Span of Control

Info

• How many employees can a manager efficiently and effectively manage? That’s what span of control is all about.
• Under the traditional view, managers shouldn´t directly supervise more than five or six subordinates.
• Determining the span of control is important because to a large degree, it determines the number of levels and managers in an organization—an important consideration in how efficient an organization will be.

What is best, wide or narrow span of control? Does a flat company have a narrow or widespan of control?

Centralisation

Decentralisation

Vs

The degree to which lower-level employees provide input or actually make decisions.

The degree to which decision-making is concentrated at the upper levels of the organization.

On the other hand, the more that lower-level employees provide input or actually make decisions, the more decentralization there is.

If top managers make key decisions with little input from below, then the organization is more centralized.

Centralization-decentralization is not an either-or concept. The decision is relative, not absolute—that is, an organization is never completely centralized or decentralized.As organizations have become more flexible and responsive to environmental trends, there’s been a distinct shift towards decentralized decision-making. This trend, also known as employee empowerment, gives employees more authority (power) to make decisions

Departamentalisation

Departmentalization – the basis by which jobs are grouped together

Process

Grouping jobs on the basis of product or customer flow

Geographical

Functional

Grouping jobs on the basis of territory or geography

Grouping jobs by functions performed

Product (or division)

Customer

Grouping jobs by product line

Grouping jobs by type of customer and needs

Divisional structure

3.

Controlling

Control

Controlling: the process of monitoring, comparing, and correcting work performance. All managers should control, even if their units are performing as planned, because they can’t really know that unless they’ve evaluated what activities have been done and compared actual performance against the desired standard. The purpose of control: to ensure that activities are completed in ways that lead to the accomplishment of organizational goals. Effective controls ensure that activities are completed in ways that lead to the attainment of goals. Whether controls are effective, then, is determined by how well they help employees and managers achieve their goals.

Control process

Process of :

• establishing the goal and objectives (standards),
• measuring actual performance, comparing actual performance against the standard, and
• taking managerial action to correct deviations or inadequate standards.

The Control Process: Step 1: Establish standards (quantified objectives or goals)

The Control Process: Step 1: Establish standards (quantified objectives or goals)

The Control Process: Step 2: Measure Performance

The Control Process: Step 3: Compare Performance against Standards

The Control Process: Step 4: Evaluate Results and Take Action

Possible actions: Actual performance better than expected performanceResearch cause and take reinforcing action, if convenient.Actual performance worse than expected performanceResearch cause and take corrective action, if convenient.Revise the standard If performance consistently deviates from the goal, then a manager should look at whether the goal is too easy or difficult and needs to be changed.

Traditional types of control

Every business wants to earn a profit. To achieve this goal, managers need financial controls. For instance, they might analyze income statements for excessive expenses. They might also calculate financial ratios to ensure that sufficient cash is available to pay ongoing expenses, that debt levels haven’t become too high, or that assets are used productively.

Budgets are planning and control tools. When a budget is formulated, it’s a planning tool because it indicates which work activities are important and what and how much resources should be allocated to those activities. But budgets are also used for controlling because they provide managers with quantitative standards against which to measure and compare resource consumption. If deviations are significant enough to require action, the manager examines what has happened and tries to uncover why.

Most popular Financial Ratios

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