3.2 Mangers, leadership and decision making Flashcards
Role of Managers
Setting objectives
Analyse & review performance
Leading
Making decisions
Levels of management - SENIOR MANAGEMENT
E.g. Board of Directors
Set corporate objectives & strategic direction
Levels of management - MIDDLE MANAGEMENT
Accountable to senior management
Run business functions and departments
Levels of management - JUNIOR MANAGEMENT
Supervisory role, accountable to middle management
Monitor & control day-to-day tasks, and manage teams of workers
Leadership styles - AUTOCRATIC
Authoritarian leadership
Assumes info and decision making are best kept at top management of organisation
Characterised by:
- 1 one way communication
- minimal delegation or decentralisation
- close supervision of employees
Advantages of autocratic
Quick decision-making especially in stress-filled situations –> relieves pressure amongst employees
Disadvantages of autocratic
Discourages group input –> decreased motivation
Hurts morale and leads to resentment –> dissatisfaction
Ignores creative solutions and expertise from subordinates
Leader can feel overwhelmed
Leadership styles - DEMOCRATIC
Decisions agreed by majority
Characterised by:
-Collaboration –> employees share ideas & opinions
-employee engagement
- increased creativity
Advantages of democratic
Greater innovation –> creativity/ideas
Group member commitment –> job satisfaction
High labour productivity, increased motivation
Disadvantages of democratic
Poor decisions by unskilled employees
Slow decision making
Leadership styles - LAISSEZ-FAIRE
‘Let it be’
Characterised by:
- Hands-off approach
- Decisions are left to employees
Advantages of laissez faire
Encourages personal growth –> facilitates employee growth and development –> increased motivation
Encourages innovation –> greater employee freedom so creativity
Faster decision-making –> no micromanagement, employees have autonomy to go forward with decisions w/o approval
Disadvantages of Laissez-faire
Organisation lacks sense of direction
Leaders don’t take accountability –> avoid responsibility
Leaders have poor involvement within the group –> lack of cohesiveness
Stages of Tannenbaum Schmidt Continuum
Four Main Styles of Leadership:
1) Tell - leader identifies problems, makes decisions & announces it to subordinates –> expects implementation
2) Sells - leader identifies problems, still makes decision but attempts to overcome resistance through discussion & persuasion
3) Consults - leader identifies problem, presents to subordinates, listens to advice & suggestions before making a decision
4) Joins - leader defines the problem, but subordinates find solutions and decisions within limits of defined superior
Tannenbaum Schmidt Continuum - LEFT & RIGHT SIDES EXPLAINED
Left = Manager centred leadership, autocratic, degree of authority
Right = Subordinate centred leadership, democratic, area of freedom
Advantages of Tannenbaum Schmidt Continuum
Gives multiple ways with how to involve and interact with your team, allowing you to become more democratic
Provides an incremental way to increase or reduce your team’s involvement in decision making.
Disadvantages of Tannenbaum Schmidt Continuum
No ‘correct’ way of managing groups –> ambiguity for the user of the model
Only examines the process of giving a task to your team, not what happens next- DOESNT show full picture
Blake Mouton Grid
Top Left - Country Club
Bottom Left - Impoverished
Top Right - Team
Bottom Right - Produce/Perish
Middle - Middle of Road
Blake Mouton Grid - Axis
Y axis - People
X axis - Task
Blake Mouton Grid - explained
Country Club - high people & low task, concerned about needs and feelings of others, work environment is likely to be relaxed but work may suffer due to lack of control
Impoverished - low people & low task, ineffective leader, work and people are both neglected
Team - high people & high task, employees are motivated and needs are met
Produce/Perish - high task & low people, v authoritarian, tasks are always done matter the implications for employees
Middle - some focus on task and people, average performance
Advantages of Blake Mouton Grid
Used by managers to increase productivity
Helps leaders understand their natural leadership style –> and allows the necessary changes to be made if needed
Disadvantages of Blake Mouton Grid
The model is overly simplistic
Too focussed on the leader –> doesn’t pay attention to other factors e.g. development level of your team, the businesses culture etc.
