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by: Merle Hoeger


Merle Hoeger
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Tina Robbins

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Tina Robbins
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This 126 page Class Notes was uploaded by Merle Hoeger on Saturday September 26, 2015. The Class Notes belongs to MGT 201 at Clemson University taught by Tina Robbins in Fall. Since its upload, it has received 169 views. For similar materials see /class/214291/mgt-201-clemson-university in Business, management at Clemson University.




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Date Created: 09/26/15
Chapter 1 The exceptional manager 11 Management What it is what its Benefits are Three qualities that brought Judy McGrath to the top were A strong sense of community she was smart lucky when choosing good people Perseverance If you really want something you got to hang in there this is undervalued Creating an environment where failure is accepted Falling flat is a great motivator so is accident Two important roles in the McGrath playbook are make change part of your DNA and Companies don t innovate people do The Art of Management De ned Management is the art of getting things done through people Pioneer of management Organization a group of people who work together to achieve some specific purpose Management 1 the pursuit of organization goals efficiently and effectively by integrating the work of people through planning organizing leading and controlling the organization s resources Ef ciency The means To be efficient means to use resources people money raw materials and the like wisely and cost effectively Effectiveness the ends 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 Why organizations value managers The multiplier effect Much has been accomplished by people working individually but more has been done through managers and groups Top ten buildings in the world were built by more than one person Good managers create value This is due to the multiplier effect your influence on the organization is multiplied far beyond the results that can be achieved by just one person acting alone The greatest shortage of all is skilled effective managers Financial Rewards of being a star manager At the lower rungs of society managers make between 25 and 50 thousand dollars In the middle levels between 35 and 110 thousand dollars There are also benefits and rewards that go with being a manager These can range from health insurance to stock options to large offices The higher your ascend tin the management hierarchy the more privileges may come your way personal parking space better furniture lunch in the executive dining room The highest achieve personal company cars and private jets What are the rewards of studying and practicing management The rewards of studying management You will understand how to deal with organizations from the outside This allows us to help understand how organizations work and how the people in them make decisions which allows defensive decisions to be made You will understand how to relate to your supervisors You ll understand how your boss makes decisions and how they will respond to you You will understand how to deal with coworkers Management policies in play can affect how your co workers behave Management can give you the understanding of teams teamwork cultural differences conflict and stress and negotiation and communication skills that will help you better understand your coworkers You will understand how to manage yourself in the workplace Management allows you to realize insights about yourself your personality emotions values perceptions needs and goals We help you build your skills in areas such as selfmanagement listening handling change managing stress avoiding groupthink and coping with organization politics The Rewards of practicing management You and your employees can experience a sense of accomplishment Every goal achieved provides satisfaction to the all the employees who helped accomplished it You can stretch your abilities and magnify your range Every promotion up the hierarchy ofan organization stretches your abilities challenges your talents and skills and magnifies the range of your accomplishments You can build a catalog of successful products or services Every product or service you provide the personal Eiffel tower or empire state building you build as it were become a monument to your accomplishments Indeed studying management may well help you in running your own business Odette pollar owner of Time management systems believes managers are able to view the business in a broader contest to plan and grow personally Manager can play more of a leadership role than ever before This is an opportunity to counsel motivate advice guide empower and influence large groups of people 12 Six challenges to being a star manager The ideal state that many people seek is an emotional zone somewhere between boredom and anxiety in the view of psychologist Mihaly Csikzentmihalyi Boredom arises because skills and challenges are mismatched your talent is wasted on low level jobs Anxiety occurs when one has low levels of skill but a high level of challenge Challenge 1 Managing for a competitive advantage Comparative advantage the ability of an organization to produce goods or services more effectively than competitors do thereby outperforming them This means saying ahead in four areas Being responsive to customers innovation quality and efficiency Being responsive to customers The first law of business is Take care of the customer Without customers buyers clients consumers shoppers users patrons guests investors or whatever they re called will result in no organization Nonprofit organizations are advised to be responsive to their customers too whether they are citizens members students patients voters ratepayers Innovation Innovation Finding ways to deliver new or better goods or services No organization can afford to become complacent especially when rivals are coming up with creative ideas Innovate or die is an important adage for any manager Quality If your organization is one of a kind the customer will deal with less than stellar services or products This is only because they have no choice If another company offers a similar product or service of better quality your company will find it falling behind Efficiency Generations ago organizations rewarded employees for their length of service Today the emphasis is on efficiency Companies strive to produce goods or services as quickly as possible using as few employees as possible Challenge 2 Managing for diversity During the next halfcentury the mix of American racial or ethnic groups will change considerably with the US becoming half minority Whites are projected to decrease from 69 of the pop to 50 in 2050 African Americans will increase from 13 to 15 Asians and pacific islanders 4 to 8 Hispanics 13 to 24 In the coming years there will be a different mix of people women elderly minorities For instance in 2006 Hispanics accounted for nearly one quarter of all US births Challenge 3 Managing for globalization the expanding management universe Gestures in America have different meanings in other countries Eye contact is rude if held for more than a few seconds in Japan and the common hand gesture of hello is an insult in Greece The point is gesture and symbols don t have the same meaning to everyone throughout the world Thomas Friedman the Worlds is flat 2005 book notes a phenomenon in which globalization has leveled the competitive playing fields between industrial and emergingmarket countries Challenge 4 Managing for information Technology Internet the global network of independently operating but interconnected computers linking hundreds of thousands of smaller networks around the world By 2010 according to International data corp internet trade between businesses will surpass 10 trillion worldwide Ecommerce The buying and selling of goods or services over computer networks This is responsible for reshaping entire industries and revamping the very notion of what a company is Ebusiness using the internet to facilitate every aspect of running a business Farranging emanagement and ecommunication Using wired and wireless telephones fax machines electronic mail or email text messages or documents transmitted over a computer network as well as project management software programs for planning and scheduling the people costs and resources to complete a project on time Accelerated decision making conflict and stress The internet not only speeds up everything it also can overwhelm us with its huge interconnected databases computerized collections of interrelated files Changes in organizational structure jobs goal setting and knowledge management Due to the increases in technology organizations and teams become virtual They are no longer as bound by time zones and locations Employees for instance may Telecommute or work from home or remote locations using a variety of information technologies Meetings are conducted via videoconferencing using video and audio links along with computers to let people in different locations see hear and talk with one another In addition collaborative computing using stateof theart computer software and hardware will help people work better together There will be an increase emphasis on knowledge management the implementing of systems and practices to increase the sharing of knowledge and information throughout an organization Challenge 5 managing for ethical standards Ethical standards is the way we conduct ourselves at work how much gifts should we give in order to land the deal how much leeway should our employees have with knocking our competition Ethical behavior is not just a nicety it is a very important part of doing business Not since sociologist Edwin Sutherland invented the term llwhitecollar crime in the 1930 s were so many top level executive being hauled into court Challenge 6 Managing for your own happiness amp life goals One must assess the correlation between happiness and meeting the organization s challenges Many people don t find being a manager fulfilling In the end however recall what Odette Pollar said llif you truly like people and enjoy mentoring and helping other to grow and thrive management is a great job llOne s experience in management is greatly affect by the company s culture 13 What managers do The four principal functions The management process four management functions planning organizing leading and controlling Planning Discussed in partB of this book Planning setting goals and deciding how to achieve them Organizing Discussed in part 4 ofthis book Organizing defined as arranging tasks people and other resources to accomplish the work Leading discussed in Part 5 of this book Leading motivating directing and otherwise influencing people to work hard to achieve the organizations goals Controlling discussed in part 6 ofthis book Controlling Monitoring performance comparing it with goals and taking corrective action as needed 14 Pyramid Power levels and Areas of management The workplace of the future may resemble a symphony orchestra famed management theorist Peter Drucker said The Traditional Management Pyramid levels and areas The picture that is drawn applies to all different kinds of organizations and describes them in ways the make sense Three levels of Management Top managers The top of pyramid these jobs include titles such as CEO COO president senior vice president Top managers make longterm decisions about the overall direction of the organization and establish the objectives policies and strategies for it Middle management Middle managers implement the policies and plans ofthe top managers above them and supervise and coordinate the activates of the rstline manager below them Titles include clinic director dean of student services etc their salaries may range from under 50K to 110K a year First line management Supervisor is the name generally given to firstline mangers Following the plans of middle and top managers First line managers make shortterm operating decision directing the daily tasks of nonmanagerial personal Areas of management functional managers vs general managers Organizations are run by two types of managers functional and general These departments in a profit organization might be Research and dev Marketing finance production In a nonprofit they are Faculty student support staff finance A functional manager responsible for just one organizational activity A general manager responsible for several organizational activities Managers for three types oforganizations Forprofit nonpro t mutual bene t For profit organizations for making money Organizations are formed to make money or profits by offering products or services Nonpro t Organizations for offering services Managers in nonprofit organizations are often known as lladministrators Nonprofit organizations may be either in the public sector such as public university or a private sector in a private college Their purpose is to offer a service not to make a profit One particular type of nonprofit organization is a commonweal organization an organization that offers services to all clients within their jurisdictions The army the fire and police forces Mutual benefits organizations for aiding members Voluntary collections of members political parties farm cooperatives labor unions trade associations and clubs who purpose is to advance members interests Do managers manage differently for different types oforganizations Key differences In a profit organization success is measured in profit in a nonprofit success is measures in the effectiveness of the services delivered 15 Roles managers must play successfully The Managers roles Mintzberg s useful ndings Henry Mintzberg s shadowed five chief executives around for a week and record their working lives 1 u llThere was no break in the pace of activity during office hours the mail 36 pieces per day telephone calls 5 per day and meetings 8 per day accounted for almost every minute from the moment these executives entered their offices in the morning until they departed in the evening Mintzberg Mintzberg s findings A manager relies more on verbal than on written communication Spoken word was the choice of communication but with email spoken work and email go hand in hand Manager works long hours at an intense pace quotA true break seldom occurred wrote Mintzberg s about his subjects Coffee was taking during meetings and lunchtime devoted to meetings Long hours are not unheard of with 50 hours being typical and 90 hours not unheard of John Kotter found that general managers worked an average 60 hours per week There is a correlation between working longer hours and earning more money A Managers work is characterized by Fragmentation Brevity and Variety Most of an executive s time is spent dealing with the interruptions of the day phone calls etc Mintzberg notes that time and task management are major challenges for every manager Three types of managerial Roles Three types of managerial roles Interpersonal informational amp decisional Interpersonal roles Figure head leader and liaison Interpersonal roles managers interact with people inside and outside their work units Information Roles Monitor disseminator and spokesperson Mintzberg s believes handling information is the most important part ofa manager s job for it allows the making of intelligent decisions Information roles as monitor disseminator and spokesperson mangers receive and communicate information with other people inside and outide the organization Decisional Roles entrepreneur disturbance handler resource allocator and negotiator Decisional roles mangers 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 Role types for each on page 22 16 The Entrepreneurial spirit Zuckerberger was an entrepreneur who created face book Entrepreneurship Defined Taking risks in pursuit ofopportunity Small businesses administration small outfits create some 75 of all new jobs represent 997 of all employers and employ 50 of the private workforce What is entrepreneurship Entrepreneurship is the process oftaking risks to try to create a new enterprise There are two types of entrepreneurship The entrepreneur An entrepreneur is someone who sees a new opportunity for a product or service and launches a business to try to realize it Most entrepreneurs run small businesses with fewer than 100 employees The intrapreneur An intrapreneur is someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organizations resources to try to realize it Someone who is within the company who see an opportunity to create a new venture which could be profitable How do entrepreneurs and managers differ An entrepreneur always searches for change responds to it and exploits it as an opportunity Being an entrepreneur is what it takes to START a business being a manager is what it takes to grow or maintain a business a preneur you initiate new goods or services as manager you coordinate the resources to produce the goods or services Entrepreneurial companies have been called Gazelles for two attributes that make them successful speed and agility Gazelles have mastered the art of quick they have internal approach and fast decision making approaches that let them move with maximum agility in a fast changing business environment People ages 2534 are 40 less likely to be entrepreneurs then their parents Entrepreneurs have characteristics that differ from managers They are as follows Characteristic of both high need for achievement Entrepreneurs for possible financial rewards Managers motivated by promotions and organizations rewards of power and perks Belief in personal control of destiny Internal locus of control belief that you control your own destiny High energy level and action orientationMore entrepreneur Rising to the top requires long hours from a manager Entrepreneurs require an extraordinary investment of time and energy to jump start their organization This makes them impatient and to want to get things done as quickly as possible making them action oriented High tolerance for Ambiguity more entrepreneurs The ability to make decisions on unclear or incomplete information More characteristic of entrepreneurs than managers selfconfidence and tolerance for risk Managers must believe in themselves and be able to make decisions This applies more so to entrepreneurs Not all entrepreneurs have faith in themselves Necessity entrepreneurs are people who were laid off trying to make an income They make up 11 of the entrepreneurs Opportunity entrepreneurs the other 89 are those who start their burning desire rather than because they lost their job 17 The skills star managers need Robert Katz found that through education and experience managers acquire three principle skills technical conceptual and human Technical skills the ability to perform a speci c job Technical skills consist of the jobspecific knowledge needed to perform well in a specialized field This is important in the lower levels of management that is among rst line managers 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 part works together This is important for top managers Human skills The ability to interact well with people 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 This is a necessary for managers ofall levels The Most value traits in managers 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 247 world Chapter 2 Management Theory 21 Evolving Viewpoint How we got today s management outlook quotThe best way to predict the future is to create itquot Pete drucker Peter Drucker was the creator and inventor of modern management Tom peters Drucker was an Austrian trained in economics and international law In 1954 he published the practice of management in which he proposed that management was one of the major social innovations of the 20 h century Evidencebased management Evidence based management translating principles based on best evidence into organization practice bring rationality to the decisionmaking process Jeffery Pfeffer and Robert Sutton evidence based management is based on the belief that quotfacing the hard face about what works and what doesn t understanding the dangerous halftruths that constitute so much conventional wisdom about management and rejecting the total nonsense that too often passes for sound advice will help organizations perform better Two overarching perspective of Management Historical includes three viewpoints classical behavioral and quantitative Contemporary systems contingency and qualitymanagement Five practical reasons for studying this chapter Understanding the present Understanding history will help you understand why some practices are still favors whether for right or wrong reasons Guide to action Good theories help us make predictions and enable you to develop a set of principles that will guide your actions Source of new ideas It can also provide new ideas that may be useful to you when you come up against new situations Clues to meaning of your managers decisions Helps you understand where the top managers are coming from Clues to meaning of outide events Helps you understand events outside of the organization that could affect you 22 Classical viewpoint scientific and administrative management Therblig phrase coined by Frank Gilbreth its gilbreth spelled backwards with the T and H reversed It refers to 1 of the 17 basic motions The Gilbreths were a husband wife team of industrial engineers who were pioneers in one of the classical approach to management part of the historical perspective Three historical perspectives are Classical Behavioral and Quantitative The classical Viewpoint emphasized finding ways to manage work more efficiently It has two branches Scientific and administrative Classical management assumes that people are rational Scienti c Management Pioneered by Taylor and gilbreths Scienti c Management emphasized the scientific study of work methods to improve the productivity of individual workers Two chief proponents were Frederick Taylor and the team of Frank and Lillian Gilbreth Fred Taylor and the four principles of scienti c Management Taylor called under achieving and loafing soldering Taylor was known as the father of scientific management he was an engineer from Philadelphia He believed that soldering could be eliminated by four principles of science 1 Evaluate a task by scientifically studying each part of the task 2 Carefully select workers with the right abilities for the task 3 Give workers the training and incentives to do the task with proper work methods 4 Use scientific principles to plan the work methods and ease the way for workers to do their jobs Taylor based his system on motions studies finding the best performing motions to increase