Session 1
Management and Team Development
1The organization of work
1.1Organisation
The term ‘organisation’ can be used in two ways.
-It can refer to a group or institution arranged for efficient work. To organize implies that there is an arrangement of parts or elements that produces more than a random collection.
-Organisation can also refer to a process. i.e. structuring and arranging the activities of the enterprise or institution to achieve the stated objectives. The very word organization implies that there is order or structure.
1.2What makes an organization?
Organisations:
-Are made up of PEOPLE
-Exist to achieve give PURPOSES or objectives
-Have some form of STRUCTURE that defines and regulates the behaviour of the members.
An organization is a ‘social arrangement for controlled performance of collective goals’.
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1.3The need for organizations
There are many reasons why organizations exist:
-They satisfy social needs. People join organizations because they consider that they will be more secure, more successful, have more needs and wants satisfied and be better off.
-Organisations exist primarily because they are more efficient at fulfilling needs than individuals. The main reason for this is the ability to employ the techniques of specilisation and the division of labour.
Specialisation occurs when organizations or individual workers concentrate on a limited type of activity. This allows them to build up a greater level of skill and knowledge than they would if they attempted to be good at everything.
Division of labour is where each worker specializes in only one small aspect of the total process. This benefits the employer in three ways:
-The simple tasks encourage the use of highly specific equipment
-Semi-skilled labour can be employed rather than highly skilled operatives
-Workers are only responsible for one process and so are able to develop a high level of expertise and increase their output per period.
Organizations can achieve results which individuals cannot achieve by themselves. Organisations:
ØOvercome people’s individual limitations
ØEnable people to specialize
ØSave time
ØAccumulate and share knowledge
ØPool the expertise
ØEnable synergy: by bringing together two individuals their combined output will exceed their output if they continued working separately
In brief, organizations enable people to be more productive.
1.4Classifications of organizations
Classification highlight similarities and differences among organizations. It can be based on:
-Size e.g. number of employees, volume of sales, profits earned
-Profit motive e.g. commercial or charitable
-Legal form e.g. sole trader, partnership and limited company
-Control e.g. directors, trustees, shareholders
-Ownership e.g. public (government owned) or private
Question 1
Required
a)Briefly explain what is meant by the term organization . (7 marks)
b)Give the main reasons why organization exist. (8 marks)
(15 marks)
Answer Plan
1.5Organisation and Structure
Organisation structure is the specific pattern of relationship that managers create. It is a framework in which organizational activities are divided, organized and co-ordinated.
There are four building blocks of organization work are:
-Division of labour
-Departmentalisation: the grouping of tasks and employees into a department
-Hierarchy: the linking of departments with specification of reporting lines
-Co-ordination: the mechanism for integrating departmental activities into a coherent whole for effectiveness and efficiency.
Henry Mintzberg
He suggested that organizational structures of building blocks and co-ordinating mechanisms which make up the detailed configuration of the organization. His five building blocks are shown in the diagram below.
The importance and relative size of these blocks will very across organizations:
-The operating core represents the basic productive work of the organization. E.g. shop-floor staff in a manufacturing organization. They are directly involved in the process of obtaining inputs, and converting them into outputs.
-The strategic apex refers to the higher levels of management who ensures the organization follows its mission. They manage the organization’s relationship with the environment.
-The middle line is the intermediate levels of management. They convert the desires of the strategic apex into the work done by the operating core.
-The technostructure refers to staff who provide a technical input without being directly engaged in core activities. This category might include the following:
ØAnalysers determine the best way of doing a job
ØPlanners determine outputs (TQM)
ØPersonnel analysts standardize skills and training
ØAccountants provide management reports for budget control
-The support staff provide services ancillary to the core operations of the organization. e.g. public relations, legal counsel. They do not plan or standardize production.
1.6The organization hierarchy
The chain of command is the organizations formal management hierarchy i.e. the chain of superiors from the lowest to the highest rank. Formal communication runs up and down the lines of authority.
The span of control refers to the numbers of subordinates reporting directly to a superior official. Organsations with a narrow span of control are able to exercise greater control from the top with little delegation.
