Management Principles

IIBM Institute of business Management Semester – 1 Principle and Practice of management Answer Sheet Section ‘A’ – Part One: 1. A plan is a trap laid to capture the FUTURE. 2. STAFFING is the function of employing suitable person for the enterprise. 3. DEPARTMENTATION means “ group of activities & employees into department”. 4. ACCEPTANCE THEORY states that authority is the power that is accepted by others. 5. DECENTRALIZATION means dispersal of decision-making power to the lower level of the organization. 6.

MASTER CHART is the basic document of the organizational structure. 7. Communication which flow from the superior to subordinates with the help of scalar chain is known as DOWNWARD COMMUNICATION . 8. Needs for belongingness, friendship, love, affection, attention & social acceptance are SOCIAL NEEDS. 9. A management function which ensure “jobs to be filled with the right people, with the right knowledge, skills & attitude is STAFFING DEFINED. 10. COUNSELING is a process that enables a person to sort out issues and reach to a decision affecting their life. Part Two: 1). The difference between management & administration are that:-

Administration is the function in industry concerned with the determination of the corporate policy, the co-ordination of finance, production and distribution whereas Management is the function concerned with the execution of policy within the limits setup by administration. Thus, administration is formulation of policies and is a determinative function while management is execution of policies and is an executive function. Administration involves the overall setting of major objectives determination of  policies, identifying of general purposes laying down broad programmes etc. hile management is the active direction of human efforts with a view to getting this done. 2). The common drawbacks of the classical and the neo classical theories of management are listed below:- i) Both the theories had certain unrealistic assumptions and hence were not applicable to the organisation at a later date. ii) Both the theories had limited application, the formats and structures of organisations are not universal in both the theories. There is no particular structure which may serve the purpose of all the organisations.

They also overlook some of the environmental constraints which managers cannot ignore and this lapse makes the practicability of the theory limited. iii) Lack of Unified Approach: The theories lack the unified approach of an organisation. 3). Line Organisation is the oldest form of an organisation. This is known by different means, i. e. , military, vertical, scalar and departmental. All other types of organisation structure have mostly been modifications of the line organisation. The concept of the line organisation holds that in any organisation derived from a scalar process, there must be a single head who commands it.

Although an executive can delegate authority, he has ultimate responsibility for results. According to some writer “Line structure consists of the direct vertical relationship which connect the positions and tasks of each level with those above and below it, and some others say “organisationally, the line is the chain of command that extends from the board of directors through the various delegations and re-delegations of authority and responsibility to the point where the primary activities of the enterprise are performed. 4).

Acceptance theory is a theory which states that authority is the power that is accepted by others. Formal authority is reduced to nominal authority if it is not accepted by the subordinates. The subordinates accept the authority if the advantages to be derived by its acceptance exceed the disadvantages resulting from its refusal. The subordinates give obedience to the mangers because they visualise the following advantages- i) Receipt of financial incentives. ii) Contribution in attaining the objectives of the enterprise. iii) Fulfilment of responsibilities. v) Appreciation from colleagues. v) Setting of an example for others. vi) Responsibility to leadership of superior. vii) Moral obligation because of regard for old age, experience, competence, etc. According to acceptance theory, authority flows from bottom to top. A manager has authority if he gets obedience from the subordinates. Subordinates obey the managers because of the fear of losing financial rewards. This theory emphasises sanctions that a manager can use and overlooks the influence of social institutions like trade unions. Section ‘B’- Case let – 1

Q1) Critically analyse Mr. Vincent’s reasoning. Ans: Mr. Vincent was a good and successful manager but he followed the traditional type of management skills, and that is why he was not unsuccessful. But when he was taught of many other ways of managements he started to think that he should only know it for the test because he was confident thinking that whatever he knows is enough as he was successful, but he was wrong because with other skills applications he could have not only been successful but could also grow his organisation and take it to the top of his competitors.

He could make an increase in the profit of his organisation and save the wastes as much as possible. Being an manager he should have always been innovative in his ideas of management but he was going the other way, even though his professor was teaching him new thought he was busy thinking that he will stick to his old way of planning, organising and controlling approach to manage his store. Q2) If you were the professor and you knew what was going through Vincent’s mind, what would you say to Vincent?

Ans: If I was the professor and knew what was going through Vincent’s mind then I would have explained him the concept again but this time the other way giving him his own example and then make him feel the lacking part of his successful management career making him feel that his thought were also correct put old enough and needed to be updated according to the needs of the environment today.

I would have told him that with modernization he should become innovative too and that not only planning, organising and controlling are steps of successful management but it could also be thought of as quantitative models, system theory and analysis, and even something called contingency relationship, so that he could implement many other theories and methods in his process of managing his job, so that he should not only be successful but Also that his organisation should grow and give good competition to the other organisations around him and so that he could make good and proper use of his available resources.