productivity Differential system more efficient workers earned higher wages Taylor is important because his principles can enhance productivity and innovations as motion and differential are still used today Frank and Lillian Gilbreth and Industrial engineering They built upon and expanded Taylor s motion studies in one instance using movie cameras to film works at work in order to isolate the parts ofa job Lillian had a PHD in psychology and was the first woman to contribute majorly to management science Administrative Management Pioneered by Fayol and Weber Scientific management is concerned with the jobs of individuals Administrative management is concerned with managing the total organization The Pioneering theorists were Henri Fayol and Max Weber Fayol was a French engineer and industrialist he became known to American business when his most important work general and industrial management was translated into English in 1930 Fayol is important because he was the first to identify the major functions of management planning organizing leading and controlling as well as coordinating Max Weber amp the Rationality of Bureaucracy Bureaucracy was a rational efficient ideal organization based on principles of logic according to Weber Weber s home country of Germany had people who held positions of power due to social standing not because of their abilities Weber reflected they didn t perform effectively A betterperforming organization he felt should have 5 positive bureaucratic features A well defined hierarchy of authority Formal rules and procedures A clear division of labor Impersonality Careers based on merit The problem with Classical view point too mechanistic See s humans as cogs within a machine not taking into account the importance of human needs Classical viewpoint is important because it approaches work activity in a rational approach through various scientific studies and specializations ofjobs it was possible to boost productivity 23 Behavior Viewpoint Behaviorism human relations and Behavioral science Behavioral viewpoint emphasized the importance of understanding human behavior and motivating employees toward achievement The behavior viewpoint developed over three phases early behaviorism the human relations movement and behavior science Early Behaviorism Pioneered by Munsterberg Follett and Mayo Hugo Munsterberg and the first application of Psychology to industry The father of industrial psychology Hugo Munsterberg Psychologist can contribute to industry in three ways Study jobs and determine which are suited for the specific jobs Identify psychological conditions in which employees do their best work Devise management strategies to influence employees to follow management s interests Mary Parker Follett and power sharing among employees and managers Follett though organizations should become more democratic with managers and employees working cooperatively The following ideas were among her most important 1 Organizations should be operated as quotcommunitiesquot with managers and subordinates working together in harmony B Conflicts should be resolved by having managers and workers talk over differences and find solutions that would satisfy both parties a process she called integration 3 The work process should be under the control of the workers with relevant knowledge rather than of managers who should act as facilitators Follett is important because she anticipated today s concepts of self managed teams worker empowerment and interdepartmental teams Elton Mayo and supposed quothawthorn effectquot Elton mayo conducted an experiment on worker s productivity and it s relation to special treatment What resulted was a hypothesis called the HAWTHORNE EFFECT namely employees worked harder if they received added attention if they thought that managers cared about their welfare and that supervisors paid special attention to them The Hawthorne effect is important based off the fact that it brought to light that workers were human and productivity could be increased if relations between manager and worker improved This led to the so called human relations movement in the 50 s and 60 s The human Relations Movement Pioneered by Maslow and McGregor Human relations movement proposed that better human relations could increase worker productivity Abraham Maslow and the hierarchy of needs Hierarchy of human needs physiological safety love esteem and selfactualization Douglas McGregor and Theory x versus Theory Y Theory X a pessimistic negative view of workers in this view workers are considered irresponsible to be resistant to change to lack ambition and hate work Want to be led then lead Theory Y represents the human relations proponents An optimistic positive view of workers This has workers capable of accepting responsibility self direction and self control and of being imaginative and creative These theories are important because helps a manager avoid falling into the trap of the self fulfilling prophecy If a manager assumes an employee will act a certain way and the employee does then his prophecy has been fulfilled Behavior science Approach Behavior science relies on scienti c research for developing theories about human behavior that can be used to provide practical tools for managers 24 Quantitative View points Management science and operations research OR operations operations research used by the Americans in World War II on how deploy their forces most efficiently These evolved into quantitative management Quantitative management the application to management of quantitative techniques such as statistics and computer simulations Two branches of Quantitative management are management science and operations management Management Science Using Mathematics to Solve Management Problems Management science focuses on using mathematics to aid in problem solving and decision making Also called operations research Why management science is important it stresses the use of rational science based techniques and mathematical models to improve decision making and strategic planning Operations Management helping organizations deliver products or services more effectively A less sophisticated version of management science operations management focuses on managing the production and delivery of an organizations products or services more effectively It is concerned with production planning facilities location and design and decisions about the optimum levels of inventory a company should maintain Why is operations management important It helps make sure that business operations are efficient and effective thought the rational management of resources and distribution of goods 25 Systems Viewpoint Contemporary perspective consists of three viewpoints Systems Contingency Qualitymanagement The Systems Viewpoint A system a set of interrelated part that operate together to achieve a common purpose Systems viewpoint regards the organization as a system of interrelated parts By adopting this point of view you can look at your organization both a Subsystem part making up the whole system and part of a larger environment Example is a college consists of faculty students etc but also as a system outside of environment and has to be responsive to parents alumni legislators nearby town s people and so on The four part ofa system Inputs are the people money information equipment and materials required to produce an organizations goods or services Outputs are the products services profits losses employee satisfaction or discontent and the like that are produced by the organization Transformation processes are the organizations capabilities in management and technology that are applied to converting inputs into outputs Feedback is information about the reaction of the environment to the output that affect the input Open and closed systems Nearly all organizations are at least to some degree open systems rather then closed systems An open system continually interact with its environment A closed system has little interaction with it environment that is it receives very little feedback from the outide Why the systems viewpoint and the concept of open systems is important The use of system viewpoints allows both inside and outside feedback on products to ensure that old mistakes are corrected and to avoid new ones 26 contingency viewpoints The contingency viewpoint emphasizes that a manager s approach should vary according to that is be contingent on the individual and the environmental situation Manager following this2 view asks which method is best under the circumstances It s important because it addresses each problem on a case by case basis and varies the solution accordingly 27 quality management viewpoint Quality management viewpoint includes quality control quality assurance and total quality management Quality Control and Quality Assurance Quality refers to the total ability of a product or service to meet customer needs One of the most important ways of adding value to produces and services Quality control de ned as the strategy for minimizing errors by managing each stage of production developed by Walter Shewart Quality Assurance focuses on the performance of workers urging employees to strive for quotzero defectquot Total Quality Management Creating an organization dedicated to continuous improvement W Edwards Deming and Joseph M Juran Deming 85 system is at fault 15 worker is at fault Juran De ned quality as quot tness for usequot TQM What is it TQM Total quality management is a comprehensive approach led by top management and supported throughout the organization dedicated to continuous quality improvement training and customer satisfaction Four component of TQM are Making continuous improvement a priority Get every employee involved Listen to and learn from customers and employees Use accurate standards to identify and eliminate problems TQM is important because it allows American companies to deal with global competition The Learning organization in an Era of Accelerated change Learning organization was a term coined by Peter Senge quotwhere people continually expand their capacity to create the results they truly desire where new and expansive patterns of thinking are nurtured where collective aspiration is set free and where people are continually learning how learn togetherquot The learning organization handling Knowledge and Modifying behavior Learning organization is an organization that actively creates acquires and transfers knowledge within itselfand is able to modify its behavior to reflect new knowledge Note the three parts Creating an acquiring knowledge getting ideas from the outside hiring new employees and expertise when the situation calls for it Transferring knowledge passing the knowledge to the company this was increased with the creation of the internet Modifying behavior managers encourage employees to use the new knowledge to change their behavior to help further the organizations goals Why organizations need to be learning organizations Living with accelerated change Reasons for companies embracing change and innovation The rise of virtual organizations Virtual organization An organization whose members are geographically apart usually working with an email collaborative computing and other computer connections This is all on the internet The rise of boundaryless organizations Boundaryless organization is a fluid highly adaptive organization who members linked by information technology come together to collaborate on common tasks the collaborators may include competitors suppliers and customers The imperative for speed and innovation Speed is emerging as the ultimate competitive weapon Innovation has increased exponentially and this is due to the increasing amount of competition The increasing importance of knowledge workers A knowledge worker is someone who occupation is principally concerned with generating or interpreting information as opposed to manual labor An appreciation for the importance of human capital Human capital is the economic or productive potential ofemployee knowledge experience and actions An appreciation for the importance of social capital Social Capital is the economic or productive potential of strong trusting and cooperative relationships New Emphasis on evidencebased management Many doctors use old practices while new information and practices are available This is what evidence based management hopes to cure obsolete knowledge How to build a learning organization Three Roles Managers Play 1 You can build a commitment to learning 2 You can work to generate ideas with impact 3 You can work to generalize ideas with impact Chapter 3 the Manager s changing work environment and Ethical responsibilities 31 The community of stakeholders inside the organization Internal and external stakeholders Stakeholders the people whose interests are affected by organizations activities Managers operate in two organizational environments consisting of two types of stakeholders Internal and external Internal stakeholder Internal stakeholders consist of employees owners and the board of directors if any r r39 are 39 39 Ito be quot 39 39 managers partners in cuttingedge kinds of companies Owners Owners of an organization consist of all those who can claim it as their legal property Board of Directors Elected by stockholders to oversee that the company is running smoothly 32 The community of stakeholders outside the organization External stakeholders people or groups in the organization s external environment that are affected by it Consists of the task and general environment Task environment The task environment consists of 11 groups that present you with daily tasks to handle customers competitors suppliers distributors strategic allies employee organizations local communities financial institutions government regulators specialinterest groups and mass media 1 Customers First law of business is taking care of customer Customers are those who pay to use an organizations goods or services 2 Competitors people or organizations that compete for customers or resources 3 Suppliers A supplier is a person or an organization that provides supplies that is raw materials services equipment labor or energy to another organization 4 Distributors A distributor is a person or an organization that helps another organization sell it goods and services to customers 5 Strategic allies describes the relationship of two organizations who join forces to achieve advantages neither can perform as well alone 6 Employee organizations unions and associations no longer are they having strikes and violence they are more focused on benefits stock ownership and campaigns for living wage 7 Local communities Local communities depend on the corporation for it tax base It provides nancial support to the community 8 Financial institutions Credit unions such as banks insurance companies investment banks that help out companies when revenue is down or to finance expansion 9 Government Regulators regulatory agencies that establish ground rules under which organizations operate They are external stake holders because the relationship they hold is mutual if a company want to produce more product and then the government will have to purchase more testers to make sure the product is approved 10 Special interest groups groups who members try to influence specific issues The way a business conducts itself may have special groups mothers against drunken driving etc at its door boycotting the product 11 Mass Media an incident will receive global coverage due to the increase in media technology therefore a business must conduct itself in a safe manner The General Environment General environment or MacroE includes six forces economic technological sociocultural demographic politicallegal and international 1 Economic forces consist ofthe general economic conditions and trends unemployment in ation interest rates economic growth that may affect an organizations performance Technological forces are new development in methods for transforming resources into N V goods or services Sociocultural forcesare influences and trends originating in a countrys a societfs or a culture s human relationships and values that may affect an organization Demographic forces in uences on an organization arising from change in the characteristics of a population such as age gender or ethnic origin Political legal forces changes in the way politics shape laws and laws shape the opportunities for and threat to an organization International Forces changes in the economic political legal and technological global U V b V in V on V system that may affect an organization 33 The Ethical responsibilities required of you as a manager Ethical dilemma a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal De ning ethics and Values 73 of employees have seen ethical misconduct at work and 36 have been distracted by it Ethics The standards of right and wrong that in uence behavior Ethical behavior is behavior that is accepted as quotrightquot as opposed to quotwrongquot according to those standards Values the relatively permanent and deeply held beliefs and attitudes that help determine a person s behavior Value system the pattern of values with an organization Four approaches to deciding ethical dilemmas 1 The Utilitarian approach for the greatest good This approach is guided by what will result in the greatest good for the greatest number of people The individual approach for your greatest selfinterest long term which will help others This is guided by what will result in the individual s best longterm interests which ultimately are in everyone39s selfinterests The Moralrights approach Respecting fundamental rights shared by everyone this is guided by respect for the fundamental rights of human beings The justice approach respecting impartial standards of fairness guided by respect for impartial standards of fairness and equity N V U V b V Enron SarbOx and Ethical Training Public outrage and SarbanesOxley reform act SarOxley reform act of 2002 known as Sarbox or SOX establishes requirement for proper financial record keeping for public companies and penalties for noncompliance How do people learn ethics Kohlberg s theories He proposed three levels of personal moral development 1 Preconventional follows rules 2 Conventional follows expectations of others 3 Post conventional guided by internal values How organizations can promote ethics Support by top managers ofa strong ethical climate Ethics codes and training programs Code of ethics consists of a formal written set of ethical standards guiding an organizations actions Rewarding ethical behavior protecting whistleblowers Whistleblower someone who report organizational misconduct to the public 34 The social responsibilities required of you as a manager Social responsibility A manager s duty to take actions that will bene t the interests of society as well as of the organization Corporate Social responsibility CSR the notion that corporations are expected to go above and beyond following the law and making a profit Archie B Carroll CSR rests on top of pyramid of corporations obligations Responsibilities should be 1 Good global corporate citizen 2 be ethical 3 obey the law 4 be profitable s social responsibility Worthwhile Opposing and supporting viewpoints Against Friedman company goals should be about maximizing profit For Samuelson Corporation must keep social responsibility in mind The Idea of Blended Value Measuring both Economic and Social bene ts Jeb Emerson blended value all 39 are 39 to operate 39 39 39 in both economic and social realms Two types of Social responsibility sustainability amp Philanthropy Sustainability the business of green Sustainability is defined as economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs Philanthropy quotnot dying rich Philanthropy making charitable donations to benefit humankind How does being good pay off 1 Effect on customers good practices creates customer loyalty 2 Effect on job applicants and employee retention The way a company conducts itself is huge in keeping and obtaining employees 3 Effect on sales growth sales will grow if customers increase therefore ethical practices result in an increase in sales 4 Effect on company efficiency honesty is a determinate in how ethical the workplace is 5 Effect on company Revenue Employee fraud costs major corporations billions of dollars 6 Stock price honesty affected the purchase of the stock 7 Pro ts Reputation of honest increased sales 35 The New diversi ed Workforce We are a changing people Race White population has decreased 8 over last 55 years Religion 44 noted their beliefs changed from when they were a kid Pregnancywork patterns working longer into pregnancy 67 then they did 4 decades ago 44 How to think about diversity Which difference are important Diversity represents all the ways people are unlike and alike the difference and similarities in age gender race religion ethnicity sexual orientation capabilities and socioeconomic background Personality defined as the stable physical and mental characteristic responsible for a person s identity Internal dimensions of diversity human differences that exert a powerful sustained effect throughout every stage of our lives External dimensions of diversity an element of choice they consist of the personal characteristics that people acquire discard or modify throughout their lives Organizational dimensions include management status union af liation work location seniority work content and division or department Trends in Workforce diversity Age Older people in the work force average age ofworker will increase Gender More women are working than ever before but are discriminated This unspoken discrimination is known as Glass ceiling the metaphor for an invisible barrier preventing women and minorities from being promoted to top executive jobs Race and Ethnicity More minorities are working in the work force There is an increase in illegal s and an unspoken glass ceiling for minorities as well Sexual orientation Gays and lesbians become more visible Gay employees tend to suffer more stress and also have to deal with a lower income per dollar People with differing physical and mental abilities American s with disabilities act prohibits discrimination against the disabled Educational levels mismatches between education and workforce needs Underemployed working atjobs that require less education than they have High school dropout and others may not have the literacy skills needed for manyjobs Barriers to diversity Stereotypes and Prejudices Ethnocentrism is the beliefthat one native country culture language abilities or behavior is superior to those of another culture Fear of Reverse Discrimination the minorities will achieve promotions over whites due to increase in diversity Resistance to diversity