The span of control is influenced by:
-Manager’s capabilities: physical and mental
-Nature of manager’s workload
-Geographical dispersion: from HQ to local operation
-Subordinate’s work: how routine/similar is the work
-Nature of problems: how critical and the resources and expertise required to solve the problem
-Interaction between subordinates
-Close group cohesion/teamwork
-Help received from other parts of the organization
A tall organization is one which, in relation to its size, has a large number of levels of hierarchy. This implies a narrow span of control.
A flat organization is one which, in relation to its size, has a small number of hierarchical levels. This implies a wide span of control.
Organisation charts are diagrammatic illustrations of the formal relationships and communication flow between positions within an organization. Their purpose is to show:
-directions of responsibility: the chart indicates the direct relationship between a group and its immediate superior and subordinates
-relationships: charts can show the relationship between the various units and the place of line, functional and staff units.
1.7Structures – functional, divisional and matrix
Functional structure
This involves setting up of departments for people who do similar jobs. This is a fairly common form of structure.
Advantages:
ØExpertise is pooled thanks to the division of work into specialist areas
ØIt avoids duplication and ensure economies of scale
ØIt makes easier the recruitment, training, and motivationof professional specialists
ØIt suits centralized businesses
Disadvantages:
ØIt is organization by internal work, rather than by customer or product. The customer is only interested in the product, and functional structure may not be the best at satisfying the customer.
ØCommunication problems may arise between different functions, who each have their own jargon.
ØPoor co-ordination, if rooted in a tall organization structure.
Divisional structure
Divisionalisation is the division of a business into autonomous regions or product businesses, each with its own revenues, expenditures and capital asset purchase programmes, and therefore each with its own profit and loss responsibility.
Advantages:
ØFocuses the attention of management below ‘top level’ on business performance
ØIt reduces the likelihood of unprofitable products and activities being continued
ØKnowledge. The manager of the unit knows better than anyone else how he is doing, and needs no one to tell him. Senior managers need only set broad targets for achievement.
ØMore authority to junior mangers.
ØReduces the number of levels of management. The top executives in each division should be able to report directly to the chief executive of the holding company.
Disadvantages:
ØIt is not always practical. Sometimes it is impossible to identify completely independent products or markets for which separate divisions can be set up.
ØLimit exists on how much independence in the division of work can be arranged.
ØResource problems. Many divisions get their resources form head office which chooses between other divisions. If it were an independent company, the division might find it easier to raise money.
Matrix Structure
This is where an organization has its activities structured on a combination of functional, product or project basis
Advantages:
Disadvantages:
1.8Centralisation and Decentralisation
The structure as shown above give an indication of hierarchy of management, but no evidence as to how much authority is delegated at each level of management.
In a centralized organization, decisions are taken by a single center of command (perhaps a head office) and relayed to local units. There is little or no scope for local managers to take decisions; their role is mainly to carry out the decisions taken by head office.
In a decentralized organization, local managers are given authority to take decisions affecting their own areas of control. Head office takes decisions only on broad strategic issues affecting the organization as a whole. In practice, no organization is fully centralised or fully decentralized. There is a range of possibilities in between the two extremes.
Advantanges of centralization:
-Senior management are able to exercise control
-Senior management are more likely to consider the interests of the organization as a whole whereas subordinates may take their own limited view
-Senior management may be more experienced or skillful
-Maximise use of expensive management skills by allowing them to take the important decisions and avoid duplication of effort
Disadvantages of centralization:
-Organisation becomes very dependent on top management and does not cultivate skills of lower managers
-Senior management become too involved with day-to-day matters to plan the longer term future of the organization
-De-motivation for lower level managers
-May tend to build empires of influence and authority
-Contributes to staff motivation, enabling lower level management to take on roles of responsibility and use their own initiative.
Question 2
All organizations need a structure within which to operate. This structure is often illustrated through the existence of the organization chart.
Required
a) Define what an organization chart demonstrates (5 marks)
b) Briefly describe four ways in which an organization might be structured (10 marks)
(15 marks)
Answer Plan
2The role of management
2.1Classical approaches
These include:
ØScientific management – Taylor
ØAdministrative theory – Fayol
ØThe bureaucratic model – Weber, Stewart
The main focus of the classical approach is that there exists a single, best approach to management, and research was aimed at identifying this.
Frederick Taylor
Invented scientific management – the main purpose was to maximize efficiency. Taylor suggested that by offering workers more money for being efficient, both the workers and the employers would benefit.
