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Module #1

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Managers in the Workforce

In today's fast-paced, competitive world, businesses are continually changing. Most of these organizations are on the hunt for the competitive advantage, or a way to strategically move ahead of the competition in the marketplace. However, earning the competitive advantage takes work; goals must be set, plans must be made, people must be motivated and mobilized, resources have to be gathered and distributed, and objectives have to be monitored and assessed.

Enter managers. These men and women come in many forms, but they all share the common task of working with people and resources to achieve organizational goals. An organizational goal can be something as simple as finding a way to shorten the amount of time it takes for a product to leave a warehouse or as elaborate as introducing a new product to the marketplace that makes all previous versions of this type of product obsolete. Regardless of the goal, someone needs to manage all of the factors necessary to seeing that goal become a reality.

Think of a manager as the foundation, support beams, and roof of a house. He or she provides the necessary support from the bottom up, and also provides oversight to all of the parts in between.

While this may seem like a great deal of responsibility and accountability for just one person to have, much like an onion, there are several layers of management. The roles and responsibilities a particular manager has correlates to their position in the organization. While job titles and roles can vary from organization to organization, they typically fall into one of three levels of management.

Top-Level Managers

The first level of management is called top-level management. Top management is made up of senior-level executives of an organization, or those positions that hold the most responsibility. Jobs titles such as Chief Operating Officer (COO), Chief Executive Officer (CEO), Chief Financial Officer (CFO), President, or Vice President are commonly used by top managers in organizations. These top managers are responsible for setting the overall direction of a company and making sure that major organizational objectives are achieved. Their leadership role can extend over the entire organization or for specific divisions such as finance, marketing, human resources, or operations.

Middle-Level Management

The second layer of management is called middle-level management. This level of managers report to top management and serve as the head of major departments and their specialized units. Middle managers serve as a between top managers and the rest of the organization from a very unique standpoint. They are typically much more visible to the greater workforce than top management, but they spend most of their time developing and implementing strategic actions plans needed to achieve the organizational goals set by top management.

Middle managers essentially have the important role of designing, selecting, and carrying out the best plan possible as a means of propelling a company towards its overall goals. Job titles of middle managers include Directors, Assistant Directors, Regional Directors, Division Managers, Deans, Branch Managers, Site Managers, and so on.

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middle & low-level managers - video & lesson transcript | study.com

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Management in Organizations: Top, Middle & Low-Level Managers - Video & Lesson Transcript | Study.com

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In today's fast-paced, competitive world, businesses are continually changing. Most of these organizations are on the hunt for the competitive advantage, or a way to strategically move ahead of the competition in the marketplace.

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Essential people management skills are so important!

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By Indeed Editorial Team

Updated May 18, 2022

Published October 7, 2019

This article has been approved by an Indeed Career Coach

Related: Top 8 Leadership Styles - Definitions & Examples

In this video, Jenn, an Indeed Career Coach, explains the top leadership styles in management and how to identify the one that's right for you and your team.

Effective people management is a necessary quality for current and aspiring leaders who aim to improve workplace communication and prepare employees for success. Examining the skills that make up people management can help you discover your strengths and identify areas for improvement.

In this article, we explore what people management is and how to develop the skills that are vital to quality people management in the workplace.

Related video: Top 8 Leadership Styles: Definitions and Examples
In this video, Jenn, an Indeed career coach, explains the top leadership styles in management and how to identify the one that's right for you and your team.

What is people management?

People management is the process of training, motivating and directing employees to optimize workplace productivity and promote professional growth. Workplace leaders, such as team leads, managers and department heads use people management to oversee workflow and boost employee performance every day.

People management is useful in many workplace situations, such as for:

Handling interpersonal conflicts

Managers and employees in leadership positions have an important role in resolving conflicts. Effective people management can help you mediate conflicts between employees in a way that promotes collaboration and respect.

Leading employee training

As a workplace leader, you may be responsible for onboarding new employees and coaching current employees on updated processes. You can use the elements of people management to provide constructive feedback and mentor employees so they can succeed in their positions.

Managing deadlines

Directing employees includes assigning tasks and establishing achievable goals. Effective people management can help you evaluate your team's resources and set realistic deadlines that encourage progress.

Building company culture

Your leadership position may allow you to positively influence your work environment. You can use your people management responsibilities to build rapport with employees. You can also ask your team for feedback on their perspective of the company, and then turn that feedback into actionable changes to a company culture that every employee can help develop.

Essential people management skills

People management requires several soft skills, including those that can lead to open and honest communication as well as improved employee experience. Each of these skills can better help you interact with your employees and perform organizational tasks.

Here are eight essential people management skills to incorporate into your workplace:

1. Empowering employees

Empowering your employees helps them develop new skills and be more productive. It's important to train new employees well and give them the knowledge and resources they need to perform assigned tasks and continue learning on their own.

Other important aspects of empowering employees include:

Offering constructive feedback to encourage skill-building

Being available for questions or additional training

Allowing them to adjust workflow or standard processes if it improves their productivity

Encouraging them to take additional skill-building courses and learning opportunities

Supporting them on or manage challenging projects

2. Active listening

Active listening is the practice of listening to the speaker to fully understand their perspective, question or concern before responding. Active listeners remove distractions, maintain eye contact and offer verbal or non-verbal cues to indicate their engagement and understanding.

When an employee comes to you with a question or issue, use nonverbal cues such as nodding to demonstrate your engagement while they're speaking. Respond thoughtfully by repeating a summary of your understanding of their message. If you have understood, you can then ask follow-up questions to learn more about what they need. You can also express that you empathize with their experience to further assure them you understand and respect them. These active listening techniques lead to quality people management that promotes positive interactions in the workplace.

Read more: Active Listening Skills: Definition and Examples

3. Conflict-resolution

Good conflict-resolution skills can help address interpersonal challenges. You can analyze the situation and identify what the causes of the conflict might be. If there's a miscommunication or differing opinions, you can mediate between opposing parties and help them make a compromise or reach a collective understanding. After mediation, monitor the situation to ensure the conflict is fully resolved and to prevent it from occurring again.