program priorities Unsupportive social atmosphere Lack of support for family demands Lack of support for Careerbuilding steps Chapter 4 Globalization The collapse of time and distance Globalization The trend of the world economy toward becoming a more interdependent system The rise of the quotglobal Villagequot and electronic commerce From transport to communication increase in the technological means of communicating Global village Shrinking of time and space as air travel and electronic media have made it easier for people ofthe globe to communicate with one another The Net the Web and the World an increase in business due to the internet and E commerce Ecommerce or electronic commerce the buying and selling of products and services through computer networks One Big World Market The Global Economy Global economy refers to the increasing tendency of the economies of the world to interact with one another as one market instead of many national markets Positive effects Medium to long term benefits are bene cial to everybody Negative effects Financial crises can affect the world Housing market crisis in America is an example Outsourcing occurs Crossborder business the rise of both megamergers and Minifirms worldwide Two types of company s huge mergers into even larger companies and small fast moving startup companies Megamergers operating worldwide corporations are trying to get bigger and cross border Minifirms operating worldwide two important results 1 Small companies can get started more easily 2 Small companies can maneuver faster 42 You and the international Management Why learn about international Management It s management overseeing corporations overseas Multinational Corporation or multinational enterprise a business firm with operations in several countries Multinational Organization is a nonprofit organization with operations in several countries You may deal with foreign customers or partners Knowing the practices of business in a foreign country is key in order to be successful You may deal with foreign suppliers knowing the practices of business is key again You may work for a foreign firm in the united states knowing the way companies are run in foreign countries results in better relations You may work for an American firm outside the united state or for a foreign one The successful international manager Geocentric not ethnocentric or polycentric Ethnocentric managers quotwe know best Ethnocentric managers believe that their native country culture language and behavior are superior to all others Parochialism a narrow view in which people see things solely through their own perspective Polycentric Managers l39they know best Polycentric managers take the view that native managers in the foreign of ces best understand native personnel and practices and so the home office should leave them alone Geocentric Managersquotwhat39s best is what39s effective regardless of originquot Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective 43 Why and how companies expand internationally Why companies expand internationally Availability ofsupplies New Markets Lower labor costs Maquiladoras manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens Access to Finance Capital Avoidance ofTariffs and Important Quota s How companies expand internationally Global outsourcing Outsourcing is defined as using suppliers outside the company to provide goods and services Global outsourcing is defined as using suppliers outside the United States to provide labor goods or services Importing exporting and Countertrading Importing a company buys goods outside the country and resells them domestically Exporting a company produces goods domestically and sells them outside the country Countertrading bartering goods for goods Licensing and franchising Licensing a company allows a foreign company to pay it for a fee to make or distribute the first companVs product or service Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share ofthe profit in return for using the first companVs brand name and a package of materials and services Jointventures strategic allies Join venture an alliance formed with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country Whollyowned subsidiaries A wholly owned subsidiary is a foreign subsidiary that is totally owned and controlled by an organization A Greenfield venture is a foreign subsidiary that the owning organization has built from scratch 44 The World of Free Trade Regional Economic Cooperation Free trade the movement of goods and services among the nations without political or economic obstruction Barriers to International trade Trade protectionism the use ofgovernment regulations to limit the import of goods and services Tariffs a tariff is a trade barrier in the form of a customs duty or tax levied mainly on imports Import Quotas A trade barrier in the form of a limit on the numbers of a product that can be imported Dumping The practice of a foreign company s exporting products abroad at a lower price than the price in the home market or even below the cost of production in order to drive down the price ofthe domestic product Embargoes a complete ban on the import or export of certain products Organizations promoting international Trade WTO consisting of 151 members the World Trade Organization is designed to monitor and enforce trade agreements World Bank Is to provide lowinterest loans to developing nations for improving transportation education health and telecommunications The International Monetary Fund designed to assist in smoothing the ow of money between nations Exchange rate the rate at which one countrfs currency can be exchanged for another countnfs currency Major Trading Blocs NAFTA EU APEC and Mercosur A trading bloc also known as an economic community is a group of nations with a geographical region that have agreed to remove trade barrier with one another Nafta formed in 1994 the north American free trade agreement is a trading bloc consisting of the united states Canada and Mexico The EU the 27 countries of the European union formed in 1957 the European Union consist of 27 trading partners in Europe Apec 21 countries on the paci c Rim The Asia paci c economic cooperation APEC is a group of 21 Paci c Rim countries who purpose is to improve economic and political ties Mercosur Ten countries of Latin America The Mercosur is the largest trade bloc in Latin America and has four core members Argentina brazil Paraguay and Uruguay with Venezuela scheduled to become a full member upon ratification by other countries and ve associate members Bolivia Chile Colombia Ecuador and Peru CAFTA Seven countries of central America the newest trade agreement you39ll hear about Includes United States Costa Rica Dominican Republic El Salvador Guatemala Honduras and Nicaragua Most favored Nation trading Status Most favored nation trading status describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties 45 The importance of understanding cultural differences Culture 3 shared set of beliefs values knowledge and patterns of behavior common to a group of people Cultural dimensions The Hofstede and Globe Project Models Low context culture shared meanings are primarily derived from written and spoken words High context culture in which people rely heavily on situation cues for meaning when communicating Hofstede s model of four cultural Dimensions ndividualismcollectivism how loosely or tightly are people socially bound Power distance how much do people accept inequality in power Uncertainty avoidance how strongly do people desire certainty MasculinityFemininity how much do people embrace stereotypical male or female traits Globe projects nine cultural dimensions Power distance how much unequal distribution of power should there be in organizations and society Uncertainty avoidance how much should people rely on social norms and rules to avoid uncertainty Institutional collectivism how much should leaders encourage and reward loyalty to the social unit ngroup collectivism how much pride and loyalty should people have for their family or organization Gender Egalitarianism how much should society maximize gender role differences Assertiveness how confrontational and dominant should individuals be in social relationships Future orientations how much should people delay gratification by planning and saving for the future Performance orientation how much should individuals be rewards for improvement and excellence Humane Orientation how much should society encourage and reward people for being kind fair friendly and generous Monochronic time preference for doing one thing at a time Polychronic time preference for doing multiple things at a time Expatriates people living or working in a foreign country Chapter 5 Chapter 51 Planning and Uncertainty Planning setting goals and deciding on how to achieve them Planning coping with uncertainty by formulating future course of action to achieve speci ed results Planning and strategic management Why not plan Planning requires you to set aside the time to do it You may have to make some decision without a lot oftime to plan How planning help you four benefits Planning helps you check your progress Planning helps you coordinate activities Planning helps you think ahead Planning helps you cope with uncertainty How Organizations respond to Uncertainty Four basic Strategy types Raymond Miles and Charles Snow Defenders let s stick with what we do best avoid other involvement Defenders are expert at producing and selling narrowly de ned products and services Prospectors let create our own opportunities not wait for them to happen Prospectors focus on developing new product or services and in seeking out new market rather than waiting for things to happen Analyzers let others take the risks of innovating and we ll imitate what works best Analyzers let other organizations take the risks of product development and marketing and then imitate or improve slightly on what seems to work best Reactors Let s wait until there s a crisis then we39ll react Reactors make adjustment only when finally forced to by environmental pressures Adaptive cycle entrepreneurial engineering administrative 52 Fundamentals of planning Mission and vision statements The mission statement What is our reason for being An organizations mission is it purpose or reason for being Mission statement expresses the purpose of the organization Vision statement what do we want to become A vision is a long term goal describing what an organization wants to become It is a clear sense ofthe future and the actions needed to get there Vision statement expresses what the organization should become where it wants to go strategically Three types of planning for three levels of management Strategic Tactical Operational Strategic planning by top management Strategic planning they determine what the organizations long term goals should be for the next 15 years with the resources they expect to have available Tactical planning by middle management Tactical planning that is they determine what contributions their departments or similar work units can make with their given resources during the next 624 months Operational planning by first line management Operational planning that is they determine how to accomplish speci c tasks with available resources within the next 152 weeks Goals Action plans and operating plans Goals Goals also known as an objective is a speci c commitment to achieve a measurable result within a stated period of time Meansend chain hierarchy of goals in the chain of management the accomplishment of lowlevel goals is the means leading to accomplishing high level goals or ends Strategic goals set by and for top management and focus on objective for the organization as a whole Tactical goals set by and for the middle managers and focus on the actions needed to achieve strategic goals Operational goal are set by and for first line managers and are concerned with short term matters associated with realizing tactical goals Action plan and operating plan Action plan de nes the course of action needed to achieve the stated goal Operating plan for a one year period defines how you will conduct your business based on the action plan it identi es clear targets such as revenues cash ow and market share Standing plans policies procedure and rules Standing plans are developed for activities that occur repeatedly over a period of time A policy a standing plan that outlines the general response to a designated problem or situation Procedure is a standing plan that outlines the response to particular problems or circumstances A rule is a standing plan that designates specific required action Singleuse plans programs and project A program is a single use plan encompassing a range of project or activities A Project is a single use plan of less scope and complexity than a program 53 Promoting goal setting Management by objective and smart goals Management by objective MBO first suggest by Peter Drucker What is M30 The four step process for motivating employees Jointly set objectives Develop action plan Periodically review performance Give performance appraisal and rewards ifany Cascading objective MBO from the Top Down 1 Top management must be committed 2 It must be applied organization wide 3 Objectives must Cascade a Cascading cascade objective down through the organization that is objectives are structured in a uni ed hierarchy becoming more specific at lower levels of the organization Setting SMART GOALS A smart goal is one that is speci c measurable attainable resultoriented and has target dates Goals should be specific not vague Measurable goals should be measurable Attainable goals should be challenging but realistic and attainable Result oriented goals should support organization39s vision Target dates should specify when the due dates are 54 The planning control cycle The planning control cycle has two planning steps and two control steps it goes as follows one make the plan two carry out the plan 3 control the direction by comparing results with the plan 4 control the direction by taking corrective action in two ways correcting deviations in the plan and improving future plans 55 Project Planning Project planning is the preparation of single use plans or projects This is followed by Project management achieving a set ofgoals through planning scheduling and maintaining progress of the activities that compromise the project Skunk works a term given to a project team who members are separated from the normal operation of an organization and asked to produce a new innovative product The Project life cycle Predictable evolution ofa project A Project life cycle has four stages from start to finish definition planning execution closing De nition stage you look at the big picture Planning stage you consider the details needed to make the big picture happen Execution stage is the actual work stage Closing state occurs when the project is accepted by the client CHAPTER 6 Business plan a document that outlines a proposed firm s goals the strategy for achieving them and the standards for measuring success embody a firm s strategy Brian aman didn t have a big picture Strategy a large scale action plan that sets the direction for an organization an educated guess about what must be done in the long term for the survival or the prosperity ofthe organization quotfind out what customers want then provide it to them as cheaply and quickly as possible wall mart strategy Strategic management a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals Strategic planning determines not only the organization s long term goals for the next 1 5 years regarding growths and profits but also the ways the organization should achieve them Why strategic management and planning are important Provide direction and momentum Encourage new ideas Above all develop a sustainable competitive advantage occurs when an organization is able to get and stay ahead in four areas in being responsive to customers in innovating in quality and in effectiveness Michael Porter Harvard business school professorquotsingle most important strategist working today and maybe of all time most influential living strategist by the strategic management society Poter said strategic positions attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company quotit means performing different activities from rivals or performing similar activities in different ways Three Key principles of Strategic management 1 Strategy is the creation of a unique and valuable position Strategic position emerges fromfew needs many customers Broad needs few customers Broad needs many customers 1 N E 62 Five steps of the StrategicManagement process Establish the mission and vision good mission statement states the organization s purpose or reason for being good vision statement describes long term direction and strategic intent PAGE 175 Establish the grand strategy explains how the organization s mission is to be accomplished Three common grand strategies i Growth strategy a grand strategy that involves expansion in sales revenues market share number of employees or number of customers or for non profits clients served ii Stability Strategy a grand strategy that involves little or no significant change iii Defensive strategy retrenchment is a grand strategy that involves reduction in the organization s efforts Formulate strategic plans determine what the organization s long term goals should be for the next 1 5 years Should include general goals and how to be achieved Should be SMART too strategy formulation the process of choosing among different strategies and altering them to best fit the organization s needs 4 Carry out the strategic plans Strategic implementation putting strategic plans into 5 Maintain strategic control consists of monitoring the execution of strategy and making adjustments if necessary to keep a strategic plan on track engage people keep it simple stay focused keep moving towards your vision of the future 63 Two kinds of strategic planning tools and techniques are SWOT analysis and forecasting trend analysis and contingency planning Environmental scanning careful monitoring of an organization s internal and external environments to detect early signs of opportunities and threats that may influence the firm s plans The starting point in establishing a grand strategy The process for doing such scanning is SWOT analysis SWOT analysis is a search for the Strengths Weaknesses inside matters Opportunities and Threats outside matters affecting the organization should provide you with a realistic understanding of your organization in relation to its internal and external environments so you can better formulate strategy in pursue of its mission Inside matters Organizational strengths the skills and capabilities that give the organization special competencies and competitive advantages in executive strategies in pursuit of its mission ie skills workforce superior reputation Organizational weaknesses the drawbacks that hinder and organization in executing strategies in pursuit of its mission Outside matters Organizational opportunities environmental factors that the organization may exploit for competitive advantage emerging markets booming economy weak rivals Organizational threats environmental factors that hinder an organization s achieving a competitive advantage Forecasting A vision or projection of the future one you complete SWOT you need to do forecasting for making long term strategy Two types offorecasting Trend analysis a hypothetical extension of a past series of events into the future time series forecasts Contingency planningScenario analysis The creation of alternative hypothetical but equally likely future conditions equips an organization to prepare for emergencies and uncertainty and also gets managers thinking strategically Thomas J Watson estimated demand for computers would never exceed five 64 Porter39s model for industry analysis business level strategies originate in five primary competitive forces in the firm s environment183 WPWN lquot Iquot E P Threats of new entrants Bargaining of new suppliers Bargaining of buyers Threats of substitute products or services Rivalry among competitors Porter39s four competitive strategies Costleadership strategy to keep the cost and hence prices of a product or service below those of competitors and to target a wide market home depot Differentiation strategy to offer products or services that are of unique and superior value compared to those of competitors but to target a wide market ritz carlton also done in companies trying to create brands to differentiate themselves from competitors Costfocus strategy To keep costs hence prices of a product or service below those of competitors and to target a narrow market discount stores FocusedDifferentiation strategy to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market luxury cars jewelers Product life cycle a model that graphs the four stages that a product or service goes through during the quotlifequot of its marketability 1 Introduction stage stage in the product life cycle In which a new product is introduced into the market place 2 Growth stage the most profitable stage is the period in which customer demand increases the product s sales grow and later competitors may enter the market 5 Maturity stage the period in which the product starts to fallout of favor and sales and profits begin to fall off must reduce cost and institute efficiencies to maintain product s profitability 4 Decline stage the period in which the product falls out of favor and the organization withdraws from the marketplace Singleproduct strategy a company makes and sells only one product within its market benefit focus risk vulnerability Diversification operating several businesses in order to spread the risk Unrelated diversification operating several businesses under one ownership that are not related to one another Gen Elect has gone into broadcasting and financial services Related diversification an organization under one ownership operates separate businesses that are related to one another grocery store Related diversification advantages Reduced risk because it s more than one product Management efficiencies administration spread over several businesses Synergy the sum is greater than the parts PepsiCo markets pepsi cola and mountain dew Synergy the economic value of separate related businesses under one ownership and management is greater together than the businesses are worth separately Competitive intelligence gaining information about one s competitors activities so that you can anticipate their moves and react appropriately The public prints and advertising Investor information Informal sources 65 Larry Bossidy Ceo of alliedsignal and ran charan are authors of the discipline of getting