Unit 2 Effective Management - hkedcity.netedblog.hkedcity.net/.../1683/uploads/unit-2_effective-management.pdf · Unit 2 : Effective Management ... Waiter 1 Waitress 2 Waiter 3 Waitress

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Professional Development Programme on Enriching Knowledge of the Business, Accounting and Financial Studies (BAFS) Curriculum

Technology Education Section, Curriculum Development InstituteEducation Bureau, HKSARG

August 2008

Unit 2 : Effective Management

Course 2 : Contemporary Perspectives on Management

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Learning Objectives

On completion of this unit, you should be able to:• develop an understanding of the importance of skills

in managing an organisation;• identify the qualities of leaders and their effect on

groups and teams;• examine a variety of principles related to the

effective practice of management;• apply the effective management principles to real

practice; and• understand how this impacts upon management

decision-making.

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Unit OutlineCasa Restaurant

Who is a Manager?

Establish Organisational GoalsEstablish Subunit ObjectivesReview Group Members’ ProposalsAgree Objectives

What is Management?Efficiency

Division of WorkAuthority and ResponsibilityUnity of Command

Effectiveness

Create an Action PlanReview Performance

Management by Objectives

Five Managerial SkillsTechnical SkillHuman SkillConceptual SkillPolitical SkillDiagnostic Skill

Qualities of Leader

Unity of Direction

Principles of Management

Passion in workSelf-confidenceTrustworthiness and Honesty

Management Functions

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Casa Restaurant (1)

• Jack is the founder and owner of an Italian restaurant group, Casa. “Casa” means home in Italian. The group has twelve restaurants in Hong Kong, and its head restaurant is located in the heart of Central, Hong Kong.

• Casa’s chefs learn how to combine fresh ingredients to create authentic Italian dishes that customers will enjoy sharing with their family and friends.

• One of the organisational goals of Casa is to serve its customers with genuine Italian dishes in a relaxed environment that makes the customers feeling like staying at home.

Unit Outline

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Casa Restaurant (2)

• Moreover, Jack would also aim at developing Casa to be the leading Italian restaurant in Hong Kong.

• Jack works closely with his management team (Catherine, Daisy, Alfred, and Bill) for achieving the organisational goals.

• They are responsible for overseeing the operations of all the twelve restaurants.

• The management of Casa is divided into two levels, Group level and Restaurant level.

• Taking the head restaurant as an example, the organisation chart is shown in next slide.

Unit Outline

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Casa’s Organisation Chart

CashierSupervisor A Supervisor B

Waiter 1

Waitress 2

Waiter 3

Waitress 4

Waiter 5

AlanCaptainSous Chef

Commis X

Commis Y

Helpers

BillFinancial Controller

JackCEO

CatherineExecutive

Chef

DaisyMarketing Manager

AlfredF&B Director

JudyHR Manager

Cost Controller

HR OfficerProcurement Officer

Gro

up L

evel

Res

taur

ant

Leve

l

Unit Outline

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Who is a Manager? (1)

• An organisational member works with other people through coordinating and integrating the work activities to achieve the organisational goals.(Robbins, 2004)

• Typically, a manager should have the ability to act independently and make decisions about supervising or directing employees or other resources in order to achieve the organisationalgoals.

Unit Outline

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Example:

• Alan, the Captain in the head restaurant, is responsible for supervising the waiters and waitresses of the head restaurant, and ensuring customers are served quickly. He is also required to handle customer complaints within stated company policy.

• Alan can recommend staffing actions but has no direct authority to hire and fire employees.

• Is Alan a manager?

Unit Outline

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• Although there are elements of supervision and managing resources in the job, Alan has restricted authority in making decision on division of labouramong waiters and waitresses, and he has limited authority to make decisions and act independently, like hiring and firing staff.

• Alan does not appear to be a manager in this case.

Unit Outline

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Example:

• Daisy, the Marketing Manager, is responsible for overseeing all marketing activities of the restaurant.

• Daisy has to propose marketing plan to Jack. After approval, she coordinates and monitors all responsible parties to ensure the marketing activities are implemented as planned and the budget is spent wisely.

• Moreover, she may need to revise her plan whenever necessary.

• Is Daisy a manager?

Unit Outline

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• Daisy is responsible for the marketing budget. She has a great deal of discretion in running the marketing plan and directs resources provided under her approved budget

• She is also accountable for the success of her marketing plan.

• These attributes shape Daisy as a manager.

Unit Outline

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What is Management?