Read more: Conflict Resolution Skills: Definition and Examples

4. Flexibility

Knowing when to be flexible and when to more firmly direct employees is an important aspect of effective people management. You can demonstrate flexibility in your management style by accommodating individual employee needs-such as adjustable schedules or remote work options-and allowing employees to adjust their individual workflow so they can be as productive as possible. You should assess the results of the employee's process to ensure its efficiency and to help them revise the process if it can be optimized.

For example, if one of your employees prefers to complete related tasks in batches while another employee moves back and forth between different tasks, analyze each employee's results. If both employees are their most productive using their respective processes, then you can encourage them to continue using and improving their systems. You may even ask them to demonstrate their individual processes to other employees to optimize the entire team's workflow. If an employee seems to be struggling with personalizing their process, you can coach them through the standard steps, and help them discover what works best for them.

5. Patience

Patience is an important people management skill that uses kindness, respect and empathy while helping others overcome obstacles. You can use patience when training new employees, teaching new processes, handling conflicts or solving problems. When employees can trust their managers to be patient, they are more likely to ask for clarification to ensure they understand directions and to increase the quality of their work.

For example, if an employee continues asking questions about a single process, you should continue to guide while trying new ways to better communicate your message. Consider providing multiple examples that clarify and demonstrate your instructions, or combine typed instructions with visual diagrams if possible.

Use patience in the workplace to encourage employees to always ask for help if they need it.

6. Clear communication

Communication is a necessary people management skill that enables team members to work together in solving problems, brainstorming new ideas and adapting to new changes. Your ability to clearly communicate with your coworkers can help you be a better team member.

Practice effective communication by using clear and simple language so every recipient understands your message. Consider revising the way you give your message to avoid common barriers, such as too much information at one time or inaccessible terms. Allow your employees to ask clarifying questions, and directly confirm that each member of your team understands the information so there is no miscommunication.

7. Trust

Trust means believing that you can rely on someone's abilities, assistance or advice when you need it most. Building trust helps your team work together more efficiently and productively. Teams should be able to trust that their leader supports them and believes in their hard work. Leaders should be able to trust that their team can complete tasks correctly and on time.

You can build trust by reliably performing your tasks and demonstrating technical skills when employees ask for help. You can also promote trust when you provide constructive feedback that helps team members improve their skills and work quality.

8. Organization

Managing a team involves handling several different ongoing tasks simultaneously. Organization is an important people management skill that helps you track and maintain your team's productivity. Signs of effective organization include:

Promptly responding to emails, approval requests and questions

Keeping a calendar to actively track deadlines

Running meetings that efficiently discuss information

Properly assigning tasks to team members

How to develop your people management skills

If you can demonstrate your people management skills, you can become a stronger candidate for future leadership roles. Identifying your strengths and areas for improvement can help you decide which distinct skills to grow. Consider using these strategies to develop specific people management skills:

1. Choose individual skills to focus on

People management is a broad skill set. Select a specific skill from the list above, such as conflict resolution, and learn more about the skill, its benefits and how to apply it in the workplace.

2. Enroll in professional development courses

Some companies offer their own management training programs while others may sponsor employees to take development courses elsewhere. You can find courses online or through an educational institution.

3. Find a mentor or business coach

Specialized or targeted attention is a great way to develop people management skills quickly. Mentors and business coaches can give you personalized feedback and specific, actionable strategies.

4. Ask other managers for feedback or advice

Ask your manager or supervisor for advice on how to develop your people management skills and potential leadership opportunities where you can demonstrate and practice those skills.

Related: What Makes a Good Leader? Best Tips & Growth Strategies

In this video, Jenn, a certified career coach, will explain what leadership at work is, essential leadership behaviors, skills and styles, and how to identify the right approach for your workplace.

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Guide To People Management: Definition, Tips and Skills

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By Indeed Editorial Team Updated May 18, 2022 Published October 7, 2019 This article has been approved by an Indeed Career Coach Related: Top 8 Leadership Styles - Definitions & Examples In this video, Jenn, an Indeed Career Coach, explains the top leadership styles in management and how to identify the one that's right for you and your team.

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4 CRUCIAL TIPS on Leadership for FIRST TIME MANAGERS

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Good article that further explains the specific elements with Planning and Decision making.

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In everyday life, all of us make and execute certain plans to achieve our goals. For example, before going on a trip, we make a plan i.e. where and when to go, how to reach the destination, the duration of the trip, where to stay and luggage to carry, etc. All these tasks require creating an effective plan which consists of certain activities for the successful execution of a trip. Process of making such plans to achieve some goal or objective is called "Planning. " In other terms, in order to execute activities in future, prior forethought is necessary and this forethought comes under the concept of "planning."

From an organizational point of view, planning is defined as "process by which an organization identifies its short-term and long-term goals, design, and implement strategies to achieve them." One of the important aspects of planning is to allocate resources and manpower in an organization.

The planning function was put forth by Henri Fayol, known for his Management Theories i.e. 14 principles of management and 5 basic functions of management.

Planning is one of the six management functions/processes of Henri and the management process starts with planning function in any organization.

For example, manpower planning or human resource planning is a crucial planning process which ensures the right kind of people at the right place, and at the right time to fulfil the right type of jobs in the organizations. This process includes different activities in the planning process to meet organizational goals.

The Purpose Of Planning

2. Cost-Effective Decision-Making

3. Forecasting

4. Productive Utilisation Of Available Resources

5. Facilitate Other Management Functions

Characteristics/Nature Of Planning

1. Basic and Important Management Function

Planning is not only the base for the rest of the management functions i.e. staffing, directing, organizing, and controlling, but it is also one of the most crucial processes for any organization to meet goals. All the above management functions involve effective planning as without proper planning no function can be performed well. Therefore, the results might be ambiguous.

2. Goal-Oriented

Planning is focused on defining organizational goals or objectives, identifying different action plans, deciding and implementing the best action plan to achieve goals.

3. Omnipresent

Planning is involved at all the levels i.e. top, middle, and bottom. The effective functioning of different departments of organizations like sales, purchase, IT, HR, finance among others depends on planning their systems, optimum use of resources, etc. The scope may vary in different functions.

