25. Entrepreneurship and its relation to management
26. Management principles are statements of fundamental truth. According to Henry Fayol management has 14 principles. Henry Fayol listed the 14 principles of management as follows:
1. Specialization of labor (A principle of work allocation and specialisation in order to concentrate activities to enable specialisation of skills and understandings, more work focus and efficiency.)
2. Authority and Responsibility (If responsibilities are allocated then the post holder needs the requisite authority to carry these out including the right to require others in the area of responsibility to undertake duties.)
3. Discipline (Discipline refers to obedience, proper conduct in relation to others, respect of authority, etc. It is essential for the smooth functioning of all organizations.)
4. Unity of Command (every subordinate should receive orders and be accountable to one and only one superior)
5. Unity of Direction (All those working in the same line of activity must understand and pursue the same objectives. All related activities should be put under one group, there should be one plan of action for them, and they should be under the control of one manager.)
6. Subordination of Individual Interest (the management must put aside personal considerations and put company objectives first. Therefore the interests of goals of the organization must prevail over the personal interests of individuals.)
7. Remuneration (Workers must be paid sufficiently as this is a chief motivation of employees and therefore greatly influences productivity)
8. The Degree of Centralization (Centralization or decentralization)
9. Scalar Chain (there should be a clear line of authority from top to bottom linking all managers at all levels)
10. Order (Social order ensures the fluid operation of a company through authoritative procedure. Material order ensures safety and efficiency in the workplace. order should be acceptable and under the rules of the company)
11. Equity (Equity, fairness and a sense of justice "should"pervade the organisation – in principle and practice.)
12. Stability of Tenure of Personnel (Time is needed for the employee to adapt to his/her work and perform it effectively. Stability of tenure promotes loyalty to the organisation, its purposes)
13. Initiative (At all levels of the organisational structure, zeal, enthusiasm and energy are enabled by people having the scope for personal initiative.)
14. Esprit de Corps (Here, Fayol emphasises the need for building and maintaining of harmony among the work force , team work and sound interpersonal relationships.)
27. Evolution of management
Early Management and the study of management
The formal study of management only began late in the 19th century.
The main driving force behind this development of management as a science was the transition from 19th century “entrepreneurial capitalism” to early 20th century “managerial capitalism”. Whereas the first capitalists were business owners who used their own finances to fund organizations that they managed themselves, rapid industrial growth saw the formation of large organizations with capital often provided by outsiders. This not only “widened the gap” between owners or shareholders and management, it also brought new management challenges.
Scientific Management
One of the early pioneers of management theory was Frederick W. Taylor (1856-1915), a mechanical engineer who believed that it was management’s task to design jobs properly and to provide incentives to motivate workers to achieve higher productivity.
Taylor’s scientific management changed the role of managers from being run-of-the-mill whip men to specialized foremen who were adequately equipped to supervise each phase of the production process. On a larger scale, he revolutionized managerial thought and laid the foundation for the formation of many other management systems in decades to come.
The Administrative Approach
Across the Atlantic ocean Jules Henri Fayol (1841-1925), a fellow engineer and manager of a group of French mines, came to the conclusion that management was an activity common to all human undertakings (including home, business, government, schools, etc.) and that all these undertakings needed five basic administrative functions (planning, organizing, commanding, coordinating and controlling). He argued that because management was an all-encompassing activity, it should be taught in schools, colleges and universities.
Fayol’s approach rejected the old notion that “managers are born, not made”, proposing instead that management is a skill which can be acquired if its principles are understood.
The Bureaucratic Approach
Max Weber (1864-1920) was a German sociologist who approached management by focusing on organizational structure, dividing organizations into hierarchies with clear lines of authority and control.
Weber’s bureaucratic system helped large organizations to function in a more stable, organized and systematic manner. However, by doing away with personality based or charismatic leadership, individuality and creativity is often sacrificed. Bureaucratic leaders and workers are required to obey rules and do only what they are told. The result is that these leaders seldom think “outside the box” and therefore find it very difficult to adapt to changing environments and new challenges.
The Human Relations Movement
Elton Mayo (1880-1949) was a Harvard professor who proposed that managers should become more “people-orientated”.