• Management involves the process of coordinatingand integrating work activitiesAND

• to ensure all activities are completed efficientlyand effectively with and through other people.(Dubrin, 2001)

Unit Outline

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Efficiency

• Efficiency: Managers have to get the most output from the least amount of inputs so that the production costs could be minimised.(Dubrin, 2001)

Unit Outline

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Effectiveness

• Effectiveness: Managers have to do the right things by completing the functions and activities so that the organisational goals are attained.(Dubrin, 2001)

Unit Outline

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Efficiency and Effectiveness (1)

Example: • Jack would like the Marketing Department to plan for

some activities to boost up the sales during the summer time but with a constraints – the expenditure must be below $100,000.

• After Daisy proposed two ideas, Jack asks her to estimate the expenditure and the return of each alternative.

• Daisy then searches for a lot of information, and makes the estimations.

Unit Outline

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15% increase$100,000Launch a lucky draw campaign to stimulate sales

B

20% increase$100,000Introduce membership system which encourages customer loyalty

A

SalesExpenditureAlternative

Example (cont.): In terms of efficiency and effectiveness, which of the following alternatives should be used?

Unit Outline

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Example (cont.): • Both alternatives A and B are effective, since they

achieve the objective of boosting up the sales. • However, with the same amount of expenditure

($100,000), alternative A attains higher efficiency, as it increases the sales by 20% which is higher than that of alternative B.

• Thus, alternative A should be adopted.

Unit Outline

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Management Functions Management Functions (1)(1)

• All managers must be able to perform four management activities: planning, organising, leading and controlling.

Unit Outline

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Management Functions Management Functions (2)(2)

Achieving the organisation’s

goals

Robbins & DeCenzo (2005) Fundamentals of Management, essential concepts and applications. Prentice Hall. 5th edition. p .9Unit Outline

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Five Managerial Skills (1)

• In order to perform the management functions satisfactorily, managers need certain skills to perform the complex activities and discharge various duties.

• Five important skills or competencies are identified: technical, human and conceptual, diagnostic and political skills. (Robbins, 2004; Dubrin, 2001)

Unit Outline

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Technical Skill

HumanSkill

ConceptualSkill

Political Skill

Diagnostic Skill

An Effective Manager

Five Managerial Skills (2)

Unit Outline

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Technical Skill (1)

• Includes understanding of and proficiency in a certain specific field involving the methods, processes, procedures or the skills that may be applied on, such as engineering or manufacturing.

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Example: • Bill, being the Financial Controller of Casa, must

be proficient in accounting procedures, rules and different types of forms so that he can lead and train his staff, and solve problems that his staff may encounter.

Technical Skill (2)

Unit Outline

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Human Skill

• The ability to work effectively with other people both on his/her own and in a group.

• Human skill is needed to attract the right employees and motivate them.

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• Mr. Chan was a former accounting manager of Casa, and is a qualified accountant who is proud of his expertise in accounting skills.

• Mr. Chan provided accurate and timely accounting reports but these reports were complex and difficult to understand to layman. He did not pay attention to simplify the reports and make them user friendly.

• Other managers could not understand these reports and felt that Mr. Chan did not provide helpful advice to them with his accounting expertise.

Do you know what’s wrong with Mr. Chan?

Challenging Corner 1

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• As an Accounting Manager, Mr. Chan should have worked with other various managers.

• He should have communicated with his colleagues to identify their needs and resolve their problems in comprehending the figures presented in his account reports.

• Instead of simplifying the account reports making them more user-friendly, he concentrated on his professional sophistication, he was seen to be lacking human skill in dealing with other managers’ requests.

Challenging Corner 1 (solution)

Unit Outline

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Conceptual Skill (1)

• According to Robbins (2004), managers must:- have the ability to think and see an abstract

situation;- understand abstract relationships, develop ideas,

and solve problems creatively;- view the organisation as a total entity; - recognise on how various subunits relate to or

affect other subunits; and- visualise how the organisation fits into the

industry, society or even the broader environment.

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Example: • Jack always encourages his staff to engage in

further studies which benefit their career development.

• He suggests and subsidises his waiters and waitresses to learn Putonghua, because he believes that more and more customers from Mainland China might visit his restaurants due to the implementation of individual visit scheme.

Conceptual Skill (2)

Unit Outline

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Political Skill (1)

• Managers require an ability to obtain power and also, to prevent others from taking it away.

• Political skill includes how to establish the right connections and give an impression to the right person.