things done they say execution is not simply tactics it is a central part of any company s strategy it consists of using questioning analysis and follow through in order to mesh strategy with reality align people with goals and achieve results promised Three core processes of business a company s overall ability to execute is a function of effectively executing in terms of its people processes strategic processes and operational processes PEOPLE PROCESS ACCORDING TO BOSSIDY AND CHARAN IS MOST IMPORTANT The first core process People If you don t get the people process right you will never fulfill the potential of your business bossidy and charan An effective leader tries to evaluate talent by linking people to particular strategic milestones developing future leaders dealing with the nonperformers and transforming the mission and operations of the human resources department The second core process Strategy most strategies fail to consider the quothow of execution a leader must take a realistic and critical view of its capabilities and competencies A strong strategic plan must ask PAGE 191 Third core process Operations Defines where an organization wants to do and the people process defines who s going to get it provides the path for people to follow should address all major activities in which the company will engage Managers are advised to engage in Know your people amp your business Insist on realism set clear goals amp priorities Follow through Reward the doers Expand people s capabilities know yourself CHAPTER 7 Decision A choice made from among available alternatives Decision making The process of identifying and choosing alternative courses of action Identifying and sorting out alternatives Risk Propensity The willingness to gamble or to undertake risk for the possibility of gaining an increased payoff 0 Another name for this is competitiveness 0 Women seem to shy away from competition men seem to enjoy it too much Decisionmaking style reflects the combination of how an individual perceives and responds to information Styles vary along to different dimensions 1 Value orientation reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions Iquot Tolerance for ambiguity indicates the extent to which a person has a high need for structure or control in his or her life Directive people with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions They are efficient logical practical and systematic in their approach to solving problems They are action oriented and decisive and like to focus on facts They tend to be autocratic to exercise power and control and to focus on the short run Analytical Much higher tolerance for ambiguity Characterized by the tendency to overanalyze a situation They like to consider more information and alternatives They are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations Conceptual High tolerance for ambiguity Focus on social aspects of a work situation They take a broad perspective to problem solving and like to consider many options and possibilities Adopt a long term perspective and rely on intuition and discussions with others to acquire information They are willing to take risks and are good at finding creative solutions to problems However a conceptual style can foster an indecisive approach to decision making Behavioral Most people oriented of the four styles Work well with others and enjoy social interactions in which opinions are openly exchanged Receptive to suggestions Prefer verbal to written information Have a tendency to avoid conflict and to be concerned about others This can lead to behavioral types to adopt a wishy washy approach to decision making and to have a hard time saying no Very few people have only one decisionmaking style 0 Knowledge of styles helps you to understand yourself 0 You can increase your ability to influence others by being aware of styles Knowledge of styles gives you an awareness of how people can take the same information and yet arrive at different decisions by using a variety of decisionmaking strategies 72 Rational Model of decision making Explains how managers should make decisions it assumes managers will make logical decisions that will be the optimum in furthering the organization s best interests Stage 1 Identify the problem or opportunity Problem difficulties that inhibit the achievement of goals ie customer complains Supplier breakdowns Staff turnover Competitor innovations Opportunities situations that present possibilities for exceeding existing goals whether you re confronted with a problem or an opportunity the decision you re called on to make is how to make Improvements how to change conditions from the present to the desirable This is a matter of Diagnosis analyzing the underlying causes Stage 2 Think up alternative solutions Employees burning with bright ideas are an employer s greatest competitive resource After you ve identified the problem or opportunity and diagnosed its causes you need to come up with alternative solutions Stage 3 Evaluate Alternatives amp Select a solution Evaluate each alternative not only according to cost and quality but also according to the following questions 1 Is it Ethical 2 Is it feasible 3 Is it ultimately effective Stage 4 Implement amp Evaluate the Solution chosen Sometimes implementation is easy Other times implementation can be quite difficult For successful implementation you need to do two things 0 Plan Carefully 0 Be sensitive to those affected For successful Evaluation 0 Give it more time 0 Change it slightly 0 Try another alternative 0 Start Over The rational model is prescriptive It describes how managers ought to make decisions not how managers actually make decisions Nonrational model of decision making explains how managers make decisions they assume that decision making is nearly always uncertain and risky making it difficult for managers to make optimal decisions It is descriptive It shows how managers actually make decisions 1 Bounded Rationality amp the Satisficing Model Herbert Simon during the 1950 s began to study managers How proposed that managers could not truly act logically because their rationality was bounded by so many restrictions Bounded Rationality The concept suggests that the ability of decision makers to be rational is limited by numerous constraints Because of constraints managers don t make an exhaustive search for the best alternative Instead they follow the Satisficing Model managers seek alternatives until they find one that is satisfactory not optimal 2 The Incremental Model Incremental Modelmanagers take small short term steps to alleviate a problem Temporary steps may impede a beneficial long term solution 3 The Intuition Model lntuition Making a choice without the use of conscious thought or logical inference Stems from Expertise a person s explicit and tacit knowledge about a person situation object or decision opportunity Which is known as a holistic hunch Benefits of intuition 1 Can speed up decision making useful when deadlines are tight 2 It can be helpful to managers when resources are limited You must convince others that your hunch makes sense 73 Jeffrey Pfeffer and Robert Sutton say that too many managers make decisions based on beliefs in what ought to work rather than what actually works EvidenceBased Decision Making The translation of principles based on best evidence into organizational practice Seven implementation principles Treat your organization as an unfinished prototype No brag just facts See yourself and your organization as outsiders do Evidence Based management is not just for senior executives Like everything else you still need to sell it If all else fails slow the spread of bad practice lO lU lbUJNH The best diagnostic question what happens when people fail What makes it hard 1 There s too much evidence 2 There s not enough good evidence 3 The evidence doesn t quite apply 4 People are trying to mislead you 5 You are trying to mislead you 6 The side effects outweigh the cure 7 Stories are more persuasive anyway Purest application of evidence based management is the use of Analytics Analytics the term for sophisticated forms of business data analysis Three Key attributes among analytics competitors 1 The use of modeling Going beyond simple descriptive statistics Predictive Modeling a data mining technique used to predict future behavior and anticipate the consequences of change 2 Having multiple applications notjust one 3 Support from the top 74 Ethics officer someone trained about matters of ethics in the workplace particularly about resolving dilemmas Decision Tree A graph of decisions and their possible consequences it is used to create a plan to reach a goal When confronted with any proposed action for which a decision is required a manager should ask 1 Is the proposed action legal If quotyesquot Does the proposed action maximize shareholder value If quotyesquot Is the Proposed Action Ethical wa If quotNoquot Would it be ethical not to take the proposed action General Moral Principles for Managers H Dignity of Human life The lives of people are to be respected N Autonomy All persons are intrinsically valuable and have the right to self determination Honesty The truth should be told to those who have a right to know it Loyalty Promises contracts and commitments should be honored Fairness People should be treated justly O lU39lbw Humaneness 1 Our actions ought to accomplish good 2 We should avoid doing evil l The common good Actions should accomplish the quotgreatest good for the greatest numberquot of people 75 Advantages of Group Decision Making Greater pool of knowledge Different perspectives Intellectual stimulation Better understanding of decision rationale Deeper commitment to the decision Disadvantages of Group Decision making Afew people dominate or intimidate Groupthink when group members agree for the sake of unanimity and thus avoid accurately assessing the decision situation Satisficing Goal Displacement occurs when the primary goal is subsumed by a secondary goal What managers need to know about Groups 8 Decision making They are less efficient Their size Affects decision quality They may be too confident Knowledge counts A group can help in decision making when 1 When it can increase quality 2 When is can increase acceptance 3 When it can increase development Participative management The process of involving employees in a setting goals b making decisions c solving problems and d making changes in the organization predicted to increase motivation innovation and performance because it fulfills three basic needs autonomy meaningfulness of work and interpersonal contact The effect of PM is small What makes PM work Top management is continually involved Middle and supervisory managers are supportive Employees trust managers Employees are ready Employees don t work interdependent jobs PM is implemented with TQM total quality management Consensus occurs when members are able to express their opinions and reach agreement to support the final decision group members don t have to agree with decision but are willing to work toward its success Brainstorming For increasing creativity Brainstorming is a technique used to help groups generate multiple ideas and alternatives for solving problems Seven Rules for Brainstorming 39 Defer Judgment Build on the ideas of others ii39 Encourage wild ideas iv 60 for quantity over quality v Be visual v39 Stay focused on the topic vii One conversation at a time it is an effective technique for encouraging the expression of as many useful new ideas or alternatives as possible ComputerAided Decision Making 1 Chauffeur driven systems For Push button consensus Ask participants to answer predetermined questions on electronic keypads who wants to be a millionaire 2 Group driven systems For anonymous networking Meeting within a room of participants who express their ideas anonymously on a computer network Comments reactions are all put on a big Input for all to see Everyone feels free to participate These have been shown to produce greater quality and quantity of ideas for large froups of people The technique also produces more ideas as group size increases from 5 to 10 members Other research reveals that the use of online chat groups led to decreased group effectiveness and member satisfaction and increased time to complete tasks compared with face to face groups 76 Four ineffective reactions 1 Relaxed Avoidance quotThere s no point in doing anything nothing bad s going to happen Relaxed avoidance a manager decides to take no action in the belief that there will be no great negative consequence 2 Relaxed Change quotWhy notjust take the easiest way out Relaxed Change a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk 3 Defensive Avoidance quotThere s no reason for me to explore other solution alternatives Defensive avoidance a manager can t find a good solution and follows by procrastinating passing the buck or denying the risk of any negative consequences often occurs in firms with high turnover 4 Panic quotThis is so stressful I ve got to do something anything to get rid of the problem Panic A manager is so frantic to get rid ofthe problem that he or she can t deal with the situation realistically Three Effective Reactions Deciding to Decide A manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision making steps Three ways to help you to decide whether to decide Importance quotHow high priority is this situationquot Credibility quotHow believable is the information about the situation Urgency quotHow quickly must I act on the information about the situationquot Six common DecisionMaking Biases Heuristics strategies that simplify the process of making decisions 1 The availability Bias Managers use information readily available from memory to make judgments Readily available info may not present a picture of a situation 2 The confirmation Bias when people seek information to support their point of view and discount data that do not 3 The representativeness Bias the tendency to generalize from a small sample or single event just because something happened once doesn t mean it s representative that it will happen again or to you 4 The sunk cost bias When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it sometimes called the concorde effect 5 The anchoring and adjustment bias The tendency to make decision based on an initial figure paying an employee based on whatever works they made the previous year 6 Escalation of commitment bias Whereby decision makers increase their commitment to a project despite negative information about it if you really hate to admit you re wrong Prospect theory decision makers find the notion of an actual loss more painful than giving up the possibility of a gain CHAPTER 8 Organizational Culture A system of shared beliefs and values that develops within an organization and guides the behavior of it s members aso called corporate culture the quotsocial glue that binds members of the organization together Four types of Organizational Culture 1 Clan Culture has an internal focus and values flexibility rather than stability and control Famiy type organization collaboration among employees Devote considerable resources to hiring and developing their employees They view customers as partners South West Airlines 2 Adhocracy Culture has an external focus and values flexibility create innovative products by being adaptable creative and quick to respond to changes in the market place Employees are encouraged to take risks and experiment Well suited for start up companies WL Gore 3 Market Culture has a strong external focus and values stability and control focused on external environment and driven by competition Strong desire to deliver results customer productivity and profits take p over and satisfaction Employees must work hard and react fast Those who deliver results are rewarded Merrill Lynch 4 Hierarchy Culture has an internal focus and values stability and control over flexibility formaized structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency timeliness and reliability in the creation and delivery of products Dell Computer The Three Levels of Organizational Culture Level 1 observable Artifactsphysical manifestations such as manner of dress awards myths and stories about the company Rituals ceremonies and decorations As well as visible behavior exhibited by managers JC PENNEY is trying to revamp itself from a traditional hierarchal culture by having businesscasual dress on weekdays and jeans on Friday Level 2 Espoused Values The explicitly stated values and norms preferred by an organization ie Hewlett Packard s quotHP Way more often influenced by enacted values represent the values and norms actually exhibited in the organization Level 3 Basic Assumptions represent the core values of an organization s culture Aren t observable Those that are taken for granted and as a result are highly resistant to change How employees learn culture 1 Symbols an object act quality or event that conveys meaning to others they represent an organizations most important values 3m has a trophy gold step award achieving significant revenue 2 Stories Narrative based on true events which is repeated and sometimes embellished upon to emphasize a particular value oral histories that are told and retold by members about incidents in the organization s history 3 Heroes A Hero is a person whose accomplishments embody the values of the organization 4 Rites and Rituals The activities and ceremonies planned and unplanned that celebrate important 39 and I 39 in the mo 39 39 slife Sports teams are well known for it Mary Kay Inc presents best salespeople jewelry and pink cadillacs Importance of Culture Culture has four functions 1 Gives members an Organizational identity 2 Facilitates Collective commitment 3 Promotes Socialsystem stability 4 Shapes Behavior by helping employees make sense of their surroundings 82 Cultures for enhancing Economic performance 1 The strength perspective assumes that the strength of a corporate culture is related to a firm s long term financial performance culture strong when employees adhere to the organization s values and weak when forced to adhere to the organization s values through extensive procedures and bureaucracies The downside is that such financial success can so reinforce cultural norms that managers and employees become arrogant inwardly focused and resistant to change with top managers becoming blinded to the need for new strategic plans 2 The fit perspective Assumes that an organization s culture must align or fit with its business or strategic context a correct fit is expected to foster higher financial performance 3 The adaptive perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes Long term financial performance was highest for the organizations with an adaptive culture Eleven ways cultures become embedded in Organizations pp247248 1 Formal statements of philosophy mission expectation etc 2 Slogans and sayings 3 Stories Legends and Myths 4 Leader reactions to crises 5 Role Modeling Training and coaching 6 Physical Design 7 Rewards Titles Promotions and Bonuses 8 Organizational Goals and Performance Criteria 9 Measurable and controllable activities 10 Organizational Structure 11 Organizational systems and procedures 83 Chester Barnard s said an Organization is a system of consciously coordinated activities or forces of two or more people Forprofit organizations formed to make money or profits by offering products or services Nonprofit organizations formed to offer services to some clients not to make a profit Hospitals Colleges MutualBenefit Organizations Voluntary collectives whose purpose is to advance members interests examples Unions trade associations Organization chart A box and lines illustration showing the formal lines of authority and the organization s official positions or work specializations Organizational charts reveal The Vertical Hierarchy ofauthority who reports to whom The chain of command Who talks to whom The horizontal specialization who specializes in what work The different jobs or work specialization 84 Edgar scheine proposed the four common elements of common purpose coordinated effort division of labor and hierarchy of authority 1 Common purpose unifies employees or members and gives everyone and understanding of the organization s reason for being 2 Coordinated effort The coordination of individual efforts into a group or organizationwide effort common purpose is realized through coordinated effort Individuals can t do everything by themselves 3 Division of labor the arrangement of having discrete parts of a task done by different people also called work specialization 4 Hierarchy ofauthority a control mechanism for making sure the right people do the right things at the right time also called a chain of command authority is most effective when arranged in a hierarchy Unity ofcommand an employee should report to no more than one manager in order to avoid conflicting priorities and demands 5 Span of control the number of people reporting directly to a given manager An organization is said to be flat when there are only a few levels with wide spans of control 6 Authority refers to the rights inherent in a managerial position to make decisions give orders and utilize resources Authority means Accountability managers must report and justify work results to managers above them means you have the responsibility for performing assigned tasks Responsibility the obligation you have to perform the tasks assigned to you managers could have too much authority and too little responsibility or vice versa which would make the job difficult Delegation The process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy to be more efficient most managers are expected to delegate as much of their work as possible Line managers have the authority to make decisions and usually have people reporting to them the president VP head of acct line positions are indicated on the organization chart by a solid line usually a vertical line Staffpersonnel have authority functions they provide advice recommendations and research to line managers legal counsels special advisors indicated by a horizontal dotted line Centralized Authority Important decisions are made by higherlevel managers very small companies tend to be the most centralized Kmart and McDonald s are examples of companies And advantage is that there is less duplication of work because fewer employees perform the same task rather the tasks is performed by a department of specialists Also procedures are uniform and thus easier to control Decentralized authority Important decisions are made by middlelevel and supervisorylevel managers power is delegated throughout the organization General Motors and HarleyDavidson are good examples An Advantage is that managers are encouraged to solve