Management TextBook Outline for Test 1
Management TextBook Outline for Test 1 MGT 3304
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This 19 page Study Guide was uploaded by Lydia Notetaker on Sunday September 18, 2016. The Study Guide belongs to MGT 3304 at Virginia Polytechnic Institute and State University taught by Anna K. Ward Barlett in Fall 2016. Since its upload, it has received 39 views. For similar materials see Management Theory and Leadership Practice in Business at Virginia Polytechnic Institute and State University.
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Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox 1.1 Management: What it is, What its Benefits Are The Art of Management Defined “The art of getting things done through people” Organization: a group o people who work together to achieve some specific purpose Management: • The pursuit of organizational goals efficiently and effectively by • integrating the work of people through • planning, organizing, leading, and controlling the organization’s resources Efficiency- the means Effectiveness- the ends To use resources-people, money, To achieve results, to make the raw materials, and the like-wisely right decisions and to successfully and cost-effectively carry them out so that they achieve the organization’s goals Good Managers create value. The Multiplier Effect à your influence on the organization is multiplied far beyond the results that can be achieved by just one person acting alone. Rewards of Studying Management: • You will understand how to deal with organizations from outside • You will understand how to relate to your supervisors • You will understand how to interact with coworkers • You will understand how to manage yourself in the workplace Rewards of Practicing Management: • You and your employees can experience a sense of accomplishment • You can stretch your abilities and magnify your range • You can build a catalog of successful products or services • You can become a mentor to help others. A mentor is an experienced person who provides guidance to someone new to the work effort Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox 1.2 What Managers Do: The Four Principle Functions Management Process/ Four Management Functions: planning, organizing, leading, and controlling • Planning: You set goals and decide how to achieve them • Organizing: You arrange tasks, people, and other resources to accomplish the work • Controlling: you monitor performance, compare it with goals, and take corrective action if needed • Leading: you motivate, direct, and otherwise influence people to work hard to achieve the organization’s goals 1.3 Seven Challenges to Being an Exceptional Manager Challenge #1: Managing for Competitive Advantage-Staying Ahead of Rivals Competitive Advantage: the ability of an organization to produce goods / services more effectively than competitors do, thereby outperforming them Organization must stay ahead in 4 areas: • Being responsive to customers: Take care of the customer. • Innovation: Finding ways to deliver new/better goods or services • Quality • Efficiency Challenge #2: Managing for Diversity- The Future won’t resemble the past Diversity & variety in staffing produce organizational strength. Managers need to maximize the contributions of employees diverse in gender, age, sex, race, ethnicity, and sexual orientation. Challenge #3: Managing for Globalization- The Expanding Management Universe Understanding global language expressions and customs Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox Challenge #4: Managing for Information Technology-Dealing with the “New Normal” Internet: the global network of independently operating but interconnected computers, linking hundreds of thousands of smaller networks around the world E-commerce: electronic commerce, the buying/selling of goods/services over computer networks E-Business: Using the Internet to facilitate every aspect of running a business • Far-ranging management: e-communication all the time such as email, texting, social media • More and more data: challenges to decision making • Cloud computing: storing of software and data on gigantic collections of computers of interrelated files • Databases: computerized collections of interrelated files • Big Data: stores of data so vast that conventional database management systems cannot handle them • The rise of artificial intelligence: the more automation in the workforce. Artificial Intelligence: is the discipline concerned with creating computer systems that simulate human reasoning and sensation • Organizational changes: shifts in structure, jobs, goals, and knowledge • Telecommute: work from home, or remote locations using a variety of information technologies • Videoconferencing: using video/audio links along with computers to let people in different locations see, hear, talk with one another • Collaborative Computing: using the state-of-the art computer software and hardware, will help, people work better together • Project Management Software: programs for planning and scheduling the people, costs, resources to complete a project on time • Knowledge Management: the implementing of systems and practices to increase the sharing of knowledge and information throughout an organization Challenge #5: Managing for Ethical Standards With pressure to meet sales, production, and other targets , managers find themselves confronting ethical dilemmas. Challenge #6: Managing for sustainability- The Business of Green Sustainability: economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox Challenge #7: Managing for Happiness & Meaningfulness “Happiness was linked to being a taker rather than a giver, whereas meaningfulness went with being a giver rather than a taker. “ Being a manager doesn’t make a person happy, but it brings them a meaningful life. Use self-assessments to see how much your motivation is to be a manager. 