INTRODUCTION TO

PRINCIPLES OF
LEADERSHIP AND
MANAGEMENT
CHAPTER 1
 THE PRINCIPLES OF MANAGEMENT, ARE THE
MEANS BY WHICH YOU ACTUALLY MANAGE, THAT
IS, GET THINGS DONE THROUGH
• FORMALLY DEFINED, THE PRINCIPLES OF MANAGEMENT ARE THE
• ACTIVITIES THAT “PLAN, ORGANIZE, AND CONTROL THE OPERATIONS OF THE BASIC
ELEMENTS OF [PEOPLE], MATERIALS, MACHINES,
• METHODS, MONEY, AND MARKETS, PROVIDING DIRECTION AND COORDINATION, AND
GIVING LEADERSHIP TO HUMAN EFFORTS,
• SO AS TO ACHIEVE THE SOUGHT OBJECTIVES OF THE ENTERPRISE.” FOR THIS REASON,
PRINCIPLES OF MANAGEMENT ARE OFTEN
• DISCUSSED OR LEARNED USING A FRAMEWORK CALLED P-O-L-C, WHICH STANDS FOR
PLANNING, ORGANIZING, LEADING, AND
• CONTROLLING.
WHO ARE MANAGERS?
• TOP MANAGERS ARE RESPONSIBLE FOR DEVELOPING THE
ORGANIZATION’S STRATEGY AND BEING A STEWARD OF ITS VISION
AND MISSION. A SECOND SET OF MANAGERS INCLUDES
FUNCTIONAL, TEAM, AND GENERAL MANAGERS.
• FUNCTIONAL MANAGERS ARE RESPONSIBLE FOR THE EFFICIENCY
AND EFFECTIVENESS OF AN AREA, SUCH AS ACCOUNTING OR
MARKETING.
• SUPERVISORY OR TEAM MANAGERS ARE RESPONSIBLE FOR
COORDINATING A SUBGROUP OF A PARTICULAR FUNCTION OR A
TEAM COMPOSED OF MEMBERS FROM DIFFERENT PARTS OF THE
ORGANIZATION.
 SOMETIMES YOU WILL HEAR DISTINCTIONS
MADE BETWEEN LINE AND STAFF MANAGERS.
• A LINE MANAGER LEADS A FUNCTION THAT CONTRIBUTES DIRECTLY TO THE
PRODUCTS OR SERVICES THE ORGANIZATION CREATES. FOR EXAMPLE, A LINE
MANAGER (OFTEN CALLED A PRODUCT, OR SERVICE MANAGER) AT PROCTER &
GAMBLE (P&G) IS RESPONSIBLE FOR THE PRODUCTION, MARKETING, AND
PROFITABILITY OF THE TIDE DETERGENT PRODUCT LINE.
• A GENERAL MANAGER IS SOMEONE WHO IS RESPONSIBLE FOR MANAGING A
CLEARLY IDENTIFIABLE REVENUE-PRODUCING UNIT, SUCH AS A STORE, BUSINESS
UNIT, OR PRODUCT LINE. GENERAL MANAGERS TYPICALLY MUST MAKE DECISIONS
ACROSS DIFFERENT FUNCTIONS AND HAVE REWARDS TIED TO THE PERFORMANCE
OF THE ENTIRE UNIT (I.E., STORE, BUSINESS UNIT, PRODUCT LINE, ETC.).
 THE NATURE OF MANAGERIAL
WORK
• MANAGERS ARE RESPONSIBLE FOR THE PROCESSES OF GETTING
ACTIVITIES COMPLETED EFFICIENTLY WITH AND THROUGH OTHER
PEOPLE AND SETTING AND ACHIEVING THE FIRM’S GOALS
THROUGH THE EXECUTION OF FOUR BASIC MANAGEMENT
FUNCTIONS: PLANNING, ORGANIZING, LEADING, AND
CONTROLLING. BOTH SETS OF PROCESSES UTILIZE HUMAN,
FINANCIAL, AND MATERIAL RESOURCES.
 LEADERSHIP, ENTREPRENEURSHIP, AND
STRATEGY
• LEADERSHIP