Case Let – 2 Q1). Diagnose the problem and enumerate the reason for the failure of D’Cuhna? Ans: D’Cuhna was a good professional executive but being good and equal sometimes might go against one’s self only.

The problem with D’Cuhna was that he was going to quickly in his work and not giving others time to catch up, everyone knew that he was selected because of his experience, background and abilities but he should also understand that he was the part of an organisation which was new and not even fully trained for the work so how could they work at his speed and expectations, the problem with D’Cuhna was that he being an old executive should know that in an organisation there human beings and that they are emotional in nature so he should not treat everyone i. . male and female staffs in the same manner, he had no right to scold someone on account of others pending work, because it was his duty to see that if someone is on sick leave he should replace that position temporarily, but D’Cuhna did not do so and went on to scold the female staff. When he was cross answered by the female staff for the first time then only he should have understood her emotional nature and talked to the higher authority for suggestions. Q2). What could D’Cuhna have done to avoid the situation in which he found himself?

Ans: If at the very beginning only D’Cuhna had looked into the matter as why the female clerk was submitting nil returns and after knowing it if he would have filled the vacant officer’s place with a temporary staff then the matter would not have been raised higher, later when the lady clerk was cross answering him then instead of firing her and scolding her if D’Cuhna had gone and spoken to the higher authorities regarding the matter then planned and taken any step to solve the problem and then taken any strict action then also D’Cuhna could have found himself out of this trouble.

Even after all this had happened if D’Cuhna had apologised to the lady staff and then explained her politely then also some chances were there for him to get out of this trouble which he had created for himself, as ladies are very emotional in nature and like politeness. But after all what had been done and finally the only option for him to get out of all this was to quit as he did. Section ‘C’ – Q1) What is training? Explain the different method of training?

Ans : Training is the act of increasing the knowledge and skills of an employee for doing a particular job, traditionally training had focused on technical and mechanical skills. Training has to focus also on interpersonal and social skills, on listening, on control over body language, on communication and presentation skills, etc. The different method of training is as follows:- i) Case Method: This method can be said to be midway between “learn by doing” and “learn by listening. In this method the trainees get a descriptive record in the form of a case. The participants, have chance to see themselves as one or another person in the case ii) Incident Process: Unlike the case method the incident is also a brief statement of an event or a situation. Additional data is event or a situation. Additional data is made available in response to specific questions from the participants. iii) Lecture Method: This is a very popular method. The lecture is actively involved while the participants are largely passive. v) Business games: In business games, the participants may form into groups of three or four, each groups would be given data about plant capacities, material costs, availability of materials, cost of carrying inventories, etc. and based on the fact provided to the participants they have to make decisions simulating situations which arise in business organisation form time to time. v) Role Playing: In this method different participants are given details and fact of a character about its past and are told to act like it. Q2) Explain Decision–Making Process of an organization?

Ans: Decision-making: Management process involves decision making at all levels. Decision-making describes the process by which a course of action is selected as the way to deal with a specific problem. If there is only one alternative, the question of decision making does not arise. The quality of alternatives which a manger selects determines the organization’s performance, and the future of the organization. The decision making process of an organization are listed below:- * Setting objectives: Rational decision-making involves a concrete goal of objectives.

So the first step in decision-making is to know one’s objectives. * Perception of the problem: Perception involves defining and recognising the problem in a clear-cut manner. * Analysing the problem: After defining the problem, the next step in decision-making is analysing it. The problem should be thoroughly analysed to find out adequate background information and data relating to the situation. * Developing alternative solutions: After analysing a problem, with the help of relevant information, the decision-maker should formulate several alternative solutions for the problem. Screening the alternatives: After developing various alternatives, the next stepshould be to judge and evaluate them through some decision criteria. * Selecting the best solution: After evaluation of various alternatives, the nextstep is the selection of the best solution. * Implementing the decision: After taking the final decision the next problem isto put decision into effect. * Feedback and Control: The last step in the process of a right decision is to follow up the decision.

Question 1) Explain the term ‘corporate (or organizational) culture’, and discuss its importance to the operational success, or failure, or organisations.

Corporate culture, also known as organisational culture is ‘the system of shared values and beliefs that develops within an organisation and guides the behaviour of its members’ (Schermerhorn,et al, pg 45, 2004). Robbins, et al, pg 70, 2003, explain that culture is a perception, and people perceive culture to be what they see hear or experience within the organisation. This is one reason that corporate culture is so important, as it just becomes part of daily routine or ‘the way we do things here’ (Schermerhorn,et al, pg 45, 2004). Therefore if these common practices are good practices there is a strong chance the organisation will be more successful.