their own problems rather than buck the decision to a higher level In addition decisions are made more quickly which increases the organization s flexibility and efficiency 85 1 Simple structure has authority centralized in a single person a flat hierarchy few rules and low work specialization most small mom and pop firms are simple structure s apple and Hewlett Packard became as twoman garage startups 2 Functional structure people with similar occupational specialties are put together in formal groups group people with similar skills in different departments such as maintenance or admissions 3 Divisional structure people with diverse occupational specialties are put together in formal groups by similar products or services customers or clients or geographic regions Product divisions group activities around similar products or services Time warner has different divisions for magazines movies Warner Bros has divisions spanning movies cable television and so on Customer Divisions tend to group activities around common customer or clients Ford Motor Co has separate divisions for passengercar dealers for large trucking customers Or a loan company may be structure with divisions for consumer loans business loans mortgage loans Geographic Divisions group activities around defined regional locations frequently used by government agencies Federal Reserve has 12 separate districts around the US 4 Matrix Structure an organization combines functional and divisional chains of command in a grid so that there are two commands vertical and horizontal Ford Motor co used this to create the Taurus and a new version of the mustang in this you report vertically and horizontally 5 TeamBased Structure team or work groups either temporary or permanent are used to improve horizontal relations and solve problems throughout the organization 5 Network structure The organization has a central core that is linked to outside independent firms by computer connections which are used to operate as if all were a single organization Corporations using this structure are sometimes called virtual corporations or virtual organizations Hollow organization The company retains important core processes critical to it s performance outsources most other processes This then seems to llhollow outquot the organization taking marketing and outsourcing human resources or distribution Modular Structure A firm assembles product chunks or modules provided by outside contractors a collection of Lego bricks that can snap togetherquot Outsourcing certain pieces of a product rather than outsourcing certain processes 86 contingency Design The process of fitting the organization to its environment What method is the best to use under these particular circumstancesquot 1 The environment Mechanistic versus Organic organizations Burns 8 Stalker McDonalds is a hugely successful example of what British behavior scientists Tom Burns and GM Stalker call a Mechanistic Organization Mechanistic Organization authority is centralized tasks and rules are clearly specified and employees are closely supervised Bureaucratic with rigid rules and top down communication Works best when organization is operating in a stable environment Has clear lines of authority Organic Organization authority is decentralized there are fewer rules and procedures and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks Tom Peters and Robert Waterman called this organization a loose structure Sometimes called quotadhocraciesquot because they operate Ad Hoc improvising as they go along Motorola and other Information technology companies favor this because they constantly have to adjust to technological change 2 The Environment Differentiation versus Integration Harvard researchers Paul R Lawrence and Jay W Lorsch proposed a differentiation integration dimension forces that impelled the parts of an organization to move apart or come together The stability of the environment confronting the parts ofthe organization determines the degree of differentiation or integration that is appropriate Differentiation Tendency of the parts of an organization to disperse and fragment The more subunits the more highly differentiated mpulse towards dispersal arises because of technical specialization and division of labor As a result specialists behave in specific delimited ways without coordinating with other parts of the organization ntegration the tendency of the parts of an organization to draw together to achieve a common purpose Specialists work together to achieve a common goal means for achieving this are a fomal chain of command standardization of rules and procedures and use of crossfunctional teams and computer networks so there is frequent communication and coordination of the parts 3 Size The larger the organization the more mechanistic Organizational size usually measured by the number of full time employees Larger organizations those with 200 or more full time employees tend to have more rules regulations and procedures and more job specialization as well as greater decentralization Larger firms are more mechanistic Small organizations tend to be informal to have fewer rules and regulations and to have less work specialization Smallfirms tend to be organic Bigger is better because the per unit cost of production decreases as the organization grows In quotsmall is beautifu because large organizations tend to breed apathy alienations absenteeism and turn over Conglomerate a large company would do business in different quite unrelated areas Used to be this way in the 1960 s Now management consultant and business schools are promulgating the idea of quotcore competencies in which companies are supposed to focus only on businesses that best fit their skills and distribution channels Tyco sold off electronics and health care businesses focusing on its product roster of safety equipment valves and controls The Dutch company Philips is seeling off some divisions narrowing its focus to consumer technology lighting and health care 4 Technology SmallBatch LargeBatch or Continuous Process The woodward model Technology Consists of all the tools and ideas for transforming materials data or labor inputs into goods and services outputs hand cranked ice cream machine Classroom the blackboard lectures are all technologies that deliver education about management Smalbatch technology often the least complex technology goods are custom made to customer specifications in small quantities The Columbia space shuttle The one of a kind portrait painting Often informal and flexible organic LargeBatch technology mass production assembly line technology Clothes bought at macy s Kenmore washer and dryers Tend to have a higher level of specialization and to be more bureaucratic according to woodward Continuousprocess technology highly routinized technology in which machines do all the work Vodka distilleries Nuclear power plants steel mills Human operators mainly read dials and repair machine breakdowns Successful continuous process organizations tend to be more organic than mechanistic less rigid and formal 5 Life Cycle Four stages in the Life of an organization Organizational life cycle has a natural sequence of stages Birth youth midlife and maturity as an organization moves through these stages it becomes not only larger but more mechanistic specialized decentralized and bureaucratic Stage 1 The Birth stage Birth stage the nonbureaucratic stage the stage in which the organization is created no written rules and little if any supporting staff Maybe a secretary Stage 2 Youth Stage Youth stage the organization is in a prebureaucratic stage a stage of growth and expansion product that is making headway in the market place and people are being added on the payroll and some division of labor and setting of rules are being instituted For Apple this stage occurred during the years 1978 1981 with the establishment of the Apple II line Stage 3 The midlife stage Midlife stage the organization becomes bureaucratic a period of growth evolving into stability formaized bureaucratic structure staffs of specialists decentralization of functional divisions and many rules 1980 s Apple computer became a large company with many ofthese attributes 1983 Pepsi cola marketer John Scully was hired as a professional manager Jobs became chairman wozniak left Stage 4 The maturity stage Maturity stage The organization becomes very bureaucratic large and mechanistic danger at this point is lack of flexibility and innovation 1997 Jobs was brought back as a temporary chairman and apples fortunes began to revive When organizations jump the gun and institute structures before they are appropriate some expanding companies in effect never grow up holding on to the prebureaucratic way of life for too long hindering the ability to deliver goods or services in relation to their size Chapter 9 Human resource management HR consists of the activities managers perform to plan for attract develop and retain and effective workforce people are an organization s most important resource Former General Electric head Jack Welch quotIf you re not thinking all the time about making every person valuable you don t have a chancequot Human resources has become a part of the strategic planning process Thus HR departments deal with not only the employee paperwork and legal accountability but also with helping to support the organization s overall strategy Human capitol the economic or productive potential of employee knowledge and actions Social Capitol the economic or productive potential of strong trusting and cooperative relationships JM Smucker quotListen with your full attention look for the good in others have a sense of humor and say thank you for a job well done the company s voluntary employee turnover rate is 3 Strategic human resource planning developing a systematic comprehensive strategy for a understanding current employee needs and b predicting future employee needs Job analysis to determine by observation and analysis the basic elements of a job UPS has specialists who ride with the couriers and time how long it takes to deliver a load of packages Job description summarizes what the holder ofthe job does and how and why he or she does it Once the fundamentals of a job are understood then you can write a job description Job specification Describes the minimum qualifications a person must have to perform the job successfully Predicting future employee needs means you have to come knowledgeable about the staffing the organization might need and the like sources for that staffing fthe organization changes you will need to understand the organization s vision and strategic plan so that the proper people can be hired to meet the future strategies and work Human resource inventory a report listing your organization s employees by name education training languages and other important information Hiring outside the organization you need to consider the availability of talent in your industry s and geographical area s labor pool the training of people graduating from various schools and such factors as what kind of people are moving into your area Hiring inside the organization you need to consider which employees are motivated trainable and promotable and what kind of training your organization might have to do 92 The human resource strategy has to operate within the environment of American Law Four areas you need to be aware of 1 Labor relations National Labor relations board enforces procedures whereby employees may vote to have a union and for collective bargaining Collective bargaining negotiations between management and employees about disputes over compensations benefits working conditions and job security 1947 law the taft hartley act allows the president of the united states to prevent or end a strike that threatens national security 2 Compensation amp Benefits the social security act of 1935 established the US retirement system Fair labor standards act of 138 established minimum living standards for workers engaged in interstate commerce including provision ofa federal minimum wage minimum wage is 725 40 hours a week is over time Salaried executives administrative and professional employees are exempt from overtime rules 3 Health 8 Safety beginning with the occupational safety and health act of 1970 OSHA there has grown a body of law requiring organizations to provide employees with nonhazardous working conditions Later laws extend health coverage 4 Equal Employment Opportunity Equal employment opportunity commission enforce antidiscrimination and other employment related laws The effort to reduce discrimination in employment based on racial ethnic and religious bigotry and gender stereotypes began with Title VII of the Civil Rights Act of 1964 Title VII applies to all organizations or their agents engaged in an industry affecting interstate commerce that employs 15 or more employees Three important concepts covered by EEO laws are 0 Discrimination occurs when people are hired or promoted or denied hiring or promotions for reasons not relevant to the jobs doesn t require an employer to extend preferential treatment because of race color religion and so on o Affirmative Action focuses on achieving equality of opportunity within an organization tries to make up for past discrimination in employment by actively finding hiring and developing the talents of people from groups traditionally discriminated against EEO s do NOT allow use of hiring quotas More successful when employees view them as being fair and equitable and when whites are not prejudiced against people of color women and minorities hired on the basis of affirmative action felt stigmatized and unqualified and incompetent and experienced lower job satisfaction and more stress than employees supposedly selected on the base of merit 0 Sexual Harassment unwanted sexual attention that creates and adverse work environment quid pro quo tangible economic injury the person to whom the unwanted sexual attention is directed is put in the position of jeopardizing being hired for a job or obtaining job benefits or opportunities unless he or she implicitly or explicitly acquiesces hostile environment offensive work environment the person being sexually harassed doesn t risk economic harm but experiences and offensive or intimidating work environment 93 quothiring great people is brutally hard Jack and Suzy Welch Jack former gen electr CEO Recruiting the process of locating and attracting qualified applicants forjobs open in the organization you want to find people whose skills abilities and characteristics are best suited to your organization Internal recruiting making people already employed by the organization aware ofjob openings Most vacant positions in organizations are filled through internal recruiting mainly through Job Posting placing information about job vacancies and qualifications on bulletin boards in newsletters and on the organizations intranet External recruiting attracting job applicants from outside the organization Placed though newspapers employment agencies executive recruiting firms union hiring halls collegejob placement offices technical training schools and word of mouth through professional associations Many are also advertising jobs on the internet ADVANTAGES AND DISAVANTAGES OF INTERNAL AND EXTERNAL RECRUITING ARE ON PAGE 285 o The most effective sources are employee referrals because to protect their on reputations employees are fairly careful about who they recommend Realistic job preview gives a candidate a picture of both positive and negative features of the job and the organization before he or she is hired people with realistic expectations tend to quit less frequently and be more satisfied than those with unrealistic expectations The SEIECthh process the screening ofjob applicants to hire the best candidate The three types of selection tools are background information interviewing and employment tests H N Background information radioshack CEO david Edmondson falsely claimed to hold degrees in psychology and theology Carolyn doran chief operating officer of Wikipedia hadn t had a background check and she had been convicted of drunken driving and fleeing a car accident Many employers don t give honest assessments offormer employees because 1 They fear that if they say anything negative they can be sued by the former employee 2 They fear ifthey say anything positive and the job candidate doesn t pan out they can be sued by the new employer Interviewing the most commonly used employee selection technique 0 Unstructured interview involves asking probing questions to find out what the applicant is like 0 ike an ordinary conversation o no fixed set of questions asked and no systematic scoring procedure 0 Compared with a structure interview an unstructured interview provides a more accurate assessment of an applicant s Job related personality traits 0 Structure interview type 1 involved asking each applicant the same questions and comparing their responses to a standardized set of answers 0 One type of structured interview is the Situational interview interviewer focuses on hypothetical situation ie quotwhat would you do if you saw two of your people arguing loudly in the work areaquot the idea is to find out ifthe applicant can handle difficult situation that may arise on the job 0 Structured interview type 2 the behavioral description interview 0 Behavioraldescription interview the interviewer explores what applicants have actually done in the past 3 Employment Tests egay considered to consist of any procedure used in the employment selection decision process appication forms interviews and experience requirements are now considered tests The three most common employment tests Ability tests measure physical abilities strength and stamina mechanical ability mental abilities and clerical abilities telephone operators need to be tested for hearing assembly line workers for manual dexterity Performance tests measure performance on actual job tasks Assessment center management candidates participate in activities for a few days while being assessed by evaluators Personality tests measure personality traits such as adjustment energy sociability independence and need for achievement Most famous personality test is the 93 question Myers Briggs Type Indicator Southwest airlines uses Myers Briggs Hewlett Packard uses a personality test to see if employees can telecommute Myers Briggs and other personality tests should be used with caution because ofthe difficulty of measuring personality characteristics and of making a legal defense if the results are challenged Other tests drug testing polygraph genetic screening handwriting analysis questionable technique Reliability the degree to which a test measures the same thing consistently Validity The tests measures what it purports to measure and is free of bias 94 Now when a hire is made companies often resort to what is known as quotonboardingquot rolling out a welcome by assigning quotbuddiesquot providing detailed orientations even sending goody baskets Orientation helping the newcomer fit smoothly into the job and organization the first 6 months on a job can be critical to how one performs over the long haul because that s when the psychological patterns are established Therefore it s better to give newcomers a helping hand After orientation the employee should emerge with information about three matters 0 Thejob routine what is required in the job how the work will be evaluated and who the immediate co workers and managers are The organization s mission and operations what the organization is all about purpose products or services operations and history Low level employees perform better if they have this knowledge as well 0 The organization s work rules and employee benefits Training and Development Employee involvement offers the highest returns out of downsizing Total quality management focuses on work methods and process control Training process involves 5 steps 1 Assessment s training needed 2 Objectives what should training achieve 3 Selection which training methods should be used 4 Implementation How should training be effected 5 Evaluation is the training working Training upgrading skills of technical and operational employees educating technical and operational employees in how to better do their current jobs Development upgrading skills of professionals and managers educating professionals and managers in the skills they need to do their jobs in the future On thejob training takes place in the work setting while employees are performing job related tasks Coaching training positions job rotation planned work activities Off the job training consists of classroom programs videotapes workbooks and the like good for learningfacts Computerassisted instruction CA computers are used to provide additional help or to reduce instructional time managers need to find out whether training offered fits with the majority of employee developmental goals 95 Performance management the continuous cycle of improving job performance through goal setting feedback and coaching and rewards and positive reinforcement performance appraisals need to be fair and accurate because its essential to performance management the purpose is to focus employees on attaining goals that are tied to the organization s strategic goals and vision and to evaluate how successful they were in accomplishing those goals Performance appraisal Assessing an employee s performance and providing him or her with feedback Judge then counsel lquot Objective appraisal based on facts and are often numerical keep track of number of products the employee sold in a month customer complaints filed against the employee Etc 0 They measure results 0 They are harder to challenge legally 2 Subjective appraisal based on a manager s perceptions of an employee s traits or behaviors few employees can be adequately measured just by objective appraisals o Trait appraisal ratings of such subjective attributes such as attitude initiative and leadership The evaluator s personal bias can affect the ratings o Behavioral appraisals Measure specific observable aspects of performance Being on time for work etc o Behaviorally anchored rating scale BARS rates employee gradations in performance according to scales of specific behaviors Who should make performance appraisals Peers and subordinates Customers and clients Self appraisals 360degree assessment employees are appraised not only by their managerial superiors but also by their peers subordinates and sometimes clients using 360 confidentially for developmental purposes builds trust using it to trigger pay and personnel decisions puts trust at risk Forced ranking performance review systems all employees within a business unit are ranked against one another and grades are distributed