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2 Management Roles, Functions, and Skills
Chapter 7

3 Copyright © 2015 Pearson Education, Inc.
Learning ObjectivesExplain the importance of management and identify the three vital management rolesDescribe the planning function and outline the strategic planning processDescribe the organizing function and differentiate among top, middle, and first-line managementCopyright © 2015 Pearson Education, Inc.

4 Learning Objectives (cont.)
Describe the leading function, leadership style, and organizational cultureDescribe the controlling function and explain the four steps in the control cycleIdentify and explain four important types of managerial skillsCopyright © 2015 Pearson Education, Inc.

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5 Copyright © 2015 Pearson Education, Inc.
ManagementManagementThe process of planning, organizing, leading, and controlling to meet organizational goalsManagement, the interrelated tasks of planning, organizing, leading, and controlling in pursuit of organizational goals, is no easy job. According to one survey, more than one-third of the people who take on new managerial positions fail within the first 18 months.Copyright © 2015 Pearson Education, Inc.

6 The Roles of Management
Managerial RolesBehavioral patterns and activities involved in carrying out the functions of management; includes interpersonal, informational, and decision making rolesAlthough managers don’t usually do the hands-on work in an organization, they create the environment and provide the resources that give employees opportunities to excel in their work. All the managerial roles that leaders must play can be grouped into three main categories: interpersonal, informational, and decisional.Copyright © 2015 Pearson Education, Inc.

7 The Roles of Management (cont.)
Interpersonal RolesProviding leadership to employees, acting as a liaison between groups, networking and fostering relationshipsInformational RolesGathering information from inside and outside the organization, sharing informationDecisional RolesFacing an endless stream of decisions, some which need to be made on the spotCopyright © 2015 Pearson Education, Inc.

8 Copyright © 2015 Pearson Education, Inc.
The Planning FunctionPlanningEstablishing objectives and goals for an organization and determining the best ways to accomplish themManagers engage in planning when they develop strategies, establish goals and objectives for the organization, and translate those strategies and goals into action plans.Copyright © 2015 Pearson Education, Inc.

9 The Planning Function (cont.)
Strategic plansPlans that establish the actions and the resource allocation required to accomplish strategic goalsUsually defined for periods of two to five years and developed by top managersStrategic plans outline the firm’s long-range (often two to five years) organizational goals and set a course of action the firm will pursue to reach its goals. The strategic planning process consists of six interrelated steps: defining the organization’s mission, vision, and values; performing a SWOT analysis; developing forecasts; analyzing the competition; establishing goals and objectives; and developing action plans (see Exhibit 7.2)Copyright © 2015 Pearson Education, Inc.

10 Copyright © 2015 Pearson Education, Inc.
The Strategic Planning ProcessExhibit 7.2Specific firms have their own variations of the strategic planning process, but these six steps offer a good general model. The circular arrangement is no coincidence, by the way. Strategic planning should be a never-ending process, as you establish strategies, measure outcomes, monitor changes in the business environment, and make adjustments as needed.Copyright © 2015 Pearson Education, Inc.

11 Defining the Mission, Vision, and Values
Mission statementA brief statement of why an organization exists; in other words, what the organization aims to accomplish for customers, investors, and other stakeholdersA mission statement is a brief expression of why the company exists. The mission statement clearly defines the scope of the company’s activities and its priorities in serving its target customers. Just as important, it eliminates activities the company could pursue, such as consumer products, but chooses not to.Copyright © 2015 Pearson Education, Inc.

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12 Defining the Mission, Vision, and Values (cont.)
Vision statementA brief and inspirational expression of what a company aspires to beValues statementA brief articulation of the principles that guide a company’s decisions and behaviorsA vision statement is a brief expression of what the company aspires to be. It provides some focus without getting into the specifics of a mission statement. It also inspires employees with a clear sense of purpose.A values statement identifies the principles that guide the company’s decisions and behaviors and establish expectations for everyone in the organization.Mission, vision, and values statements are sometimes dismissed as vague “happy talk” that companies spend a lot of time creating but never look at again, and this criticism is sometimes deserved. However, if the statements are (1) crafted with the purpose of truly defining what the company stands for and (2) used in both strategic planning and the ongoing evaluation of the company’s performance, they become essential parts of the company’s “DNA.”Copyright © 2015 Pearson Education, Inc.

13 Copyright © 2015 Pearson Education, Inc.
SWOT AnalysisExhibit 7.3Before establishing long-term goals, a company needs to have a clear assessment of its strengths and weaknesses relative to the opportunities and threats it faces. This analysis is commonly referred to as SWOT (pronounced “swat”), which stands for strengths, weaknesses, opportunities, and threats.Strengths are positive internal factors that contribute to a company’s successWeaknesses are negative internal factors that inhibit the company’s successOpportunities are positive situations that represent the possibility of generating new revenueThreats are negative forces that could inhibit a firm’s ability to achieve its objectives,Copyright © 2015 Pearson Education, Inc.