1.4 Pyramid Power: Levels & Areas of Management Four Levels of Management: • Top managers: Determining Overall Direction. They make the long-term decisions about the overall direction of the organization and establish the objectives, policies, and strategies for it. • Middle Managers: Implementing Policies & Plans. Implement the policies & plans of the top managers above them & supervise & coordinate the activities of the first-line managers below them. • First-Line Managers: Directing Daily Tasks. Make short-term operating decisions, directing the daily tasks of non-managerial personnel. • Team Leaders: Facilitating Team Activities. Not all companies have teams (small groups of people with complementary skills who are committed to a common purpose). A team leader is a manager who is responsible for facilitating team activities toward achieving key results. Areas of Management: Functional Managers vs. General Managers • Functional Managers: Responsible for One Activity. Ex. Director of Finance • General Managers: Responsible for several activities. Ex. Big Company CEOs Managers of Three Types of Organizations: For Profit, Nonprofit, And Mutual Benefit • For-Profit Organizations: For making money • Nonprofit Organizations: For offering Services • Mutual-Benefit Organizations: For aiding members. Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox 1.5 The Skills Exceptional Managers Need 1. Technical Skills- The ability to perform a Specific Job. Consists of the job- specific knowledge needed to perform well in a specialized field. 2. Conceptual Skills- The Ability to Think Analytically. Consists of the ability to think analytically, to visualize an organization as a whole and understand how the parts work together. 3. Human Skills- “Soft Skills”, the ability to interact well with people. Human skills consist of the ability to work well in cooperation with other people to get things done. Soft skills is the ability to motivate, to inspire trust, to communicate with others The Most Valued Traits in Managers • Ability to motivate & engage others • Ability to communicate • Work experience outside the United States • High energy levels to meet the demands of global travel and a 24/7 world 1.6 Roles Managers Must Play Successfully The Manager’s Roles: Mintzbergs Useful Findings Henry Mintzberg shadowed 5 CEOs for a week and recorded working lives, What he found applied to hall managers 1. A manager relies more on verbal than on written communication 2. A manager works long hours at an intense pace 3. A manager’s work is characterized by Fragmentation, Brevity, & Variety Three Types of Managerial Roles: 1. Interpersonal Roles: Figurehead, Leader and Liaison. Managers interact with people inside/outside their work units. 2. Informational Roles: Monitor, Disseminator, & Spokesperson. Managers receive and communicate information. 3. Decisional Roles: Entrepreneur, Disturbance, Handler, Resource Allocator, & Negotiator. Managers use information to make decisions to solve problems or take advantage of opportunities. Management Outline Study Guide Chapter 1 The Exceptional Manager Notes by Lydia Cox 1.7 The Link between Entrepreneurship & Management Start-up: being defined as a newly created company designed to grow fast. Entrepreneurship Defined: Taking risks in pursuit of opportunity Entrepreneurship: the process of taking risks to try to create a new enterprise. • Entrepreneur: someone who sees a new opportunity for a product/service and launches a business to try to realize it. • Intrapreneur: someone who works inside an existing organization who sees an opportunity for a product/service and mobilizes the organization’s resources to try to realized it How do Entrepreneurs & Managers Differ? An entrepreneur is what it takes to start a business and a being a manager is what it takes to grow & maintain a business. Characteristics of Both: • High need for achievement • Belief in personal control of destiny. Internal locus of control is the belief that you control your own destiny. • High energy level and action oriented (both, but mostly in entrepreneurs) • High tolerance for ambiguity (both, but mostly in entrepreneurs) Characteristics of Entrepreneurs, rather than manager • Self confidence and tolerance for risk Textbook: Management: A Practical Introduction -Kinicki, Williams, 7e Important People to Know: • Peter Druker: inventor of modern management. Trained in Austria (economics & Management Outline Study Guide: international law) & came to the United States. Published The Practice of Management: hing Perspectives management was a major social innovation and should be treated as a profession. about Managementà Chapter 2 Management Theory Notes by Lydia Cox • Peter Senge: We need to keep on learning! Historical & Contemporary Historical Perspective Contemporary Perspective (1911-1950s) (1960s-present) Classical Behavioral Quantitative Systems Contingency Quality- Ways to manage work more Importance of Applies Quantitative Organization is a system of Manager’s approach Management efficiently understanding human techniques to interrelated