Management CLEP notes

Module 1 – Introduction What Is Management? (Module 1.1) Managers are people who do the four main management tasks: Planning - Forecasting the future, developing strategy, setting goals, analyzing the environment Organizing - Building the org chart, putting resources in the right places, aligning authority and responsibility Leading - Motivating, communicating, building teams Controlling - Measuring progress, keeping things on track, spotting errors and misdirection Not all managers do all four of these tasks. But every manager does at least one or two of them. Planning tells you what to do – organizing is how you do it What Is the Brief History of Management? (Module 1.2) Early Management Management is timeless. Many of the talents and skills that we learned as primitive savages, we’re still using today in modern management and leadership. Tactics used to train and organize early armies still work today. “Modern” Management Henri Fayol, 1888 - "Administrative Management" - identified 5 functions of management and 14 points for managers. Showed you could use management concepts to make money Frederick Taylor - "Scientific Management" - identify the one right way to do anything and subdivide jobs into simple, repetitive tasks you can teach anybody to do. Made possible the modern assembly line and made advances in manufacturing and mining Frank & Lillian Gilbreth - "Time and Motion Studies" - subdivide work into the smallest measurable pieces and then time how long it takes a worker to do those pieces. Integral to Scientific Management but still done by industrial engineers today Professional Management - school of thought that applied “scientific” management skills to service industries. By so doing, we learned: Management is a set of skills that individuals can learn, and that means we can teach people to be managers The workers have insight on how best to do their job, and that means it’s okay for managers to consult employees on the best way to do the job Elton Mayo, 1933 - "Human Relations Movement" - Studied how employees interacted, and the role of.

those interactions, on productivity. Managers were expected to understand their employees, and to use that understanding to increase productivity (Behaviorist school of management) Also ran the Hawthorne Studies, how to motivate employees who worked in teams Recent Happenings By 1990, management begins to look at managing knowledge workers. Peter Drucker - Author looking at how knowledge workers are motivated and how they differ from other types of workers. Michael Porter - developed key theories of management as strategy What Makes A Manager Ethical? (Module 1.3) Following certain legal requirements Foreign Corrupt Practices Act (FCPA) - Holds US businesses accountable of ethical behaviors overseas by extending the reach of US ethics law into other countries. Bans bribery even if legal in the occupying country Sarbanes - Oxley Act - Requires US corporations to publish ethical guidelines (because of Enron) ISO 14000 - International set of standards for organizations that want systematic environmental management Subscribing to certain Ethical Decision Views Utility - Provide the most good for the most people Theory of Justice - Provide what is perceived as fair Rights - Ensure that an individual’s rights are not violated Compassion - Treat people how we want to be treated Module 2 – Planning and Strategy Planning (Module 2.1) Planning is how managers decide how to reach goals with their available resources. Plans tell us where we want to go and how we intend to get there. Mission and Vision Define our Plans.

In order to plan properly, it is important to start with the mission and vision. These are the most basic statements about your organization, and they shape all of your plans. Mission Statement - describes your organization’s reason for being – why you exist Vision Statement - describes what the organization wants to become – how you see yourself in the future. Types of Plans Together the mission and vision serve as your destination. The strategic plan is how you will get there. Strategic Plan - describes broadly how you intend to “win the game”. Strategic plans are long-term (5 to 7 years) driven by the mission based on expectations for the future seldom very detailed Tactical/Operating Plan - describes more specifically how to achieve near-term goals laid out in the strategic plan. Tactical plans are short-term (usually 1 year) specific to a particular goal or goals detailed enough to define what all needs done but may require even more specific plans (job/task plans) to describe how to do what all needs done Other types of plans: Single-Use Plans - only used one time for a specific case (the President is in town!) Scenario Planning - plans with multiple different assumptions that can be compared and analyzed to aid in decision-making Contingency Plans - plans for anticipated but unexpected events. “Plan B”. Planning Tools (Module 2.2) Planning Tools to Assist Strategic Management Strategic Management is the development of a strategy and the use of that strategy in long-term planning. These tools include: SWOT Analysis - Strengths, Weaknesses, Opportunities, Threats – an evaluation of the internal and external factors influencing a company’s strategy Planning Tools to Assist Project Management Project Management involves getting a specific goal done in the short-term, as quickly and effectively as possible..