4. Continuous Process

Planning is a continuous process in an organization which involves making plans for a particular time period i.e. monthly or quarterly, half-yearly, yearly, etc. New plans are initiated after the previous plans lapse to fulfil organizational goals.

5. Demands Strong Analytical Skills

Planning requires robust analytical abilities i.e. analyzing information, problem-solving, decision-making, critical thinking, etc. at each level and function.

Planning process demands forecasting future needs, i.e. analyzing and detecting future requirements, challenges in accomplishing organizational goals, etc.

Importance Of Planning

1. Increase In Efficiency

Planning helps in increasing efficiency by aiming at cost-reduction and generating maximum output. It controls the wastage of available resources and their duplicity.

2. Minimize Risks

Risk-management is an important aspect of any organization, especially in forecasting. Planning predicts various risks related to business and further helps in generating action plans to control and reduce these risks. So, with effective planning, organizations prepare themselves for any future uncertainty.

Planning ensures effective coordination at different levels, between various departments or functions. Plans are formulated at each level i.e. top, middle, and bottom as well as in different departments. Effective execution of these plans requires proper coordination which is possible through effective planning. Similarly, different plans like short-, mid-, and long-term plans require coordination to achieve organizational goals where planning plays an important role.

4. Optimum Utilization Of Available Resources

An organization needs different resources like funds, manpower, physical assets to disburse activities of different departments. These resources are limited. So, it's necessary to utilize and organize them efficiently to produce maximum output. Planning helps in organizing these resources carefully.

5. Smooth Supervision And Direction

Planning paves a path for supervising subordinates, providing right instructions, and rendering top-notch guidance. It aims to provide help, direction for performing various tasks, and methods for carrying out different activities.

6. Facilitates Control

Performance of staff can be controlled or improved by devising plans for improvement in performance according to the variance in performance plans and actual performance at work. Without planning, this process of control could not be smooth.

7. Staff Motivation

Attractive monetary and non-monetary benefits can be designed through proper planning which is helpful in boosting the morale of the staff. This leads to high motivation among staff and reduces turnovers of quality staff.

8. Trouble-Free Decision-Making

Making effective and right decisions in an organization is essential to achieve goals. A supervisor has to make different plans and strategies for the smooth functioning of the department and to decide the most appropriate plan. So, planning helps in smooth decision-making in an organization.

9. Goal-Oriented

Proper planning ensures that the best strategies and decisions are made to fulfil organizational goals. Different plans made at different levels are aimed at achieving individual, departmental, and organizational goals.

10. Encouraging Creativity And Innovative Ideas

Planning demands thinking and implementing the best ideas or strategies for organizational success. Both supervisors and subordinates are encouraged to exploit their creative skills and present their innovative plans.

Elements/Components Of Planning

The planning process revolves around different aspects as shown in the diagram below:

Mission or purpose is the base of planning in any organization. The mission of an organization specifies its reason for existence, customers, products or services, service locations, etc. and mostly in written form. It acts as a direction towards achieving organizational goals. Mission also includes an organization's values and belief system. It also clears the organization's viewpoint on staff. Organizational goals are defined based on the mission statement of an organization.

The ultimate aim of the functioning of each department in an organization is to achieve organizational goals and objectives. Planning also requires setting of goals to make a plan further. Goals can be individual or team based. For example:

Individual goal of Hiring Manager in the HR department: To recruit top talent in the organization in given time-frame.

Team goal of Human Resource Department: To ensure the development of employees by fulfilling an individual's personal, professional needs and by meeting organizational goals.

Goals are specific, measurable, achievable, realistic, and time-bound. Short-term goals can be for less than a year and long-term goals are defined for a time-period of more than a year.

3. Policies

Planning is also based on defined policies of an organization. Policies are a set of guidelines to accomplish any task effectively and also includes procedure and actions. These are defined as a set of plans to handle different situations. Different policies like an insurance policy, travel policy, HR policies are designed to facilitate smooth functioning in any organization. Similarly, if an organization policy says that the minimum annual salary increment of staff will be 10% of the salary then increment can't be less than 10%. So, policies act as a decision-making element as well.

Planning is connected to a process, and it is an important element of planning. A process defines guidelines to execute different activities, i.e. action plan. In any planning activity, the process is practical. A process like planning is aimed at achieving something. These are step-by-step inter-related activities to be performed and require different resources like money, manpower, machinery, etc. to produce the desired output. For example, in a manufacturing company, different processes are present like production process, quality control and quality assurance process, maintenance process etc.

Plans that are made for estimating income and expenses for a specific period are defined as "budget." Budget is a set of financial plans which are made for a specific period and reviewed at regular intervals. Whether it is an organization or a family or an individual; all make budget plans to utilize their financial resources efficiently. For example, in an organization business budget is present that includes fixed and variable costs, expected sales, profits, etc.

A well-designed budget also helps in planning during a financial crisis.

Project in an organization refers to the set of inter-related activities which are planned to fulfil certain goals in a specific time period at a given cost using limited resources. Project planning includes defining goals, project schedule, resources, budget, project quality, manpower, and risk management. So, this element of planning consists of other planning elements as well. For example, software companies work on different projects for their clients.

Strategies are a set of plans and actions that are defined to meet certain results. Proper planning and implementation of strategies are essential for organizational success and to meet certain goals.

Planning is mainly of four types i.e. Operational, Strategic, Tactical, and Contingency.

a) Operational Planning

Operational plan or work plan refers to the planning process aimed at achieving departmental and organizational goals. It is related to the day-to-day functioning of organizations. These plans clear planned activities of departments for the near future in detail. The operational plan provides answers of:
-What goals have to be achieved and what strategies to use?

-Who will be responsible for different activities?

-What is the time limit to complete activities?-

-How much budget in terms of financial resources is required and available to complete activities?

For example, the goal of the marketing team of an engineering college is to increase the number of students by increasing marketing promotional activities. Marketing operational plan is explained in the diagram below:

Operational planning is of two types i.e. single use plans or ongoing plans. Single-use plans are developed for one-time activities or tasks like sales or marketing event or seminar. Ongoing plans have a defined set of policies, rules, and procedures to achieve goals and are continued for the future as well, like a performance management system for employees.