• IF WE CAN FIND BOTH MANAGEMENT AND LEADERSHIP DESCRIBED AS GETTING
THINGS DONE THROUGH OTHERS, THEN LEADERSHIP SHOULD BE FURTHER
DEFINED BY THE SOCIAL AND INFORMAL SOURCES OF INFLUENCE THAT YOU USE
TO INSPIRE ACTION TAKEN BY OTHERS. IT MEANS MOBILIZING OTHERS TO WANT
TO STRUGGLE TOWARD A COMMON GOAL. GREAT LEADERS HELP BUILD AN
ORGANIZATION’S HUMAN CAPITAL, THEN MOTIVATE INDIVIDUALS TO TAKE
CONCERTED ACTION. LEADERSHIP ALSO INCLUDES AN UNDERSTANDING OF
WHEN, WHERE, AND HOW TO USE MORE FORMAL SOURCES OF AUTHORITY AND
POWER, SUCH AS POSITION OR OWNERSHIP.
 ENTREPRENEURSHIP
• IS DEFINED AS THE RECOGNITION OF OPPORTUNITIES (NEEDS, WANTS,
PROBLEMS, AND CHALLENGES) AND THE USE OR CREATION OF RESOURCES TO
IMPLEMENT INNOVATIVE IDEAS FOR NEW, THOUGHTFULLY PLANNED VENTURES.
PERHAPS THIS IS OBVIOUS, BUT AN ENTREPRENEUR IS A PERSON WHO ENGAGES
IN THE PROCESS OF ENTREPRENEURSHIP. WE DESCRIBE ENTREPRENEURSHIP AS A
PROCESS BECAUSE IT OFTEN INVOLVES MORE THAN SIMPLY COMING UP WITH A
GOOD IDEA—SOMEONE ALSO HAS TO CONVERT THAT IDEA INTO ACTION. AS AN
EXAMPLE OF BOTH, GOOGLE’S LEADERS SUGGEST THAT ITS POINT OF
DISTINCTION “IS ANTICIPATING NEEDS NOT YET ARTICULATED BY OUR GLOBAL
AUDIENCE, THEN MEETING THEM WITH PRODUCTS AND SERVICES THAT SET NEW
STANDARDS.
 STRATEGY
• WHEN AN ORGANIZATION HAS A LONG-TERM PURPOSE, ARTICULATED IN CLEAR GOALS
AND OBJECTIVES, AND THESE GOALS AND OBJECTIVES CAN BE ROLLED UP INTO A
COHERENT PLAN OF ACTION, THEN WE WOULD SAY THAT THE ORGANIZATION HAS A
STRATEGY. IT HAS A GOOD OR EVEN GREAT STRATEGY WHEN THIS PLAN ALSO TAKES
ADVANTAGE OF UNIQUE RESOURCES AND CAPABILITIES TO EXPLOIT A BIG AND
GROWING EXTERNAL OPPORTUNITY. STRATEGY, THEN, IS THE CENTRAL, INTEGRATED,
EXTERNALLY-ORIENTED CONCEPT OF HOW AN ORGANIZATION WILL ACHIEVE ITS
OBJECTIVES (HAMBRICK & FREDRICKSON, 2001). STRATEGIC MANAGEMENT IS THE
BODY OF KNOWLEDGE THAT ANSWERS QUESTIONS ABOUT THE DEVELOPMENT AND
IMPLEMENTATION OF GOOD STRATEGIES.
PLANNING, ORGANIZING, LEADING, AND
CONTROLLING
 PLANNING
• PLANNING IS THE FUNCTION OF MANAGEMENT THAT INVOLVES SETTING OBJECTIVES
AND DETERMINING A COURSE OF ACTION FOR ACHIEVING THOSE OBJECTIVES.
PLANNING REQUIRES THAT MANAGERS BE AWARE OF ENVIRONMENTAL CONDITIONS
FACING THEIR ORGANIZATION AND FORECAST FUTURE CONDITIONS. IT ALSO
REQUIRES THAT MANAGERS BE GOOD DECISION-MAKERS.
• PLANNING IS A PROCESS CONSISTING OF SEVERAL STEPS. THE PROCESS BEGINS WITH