along some sort of bell curve as many as a quarter of the fortune 500 companies have instituted forced ranking performance review systems top performers are rewarded with bonuses and promotions worst performers are rehabilitated or dismissed if implemented overnight shock to morale productivity and loyalty can have legal ramifications with law suits alleging that they have a disparate effect on particular groups of employees Effective performance feedback Bossidy recommends an appraisal take up halfa page and cover just three topics what the boss like about your performance what you can improve and how you and your boss are going to make that happen To increase employee performance a manager can use two kings of appraisals formal and informal Formal appraisal conducted at specific times throughout the year and are based on performance measures that have been established in advance weeks may go by in which you are unaware of how well you re doing manager should give feedback describing how he or she is performing well and not so well and giving examples Facts should always be used rather than impressions Informal appraisal conducted on an unscheduled basis and consist of less rigorous indications of employee performance equivaent of pop quizzes and short papers or drop ins to the professors office How to give performance feedback to employees Take a problem solving approach avoid criticism and treat employees with respect Be specific in describing the employee s present performance and in the improvement you desire Get the employee s input 96 Compensation has three parts Wages or salaries incentives and benefits in different organizations one may take on more importance than another Wages or Salaries Base Pay consists of the basic wage or salary paid employees in exchange for doing their jobs determined by the prevailing pay levels in a particular industry and location what competitors are paying whether the jobs are unionized if the jobs are hazardous what the individual s level is in the organization how much experience he or she has Incentives to induce employees to be more productive or to attract and retain top performers many organizations offer incentives such as commissions bonuses profit sharing plans and stock options Benefits Benefits Are additional nonmonetary forms of compensation designed to enrich the lives of all employees in the organization health insurance dental insurance retirement plans holidays off sick days vacation days quotgolden parachutes generous severance pay for those who might be let go in the event the company is taken over by another company Are a large part of a company s cost 44 in 2006 with medical benefit costs 97 Amitai Etzioni GWU sociologist American society can be depicted by the term quotpluralism constituting the largest part Promotion Moving and employee to a higher level position the most obvious way to recognize that person s superior performance has three concerns Fairness Nondiscrimination Other s resentments Transfer movement of an employee to a different job with smaller responsibility may or may not mean a change in geographical location empoyees may be transferred to solve organizational problems by using their skills at another location broaden their experience in being assign to a different position retain their interest and motivation by being presented with a new challenge or to solve some employee problems such as personal differences with their bosses Dismissals Layoffs suggests that a person has been dismissed temporarily and may be recalled later when economic conditions improve Downsizings permanent dismissal no rehiring later Firings a person is dismissed permanently for a cause absenteeism sloppy work habits failure to perform satisfactorily breaking up the law etc steps must be taken to avoid employees suing for quotwrongful terminationquot An employer has to careful document the reasons for dismissals Right way to handle a dismissal 0 Give the employee a chance at first 0 Don t delay the dismissal S make sure it s completely defensible 0 Be aware how devastating a dismissal can be both to the individual amp those remaining 0 Offer assistance in finding another job Chapter 10 Fundamental change What will you be called on to deal with Niels Bohr quotIt is hard to predict especially the futurequot but it is possible to identify and prepare for the future that has already happened Supertrends shaping the future of business 1 The marketplace is becoming more segmented 8 Moving toward more niche products 0 In the past managers could think of terms of mass markets mass comm mass behavior mass values 0 Now we have de massi cation customer groups becoming segmented into smaller and more specialized groups responding to more narrowly targeted commercial groups 0 Small sales one or two rather than million items at a time can produce big profits 2 There are more competitors offering targeted products requiring faster speedto market 0 Companies offering a broad range of products or services are now experiencing intense pressure from competitors offering specialized solutions and beating them to the punch by devising novel speed to market strategies 0 quotspeed is emerging as the ultimate competitive weaponquot 0 Virgin Group Ltd Richard Branson music and airline business is branching out and Virgins comics went from an idea to public announcement in less than 11 months 3 Some traditional companies may not survive radically innovative change 0 Clayton Carlson Harvard business school professor argues that when successful companies are confronted with a giant technological leap that transforms their markets all choices are bad ones 0 He argues that a company should set up and entirely separate organization that can operate much like a startup 0 Kodak sales went down with introduction of digital cameras They had to invest resources to digital cameras and eventually finished with a jump in profit 4 China India and other offshore suppliers are changing the way we work 0 quotThey offer enormous gains in efficiency productivity quality and revenues that can be achieved by fully leveraging offshore talent 0 Overseas firms now look to the United States for talented workers especially in technology and finance as has been the case with information technology companies in Ireland I I a 5 Knowledge not information is L 39 g the new 0 Karl Albrecht quotInformation is rapidly becoming a profitless commodity and knowledge is becoming the new competitive advantage 0 Knowledge work is analytic and involves problem solving and abstract reasoning 0 Knowledge drives the future and creates wealth Alvin and Heidi Toffler Two types of change Reactive versus Proactive Reactive change making changes in response to problems or opportunities as they arise when managers talk about putting out fires they are talking about reactive change Proactive change involves making carefully thoughtout changes in anticipation of possible or expected problems or opportunities Forces originating outside the organization external Demographic Characteristics Market Changes Technological Advancements Social amp Political pressures Forces originating inside the organization internal Employee problems Manager s behavior Areas in which change is needed 1 Changing people 0 Perceptions employees may feel they are underpaid for what they do manager can they compare pay to those offered by competitors 0 Attitudes Break the traditional adversarial relationship between employees and managers 0 Performance 0 Skills Altering or improving skills is an ongoing challenge 2 Changing technology Technology isn t just computer technology it is any machine or process that enables and organization to gain competitive advantage in changing materials used to produce a finished product 3 Changing structure recent trend is toward quotflattening the hierarchy eliminating sever middle layers of management and using work teams linked by electronic networks 4 Changing strategy 102 Organization development OD is a set oftechniques for implementing planned change to make people and organizations more effective focuses specifically on people in the change process often put into practice by a change agent a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways Can be used to 1 Manage conflict 2 Revitalizing Organizations 3 Adapting to mergers OD managers and consultants follow a medical like model They approach the organization as if it were a sick patient using Diagnosis use questionnaires surveys interviews meetings direct observation to attain attitudes Intervention the attempt to correct the diagnosed problems quottreatmentquot Evaluation OD needs objective evaluation to see if it has done good American Airlines BF Goodrich General Electric Honeywell ITT Polaroid Procter amp Gamble Prudential Texas instruments Westinghouse Canada All use OD OD is most successful under the following circumstances 1 Multiple interventions 2 Management support expectations for change shouldn t be unrealistic 3 Goals geared to both Short amp Long term results 4 OD is affected by culture OD that worked in one country should not be blindly applied to a similar situation in another country 103 Innovation the activity of creating new ideas and converting them into useful applications specifically new goods and services Larry Seldon and Ian MacMillan argue that firms are focusing their innovation efforts in the wrong way We must start working to understand what the customer wants and then use the understanding to drive innovation Cynthia Barton Rabe Intel Too much knowledge and experience can actually kill innovation Jack and Suzy Welch organizations must create and innovation mindset or culture in order to effectively innovate OpenSource idea taps masses of people for inspiration Linus Torvalds Linux Time O Reilly quotarchitecture of participation which companies make it easy interesting and rewarding for a wide range of contributors to offer ideas solve problems and improve products Culture of innovation a big part of what makes innovation happen is a country and a corporation s culture Americans are more comfortable with taking risks than Europeans Product innovation a change in the appearance or performance ofa product or a service or the creation of a new one Process innovation a change in the way a product or service is conceived manufactured or disseminated quotinnovation is about much more than new products It is about reinventing business processes and building entirely new markets that meet untapped customer needsquot Incremental innovation the creation of products services or technologies that modify existing ones Radical innovation the creation of products services or technologies that replace existing ones Rosabeth Moss Kanter says innovation has four characteristics 0 Innovating is an uncertain business 0 People closest to the innovation know the most about it at least initially innovation is knowledge intensive 0 Innovation may be controversial uses resources which others are always in competition for 0 Innovation can be complex because it may cross organizational boundaries may require you to draw on your finest communication skills You must know how the process works AND how it requires special handling to make it successful within different parts of the organization Organizations have to develop ways to make innovation right over and over again The three ways to do so are 1 The right organizational culture 2 The appropriate resources and 3 The correct reward systems Culture celebration of failure is vital towards fostering innovation Top ten companies with cultures that strongly encourage innovation Apple Google 3M Toyota general electric Microsoft Procter amp Gamble 3M Walt Disney and IBM Resources Innovation doesn t come cheap Costs in money time energy and focus There is always competition for resources which may make a company quotmiss the next wavequot Rewards Reward with incentives like commissions bonuses and perks Don t punish when attempts don t work out Only when people are acting half heartedly sloppily or incompetently shoud sanctions be used such as the withholding of raises and promotions How to Foster Innovation 1 Recognize Problems 8 opportunities 8 devise solutions ideas originating at the grassroots level of an organization may be a particularly fruitful source of innovation recognizing opportunity Iquot Gain allies by communicating your vision 9quot Overcome employee resistance 8 empower 8 reward them to achieve progress 104 The degree to which employees feel threatened by change depends on whether the change is adaptive innovative or radically innovative Adaptive change reintroduction of a familiar practice owest in complexity cost and uncertainty Also east threatening due to familiarity Innovative change Introduction ofa practice that is new to the organization moderate complexity cost and uncertainty Apt to trigger some fear and resistance Radically innovative change involves introducing a practice that is new to the industry most complex costly and uncertain Extremely threatening to managers confidence and employees job security and may well tear at the fabric of an organization Ten reasons employee resist change 1 Individual s predisposition toward change 2 Surprise and fear ofthe unknown Rosabeth Moss Kanter a transition manager should be appointed who is charged with keeping all relevant parties adequately informed stop rumors Climate of mistrust Fear offaiure Loss of status or job security Peer pressure Disruption of cultural traditions or group reations 9 N9 EJ PE Personality conflicts Lack of tact or poor timing 10 Nonreinforcing reward systems Lewin s change model Most theories of organizational change originated with the landmark work of psychology Kurt lewin it explains how to initiate manage and stabilize unplanned change 1 Unfreezing stage Instill in employees the motivation to change and let go of attitude and behaviors that are resistance to innovation Managers also need to reduce the barriers to change during this stage Benchmarking a process by which a company compares its performance with that of high performing organizations many professional sports teams do this 2 Changing stage employees need to be given new tools for change new Information new perspectives new models of behavior Use mentoring or training Advisable to convey the idea that change is a continuous learning process not just a one time event 3 Refreezing Employees need to be helped to integrate the changed attitudes and behavior into their normal ways of doing things John Kotter s Eight steps for leading organizational change He believes that to be successful organizational change needs to follow eight steps to avoid the eight common errors senior management usually commits The steps correspond to Lewins change model 1 4 represent unfreezing establish a sense of urgency create the guiding coalition develop a vision and a strategy and communicate the change vision 5 7 changing empower broad based action generate short term wins consolidate gains and produce more change step 8 is refreezing Anchor new approaches in the culture They provide specific recommendations about behaviors that managers need to exhibit to successfully lead organizational change YOU CAN T SKIP A STEP And successful organizational change is 70 90 leadership 10 30 managing change Chapter 11 Personality Consists of the stable psychological traits and behavioral attributes that give a person his or her identity they affect how people perceive and act within the organization there for it is important to understand Big five personality dimensions 1 Extroversion outgoing talkative sociable best for managers and sales 2 Agreeableness trusting good natured soft hearted 3 Conscientiousness dependable personality strong work ethic achievement oriented persistent strongest positive correlation with job performance and training performance 4 Emotional Stability relaxed secure unworried 5 Openness to experience intellectual imaginative curious broad minded Use professionals Don t fire on the basis of personality tests alone be alert for gender racial and ethnic bias graphology tests don t work but integrity tests do Proactive personality someone who is more apt to take initiative and persevere to influence the environment most likely scores well on the Big 5 for conscientiousness They act on opportunities which makes them associated with success and ENTREPRENEURSHP Five traits important in organizations Locus of control indicates how much people believe they control their fate through their own efforts I Internal you control your destiny less anxiety greater work motivation stronger expectation that effort leads to performance Also have higher salaries I Internal resist close managerial supervision should be placed in jobs requiring high initiative and lower compliance I External do better in highly structure jobs requiring greater compliance 2 Selfefficacy belief in one s personal ability to do a task reduced anxiety successful Low self efficacy is associate with learned helplessness the debilitating lack of faith in one s ability to control one s environment 3 Selfesteem the extent to which people like or dislike themselves their overall self evaluation High handle failure better emphasize positive take more risks choose more unconventional jobs When faced with pressure situations become egotistical and boastful Some are aggressive and violent Low focus on weaknesses and have primarily negative thoughts Dependent on others and are more apt to be influenced by them and to be less likely to take independent positions How can managers build selfesteem o Reinforce employees positive attributes and skills 0 Provide positive feedback whenever possible 0 Break larger projects into smaller tasks and projects 0 Express confidence in employees abilities to complete their tasks 4 SelfMonitoring the extent to which people are able to observe their own behavior and adapt it to external situations 5 Emotional Intelligence Daniel goleman argues that the most important attribute in a leader is emotional intelligence the ability to cope empathize with others and be self motivated I Traits of emotional intelligence are Self awareness Self management Social awareness Relationship management 112 Organizational Behavior OB is dedicated to better understanding and management of people at work Explain and predict workplace behavior it s focus are the informal aspects forma are goals policies structure It looks at Individual Behavior and Group behavior Values abstract ideals that guide one s thinking and behavior across all situations global compensation recognition and status are common values in the workplace can be changed by life changing events Attitude a learned predisposition toward a given object specific affective component of attitude consists of the feelings or emotions one has about a situation Cognitive component of attitude consists of beliefs and knowledge one has about a situation Behavioral component of attitude also known as the intentional component refers to how one intends or expects to behave towards a situation 1957 Leon festinger proposed the term Cognitive Dissonance to describe the psychological discomfort a person experiences between his or her cognitive attitude and incompatible behavior How they deal with the discomfort depends on the Importance ofthe elements creating the dissonance the control one has over matters that create it and the rewards at stake in the dissonance Ways to change cognitive dissonance Change attitude andor behavior Belittle the importance of inconsistent behavior Find consonant element that outweigh the dissonant ones Behavior actions and judgments Vaues and attitudes influence people s workplace behavior 113 Job satisfaction the extent to which you feel positively or negatively about various aspects of your work related to stronger motivation job involvement organization commitment life satisfaction less absenteeism tardiness turnover and perceived stress job satisfaction and performance are moderately related meaning satisfaction is a key work attitude managers should consider when trying to increase performance also the relationship between satisfaction and performance is complex Job involvement extent to which you identify or are personally involved with your job moderatey correlated with job satisfaction Organizational commitment reflects the extent to which an employee identifies with an organization and is committed to it s goals Strong positive correlation between org commitment and job satisfaction and moderate solution with job performance Absenteeism when an employee doesn t show up for work sometimes legitimate related to job dissatisfaction may be a precursor to turnover when employees leave their jobs Organizational citizenship behaviors employee behaviors that are not directly part of employees job descriptions that exceed their work role requirements positive correlation between organizational citizenship behaviors and job satisfaction and performance Counterproductive work behaviors CWB types of behavior that harm employees and the organization as a whole absenteeism tardiness drug and alcohol abuse accidents sabotage sexual harassment violence theft white collar crime must be taken care of immediately Pitney bowes set up a hotline for employees to call screen for CWB during hiring process higher scores on cognitive ability tests are less likely to be involved in violence or property damage 45 of worker said they had an abusive boss 114 Perception the process of interpreting and understanding one s environment Process is broken down into four steps Selective attention Interpretation amp evaluation Storing in memory Retrieving from memory to make judgments and decisions Distortions in perception 1 Selective perception The tendency to filter out information that is discomforting that seems irrelevant or that contradicts one s beliefs managers can distort problem solving through selective perception 2 Stereotyping The tendency to attribute to an individual the characteristics one believes are typical of the group to which that individual belongs sex role stereotypes belief that differing traits and abilities make males and females particularly well suited to different roles Age stereotypes depict older workers as less involved in their work less satisfied less motivated and less committed than younger workers Michael Debakey worked until his 90 s Raceethnicity stereotypes not many Hispanic and African American managers in the USA 3Halo effect we form an impression of an individual based on a single trait also called horn and halo attractive people are treated better paid more have higher expectations 4 Casual attribution The activity of inferring causes for observed behavior Fundamental attribution bias people attribute another person s behavior