parts that should vary according to Quality control, quality Scientific behaviors & motivating management such as operate tog. To achieve a individual & assurance, & total quality Scientific study of work employees toward statistics & computer common purpose environmental situation management. methods to improve achievement. simulations Subsystem: parts making up *Advanced by Taylor & Fayol Quality: total ability of a productivity of indiv. Early Behaviorism Management Science whole system Patterns that show the best way to do something. product/service to meet Workers Hugo Munsterberg: Father Using mathematics to 4 Parts of a System: customer needs People = machines of industrial psychology. aid in problem solving Inputs: people, $, info, Identify patterns that Quality Control strategy Frederick Tayler : wanted to Study jobs, identify best & decision-making. equipment, & materials req. tend to work & then find for minimizing errors by working conditions, devise deviations eliminate soldiering, management strategies. à Analytics & Big Data to produce an organizations managing each stage of working less than full Where employees work best. -Focus on people & goods/services production. Minimal capacity. Motion Studies roles throughout Transformational Gary Hamel: Mgt. theory Errors Frank & Lillian Gilbreth: Mary Parker Follett: “self process is dated & doesn’t fit the identify therebligs to eliminate managed teams”, “worker processes: Org, capabilities Walter Shewart : used empowerment” & -Evidence to back up in management & tech that current realities. Mgt. is a statistical sampling to motions & reduce fatigue. “interdepartmental teams” decisions are applied to converting process that’s needs locate errors by testing Bricklayer example. Elton Mayo: “Hawthorne Operations Mgt inputs to outputs. Ex. Tools, innovation for future Cheaper by the Dozen Effect” employees work just some items on prod. Henry Gantt managing production & website success. run. The Gantt Chart harder if received extra delivering of an Outputs: products, Evidence-based Mgt Quality Assurance attention. Ex. Diff. Light organizations products services, profits, losses, Translating principles Administrative Settings bases on best evidence focuses on the Managing the total Human Relations M. & services more employee satisfaction or performance of workers, organization. better human relations effectively discontent prod. By org. into org. practice, bring urging employees to Use rational models Feedback: Info about rationality to decision- strive for “ zero defects” Henri Fayol: Systemize it. increase worker prod. making process First to identify major funct. Abraham Maslow : The reaction of the environment Zero Errors/Defects Of management: planning Hierarchy of Needs: to the outputs, which affects -Sometimes this is a hard goal to organizing, leading, inputs Jeffrey Pfeffer & Robert attain by employees physiological, safety, love, Sutton: facing the hard controlling esteem, self-actualization. Max Weber: bureaucracy Douglas McGregor: Open Syst: cont. interacts facts about what works & Total Quality was a rational efficient, Manager Self-Fulfilling Prophecies with environment what doesn’t, Management (TQM) Theory X: neg. view of workers Closed Syst:little interaction understanding the Dedicated to cont. quality ideal organization: defined Theory Y: optimistic view dangerous half-truths improvement, training, & authority line, formal rules, Behavioral Science customer satisfaction & impersonality, careers Complexity Theory: study of that constitute so much Scientific research for how order & pattern arise conventional wisdom POST WWII Japan: based on merit. Influence developing theories about about mgt., rejecting the W. Edwards Deming: large corporations human beh. That can be from very complicated Quality stemmed from PROBLEM: Too Mechanistic apparently chaotic systems. total nonsenseàlearning “constancy of purpose” & used to provide practical to make mgt. decisions focus of org. mission tools for managers: based on evidence Joseph M. Juran: Quality as psychology, sociology, anthropology, & “fitness for use”. Best way to focus a companies efforts to economics concentrate on real needs of people Management Outline Study Guide: Chapter 2 Management Theory Notes by Lydia Cox The Learning Organization: Handling Knowledge & Modifying Behavior Learning Organization: organization that actively creates, acquires, and transfers knowledge within itself and is able to modify its behavior to reflect new knowledge 1. Creating & Acquiring Knowledge 2. Transferring Knowledge 3. Modifying Behavior/encourage employees to use new knowledge to change their behavior to help further organizations goals How to Build a Learning Organization: Three Roles Managers Play 1. You can build a commitment to Learning 2. You can work to generate ideas with impact 3. You can work to generalize ideas with impact Notes by Lydia Cox Textbook: Management: A Practical Introduction-Kinicki, Williams, 7e Management Outline Study Guide Chapter 3 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox How do people excuse lying & cheating? • “Holier-Than-Thou” Effect: over optimistic about abilities • Motivated Blindness: overlook information that works against self-interest 3.1 The Bottom Line: People, Planet, & Profit The triple bottom line: representing people, planet, and profit (3 Ps)- measures an organizations social, environmental, and financial performance Social Audit: measure of success, a systematic assessment