These tools include: Program Evaluation and Review Technique (PERT) - identifies the critical path through a project’s tasks and milestones Gantt Chart - a tool used to show scheduling relationships and logical ordering of tasks Competitive Advantage (Module 2.3) Identifying competitive advantage is the first step in developing strategy and a strategic plan. A competitive advantage is the thing that makes your organization uniquely competitive. Ultimately, the competitive advantage is the thing that allows you to be in business, and the value you package and provide to your clients/customers It must be unique – because if your competitors also have this advantage, then it isn’t actually an advantage (you’re just keeping up with the Joneses) Sources of Competitive Advantage Intellectual Property - patents, trademarks, copyrights Brand Recognition - what people think about your brand Location - owning unique real estate that affords you favorable geographic positioning Expertise - special skills or knowledge that others lack Scale - bigger than everybody else in the market, allowing you to strike favorable deals on materials and charge lower prices First-Mover Advantage - you’re the original, everybody else is an imitator How Competitive Advantage Informs Strategy Successful business strategy always involves using your competitive advantage to beat the competition. You use your competitive advantage to calibrate the lens through which you assess externals and recognize internals. Externals include: markets economies societies technologies competitors governments Porter’s 5 Forces Model.

Porter’s 5 Forces Model is used to identify specific external threats an organization may face from within its respective industry: Supplier Power may increase, forcing us to accept less favorable terms for raw materials New Entrants to the market may increase the number of competitors we have to stave off New Technology may produce substitute goods which dilute the available market share for products we make, possibly even making them obsolete Rivalry Among Existing Companies can complicate the market we operate in Each of these forces has the net effect of increasing the customer’s buying power which makes it harder for us to offer attractive goods at a profit Generic Competitive Strategies Model Porter also gives us the GCSM, which gives us fundamental base strategies for how businesses compete. It asks two questions: Is your market broad or narrow? Is your product ordinary (low-cost) or unique (high-cost)? From those two questions it produces these four basic strategic choices: Differentiation - broad market, high cost – you attempt to position yourself as the “better” choice with premium features Cost Leadership - broad market, low cost – you promote your low prices and your market ubiquity Focused Cost Leadership - niche market, low cost – you promote your product as the economical choice for solving your market’s specific needs Focused Differentiation - niche market, high cost - you position yourself as the “specialist” choice for the high-end, discerning customer There’s lots of room in the market for differentiated products and service providers, but there’s typically only one cost leader – nobody brags about being the “second cheapest in town”. These strategic choices each have well-defined roles and playbooks full of typical competitive strategies which will be described in further detail in 2.6 and 2.7. Product Planning and Strategy (Module 2.4) Most organizations, including all businesses, survive by producing products. These can be goods or services, but the product is key to strategy. The Product is the vehicle for delivering your competitive advantage to your customers and stakeholders. Controlling the Product Life Cycle.

The BCG Matrix categorizes products into four major categories based on market growth rate and relative market share: Rising Stars - high growth rate, high market share Cash Cows - low growth rate, high market share Question Marks - high growth rate, low market share Dogs - low growth rate, low market share Feed the stars, milk the cows, shoot the dogs. But what about the question marks? The future of a product often depends on what you decide at the beginning of its life cycle. This is where product planning decisions matter most. Cost Leadership vs. Differentiation (Module 2.5) If you’re a cost leader, you always have the same advertising slogan: “We’re all the same, so just buy mine – it’s the cheapest.” If you’re a differentiated competitor, you always have the same advertising slogan: “My product is different, and different is better.” How to Manage a Cost Leader (Module 2.6) Cost leaders have a distinctive strategy by which they compete, so they need a different playbook than a differentiated competitor. Key Competitive Advantage: Economies of Scale Key Mission: Cut Costs Key Vision: Grow, Grow, Grow Key Marketing Strategy: Get New Customers for Our Existing Products Cost leaders seek to operate at the sweet spot of the Average Total Cost curve – where economies of scale are maximized and diseconomies of scale haven’t yet taken effect. This is the point of minimum product unit cost. As production capacities are exceeded and the diseconomies of scale start kicking in, rather than riding up that curve a cost leader will invest in more capital equipment and in so doing will shift the ATC curve further to the right and a little bit further down. By investing in capital, the business can build more units at the minimum product unit cost… and somewhat reduces their minimum product unit cost by improving the effect of economies of scale..