to his or her personal characteristics rather than to situational factors manger attributing back pain to workers when worker attributed it to the environment Selfserving bias people tend to take more personal responsibility for success than for failure Ken lay ENRON The wall street journal Andrew Fastow Selffulfilling prophecy Pygmalion describes the phenomenon in which people s expectations ofthemselves or others lead them to behave in ways that make those expectations come true 115 workpace stress is negatively related to positive emotions job satisfaction organizational commitment and job performance and positively associated with alcohol and illicit drug use overeating and turnover Historically they believed Inverted U shape between stress and performance Optimal performance results when people are subjected to moderate levels of stress Stress the tension people feel when they are facing or enduring extraordinary demands constraints or opportunities and are uncertain about their ability to handle them effectively t s the feeling oftension and pressure the source of stress is called a stressor can be crises or hassles and can be negative or positive Hans selye father of modern concept of stress quotstress is the non specific response ofthe body to any demand made upon it also called good stress quoteustressquot emotionaly it s the feeling of being overwhelmed The sources of jobrelated stress Demands created by individual differences TypeA behavior pattern involved in a chronic determined struggle to accomplish more in less time higher blood pressure Individual task demands worry about being laid off job security Individual role demands role sets of behaviors people expect of occupants of a position Stress may come because of Role overload when others expectations exceed one s ability or Role Conflict when one feels torn by the different expectations of important people in one s life or Role ambiguity when others expectations are unknown Group demands Organizational demands Nonwork demands money divorce elderly relatives People with lower incomes education level and work status are particularly apt to have higher stress Consequences of stress Positive stress can energize you increase your effort creativity and performance Negative stress destructive poorer quality of work dissatisfaction errors absenteeism and turnover Symptoms of stress physiological signs sweaty palms restlessness back aches headaches upset stomach and nausea More serious signs are hypertension and heart attacks Psychological signs boredom irritability nervousness anger anxiety hostility and depression Behavioral signs sleeplessness changes in eating habits increased smokingalcoholdrug abuse Stress may be revealed through reduced performance and satisfaction Burnout a state of emotional mental and even physical exhaustion expressed as listlessness indifference or frustration Alcoholism shows up in absenteeism accidents slipshod work or significant use of a company s medical benefits It s the most common drug of abuse workpace drug use has declined over the past 15 years Buffer administrative changes that managers can make to reduce the stressors that lead to employee burnout Extra staff at peak periods increased freedom to make decisions time off sabbatical leaves to replenish energy and desire to work Strategies for reducing unhealthy stressors are Employee assistance programs a host of programs aimed at helping employees cope with stress burnout substance abuse health related problems family and marital issues and any general problem that negatively influences performance Holistic wellness program focuses on self responsibility nutritional awareness relaxation techniques physical fitness and environmental awareness encourages employees to strive for quota harmonious and productive balance of physical metal and social well being brought about by the acceptance of one s personality for developing and adhering to a health promotion programquot Create a supportive environment Make jobs interesting Make career counseling available Chapter 12 Motivation the psychological processes that arouse and direct goal directed behavior Hard to see inferred from one s behavior People have needs that motivate them to perform behaviors for which they receive rewards that feed back and satisfy the original need Extrinsic rewards Satisfaction in the payofffrom others the payoff such as money a person receives from other performing a particular task Intrinsic rewards Satisfaction in performing the task itself the satisfaction such as feeling of accomplishment a person receives from performing the particular task it You want to motivate people to Join your organization Stay with your organization Show up for work at your organization Perform better for your organization Do extra for your organization 122 Content Perspectives theories that emphasize the needs that motivate people Needs physiological or psychological deficiencies that arouse behavior Hierarchy of needs theory Proposes the people are motivated by five levels of needs 1Physiological Most basic human physical needs Food shelter clothing comfort 2 Safety Concerned with physical safety and emotion security avoiding violence amp threats 3 Love Love friendship and affection 4 Esteem Self respect status reputation recognition and self confidence 5 Self actualization Highest level of need it s self fulfillment the need to develop one s fullest potential deveoped by Abraham Maslow needs are never satisfied ERG Theory assumes that three basic needs influence behavior Existence needs physiological need and well being Relatedness needs desire to have relationships with people who are significant to us Growth needs Desire to grow as human beings and to use our abilities to their fullest potential deveoped by Clayton Alderfer in the late 1960 s unlike Hierarchy these needs can be activated at a time rather than a step by step process Using ERG to motivate It s consistent with the finding that individual and cultural differences influence our need states People are motivated by different needs at different times in their lives which suggests that managers should customize their reward and recognition programs Acquired Needs theory states that three needs achievement affiliation and power are major motives determining people s behavior at the workplace we learn them from the culture Made by David McClelland Achievement quotI need to excel at tasksquot Affiliation quotI need close relationships Power quotI need to control others 2 forms Personal power desire to dominate others and manipulating people for one s own gratification Institutional power the need to solve problems that further organizational goals has no classification for lower level needs Using acquired needs theory to motivate High need for achievement don t mind working alone willing to take risks accomplishment of a task rewarding prefer work with feedback on performance challenging but achievable goals individual responsibility for results High need for affiliation Not an efficient managers at times make decisions where people will resent you work such as sales is good Two factor theory Work satisfaction and dissatisfaction arise from two different factors work satisfaction from motivating factors and work dissatisfaction from hygiene factors Made by Frederick Herzberg Hygiene factors quotwhy are my people dissatisfiedquot The lower level needs factors associated with job dissatisfaction such as salary working conditions interpersonal relationships and company policy all of which affect the job context in which people work In between is NEUTRAL Motivating factors quotWhat will make my people satisfiedquot the higher level needs motivating factors factors associated with job satisfaction such as achievement recognition responsibility and advancement all of which affect the job content or the rewards of work performance Using two factor theory to motivate basically lesson is that managers should first eliminate dissatisfaction working conditions pay levels etc then concentrate on spurring motivation by providing opportunities for achievement recognition and personal growth 123 Process Perspectives Concerned with the thought processes by which people dictate how to act Equity Theory Focuses on employee perceptions as to how fairly they think they are being treated compared to others Developed by JStacy Adams Some people think this is the cause for the 50 billion stole a year from employee theft The key elements in equity theory are 1 Inputs quotWhat do you think your putting into the job Creativity time experience 2 Outputs or rewards quotWhat do you think your getting out ofthe job pay promotion etc 3 Comparison quotHow do you think your ratio of inputs and rewards compares with those of otheresquot people compares their ration of inputs and outputs Using equity theory to motivate employees if dissatisfied 1 Reduce inputs 2 Try to change outputs or rewards received 3 Distort the inequity 4 Change object of comparison 4 Leave the situation 3 practical lessons 1 Employee perceptions are what count 2 Employee Participation helps 3 Having an appeal process helps Expectancy theory Suggests that people are motivated by two things How much they want something and 2 How likely they are to get it Made by Victor Vroom Expectancy quotWill I be able to perform at the desired level on a task Instrumentality quotWhat outcome will I receive if perform at this level Valence quotHow much do I want the outcome If bonus is impt to you you have high level of valence Using Expectancy theory to motivate employees 1 What rewards to employees value 2 What are the job objectives and performance level you desire 3 Are the rewards linked to performance 4 Do employees believe you will deliver the right rewards for the right performance credibility Goal setting theory Employees can be motivated by goals that are specific and challenging but achievable Edwin Locke and Gary Latham Theory is only useful is people understand and accept the goals Goals should be specific Goals should be challenging Goals should be achievable Using it to motivate employees Goals should be SMART Specific measurable Attainable Results Oriented and Have target Dates Also make sure feedback is given and reward people for what they set out to do 124 Job Design The division of an organization s work among its employees and 2 The application of motivational theories to jobs to increase satisfaction and performance Fitting jobs to people based on the assumption that people are underutilized at work and they want more variety and challenges Is an outgrowth of Herzberg s philosophy Job enlargement Increasing the number of tasks in a job to increase variety and motivation Job enrichment Building into a job such motivating factors as responsibility achievement recognition stimulating work and advancement Fitting people to jobs based on assumption that people will gradually adapt to any work situation quotHow can we make the worker most compatible with the workquot Job simplification Reducing the number oftasks and worker performs increases efficiency and productivity Job Characteristics Model Consists of five core job characteristics that affect three critical psychological states of an employee that in turn affect work outcomes the employee s motivation performance and satisfaction Five Job Characteristics 1Skill Variety quotHow many different skills does your job requirequot 2 Tasks Identity quotHow many different tasks are required to complete the workquot 3 Task Significance quotHow many other people are affected by your jobquot 4 Autonomy quotHow much discretion does your job give youquot 5 Feedback quotHow much do you find out how well you re doingquot How the model works These 5 characteristics affect a worker s motivation because they affect three critical psychological states Meaningfulness of work responsibility for results and knowledge of results In turn these positive states fuel high motivation performance satisfaction and low absenteeism and turnover Contingency Factors the degree to which a person wants personal and psychological development doesn t work when people don t want it How to apply it Diagnose the work environment to see if a problem exists Determine whether job redesign is appropriate Consider how to redesign the job 125 Reinforcement theory attempts to explain behavior change by suggesting that behavior with positive consequences tends to be repeated whereas behavior with negative consequences tends not to be repeated The use of reinforcement theory to change human behavior is called Behavior modification Made by Edward LThorndike and BF Skinner father of operant conditioning the process of controlling one s behavior by manipulating its consequences Positive reinforcement giving rewards Use of positive consequences to encourage desirable behavior Negatives reinforcement Avoiding unpleasantness The removal of unpleasant consequences following a desired behavior Above are for improved performance Below are for not improved performance Extinction withholding rewards The withholding or withdrawal of positive rewards for desirable behavior so that behavior is less likely to occur in the future Punishment Applying Negative consequences the application of negative consequences to stop or change undesirable behavior Using Reinforcement to motivate employees Positive reinforcement 1 Reward only desirable behavior 2 Give rewards asap 3 Be clear about what behavior is desired 4 Have different rewards and recognize individual differences Punishment 1Punish only undesirable behavior 2 Give reprimands or disciplinary actions asap 3 Be clear about what behavior is undesirable 4 Administer punishment in private 5 Combine punishment and positive reinforcement Also say what they are doing right and what rewards they might be eligible for 126 Employee engagement A heightened emotional connection that an employee feels for his or her organization which influences him or her to exert greater discretionary effort in his or her work Pay for performance pay based on one s results Piece rate employees are paid according to much output they producefarm workers Sales commission Sales representatives are paid a percentage of the earnings the company made from their sales Bonuses Cash awards given to employees who achieve specific performance objectives Profit Sharing The distribution to employees ofa percentage of the company s profits Gain Sharing The distribution of savings or gains to groups of employees who reduced costs and increased measurable productivity Stock Options certain employees are given the right to buy stock at a future date for a discounted price work hard to make stock rise Pay for knowledge ties employee pay to the number ofjob relevant skills or academic degrees they earn Thoughtfulness The value of being nice Work life benefits used by employers to increase productivity and commitment by removing certain barriers that make it hard for people to strike a balance between work and their personal lives Surroundings Cubicle stops creativity Skill building and education opportunities workers matched with coworkers from which they can learn part time study at a college Sabbatical Paid break enables employees to recharge themselves and connect loyalty to organization 131 Group versus Team Management Philosopher Peter Drucker predicted that future organizations would not only be flatter and information based but also organized around team work General Electric Ceo Jeffrey mmelt quotYou lead today by building teams and placing others first Teamwork is key in organizations it s no longer about being the lone genius or even working as the lone wolf and you ll be working in situations demanding teamwork Why Team work is important Increased Productivity Increased speed Reduced costs Improved Quality Reduced destructive internal competition Improved workplace cohesiveness What a group is A group is defined as two or more freely interacting individuals who share collective norms share collective goals and have a common identity It differs from a crowd in the fact that a crowd doesn t interact with each other It also differs from an organization on the basis that the organization is so large the members don t interact An example of a work group would be 10 employees meeting to exchange information about various companies polices on wages and hours What a team is McKinsey and Company management consultants Jon Katzenbach and Douglas Smith say it is a mistake to use the terms group and team interchangeably Successful teams take on a life oftheir own Ateam is defined as a small group of people with complementary skills who are committed to a common purpose performance goals and approach for which they hold themselves mutually accountable The essence ofa team is common commitment An example of a team would be a collection of 2 10 employee s who are studying industry pay scales with the goal of making recommendations for adjusting pay grades within their company Formal vs Informal Groups Formal groups Formal groups created to do productive work A formal group is a group established to do something productive for the organization and is headed by a leader Examples include a division a department a work group or a committee It may be permanent or temporary People are assigned according to their skills and the organizations requirements Informal groups Informal groups created for friendship An informal group is a group formed by people seeking friendship and has no officially appointed leader although a leader may emerge from the membership Example include a collection of friends who hang out with one another such as those who take coffee breaks together or it may be as organized as a prayer breakfast a bowling team a service club Work Teams for four purposes Advice Production Project amp Action Various types of teams Cross functional team Members composed of people from different departments such as sales and production pursuing a common objective Problem solving team Knowledgeable workers who meet as a temporary team to solve a specific problem and then disband Quality Circle Volunteers of workers and supervisors who meet intermittently to discuss workplace and quality related problems Self managed team Workers are trained to do all or most ofthe jobs in a work unit have no direct supervisor and do their own day to day supervision Top management team Members consist ofthe CEO president and top department heads and work to help the organization achieve its mission and goals Virtual team Members interact by computer network to collaborate on projects Work Team Members engage in collective work requiring coordinated effort purpose of team is advice production or action Advice teams Advice teams are created to broaden the information base for managerial decisions Examples are committees review panels advisory councils employee involvement groups and quality circles Production teams Production teams are responsible for performing day to day operation Examples are mining teams flight attendant crews maintenance crews assembly teams data processing groups and manufacturing crews Project teams Project teams work to do creative problem solving often by applying the specialized knowledge of members of a cross functional team which is staffed with specialist pursuing a common objective Examples are Task forces research groups planning teams architect teams engineering teams and development teams Action Teams Action teams work to accomplish task that require people with specialized training and a high degree of coordination as on a baseball team with specialized athletes acting in coordination Examples are hospital surgery teams airline cockpit crews mountain climbing expeditions police swat SelfManaged Teams Workers with Own Administrative Oversight Quality Circles Which consist of small groups of volunteers or workers and supervisors who meet intermittently to discuss workplace and quality related problems Self managed teams are defined as groups of workers who are given administrative oversight for their task domains Nearly 70 of Fortune 1000 companies have created self managed work teams Self managed teams are an outgrowth of a blend of behavioral science and management practice All practices for the team must be for the group not for the individual Group rewards instead of individual Also the role of manager and employee is getting significantly smaller with employees gaining authority on issues and managers taking less responsibility The company must adapt to these teams and integrate them into their company rather than simply just patching them on 132 Stages of Group amp Team Development There are five stages of development Stage 1 forming o The first stage Forming is the process of getting oriented and getting acquainted o This stage people are figuring out who is in charge and what s trying to be accomplished Stage 2 Storming Storming is characterized by the emergence of individual personalities and roles and conflicts within the group This stage is questioning why people are fighting over who does what or who is in charge This is considered a time of testing Stage 3 Norming Norming Conflicts are resolved close relationships develop and unity and harmony emerge Individuals What do the others expect me to do Group Can we agree on roles and work as a team Group may now evolve into a team Group cohesiveness a quotwe feeling binding group members together Stage 4 Performing Performing members concentrate on solving problems and completing the assigned task Individuals How can best perform my role Group can we do the job properly Stage 5 Adjourning Adjourning members prepare for disbandment Individual What s next Team Can we help members transition out 133 Building Effective Teams Performance goals and feedback The purpose for a team needs to be defined in terms of specific measureable performance goals with continual feedback to tell team members how well they are doing Motivation through mutual accountability When people are depending on you as a team you feel more obliged to get your work done and well for the fact of the matter Size Small or Large teams Small teams 2 9 members have two advantages Better interaction and Better morale s They also have two disadvantages Fewer resources possibly ess innovation and unfair work distribution Larger Teams have different advantages More resources and Division of labor Division of labor in which work is divided into particular tasks that are assigned to particular workers Large teams also have disadvantages as well Less interaction and lower moral social loafing The tendency of people to exert less effort when working in groups than when working alone Roles How team members are expected to behave A role is a socially determined expectation of how an individual should behave in a specific