of a company’s performance in implementing socially responsible programs, often based on predefined goals Factors to achieve a meaningful life: 1. Understanding the environment in which a manager operates-the community of stakeholders inside & outside the organization 2. The ethical and social responsibilities of being a manager 1 Management Outline Study Guide Chapter 3 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox 3.2 & 3.3 The Community Stakeholders Inside/Outside the Organization Stockholders: the people whose interests are affected by an organization’s activities Managers operate in two organizational environments: Internal Stockholders External Stockholders • Employees: the “talent People or groups in the organization’s external environment that are affected force”, most important by it resource to the organization The Task Environment: • Owners: consist of all those who can claim it as their Consists of 11 groups that present you with daily tasks to handle: legal property • Customers: those who pay to use an organization’s goods or services • Board of Directors: Ex. In a • Competitors: people/organizations that compete for customers/resources • Suppliers: is a person/organization that provides supplies (raw materials, corporation, members services, equipment, labor, or energy) to other organizations elected by the stockholders • Distributors: a person/organization that helps another organization sell its to see the company is being goods/services to cust omers run according to their interests • Strategic Allies: relationship of two organizations who join forces to achieve advantages neither can perform as well alone • Unions: takes care of the employees • Local Communities: Ex. if a community gives a company tax breaks in return for the promise of new jobs & if the firm fails to deliver àcommunity implements clawbacks: rescinding the tax breaks when firms don’t deliver promised jobs • Financial Institutions/ Lenders: Established companies often need loans to tide them over when revenues are down or finance expansion. Crowdfunding: raising money for a project or venture by obtaining many small amounts of money from many people (the “crowd”) ‘ • Government Regulators: regulatory agencies that establish ground rules under which organizations may operate • Special-Interest Groups: groups whose members try to influence specific issues • Media: companies usually have a public relations person or department to communicate effectively with the press The General Environment: • Economic Forces : consist of general econom ic conditions & trends – unemployment, inflation, interest rates, economic growth - that may affect an organizations growth • Technological Forces: are new developments in methods for transforming resources into goods or services • Sociocultural Forces: influences & trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect the organization • Demographic Forces: influences on an organization arising from changes in the characteristics of population (age, ge nder, or ethnic origin) • Political-legal Forces: are changes in the way politics shape laws and laws shape the opportunities for and threats to an organization • International Forces: are changed in the economic, political, legal, and technological global sys tem that may affect an organization 2 Management Outline Study Guide Chapter 3 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox 3.4 The Ethical Responsibilities Required of You as a Manager Ethical dilemma: a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even legal Ethics: Ethical Behavior: Standards of right and Behavior that is accepted as wrong that influence “right” as opposed to “wrong” behavior according to those standards Values Value System Relatively permanent & The pattern of values within an deeply held underlying organization beliefs & attitudes that help determine a person’s behavior Four Approaches to Deciding Ethical Dilemmas: 1. The Utilitarian Approach: For the Greatest Good, guided by what will result in the greatest good for the greatest number of people 2. The Individual Approach: For your Greatest Self Interest Long Term, which will help others, guided by what will result in the individuals best long-term interests, which ultimately are in everyone’s self interest 3. The Moral Rights Approach: Respecting Fundamental Rights Shared by Everyone, guided by respect for the fundamental rights 4. The Justice Approach: Respecting Impartial Standards of Fairness, guided by respect for impartial standards White Collar Crime, SarbOx, & Ethical Training Insider Trading: the illegal trading of a company’s stock by people using confidential company information Ponzi Scheme: using cash from newer investors to pay off older ones Sarbanes-Oxley Act of 2002: (SarbOx or SOX), established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance 3 Management Outline Study Guide Chapter 3 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox People learn Ethics through Kohlberg’s Theories: Laurence Kohlberg proposed three levels of personal moral development • Level 1, preconventional-follows rules • Level 2, conventional-follows expectations of others • Level 3, postconventional-guided by internal values How Organizations can promote Ethics: 1. Creating a Strong Ethical Climate: represents employees perceptions about the extent to which work environments support ethical behavior 2. Screening Prospective Employees 3. Instituting Ethics Codes & Training Programs: code of ethics consists of