Strategic planning is defined as the strategies made by management to achieve its objectives. It also includes defining directions and allocating resources for execution. Strategic planning is meant for long-term business decisions. A strategic plan starts with the vision and the mission statement of an organization.

The process of strategic planning includes vision clarity, collecting and analyzing information, strategy formulation, and implementation of strategy, evaluating, and controlling. For example, the strategic plan of an organization which aims to reduce the current turnover rate is explained in the below diagram:

Models of Strategic Planning

There are five models of strategic planning which represents its designs or blueprints. Selection of the right model depends on an organization's goals, mission, and vision. These models are:

1. The basic model of strategic planning

These are used by new organizations having less experience in using strategic business planning. It is mainly useful for small-scale organizations and business. This planning includes defining mission, goals, identifying strategies, creating action plans, evaluation etc.

This one is an extended version of the basic strategic planning model and is used by established organizations which aim at introducing an improved strategic process. The process of this model includes a SWOT analysis (strength, weakness, opportunity and threat), identifying goals and mission, making strategies, action plans, operational plans, budget allocation, and evaluation on yearly basis.

3. Scenario-based model

This model is more of a technical model. It is used by organizations to face different challenges or scenarios which arise due to external factors or environmental change. Change can be demographic or in the form of rules and regulations. The process includes identifying problem areas in business and different scenarios- both best and worst, designing suggestions for an action plan of business in different scenarios, selecting common strategies to handle changes, and identifying common issues through which business is being affected or will be affected in the near future.

This model is useful in making a balance between an organization's mission and available resources as well as aligning resources to the mission. It helps in identifying any gaps in planning i.e. gap between actual results and expected results. Organizations facing huge efficiencies prefer this strategic planning model to rectify issues.

The process includes identifying an organization's mission, resources, process, etc, inspecting which areas are working in the right direction and which areas need improvement. It also requires finding ways of improvement and incorporating these improvements in the form of strategies in the plan.

This strategic model is the self-organizing model which is based more on the value system and less on the process. The process includes clearing values and vision to stakeholders in a meeting; an action plan is established by each person as per values and vision, everyone clears results of actions and update values, vision accordingly.

This type of planning is for short duration i.e. plans and actions by functions for short-term and aims at contributing to the strategic plan of an organization. Tactical planning is based on today's need and is a bit more detailed. This planning needs to be flexible to meet unexpected issues which are not predefined. It answers what to do to achieve the strategic objective rather than how-to-do as in case of operational plans. Below is an example of tactic planning by HR Hiring Manager to achieve the goal of hiring twenty sales representatives in the first quarter:

d) Contingency Planning

These type of plans are need-based and are formulated when the need for change arises or during the occurrence of any unexpected circumstance. It is also called alternate plans as it comes under picture once other plans fail to produce desired results. The process includes formulating policy, identifying critical factors of a business, risk analysis, preventive control measures, developing recovery strategies, and testing, training, monitoring plan.

An example of contingency planning can be seen in the diagram below which is a crisis situation of organization i.e. what-if HR Head, who is taking care of all HR gamut of organization, left suddenly. To handle such unexpected situations, contingency plans are made. Like in the below diagram, an organization has formulated a plan i.e. performance development program to train the rest of the HR staff to work at the capacity of HR Head in such crisis situations.

The planning process is defined as the steps to define goals and making the best action plans to achieve it.
Steps In Planning Process
1. Defining goal or objective

Goal setting is the first and important step in the planning process. Goals are defined at the organizational, department, and individual level and are meant to be achieved in future in a specific time period. A goal can be short-term, mid-term or long-term. Plans are devised which are aimed at achieving these predefined goals. Goals specify what to achieve by defined rules, policies, process, resources, strategies, etc.

2. Collecting information

Gathering information like facts and figures required to achieve goals is a necessary part of planning. Target audience, circumstances, market information, competitor's strategy, etc. are required to make a right and effective plan.

3. Analyzing information

The next step in the planning process is interpreting information as per goals. Analyzing information includes organizing collected information as per importance, identifying accuracy and relevancy of information from different sources, its unique features, sources and reliability for the organization.

Once relevant information is collected and analyzed, the next step is to formulate a plan to achieve defined goals; the plan includes identifying different activities, required resources, timelines, etc. to implement a plan.

Implementing a plan refers to allocate defined activities, resources, time guidelines to individuals. In this step, strategies and plans are converted into actions to achieve goals. Implementation of plans also requires allocation of responsibility in the team which is responsible for accomplishing the plan.

Once a plan is implemented, it's necessary to evaluate and monitor its effectiveness and impact according to desired goals.

The planning process can be understood further in below example of an organization plan to formulate competitive compensation and benefits structure or plan for employees.

Although planning has lots of advantages for any organization aiming to achieve its goals; it also has certain constraints or limitations. Few of them are:

Planning requires much investment as lots of aspects, i.e. funds, resources, manpower etc, are included in the process of planning. Due to limited capital or funds in small and medium organizations, it is quite challenging to have comprehensive plans. It is hard to allocate funds for information gathering, predicting future needs, developing strategies, and hiring specialists. If a plan is more detailed, then the cost is high too.

The planning process is a bit time-consuming and, sometimes, there is a delay in decision-making especially in immediate decisions. Due to this, the planning process can't be detailed in some organizations.

3. Fewer employee initiatives

Planning demands work under predefined policies and rigid processes. This, in turn, marks an impact on initiatives and innovative ideas from the employees. Complexity arises in managerial work as well.

The planning process is backed by a change in methods, policies, rules, etc. Employees resist this change due to insecurity, the uncertainty of new plans' success, and getting used to the current plan. This fails the new plan.

The planning process requires an appropriate or fixed financial budget for future actions. An investment in purchasing fixed assets by organizations puts a constraint on the budget required for implementing the planning process.

Planning cannot be 100% accurate and reliable as it is based on forecasting and the future is uncertain, data and information used in making plans may not be accurate, vague decisions made by incompetent planner etc. There is no surety of risks in future.