His four principles of scientific management are:
ØA science of work to replace old methods – the best way of doing a job
ØScientific selection and development of the worker
ØEnsure work being done is in accordance with the principles of scientific management
ØEqual division of work and responsibility between workers and management
Henri Fayol
Henri Fayol was concerned with the efficiency of administrative processes through system co-ordination and endeavoured to establish certain principles of good management.
Activities that occur in business organizations could be divided into six main groups:
§Technical – production, manufacturing
§Commercial – buying, selling, exchange
§Financial – obtaining and using capital
§Security – protection of people and property
§Accounting – stock taking, costing, statistics and the balance sheet
§Managerial – planning, organizing, commanding, co-ordinating and controlling
Fayol concluded that it is the role of management to ensure all six activities work smoothly to achieve the goals of the enterprise. He believed that the same principles of management could be applied, regardless of size, to organizations of all kinds, whether industrial, commercial, governmental, political, or even religious.
Fayol applied fourteen rules of managerial conduct. These are:
1)Division of work – to improve practice and familiarity and become specialised
2)Authority – the right to give orders, linked with responsibility
3)Discipline – respect in accord with the agreement between the firm and its employees
4)Unity of command – each subordinate answerable to only one superior
5)Unity of direction – only a single head and plan fro a set of activities
6)Subordination to the general interest – the general good prevails over individual or sectional interests
7)Remuneration – should be fair to both the recipient and the firm
8)Centralisation – inevitable in organizations, but the degree should be appropriate
9)Scalar chain – graduated lines of authority should exist from the top to the bottom of the organisation
10)Order – workers and materials should be in their prescribed place
11)Equity – combining clemency with justice
12)Tenure of personnel – adequate time for setting into jobs should be allowed
13)Initiative – should be encouraged within the boundaries of authority and discipline
14)Esprit de corps – harmony and teamwork should be encouraged in the organization
Fayol believed that a manager obtained the best performance from his workforce by leadership qualities, by his knowledge of the business and his workers, and by his ability to instill a sense of mission.
Max Weber
Analysed the role of the leader in an organization and how and why individuals respond to various forms of authority.
§Authority – “getting things done through orders being accepted as justified or legitimate”.
§Power – “ getting things done by exercising force or by threatening sanctions.”
Weber claims that a bureaucratic organization is technically the most efficient form of organization possible because:
§It is free from personal whim and tradition, being a depersonalized institution
§Each official has a role circumscribed by a written definition of his authority and fits into a fairly rigid, well-defined hierarchy, with each successive level embracing all those beneath it.
§Every possible contingency is covered by ponderous rules and procedures, and all information is written down and filed.
§Appointments are based on technical ability, technical expertise, and professional management.
Rosemary Stewart
Summarised the four main features of bureaucracy as:
§Specialisation – applies to the job rather than the person undertaking the job. This allows for continuity, because the job may continue after the jobholder leaves.
§Hierarchy of authority – shows the sharp distinction between management and workers. Within the management ranks there are clearly defined levels of authority.
§System of rules – to provide for an efficient and impersonal operation. In a bureaucracy, knowledge of the rules is a requisite part of holding a job.
§Impersonality – provides for the allocation of privileges and the exercise of authority in accordance, with the laid-down system of rules, rather than arbitrarily.
2.2Human relations approach
Elton Mayo
He identified the basis of work satisfaction as non-economic and to connect it more with the interest taken in the worker’s performance than with the financial reward. He laid the foundation for the work of many later management thinkers.
His view was that the workers performance is dependent by work satisfaction, the development of personal friendships, the social atmosphere, and attitudes to work, to supervision and to working in groups.
2.3Contributions made by modern writers on management
Peter Drucker
He believes that management is the job of organizing resources to achieve the satisfactory performance of an enterprise. He defines his view of management under three broad headings:
§To fulfil the specific purpose and mission of the organization
§To make work productive and the worker achieving
§To manage social impacts and social responsibility
Drucker identified five basic operations in the work of a manager.
§Set objectives: determining what they should be and what the goals in each area should be. They decide what has to be done to reach these objectives and make them effective by communicating them to the people who are going to perform them.
§Orginise: analyzing the activities, decisions and relations needed. They classify the work, divide it into manageable activities and further divide the activities into manageable jobs. They group the units and jobs, and select people for the management of the units and for the jobs to be done.
§Motivate and communicate: making a team out of the people that are responsible for various jobs.
