MANAGEMENT



MANAGEMENT

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|STUDY UNIT 11 |

|MOTIVATION |

MOTIVATION

Text chapter 14

Motivation is an inner desire to satisfy an unsatisfied need.

• Willingness of an employee to achieve organisational goals

THE MOTIVATION PROCESS

• Comprises an inner state of mind that channels an employee’s behaviour & energy towards the attainment of organisational goals.

1 Need

- eg. unfulfilled need for higher status/promotion

2 Motive

- Desire to advance to managerial position

3 Behaviour

- Need will engage in specific behaviour eg. work overtime

4 Consequence

- May be positive and negative. May be promoted or not

5- Satisfaction / dissatisfaction

- Consequence of behaviour could lead to satisfaction or dissatisfaction

6 Feedback

- Dissatisfaction ( process starts again

- Satisfaction ( want to achieve an even better level

Equation: Motivation x Ability x Opportunity = Performance

THE CLASSIFICATION OF MOTIVATION THEORIES

Content theories

1. Maslow’s hierarchy of needs

Assumptions:

- People always want more, needs depend on what they already have. Only unsatisfied needs influence behaviour

- People’s needs arise in order of importance.

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2. Herzberg’s two-factor theory

• Work satisfaction ( MOTIVATION FACTORS

- Relate to job content

• Work dissatisfaction ( HYGIENE FACTORS

- Job context

|Motivator factors | Hygiene factors |

|Achievement |Organization policy |

|Recognition |Supervision |

|Work itself |Salary |

|Responsibility |Working conditions |

|Advancement |Interpersonal relationships |

3. Acquired needs model (McClelland’s achievement motivational theory)

• People acquire certain types of needs during a lifetime of interaction with the environment.

- Need for achievement (N Ach)

• Need to excel / succeed

- Need for affiliation (N Aff)

• Desire for friendly & close relationships

- Need for power (N Pow)

• Makes others behave in a way they wouldn’t normally behave

Process theories

Focus

• How motivation actually occurs

• Emphasis is on process of individual goal setting & evaluation of satisfaction after the goals have been achieved.

1. Equity theory of motivation

• Individual must perceive the relationship between

(1) the reward they receive & (2) their performance.

• Individual perceives a relationship based on a comparison of input- output ratio between themselves & someone else regarded as an equal.

Reward (individual’s own inputs) = Reward (comparable individual’s inputs)

• Inputs ( effort, experience, qualifications, seniority & status

• Outputs ( praise, recognition, salary & promotion.

2. Expectancy theory of motivation (Victor Vroom)

People will act according to their I) perceptions that their work effort will lead to certain performances and outcomes, and 2) how much they value the outcomes

• Expectancy (effort-performance relationship)

- Belief that a certain level of performance follows a certain level of effort.

• Instrumentality (performance-reward relationship)

- Degree to which an individual believes a certain level of performance leads to the attainment of a desired outcome.

• Valence (rewards-personal goals relationship)

- Value an individual attaches to work outcomes.

3. Reinforcement theory of motivation (Behaviourist approach)

• Behaviour is a function of its consequences.

• Reward if move to desired behaviour (Positive reinforcement.)

• Negative reinforcement ( (two types) punishment & extinction

Various strategies for scheduling reinforcement:

- Continuous reinforcement

- Fixed interval schedule regardless of behaviour e.g. monthly salary

- Variable interval schedule, intervals differ e.g. inspections (random)

- Fixed ratio schedule ( after a fixed number of performances.

- Variable ratio schedule ( influences maintenance of desired behaviour by varying number of behviours required.

MONEY AND MOTIVATION

In summary: most motivation theories suggest that money plays a vital part in the motivation of behaviour under certain conditions.

DESIGNING JOBS THAT MOTIVATE

Job enlargement

• Horizontal workloading ( adding greater variety of tasks

• Disadvantage ( increase the variety of tasks but doesn’t alter the challenge work offers

Job enrichment

• Vertical workloading ( individual now performs planning & control of work, occurs when the person responsible for the actual job now performs the planning and control of work, previously performed by people in higher levels of management to an existing job.

• Addition of: measurable goals, decision-making responsibility, control & feedback

Job characteristics model (Hackman & Oldham)

• Certain job dimensions create critical psychological states which lead to beneficial personal & work outcomes.

• 5 core dimensions: NB

- Skill variety – more challenge

- Task identity – perform job in its entirety

- Task significance – influence lives and work of others

- Autonomy – control over decision making

- Feedback - extent receive direct and clear feedback

• 3 critical psychological states

- Meaningfulness of work

- Responsibility for outcomes of work

- Knowledge of actual results of work activities

JDS ( Job Diagnostic Survey

MPS ( Motivating Potential Score =

MPS = Skill variety + Task identity + Task significance x Autonomy x feedback

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|MANAGEMENT |

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|STUDY UNIT 12 |

|CHAPTER 16 |

TOPIC 6: CONTROL

CONTROLLING

• Measures actual performance against set standards.