Value of decision making
(risk, rewards, uncertainty, opportunity costs)
Risks - the potential that a decision will lead to a loss or an undesirable outcome
Rewards - potential profits from a decision, better recruitment, low costs, opening new markets etc.
Uncertainty - decision making without all the information about the potential risks.
Opportunity costs - represents the benefits that could have been gained by taking a different decision.
Other types of decisions
Programmed - familiar routine decisions
Non-programmed - less structured –> require unique solutions
Tactical - short term, fewer resources involved, easier to reverse, junior management
Strategic - long term, large commitment of resources, difficult to reverse, senior management
Decision Making - HUNCH & INTUITION
Managers rely on their instincts / gut feeling
Advantages of hunch & intuition
Speedy –> decisions are instant, rather than waiting for the results of scientific data analysis
Based on personal experience: data isn’t always reliable –> manager may feel more comfortable with the gut feeling
Disadvantages of hunch & intuition
Can be unsuitable for important decisions
May be too hasty, more susceptible to making the wrong decision
Decision making - SCIENTIFIC
Based on quantitative data, uses a logical & rational approach
Linked to decision trees
Decision trees
Estimates and probabilities to calculate likely outcomes
NET GAIN = EXPECTED VALUE - INITIAL COST
How to calculate decision trees
1) Multiply probability by result (ending bit) on both high and low sales
2) Add the answers of both these together to find the expected value
3) Subtract this answer (expected value) from initial cost to find the net gain
4) DO THE SAME FOR OPTION 2
5) Compare both net gains and see which one is higher to find the better option
Decision trees - What if both options’ net gains are negative?
‘Do nothing’
Advantages of decision trees
More logical way, less rushed –> based on evidence
Potential options & choices are considered at the same time
Use of probabilities enables the “risk” of the options to be addressed
Easy to understand & tangible results
Disadvantages of decision trees
Probabilities are just estimates – always prone to error
Uses quantitative data only – ignores qualitative data
Influences on decision making - MISSION & OBJECTIVES
Mission - sets out broad goal/aim
Objectives - quantifiable and time-related targets
Influences on decision making - ETHICS
Provides moral guidelines
Info spreads quickly –> potentially damages sales?
Businesses should consider ethical dimension as they should have genuine desire to operate ethically, while others wish to avoid any adverse publicity
Influences on decision making - RISKS
If manager is taking a high risk (non-programmable) they may consider scientific decision making
Whereas low risk (programmable) may be done through intuition/hunch
influences on decision making - EXTERNAL ENVIRONMENT + COMPETITION
Consists of:
- competition
- consumer incomes
- interest rates
- demographic factors
- environmental issues
Influences on decision making - RESOURCE CONSTRAINTS
Managers need necessary resources to be available e.g. info, time raw materials & labour
However most managers don’t have all these resources available all the time –> so they have to satisfice ( make best possible decision with resources that are available)
Stakeholders
A stakeholder is anyone that is interested and affected by the business
Internal - shareholders & owners, managers, employees
External - customers, suppliers, local community, pressure groups & government
Stakeholders v Shareholders
Stakeholders - interest in the business but don’t own it
Shareholders - own the business, benefit directly from the business (dividends), expect a return on investment
Stakeholder Needs
INTERNAL
Shareholders and owners: return on investment, profits & dividends, success + growth, proper running of the business
Managers/Employees: good salary, job security & satisfaction, promotion opportunities, motivation etc.
