UNIT 2 Flashcards
What do managers do?
- Set objectives = for their departments and for people under them - decide what work needs to be done for them to meet objectives and what resources they need
- Analyse & interpret data = e.g data on employee performance, sales, production costs
- Make decisions = use data analysis and interpretation to do this e.g busiest hours of the day, increase number of staff
- Review the effectiveness = of their decisions and make further decisions based on conclusions
- Lead the staff = managing means telling people what to do and organising resources to get jobs done & leading means motivating people and inspiring them to do things
Types of management and leadership styles
Authoritarian or autocratic style = leader/manager makes decisions on their own - useful when dealing with unskilled staff and in crisis - requires supervision and monitoring - workers cannot make their own decisions - demotivating
Paternalistic = softer form of autocratic style - leader consults workers before making decisions, explains the decision and persuade them it is for them - believe getting involved and caring about human relations is a positive motivator
Democratic = leader encourages the workforce to participate in the decision-making process - discuss issues with the workforce, delegate responsibility and listen to advice - shows leaders have confidence in the workforce - leads to increased employee motivation
Laissez-faire = weak form of leadership - leader rarely interferes with the running of the business - only suitable for small, highly motivated team of able workers
Internal and external factors influence management style
Internal
- Urgent tasks - autocratic style - to tell employees what to do and how to do it
- Large, unskilled workforce - suits autocratic leadership - small, educated workforce suits democratic style
External
- Recession - strong leadership to guide through difficult economic times - autocratic or paternalistic leaders are efficient in time of crisis
- Growing economy - democratic approach - communicate with employees
- Increased competition - requires democratic leaders who can motivate their employees
Tanneunbaum Schmidt continuum - Theory
Places managers on a scale ranging from autocratic management through increasing levels of participation in decision-making by the workforce - identifies 7 key stages
- Tells - autocratic - zero involvement of the workforce
- Sells - managers make decisions and present it to the workforce - they do not have an influence on decision-making
- Suggests - decisions outlined to the workforce - allowed to discuss and ask questions - helps them feel opinions are considered
- Consults - managers proposes a decision and invites discussion - decision is open to be modified - recognises value and insight of the workforce
- Joins - manager proposes a problem and the workforce work together to discuss solutions - manager will make the final decision
- Delegates - manager outlines the problem and team discuss solutions and make the final decision - show high level of trust
- Abdicates - team define and solve the problem - freedom of workers - trusted and highly motivated
Blake Mouton Grid - Theory
Assess managers based on how much they care about their employees and how much they care about production
- Country club style = over-concern for worker welfare - leads to happy but not very productive workforce - does not motivate their workers to increase their output
- Team style = ideal leadership style - high concern for people and production - creates a happy, motivated, productive workforce - often uses non-financial methods of motivation
- Middle of the road = average concern for both
- Impoverished style = low concern for people and production - poor management of human and production resources - results in low levels of motivation in the workforce and low levels of productivity
- Produce or perish = autocratic focus on work - strict rules that leads to a neglect of workers needs and a demotivated workforce - results in high levels of absenteeism and staff turnover
Scientific decision making
Decisions can be scientific - decisions made scientifically are based on data and their outcomes are compared to the initial objectives
Decisions based on data reduces the risk of making expensive mistakes - however can be costly and time-consuming - involves collecting and analysing a lot of data - needs to reliable and up to date data
Intuitive decision making
Decisions can be intuitive - means making decisions based on a hunch or gut instinct - some managers have good intutition - can sense when a decision is the right one based on past experiences - can lead to great business decisions and keep the company ahead of its competition
Decisions on intuition can be made quickly - do not have to spend time collecting and analysing data but is a risky method - people can make mistakes
When making decisions, managers have to take into account risks, rewards, uncertainty and opportunity cost
Risks = all businesses have to take risks - some decisions can be high risk but if they are successful, they bring high rewards. businesses often try to reduce risks - scientific decision making can help with this
Rewards = managers expect decisions to bring rewards - can be financial e.g higher sales or profits or beneficial in other ways e.g higher productivity or low staff turnover
Uncertainty = all businesses involve some degree of this - no one knows for sure what the outcome of the decision will be - scientific decision making can help reduce this but there will always be uncertainty
Opportunity cost = the next best alternative choice
Other influences on decision-making
- mission = taken into account - main purpose of the business
- objectives = medium to long-term targets that help a business achieve its mission - decisions will be made with the aim of achieving the objectives to measure their success
- ethics = morale and social values e.g business might not decide to switch to a cheaper supplier if that one is less environmentally friendly
- external environment = outside factors that affect the business - competition, seasonal demand, the economy and environmental concerns
- resource constraints = resource availability - includes money, time and raw materials
Decision trees
When a business makes decisions, they know what the cost will be. Probability = likelihood of an event occurring Managers do not know how likely it is that ab outcome will happen, so they make a subjective estimate based on past experience or data Expected value (EV) of an outcome is the probability of the outcome occurring, multiplied by the pay-off the business ix expected to get Net gain = EV - initial cost Financial gain after initial costs of the decision have been subtracted
Advantages and disadvantages of decision trees
Advantages
- Makes managers work out and think about probability
- Nice visual representation of the potential outcomes
- Compare options quantitatively and objectively
Disadvantages
- Quantitative - based on numbers
- Probabilities are very hard to predict accurately
- In reality, there are a wider range of potential outcomes
Stakeholders
Stakeholder = anyone who is affected by the business
Internal stakeholders; (people inside the business)
- Owners - make a profit if the business is successful and decide what happens to the business. In a limited company, shareholders are the owners - want high dividends and share price
- Employees - interested in job security and promotions prospects - want to earn a decent wage and have pleasant working conditions
External stakeholders; (people outside the business)
- Customers - want high quality products and services at lower prices
- Suppliers - people and businesses who sell raw materials to businesses - suppliers want a fair price and be paid on time
- Local community - will gain if the business provides local employment and sponsors local activities - community will suffer if the business causes noise and pollution or if the business cut jobs
- Government - get more in taxes when the business makes good profit
- Creditors - those who the business owes money to e.g bank
Stakeholder mapping
Considers power and interest
Managers have to think about which stakeholder group is the most important - helps to identify how much interest in and power over the business stakeholders have
Helps a business decide how to best manage its stakeholders - each group is mapped into four sections which determines how much communication and attention is needed
High levels of interest/power = manage closely - satisfaction is vital
Little levels of power/interest = require monitoring but are less important
- Keep satisfied - media and council
- Manage closely - more effort - shareholders
- Monitor - less effort - local residents
- Keep informed - employees, customers, suppliers
Relationships with stakeholders
Businesses need to manage their relationship with stakeholders - if they focus to satisfying one stakeholder at the expense of another, it could result in staff leaving or going on strike, which will damage the business
- Consulting = one way of managing relationships - consult key stakeholders before making a decision - likely to feel valued if their opinions are considered
- Communication = needs to be good - vital in managing relationships e.g keep employees informed with any changes or using social media and their website to communicate with customers