ENVIRONMENTAL SCANNING WHICH SIMPLY MEANS THAT PLANNERS MUST BE
AWARE OF THE CRITICAL CONTINGENCIES FACING THEIR ORGANIZATION IN TERMS OF
ECONOMIC CONDITIONS, THEIR COMPETITORS, AND THEIR CUSTOMERS. PLANNERS
MUST THEN ATTEMPT TO FORECAST FUTURE CONDITIONS. THESE FORECASTS FORM
THE BASIS FOR PLANNING.
• STRATEGIC PLANNING INVOLVES ANALYZING COMPETITIVE OPPORTUNITIES AND THREATS,
AS WELL AS THE STRENGTHS AND WEAKNESSES OF THE ORGANIZATION, AND THEN
DETERMINING HOW TO POSITION THE ORGANIZATION TO COMPETE EFFECTIVELY IN ITS
ENVIRONMENT. STRATEGIC PLANNING HAS A LONG TIME FRAME, OFTEN THREE YEARS OR
MORE. STRATEGIC PLANNING GENERALLY INCLUDES THE ENTIRE ORGANIZATION AND
INCLUDES THE FORMULATION OF OBJECTIVES. STRATEGIC PLANNING IS OFTEN BASED ON THE
ORGANIZATION’S MISSION, WHICH IS ITS FUNDAMENTAL REASON FOR EXISTENCE. AN
ORGANIZATION’S TOP MANAGEMENT MOST OFTEN CONDUCTS STRATEGIC PLANNING.
• TACTICAL PLANNING IS INTERMEDIATE-RANGE (ONE TO THREE YEARS) PLANNING THAT IS
DESIGNED TO DEVELOP RELATIVELY CONCRETE AND SPECIFIC MEANS TO IMPLEMENT THE
STRATEGIC PLAN. MIDDLE-LEVEL MANAGERS OFTEN ENGAGE IN TACTICAL PLANNING.
• OPERATIONAL PLANNING GENERALLY ASSUMES THE EXISTENCE OF ORGANIZATION-WIDE OR
SUBUNIT GOALS AND OBJECTIVES AND SPECIFIES WAYS TO ACHIEVE THEM. OPERATIONAL
PLANNING IS SHORT-RANGE (LESS THAN A YEAR) PLANNING THAT IS DESIGNED TO DEVELOP
SPECIFIC ACTION STEPS THAT SUPPORT THE STRATEGIC AND TACTICAL PLANS.
 ORGANIZING
• ORGANIZING IS THE FUNCTION OF MANAGEMENT THAT INVOLVES DEVELOPING AN
ORGANIZATIONAL STRUCTURE AND ALLOCATING HUMAN RESOURCES TO ENSURE THE
ACCOMPLISHMENT OF OBJECTIVES. THE STRUCTURE OF THE ORGANIZATION IS THE
FRAMEWORK WITHIN WHICH EFFORT IS COORDINATED. THE STRUCTURE IS USUALLY
REPRESENTED BY AN ORGANIZATION CHART, WHICH PROVIDES A GRAPHIC
REPRESENTATION OF THE CHAIN OF COMMAND WITHIN AN ORGANIZATION. DECISIONS
MADE ABOUT THE STRUCTURE OF AN ORGANIZATION ARE GENERALLY REFERRED TO
AS ORGANIZATIONAL DESIGN DECISIONS.
 LEADING
• LEADING INVOLVES THE SOCIAL AND INFORMAL SOURCES OF INFLUENCE THAT YOU
USE TO INSPIRE ACTION TAKEN BY OTHERS. IF MANAGERS ARE EFFECTIVE LEADERS,
THEIR SUBORDINATES WILL BE ENTHUSIASTIC ABOUT EXERTING EFFORT TO ATTAIN
ORGANIZATIONAL OBJECTIVES.
• THE BEHAVIORAL SCIENCES HAVE MADE MANY CONTRIBUTIONS TO UNDERSTANDING
THIS FUNCTION OF MANAGEMENT. PERSONALITY RESEARCH AND STUDIES OF JOB
