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ISBA International School of Banking Academy of Vietnam

Leadership and Management

Lecturer
Andrea Dezi (MD, MBA)

University of Macerata
Director of the Internationalization Strategies Office

ERUA2 - European Reform Universities Alliance


WP4 - Project Manager
ISBA International School of Banking Academy of Vietnam

INTRODUCTION

week 01/10
ISBA International School of Banking Academy of Vietnam

Introduction

Management is defined as the pursuit of organizational goals


efficiently and effectively
Organizations, or people who work together to achieve a specific
purpose, value managers because of the multiplier effect:
Good managers have an influence on the organization far beyond the
results that can be achieved by one person acting alone.

Managers cooperate with the chief executive officers (CEOs) and


presidents.
ISBA International School of Banking Academy of Vietnam

Introduction

Management is defined as the pursuit of organizational goals


efficiently and effectively
The words efficiently and effectively, which basically mean “doing things
right.”
■ Efficiency—the means. Efficiency is the means of attaining the
organization’s goals. To be efficient means to use resources—people,
money, raw materials, and the like—wisely and cost-effectively.
■ Effectiveness—the ends. Effectiveness regards the organization’s ends,
the goals.
To be effective means to achieve results, to make the right decisions,
and to successfully carry them out so that they achieve the
organization’s goals.
ISBA International School of Banking Academy of Vietnam

Introduction

Why Organizations Value Managers: The Multiplier Effect


Some great achievements of history, such as scientific discoveries or works of
art, were accomplished by individuals working quietly by themselves. But so
much more has been achieved by people who were able to leverage their
talents and abilities by being managers.

Good managers create value. The reason is that in being a manager you have a
multiplier effect: Your influence on the organization is multiplied far beyond the
results that can be achieved by just one person acting alone. Thus, while a solo
operator such as a salesperson might accomplish many things and incidentally
make a very good living, his or her boss could accomplish a great deal more and
could well earn two to seven times the income.
ISBA International School of Banking Academy of Vietnam

Defining management

Management has four functions: planning, organizing, leading, and


controlling - POLC
ISBA International School of Banking Academy of Vietnam

Defining management

Management has four functions: planning, organizing, leading, and


controlling - POLC

● Planning is defined as setting goals and deciding how to achieve


them.
● Organizing is defined as arranging tasks, people, and other
resources to accomplish the work.
● Leading is defined as motivating, directing, and otherwise
influencing people to work hard to achieve the organization’s goals.
● Controlling is defined as monitoring performance, comparing it with
goals, and taking corrective action as needed.
ISBA International School of Banking Academy of Vietnam

Defining management

Pyramid Power: Levels and Areas of Management

Within an organization, there are four levels of managers: top, middle,


and first-line managers as well as team leaders.

Managers may also be general managers, or they may be functional


managers, responsible for just one organizational activity, such as
Research & Development, Marketing, Finance, Production, or Human
Resources. Managers may work for for-profit, nonprofit, or
mutual-benefit organizations.
ISBA International School of Banking Academy of Vietnam

Defining management

Pyramid Power:
Levels and
Areas of Management

Top managers make long-term


decisions, middle managers
implement those decisions, and
first-line managers make short
term decisions. Team leaders
facilitate team activities toward
achieving a goal.
ISBA International School of Banking Academy of Vietnam

Defining management
Pyramid Power: Levels and Areas of Management

Top managers make long-term decisions about the overall direction of the
organization and establish the objectives, policies, and strategies for it. Attention
to the environment outside the organization, being alert for long-run
opportunities and problems and devising strategies for dealing with them.

Middle managers implement the policies and plans of the top managers above
them and supervise and coordinate the activities of the first-line managers
below them. Titles might include plant manager, district manager, and regional
manager, among others. In the nonprofit world, middle managers may have
titles such as clinic director, dean of student services, and the like
ISBA International School of Banking Academy of Vietnam

Defining management
Pyramid Power: Levels and Areas of Management

First-line managers make short term operating decisions, directing the daily
tasks of non managerial personnel, who are of course, all those people who
work directly at their jobs but don’t oversee the work of others.