• Managers with strong political abilities are more likely to have self-confidence and a sense of control over their professional destiny.

Unit Outline

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Example:

• Bill, the Financial Controller, has to monitor the budget and control the expenditures of the restaurant group.

• He is performing an advisory role not involving in frontline operations.

• To perform his tasks effectively, he needs to gain trust and establish the right channel of communication and connection with Jack, the CEO.

• Without Jack’s backing, he will not have the political power to monitor the performance of individual departments/restaurant and influence the actions of other managers.

Political Skill (2)

Unit Outline

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Diagnostic Skill (1)

• Managers require an ability to investigate problems, design a solution and implement the remedies.

• It often requires different skills such as technical, human, conceptual and political skills to resolve the problem they encounter.

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Example: • A new fully computerised system is installed in Casa.

The system is used for order-taking, automatic billing and inventory control.

• The vendor claimed that the system can reduce the operating cost by 5%.

• However, after 3 months of trial run, the results are disappointing. Operating cost is surprisingly increased by 3%.

• Diagnostic skill is required to investigate the problem, and suggest a solution.


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Example (cont): • In this case, the managers may need to

– talk to their staff to understand how they use the system;

– look into the detailed breakdowns of the operating cost in the past few months to identify any abnormal changes.


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Qualities of Leader

• Dubrin (2001) describes that trait theory lists the followings as the characteristics and traits of effective leaders:

– Passion in work

– Self-confidence

– Trustworthiness and honesty

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Passion in Work

• Leaders should invest the time and effort in their work and the passion they have for work.

• They will find the joys in accomplishing the work, achieving the target and leading the subordinates to work together.

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Self-confidence

• As a self-confident leader, he or she will project a powerful image that encourages his or her staff to have faith in him/her even when he or she faces any difficulties at work.

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Trustworthiness and Honesty

• Effective leaders should know they must build strong relationship with employees through trust building.

• This can create commitment between the leader and his/her team, which leads to an increase in productivity.

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Principles of Management (1)

• Henri Fayol (1917) developed a general theory of what managers do and what constitutes good management practice.

• His focus aimed at the activities of all managers and his attention was on the entire organisation.

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• Five principles of effective management are:

- division of work

- authority and responsibility

- unity of command

- unity of direction; and

- management by objectives (MBO)

Principles of Management (2)

Unit Outline

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Division of Work (1)

• The concept of specialisation

• Making each worker’s task specialised, and more output/work can be produced/achieved with the same effort through increased efficiency and quality or effectiveness.

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Example: • Waiters in Casa are assigned for different tasks. • Some waiters are responsible for taking orders;

some are helping to deliver dishes while some are managing reservations and table arrangement at the reception.


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• Specifically, division of work can result in the following advantages:

– Each person may be required to possess a few specialised skills, so it is easier to supply the skills required through staff selection or training purposes.

– Repetition or practice of the same job develops proficiency.

– Efficiency use of skills by primarily utilising each worker’s best skills.


Unit Outline

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Authority and Responsibility (1)

• Authority is defined as the rights inherent in a managerial position to issue commands and expect the employees to be obeyed. Authority is synonymous with legitimate power and thus, authority is actually a subset of power. (Robbins & Coulter, 2004)

• Responsibility is defined as an obligation to perform assigned activities. (Robbins & Coulter, 2004)

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Example: • An accounting manager has the authority to

assign the task to his/her subordinates to work for him, such as requests an accounts clerk to handle the payments on account receivable.

• The clerk has the responsibility in checking the payments carefully and he/she also has the delegated authority to get the money back from the debtors.

Authority and Responsibility (2)

Unit Outline

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Unity of Command (1)

• Unity of command states that every individual has only one designated boss.

• Each worker should report to no more than one boss.

• Otherwise, it will cause workers’ confusion and conflicts among the bosses.

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Example

• There are totally 5 waiters and waitresses working under two separate teams.

• Supervisor A asks his team’s subordinate, waiter 1, to clean up the table. While waiter 1 is tidying up the table, supervisor B asks him to take the order from another table.

• Waiter 1 may feel confused, as he does not know what to do with these two supervisors’ commands – should he keep cleaning up the table or go to take the customer order?

• Moreover, conflict among supervisors A and B may arise.

Unity of Command (2)

Unit Outline

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Unity of Direction (1)

• It states that a person engaged in the same kind of activities must have the same objectives or goals in a plan in order to ensure unity and coordination in the enterprise.