14 Copyright © 2015 Pearson Education, Inc.
Developing ForecastsQuantitative Forecaststypically based on historical data or tests and often involve complex statistical computationsQualitative Forecastsbased on intuitive judgmentsManagerial forecasts fall under two broad categories: quantitative forecasts, which are typically based on historical data or tests and often involve complex statistical computations, and qualitative forecasts, which are based more on intuitive judgments. Neither method is foolproof, but both are valuable tools and are often used together to help managers fill in the unknown variables that inevitably crop up in the planning process.As important as forecasting is, it represents a vexing paradox because, to a significant degree, the future is simply not predictable. Technology, fashion, and other influential forces often move forward in lurches and leaps that are difficult to predict. Extraordinary events—such as wars, economic meltdowns, or natural disasters can play havoc with the best forecasts.Copyright © 2015 Pearson Education, Inc.

15 Establishing Goals and Objectives
A broad, long-range target or aimObjectiveA specific, short-range target or aimAlthough the terms are often used interchangeably, it helps to think of a goal as a broad, long-range accomplishment that the organization wants to attain and to think of an objective as a specific, short-range target designed to help reach that goal.Copyright © 2015 Pearson Education, Inc.

16 Establishing Goals and Objectives (cont.)
SpecificMeasurableAttainableRelevantTime limitedBusinesspeople are often advised to make their goals and objectives “SMART,” as in specific, measurable, attainable, relevant, and time limited. For example, “substantiallyincrease our sales” is a poorly worded statement because it doesn’t define what substantially means or when it should be measured. This acronym can be a helpful reminder to set meaningful goals, but as with the paradox of forecasting, it’s important to use good judgment and be flexible, too.8 For example, you may not know whether a goal is really attainable until you try to reach it, or you might reach it easily and realize you set your sights too low. For more on the benefits and risks of goal setting, see page 226.Copyright © 2015 Pearson Education, Inc.

17 The Organizing Function
The process of arranging resources to carry out the organization’s plansManagement PyramidAn organizational structure divided into top, middle, and first-line managementOrganizing, the process of arranging resources to carry out an organization’s plans, is the second major function of managers. To organize effectively, managers must think through all the activities that employees perform, as well as all the facilities and equipment employees need in order to complete those activities. Managers also give people the ability to work toward company goals by determining who will have the authority to make decisions, toperform or supervise activities, and to distribute resources.For now, it’s sufficient to recognize the three levels of management in a typical corporate hierarchy—top, middle, bottom—commonly known as the management pyramid (see Exhibit 7.4).Copyright © 2015 Pearson Education, Inc.

18 The Management Pyramid
Exhibit 7.4Here are some of the typical jobs at the three basic levels of management.Copyright © 2015 Pearson Education, Inc.

19 The Management Pyramid (cont.)
Top ManagersThose at the highest level of the organization’s management hierarchyResponsible for setting strategic goals, and they have the most power and responsibility in the organizationTop managers are the upper-level managers who have the most power and who take overall responsibility for an organization. This tier includes corporate officers (see page 105) usually the next layer or two of management beneath them, depending on the size and structure of the company. The term executive applies to top managers. Typical job titles include the “C” level positions, such as chief marketing officer (CMO) and chief financial officer (CFO), and vice presidents (the largest corporations may have dozens of vice presidents overseeing various divisions or functions).Top managers establish the structure for the organization as a whole, and they select the people who fill the upper-level positions. Top managers also make long-range plans, establish major policies, and often represent the company to the media, the community, and other stakeholders.Copyright © 2015 Pearson Education, Inc.

20 The Management Pyramid (cont.)
Middle ManagersThose in the middle of the management hierarchythey develop plans to implement the goals of top managers and coordinate the work of first-line managersMiddle managers have similar responsibilities but on a smaller scale, such as for an individual division or facility. The term middle management is somewhat vague, but in general, managers at this level report upward to top executives, while first-line managers report to them. In other words, they usually manage other managers, not workers.The term “middle management” is sometimes used disparagingly, giving the impression that middle managers are “bureaucrats” who clog up the works without adding much value. Some highly regarded opinion leaders have gone so far as to blame such managers for much that ails the modern corporation.Copyright © 2015 Pearson Education, Inc.

21 The Management Pyramid (cont.)
First-line ManagersThose at the lowest level of the management hierarchyThey supervise the operating employees and implement the plans set at the higher management levelsAt the bottom of the management pyramid are first-line managers (or supervisory managers). They oversee the work of non-managerial employees, and they put into action the plans developed at higher levels. Titles at this level include supervisor, department head, and office manager. The types of employees these managers supervise vary widely, from entry-level workers with limited experience and education to advanced experts in engineering, science, finance, and other professional specialties.Copyright © 2015 Pearson Education, Inc.