Nonmanagerial employees either work alone on tasks or with others on a


variety of teams. They do not formally supervise or manage other people, and
they are the bulk of a company’s workforce.
ISBA International School of Banking Academy of Vietnam

Defining management
Areas of Management: Functional Managers versus General Managers

We can represent the levels of management by slicing the organizational


pyramid horizontally or we can also slice the pyramid vertically to represent the
organization’s departments or functional areas.
In a for-profit technology company, these might be Research & Development,
Marketing, Finance, Production, and Human Resources. In a nonprofit college,
these might be Faculty, Student Support Staff, Finance, Maintenance, and
Administration.

Whatever the names of the departments, the organization is run by two types
of managers—functional and general. (These are line managers, with authority
to direct employees. Staff managers mainly assist line managers.)
ISBA International School of Banking Academy of Vietnam

Defining management
Areas of Management: Functional Managers versus General Managers

Functional Managers: Responsible for One Activity If your title is Vice President
of Production, Director of Finance, or Administrator for Human Resources, you
are a functional manager. A functional manager is responsible for just one
organizational activity.

Google is particularly noteworthy for its unusual functional management job


titles, such as Fitness Program Manager, Green Team Lead, and VicePresident of
Search Products & User Experience. Yahoo! also has unusual functional titles,
such as VP of Talent Acquisition, VP Consumer Platforms, and VP of Research
for Europe & LatAm.
ISBA International School of Banking Academy of Vietnam

Defining management
Areas of Management: Functional Managers versus General Managers

General managers: Responsible for Several Activities If you are working in a


small organization of, say, 100 people and your title is Executive Vice President,
you are probably a general manager over several departments, such as
Production and Finance and Human Resources.

A General manager is responsible for several organizational activities.


At the top of the pyramid, general managers are those who seem to be the
subject of news stories in magazines such as Bloomberg Businessweek, Fortune,
Forbes, and Inc. Examples are big-company CEOs Denise Morrison of Campbell
Soup and Jeff Bezos of Amazon.com, as well as small-company CEOs..
ISBA International School of Banking Academy of Vietnam

Defining management
Managers for Three Types of Organizations: Profit, Non profit, Mutual-Benefit

But not all general managers are in for profit organizations.


There are three types of organizations classified according to the three purposes for which they are
formed—for-profit, nonprofit, and mutual-benefit.
1. For-Profit Organizations: For Making Money For-profit, or business, organizations are formed to
make money, or profits, by offering products or services.

2. Non profit Organizations: For Offering Services Managers in nonprofit organizations are often known
as administrators. Nonprofit organizations may be either in the public sector or in the private sector,
such as Stanford University. Either way, their purpose is to offer services to some clients, not to make a
profit. Examples of such organizations are hospitals, colleges, and social-welfare agencies (the Salvation
Army, the Red Cross).
One particular type of nonprofit organization is called the commonweal organization. Unlike nonprofit
service organizations, which offer services to some clients, commonweal organizations offer services to
all clients within their jurisdictions. Examples are the military services, the Vn Postal Service, and your
local fire and police departments.
ISBA International School of Banking Academy of Vietnam

Defining management
Managers for Three Types of Organizations: for Profit, Non profit, Mutual-Benefit

3. Mutual-Benefit Organizations: For Aiding Members Mutual-benefit organizations are


voluntary collections of members—political parties, farm cooperatives, labor unions, trade
associations, and clubs—whose purpose is to advance members’ interests.

The single biggest difference, however, is that in a for-profit organization, the measure of
its success is how much profit (or loss) it generates. In the other two types of
organizations, although income and expenditures are very important concerns, the
measure of success is usually the effectiveness of the services delivered—how many
students were graduated, if you’re a college administrator, or how many crimes were
prevented or solved, if you’re a police chief.
ISBA International School of Banking Academy of Vietnam

Defining management
The Manager’s Roles: Mintzberg’s Useful Findings
Henry Mintzberg in the late 1960s, shadowed five chief executives for a week
and recorded their working lives. And what he found is valuable to know, since it
applies not only to top managers but also to managers on all levels.

