Lecture 1: What is Management

Stage 2 Session 2

Introduction to Management 1

2

Overview

• Introduction to the ‘management’ of others, what is different from being an individual contributor

• The key employee: manager interfaces and their implications for effectiveness

• What is ‘Performance Management’ (PM) - definition, origins – the key task of the manager above all else

• Stretch goals and expectancy theory• The process that is true performance management – beyond

the theory• Goal setting practice – theory and reality

Learning Outcomes of this lecture

• To be able to understand what does it mean to be a manager, how this differs from being an individual, and how the role changes with the scope of the responsibility

• To understand in depth what is meant by managing the performance of others – what ‘performance management’ is and how to apply it in organisations

What is ‘management’

• Question 1 – what is meant by management?

• Question 2 – is it an art or a science? (creative and free or governed by certain rules and principles?)

• Question 3 – what does it involve?

Summary

Management is the process of achieving organizational objectives through people and other

resources.

The role of the Manager

PASSSAGE 1

PASSAGE 4

PASSAGE 5

PASSAGE 3

PASSAGE 2

ENTERPRISE MANAGER

The Pipeline Model

In each passage the role has similar issues applied very differently

ENTERPRISE MANAGER

BUSINESS MANAGER

MANAGE MANAGERS

MANAGE SELF

GROUP MANAGER

FUNCTIONAL MANAGER

MANAGE OTHERS

PASSAGE 6

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Defining The Six Passages

• Individual contributors, responsible for one’s own contributions

• Skills : Primarily technical or professional skills• Time : Focuses on completing own tasks• Values : Accepts the company rules and practices, exhibits professional• pride and makes prudent use of resources

Managing Self

• First line supervision of others, responsible for others’ contributions

• Skills : Management skills including planning, assigning work, coaching and counselling, and measuring work of others

• Time : Ensures others are working at full capacity, developing their skills and adopting the values of the corporation

• Values : Values managerial work and makes commitment to acquiring• and building new skills

Managing Others

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Defining The Six Passages

• Responsible for providing strategy and direction, integrating with other functions

• Skills : new communication skills to penetrate additional management layers• Time : participating in business team meetings ; day-to-day operations are delegated

to subordinate managers • Values : values work that is new and different from one’s own experience

Manage Managers

• Responsible for providing strategy and direction to a function, integrating with other functions

• Skills : understanding and managing work outside of one’s own skill area, developing functional strategy

• Time : focuses on communicating with other functional managers, securing resources

• Values : values work that is new and different from one’s own experience

Functional

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Defining The Six Passages• Most have management responsibility of all functions of P&L

• Skills : Must be able to learn enough about all functions to make trade-offs decisions and integrate the plans and programs of diverse functions into one effective business plan ; develop business strategies

• Time : Spends time working with functions perhaps not understood or valued in the past

• Values : Changes mindset from a functional perspective (‘can we do it ?’) to a profit perspective (‘should we do this ? Will we make money ? Does it fit our strategy ?’)

Business Managers

• Manager of several businesses

• Skills : Evaluate business strategy to determine how to allocate resources across businesses ; determine what businesses the Group should be in and which to exit ; build programs that will produce functional managers who can grow to general business managers ; must be ‘maze-bright’ and able to effectively interact with total organisation, community, industry, governmental representatives

• Time : Same as business manager but time spans are longer, decisions are bigger and risks and uncertainties are greater

• Values : Values other’s successes and gains satisfaction in developing the organisation beyond personal success

Functional Managers

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Defining The Six Passages

• Responsible for managing a conglomerate, multi-business company

• Skills : Create strategic framework that sets appropriate boundaries for group and business strategy ; integrate group activities to create a complete global business ; connect group to corporation ; change in self-concept as a leader of an enterprise

• Time : Spends significant time on corporate issues ; focuses on long term (5-10 yrs.) and immediate results ; makes decisions in the context of long-term policy implications

• Values: Embodies corporate values ; focuses on building long term infrastructure, global positioning and achievement ; focuses on a few but significant strategic decisions

Enterprise Manager

The role of the manager: key interfaces

• Managing is primarily concerned with the effectiveness of others• There are critical interfaces that will enable or disable a manager in their role:

Managing the performance of others Directing others – and how to direct, or coach to meet objectives How to address conflict that arise between others How to motivate others to do what is required of them by the organisation How to develop others and also how to develop the self

Managing the performance of others

Daniels:

"In simplest terms, it's a way of getting people to do what you want them to do and to like doing it."

A formal definition:

• Performance Management is a scientifically based, data-oriented management system.

• It consists of three primary elements:

1. Measurement2. Feedback3. Positive reinforcement.

Although each of these three elements can exist alone, all three must be present before you have true Performance Management. And they must be implemented systematically and in sequence

Managing the performance of others

The Performance Management Life Cycle: a case studyWillACHIEVE is the way we manage, and want you to manage, our business performance

It is comprised six key elements:

1.Understanding your business 2.Setting Objectives with your Associates3.Reviewing the objectives mid year4.Undertaking a year end review5.Rating your Associates at the year end6.Paying your Associates to their performance rating

1. Understanding your business

Q1

Q2

Q3

Q4

2. Setting Objectives with your Associates

3. Reviewing the objectives mid year

4. Undertaking a year end review

5. Rating your Associates at the year end

6. Paying your Associates to theirperformance rating

Objectives should cascade from the business

“Expectancy theory”

• Expectancy theory has been researched by many, but is attributed to Victor Vroom.

• It appears to hold up well to experiment – many theories of motivation don’t.

• It also seems pertinent to sales situations, business situations, particularly how well the motivation of the seller matches the motivation of the buyer, and performance managment more generally

What the theory says

• We create for ourselves expectations about future outcomes, e.g. “Having a villa in France would probably make me happy”.