Mayo’s findings once again revolutionized the role of managers in organizations. The work performed by individuals has to satisfy their “personal, subjective” social needs as well as the company’s productive requirements. He and other proponents of this movement therefore called for managers to “accept a new role” in their relationship with workers; develop a new concept of authority; and help foster a new social order in the workplace (George, 1968). In practice managers were encouraged to consult workers about change, take note of their views, and to show concern for their physical and mental health (Wren, 2005, p. 293).
Servant Leadership
This approach completely revolutionized the role of managers in organizations as it calls for leaders to place the priorities and needs of their followers before their own or that of the organization. It also differentiates clearly between the functions of leadership and management, although the ideal is that modern day servant leader / managers should be able to perform both functions simultaneously.
28. Resource based view - а view that resources of an enterprise can be a source of sustainable competitive advantage.
29. The nature of change in the external environment is frequently difficult to predict. The world is characterized by significant uncertainty, which in this context means an inability to predict with accuracy the nature, magnitude, timing, and direction of change in the environment. Managers typically seek to reduce the amount of environmental uncertainty they face by collecting more information and by trying to exert some control over the environment.
By collecting information about different aspects of the environment they face, managers hope to reduce uncertainty, increase their knowledge, and thus make better decisions. However, although uncertainty can be reduced by collecting more information, it can never be eliminated altogether. The world is an inherently uncertain and unpredictable place. The best that can be hoped for is to reduce the uncertainty to some manageable level.
In addition to collecting information, managers try to reduce the environmental uncertainty they face by increasing their ability to exert control over it. They may acquire, merge with, or collaborate with competitors, thereby reducing the uncertainty associated with competitive rivalry. Similarly, to reduce uncertainty firms may acquire distributors, key suppliers, or important complementors to increase their control over them.
30. Elements of the general and task environments are always changing. Changes in the general environment, such as those in regulations, macroeconomic trends, demographics, social mores, or technology, impact the nature of competition in a firm’s task environment. For example, new technology and deregulation can lower barriers to entry into an industry and increase the intensity of competition. Similarly, strong economic growth and falling interest rates can lead to greater customer demand in the task environment, whereas an economic recession and climbing interest rates may result in a contraction in demand.
Even when the general environment is relatively stable, changes in the task environment can still occur. By their own actions firms can change the nature of competition in their industries. Price cutting by one firm can spark a price war; introduction of a new product might spur greater demand growth; bankruptcy of marginal players in the industry can reduce capacity and create a more favorable competitive environment; and so on.
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Figure 14.1 , has two interrelated activities connected to cognition and emotion. On the cognitive side, your feelings toward someone or something (such as a merger) are shaped by your beliefs about that person or event. Next, feelings directly influence behavioral intentions. Finally, behavioral intentions are better than feelings or beliefs at predicting a person’s behavior. Even so, behavioral intentions do not perfectly predict behavior because they represent only the motivation to act, whereas actual behavior is also caused by the other three factors in the MARS model—ability, role perceptions, and situational factors.
77. Organizational commitment refers to an employee’s emotional attachment to, identification with, and involvement in a particular organization. It is the employee’s pride and loyalty toward the organization.
78. Employees at many organizations are experiencing increasing levels of work-related stress. Stress is an adaptive response to a situation that is perceived as challenging or threatening to a person’s well-being. We often hear about stress as a negative experience. This is distress —physiological, psychological, and behavioral deviation from healthy functioning. However, some level of stress—called eustress —is also a necessary part of life because it activates and motivates people to achieve goals, change their environments, and succeed in life’s challenges.
Some degree of stress is good (eustress), but for the most part managers need to figure от how to minimize distress among their staff. Most stress management strategies can бе organized into the five categories summarized in Figure 14.6 : withdraw from the stressor,change stress perceptions, control stress consequences, receive social support, and remove the stressor.
79. The general adaptation syndrome describes the stress experience; but to manage work-related
stress, we must understand its causes. Stressors include any environmental conditions that place a physical or emotional demand on a person. As you might imagine, people face numerous stressors at work. There is three of the most prevalent stressors: harassment and incivility, workload, and lack of task control.