22 Copyright © 2015 Pearson Education, Inc.
The Leading FunctionLeadingThe process of guiding and motivating people to work toward organizational goalsLeading is the process of influencing and motivating people to work willingly and effectively toward common goals. Managers with good leadership skills have greater success in influencing the attitudes and actions of others and motivating employees to put forth their best performance.All managers have to be effective leaders to be successful, but management and leadership are not the same thing. One way to distinguish between the two is to view management as the rational, intellectual, and practical side of guiding an organization and to view leadership as the inspirational, visionary, and emotional side. Both management and leadership involve the use of power, but management involves position power (so called because it stems from the individual’s position in the organization), whereas leadership involves personal power (which stems from a person’s own unique attributes, such as expertise or charisma).Copyright © 2015 Pearson Education, Inc.

23 The Leading Function (cont.)
Cognitive Intelligenceinvolves reasoning, problem solving, memorization, and other rational skillsEmotional Intelligencemeasure of a person’s awareness of and ability to manage his or her own emotionsCognitive intelligence involves reasoning, problem solving, memorization, and other rational skills. Obviously, leaders need a sufficient degree of cognitive intelligence to understand and process the information required for planning and decision making in their jobs.Emotional intelligence is a measure of a person’s awareness of and ability to manage his or her own emotions. People with high emotional intelligence recognize their own emotional states and the effect those emotions have on others, they are able to regulate their emotional responses in order to control or reduce disruptive impulses and moods, and they have a high degree of empathy (the ability to understand others’ feelings).Copyright © 2015 Pearson Education, Inc.

24 The Leading Function (cont.)
Social intelligenceinvolves looking outward to understand the dynamics of social situations and the emotions of other people, in addition to your ownSocial intelligence involves looking outward to understand the dynamics of social situations and the emotions of other people, in addition to your own. Socially adept managers have a knack for finding and building common ground with people of all kinds. Moreover, leaders, in a sense, “infect” their organizations with their own emotions, positive or negative.Copyright © 2015 Pearson Education, Inc.

25 Copyright © 2015 Pearson Education, Inc.
Leadership StylesExhibit 7.5Leadership styles fall on a continuum from autocratic (manager makes the decisions) to democratic (manager and subordinates make decisions together) to laissez-faire (subordinates make decisions on their own). Each style has strengths and weaknesses, and effective managers often adapt their style to suit specific situations.Copyright © 2015 Pearson Education, Inc.

26 Leadership Styles (cont.)
Autocratic leadersLeaders who do not involve others in decision making.Democratic leadersLeaders who delegate authority and involve employees in decision making.Autocratic leaders control the decision-making process in their organizations, often restricting the decision-making freedom of subordinates. Autocratic leadership generally has a bad reputation, and when it’s overused or used inappropriately, it can certainly produce bad results or stunt an organization’s growth. However, companies can find themselves in situations where autocratic leadership is needed to guide the firm through challenging situations or to bring uncooperative units in line.Democratic leaders, in contrast, delegate authority and involve employees in decision making. Also known as collaborative leaders, these managers invite and seek out input from anyone in the organization who can add insight to the decision-making process.Copyright © 2015 Pearson Education, Inc.

27 Leadership Styles (cont.)
Laissez-faire leadersLeaders who leave most decisions up to employees, particularly those concerning day-to-day matters.Laissez-faire leaders take the role of supporters and consultants, encouraging employees’ ideas and offering insights or opinions when asked.Copyright © 2015 Pearson Education, Inc.

28 Leadership Styles (cont.)
Participative ManagementA philosophy of allowing employees to take part in planning and decision makingEmployee EmpowermentGranting decision-making and problem-solving authorities to employees so they can act without getting approval from managementCopyright © 2015 Pearson Education, Inc.

29 Coaching and Mentoring
Helping employees reach their highest potential by meeting with them, discussing problems that hinder their ability to work effectively, and offering suggestions and encouragement to overcome these problemsLeaders have an important responsibility for education and encouragement, which may take the form of coaching and mentoring. Coaching involves taking the time to meet with employees, discussing any problems that may hinder their ability to work effectively, and offering suggestions and encouragement to help them find their own solutions to work related challenges. (Note that the term executive coaching usually refers to hiring an outside management expert to help senior managers.)Copyright © 2015 Pearson Education, Inc.