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Example:

• Daisy, Marketing Manager in Casa, sets an objective of increasing the sales volume by 10% within 3 months. Then, she plans for a series of activities such as discount offerings and advertising.

• Her subordinates have to follow Daisy instructions and requirements to carry out the details of the plan to accomplish the objective.

Unity of Direction (2)

Unit Outline

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Challenging Corner 2Challenging Corner 2

If you were a captain at Casa restaurant, which of the above management principles do you think you would have difficulties in applying at work?

Why?

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Challenging Corner 2Challenging Corner 2

Answers may vary.For example, although responsibilities of each waiter/waitress are clearly stated, it is difficult to sustain such specific division of work especially during peak hours.A waiter assigned for managing table reservations may need to take orders from customers, while other waiters/waitresses are busy with their works.In most cases, it requires every waiter to deal with different kinds of tasks within a restaurant. Thus, every waiter has to be trained in multi-tasking at work.

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Management by objectives (MBO) (1)

• MBO is a systematic and organised approach that allows the management to focus on achievable goals and to accomplish the best possible outcomes from available resources. (Robbins, 2004; Dubrin, 2001)

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Step 1: Establish organisational goalsStep 1: Establish organisational goals

Step 2: Establish subunit objectivesStep 2: Establish subunit objectives

Step 3: Review group members’ proposalsStep 3: Review group members’ proposals

Step 4: Agree objectives between supervisor and subordinates


Step 5: Create an action plan to achieve the objectives


Step 6: Review performanceStep 6: Review performance

Restart the process

Management by objectives (MBO) (2)

Unit Outline

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• Managers of the top begin with setting organisational goals. The goals most often are strategic.

Step 1: Establish organisational goals (1)

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Example: • Jack sets an organisational goal of improving the

satisfactory level of the customers of the Casarestaurant.

Step 1: Establish organisational goals (2)

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• Various unit heads then establish the objectives for their particular units.

• People at each level become more aware of the organisational objectives.

Step 2: Establish subunit objectives (1)

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Example:

• Following the organisational goal, the Marketing Manager decides to work more closely with the Executive Chef and the F&B Director in order to provide an attractive and comfortable environment to customers.

• The F&B Director may propose to change the layout and setting of the restaurant to fit a particular Italian style.

• The Executive Chef may introduce new menu to promote a new series of Italian dishes.

Step 2: Establish subunit objectives (2)

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Guidelines on setting effective goals and objectives

An objective must be:1. concise and specific with a single key result;2. measurable;3. attainable and achievable;4. convergent to the goals of the organisation; and5. stated specifically.

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Step 3:Review group members’ proposals (1)

• Each member in his/her own department is required to make proposals about how he/she will contribute to his/her own department’s or unit’s objectives.

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Example:

• Captains may propose to carry out a questionnaire survey to collect customers’feedback on the restaurant’s dining environment in the aspect of customer services, comfortabilityand decorations, food quality etc.

• The results can be used by the F&B Director and the Executive Chef to improve their services and food quality.

Step 3:Review group members’ proposals (2)

Unit Outline

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Step 4: Agree objectives between supervisor and subordinates (1)

• Achieving self formulated objectives can improve motivation and thus, job performance.

• It should be stressed that the subordinates should genuinely be involved in setting his or her objectives as opposed to simply agreeing with the objectives the boss has set.

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Example: • After reviewing customers’ feedback,

redecoration may come up as a key area requiring most consideration, since some Casarestaurants have not been furnished for the last 5 years.

Step 4: Agree objectives between supervisor and subordinates (2)

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Step 5: Create an action plan to achieve the objectives (1)

• Individuals are allowed to pursue their objectives essentially in their own manner according to the action plan agreed and defined by both parties.

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Example:

• The Marketing Manager and F&B Director need to plan how to redecorate, such as re-designing the image of the restaurant projected to the customers, changing the furniture, or even changing in the interior design.

• They will need to design a plan setting out the resources requirements and timeline to accomplish their objectives.

Step 5: Create an action plan to achieve the objectives (2)

Unit Outline

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Step 6: Review performance (1)

• The performance review is conducted at a planned and agreed schedule such as once quarterly or semi-annually or annually.

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Step 6: Review performance (2)

For example

• The Marketing Manager and F&B Director will execute the redecoration plan and their performance is evaluated on how well they execute the plan against the actual result i.e. improvement in customers’ satisfaction level.

