Welcome To
Understanding
Management, Leadership,
& Decision-Making
Understanding Management, Leadership, and Decision-Making
What Managers Do:
​Setting Objectives: Managers play a crucial role in defining the goals and objectives of an organisation. This involves determining what the company aims to achieve and setting a clear direction for employees.
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Analysing: Managers are responsible for gathering and analysing information about the internal and external environment of the organisation. They need to understand market trends, competition, and the company's own strengths and weaknesses.
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Leading: Leadership involves motivating and guiding employees to work towards the company's objectives. Effective leaders inspire and empower their teams to achieve excellence.
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Making Decisions: Managers make decisions at various levels of the organization. These decisions can range from day-to-day operational choices to strategic decisions that shape the company's future.
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Reviewing: Regular assessment and review of processes, performance, and outcomes are essential. Managers must ensure that the organisation is on track to meet its objectives and make necessary adjustments when required.
Types of Management and Leadership Styles and Influences:
​The Tannenbaum Schmidt Continuum: This model illustrates a range of leadership styles, from autocratic (where the leader makes all decisions) to democratic (where the leader involves employees in decision-making). The choice of style depends on factors like the situation, the team's maturity, and the leader's preference.
The Blake Mouton Grid: This grid assesses leadership styles based on two dimensions: concern for people and concern for production. It identifies five leadership styles, including the Team Leader, Country Club Manager, Impoverished Manager, Produce or Perish Manager, and Middle of the Road Manager.
The Effectiveness of Different Styles of Management and Leadership:
​The effectiveness of a management or leadership style depends on several factors, including the organization's culture, the nature of the tasks, the skills and preferences of the leader, and the needs and expectations of the team.
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For example, in a crisis, an autocratic leadership style may be necessary for quick decision-making. In a creative brainstorming session, a more democratic approach could be effective in encouraging employee input.
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Effective managers and leaders often adapt their style to suit the specific circumstances and individuals they are working with. Flexibility and the ability to switch between styles are valuable traits.
Influences on Decision Making:
​Mission and Objectives: The mission and objectives of an organisation guide decision making. Decisions should align with the broader purpose and goals of the company.
Ethics: Ethical considerations are essential in decision making. Managers must make choices that are morally sound and uphold the values of the organisation.
External Environment, Including Competition: The external business environment, including market conditions and competitive forces, can significantly influence decision making. Managers need to adapt to changing market dynamics.
Resource Constraints: The availability of resources, such as budget, manpower, and technology, can impact decision making. Managers must make choices that optimise resource utilisation.
Understanding Management Decision Making
The Value of Decision Making Based on Data and Intuition:
​Scientific Decision Making: This approach involves using data, facts, and analytical tools to make informed decisions. It relies on evidence and logical reasoning. Scientific decision making includes understanding and interpreting decision trees, as well as calculating expected value and net gains.
Intuition: Intuition involves relying on one's gut feeling or instincts when making decisions. It can be particularly valuable when there is limited data or when quick decisions are needed.
Decision Making: Risks, Rewards, Uncertainty, Opportunity Cost:
​Risks: Every decision carries a level of risk, which is the potential for undesirable outcomes. Managers need to assess and manage risks to make informed choices.
Rewards: Decisions also come with potential rewards, which are the positive outcomes or benefits that can result from a decision. Managers should weigh risks against rewards.
Uncertainty: In many situations, outcomes are uncertain, and it's impossible to predict with certainty what will happen. Managers must navigate this uncertainty by making informed guesses or using probabilistic models.
Opportunity Cost: Every decision involves trade-offs. Opportunity cost is the value of the next best alternative that is foregone when a particular choice is made. It's essential to consider what is sacrificed when making a decision.
The Use and Value of Decision Trees in Decision Making:
​Decision trees are graphical tools that help visualise the decision-making process. They are particularly useful for decisions with multiple possible outcomes and uncertainties.
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Decision trees allow managers to map out various decision paths, assign probabilities to different outcomes, and calculate the expected value and net gains associated with each choice. This helps in making more informed decisions.