Here are three of Mintzberg’s findings, important for any prospective manager:
1. A Manager Relies More on Verbal than on Written Communication

Writing letters, memos, and reports takes time. Most managers in Mintzberg’s
research tended to get and transmit information through telephone
conversations and meetings. No doubt this is still true, although the
technologies of e-mail, texting, and Twitter now make it possible to
communicate almost as rapidly in writing as with the spoken word.
ISBA International School of Banking Academy of Vietnam

Defining management
The Manager’s Roles: Mintzberg’s Useful Findings

2. A Manager Works Long Hours at an Intense Pace.


“A true break seldom occurred,” wrote Mintzberg about his subjects. “Coffee
was taken during meetings, and lunchtime was almost always devoted to formal
or informal meetings.”

Long hours at work are standard, he found, with 50 hours being typical and up
to 90 hours not unheard of. More recently, decades following the Mintzberg
research, another study found that many professionals worked a whopping 72
hours a week, including weekend work.
ISBA International School of Banking Academy of Vietnam

Defining management
The Manager’s Roles: Mintzberg’s Useful Findings

3. A Manager’s Work Is Characterized by Fragmentation, Brevity, and Variety


Only about one-tenth of the managerial activities observed by Mintzberg took
more than an hour; about half were completed in under 9 minutes. Phone calls
averaged 6 minutes, informal meetings 10 minutes, and desk-work sessions 15
minutes. “When free time appeared,” wrote Mintzberg, “ever-present
subordinates quickly usurped it: “the interrupt-driven day” .

The practice of mindfulness can help overcome these tendencies (How Good
Are You at Focusing Your Thoughts, Controlling Your Impulses, and Avoiding
Distractions?”).
20

2 missing roles in Mintzberg roles

Subordinate Worker
Except senior managers, other Some managers spend time
managers have to be doing the work in organizations.
subordinates for their Head of a department in a
superiors. university might be a teacher
So, they have to advice, assist sometimes.
and influence their boss.
ISBA International School of Banking Academy of Vietnam

Pratical action

So what is mindfulness?
Mindfulness is “the awareness that emerges through paying attention on purpose, in the present
moment, and nonjudgmentally to the unfolding of experience moment by moment.”

In case you are thinking this sounds like an impractical trait for a busy manager to cultivate, consider that
learning how to focus just on the task or conversation at hand is actually an invaluable way to get more
done. Meditation is called a practice because it’s a skill that you improve over time.

If you’re new to it, try repeating this simple method for five minutes a day:
Sit still in a quiet place, inhale while counting to seven, hold your breath for seven counts, and exhale
for seven counts. Clear your mind, thinking of nothing but your breathing, and if you find other
thoughts intruding, don’t be discouraged. Put them gently aside and try again. If you find it helpful,
place a neutral object in front of you on which to focus, like a candle or a small object that has religious
or spiritual meaning for you, or close your eyes.
2
Roles of managers

22
ISBA International School of Banking Academy of Vietnam

Defining management
Three Types of
Managerial
Roles:

Interpersonal

Informational

Decisional
24

4. Roles of managers
Mintzberg (1973)

Informational
• Monitor
• Disseminator
• Spokesperson

Interpersonal
• Figurehead
• Leader
• Liaison

Decisional
• Entrepreneur
• Disturbance handler
• Resource allocator
• Negotiator
25

Information roles
Information roles refer to activities collecting data, distributing data and official state
information

Monitor Seek, receives and screens


information to understand
organization and its context.

