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The Human Resources Institute of New Zealand

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Glossary of Management Terms

This Glossary is a non-exhaustive list of Management Terms.

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Term definition
Abilene Paradox Story about a family who, collectively, decides to drive to Abilene, Texas, despite the fact that, individually, none of them really wants to make the trip. Used as a parable to illustrate the dangers of organisational groupthink where the inclination to conform to the action of others takes priority over independent, rational decision-making processes.
Accounts Payable The monies the company owes for goods or services received, but not yet paid for.
Acid test ratio Current assets - current liabilities. This measures liquidity.
Acquisition One firm gains a controlling interest in another.
Arbitration Referral of a dispute to a third party for settlement or advice; method of settling an industrial dispute where a third party renders a binding decision.
Attrition Decrease in total employment of an organisation or industry through the normal course of events such as resignation, retirement or death.
Balanced Scorecard A strategic, measurement-based management system, originated by Robert Kaplan and David Norton, which provides a method of aligning business activities to the strategy,
and monitoring performance of strategic goals over time.
Barriers to entry Barriers to entry are those things that make it difficult for a new company to compete against companies already established in the field. Examples include such things as patents, trademarks, copyrighted technology, and a dominant brand.
Benchmarking The use of performance or profiles as standards for measuring one’s own performance.
Blake and Mouton’s Managerial Grid An explanation, through the medium of a grid, of five styles of management concentrating on concern for people and concern for production.
Bureaucratic theory This is the contribution to classical management theory from the German academic Max Weber (1864 - 1920)
Buy Back The repurchase by a company of some or all of its shares from an investor, who acquired them by putting venture capital into the company when it was formed. May also occur when a company buys back the shares in a public company so that it becomes privately owned again.
Buy Out The purchase of the ownership, controlling interest, shares etc of a company. May also occur when a company is sold to its top managers.
Coalface The place where the actual physical work gets done as opposed to managing and administration.
Competitive Advantage What leads to a firm being able to outmatch its rivals in attracting & maintaining its targeted customers.

Compensation for injury to an employee arising out of and in the course of employment that is paid to the worker or dependents by an employer whose strict liability for such compensation is established by statute.  Where established by statute, workers' compensation is generally the exclusive remedy for injuries arising from employment, with some exceptions.
Workers' compensation statutes commonly include explicit exclusions for injury caused intentionally, by willful misconduct, and by voluntary intoxication from alcohol or illegal drugs.

Control The measurement and correction of the performance of subordinates to ensure that organisational objectives and the plans for attaining them are being met. See Management information systems.
Core Competencies An organisation’s basic lines of business. Its core strengths and abilities.
Cost Benefit Anaylsis Calculation of the estimated costs and gains from an anticipated strategic decision.
Cost Centre Unit of firm measured by its variance from budget.
Due Diligence The process of enquiry made during a merger and acquisition and by the purchaser as to the various financial, logistical and legal matters involved in such a transaction.
Economies of scale and scope Scale: being efficient by creating the lowest per unit cost of production and/or marketing; and Scope: being efficient by sharing a cost of an activity across product lines.
Efficiency Ration of outputs to inputs. Efficiency increases when costs of inputs are reduced or value of outputs are increased.
Enviromental Factors Political-legal - the role of government and the legislative framework of society; Economic - the state of the economy, both global and domestic is a crucial factor in managerial decision making;
Competitive - management must alert organisations of existing and potential competition; Technological - the information, equipment, techniques and processes required to transform inputs into outputs in the organisation; Socio-cultural - concerned social norms, attitudes, beliefs, values and lifestyles of the organisation’s stakeholders; Physical-natural - concentrates upon the natural environment and society’s awareness of ecology.
Ergonomics An approach to job design by focusing on the worker and considering how s/he interacts with the machine.
Ethics Standards of conduct, moral judgement.
Expected Value The estimated or assessed cost (or benefit) of some action, proposal or event multiplied by the expected probability of it occurring.
FAYOL - Henri Fayol established the tasks of managing involving five categories: Planning; Organising; Motivating; Controlling; Co-ordinating.
Fiduciary responsibility Holding or investing of property or assets that have been entrusted to an individual or organisation for a beneficiary.
Fixed Assets Non-liquid assets that are required for the company's day-to-day operations. They include facilities, equipment, and real property.
Fixed Costs Expenses that don't change based on production or sales volumes. They include salaries, rent, insurance, etc.
Gantt Chart Developed by Henry Gantt, an associate of Frederick Taylor. This is part of the planning process and is an early method of scheduling
Goodwill Used exclusively for accounting and financial purposes. It is the vague and arguable excess value of a business or asset over its net worth (usually intangible).
Gross Profit Gross Profit equals sales revenue minus the cost of goods sold.
Gross Revenue Gross Revenue is money generated by all of a company's operations, before deductions for expenses.
Hostile Takeover Acquisition of a company which opposes the transaction.
Handy- Charles

Writer of the best selling book on management - The Age of Paradox.