THE NATURE OF CONTROL

• Keep deviations from planned activities to a minimum.

• Complements planning: shows when plans and goals must be revised.

• Control system informs management of:

- Activities proceeding according to plan – plan continued

- Things not proceeding according to plan – plan adjusted.

- Situation has changed – new plan devised.

IMPORTANCE OF CONTROL

• Ensures resources deployed efficiently and effectively.

• Ensures all activities at all levels of the organization are inline with organisation’s goals

• Better quality.

• Cope with change and uncertainty.

• Competition.

• Complexity.

• Minimize costs.

• Facilitates delegation & teamwork.

THE CONTROL PROCESS (Figure 16.2) NB

1. Establish standards of performance. (Set standards) Performance standards should be realistic, attainable and measurable. Standards of performance include profit standards, market share standards, productivity standards and staff development standards.

2. Measure actual performance. Involves collecting data and reporting on actual performance. The variables should be quantifiable to make meaningful comparison possible. Observation and measurement should be in accordance with the control system. Subordinates communicate only exceptional differences between actual and planned performance to top management (control by exception), deal with less significant deviations themselves.

3. Evaluate deviations. (Performance gap) Determining whether performance matches standards by evaluating differences between actual performance and the predetermined standards.

4. Rectify deviations - Take corrective action. Taking corrective action with the aim of achieving or improving on the performance standard, ensuring that differences do not recur in future. Corrective action may include improving the actual performance, revising the strategy or lowering performance standards.

FOCUS OF CONTROL

See Figure 16.3

A. Control of physical resources

• Tangible assets; office furniture, equipment, vehicles etc

(1) Inventory control

• Organisation's keep inventory to:

- Satisfy customer needs.

- Keep uncertainties to a minimum.

- As a hedge during inflation.

- Economic Ordering Quantity (EOQ) – replenishing levels by ordering most economic quantity.

- Materials Requirements Planning (MRP) – inventories ordered when needed, costs of maintaining inventory levels eliminated

- Just-In-Time (JIT) – actual orders for finished products are converted into orders for raw material arrives just in time for manufacturing process.

(2) Operational control

• Competent purchasing & materials management to ensure the required quality and quantity of raw materials available at lowest prices.

(3) Quality control

• Total Quality Management (TQM).

• Steps:

- Defining quality objectives – qualitative & quantitative character – the process of learning how other businesses do things exceptionally well

- Measuring quality – use benchmarking.

- Rectifying deviations – keep cost of quality low as possible

B. Control of financial resources – Two instruments

(1) The budget

• Formal plan, expressed in financial terms indicating how resources are allocated to different departments.

• Co-ordinate resources.

• Applies resources.

• Sets standards.

• Evaluation of resource allocation.

• Advantages – co-ordination & money value on operations (pinpoint problems).

• Disadvantages – limits flexibility (see table Pg 398)

• Types of budgets Table 16.7.

(2) Financial analysis

• Ratios (table Pg 399).

• Reflection of organisation’s total performance.

C. Control of information resources

• Information must be relevant & timely in aiding management in POLC. Management Information systems (chapter 7).

D. Control of human resources

• Main instrument used is performance management / measurement – involves evaluating employees and managers.

• Other instruments: specific ratio analyses applied in respect of labour turnover, absenteeism, composition of labour force.

• See Pg 401 performance management process.

LEVELS OF CONTROL

Strategic control

• Studies organisation’s:

- Total effectiveness.

- Productivity – Increased by improving operations and increased employee involvement.

- Management effectiveness includes:

- profitability.

- organizational structure.

- research and development.

- financial policy and market share.

Operations control

• Entails transforming resources into products & services

• 3 forms of operation control.

(1) Preliminary control

• Anticipates and prevents problems regarding resources.

• Focus on inputs into the transformation process.

(2) Screening control

• Ensure standards for product and service quality are met.

• Focus on how inputs productively transformed into outputs. Focuses on quality.

(3) Post-action control

• Focuses on outputs and involves actions to fix faulty outputs.

• Final inspection before product is sold.

• Also used for performance management.

• Warranties.

CHARACTERISTICS OF AN EFFECTIVE CONTROL SYSTEM (list)

Integration

Figure 16.7

Integrated with the planning system.

Flexibility

Able to accommodate change.

Accuracy

A goal-orientated and accurate picture of the situation.

Timeliness

Control data should be supplied regularly.

Avoid unnecessary complexity

Too much information makes great demands on time and attention of management. Therefore, control process becomes expensive.

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|MANAGEMENT |

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|STUDY UNIT 13 |

|CHAPTER 17 |

TOPIC 7: ETHICS, CORPORATE SOCIAL RESPONSIBILITY & CORPORATE GOVERNANCE

ETHICS

• Code of moral principles and values that direct behaviour in terms of what is right & wrong.