Disseminators Forward information to


others

Spokesperson Represent the unit to provide


outsiders information.
26

Interpersonal roles
Derive from manager’s formal authority and status, and shape relations with people within and
beyond the organization

Figurehead Representing the unit in


legal and ceremony duties

Leader role Motivating, communicating and


developing subordinates’ skills and
confidence

Liaison Maintaining contact with


outsiders
ISBA International School of Banking Academy of Vietnam

Defining management
Three Types of Managerial Roles: Interpersonal, Informational, and Decisional

1. Interpersonal Roles - Figurehead, Leader, and Liaison In their interpersonal roles,


managers interact with people inside and outside their work units.
The three interpersonal roles include figurehead, leader, and liaison activities.
2. Informational Roles - Monitor, Disseminator, and Spokesperson. The most important
part of a manager’s job, Mintzberg believed, is information handling, because
accurate information is vital for making intelligent decisions. In their three
informational roles—as monitor, disseminator, and spokesperson—managers receive
and communicate information with other people inside and outside the organization.
3. Decisional Roles - Entrepreneur, Disturbance Handler, Resource Allocator, and
Negotiator. In their decisional roles, managers use information to make decisions to
solve problems or take advantage of opportunities. The four decision-making roles
are entrepreneur, disturbance handler, resource allocator, and negotiator.
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Decisional roles

Entrepreneurial role Resource allocating role


Grasp the opportunities, create a Utilise the resource usage
team to deal with them

Disturbance handling role Negotiation role


Put in place system and procedures Seek agreement to other parties
to limit sudden shock’s that the organization relies on.
consequences
ISBA International School of Banking Academy of Vietnam

Defining management: key terms


● attitude
● innovation
● career readiness
● interpersonal roles
● competitive advantage
● knowledge management
● conceptual skills
● leading
● controlling
● management
● decisional roles
● meaningfulness
● effective
● middle managers
● efficient
● mindfulness
● first-line managers
● nonmanagerial employees
● four management
● planning
● functions
● process
● functional manager
● resilience
● general manager
● soft skills
● human skills
● sustainability
● information technology
● technical skills
● application skills
● top managers
● informational roles
ISBA International School of Banking Academy of Vietnam

Key skills and competences of management

week 01/10
ISBA International School of Banking Academy of Vietnam

Key skills and competences of management


Three Types of Managerial Roles: Interpersonal, Informational, and Decisional

Good managers need to work on developing three principal skills.


● The first is technical, the ability to perform a specific job.
● The second is conceptual, the ability to think analytically.
● The third is human, the ability to interact well with people.

In the mid-1970s, researcher Robert Katz found that through education and
experience managers acquire three principal skills—technical, conceptual, and
human
ISBA International School of Banking Academy of Vietnam

Key skills and competences of management


Three Types of Managerial Roles: Interpersonal, Informational, and Decisional

1. Technical Skills—The Ability to Perform a Specific Job


Technical skills consist of the job-specific knowledge needed to perform well in a
specialized field. Having the requisite technical skills seems to be most important at
the lower levels of management—that is, among employees in their first professional
job and first line managers.

2. Conceptual Skills—The Ability to Think Analytically


Conceptual skills consist of the ability to think analytically, to visualize an organization
as a whole and understand how the parts work together. Conceptual skills are more
important as you move up the management ladder, particularly for top managers,
who must deal with problems that are ambiguous but that could have far-reaching
consequences.
ISBA International School of Banking Academy of Vietnam

Key skills and competences of management


Three Types of Managerial Roles: Interpersonal, Informational, and Decisional

3. Human Skills—“Soft Skills,” the Ability to Interact Well with People


This may well be the most difficult set of skills to master. Human skills consist of
the ability to work well in cooperation with other people to get things
done—especially with people in teams, an important part of today’s
organizations.

Among the chief skills companies seek in top managers are the following:
■ The ability to motivate and engage others.
■ The ability to communicate.
■ Work experience outside the United States.
■ High energy levels to meet the demands of global travel and a 24/7 world.
ISBA International School of Banking Academy of Vietnam

Management competences
Companies want to hire career-ready college graduates. In this section
we describe a model of career readiness and offer tips for building
your readiness

Career readiness represents the extent to which you possess the


knowledge, skills, and attributes desired by employers.

How ready do you believe you are?