Human relations-orientated theory Contributed by Elton Mayo (1880 - 1949)
Insider Trading Trading in a security (buying or selling a stock) based on material information that is not available to the general public.
Intellectual Property Intellectual Property (IP) is all of a company's patents, trademarks, service marks, trade names, trade secrets, and copyrights. It is distinguished from capital property.
Intervention Used in Organisational Development to describe the range of activities by the client and consultant during an organisation development programme.
Job Charasteristics A manager should analyse the job content along five dimensions: skill variety, task identity, task significance, autonomy and feedback.
Job Design This aspect of management is part of organisation structure. Individuals carry out activities that lead to the achievement of the organisation’s objectives.
Job Enrichment Involving the assignment of more decision-making responsibilities to the worker.
Job Rotation and Enlargement A reaction against job specialisation. Linked to the Human Relations School.
Job Specialisation A process of reducing the job content. There will be minimal variety.
Just in Time (JIT) A system of inventory control that does away with large stocks.
Leadership Theories The following represent the leading exponents of leadership theory: Tannenbaum and Schmidt’s leadership continuum; Fiedler’s contingency theory; House’s Path-Goal theory of leadership; Vroom-Yetton model
Legacy Systems Systems based on outdated technology. Organisations usually have invested much money and effort in them and are often unwilling or unable to replace them.
Liabilities Liabilities are all of a company's financial obligations that have a negative value.
Net Income Net Income is total revenue minus total expense, what's left of the monies received after all debts have been paid, the bottom line. If Net Income is positive it is also called Net Profit.
Non-disclosure Agreement A Non-disclosure Agreement is a legal contract that allows a company to share its intellectual property (IP) with others, whose input it needs, without unduly jeopardizing that information.
McKinsey’s 7-S framework An alternative framework for management analysis.
Management The achievement of objectives by identifying and utilising material and human resources.
Management by objectives [MBO] A philosophy of management that encourages all levels of an organisation to participate in the management of that organisation’s affairs.
Management information systems See Control. The exercise of control depends on the collection of sufficiently accurate and timely information.
Manager Anyone who holds a senior level in a particular organisation.
Matrix Organisation The development of project organisation. Several projects are run at one time, each project manager having functional specialists loaned to him/her for the duration of the project.
Merger A combination of two or more firms into one operational entity.
MINZBERG - Henry subroles for management Interpersonal roles Figurehead Leader Liaison
Monitor Disseminator Spokesperson Informational roles
Motivation Has a subjective and objective aspect: Subjective side is a condition in the individual, which is called a need, a drive or a desire; Objective side is an object outside the individual, which may be called the incentive or goal. When the natures of the need and the incentive are such that obtaining the incentive satisfies the need, we call the situation motivating .
Nonprofit organisation An organisation established solely for providing a service, not for making a profit.
Objectives Peter Drucker in The Practice of Management cites eight key areas in which objectives of performance and results should be set: Market standing; Innovation; Productivity; Physical and financial resources; Profitability; Manager performance and development; Work performance and attitude, and; Public responsibility.
Organisational Change Usually occurs as a result of, or in response to, pressures from outside (external) and/or from within (internal) the organisation.
Organisational Development planned, organisation-wide effort, managed from the top, to increase organisational effectiveness through planned interventions in the organisation process using behavioural science knowledge.
Outcome A description of the intended result, effect, or consequence that will occur from carrying out a program or activity. A long-term, ultimate measure of success or strategic effectiveness.
Outplacement Assistance provided to employees who are losing their jobs.
Pareto Principle In any ‘normal’ situation it is found that approximately 20% of items account for 80% of the effect. The 80/20 rule. EG With 100 products there are likely to be 20 best selling products which account for 80% of the profit. Also there will be about 20 products (not necessarily the same 20) which account for about 80% of the profit. 20 of the products will account for about 80% of the customer complaints.
Performance Indicator A particular value or characteristic used to measure output or outcome.
Peripheral technology Proprietary knowledge of a firm that is not related to its most important product or service.
Peter Principle In any hierarchy a person is promoted until that person has reached his/her level of maximum competence. Once this occurs there is no further promotion.
Planning and Control There are two techniques used widely by management for planning and control: Critical Path Method; and Precedence Diagramming Method
PORTER - Michael The C. Roland Christensen Professor of Business Administration at the Harvard Business School. He expounded the Porter Analysis model in his books - Competitive Strategy and Competitive Advantage.
Power Position Three bases of power relate to a manager’s official position in a hierarchy of authority. Reward power is the capability to offer something of value, a positive outcome, as a means of controlling other people. Coercive power is the capability to punish or withhold positive outcomes as a means of controlling other people. Legitimate power is the capability to control other people by virtue of the rights of office.
Profit Centre Unit the firm controls (measures) by its profit or loss performance.
Risks Anaylsis Measures the risk of loss, including financial, insurance and hazardous waste risks, and political/economic issues impacting company operations.
Return on Investment (ROI) Abbreviation for Return on Investment. It is a measure of a company's ability to use its assets to generate additional value for shareholders. It is calculated as Net Profit divided by Net Worth, and expressed as a percentage.
Scientific Management Classical-orientated theories associated with Frederick Winslow Taylor (1856 - 1915)


An ongoing programme of activity which is designed to help an organisation or an individual achieve goals and objectives. A corporate strategy can be evaluated on six basic criteria: Internal consistency; Consistency with the environment; Appropriateness in the light of available resources; An acceptable degree of risk; An appropriate time horizon; Feasibility of the strategy.


Determining an organisation’s Strengths, Weaknesses, Opportunities and Threats.

Systems Management Maintaining an information system; may involve system analysis, design, application development and implementation.
Test Marketing Introducing new product in a limited area to reduce the financial risk of a full introduction and to determine its likely acceptance in the market.

Total Quality Management

TQM is concerned with quality right throughout the organisation, not just at the production stage.

Value Chain All the activities that a firm uses to design, produce, market, deliver and support its product.
Variable Costs Expenses that vary based on production volumes. They include material, labour, production utilities, etc.
Virtual Reality Computer-generated simulation of reality in which users can interact with the use of specialised peripherals.
Vision Long-term goal of strategy. What an organisation is and wants to become.
Working Capital The funds tied up in such things as inventories and debtors as distinct from fixed assets such as building and plant.

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