ATTITUDES PROVIDE IMPORTANT INFORMATION AS TO HOW MANAGERS CAN MOST
EFFECTIVELY LEAD SUBORDINATES. FOR EXAMPLE, THIS RESEARCH TELLS US THAT TO
BECOME EFFECTIVE AT LEADING, MANAGERS MUST FIRST UNDERSTAND THEIR
SUBORDINATES’ PERSONALITIES, VALUES, ATTITUDES, AND EMOTIONS.
 CONTROLLING
• CONTROLLING INVOLVES ENSURING THAT PERFORMANCE DOES NOT DEVIATE FROM
STANDARDS. CONTROLLING CONSISTS OF
• THREE STEPS, WHICH INCLUDE
• (1) ESTABLISHING PERFORMANCE STANDARDS,
• (2) COMPARING ACTUAL PERFORMANCE AGAINST STANDARDS, AND
• (3) TAKING CORRECTIVE ACTION WHEN NECESSARY.
• PERFORMANCE STANDARDS ARE OFTEN STATED IN MONETARY TERMS SUCH AS REVENUE,
COSTS, OR PROFITS BUT MAY ALSO BE STATED IN OTHER TERMS, SUCH AS UNITS
PRODUCED, NUMBER OF DEFECTIVE PRODUCTS, OR LEVELS OF QUALITY OR CUSTOMER
SERVICE.
 ECONOMIC, SOCIAL, AND ENVIRONMENTAL
PERFORMANCE
• ECONOMIC PERFORMANCE
• IN A TRADITIONAL SENSE, THE ECONOMIC PERFORMANCE OF A FIRM IS A FUNCTION OF ITS
SUCCESS IN PRODUCING BENEFITS FOR ITS OWNERS IN PARTICULAR, THROUGH PRODUCT
INNOVATION AND THE EFFICIENT USE OF RESOURCES. WHEN YOU TALK ABOUT THIS TYPE
OF ECONOMIC PERFORMANCE IN A BUSINESS CONTEXT, PEOPLE TYPICALLY UNDERSTAND
YOU TO BE SPEAKING ABOUT SOME FORM OF PROFIT.
• THE DEFINITION OF ECONOMIC PROFIT IS THE DIFFERENCE BETWEEN REVENUE AND THE
OPPORTUNITY COST OF ALL RESOURCES USED TO PRODUCE THE ITEMS SOLD (ALBRECHT,
1983). THIS DEFINITION INCLUDES IMPLICIT RETURNS AS COSTS. FOR OUR PURPOSES, IT
MAY BE SIMPLEST TO THINK OF ECONOMIC PROFIT AS A FORM OF ACCOUNTING PROFIT
WHERE PROFITS ARE ACHIEVED WHEN REVENUES EXCEED THE ACCOUNTING COST THE
FIRM “PAYS” FOR THOSE INPUTS.
 SOCIAL AND ENVIRONMENTAL
PERFORMANCE
• YOU HAVE LEARNED A BIT ABOUT ECONOMIC PERFORMANCE AND ITS
DETERMINANTS. FOR MOST ORGANIZATIONS, YOU SAW THAT ECONOMIC
PERFORMANCE IS ASSOCIATED WITH PROFITS, AND PROFITS DEPEND A GREAT DEAL
ON HOW MUCH CUSTOMERS ARE WILLING TO PAY FOR A GOOD OR SERVICE.
• WITH REGARD TO SOCIAL AND ENVIRONMENTAL PERFORMANCE, IT IS SIMILARLY
USEFUL TO THINK OF THEM AS FORMS OF PROFIT—SOCIAL AND ENVIRONMENTAL
PROFIT TO BE EXACT. INCREASINGLY, THE TOPICS OF SOCIAL AND ENVIRONMENTAL
PERFORMANCE HAVE GARNERED THEIR OWN COURSES IN SCHOOL CURRICULA; IN
THE BUSINESS WORLD, THEY ARE COLLECTIVELY REFERRED TO AS CORPORATE
SOCIAL RESPONSIBILITY (CSR)
 PERFORMANCE OF INDIVIDUALS AND
GROUPS