Recent surveys of college graduates and recruiters reveal a big gap in the
degree of readiness each group perceives in students.
ISBA International School of Banking Academy of Vietnam

Management competences
Closing the gaps for three reasons:
1. To get a job and earn more money. Today’s jobs require greater interpersonal
or soft skills, and employers are willing to pay higher salaries to those possessing
them.
2. To impress employers with your self-awareness. Companies prefer to hire
people with realistic perceptions of their own strengths and weaknesses. This
underscores the need to obtain information about your strengths and
weaknesses throughout your career.
3. To create your own motivation to learn. Studies of human behavior reveal
that people won’t spend time on personal development unless they feel the
need. Overinflated perceptions of career readiness will not motivate you to
develop the attributes that enhance that readiness. You need to motivate
yourself to learn and develop.
ISBA International School of Banking Academy of Vietnam

Management competences
KSAO
Four key categories of competency fuel career readiness: knowledge, soft skills,
attitudes, and other characteristics (KSAOs for short)

1. Knowledge (K) Skills in the knowledge category, generally referred to as


“hard skills,” encompass the basic knowledge employers expect you to
possess. They develop from your ability to apply academic and practical
knowledge while performing the job.

2. Soft Skills (S) We defined soft skills above as interpersonal or “people” skills
needed for success at work. These are not knowledge or technical skills.
Soft skills are becoming increasingly important as companies outsource and
automate routine tasks.
ISBA International School of Banking Academy of Vietnam

Pratical action

Willingness is at
the center of
developing your
career readiness.
This reinforces the
point that it’s up to
you to shape and
direct your future.
ISBA International School of Banking Academy of Vietnam

Theories of management
Classical theorists, including Administrative (Fayol) and Scientific
(Taylor).

week 01/10
ISBA International School of Banking Academy of Vietnam

Theories of management
Two Overarching Perspectives about Management:
Historical and Contemporary

■ The historical perspective (1911–1950s) includes three


viewpoints: classical, behavioral, and quantitative.

■ The contemporary perspective (1960s–present) includes three


viewpoints: systems, contingency, and quality-management.
ISBA International School of Banking Academy of Vietnam

Theories of management
ISBA International School of Banking Academy of Vietnam

Theories of management
ISBA International School of Banking Academy of Vietnam

Theories of management

Classical Viewpoint: Scientific and Administrative Management

The classical viewpoint, which emphasized ways to manage work more efficiently, had two
approaches:

(a) scientific management and


(b) administrative management.

Scientific management, pioneered by Frederick W. Taylor and Frank and Lillian Gilbreth,
emphasized the scientific study of work methods to improve the productivity of individual
workers.
Administrative management, pioneered by Charles Spaulding, Henri Fayol, and Max
Weber, was concerned with managing the total organization.
ISBA International School of Banking Academy of Vietnam

Behavioral approach

Managers get things done by working with people.

The field of study that researches the actions (behavior) of people at


work is called organizational behavior (OB).

Much of what managers do today when managing people—motivating,


leading, building trust, working with a team, managing conflict, and so
forth—has come out of OB research.

43
ISBA International School of Banking Academy of Vietnam

Quantitative management viewpoint


Another category under historical During the air war known as the Battle of Britain in
World War II, a relative few of England’s Royal Air
perspectives consists of quantitative
Force fighter pilots and planes were able to
viewpoint which emphasize the application successfully resist the overwhelming might of the
to management of quantitative techniques, German military machine.
such as statistics and computer simulations. How did they do it?
Operations Research techniques have Military planners drew on mathematics and statistics
to determine how to most effectively allocate use of
evolved into quantitative management, the
their limited aircraft.
application to management of quantitative When the Americans entered the war in 1941, they
techniques, such as statistics and computer used the British model to form operations research
simulations. (OR) teams to determine how to deploy troops,
submarines, and other military personnel and
Two branches of quantitative management
equipment most effectively.
are management science and operations
management.
44
ISBA International School of Banking Academy of Vietnam

Quantitative viewpoint

Management science focuses on using mathematics to aid in


problem solving and decision making.

Sometimes management science is called operations research.

Management science stresses the use of rational, science-based


techniques and mathematical models to improve decision making
and strategic planning.

45
ISBA International School of Banking Academy of Vietnam

Quantitative viewpoint

Operations management focuses on managing the production and delivery


of an organization’s products or services more effectively.