Apart from these, there are few other external factors like change in government policies i.e. tax policy, import-export policy etc. The trade-unions may also hinder a smooth planning process.

Decision-making is defined as the process by which different possible solutions or alternatives are identified and the most feasible solution or course of action is finalized. It is an integral part of planning. Decision-making results in selecting the right action among different available options.

It is also one of the important management functions and effective decision-making leads to fulfilling expected goals by sorting out different problems related to such decisions. Decision-making is also a time-bound process and eliminates confusions to reach a conclusion. It has a minimum of two or more alternatives or solutions to a problem so that the best can be decided. If only one alternative is available, then there is no requirement of decision-making.

Relation Between Planning And Decision-Making

Both planning and decision-making are connected to each other. These are the most important aspects of management functions. Planning requires a series of decisions to be incorporated in advance. The foundation of planning is decision-making. The role of a planner demands good decision-making abilities also as the planner has to take a lot of decisions simultaneously. So, decision-making is an important task in planning. Simultaneous and a number of decisions make a plan. In the absence of decision-making, it's not possible to answer what, how, when, and who is planning. To execute planned activities, decision-making is compulsory.

So, planning has an important role to play in decision-making.

Characteristics of Decision-Making

Different characteristics of decision-making are mentioned below:

Decision-making consists of a process to choose the best solution to a problem among available alternatives. The process includes identifying and analyzing problems, collecting different facts and figures, finding different solutions, and, finally, narrowing down and implementing the best one to meet organizational goals.

2. Demands creativity and Intellectual mind

Decision-making process requires creativity and logical thinking. It demands a lot of mental exercise and other components, i.e. education, experience level, intelligence, etc.

3. Demonstrates commitment

Decision-making process ensures better results based on the decisions made. So, it indicates the commitment of desired results. It requires joint efforts of the team.

4. Ensures the best solution

Decision-making also provides the best solution to any problem as the best solution is decided after evaluating different available alternatives.

5. Impacts of decision-making

Decision-making can be either positive or negative. A positive or right decision can bring positive results and negative or wrong decisions can bring negative results.

6. Decision-making is a final process

After disbursing different activities and tasks, decision-making takes place to get the results of the work done. It is the end result of discussions, comparisons, etc.

7. An ongoing and changing process

Organizations take decisions on a regular basis; so, decision-making is a continuous process. Every decision consists of separate situations that make decision-making a changing process.

Decision-Making Process

There are different steps in effective decision-making process;

a. Situation analysis and information gathering

The first step of the decision-making process is analyzing any situation, defining a problem, collecting relevant information, and identifying goals. This step includes collecting data and information to identify a real issue or problem. Problem identification is necessary for furthering the decision-making process. Once the problem is identified, an effective solution is determined. Problems are solved as per priority. After the solution is improvised, an action plan is designed to achieve the solution.

b. Plan and make alternatives

After collecting information, the next step is to develop different action plans or an alternative course of action. It requires imagination skills of a decision maker. Sometimes, additional information is also required to define better alternatives.

c. Evaluating and selecting the best alternative

This step in the decision-making process not only includes the analysis of different alternatives available or solutions but also an examination of each one of them based on results they are going to produce. The actual results of these solutions are not known as it's based on performance in the future. So, it comes with uncertainty. It also includes choosing the best solution to achieve objectives. Different alternatives or solutions are judged based on different criteria, i.e. risk involvement, the least effort, the least timing based on the urgency of the situation, limited resources etc.

d. Implementing and evaluating decisions

After deciding the best solution to address a problem, the next step is to make and implement plans. This requires getting and allocating resources, budgets, time frame, etc. Once made, decisions are evaluated to know the progress by preparing progress reports.

Evaluating and monitoring decisions will clear different aspects, i.e. if everything is going as per the plan, different internal and external factors influencing decisions, the performance of subordinates as expected etc.

Example of the decision-making process is shown in the below visual presentation to solve the problem of high employee turnover in an organization;

Factors Affecting Decision-Making

The quality of decisions depends on how much time has been devoted to making decisions. Most of the time decision-makers have to take decisions in a limited time frame as instructed by the management. Due to the time limit, decision-makers are not able to collect all the necessary information that influences decisions and are, also, not able to look for more alternatives.

2. Value and beliefs of decision-makers

In addition, the quality of decisions also depends upon the value and belief system of the decision-makers. Anyone's reaction to a particular situation is more likely to depend on the individual's values, likes and dislikes, thoughts, and beliefs. It is also a behavioural aspect of the decision-makers and reflects in their decisions related to goals, strategy-making activities. So, value-based decisions help in prioritizing tasks and making goals, identifying different solutions to problems, and finalizing the best solution or alternative.

3. Policies of organization

Decisions are affected by the policies of an organization. Decisions taken have to be in the boundary or within the limits of these policies. Decisions which violate policies are not considered for implementation. Though there is a scope to make changes in policies as per decision, most of the time decisions should be at par with the policy guidelines. However, a change in policy is a time-consuming task and requires lots of things to be considered before any change. Comparatively, a change in proposed decisions is much easier.

4. Other factors like budget, manpower, values of management also influence decision-making.

Decisions can be of different types depending upon their nature and influence:

1. Programmed and non-programmed decisions

Programmed decisions are meant for daily routine issues and for those problems that repeat frequently. A Set of tasks are defined to handle such problems or issues and are mostly initiated by the entry-level decision-makers.

For example, HR department issues like handling grievances related to leaves or attendance of employees require programmed decisions. Non-programmed decisions are made for tough situations where defining different alternatives is a challenging task. These types of decisions strategically affect organizations.

For example, decisions related to expanding the operation of an organization to other countries, launching a new product, introducing performance management system for the first time to the employees are non-programmed decisions where decision-making is a challenging task and these decisions are mostly taken by management or at the top-level.

2. Routine and strategy-oriented decisions

Routine decisions are a regular activity in an organization once identified. These are quick decisions and don't require deep thinking or analysis. These decisions are generally taken by the bottom-management staff. Different alternatives are not required in these as everyone is aware of what action to take on a daily basis.

Examples of such decisions include what reports to generate from the biometric system of attendance by the HR staff.