a formal written set of ethical standards guiding an organization’s actions 4. Rewarding Ethical Behavior: Protecting Whistle-blowers, employees or even an outside consultant who reports organizational misconduct to the public 3.5 The Social Responsibilities Required of You as a Manager Social Responsibility: a manager’s duty to take actions that will benefit the interest of society as well as of the organization Corporate Social Responsibility (CSR): the notion that corporations are expected to go above and beyond following the law and making a profit Corporate Social Responsibility Pyramid by Archie B. Carroll 4 Management Outline Study Guide Chapter 3 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox How does being Good Pay off? Effect on: • Customers • Employees work effort • Job Applicants & Employee Retention • Sales Growth • Company Efficiencies • Company Revenue • Stock Price • Profits *Graphic from textbook Corporate Governance: the system of governing a company so that the interests of corporate owners and other stakeholders are protected Textbook: Management: A Practical Introduction -Kinicki, Williams, 7e 5 Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox 7.1 Two Kinds of Decision Making: Rational & Nonrational Decision: a choice made among available alternative Decision Making: the process of identifying & choosing alternative courses of action 2 Systems in Decision Making System 1 System 2 Intuitive & largely unconscious Analytical & Conscious • Operates automatically and quickly • Slow, deliberate, analytical and consciously effortful mode of reasoning The Rational Model of Decision Making: (classical model), explains how managers should make decisions that are logical and will be the optimum in furthering organization’s best interests St ge 1: Stage 2: Stage 3: Stage 4: Identify the Problem & Think up alternative Evaluate alternatives Evaluate & Opportunity solutions. & select a solution Implement the solution chosen • Problem : difficulties • Both the obvious • Ethics, Feasibility, that in ibit the and the creative and effectiveness • Successful achievement of goals Implementation is to • Opportunities: PLAN CAREFULLY situations that present and BE SENSITIVE possibi ities for TO THOSE AFFECTED exceedi g existing • Evaluation is to give goals it more times, change • Diagnosis: analyzing it slightly, try another the underlying causes alternative, or start over Weaknesses with Rational Model: It is all about perspective. It talks about managers making the decision, but it doesn’t break it down to explain how they make the decision. It is not right to assume that there is complete information without uncertainty, all decisions are made logically with unemotional analysis, and that the best decision is made for the organization. This is impossible to do. 1 Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox Nonrational Decision Making: Managers find it Difficult to Make Optimal Decisions This explains how managers make decisions; they assume decision-making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions 1. Bounded Rationality & the Satisficing model: “ Satisfactory is Good Enough” • Herbert Simon (1950s) began a study on how managers actually make decisions. He proposed that managers could not act logically because rationality is bounded by many restrictions • Bounded Rationality: concept suggests that the ability of decision makers to be rational is limited by numerous constraints (time, money, values, habits, etc.) • Satisficing Model: managers seek alternative until they find one that is satisfactory, not optimal. 2. The Intuition Model: “It Just Feels Right” • Intuition: is making a choice without the use of conscious thought or logical inference 7.2 Making Ethical Decisions 2 Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox Ethics Officer: someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas Road Map to Ethical Decision Making: A Decision Tree Decision Tree: a graph of decisions and their possible consequences; it is used to create a plan to reach a goal Manager should ask these questions when confronted with any proposed action requiring a decision: 1. Is the proposed action legal? 2. If Yes, Does the Proposed Action Maximize Shareholder Value? 3. If Yes, is the Proposed Action Ethical? 4. If No, Would it be Ethical not to take a proposed action? 7.3 Evidence-Based Decision Making & Analytics Evidence-Based Decision Making Jeffrey Pfeffer & Robert Sutton identified 7 implementation principles to help companies that are committed to doing what it takes to profit from evidence-based management: 1. Treat organization as unfinished prototype. Don’t let your organization be ruined by dangerous new ideas or management/employee resistance. Use data to find out information. 2. No brag, just facts. 3. See yourself and your organization as outsiders do. 4. Evidence-based management is not just for senior executives. 5. Like everything else, you still need to sell it. 6. If all fails, slow the spread of bad practice. 