By growing bigger and bigger, they can make products cheaper and cheaper while making more and more of them. Cost leaders thrive on: Efficiency - maximum output for minimum input Standardization - not flexibility Centralized organizations - decisions made by senior management Functional organizations - grouped around the jobs people do Cost leaders do not offer: Flexibility Customization Delegated authority Managers of cost leaders typically handle operations and finance/accounting functions. All strategic decisions and most operations decisions are made by corporate-level management. What makes a good manager at a cost leader? Order-followers - very efficient and precise at doing what is told Enforcers - ensure that rules and policies are being followed Motivators - make a cheap labor force produce the desired output as cheaply as possible Cost-cutters - cost is the most closely controlled function. Budgets and spending reports are most important tools, and all investments are aimed at reducing costs. How to Manage a Differentiated Competitor (Module 2.7) Differentiated competitors have a distinctive strategy by which they compete, so they need a different playbook than a cost leader. Key Competitive Advantage: Uniqueness, Strong Branding Key Mission: Customer Satisfaction Key Vision: Adapt, Improvise, Overcome Key Marketing Strategy: Appeal to a Discerning and Ever-Changing Customer Base with Strong Branding That Delivers on Promises Differentiated competitors thrive on: Flexibility - the ability to change and adjust to customer desires and demands Decentralized organizations - decisions made by the people closer to the problems Customer-Centered organizations - allowing the needs of the customer to permeate the entire organization Delegated Authority - managers are aware of what customers are looking for and are empowered to do what it takes to deliver on customer expectations.

Differentiated competitors typically don’t offer: Standardization One-size-fits-all solutions Managers of differentiated competitors typically handle marketing and customer service functions, in addition to operations. Cost is tracked but is usually not the main control – costs can be passed on to customers. What makes a good manager at a differentiated competitor? Creatives - people who can come up with new ways of doing things Problem-solvers - people who can sell solutions People who understand others Market-share maximizers Customer satisfiers Customer relationship builders Sales improvers Brand strengtheners New product developers Really, really, really good marketers Risk and Decision-Making (Module 2.8) Certainty is associated with objective probabilities. Uncertainty is associated with subjective probabilities. The closer we get to certainty, the easier decisions are to make – but most important decisions are made under uncertain conditions. Risk comes in two flavors: Upside risk - “what’s the best that could happen?” Downside risk - “what’s the worst that could happen?” Risk is not always parallel or symmetrical – you can’t sell less than zero, but upside might be technically unlimited. We want to minimize downsides and maximize possible upsides - and remember - risk can be a good thing. Taking more risks gives you an opportunity to pick up more wins and beat your competitors. Programmed vs. Non-Programmed Decisions Programmed Decisions - made under lower-risk conditions and always made in the same way Non-Programmed Decisions - Higher-risk decisions that require deeper analysis before making them..

Usually unique decisions about unique situations Types of Decision-Making Rational Decision-Making - tries to optimize - selecting the best among the possible outcomes. Long and drawn-out. Bounded Rationality - tries to satisfice - selecting the first acceptable outcome that presents itself. Streamlined and quick. Tools for Decision-Making Data Mining Regression Modeling Varying Sensitivity to Risk Organizations vary in the amount of risk they will accept. We talk about their level of risk aversity. Risk- averse companies take less risk. Organizations can afford to take more risk under these circumstances: More resources - survive the downside More information - better decision-making ability, less uncertainty Nothing left to lose - the all-in push – downside means losing my company, but status quo I’ll lose my company anyway Risk cannot be eliminated - we must manage it instead. Take as many measured risks as you can afford, but don’t take any risks you don’t have to take. Forecasting (Module 2.9) When making plans for the future, you must decide what the future you’re planning toward is going to be like, even if you can’t be sure. Forecasting - attempting to figure out what the future will bring. Sales forecast are usually time series regressions. These rely on prior-year sales data. They work great… Unless you don’t have prior-year sales data. Then you have to resort to some sort of simulation to develop a starting point. If none of that works… I’m just going to guess. How To Guess Delphi Technique is a method of improved guessing, wherein you get “educated” guesses from several.