Decisions, in which involvement of organizational goals, resources, and policies is required, are termed as strategic decisions. Strategy-based decisions are future-related and executed by the top management. These are for the long term and are centrally focused. A large amount of investment is required to execute strategic decisions. Different alternatives or course of actions are considered and evaluated to finalize such decisions.

For example, developing a performance management system (PMS) strategy for employees demands strategic decisions. Steps involved in strategic decision-making for formulating PMS strategy starts with identifying goal which might be retaining and motivating the quality staff. Further steps involved are: developing a process for monitoring performance and formulating a comprehensive PMS plan.

3. Policy-related and operational decisions

Decisions related to policy issues are policy-related or tactical decisions. These decisions come under the preview of the top management and leave a long-term impact. For example, changing leave structure or office timings are policy-related decisions.

Operating decisions are for operational functioning and on a daily basis. Middle- and bottom-level management is responsible for such decisions. Different departments or functions of an organization like sales, IT, production, purchase, accounts, or HR take operations decisions.

For example, Diwali bonus payment to employees is a policy matter and calculation of such bonus to handover to employees is considered an operational decision.

4. Organization-based and personal decisions

Decisions, taken by an individual as office staff, are organizational decisions. For example, conducting a campus interview decision by hiring executives is an organizational decision. Wherein, personal decisions are related to an individual's decision to meet personal commitments. These are also known as life decisions. Buying a house is a personal decision.

5. Major and minor decisions

Major decisions are those which require much time, effort, and thinking to finalize and have a long-term impact. For example, a decision regarding higher studies whether to continue in own country or to go abroad is a major decision.
Minor decisions are routine decisions and don't require much time and deep thinking. Like purchasing stationery for different departments is a minor decision.

6. Individual and group decisions

Individual decisions are taken by one person i.e. routine decisions; as the decision of making an excel sheet for attendance management to keep the attendance record is an individual decision.

Decisions which are taken by a group of people aiming to achieve a common goal are group decisions. For example, employee engagement activities demand HR staff to work as a group and take decisions for better employee engagement programs.

Importance of Decision-Making

1. Optimum utilization of resources

With the help of decision-making, all resources of organizations i.e. money, men, material, machine, market and method are used carefully and as per requirement.

2. Problem-solving approach

By decision-making, organizations can determine and face different problems in working. It not only helps in identifying problems but also solving them by making correct and fast decisions.

3. Contributes to organizational growth

As decision-making ensures optimum utilization of resources, making the right decisions to solve problems or issues helps in achieving organizational goals and overall growth.

4. Encourage initiatives and innovations

Decision-making task is performed at all levels of organization i.e. top, middle and bottom. This motivates the staff members to contribute to decisions through brainstorming or alternatives to solve the problem. Thus, it encourages innovative thoughts and ideas which, in turn, help the organization to be at a competitive place in the market.

Good decisions help in increasing the productivity of organizations that result in more profits. Surplus profits help in increasing compensation benefits to employees which ultimately boosts their morale and keeps them motivated.

To conclude, planning is a systematic process that supports organizations to carry out all its present and future activities to achieve desired objectives. Planning, being a continuous function, works well in adverse situations too. Plans can be modified and restructured as per requirement and available information.

Decision making is also an important activity that supports the organization by reducing risks in projects with quick and better decisions.

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Planning And Decision Making: Characteristics, Importance, Elements, Limitations

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In everyday life, all of us make and execute certain plans to achieve our goals. For example, before going on a trip, we make a plan i.e. where and when to go, how to reach the destination, the duration of the trip, where to stay and luggage to carry, etc.

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I enjoyed this image that breaks down Planning & Decision making. Like how it shows "Engage others", which is very important for an organization.

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Module #5.  Good explanation of organizational structures

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Module #5.  Good explanation of organizational structures

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By Indeed Editorial Team

Updated May 27, 2022

Published February 4, 2020

To run more efficiently, a business may implement an organizational structure in its workplace. Depending on the size of the company and the way it operates, some structures might be more beneficial than others. Knowing how your company operates will help you perform in line with what's expected of you and help you become a better employee overall.

In this article, we define organizational structures, including their various types and the purpose and benefits of using them.

Related: How To Build Business Development Skills

What is an organizational structure?

An organizational structure details how certain activities are delegated toward achieving an organization's goal. It outlines an employee's role and various responsibilities within a company. The more authority employees have, the higher up they'll be on the organizational structure. In addition, the more organized a structure is, the more efficiently a company operates.

Types of organizational structures

There are four types of organizational structures. Understanding how they work and what their benefits and drawbacks are can help you make a more informed decision as to which to implement in your workplace. The four types are:

1. Functional structure

In a functional structure, organizations are divided into specialized groups with specific roles and duties. A functional structure is also known as a bureaucratic organizational structure and is commonly found in small to medium-sized businesses. Most people in the workforce have experience working in this type of organizational structure. For example, many companies divide their organization into various departments such as finance, marketing and human resources. Each of these departments then has a manager who oversees it. This manager is then supervised by an administrator or executive who oversees multiple departments.

Advantages of this structure may include:

Disadvantages of this structure may include:

Lack of communication with other departments

Unhealthy competition

Management issues

2. Divisional structure

In a divisional structure, various teams work alongside each other toward a single, common goal. Each of these divisions has an executive who manages how that branch operates, controls its budgets and allocates its resources. Large companies employ this type of organizational structure. One example of the divisional structure is a car company that separates its company into SUV, electric or sedan vehicle branches. While each branch has its own function, they all work toward the same goal of making a sale. This is also known as the multi-divisional structure.

Advantages of this structure may include:

Focus on a single good or service

More centralized leadership

Disadvantages of this structure may include:

Poor integration with other divisions

Competition between divisions

Lack of communication between divisions

Potential tax implications

3. Flatarchy

In a flatarchy, there are little to no levels of management. A company using this structure could have only one manager in between its executive and all other employees. It is called a flatarchy because it is a hybrid of a hierarchy and a flat organization. This type of organizational structure is used more by smaller companies since they have fewer employees, though it can be used in companies of all sizes. While some companies grow out of this organizational structure, others continue to use it.