EXTERNAL
Customers: good quality and range of products at reasonable prices, good customer service
Suppliers: receive payments on time, regular orders
Local community: looking for employment
Pressure groups: compliance with local laws & regulations e.g. noise, pollution)
Government: create more jobs to raise more money from taxes, compliance with business legislation
Stakeholder Mapping - POWER & INTEREST
High power, high interest - Key players, take notice of them and engage directly with them
High power, low interest - keep them satisfied
Low power, high interest - communicate regularly with them
Lower power, low interest - communicate only when necessary
Overlap & conflict of stakeholder needs - EXPAND PRODUCTION
Employees - more jobs available, promotion, higher pay?
Customers - new products, lower prices maybe?
Shareholders - share price & long-term profits will increase BUT investment needed may cut short-term profits
Suppliers - larger/regular orders BUT expectation of reduced prices
Overlap & conflict of stakeholder needs - CUT COSTS
Employees - more jobs may result if successful
Customers - lower prices maybe BUT quality will be bad
Shareholders - increased profits, dividends & share price BUT reduced quality can turn customers away resulting in reduced sales and profit
Supplier - business may seek alternative lower cost supplier
Overlap & conflict of stakeholder needs - RAISE PRICES
Employees - increased wages, better working conditions BUT sales decline resulting in job losses
Customers - unaffordable products –> less value received
Shareholders - increase in profit, dividends & share price BUT adverse publicity if its an essential product
Suppliers - higher prices BUT orders may fall of price rises reduce demand significantly
Overlap & conflict of stakeholder needs - LAUNCH NEW PRODUCTS
Employees - more jobs, higher pay, better working conditions if successful
Customers - better choice & improved products BUT increases in prices due to development costs
Shareholders - increased sales, prices, profits BUT initial costs of launch may reduce profits
Suppliers - increased orders BUT product may require different suppliers resulting in different loss of contract
Overlap & conflict of stakeholder needs - USE OF TECHNOLOGY IN PRODUCTION
Employees - new higher paid jobs created to manage technology BUT loss of jobs
Customers - lower prices as tech is more efficient BUT standardised products may less likely meet individuals needs
Shareholders - higher long term profits BUT business may suffer due to job losses damaging share price
Suppliers - increased sales may result in larger orders
Influence on the relationship with stakeholders - INTERNAL FACTORS
MANAGEMENT & LEADERSHIP STYLE –> autocratic/democratic & concern for people/production
OBJECTIVES –> growth, profits, ethical/social goals
SIZE & OWNERSHIP –> social enterprises, sole traders, PLCS
Influence on the relationship with stakeholders - EXTERNAL FACTORS
MARKET CONDITIONS –> number and strength of competitors & sales levels and trends
STAKEHOLDER POWER –> majority shareholders & dominant customers
GOV POLICIES –> codes of conduct & laws
Managing relationships with stakeholders - COMMUNICATION & CONSULTATION
Communication - exchange of info or ideas between two or more parties
Consultation - process by which one groups discover the views of another
Managing relationship with stakeholders - ENGAGEMENT APPROACH
Partnership - high power, high interest stakeholders
Participation - high power, low interest stakeholders
Consultation - low-power, high interest stakeholders
Push communications - low power
Pull communications - lower interest stakeholders
Managing stakeholder relationships - PARTNERSHIP
Decisions are taken jointly by management team & relevant stakeholders
Responsibility will be shared –> lots of two-way communication
Managing stakeholder relationships - PARTICIPATION
Stakeholders will be apart of the team and relevant decision making
may have responsibility for part of the activity and may implement that part of the decision
likely to be engaged in two-way communication
managing stakeholder relationships - CONSULTATION
stakeholders will be expected to respond to questions
still two-way communication but stakeholders will have limited power to influence decisions and subsequent actions
managing stakeholder relationships - PUSH COMMUNICATIONS
One-way communication from the business to relevant stakeholders through emails, letters etc.
suited to stakeholders with low levels of interest
managing stakeholder relationships - PULL COMMUNICATIONS
stakeholders choose if they want to engage and access communication with the business
appropriate for stakeholders with little power & interest