different people within the organization, and then average their guesses. Remember that all forecasts, no matter how apparently scientific, they’re all just guesses. That means they represent a risk. Module 3 – Controlling Feedback and Control (Modules 3.1, 3.2) Control - how we manage the execution of our plans and make sure we stay on target Control systems need two things: Goal - the target Feedback Loop - the process where we gain information about the system we’re controlling Negative Feedback - says you’re doing something wrong, corrects you back onto course Positive Feedback - says you’re doing something right, confirms and keeps you on course Closeness of Coupling - This sets how much deviation from nominal is required before you react. “Sensitivity”. Plans provide the goals that are your target. Feedback gets you to the goals. Without control, you’re not really managing anything - your “goals” are just dreams. Types of Control Mechanisms Budgets - control spending Schedules - control timing Personnel Reviews - control performance Quality Control - controls product quality Financial and Non-Financial Controls (Module 3.3) Key Financial Control Tools Budgets - control spending Cash Flow Statements - control money in and out Balance Sheets - show current financial conditions Break-Even Analysis - when will the investment start paying off? Productivity Analysis - how much of the inputs become useful outputs?.

Key Non-Financial Control Tools Productivity Analysis - becomes non-financial when the inputs are not expressed in terms of dollars (raw materials, labor hours, etc.) Quality Control - are the products being built in the right way? Performance Reviews - are the employees performing in the right way? Customer Satisfaction - are customers being treated in the right way? Schedule - are things being done at the right time? Waste Management - are you wasting resources that you could be using? Control Tools as Comparators Ratios are used to correct for differences in absolute size, and allow us to compare very big things with very small things. Productivity is commonly defined as the ratio of total outputs to total inputs. Control and Planning (Module 3.4) Planning and control are the most closely-related management functions. Planning sets the goals; control manages how we reach them. Types of Controls Strategic Controls - broad plans need controls that track broad outcomes. Used by senior managers trying to execute the broadest strategy plans. Tactical Controls - short-term plans need flexible controls that track very specific actions and outcomes over short periods of time. If planning and control are not connected, planning is useless, and control is not efficient. Make sure your goals are measured effectively. Module 4 – Organizing Organizational Charts and Designs (Module 4.1) Functional Organization is where the company is grouped around its individual internal functions. All the production in one group, all the marketing in another, etc..

Product Organization is where the company is grouped around its different product divisions. A chemical company might have a paints division, a solvents division, a home products division, etc. Each division then has its own VP who acts as mini-CEO over that division. Geographical Organization is where the company is grouped around where in the world it operates. Typically globalized organizations will have a North America division, a European division and an Asian division. Each division then has its own VP and functional departments. Organization comes from planning. Design the way you plan to compete. Centralized and Decentralized Organization (Module 4.2) Centralization is all about where in the organization key decisions are made. Centralized organizations make decisions at the top Decentralized organizations make decisions all over the company, wherever the decision needs to be made An org chart can’t tell you anything about where the decisions are made. Centralized organizations are preferred where you tend to reduce costs by being efficient and standardized, and are most popular when you make only a few standard product types at cheap costs. (Cost leaders) Decentralized organizations are more flexible and are better able to adapt to changing circumstances. (Differentiated marketers) Span of Control (Module 4.3) Span of Control is how many people report directly to a manager. Small span of control = lots of management = micromanagement = topheavy organization Large span of control = few managers, few management levels = flat organization Span of control can be increased where the manager can easily monitor employees and where the employees all have similar jobs. Tall or Topheavy organizations cost a lot for all the added management layers, but those managers have more time to analyze, plan, and manage Flat organizations are lean and run lower costs, plus better communications up and down the chain of command. But managers tend to be very busy. Suggestion: Always make your organization as flat as you can without losing control..