Advantages of this structure may include:

Disadvantages of this structure may include:

4. Matrix structure

In the matrix style of organizational structure, employees are divided into teams that report to two managers-a project or product manager along with a functional manager. In essence, a matrix structure is a combination of various organizational structures. Because these teams have two managers, a matrix structure promotes duality and the sharing of resources. Employees working for companies using the matrix structure have the potential to widen their skill set since they might be assigned to various projects requiring different levels of expertise or skills.

Advantages of this structure may include:

Disadvantages of this structure may include:

Leadership confusion

Conflicting leadership loyalties

Potentially more costly

Roles may not be clearly defined

Potentially heavy employee workload

What are the benefits of organizational structures?

Though not all businesses use organizational structures, those that do can reap several benefits. Here are some benefits of implementing an organizational structure in your company:

Faster decision-making

When your company's various teams communicate more effectively, your company's overall communication will be positively impacted as well. This will then lead to quicker decision-making. In other words, the flow of information with an organizational structure can be used to promote faster decision-making.

Multiple business locations

If you're a business owner, having an organizational structure helps to ensure all of your locations are operating similarly and are abiding by the same procedures. Because owners can't be at every location, an organized structure can provide you with some peace of mind. This is particularly the case when your company begins to grow in size.

Improved operating efficiency

Because organizational structures divide companies into various teams or branches, they're helping to ensure that all tasks and responsibilities specific to those divisions are met more easily. When an employee knows what they should be working on, they're able to operate quickly and more efficiently. In essence, an organized structure creates an efficient and streamlined system that helps improve company operations overall.

Greater employee performance

When an employee is delegated certain tasks and responsibilities, they're able to perform well at their job. An organized structure provides employees with the guidance they need to perform at their best every day. An improvement in employee performance can also lead to greater employee morale and confidence.

Eliminates duplication of work

When employees are divided into teams according to their skills and expertise, the risk of overlapping job duties is eliminated. For example, if a project is assigned to one team, the other teams know it's not their responsibility to take it on because they have their own tasks outlined as well.

Reduced employee conflict

Using organizational structures can potentially eliminate conflict between employees. While several factors can come into play in this regard, once an employee knows their duties, the more focused they'll be on their work. For the most part, this is a great way to avoid any rising conflict between coworkers.

Better communication

While this will vary from company to company and depend on the specific organizational structure in place, an organizational hierarchy has the potential to foster healthy communication between different divisions and teams. Once duties are delegated to various teams and individuals, others in the workplace will know who to turn to for certain matters. For example, if you're on a team with one manager, you'll know who to report to should issues arise. Similarly, if someone from marketing has a question about the design of the project, they know to contact the art department.

Related: 10 Communication Skills for Career Success

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4 Types of Organizational Structure: Definitions and Examples

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By Indeed Editorial Team Updated May 27, 2022 Published February 4, 2020 To run more efficiently, a business may implement an organizational structure in its workplace. Depending on the size of the company and the way it operates, some structures might be more beneficial than others.

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Motivation

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√ Operations Processes: Monitoring, Control and Improving | Business Studies

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If you manage a team, there's a good chance you've heard of key performance indicators (KPIs). Regardless of whether you're familiar with them or you're still asking, "What is a KPI exactly?", let's take a little refresher course and then look at some examples and equations for the most important metrics for your organization.

Let's start by answering the question, "What is a KPI?". In its simplest form, a KPI is a type of performance measurement that helps you understand how your organization or department is performing. A good KPI should act as a compass, helping you and your team understand whether you're taking the right path toward your strategic goals. To be effective, a KPI must be:

Well-defined and quantifiable.

Communicated throughout your organization and department.

Crucial to achieving your goal. (Hence, key performance indicators.)

Applicable to your Line of Business (LOB) or department.

The trouble is, there are thousands of KPIs to choose from. If you choose the wrong one, then you are measuring something that doesn't align with your goals. How, then, should you go about selecting the right KPIs for your organization?

The best way to accomplish this is by researching and understanding some of the most important KPIs. This way, you'll have a better understanding of which ones are specific to your industry and which ones will be of no benefit.

18 Key Performance Indicator Examples & Definitions

We've broken down our list of KPIs into the four categories of the Balanced Scorecard: Financial, Customer, Process and People. Make sure you select a few from each category so that your strategy is well balanced across the organization.

Financial Metrics

1. Profit: This goes without saying, but it is still important to note, as this is one of the most important performance indicators out there. Don't forget to analyze both gross and net profit margin to better understand how successful your organization is at generating a high return.

2. Cost: Measure cost effectiveness and find the best ways to reduce and manage your costs.

3. LOB Revenue Vs. Target: This is a comparison between your actual revenue and your projected revenue. Charting and analyzing the discrepancies between these two numbers will help you identify how your department is performing.

4. Cost Of Goods Sold: By tallying all production costs for the product your company is selling, you can get a better idea of both what your product markup should look like and your actual profit margin. This information is key in determining how to outsell your competition.

5. Day Sales Outstanding (DSO): Take your accounts receivable and divide them by the number of total credit sales. Take that number and multiply it by the number of days in the time frame you are examining. Congratulations-you've just come up with your DSO number! The lower the number, the better your organization is doing at collecting accounts receivable. Run this formula every month, quarter, or year to see how you are improving.

6. Sales By Region: Through analyzing which regions are meeting sales objectives, you can provide better feedback for underperforming regions.

7. LOB Expenses Vs. Budget: Compare your actual overhead with your forecasted budget. Understanding where you deviated from your plan can help you create a more effective departmental budget in the future.

Customer Metrics

1. Customer Lifetime Value (CLV): Minimizing cost isn't the only (or the best) way to optimize your customer acquisition. CLV helps you look at the value your organization is getting from a long-term customer relationship. Use this performance indicator to narrow down which channel helps you gain the best customers for the best price.

2. Customer Acquisition Cost (CAC): Divide your total acquisition costs by the number of new customers in the time frame you're examining. Voila! You have found your CAC. This is considered one of the most important metrics in e-commerce because it can help you evaluate the cost effectiveness of your marketing campaigns.

