Unit 2:

• Managers


  • Set objectives for their department, and for the people under them
  • Decide what work needs to be done to meet the objectives, and what resources they need
  • Analyse and interpret data — e.g. data on employee performance, sales, production costs, etc.
• Managers make decisions


  1. Use data analysis and interpretation

  2. Make decisions

  3. Review the effectiveness of their decisions, and make further decisions based on their conclusions
• Managers


  • Appraise their employees' strengths and weaknesses and develop their talents
  • Need to be able to lead their staff
• Managing vs Leading


  • Managing means telling people what to do and organising resources to get the job done
  • Leading means motivating people and inspiring them to do things
• Management and Leadership Styles

  • Authoritarian or autocratic style
  • Paternalistic (fatherly) style
  • Democratic style
  • Laissez-faire style
• Authoritarian or autocratic style


  • The leader (or manager) makes decisions on their own
  • Useful when dealing with lots of unskilled workers and in crisis management
  • Requires lots of supervision and monitoring, workers can't make their own decisions
  • Can demotivate able and intelligent workers
• Paternalistic (fatherly) style


  • The leader consults the workers before making decisions, then explains the decisions to them to persuade them that the decisions are in their interest
  • Paternalistic leaders think that getting involved and caring about human relations is a positive motivator
• Democratic style


  • The leader encourages the workforce to participate in the decision-making process
  • Leaders discuss issues with workers, delegate responsibility and listen to advice
  • Shows leaders have a lot of confidence in the workforce, increased employee motivation
  • Takes some of the weight of decision making off the leader
• Laissez-faire style


  • Leaders might offer employees coaching and support, but they rarely interfere in the running of the business
  • Appropriate for a small, highly motivated team of able workers
• Factors influencing Management and Leadership Styles

  
  

  External Factors

  In a recession, a business needs strong leadership to guide it through difficult economic times. Authoritarian or paternalistic leaders can be efficient in times of crisis — they can issue clear, quick commands because they don't have to consult others. When the economy is growing, managers don't always need such a strong leadership approach. Democratic leaders can take the time to communicate with employees.
• Tannenbaum Schmidt Continuum


  • Places managers on a scale ranging from autocratic management through increasing levels of participation in decision-making by the workforce
  • Identifies seven key types of management style: Tells, Sells, Suggests, Consults, Joins, Delegates, Abdicates
• Blake Mouton Grid


  • Assesses managers based on how much they care about their employees and how much they care about production
  • Identifies four main leadership styles: Impoverished Style, Produce or Perish Style, Country Club Style, Team Style
• Authoritarian management style

  Zero involvement of the workforce in decision making — they're not trusted with decisions, so this style can be divisive between management and the workforce
• Sells management style

  The manager makes the decision but tries to present it to the workforce as having a sound rationale. The workforce are allowed to ask questions but they do not influence the decision being made
• Suggests management style

  A decision is outlined to the workforce and they are allowed to discuss and ask questions. This helps them feel that their opinions are being considered
• Consults management style

  The manager proposes a tentative decision and invites discussion. The decision is open to being modified. This recognizes the insight and value of workforce participation in decision making
• Joins management style

  The manager proposes a problem and the workforce work together to discuss solutions. Ultimately the manager will make the final decision. This style is useful if the workforce team have specific knowledge that helps the manager to make the best decision
• Delegates management style

  The manager outlines the problem and sets the constraints. The team discuss solutions and make the final decision, but the manager is accountable for the outcome of the decision. This delegation of authority shows a high level of trust that the manager is placing on the team
• Abdicates management style

  The team define and solve the problem. This is the ultimate level of freedom for the workforce. The team are trusted to use their expertise to make decisions, which should be highly motivating for the team. The manager is still accountable for the decision, so must be sure the team can handle the responsibility
• Blake Mouton Grid


  Assesses managers based on how much they care about their employees and how much they care about production
• Impoverished Style

  Low concern for people and low concern for production. This is poor management of both human and production. This results in low levels of motivation in the workforce and low levels of productivity or failing quality
• Produce or Perish Style

  An authoritarian focus on the work with strict rules that leads to a neglect of workers' needs and a demotivated workforce. This may result in high levels of absenteeism and staff turnover
• Country Club Style

  An over-concern with worker welfare and harmony leads to a happy but not very productive workplace. This leadership style doesn't motivate the workers to increase their output
• Middle of the Road


  Average concern for worker needs and average focus on production leads to mediocre results. Although productive output is higher than in the Impoverished or Country Club style, it could be better
• Team Style


  This is seen as the ideal leadership style. High concern for people and production creates a happy, motivated and productive workforce. It often uses non-financial methods of motivation
• Decision Tree Analysis

  Combines Probability and Expected Pay-Off
• When businesses make decisions, they know the cost but the outcome isn't certain
• Probability

  The likelihood of an event occurring
• Managers often don't know how likely it is that an outcome will happen, so they make a subjective estimate based on experience or past data
• Probability expression

  Usually expressed as a decimal in decision trees — e.g. 0.6 for a 60% probability
• The probability of an event happening and the probability of it not happening have to add up to 1 (certainty)
• Decision Tree Analysis

  • Makes managers work out and think about the probability and the potential pay-off of each outcome of their chosen action
  • Managers have to come up with real numerical values for these - much better than vague statements like "this will increase sales"
• Decision trees


  A nice visual representation of the potential outcomes of a decision
• Decision trees

  • Allow managers to compare options quantitatively and objectively, rather than going for the fashionable option or the option they thought of first
  • Useful in familiar situations where the business has enough experience to make accurate estimates of probabilities and benefits
• Disadvantages of Decision Trees

  • They are quantitative - based on numbers and ignore non-numerical qualitative data
  • Probabilities are very hard to predict accurately and estimated pay-offs are also assumed to be accurate - in real life things may work out differently
  • In reality there's a wider range of potential outcomes than the decision tree suggests
• Qualitative data includes things like the employees' opinions about business decisions, and businesses should take qualitative data into account before deciding on a course of action
• If either the probability or pay-off estimates are based on dodgy information, the decision is flawed too
• A new marketing campaign might increase sales for a shorter period than predicted, but the decision tree might only allow for success or failure, not for short-term success versus long-term success
• Relationships with Stakeholders

  • Important
• As well as power and interest, other factors can influence a business's relationships with its stakeholders