• Human behaviour falls into 3 areas:

1. Behaviour directed by prescribed law

- Legal system govern values and standards

- E.g. Taxes

2. Behaviour directed by ethics

- Obedience is to unenforceable norms and standards of which the industry / organization is conscious.

- Certain standards of conduct, based on shared principles and values about moral behaviour, that guide the industry / organisation.

3. Behaviour directed by free choice

- No laws govern behaviour, complete freedom of behaviour.

Levels of ethical decision-making

• Understanding ethical dilemmas by identifying the level at which the issues originate can clarify issues for those who must decide what action to take.

1. Individual level

• People face issues involving individual responsibility.

• E.g. accepting a bribe.

2. Organisational level

• Industry consults policies, procedures and code of ethics to clarify issue.

• E.g. organization requires employee to perform illegal act to earn profit.

3. Association level

• Industry refers to professional association’s code of ethics for guidelines on conducting ethical business.

• No enforceable code of conduct exists to regulate practices of these consultants.

4. Societal level

• Laws, norms, customs & traditions direct legal and immoral acceptability of behaviour.

5. International level

• Example of an ethical issue would be whether an employee should accept organisation’s policy of doing business with a government that fails to stop child labour.

Different approaches to ethical decision making NB!

• 2 subjects relevant:

- Approach industry manager can use.

- What organizations can do.

1. Utilitarian approach –“ for the greatest good”

• Effects of a particular action on those directly involved are judged in terms of what provides the greatest good for the greatest number of people.

2. Human rights approach

• Human beings have fundamental rights & liberties that nobody else’s decision can take away from them.

• Ethically correct decision, is one that best protects the rights of those affected by it. eg. Bill of Right

3. Justice approach

• Ethical decisions should entail equitable, fair and impartial distribution of benefits and costs among industries and groups.

Capitalistic goal of wealth max is consistent with the largest benefit for the greatest number of people. Therefore, many use the utilitarian approach.

Steps in ethical decision-making process – Just learn!

1. identify the problem

2. determine whose interests are involved

3. determine the relevant factors

4. determine the expectations of those involved

5. weigh up the various interests

6. determine the range of choices

7. determine consequences of choices for those involved

8. make your choice

MANAGING ETHICS IN THE ORGANISATION

Leading by example

• Top management must be committed to ethical conduct and provide constant leadership in reinforcing ethical values in an organization.

Developing a corporate code of ethics

• An organisation’s code of ethics sets out the guidelines for ethical behaviour in an organization.

Creating ethical structures

• Ethics committee can judge doubtful behaviour and enforce discipline where necessary.

• Ethical training programmes.

Managing whistle blowing

• How the organization protects whistle blowers by following a specific procedure when employees make confidential disclosures.

CORPORATE SOCIAL RESPONSIBILITY NB!

• Implies that a manager is obliged to take actions that also protect & enhance society’s interests.

Levels of social responsibility

1. Social obligation

• an organisation engages in socially responsible behaviour when it pursues profit within the constraints of the law imposed by society.

• organisation owes it to society to make profits

• only economic and legal responsibility

2. Social reaction

• Society is entitled to more than the mere provision of goods & services from businesses. A minimum requirement is that organisations must be accountable for ecological, environmental and social costs that result from their actions. eg. civic groups request donations for scholarships, anti-drug programmes, sponsorship at sport teams

• ecological, environmental, social

3. Social responsiveness

• Socially responsible actions of the organization that exceed social obligation and social reaction.

• Organisations seek to find solutions to social problems, includes civil responsibilities

To whom is business responsible?

• Stakeholders – any individual / group who can affect or is affected by actions etc of an organisation.

Primary stakeholders – market and micro environment, include owners, stockholders and board of directors, employees, suppliers and customers.

Secondary stakeholders – macro-environment, include local communities and country as a whole and international environment.

Sustainability reporting

• Move away from companies’ reporting exclusively on their economic performance “to triple bottom line” reporting, which includes reporting on the economic performance, environmental aspects and social activities. (King 2002 Report on Corporate Governance).

CORPORATE GOVERNANCE NB!

• System by reference to which organization’s are managed and controlled and from which the organizations values and ethics emerge.

7 characteristics of good Corporate Governance (King II Report)

• Discipline – behaviour that is correct and proper.

• Transparency – ease with which outsider can analyze business.

• Independence – systems in place to minimize conflicts.

• Accountability – individual accountable for their actions.

• Responsibility – behaviour that allows for corrective action.

• Fairness – rights of groups acknowledged and accepted.

• Social responsibility – ethical standards.

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Low order needs satisfied by extrinsic rewards

Self actualization needs

Esteem needs

Affiliation needs

Social

Security needs

Physiological needs

High Order needs satisfied by intrinsic rewards

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