The culture of an organisation is very important and can for a large part determine the success of organisations. As culture is a perception, it is concerned with how its members perceive the organisation and not whether they like it, (Robbins, et al, pg 70, 2003). If its members like the culture, the organisation is more likely to succeed. Organisations that have a good culture often perform at high levels, which also corresponds with staff morale. Robbins et al, pg 73, 2003 refer to a case study involving Virgin Blue, who have a different recruiting policy and job roles than other airlines in Australia. Virgin Blue want their staff to show their outgoing personality and interact with their customers during flights. Virgin Blue staff say morale is high and management gets on well with the workforce. The perception of Virgin Blue is that it is a little different to the other airlines in Australia, and that it is a fun outgoing organisation to be a part of, which is a perception Virgin Blue appears to promote and are proud of.

Question 2) Examine and summerize the cultural shifts that occurred on the ANZ over this period and the benefits they brought to various stakeholders.

The ANZ like most banks in the late 1990’s had a poor public image. Banks were criticised for bank fees, branch closures and scandals, as a result morale for bank employees was also poor.

ANZ conducted a staff survey, which confirmed morale was low and staff satisfaction was below 50%. The survey results were quite clear that staff did not feel valued in their workplace, and employees were asked to nominate words they felt best describes the ANZ bank. Words rating at the top of the list were cost reduction, profit and shareholder value.

The ANZ initiated a program, ‘the breakout program’ which was designed to shift the culture, as the bank wanted to create a new public image or perception that distinguished them from other banks. Executives of the ANZ realized a shift if employees mind set was needed to regain the trust of their staff and assist with this intended culture change. This was done with various workshops and subsidising computers for its staff, which in particular was very well received by its staff.

As well as increasing staff morale by subsidising computers, staff were given the opportunity to use skills they had acquired by assisting and educating customers with money matters. This was something staff were very passionate about, and by giving them the opportunity to complete such duties may have been a factor to increased morale.

ANZ claim a complete transformation in organisational culture, believing their culture has changed for ever. Judging by further surveys conducted since the change in culture, staff morale is high, and this also coincides with customer satisfaction.

Question 3) Evaluate the leadership style/s that would have been used by McFarlane and other senior executives in ANZ to implement this cultural shift in the ANZ and describe other leadership styles that may not have been beneficial in doing so.

It is quite likely that more than one leadership style or a combination of styles was used by ANZ to initiate its change in organisational culture.

One particular style that may have been used is the path-goal theory. ‘A leadership theory that says it is the leaders job to assist their followers in attaining their goals and to provide the direction or support needed to ensure that their goals are compatible with the overall objectives of the groups or organisation’ (Robbins, et al, pg 577, 2006).

At the ANZ bank staff morale was low and its public image poor, and to change that McFarlane used the path-goal leadership style to attempt to increase morale, which would also lead to enhancing its public image. The path-goal theory discusses input from staff, this was done by taking information from the staff survey, and gaining an understanding of what is important to staff. Change was then implemented so staff could start working in an environment which they feel much more comfortable, more likely to succeed and have higher job and customer satisfaction. The staff were given direction (path) and could see the rewards or goals, the leader helps facilitate this transition.

Mcfarlane changed his leadership style, to give staff more involvement by conducting staff surveys, then implementing change due to results of the survey, this is further evidence to using path-goal theory. As the path goal leadership style assumes that leaders are flexible and can change their behaviours (Robbins, et al, pg 587, 2006). This is contrast to another leadership style, Fielders contingency model, which suggests that leaders could not change their behavior. If using this theory it would been very difficult for ANZ to change its culture as the leader would be unwilling to change their own behaviour in order to facilitate the required changes to result in the change in culture.

Question 4) Discuss the challenges faced by McFarlane and his executive team in introducing change across ANZ.

For change to occur, someone must take responsibility for managing the change process, the person who does this, who is also usually a manager, is known as a change agent (Robbins and Coulter, pg 360, 2007). At ANZ their CEO McFarlane is the change agent, and he may have encountered significant resistance change.

There are numerous reasons why people within organisations resist change. Kreitner & Kiniki pg 546 – 547, 2008 explain that individual and group behaviour following organizational change can take many forms, from extreme ranges of acceptance to active resistance. This resistance to change is an emotional /behavioural response to real or imagined threats to an established work routine. One particular reason discussed by Kreitner & Kiniki, 2008 is an individuals predisposition to change, which is highly personal and deeply ingrained. With so many employees at the ANZ there is a strong chance that there would have been quite a lot of people who just resist change for personal reasons.