Unit Outline

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Challenging Corner 3

A pizza chain company receives a series of complaints on the unsatisfactory dining environment – the hygiene conditions, such as the smell from washroom and the tidiness and cleanness of the tables. The managers then hold a meeting to discuss about these complaints.

Use MBO as guidelines to apply to this situation.

Unit Outline

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Challenging Corner 3 (solution) (1)

Step 1: Establish organisational goals

Regarding the complaint letters, identify the most serious problems that cause the complaints, such as the smell from washroom, tidiness and cleanness of the tables, etc. Establish a set of goals that focus on improving the identified problems within a certain period, say 2 months.

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Step 2: Establish subunit objectives

Each subunit has to establish the objectives to achieve the overall goal – to improve the hygiene conditions at the chain store.

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Step 3: Review group members’ proposals

One of the branch managers brings this issue to discuss with his/her subordinates. The manager holds a meeting and collects opinions on how to achieve the goal.

A supervisor proposes that the frequency of cleaning the tables and washroom should be increased. However, due to lack of manpower, he suggests the branch should employ an extra cleaner to work with this issue.

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This proposal is agreed by the branch manager and the subordinates.


A cleaner is employed to deal with the cleaning issues. She is required to clean the toilets once an hour and helps the other amahs to tidy up the tables.

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Step 6: Review performance

After 2 months, no more complaint letters are received, and thus the top management concludes that the hygiene condition of the chain restaurants is improved, and the goal of resolving customers’complaints is achieved.

Unit Outline

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Summary

Now, you have come to the end of the unit. You should be able to:– understand the five major management skills

required by the managers; and

– identify and apply the principles of effective management.

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References

• Dubrin, Andrew J. (2005), Essentials of Management, 7th edition, Thomson. South-Western, chapter 1, 5, 9-11

• Gerard M Blair (1997), The Difference Between Management And Leadership, available at http://www.see.ed.ac.uk/~gerard/MENG/ME96/Documents/Intro/leader.html

• Henri Fayol (1917) Principles of Management in Robbins, Stephen, P. Mary Coulter (2004), Fundamentals of Management, 7th edition, Prentice Hall

• Robbins, Stephen, P. Mary Coulter (2004), Fundamentals of Management, 7th edition, Prentice Hall

• Rue, Leslie W (2004), Management: Skills and application, 11th edition, Irwin

• Torrington, Derek (2004), Effective management: people and organisation, Prentice Hall, chapter 1-3

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Further Readings (1)

• Analoui, F., Labbaf, H & Noorbakhsh, F. (2000), Identification of clusters of managerial skills for increased effectiveness: the case of the steel industry in Iran, International Journal of Training and Development, 4 (3), 217–234.

• Anderson, J.C., Manus R., Schroeder, R, (1994), A Theory of Quality Management Underlying the Deming Management Method, The Academy of Management Review, 19(3), Special Issue: "Total Quality", pp. 472-509

• Behn, R.D.(1992), Management and the Neutrino: The Search for Meaningful Metaphors, Public Administration Review, 52(5), 409-419

• Breeze, J. D. & Miner, F. C., Jr. (1980), Henri Fayol: A new definition of “administration”, Academy of Management Proceedings, 110-113.

• Creighton, A., Arendall, C. S., & Pray, B. B. (1995, fall), Biblical managers and the functions of management: Do Today’s Management Principles Apply? Journal of Biblical Integration in Business, 13-20.

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• Holder, M. and Rollins, G. (2004), Helping Students Integrate Faith Practice with Business Practice: A Case Study in Nehemiah

• Jae Wook Yoo, David J. Lemak, Youngjun Choi, (2006), Principles of management and competitive strategies: using Fayol to implement Porter, Journal of Management History, 12(4),352 - 368

• Kennedy, M. H. (1999). Fayol’s principles and the rule of St. Benedict: Is there anything new under the sun? Journal of Management History, 5(5), 299.

• Pavett, Cynthia M. and Alan W. Lau, (1983), Managerial Work: The Influence of Hierarchical Level and Functional Specialty, The Academy of Management Journal, 26, (1), 170-177

• Reshef, Y.(2005), Henri Fayol (1841-1925) General and Industrial Management. Available on URL: http://www.bus.ualberta.ca/yreshef/orga417/Fayol.htm

• 管理學原理, 中文大學出版社 (1997)

• 饒美蛟 (2002), 企業管理學導論, 商務印書局．

Further Readings (2)

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End of the Unit End of the Unit

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Please go to the Unit Assessment before attempting

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