80.
81. Good leadership is critical for success as a manager because by leadership we mean the process of motivating, influencing, and directing others in the organization to work productively in pursuit of organization goals. Great managers are able to work through other people to achieve remarkable transformations in the performance of an organization.
82. Transactional and transformational leadership are two distinct managerial styles that either seek to maintain or change the organization. Transactional leadership is largely characterized by a desire to maintain the company's existing culture, policies, and procedures. It uses a reward-and-punishment based system to compel employees to perform certain behaviors. In contrast, the transformational leadership style seeks to provoke change in the way the company operates. Leaders who exhibit transformational leadership are often characterized as charismatic, inspiring, and motivating.
83. Managing and leading are not two different tasks that require different skills; they are the same thing. To be effective, whatever their position in the organization so is in asserting that too many managers have not grasped the basic truth that leading is a critical component of their job.84.
85. A controversial contributor to the trait approach to leadership is a perspective called emotional intelligence , which refers to the ability to monitor one’s own and others’ feelings and emotions, to discriminate among them, and to use this information to guide one’s thinking and actions.
86. The path-goal leadership theory was originally developed by Robert House. The Path-Goal Theory of Leadership was developed to describe the way that leaders encourage and support their followers in achieving the goals they have been set by making the path that they should take clear and easy. Like Fiedler’s theory, path–goal theory is a contingency theory. It states that the best leadership style depends on the situation. Path–goal theory is based on the assumption that leaders can change their style to match the situation
87. The leadership substitutes approach identifies contingencies that may be “substitutes” for a leadership style. A substitute is a situational variable (a contingency) that makes a leadership style unnecessary. The theory identifies several contingencies that substitute for task-oriented and people-oriented leadership styles.
88. Communication is the process by which information is exchanged and understood between people so the main elements of communication system are:
Transmit information about their goals, strategies, expectations, management philosophy,
and values.
Build commitment among subordinates to their programs and policies, convince allies in
their network to support them, persuade their bosses that they are performing well, and
influence stakeholders.
Achieve coordination between different units within an organization, such as R&D,
marketing, and production.
Help shape the image of themselves that they present to the world (something Larry
Summers did not do well).
89. FORMAL COMMUNICATION CHANNELS:
Downward communication occurs when information flows from higher to lower levels within an organization hierarchy.
Upward communication occurs when information flows from lower to higher levels
within an organization.
Horizontal communication occurs among employees and units that are at the same
hierarchical level in an organization.
INFORMAL COMMUNICATION CHANNELS
Personal communication networks can be a valuable source of information about what is going on in an organization and a conduit for the exchange of ideas.
The grapevine can spread unsanctioned information (rumor and gossip) rapidly through personal networks. Grapevines always exist in organizations, often becoming the dominant force for transmitting information about what is going on—particularly in highly uncertain situations when information has not been released through formal channels
90. The sources of noise that lead to miscommunication within organizations. There are perceptions, filtering, language, information overload, cultural differences, and gender differences.
91. Communication is often distorted by noise. Despite the best intentions of sender and receiver to communicate, several barriers can inhibit the effective exchange of information. Pervasive communication barriers that cause noise are perceptions, filtering, language, information overload, cultural differences, and gender differences. The amount of noise in a communication system increases if the communicator does not match the medium to the message.
92. It is time to look at what managers can do to improve communication and limit noise. Communication can be improved (and noise reduced) if managers match media to messages; take steps to reduce information overload; think about how best to get messages across; engage in active listening when decoding incoming messages; proactively use the grapevine to gather and disseminate information; engage in direct communication with employees; and design workspaces to facilitate communication.
93. In Organizational communication the communication flows through two main channels in an organization: formal channels and informal channels. Formal channels are systems of officially sanctioned channels within an organization that are used regularly to communicate information. Formal channels tend to follow the structure of an organization, with information transmitted up and down a management hierarchy and horizontally between subunits. Informal channels are unofficial channels that have not been formally established by managers. Informal channels typically do not follow the structure of an organization. Informal channels include communication that flows through the personal networks of employees (that is, gossip networks).