Another reason for resistance to change is due to a climate of mistrust (Kreitner & Kiniki pg 547, 2008). This may have been the biggest resistance to change within the ANZ. Prior to the change employee morale was low, employees perceptions of ANZ were that they did not care about their staff and were more concerned with profits, cost reduction etc. ANZ were aware of their employees feelings, the lack of trust and realized the importance of having employees trust. Therefore when ANZ were initiating change staff may have found it difficult to adjust and believe that the change was going to be a change for the good.

Question 5) Discuss whether or not the executive management instigated changes to the culture of the ANZ are ethical.

Ethical behaviour is described as ‘behaviour that conforms to generally accepted social norms’ (Davidson & Griffen, pg 106, 2003). The workplace info case study mentions that most banks in the late 1990’s had a poor public image due to bank fees, branch closures etc. Although it is common practice amongst banks to operate under the conditions, .it is not considered acceptable behavior by the wider community, namely its customers.

The ANZ bank wanted to be different to the other banks, it wanted its culture to be a point of difference from the others. It could be said that the ANZ felt it had a responsibility to change peoples perceptions of itself and banks in general. Davidson & Griffen, pg 117, 2003 explain that ‘ethics relate to individuals. Organisations themselves do not have ethics, but organisations do relate to their environment in ways that often involve ethical dilemmas and decisions. Social responsibility is the set of obligations an organisation has to protect and enhance the society in which it functions’. The society for the ANZ bank is the banking community, general community (customers) and its staff.

The ANZ bank felt it had responsibilities to their customers, by providing a higher level of customer service in order to enhance its public image, but it had a responsibility to its staff, as they are the people who are to implement the changes. The ANZ may have avoided an ethical issue when it decided that its staff could choose where it could spend time volunteering. ANZ originally controlled where staff would go to volunteer, but this was quickly changed, possibly as a result to ethical dilemmas that may have arose.

While there may have been some resistance by staff to change, it did occur and its staff and customer satisfaction have increased, without any major ethical dilemmas arising.

Question 6) Determine the organisational structure that would best facilitate the implementation of these new practices.

Organisational structure is the formal arrangement of jobs within an organisation. When managers develop change or structure, they’re engaged in organisational design, which involves 6 key elements (Robbins and Coulter, pg 266, 2007). Therefore to develop an organisational structure the manager must consider the elements of organisational design.

One of these elements that would have been used by ANZ would have been p of control, which would then also lead to either having a tall or flat organisation structure. Span of control is determining how many people will report to each supervisor or manager (Davidson & Griffen, pg 357, 2003). The decision about p of control determines the overall structure of the organistaion, which will be either a flat or tall organization (Davidson & Griffen, pg 358, 2003).

The ANZ may have shifted from a tall organizational structure to a flat structure. Davidson & Griffen, pg 106, 2003 explain that many experts agree that business run more effectively with fewer layers of organisations, which depicts a flat organisational structure. Flat organisations often lead to increased staff morale, productivity as well as increased managerial responsibility (Davidson & Griffen, pg 358, 2003). ANZ structure may look like a tall organization due to the large number of employees, braches and therefore managers for each branch, however a change occurred which would have resulted in less layers, which increased communication from employees to management which assisted in the culture change at ANZ.

Question 7) Explain the importance of informal groups in achieving the managerial objective of cultural change.

Groups are defined as ‘two or more interacting and interdependent individuals who come together to achieve specific goals’ (Robbins and Coulter, pg 424, 2007). For example, an ANZ branch might have a customer service team, who get together regularly to discuss new ways to increase customer satisfaction. The members in this group are from same ‘team’, and perhaps if not for working within close proximity of each other would not socialise, they are organised formal groups.

Contrast to this is informal groups, which Davidson and Griffen, pg 645, 2003, descibe as ‘A group created by its members for purposes that may or may not be relevant to the organisation’s goals’. Informal groups may form while standing around in the morning making coffee, some informal groups are formed by an interpersonal attraction (Davidson and Griffen, pg 646, 2003).

Whatever the reason informal groups are formed, they will be important in assisting in the shift for cultural change. When informal groups are formed, they are likely to become cohesive groups, Davidson and Griffen, pg 653, 2003, explain cohesiveness as ‘the extent to which members are loyal and committed to a group; the degree of mutual attractiveness in the group’. Therefore if informal groups within an organisation are open to change it is more likely that the organisation will be able to achieve its objectives, and it this case that is assist with a cultural change.

The ANZ bank appears to have undergone a successful cultural transformation, with a focus of staff morale, which increased customer satisfaction. This change has been so well received by staff it now embedded in its staff, and will become the norm for all future staff, regardless of their personality or who is managing them.