Understanding the Role and Importance of Stakeholders
The Significance of Stakeholders:
​Stakeholders are individuals, groups, or entities who have an interest in or are affected by the actions and decisions of an organisation. They play a crucial role in shaping the success and sustainability of a business.
The Need to Consider Stakeholder Needs When Making Decisions:
It is essential for managers to consider the needs and interests of stakeholders when making decisions. This is because stakeholders can significantly impact, or be impacted by, the outcomes of those decisions.
Stakeholder Mapping:
Stakeholder mapping is a strategic management tool used by organisations to identify, categorise, and analyse their stakeholders based on two key dimensions: power and interest. This process helps in understanding the relationships between the organisation and its stakeholders, guiding effective engagement and decision-making strategies.
Here's a breakdown of the key components of stakeholder mapping:
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Power: This dimension assesses the level of influence, authority, or control that a stakeholder holds over the organisation. Stakeholders with high power can significantly impact the organisation's actions and decisions, while those with lower power have less direct influence.
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Interest: This dimension gauges the degree of concern or involvement a stakeholder has in the organisation's activities. Stakeholders with high interest closely monitor the organisation's actions and decisions, while those with lower interest may have more peripheral or occasional involvement.
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By plotting stakeholders on a grid based on their power and interest levels, organisations can categorise them into different groups. Common categories include:
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Key Players (High Power, High Interest): These stakeholders possess substantial influence and are deeply invested in the organisation's activities. They require close engagement and proactive management.
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Keep Informed (High Power, Low Interest): Stakeholders in this category wield significant power but may not be intensely interested in day-to-day operations. They should be kept informed about major developments.
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Keep Satisfied (Low Power, High Interest): Stakeholders in this group have limited direct influence but a strong interest in the organisation's actions. Their needs should be met to prevent dissatisfaction or negative advocacy.
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Monitor (Low Power, Low Interest): These stakeholders have minimal influence and may have limited interest in the organisation's activities. While they don't require extensive engagement, periodic monitoring is still necessary.
Stakeholder mapping is a valuable tool for organisations to prioritise their engagement efforts, tailor communication strategies, and manage relationships effectively. It ensures that the organisation's decisions and actions align with the expectations and concerns of those who have the greatest impact or interest in its operations. Stakeholder mapping is an ongoing process, allowing organisations to adapt to changing dynamics and evolving stakeholder relationships.
Stakeholder Power and Interest (revisited)​
Stakeholder Power: This refers to the influence or authority that stakeholders have over the organisation's actions. Stakeholders with high power can exert more pressure on decision-making.
Stakeholder Interest: Interest reflects the level of concern or involvement a stakeholder has in the organisation's activities. Stakeholders with high interest are more likely to closely monitor the organisation's decisions and actions.
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Stakeholder Needs and the Possible Overlap and Conflict of These Needs:
Stakeholders often have diverse needs and expectations. While some needs may align, conflicts can arise when the interests of different stakeholders diverge. Managing these conflicts is vital to maintain positive stakeholder relationships.
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Influences on the Relationship with Stakeholders:
Several factors can influence the relationship with stakeholders, including the organisation's mission, objectives, ethics, and external environment. Regulatory changes, economic conditions, and market dynamics can also affect these relationships.
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How to Manage the Relationship with Different Stakeholders:
Communication: Effective communication is key to maintaining positive stakeholder relationships. Keeping stakeholders informed about decisions, progress, and challenges fosters trust and transparency.
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Consultation: Actively involving stakeholders in decision-making processes through consultation can help align their interests with the organisation's goals. This collaborative approach can lead to more mutually beneficial outcomes.
Managing relationships with stakeholders is a critical aspect of successful leadership and decision making. It ensures that decisions consider the interests and concerns of those who are affected by them. Stakeholder mapping helps identify key stakeholders, their level of influence, and their interests, allowing organisations to prioritise their engagement efforts. Balancing the diverse needs of stakeholders and proactively managing conflicts contributes to long-term organisational success and sustainability. Effective communication and consultation are essential tools for nurturing these valuable relationships.