It governs managers’ decisions about how to increase productivity and


efficiency, as well as how to achieve the highest possible quality of both
goods and services.

Another major function of operations management is managing the supply


chain, which is the process of creating the product, starting with designing
and obtaining raw materials for physical goods or technology for services
and going all the way through delivery to customers’ hands, and sometimes
even beyond to responsible disposal or recycling. 46
ISBA International School of Banking Academy of Vietnam

How Today’s Managers Use The Behavioral Approach

The behavioral approach has largely shaped how today’s organizations


are managed.
• From the way that managers design jobs to the way that they work
with employee teams to the way that they communicate, we see
elements of the behavioral approach.
• Much of what the early OB advocates proposed and the conclusions
from the Hawthorne studies have provided the foundation for our
current theories of motivation, leadership, group behavior and
development, and numerous other behavioral approaches.
47
ISBA International School of Banking Academy of Vietnam

Theories of management: Contemporary Perspective

Three contemporary management perspectives are (1) the systems, (2) the contingency, and
(3) the quality management viewpoints.

1. The systems viewpoint sees organizations as a system, either open or closed, with
inputs, outputs, transformation processes, and feedback. The systems viewpoint has led
to the development of complexity theory, the study of how order and pattern arise
from very complicated, apparently chaotic systems.
2. The contingency viewpoint emphasizes that a manager’s approach should vary
according to the individual and environmental situation. It is a forerunner to
evidence-based management.
3. The quality management viewpoint has two traditional approaches: quality control, the
strategy for minimizing errors by managing each stage of production, and quality
assurance, which focuses on the performance of workers, urging employees to strive for
zero defects. A third quality approach is the movement of total quality management 48
ISBA International School of Banking Academy of Vietnam

Theories of management: Contemporary Perspective

Three contemporary management perspectives are (1) the systems, (2) the contingency, and
(3) the quality management viewpoints.

1. The systems viewpoint sees organizations as a system, either open or closed, with
inputs, outputs, transformation processes, and feedback. The systems viewpoint has led
to the development of complexity theory, the study of how order and pattern arise
from very complicated, apparently chaotic systems.
2. The contingency viewpoint emphasizes that a manager’s approach should vary
according to the individual and environmental situation. It is a forerunner to
evidence-based management.
3. The quality management viewpoint has two traditional approaches: quality control, the
strategy for minimizing errors by managing each stage of production, and quality
assurance, which focuses on the performance of workers, urging employees to strive for
zero defects. A third quality approach is the movement of total quality management 49
ISBA International School of Banking Academy of Vietnam

Theories of management:
management Contemporary Perspective
ISBA International School of Banking Academy of Vietnam

Contingency theories

Global
environment

Macro
environment

Micro-environ
ment/
industry
environment

Internal
environment

51
ISBA International School of Banking Academy of Vietnam

Contingency theories
There is no best way to manage.

There is no one best way of managing that is effective in some situations may not
be successful in others.

The optimal management style is contingent upon various internal and external
constraints.

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ISBA International School of Banking Academy of Vietnam

Contingency theories
1. There is no universal or one best way to manage
2. Wide range of external and internal factors must be considered,
and the focus should be on the action that best fits the given
situation.
3. Effective organizations not only have a proper 'fit' with the
environment but also between its subsystems
4. The needs of an organization are better satisfied when it is
properly designed, and the management style is appropriate
both to the tasks undertaken and the nature of the work group.
5. Each managers situation must be viewed separately.
6. Managers need to be developed in skills that are most useful in
identifying the important situational factors.
ISBA International School of Banking Academy of Vietnam

Theories of management

Fayol's Administrative Theory


Henri Fayol is the father of administrative theory, which focuses on general
management principles applicable to all organizations.
These principles include division of labour, authority and responsibility, unity of
command, and centralization.
● Fayol's administrative theory offers a holistic view of management,
highlighting the importance of planning, organization, and command and
control.