Authority and Unity of Command (Module 4.4) Organizations have formal and informal authorities. Formal Authority is the defined reporting chain for an employee up to his direct manager. Unity of Command dictates that every employee should have one manager. Sometimes organizations try to cross- functional the management (matrix organizations) but this means employees have several managers and illustrates poor unity of command. Informal Authority is the person you turn to when you need subject-matter expertise on a project you’re working on. They have the technical ability, the seniority, the reputation and the personal influence to help you out. Incentives and Motivation Tools (Module 4.5) Once we put people in the organization, we have to motivate them to do the work we need done Theories on Motivation Needs-Based Motivation - motivation is the result of individuals trying to satisfy their own needs (people work to make a living) Process-Based Motivation - motivation is a rational process where individuals make choices based on their own situation (people work for needing a purposeful struggle) Reinforcements as Motivation Positive Reinforcement – do good, get reward Punishment – do bad, get hit Negative Reinforcement – do good, don’t get hit Extinction – do bad, don’t get reward Locus of Motivation Intrinsic Motivation - the motivation comes from inside you. Doing something because you want to feel a sense of achievement and accomplishment Extrinsic Motivation - the motivation comes from outside you. Doing something because you really want that external reward Maslow’s Hierarchy of Needs (Module 4.6) Come on, man, it’s Maslow. It’s classic..

Survival > Safety > Social > Self-Esteem > Self-Actualization There’s also something called ERG Theory which is Existence, Relatedness, and Growth. The key point here is that this isn’t a hierarchy. They’re all different itches we need to scratch at various times in our life and we may be motivated by multiple of them at a time. If we can’t meet one set of needs, we may focus on another one Maslow is more familiar, but ERG better explains how people actually work. McGregor’s Theory X and Theory Y (Module 4.7) Theory X and Y describes the motivational approach stemming from manager’s beliefs about their employees. Theory X Managers are hardasses. “Authoritarian Approach” – they believe that employees only work for extrinsic rewards and they must be watched, monitored, motivated, and pushed. Employees always need constant rewards and punishments. Employees cannot be trusted. They hate their jobs and are only there for the money. Theory Y Managers are pushovers. “Participative Approach” – they believe that employees are there to seek satisfaction in their work, and they should be included as stakeholders in managerial decisions. The people doing their work are the experts at their work. Work is fulfilling and satisfying. So employees can be trusted to work well without direct supervision. They work best when they have the ability and authority to solve problems creatively on their own. Expectancy Theory (Module 4.8) Rather than the other theories we’ve talked about, expectancy theory is a process-based theory - one where people approach it rationally and they make a decision about what’s best for themselves based on their analysis of the situation. Expectancy theory tells us that people will ask themselves three basic questions about a possible reward. 1. Expectancy - Will hard work lead to the right outcome? – Do I expect to be able to reach this goal? Do I think it’s possible? 2. Instrumentality - Will reaching the goal deliver the reward? – Will I actually get the thing I want if I reach the goal? Do I expect my success to be rewarded? 3. Valence - Will the reward be valuable to me? – Will this be worth all of the work it takes to earn it? An answer of no to any single question means the incentive offers no motivation at all. What does this mean? Difficulty of task and desirability of reward have to increase together.

Once the task begins to appear impossible, your highly motivated workforce is suddenly completely unmotivated. Setting high goals provides a high, but unpredictable, level of motivation. Once an all-or-nothing incentive has been achieved, motivation stops to get any more. Setting low goals provides a predictable, but low, level of motivation. If employees don’t expect to actually earn your incentive, it doesn’t incentivize them We can use this to devise an incentive system where managers and employees agree on a progressive set of goals and rewards. This is called Management By Objective (MBO). Equity Theory (Module 4.9) Equity theory is another process-based theory about how rewards motivate us. Equity theory tells us that we don’t judge the value of a rewards in absolute terms – we judge the value of our rewards in comparison to what’s given to others. We refer to what other people receive to gauge the value of what we receive. The people we compare against are called the referents and we typically choose people who are much like us in job function, tenure, and skill level. We compare against our chosen referent’s inputs: Hard work, Loyalty, Education, Skills, Experience, Seniority And then we reflect against the outputs: Pay, Promotions, Recognition, Opportunities, Respect and Trust And then we make a judgement call – did I do at least as well as they did, given the differences in the inputs and outputs? The goal is fairness – i.e. equity. Employees strive for fairness, and will be demotivated if they perceive they have been handled unfairly. But – employees tend to not be very good arbiters of what’s fair, and often don’t have the whole story or don’t have objective perspectives. So it may be hard to please everybody. Management’s best solution is to discourage employees from comparing against each other. Note – this is only good advice for managers. It’s always in employees’ best interests to compare against each other and advocate for equitable treatment. Herzberg’s 2 Factor Theory (Module 4.10) Herzberg provided a modification to Maslow’s Hierarchy: Certain needs, called hygiene factors, have the ability to demotivate employees if the needs are not.