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30 Coaching and Mentoring (cont.)
A process in which experienced managers guide less-experienced colleagues in the nuances of office politics, serving as a role model for appropriate business behavior, and helping to negotiate the corporate structureMentoring is similar to coaching but is based on long-term relationships between senior and junior members of an organization. The mentor is usually an experienced manager or employee who can help guide other managers and employees through the corporate maze. Mentors have a deep knowledge of the business and can explain office politics, serve as role models for appropriate business behavior, and provide valuable advice about how to succeed within the organization. Mentoring programs are used in a variety of ways, such as helping newly promoted managers make the transition to leadership roles and helping women and minorities prepare for advancement.Copyright © 2015 Pearson Education, Inc.

31 Copyright © 2015 Pearson Education, Inc.
Managing ChangeIdentify everything that needs to changeIdentify the forces acting for and against a changeChoose the approach best suited to the situationReinforce changed behavior and monitor continued progressChange presents a major leadership challenge for one simple reason: Many people don’t like it, or at least they don’t like being told they need to change. They may fear the unknown, may be unwilling to give up current habits or benefits, may not trust the motives of the people advocating change, or may simply have experienced too many change initiatives that didn’t yield the promised results. To improve the chances of success when the organization needs to change, managers can follow these four steps.Copyright © 2015 Pearson Education, Inc.

32 Building a Positive Organizational Culture
A set of shared values and norms that support the management system and that guide management and employee behaviorStrong leadership is a key element in establishing a productive organizational culture (sometimes known as corporate culture)—the set of underlying values, norms, and practices shared by members of an organization (see Exhibit 7.6). Culture can be a negative or a positive force in an organization, and managers set the tone by establishing expectations, defining rules and policies that shape behavior, and acting as role models.Copyright © 2015 Pearson Education, Inc.

33 Copyright © 2015 Pearson Education, Inc.
Creating the Ideal Culture in Your CompanyExhibit 7.6You can’t create a culture directly, but you can establish the behaviors and values that in turn do create a culture. Use this list of questions to explore the many ways you can foster a positive culture—and avoid the growth of a negative culture.Copyright © 2015 Pearson Education, Inc.

34 Copyright © 2015 Pearson Education, Inc.
Creating the Ideal Culture in Your Company (cont.)Exhibit 7.6Copyright © 2015 Pearson Education, Inc.

35 The Controlling Function
The process of measuring progress against goals and objectives and correcting deviations if results are not as expectedControlling is the management function of keeping a company’s activities on track toward previously established goals. The nature of control varies widely, from directly intervening in a process to modifying policies or systems in a way that enables employees to reach their objectives.Copyright © 2015 Pearson Education, Inc.

36 Establishing Performance Standards
Criteria against which performance is measuredBenchmarkingCollecting and comparing process and performance data from other companiesIn the first step of the control cycle, managers set standards, the criteria against which performance will be measured. Top managers set standards for the organization as a whole, such as revenue and profitability targets. Then for their individual areas of responsibility, middle and first-line managers set standards based on the overall organizational standards of performance.A common approach to setting standards is benchmarking, comparing a company’s key performance attributes with those of industry leaders. For example, a company might discover that its average revenue per employee (total sales divided by the number of employees) is significantly lower than that of the best company in its industry. With this data point in hand, the company could look for ways to make its selling process more efficient, train sales people to go after bigger deals, or find other ways to improve the cost–revenue ratio.Copyright © 2015 Pearson Education, Inc.

37 Essential Management Skills
Interpersonal SkillsSkills required to understand other people and to interact effectively with themTechnical SkillsThe ability and knowledge to perform the mechanics of a particular jobCopyright © 2015 Pearson Education, Inc.

38 Essential Management Skills
Administrative SkillsTechnical skills in information gathering, data analysis, planning, organizing, and other aspects of managerial workConceptual SkillsThe ability to understand the relationship of parts to the wholeThe various skills required to communicate with other people, work effectively with them, motivate them, and lead them are interpersonal skills. Because managers mainly get things done through people at all levels of the organization, such skills are essential. Encouraging employees to work together toward common goals, interacting with employees and other managers, negotiating with partners and suppliers, developing employee trust and loyalty, and fostering innovation are all activities that require interpersonal skills.Copyright © 2015 Pearson Education, Inc.

39 Essential Management Skills (cont.)
Decision-Making SkillsThe ability to identify a decision situation, analyze the problem, weigh the alternatives, choose an alternative, implement it, and to evaluate the resultsHow to Make Wise Decisions:Recognize and define the problem or opportunityIdentify and develop optionsAnalyze the optionsSelect the best optionImplement the decisionMonitor the results THE END!Decision-making skills involve the ability to define problems and opportunities and select the best course of action. To ensure thoughtful decision making, managers can follow a formal process such as the six steps highlighted in Exhibit 7.9:Recognize and define the problem or opportunityIdentify and develop optionsAnalyze the optionsSelect the best optionImplement the decisionMonitor the resultsCopyright © 2015 Pearson Education, Inc.

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