For example, we can illustrate how the division of labour and clear authority can improve
the efficiency and productivity of an organization; in a manufacturing company, the
division of labour can allow each employee to specialize in specialized tasks, thus
ISBA International School of Banking Academy of Vietnam

Theories of management

Taylor Scientific Management


Frederick Taylor is known for his scientific management theory, which focuses on
optimizing work processes.
Taylor's core principles include time and motion analysis, standardization, and
fair pay for performance.
● Scientific management aims to eliminate waste, reduce downtime, and
optimization by applying scientific methods and procedures.

For example, we can show how a manufacturing company implemented time and
motion studies to identify inefficiencies in manufacturing processes and make
improvements. For example, a detailed analysis of worker movements can optimize
line layout and reduce wasted time.
ISBA International School of Banking Academy of Vietnam

Theories of management

Handy, Management as an organizational function

Charles Handy developed the theory of management as a function of


organizations. There are four types of cultures or management styles that
managers play within organizations: power culture, role culture, task culture,
and person culture.
Each culture or management style has different characteristics and implications
for organizational power relations and communication methods.
Example: We can explain how a culture of power, in which authority is
centralized and made by leaders, can be suitable for an organizational hierarchy.
In contrast, a task culture emphasizing collaboration and problem-solving may
be better suited to organizations with high flexibility and adaptability.
ISBA International School of Banking Academy of Vietnam

Theories of management

Management by objectives (MBO)

Management by objectives (MBO) is a systematic and organized approach that allows


management to focus on achievable goals and to attain the best possible results from
available resources. It aims to increase organizational performance by aligning goals and
subordinate objectives throughout the organization. Ideally, employees get strong input
to identify their objectives, timelines for completion, etc. MBO includes ongoing tracking
and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book
'The Practice of Management'. In the 90s, Peter Drucker himself decreased the
significance of this organization management method, when he said: "It's just another
tool. It is not the great cure for management inefficiency... Management by Objectives 57
works if you know the objectives, 90% of the time you don't."
ISBA International School of Banking Academy of Vietnam

Management by objectives (MBO)

According to Drucker managers should "avoid the activity trap", getting so involved in
their day to day activities that they forget their main purpose or objective.

Instead of just a few top-managers, all managers should:

• participate in the strategic planning process, in order to improve the


implementability of the plan
• implement a range of performance systems, designed to help the organization stay
on the right track.

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ISBA International School of Banking Academy of Vietnam

Management by objectives (MBO)

MBO managers focus on the result, not the activity.

They delegate tasks by "negotiating a contract of goals" with their


subordinates without dictating a detailed roadmap for implementation.

Management by Objectives (MBO) is about setting yourself objectives and


then breaking these down into more specific goals or key results.

59
ISBA International School of Banking Academy of Vietnam

Management by objectives (MBO)

The principle behind Management by Objectives (MBO) is to make sure


that everybody within the organization has a clear understanding of the
aims, or objectives, of that organization, as well as awareness of their own
roles and responsibilities in achieving those aims.

The complete MBO system is to get managers and empowered


employees acting to implement and achieve their plans, which
automatically achieve those of the organization.

60
ISBA International School of Banking Academy of Vietnam

Management by objectives (MBO)

The MBO style is appropriate for knowledge-based enterprises when your staff is
competent. It is appropriate in situations where you wish to build employees'
management and self-leadership skills and tap their creativity, tacit knowledge and
initiative.

Management by Objectives (MBO) is also used by chief executives of


multinational corporations (MNCs) for their country managers abroad.

61
ISBA International School of Banking Academy of Vietnam

Management by objectives

Set
Reward
organizational
Achievers
objectives

Evaluated Set the


employee
Performance objectives

Progress
monitor

62
Why are managers important?
64

Luthans (1988) research

Sucessfull managers Effective managers


- Rapid promotion - Work-unit performance and
- Spend more time on networking subordinate satisfaction
(socializing, politicking, interacting - Spend more time on communication
with outsiders) and HRM
Pratical action

No Activities Role
1 Find information
2 Make decisions
3 Go to ceremony
4 Calculate the resources needed
5 Deal the price with the suppliers
6 Contact with government officers
7 Email the customer feedbacks for related departments
8 Motivate the subordinates
9 Report to the upper level management
10 Build the plan to deal with Covid 19

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