met but cannot motivate employees above a baseline. Other needs, called motivators, have a nearly limitless potential to motivate employees – but their absence doesn’t typically demotivate employees below a baseline (unless you took them away and didn’t replace them). Hygiene Factors are those needs at the base of Maslow’s Hierarchy – survival and safety/security. Dirty bathrooms, looming layoffs, OSHA violations, mean supervisors. Motivators are those needs at the top of Maslow’s Hierarchy – social, self-esteem, and self-actualization. Making people feel better about themselves, feel like they belong in the organization, helping them grow and reach their goals. Powerful because they are intrinsic and typically limitless. Note: Salary/pay is considered a hygiene factor. Lacking sufficient salary will demotivate you, but providing more than “enough” salary will not sufficiently motivate you. Note also: this is managerial fan-fiction. They paid a PhD to say this so companies can feel justified with paying below market rates. Job Design (Module 4.11) Herzberg’s 2 Factor Theory can be applied alongside other management theories to produce applied job design theory. There are three key ways to design a job so that people will be more motivated to do it: Enrich it – add motivators like recognition, responsibility, achievement, and personal growth Enlarge it – add more tasks so the job has variety and workers are less bored at their job Rotate it – circulate workers through different jobs so they get a taste of all of them. Workers have something different to do on every rotation, they’re not as bored, and you can develop their skills in several areas Job Characteristics Model - links core job characteristics to worker’s psychological states to determine work satisfaction outcomes. Good in = good out, shit in = shit out. Module 5 – Leading Leadership Versus Management (Module 5.1) Leadership and management are not the same things, but we need both to manage successfully. Management is about groups and organizations, while leadership is about individual traits and behaviors..

There are two main theories on leadership: Trait Theories - leaders are born with an innate set of traits Behavioral Theories - leaders are taught to perform certain actions Common traits/behaviors a leader possesses: Integrity, intelligence, extraversion, conscientiousness, openness to experience, self-esteem Leadership Studies Several independent research studies found that effective leaders typically perform on two axes: People - “consideration” - leaders have care and concern for members of the group they lead Tasks - “initiating structure” - leaders have focus and concern on meeting expectations and getting things done These studies include the Ohio State Leadership Studies, the Michigan State Leadership Studies, and the Blake and Mouton studies. Leadership Skill and Decision Styles Most leaders show both people-oriented skills and task-oriented skills. But the level of skill/focus may vary between leaders, giving rise to different leadership skill styles: High people/high task = “selling” or “team” (these type are the strongest leaders) High people/low task = “participating” or “country-club” Low people/high task = “telling” or “produce-or-perish” Low people/low task = “delegating” or “impoverished” (these type are barely leaders at all) There are also different leadership decision styles: Democratic - followers participate in decision-making Autocratic - leader makes all the decisions alone Human Relations - leader empowers followers to make their own decisions, with full guidance and support Laissez-Faire - leader does nothing and just expects the followers to make their own decisions These tend to pair with the corresponding leadership skill styles. Leadership By Example Leaders have the power to passively influence their group via leadership by example. They communicate the expectation by demonstrating the desired behavior. In so doing they set the standard for the group to follow. This also subconsciously reinforces to the group “you are following my lead because I am the leader”. Leaders who rely on telling - i.e. “Do as I say, not as I do” - undermine their own leadership ability..