§Establish yardsticks: by making measurements available which are focused on the performance of the whole organization and which, at the same time, focus on the work of the individual and help them to do it. Managers analyse, appraise and interpret performance.
§Develop people including themselves.
Ouchi
In Theory Z there is an emphasis on the interpersonal skills that form the basis of group working, where decision-making is by consensus, but responsibility remains with the individual. There is an emphasis on building trust through informal and democratic relationships. But the formal hierarchy remains intact.
The characteristics of the Theory Z organization are:
§Long-term employment: not necessarily lifetime, but longer that the average in American and European companies
§Slow evaluation and promotion
§Moderately specialized careers which may not change
§Consensual decision-making
§Individual responsibility: this could mean giving greater responsibility lower down the line
§Implicit informal control: but with very explicit measures
§Concern for the employee
Rosabeth Kanter
Identified that the world outside the business has changed. Competition has increased, economic circumstances have altered and technology has made the former ways of doing things look outdated, unprofitable and hard to justify.
A logical progression is that traditional, bureaucratic organizations stultify individual talents and the ability of organizations to deal with the changes. Modern corporations are releasing and ‘empowering’ the talents of their employees in flatter, less hierarchical structures.
The new model corporation has fewer management levels, is able to do ‘more with less’, to anticipate change and to avail itself of opportunities such as strategic alliances with other companies
Kanter’s “post-entrepreneurial” model corporation is a three-part mix:
§The values and goals which emanate from top management
§The channels, programmes and relationships designed in the middle to support those goals and values
§The project ideas pushing up from below: ideas for new ventures or technological innovations
2.4Comparing the classical and modern views
Classical view
The main conclusions of the approach were:
§A set of rules or conditions would satisfy organizational needs
§These rules should concentrate on the company and its work requirements
§The worker was regarded as a tool to get work done to company standards, and was often referred to as ‘economic man’.
§Individuals were not influenced by the actions, thoughts and interactions of others
§Individuals are rational and therefore motivated almost entirely by the economic rewards of their actions.
The principles expounded by these writers have given a framework for organization design, and many of the rules still retain their values in today’s business environment.
The main features of their approach were as follows
§Belief in one central controlling authority
§Clear division between line and staff functions
§Use of optimum spans of control
§Responsibility and authority clearly specified
§Use of delegation
§Specialization of tasks
§Unity of direction and command
§Fair pay and good working conditions, decided by management decentralization to be implemented where needed
§Authority derived from the position held in the formal organization
Modern view
The modern approach emphases that psychosocial system and the human aspects of administration. This view put the human element back into the organization, an aspect that the classical theorists had minimized. The list of management tasks could be extended to incorporate leading, motivation, creating, communicating and staffing.
Contingency theory takes the view that what a manager does in practice will depend on the particular circumstances or situation. It rejects the belief, that there is a universally correct approach to management.
Question 3
In the second half of the twentieth century, the classical approach to management has, in some industries and many organizations, been replaced by the human relations approach. Other parts of society, and other organizations, have not adopted the human relations approach, or have even reverted to the earlier concepts.
Required
a)Compare and contrast classical and human relations approaches to management.
(9 marks)
b)Give reasons why some organizations may use one or the other approach in present-day conditions. (6 marks)
(15 marks)
Answer Plan
APPROACH TO EXAMINING THE SYLLABUS
The examination is a three-hour written paper in two sections, A and B.
Section A:
consists of a brief scenario with one compulsory question worth 40 marks, comprising a range of 6-7 requirements each carrying between 5-10 marks. Candidates should apply relevant theoretical knowledge from the main areas of the syllabus to the information
contained within the scenario to achieve the highest marks.
Section B:
Consists of five essay-type questions assessing knowledge acquired from all five main areas of the syllabus. Each question carries 15 marks and candidates must attempt four
questions, giving a possible total of 60 marks for that section.
Candidates should be aware that although questions in Section B may have several parts, answers should be presented in essay form. Candidates need to show a conceptual understanding of each topic area, and not simply list points. Candidates should also be aware that although the course may be taught as a number of discrete
topics, individual examination questions may combine or integrate
more than one area. The Study Guide provides more detailed
guidance on the syllabus.
Number of marks
Section A: 1 compulsory scenario-based question 40
Section B: Choice of 4 from 5 questions (15 marks each) 60
100