• PRINCIPLES OF LEADERSHIP AND MANAGEMENT ARE CONCERNED WITH

ORGANIZATION-LEVEL OUTCOMES SUCH AS ECONOMIC, SOCIAL, OR
ENVIRONMENTAL PERFORMANCE, INNOVATION, OR ABILITY TO CHANGE AND
ADAPT. HOWEVER, FOR SOMETHING TO HAPPEN AT THE LEVEL OF AN
ORGANIZATION, SOMETHING MUST TYPICALLY ALSO BE HAPPENING WITHIN THE
ORGANIZATION AT THE INDIVIDUAL OR TEAM LEVEL.
 INDIVIDUAL-LEVEL PERFORMANCE

• INDIVIDUAL-LEVEL PERFORMANCE DRAWS UPON THOSE THINGS YOU HAVE TO DO

IN YOUR JOB, OR IN-ROLE PERFORMANCE, AND THOSE THINGS THAT ADD VALUE
BUT WHICH AREN’T PART OF YOUR FORMAL JOB DESCRIPTION. THESE “EXTRAS” ARE
CALLED EXTRA-ROLE PERFORMANCE OR ORGANIZATIONAL CITIZENSHIP
BEHAVIORS (OCBS). AT THIS POINT, IT IS PROBABLY SIMPLEST TO CONSIDER AN IN-
ROLE PERFORMANCE AS HAVING PRODUCTIVITY AND QUALITY DIMENSIONS
ASSOCIATED WITH CERTAIN STANDARDS THAT YOU MUST MEET TO DO YOUR JOB. IN
CONTRAST, OCBS CAN BE UNDERSTOOD AS INDIVIDUAL BEHAVIORS THAT ARE
BENEFICIAL TO THE ORGANIZATION AND ARE DISCRETIONARY, NOT DIRECTLY OR
EXPLICITLY RECOGNIZED BY THE FORMAL REWARD SYSTEM (ORGAN, 1988).
 GROUP-LEVEL PERFORMANCE

• A GROUP IS A COLLECTION OF INDIVIDUALS. GROUP-LEVEL PERFORMANCE FOCUSES

ON BOTH THE OUTCOMES AND PROCESS OF COLLECTIONS OF INDIVIDUALS OR
GROUPS. INDIVIDUALS CAN WORK ON THEIR OWN AGENDAS IN THE CONTEXT OF A
GROUP. GROUPS MIGHT CONSIST OF PROJECT-RELATED GROUPS, SUCH AS A PRODUCT
GROUP OR AN ENTIRE STORE OR BRANCH OF A COMPANY. THE PERFORMANCE OF A
GROUP CONSISTS OF THE INPUTS OF THE GROUP MINUS ANY PROCESS LOSS THAT
RESULTS IN THE FINAL OUTPUT, SUCH AS THE QUALITY OF A PRODUCT AND THE
RAMP-UP TIME TO PRODUCTION OR THE SALES FOR A GIVEN MONTH. PROCESS LOSS
IS ANY ASPECT OF GROUP INTERACTION THAT INHIBITS GOOD PROBLEM-SOLVING.
KATZ'S THREE SKILLS
 TECHNICAL SKILLS