3. Customer Satisfaction & Retention: On the surface, this is simple: Make the customer happy and they will continue to be your customer. Many firms argue, however, that this is more for shareholder value than it is for the customers themselves. You can use multiple performance indicators to measure CSR, including customer satisfaction scores and percentage of customers repeating a purchase.

4. Net Promoter Score (NPS): Finding out your NPS is one of the best ways to indicate long-term company growth. To determine your NPS score, send out quarterly surveys to your customers to see how likely it is that they'll recommend your organization to someone they know. Establish a baseline with your first survey and put measures in place that will help those numbers grow quarter to quarter.

5. Number Of Customers: Similar to profit, this performance indicator is fairly straightforward. By determining the number of customers you've gained and lost, you can further understand whether or not you are meeting your customers' needs.

Process Metrics

1. Customer Support Tickets: Analysis of the number of new tickets, the number of resolved tickets, and resolution time will help you create the best customer service department in your industry.

2. Percentage Of Product Defects: Take the number of defective units and divide it by the total number of units produced in the time frame you're examining. This will give you the percentage of defective products. Clearly, the lower you can get this number, the better.

3. LOB Efficiency Measure: Efficiency can be measured differently in every industry. Let's use the manufacturing industry as an example. You can measure your organization's efficiency by analyzing how many units you have produced every hour, and what percentage of time your plant was up and running.

People Metrics

1. Employee Turnover Rate (ETR): To determine your ETR, take the number of employees who have departed the company and divide it by the average number of employees. If you have a high ETR, spend some time examining your workplace culture, employment packages, and work environment.

2. Percentage Of Response To Open Positions: When you have a high percentage of qualified applicants apply for your open job positions, you know you are doing a good job maximizing exposure to the right job seekers. This will lead to an increase in interviewees, as well.

3. Employee Satisfaction: Happy employees are going to work harder-it's as simple as that. Measuring your employee satisfaction through surveys and other metrics is vital to your departmental and organizational health.

13 Bonus Key Performance Indicator Examples & Definitions

People Metrics

1. Retirement Rate: This metric is particularly important for any organization developing a strategic workforce plan. It can be calculated by looking at the number of employees who retired as a percentage of the total headcount. If you do not have an aging workforce, turnover is a good measure as well.

2. Knowledge Achieved With Training: Helps the company see the effectiveness of employee training. It can be determined by creating an exam and monitoring exam pass rate percent, average score percent. If you are a larger organization, you may conduct a pre-test before training and then a post-test after training to see specifically what was learned.

3. Internal Promotions Vs. External Hires: This ratio measures how many people working at a company are considered for internal promotions versus the number of external hires. It can be particularly effective when looking at organizational succession planning.

4. Salary Competitiveness Ratio (SCR): Used to evaluate the competitiveness of compensation options. This ratio is determined by dividing the average company salary by the average salary offered by competitors or by the rest of your industry.

Customer Metrics

1. Customer Churn Rate: This metric indicates the percentage of customers that either fail to make a repeat purchase or discontinue their service during a given period. Formula: (Number of Customers Lost in a Given Period) / (Number of Customers at the Start of the Period) = (Customer Churn Rate). Make sure you look at the number of customers that should have renewed during that period.

2. Contact Volume By Channel: Keeping track of the number of support requests by phone and email allows you to see which method customers prefer, as well as the number of support requests month-to-month.

3. Percentage Of Customers Who Are "Very" Or "Extremely" Satisfied: Determining this metric opens up an opportunity for further surveying what makes happy customers so satisfied. This is also a good measure to look at over time, so keep your questions consistent on your surveys. Formula: (Customers Who Consider Themselves "Very" or "Extremely" Satisfied) / (Total Survey Respondents) = (Percentage of Customers Who Are "Very" or "Extremely" Satisfied).

4. Number Of New Vs. Repeat Site Visits: Allows companies to differentiate their website traffic and generate insights on prospective customers. Formula: (Website Visits by New Visitors) / (Total Website Visits) = percent of new visitors.

Financial Metrics

1. Cash Flow From Financing Activities: This metric demonstrates an organization's financial strength. Formula: (Cash Received from Issuing Stock or Debt) - (Cash Paid as Dividends and Reacquisition of Debt/Stock) = (Cash Flow from Financing Activities).

2. Average Annual Expenses To Serve One Customer: This is the average amount needed to serve one customer. Formula: (Total Expenses) / (Total Customers) = (Average Annual Expenses to Serve One Customer).

3. EBITDA (Earnings Before Interest, Taxes, Depreciation, & Amortization): Measures revenue after expenses are considered and interest, taxes, depreciation, and amortization are excluded. Formula: (Revenue) - (Expenses Excluding Interest, Tax, Depreciation & Amortization) = (EBITDA).

4. Innovation Spending: This metric shows the amount of money that an organization spends on innovation. Some organizations have this budgeted as research and development, and others have different accounting terms. Ultimately, if you use this measure, you are valuing innovation as a key strategic thrust.

5. (Customer Lifetime Value) / (Customer Acquisition Cost): The ratio of customer lifetime value to customer acquisition cost should ideally be greater than one, as a customer is not profitable if the cost to acquire is greater than the profit they will bring to a company. Formula: (Net Expected Lifetime Profit from Customer) / (Cost to Acquire Customer).

How Do I Determine Which KPIs To Use?

There are a lot of KPIs to choose from, and you'll want to narrow down the list so you're only tracking the KPIs that will truly help drive your strategy forward. The right KPIs for you might not be the right KPIs for another organization. Make sure you've researched as many key performance indicators as you can to determine which ones are appropriate for your industry. From there, determine which KPI targets will help you further understand and meet your goals, and then integrate them throughout your department. KPIs should match your strategy, not just your industry.

If you're overwhelmed by keeping track of your KPIs, download the guide below. You'll learn about different reporting applications and determine which method will help your organization save time and get organized.

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18 Key Performance Indicator (KPI) Examples Defined

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If you manage a team, there's a good chance you've heard of key performance indicators (KPIs). Regardless of whether you're familiar with them or you're still asking, "What is a KPI exactly?", let's take a little refresher course and then look at some examples and equations for the most important metrics for your organization.