Transactional Leadership (Module 5.2) Transactional Leadership is one of the three leadership styles. It is the most common style of leadership used in organizations. Transactional leaders use a style that emphasizes rewards and consequences. Note: Guess what two things are almost entirely ineffective on ADHD people?? Transactional leaders: Know the rules and follow them Hold everybody to the same standards Use rewards and repercussions to enforce those standards Anybody can use this leadership type. Personality style isn’t important. You just have to have integrity. “I don’t care if you like me – you better damn well respect me” Key Leadership Traits: Intelligence, Conscientiousness, Integrity Parents are often transactional leaders. Good parents set expectations and very, very reliably follow up with punishments and rewards. Other famous transactional leaders: cops, teachers. Cons – Transactional leaders are much less effective in times of rapid change and uncertainty. Transactional leadership stops working when the rules stop working. Transformational Leadership (Module 5.3) Transformational Leadership is one of the three leadership styles. It is the most effective style of leadership. Transformational leaders use a style that offers a vision for the future and convincing followers to believe in it. Transformational leaders have a vision for the future have the confidence in themselves to get there persuade others to follow them Personality type is vital here. Not everyone is good at transformational leadership. It requires the leader to be absolutely dripping with charisma. Key Leadership Traits: Intelligence, Extraversion, Self-Esteem Steve Jobs and Gandhi were classic transformational leaders..

Other famous transformational leaders: Hitler, Charles Manson Tools: Inspirational Motivation - a compelling vision of the future Intellectual Stimulation - thinking past today’s norms and conventions Individualized Consideration - showing care for each of the individuals they lead Charisma - able to inspire confidence, commitment, and admiration in followers Situational Leadership (Module 5.4) Situational Leadership is one of the three leadership styles. More carefully, it’s a hybrid style that blends between the other two styles. Situational leaders adapt to different circumstances and lead according to whichever style gets the best results for the given situation. They are also called contingent leaders because they can draw from Fiedler’s Contingency Theory on leadership: in poorly-structured environments, you need to be a transformational leader in clearly-structured environments, you need to be a transactional leader They can also draw from path-goal theory, where your leadership style changes based on where you’re trying to go: directive leaders give employees clear directions supportive leaders get employees through challenging periods participative leaders involve their employees in key decisions achievement-oriented leaders set goals for employees and encourage them to meet the goals Key Leadership Traits: All of them. This type of leadership requires a vast amount of experience in different situations Personality Types (Module 5.5) The trait theory of leadership says our personalities determine how we lead. So …what does that look like? THE BIG 5 OCEAN (and other assorted bunkery) Openness (inventive/curious vs consistent/cautious) Conscientiousness (efficient/organized vs extravagant/careless) Extraversion (outgoing/energetic vs solitary/reserved) Agreeableness (friendly/compassionate vs critical/rational).

Neuroticism (sensitive/nervous vs resilient/confident) High openness thrive in new situations that require flexibility. They like to gain new information and are willing to change their opinions when new facts present themselves. High conscientiousness have a high attention to detail. They like to be on time, manage complex details carefully, and care about outcomes. (One of the best overall predictors for success as a manager.) High extraversion like other people, have strong interpersonal skills, and deal well with people in different situations. High agreeableness interacts with others well on an emotional level. They are forgiving and fair. High neuroticism tend to have trouble forming relationships and are often not sought for advice. You want a low score in this one Other Personality Traits You May Desire Self-Monitoring - can adapt behavior to external situations Proactive - can fix their own problems and address their own challenges, tend to be more resilient and more successful over time Self-Esteem - capable of taking actions without experiencing self-doubt Self-Efficacy - believe they can be successful in a particular task – this one is job-specific Power and Limitation of Trait Theory Trait theory tells us who is most likely to step up and be a good leader. (Strong confidence and interpersonal skill = born leader) Behaviors matter more – just because you can be a good leader doesn’t mean you will be. When the rubber meets the road, a leader is defined by the decisions they make and the actions they take. These are behaviors! Power in Organizations (Module 5.6) Managers and leaders exercise power. Power is how we assert our will and convince others to do our bidding. Organizational power is how an organization asserts its will and convince others to do its bidding. (It’s just power that an organization has.) Sources of Organizational Power Power can come from a few different sources:.