• OF THE THREE SKILL SETS IDENTIFIED BY KATZ, TECHNICAL SKILLS ARE THE
BROADEST, MOST EASILY DEFINED CATEGORY. TECHNICAL SKILL IS DEFINED AS A
LEARNED CAPACITY IN JUST ABOUT ANY GIVEN FIELD OF WORK, STUDY, OR EVEN
PLAY. FOR EXAMPLE, THE QUARTERBACK OF A FOOTBALL TEAM MUST KNOW HOW
TO PLANT HIS FEET AND HOW TO POSITION HIS ARM FOR ACCURACY AND
DISTANCE—BOTH TECHNICAL SKILLS. A MECHANIC NEEDS TO BE ABLE TO
DECONSTRUCT AND RECONSTRUCT AN ENGINE, EMPLOY VARIOUS MACHINERY
(LIFTS, COMPUTER SCANNING EQUIPMENT, ETC.), AND INSTALL A MUFFLER.
 CONCEPTUAL SKILLS

• CONCEPTUAL THINKING IS DIFFICULT TO DEFINE BUT CAN GENERALLY BE

CONSIDERED AS THE ABILITY TO FORMULATE IDEAS OR MENTAL ABSTRACTIONS IN
THE MIND. CONCEPTUAL SKILLS PRIMARILY REVOLVE AROUND GENERATING IDEAS,
UTILIZING A COMBINATION OF CREATIVE INTUITIONS, AND A COMPREHENSIVE
UNDERSTANDING OF A GIVEN CONTEXT (I.E., INCUMBENT‘S INDUSTRY,
ORGANIZATIONAL MISSION, AND OBJECTIVES, COMPETITIVE DYNAMICS, ETC.).
WHEN COMBINED WITH A VARIETY OF INFORMATION, AS WELL AS A DEGREE OF
CREATIVITY, CONCEPTUAL THINKING RESULTS IN NEW IDEAS, UNIQUE STRATEGIES,
AND DIFFERENTIATION.
 INTERPERSONAL SKILLS

• OVER THE YEARS, THE COMMON DEFINITION OF MANAGEMENT HAS BECOME LESS
SPECIFIC, AS MANAGERIAL FUNCTIONS CAN INCLUDE STAFFING, DIRECTING, AND
REPORTING. MODERN COMPANIES HAVE FEWER LAYERS OF MANAGEMENT, AS THESE
COMPANIES INSTEAD RELY ON THE DELEGATION OF RESPONSIBILITIES AND
AUTHORITY TO ACHIEVE GOALS. AS A RESULT, BUSINESSES OFTEN SPEAK OF
LEADING OR GUIDING, PEOPLE RATHER THAN GIVING INSTRUCTIONS FOR EVERY
ACTION. LEADING PEOPLE REPRESENTS A CENTRAL COMPONENT OF HUMAN SKILLS.
INTERPERSONAL SKILLS DIFFERENTIATE A MANAGER FROM A LEADER. A MANAGER
IS SIMPLY MANIPULATING RESOURCES TO ACHIEVE A GIVEN OBJECTIVE, WHILE A
LEADER APPEALS TO THE HUMAN SIDE OF EMPLOYEES TO GENERATE CREATIVITY
AND MOTIVATION.
 YOUR "PRINCIPLES OF LEADERSHIP AND
MANAGEMENT" SURVIVOR’S GUIDE

• ASSESS YOUR LEARNING STYLE

• SENSING AND INTUITIVE LEARNERS
• VISUAL AND VERBAL LEARNERS
• SEQUENTIAL AND GLOBAL LEARNERS
Next Meeting: QUIZ
REFERENCESS:
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