7. The best diagnostic question: What happens when people fail? What makes it hard to be Evidence Based? There’s too much evidence. There’s not enough good evidence. The evidence doesn’t quite apply. People are trying to mislead you. You are trying to mislead you. The side effects outweigh the cure. Stories are more persuasive. Analytics: business analytics, sophisticated forms of business analysis 1. Use of Modeling: Going beyond simple Descriptive Statistics 3 Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox Predictive Modeling: data-mining technique used to predict future behavior & anticipate the consequences of change 2. Have Multiple Applications, Not just one 3. Support from the Top Big Data: includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance data Big Data Analytics: the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information 7.4 Four General Decision-Making Styles Decision-making style: reflects the combination of how an individual perceives and responds to information 1. The Directive Style: Action-Oriented Decision Makers Who Focus 2. The Analytical Style: Careful Decision Makers Who Like Lots of information & Alternative Choices 3. The Conceptual Style: Decision Makers who rely on intuition & Have a Long- Term Perspective 4. The Behavioral Style: The Most People-Oriented Decision Makers Know Thyself, Influence Others, Deal with Conflict 7.5 How to Overcome Barriers to Decision Making How do Individuals Respond to a Decision Situation? Ineffective & Effective Responses, Four Ineffective Reactions: 1. Relaxed Avoidance-“There’s no point doing anything; nothing bad’s going to happen” a manager decides to take no action in the belief that there will be no great negative consequences 2. Relaxed Change-“Why Not Just Take the Easiest Way Out?” A manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk 3. Defensive Avoidance-“There’s No Reason for Me to Explore Other Solution Alternatives.” A manager can’t find a good solution and fellows by: a. Procrastinating b. Passing the buck c. Denying the risk of any alternative consequences 4. Panic-“This is So Stressful, I’ve Got to do Something-anything-to get Rid of the Problem. In panic, a manager is so frantic to get rid of the problem that he/she can’t deal with the situation realistically. 4 Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox Three Effective Reactions: Deciding to Decide Deciding to decide: a manager agrees that he/she must decide what to do about a problem or opportunity and take effective decision-making steps 1. Importance-“How high priority is this situation?” 2. Credibility-“How Believable is the information about the situation?” 3. Urgency-“How Quickly must I act on the Information about the situation?” 9 Common Decision Making Biases: Rules of Thumb, or “Heuristics” Heuristics: strategies that simplify the process of making decisions 1. The availability bias: using only the information available. Mangers use information readily available from memory to make judgments. 2. The Representativeness Bias: Faulty Generalizing from a Small Sample or a Single Event. The tendency to generalize from a small sample or a single event. 3. The Confirmation Bias: Seeking Information to Support One’s Point of view. When people seek information to support their point of view and discount data that do not. 4. The Sunk-Cost Bias: Money Already Spent Seems to Justify Continuing. It is when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it. 5. The Anchoring & Adjustment Bias: Being influences by an initial figure. It is the tendency to make decisions based on an initial figure. 6. The Overconfidence Bias: Blind to One’s Own Blindness. The bias in people’s subjective confidence in their decision-making is greater than their objective accuracy. 7. The Hindsight Bias: The I knew it All Along Effect. The tendency of people to view events as being more predictable than they really are. 8. The Framing Bias: Shaping how a problem is presented. The tendency of decision makers to be influenced but the way a situation or problem is presented to them. 9. The Escalation of Commitment Bias: Feeling overly invested in a Decision. Decision makers increase their commitment to a project despite negative information about it. 7.6 Group Decision making: How to work with others Advantages & Disadvantages of Group Decision Making Disadvantages: • A few people dominate or intimidate • Groupthink: when group members strive to agree for the sake of unanimity and thus avoid assessing the decision situation • Satisficing 5 • Goal Displacement: occurs when the primary goal is subsumed by a secondary goal Management Outline Study Guide Chapter 7 The Manager’s Changing Work Environment & Ethical Responsibilities Notes by Lydia Cox Advantages: • Greater pool of knowledge • Different perspectives • Intellectual stimulation • Better understanding of decision rationale • Deeper commitment to the decision What managers need to know about groups & decision making 1. They Are less Efficient 2. Their size Affects Decision Quality 3. They May be too confident 4. Knowledge Counts Minority Dissent: occurs when a minority in a group publicly opposes the beliefs, attitudes, ideas, procedures, or policies assumed by the majority of the group Group Problem-Solving Technique: Reaching for Consensus Consensus: which occurs when members are able to express their opinion and reach agreement to support the final decision. Other Techniques: brainstorming, Delphi Technique, Computer-aided decision making Brainstorming: a technique used to help groups generate multiple ideas & alternatives for solving problems (electric brainstorming uses technology) Delphi Technique: a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect to achieve a consensus of expert opinion. A Decision Support System: a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future Textbook: Management: A Practical Introduction-Kinicki, Williams, 7e 6
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