Coercive - the power to punish non-compliance. Reward - the power to make one’s dreams come true (opposite of coercive power). Referent - the power that comes from having other people with power like me and want to please me Expert - power derived from knowing more than other people about something Information - power derived from knowing secrets so others can’t safely disobey me. “I have dirt on you.” The KGB calls this kompromat Connection - “friends in high places” - the ability to call in a favor Leadership in Teams (Module 5.7) Leadership becomes even harder when you have to lead a team. How Teams Function Group formation undergoes a standard linear process Forming - first, you put the group of people together. Storming - people initially bicker and fight for dominance, amongst themselves. Norming - the pecking order is established, now we must learn how to cooperate with each other. Performing - time to get some stuff done Adjourning - the group cycles out and people go back to their jobs The reason for forming the group in the first place is to get to the performing stage. But you have to live with all the other stages too – they can’t be skipped. Punctured equilibrium is a competing group dynamic theory where all five stages exist, but you’re able to go back and forth between stages. As members join and leave the group, you may need to go back and re- legislate the pecking order. How To Lead a Functioning Team At each of these stages, a different style of leadership is required: Forming requires an authoritarian style Storming - participative – allow feedback and watch how the pecking order is established. Norming - coach/cheerlead people by reminding them on the tasks that need completed Performing - be a democratic leader and help them reach their goals, or be laissez-faire and stay out of their way Fostering Team Cohesion Cohesion is “Social Glue” - it helps the team stick together. Without it, the team argues amongst itself and isn’t effective. Too much cohesion causes groupthink and lack of individuality causes social loafing – slacking..

Groups are more cohesive if you select team members for Similarity Stability Size Support Satisfaction Types of Teams One dimension of team type has to do with where the members are sourced: Cross-Functional - team members come from many different backgrounds and functional centers. A diverse team which can solve a varied and diverse set of problems. Fuctional - team members all come from the same department/function within the company. Specialists who know their role and do it well. Very cohesive but prone to groupthink. Another dimension of team type has to do with how the team is managed: Self-Managed - the team is empowered with the responsibility and authority to lead itself Managed or externally-managed – the opposite When To Adjourn The Team Break up the team when: the task is done and there’s no replacement task for them to work on the task is not done but the team becomes dysfunctional the team has been together for a long time and there is a desire for new ideas/“fresh blood” Consider keeping the team together if they’ve been extremely effective – breaking up a good team means another team will have to be formed and go through the team formation process again – this requires paying the “formation cost”. Managing Teams (Module 5.8) In this final module, we take all the information we’ve covered in this chapter and turn it into pragmatic advice for managing actual teams. Reuse Your Teams We want to get our team to the Performing stage. But we must always pay the cost of team formation. Never form a new team where you can use an older, existing team. Staffing Your Teams.

Think about who you’re putting on the team – not as a faceless group of individuals, but as individual personalities. Will they get along? Are they all likely to be motivated by the same types of tasks? You want as much similarity, stability, support, satisfaction as possible in a team of manageable size. Who really wants to be on that team? Seek volunteers as much as is practical – being excited to be on a team means that person self-selected into the role. It’s probably something they really want to do. Avoiding Groupthink Groupthink is a downside of keeping a successful team together too long. Too much cohesion and time together can create a sort of old-boys’-club where the loyalty is to the team rather than to new, important ideas. Challenge this by bringing an outsider (or enlisting one of the insiders) to play Devil’s Advocate and question the team’s assumptions. This person needs strong self-esteem and strong self-efficacy in the role so they are able to effectively question the team. Fight Social Loafing Social loafing happens when team members believe/realize they won’t be rewarded or punished differentially from their group members. Fight this by rewarding or punishing differentially from their group members – develop assessments of individual performance. Recognize outstanding individual achievement and call out individual failure. Prove the loafers wrong. Right-Sizing Teams When forming a team for a specific task, keep it as small and simple as possible. Only add complexity to the team when the task demands it. Big teams are harder to lead than smaller ones. Cross-functional teams take longer to form. Managing Self-Managed Teams Get the fuck out of their way. Give them oversight into planning, scheduling, monitoring, and staffing – If you want them to manage themselves, you need to hand over the keys and give them the tools. You manage a self-managed team by setting up the problem specification/requirements and very clearly communicating these to the team. Module 6 – Global Trends and Issues in Management.

International Management and Culture (Module 6.1) Conflict Resolution (Module 6.2) Organizational Communications (Module 6.3) Operations Management (Module 6.4) Human Resource Management (Module 6.5).