• We weigh up considerations about those expectations before taking action:

– How much do I value the outcome? What’s in it for me? Is it worth the effort? How does it stack up against other outcomes I want?

– Is there any way of achieving those outcomes? Can I see a clear path of actions that would lead to that outcome? How do other people do it?

– Am I, personally, capable of taking those actions? Do I have the knowledge and skills? Resources?

• If the answers to all three questions are positive, I am likely to be motivated into action.

• If the answer to any one of the three questions is negative, I am unlikely to take any action at all.

What about SMART (Doran)

• Specific• Measurable• Achievable• Realistic• Time bound

The traditional model of setting objectives – entrenched in MBO (Drucker)

But what is less good about it?

Think SIMple

The SIMple model of objective setting:

Specific – Clarity on what and when. Effective objectives are very clear about the outcome required. What do you want to see happen?

Important – A few important goals, critical for the company to achieve its results and motivational for the individual.

Measurable – Think impact. What real impact does the goal have on what we value? Ensure that the impact is expressed with a number or numbers.

Stretch objectives: Clear, simple rules to follow

Using SIMple rules, stretch objectives should be:

1. Within the scope of the accountabilities of the role.2. Agreed by both parties. 3. Balanced across a number of impactful areas, but not too many (three to six

maximum). 4. Stretching and motivating. Stretching does not mean unrealistic; it means with

ambition.5. Adaptable to changing circumstances. Things change, and so will objectives throughout

the year.6. Delivered through performing the job – by your efforts in your role, not those of

others, or by ‘lucky’ events or happy circumstances.7. Results are based on outcomes: outputs, not inputs. Measure by what happens: the

impact.

Good objectives or not?

1. Improve retention rate by 1 % in BU by end of 20142. Develop more accounts3. Achieve year over year growth of 8%4. Develop a bench of 2 ready successors for my XX role by end of 20145. Raise morale in my team6. Connect more with my colleagues in RE7. Role model completion of performance reviews targeting all my direct

reports and their directs reports by end of February 2014.

Who should undertake a rating?

How should they do it?

What issues should you consider in designing a rating scale?Question 2

Rating Scales in Performance Management

A rating scale- needs enough points to extract meaningful data.- Needs to be able to differentiate performance - Needs considerable ‘face validity’

BLOOM’s 5-point approach to performance reviews

5 – Exceptional performance. The employee changed the way the company operates and has provided great value to customer experience and profitability.4 – Above average performance. The employee excels over others in a talent area. 3 – Performance meets expectations. Every job has tasks that need to be done consistently well.2 – Needs improvement. Without this rating there is no opportunity to convey areas where an employee seems to be slipping and needs support. 1 – Poor performance. Behaviour exists where an employee is experiencing apathy over a period of time even after developmental interventions.

Rating Scales

The Willis Rating Scale

3.1 3.2 3.3 3.4 3.5

2.1 2.2 2.3 2.4 2.5

1.1 1.2 1.2 1.4 1.5

Exceeded Expectations

Fully Met Expectations

Partially Met Expectations

A serious issue

Some weakness,

needs work

Objectives“What”

Values“How”

But what do we mean?

Effective, skilled,

solid

Towering strength,

outstanding role model

Talented, exceeds expectati

ons

How to Decide a Rating – The ‘What’

3

2

1

Exceeded Expectations

Fully Met Expectations

Partially Met Expectations

Objectives“What”

3Superior performance which demonstrably stretched beyond expectations.

Fully met on all objectives, overachieved on the most important objectives,

Consistently delivered more than expected

2

Good solid and effective performance. Fully met on the majority of the most important objectives

Occasionally exceeded expectations

1Partially Met Expectations’ means performance fell short and was below expectations. Did not meet on the most important objectives

Measuring the ‘how’

Rating Guidance1.1 A serious issue Behaves independently, with little reference to

Willis Values.Poor Corporate ‘citizen’ ‘nods no’

1.2 Some weakness, need work Behaves according to some Values, but ignores others, and shows limited desire to fully participate

1.3 Effective, skilled, solid Solid display of most Values, probably not all but working on it, and shows awareness and willingness

to do so

1.4 Talented exceeds expectations Displays most of the values very well, working at improving

1.5 Towering strength, outstanding role model Absolute Willis Role Model, others look to them, aspire to their skill levels

Rating Values: Practice

Watch this short video’s and assess the team working:

– Team working – what do we mean before we view the video?

– http://www.youtube.co/watch?v=qfVRzc3yA1U

What Can Go Wrong?At times ‘wrong’ ratings are applied, not deliberately, but because managers:

Want to be nice Want to support colleagues inappropriately Want to get the process over with as quickly as

possible Apply the ‘wrong’ criteria

Why does it matter?

Wrong Rating

Wrong Reward

Wrong Performance

Halo Effect

Tendency Bias

Primacy/Recency

Contrast Effect

Personal Bias

‘Best Practice’ Performance Management: McKinsey• The performance review is split into two parts:

1. Peer review: – you ask for feedback from the colleagues you have worked with on a

particular project.– It is in the form of a questionnaire and even a phone call. These reviews are

on a scale of 1-3• An independent review of how well you have progressed with the professional

development plan you decided on earlier in the year. Someone senior in the firm who can guide the career. He/she bases his opinion on the feedback received from peers and seniors. Not the line manager.

• Promotion:Once these two reviews are done, the DGL presents your case in front of the evaluation committee. The evaluation committee consists of other leaders, seniors, partners etc. Everyone gives their opinion once the case is presented. On the basis of this discussion, your promotion is decided.

End of Lecture

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© Pearson College 2013