position Task Role consists of behavior that concentrates on getting the team tasks done Maintenance roles consist of behavior that fosters constructive relationships among team members Norms Unwritten Rules for Team members Norms are general guidelines or rules of behavior that most group or team members foow Norms are enforced for four reasons to help the group survive to clarify roe expectations to help individuals avoid embarrassing situations and to emphasize the groups important values and identity Cohesiveness The importance of Togetherness Cohesiveness the tendency of a group or team to stick together Ways to build collaborative teams include Investing in signature relationship practices Modeling collaborative behavior Creating a gift culture Ensuring the requisite skills Supporting a strong sense of community Assigning team leaders that are both task and relationship oriented Building on heritage relationships Understanding role clarity and task ambiguity Groupthink When peer pressure discourages quotThinking outside the boxquot Groupthink a cohesive group blind unwillingness to consider alternatives Team members are close and tight nit but cannot see outside the box because they want to agree with everyone Symptoms of groupthink include nvunerabiity inherent morality and stereotyping of opposition Rationalization and self censorship Illusion of unanimity peer pressure and mind guards Groupthink versus the wisdom of crowds The Results of Groupthink Decision making defects There are various numbers of defects as a result of group think and they include Reduction in alternative ideas Limiting of other information Preventing Group thinks Making criticism and other perspectives permissible Allow Criticism Allow other perspectives 134 Managing Conflict The nature of conflict disagreement is normal Conflict A process in which one party perceives that its interest are being opposed or negatively affected by another party Negative conflict Bad for organizations Negative conflict is conflict that hinders the organizations performance or threatens its interests Constructive conflict good for organizations Constructive conflict benefits the main purposes of the organization and serves its interests Can too little or too much conflict affect performance Too little conflict indolence results in missed deadlines indecision and lack of creativity Too much conflict Warfare Results in political infighting lack of team work and turnover Seven Causes of conflict Competition for scarce resources When two parties need the same thing Time pressure When people believe there aren t enough hours to do the work Inconsistent goals or reward systems When people pursue different objectives Ambiguous Jurisdiction When Job boundaries are Unclear Status differences When there are inconsistencies in power and influence Personality Clashes When individuals differences cannot be resolved Communication failures when people misperceive and misunderstand How to stimulate constructive conflict Spur competition among employees Change the organizations culture and procedures Bring in outsiders for new perspectives Use programmed conflict Devils advocacy and Dialectic method Programmed conflict is designed to elicit different opinions without inciting people s personal feelings Devil39s advocate roleplaying criticism to test whether a proposal is workable Devils advocacy is the process of assigning someone to play the role of critic The Dialectic method Role playing two sides of a proposal to test whether it is workable Chapter 14 The Nature of Leadership 141 The big picture Leadership is the ability to influence employees to voluntarily pursue organizational goals n effective organizations leadership is present on every level Managers and leaders They are not the same thing Management is about coping with complexity Leadership is about coping with change Being a manager Coping with complexity Companies manage complexity in three ways Determining what needs to be done planning and budgeting Creating arrangements of people to accomplish an agenda organization and staffing Ensuring people do their jobs Controlling and problem solving Being a leader coping with change More changes are needed for survival hence leadership Leadership copes with change in three ways Determining what needs to be done setting a direction Creating arrangements of people to accomplish an agenda aligning people Ensuring people do their jobs motivating and inspiring Five sources of power Authority is the right to perform or command it comes with the job Power is the extent to which a person is able to influence others so they respond to orders Personalized power Power directed at helping oneself Socialized power power directed at helping others Within organizations there are typically five sources of power leaders may draw on Legitimate power Influencing behavior because of one39s formal position Legitimate power power which all managers have is power that results from managers formal positions within organizations Power obtained from being higher up on the food chain Reward power influencing behavior by promising or giving rewards Reward power which all managers have is power that results from managers authority to reward their subordinates Rewards can range from praise to pay raises and promotions Coercive Power influencing behavior by threatening or giving punishment Coercive power which all managers have results from managers authority to punish their subordinates Punishment can range from verbal or written reprimands to demotions or terminations Expert Power Influencing behavior because of one s expertise Expert power is power resulting from one specialized information or expertise This includes having an advantage over another clue to having knowledge others lack Referent Power influencing behavior because of one s personal attraction Referent power is power deriving from one s personal attraction This includes having charisma strong attitude and inspiring personality Leadership and Influence using persuasion to get your way at work The nine answers that people replied on how to get their coworkers or boss to do something they wanted are listed from most used to least Rational persuasion trying to convince someone by using reason logic or facts Inspirational Appeals Trying to build enthusiasm or confidence by appealing to others emotion ideals or values Consultation Getting others to participate in a decision or change ngratiating Tactics Acting humble or friendly or making someone feel good or feel important before making a request Personal Appeals Referring to friendship and loyalty when making a request Exchange tactics Reminding someone of past favors or offering to trade favors Coalition Tactics Getting others to support your co effort to persuade someone Pressure Tactics using demands threats or intimidation to gain compliance Legitimating Tactics Basing a request on ones authority or right organizational rules or policies or express or implied support from superiors All these influence tactics are considered Generic based off the fact that they are applied in all directions of the organization Five approaches to Leadership The next five sections describe five principal approaches or perspectives on leadership Trait approaches Kouzes and Posners five traits honest competent forward looking inspiring intelligent Gender studies Motivating others fostering communication producing high quality work and so on Leadership lessons from the globe project visionary and inspiration charismatic leaders who are good team builders are best worldwide Behavior Approaches Michigan model two leadership styles job centered and employee centered Ohio state model two dimensions initiating structure behavior and consideration behavior Contingency approaches Fiedler contingency model task oriented style and relationship oriented style and three dimensions of control leader member task structure and position power House path goal revised leadership Model Clarifying paths for subordinates goals and employee characteristics and environmental factors that affect leadership behaviors Hersey and Blanchard s situational leadership model adjusting leadership style to employee readiness Fullrange Approach Transactional leadership clarifies employee roles and tasks and provides rewards and punishments Transformational leadership transform employees to pursue organizational goals over self interests using inspirational motivation idealized influence individualized consideration intellectual stimulation Four additional perspectives Leader member exchange LMX model leaders have different sorts of relationships with different subordinates Shared leadership mutual influence process in which people share responsibility for leading Greenleaf s servant leadership model providing service to others not oneself E leadership using information technology for one to one one too many and between group and collective interactions 142 trait approaches do leaders have distinctive personality characteristics The big picture There are five traits that researcher Ralph Stogdill concluded were typical of successful leaders Trait approaches to leadership which attempt to identify distinctive characteristics that account for effectiveness of leaders ls trait theory useful Key positive leadership traits Intelligence Self confidence Determination Honestyintegrity Sociability Problem solving skills Extraversion Conscientiousness OOOOOOOOO Honesty is considered the most important trait in a leader being selected 87 out of 7500 people surveyed Women are proven to be better executives then men scoring higher on 42 out of 52 skills measured Men believe Women are not CEOs because of two reasons they lack significant general management experience and women have not been in the executive talent pool long enough to get selected Women believe they are not CEOs because of male stereotyping and exclusion from important informal networks which prevents promotion 143 behavior approaches Do leaders show distinctive patterns of behavior Behavior leadership approaches Which attempt to determine the distinctive styles used by effective leaders University of Michigan leadership model 0 Two types of leadership job centered and employee centered 0 Job centered leaders focused on achieving production efficiency keeping costs down and meeting schedules 0 Employee centered managers paid more attentions to employee satisfaction and making work groups cohesive Ohio State leadership Model Two major dimension of leader behavior were identified Initiating structure What do I do to get the job done Consideration what do I do to show consideration for my employees Overall experts have concluded from both models that effective leaders tend to have supportive or employee entered relationships with employees and use group rather than individual methods of supervision They also set high performance goals 144 Contingency Approaches Does Leadership vary with the situation Contingency approach to leadership who believe that effective leadership behavior depends on the situation at hand The contingency Leadership Model Fiedler39s approach Developed by Fred Fiedler in 1951 The contingency leadership model determines if a leader s style is task oriented or relationship oriented and ifthat style is effective for the situation at hand Two leadership orientations Tasks versus Relationships are you more concerned with the task or people The Three dimension of Situation Control how much control and influence a leader has in the immediate work environment Thee dimension of situational control include Leader member relations task structure and position power Which style is most effective Task oriented style is best because it works in high or low control situations Relationship oriented style works best in situations of moderate control The Pathgoal leadership Model House39s approach Created by Robert house in 1970 Path goal leadership model which holds that the effective leader makes available to followers desirable rewards in the workplace and increases their motivation by clarifying the paths or behavior that will help them achieve those goals and providing them with support What determines leadership effectiveness employee characteristics and environmental factors affect leader behavior Does the revised pathgoal theory work 0 Use more than one leadership style 0 Modify leadership style to fit employee and task characteristics The situational leadership theory model Hersey and Blanchard s approach Situational leadership theory leadership behavior reflects how leaders should adjust their leadership style according to the readiness of the followers Readiness is defined as the extent to which a follower possesses the ability and willingness to complete a task How the situational leadership model works 0 Leadership styles relationship behavior plus task behavior Relationship extent to which leaders maintain personal relationships Task the extent to which leaders organize and explain the r ole of their followers Four leadership styles telling selling participating delegating When a leadership style should be used depends on the readiness of the followers 0 Telling represents the guiding and directing of performance 0 Selling is explaining the decisions and persuading others to follow a course of action 0 Participating involves encouraging followers to solve problems on their own 0 Delegating is providing subordinates with little support or direction 0 Does the model work Inconsistent over scientific research 145 the full range model uses of transactional and transformation leadership Bernard bass and Bruce avolio full range leadership Suggest that leadership behavior varies along a full range of leadership styles from take no responsibility laissezfaire quotleadershipquot at one extreme through transaction leadership to transformation leadership at the other extreme Transactional leadership focusing on clarifying employee39s roles and task requirements and providing rewards and punishments contingent on performance Transformational leadership transforms employees to pursue organization goals over self interests Influenced by two factors individual characteristics and organizational culture The best leaders are both transaction and transformational Four key characteristics of Transformational leaders Inspirational motivation charisma Idealized influence we are here to do the right thing Individualized consideration quotyou have the opportunity here to grow and excel Intellectual stimulation quotLet me describe the great challenges we can conquer together Implications of transformation leadership for managers Positively associated with measure of organizational effectiveness measures of leadership and 39 job quot quot and more employee identification with their leader and with their immediate work groups also high levels of intrinsic motivation group cohesion and work engagement u L 146 Four additional perspectives George Graen and Fred Dansereau the leadermember exchange model of leadership emphasizes hat leaders have different sorts of relationships with different subordinates In group exchange relationship between leader and follower becomes a partnership characterized by mutual trust Favoritism Outgroup exchange leadership is characterized as overseers who fail to create the mutual trust Subordinates are not favored Shared leadership Simultaneous ongoing mutual influence process in which people share responsibility for leading Servant leadership coined in 1970 by Robert Greenleaf Servant leaders focus on providing increased service to others meeting the goals of followers and the organization rather than themselves Eleadership can involve one to one one too many within group and between group and collective interactions via information technology 151 Communication process What it is how it works Communication defined The transfer of information and understanding Communication the transfer of information and understand from one person to another How the communication process works Sender message and receiver The sender is the person wanting to share information called the message The receiver is the person for whom the message is intended SenderMessageReceiver Encoding and Decoding Encoding is translating a message into understandable symbols or language Decoding is interpreting and trying to make sense of message Sender encodingMessagedecoding receiver The Medium the pathway by which a message travels Sending encodingMessage medium messageDecoding receiver Feedback the receiver expresses his or her reaction to the senders message occurs after decoding and brought back to the sender encoding Noise any disturbance that interferes with the transmission of a message Static slurring Media richness indicates how well a particular medium conveys information The richer it is the better it is conveying information High richness face to face presence video conferencing Low richness Personal written media email memos etc and impersonal written media newsletters fliers general reports Rich medium best for nonroutine situations and to avoid oversimplification Lean medium best for routine situations and to avoid overloading 152 Barriers to Communication There are three types of barriers of communication physical barriers semantic barriers and personal barriers Physical barriers anything that prevents a message from being sent such as distance a machine roaring so your voice is cutout or plain walls Semantic barrier When words matter The prevention of a message being sent due to jargon or lack of articulation Semantics is the study of the meaning of words Jargon terminology specific to a particular profession or group Personal barriers individual attributes that hinder communication Variable skills in communicating effectively Variations in how information is processed and interpreted Variations in trustworthiness and Credibility Oversized Egos Faulty Listening Skills Tendency to Judge Others Messages Inability to listen with understanding r n and 39 quot A consists of oversimplified beliefs about a certain group of people Nonverbal communication Nonverbal communication Nonverbal communication consists of messages sent outside of the written or spoken word Seven ways nonverbal communication is expressed are Interpersonal space Cultures vary on how situations are handled Eye contact eye contact varies across culture and is interpreted differently Facial Expression expressions and their meanings vary across cultures Body movements and gestures Touch holding hands in the Middle East by two males is common frowned upon in America Setting the way your office is setup often expresses the accessibility of the person in it Time Gender related communication differences 153 How managers fit into the communication process Formal communication channels up down sideways and outward Formal communication channels follow the chain of command and are recognized as official Vertical communication up and down the chain of command Downward communication from top to bottom Downward communication flows from a higher level to a lower level Upward communication From bottom to top Upward communication flows from a lower level to a high level Horizontal communication flows within and between work units its main purpose is coordination Horizontal communication can be impeded in three ways by specialization that makes people focus just on their jobs alone by rivalry between workers or work units which prevents sharing information and by lack of encouragement from management External communication flows between people inside and outside the organization Informal communication channels Informal communication channels develop outside the formal structure and do not follow the chain of command Two types of informal channels are the grapevine and management by wandering around The grapevine is the unofficial communication system of the informal organization Management by wandering around MBWA is the term used to describe a managers literally wandering around his or her organization and talking with people across all lines of authority 154 Communication in the information age Multicommunicating represents the quotuse of technology to participate in several interactions at the same timequot Communications tools of information technology The internet intranets and extranets Intranets an intranet is nothing more than an organization private internet Extranets an extranet is an extended intranet in that it connects internal employees with selected customers suppliers and other strategic partners Email benefits reduced cost of information increased teamwork reduced paper cost and increased flexibility Three drawbacks are wasted time such as dealing with spam information overload And neglect of other media Spam or unsolicited jokes and junk mail Videoconferencing Telepresence technology high definition videoconference systems that simulate faceto face meeting between users Group support systems entail using stateoftheart computer software and hardware to help people work better together Telecommuting involves doing work that is generally performed in the office away from the office Handheld devices cell phones pda s etc Blogs a blog is an online journal in which people write whatever they want about any topic Work place problems impediments to productivity They include misuse of technology fussing with computers and information overload Information overload occurs when the amount of information received exceeds a personas ability to handle or process it 155 improving communication effectiveness Being an effective leader Concentrate on the content of the message Judge content not delivery Ask questions summarize remarks Listen for ideas Resist distractions show interest Give a fair hearing Being an effective Reader Realize that speed reading doesn t work Learn to streamline Be savvy about periodical and books Transfer your reading load Make internal memos and email more efficient Do top down reading SQ3R Rate reasons to read Question and predict answers Survey the big picture Skim for main ideas Summarize Being an effective writer Don39t show your ignorance Understand your strategy before you write Most important to least important Least controversial to most controversial Negative to positive Start with your purpose Write simply concisely and directly Telegraph your writing with a powerful layout Use bold and italics to convey emphasis on certain words and messages Use white space empty margins etc to create a clean attractive paper Being an effective speaker Tell them what you39re going to say Say it Tell them what you said Chapter 16 161 Managing for productivity What is productivity Defined as outputs divided by inputs for a specified period of time Why increasing productivity is important Important because it determines if a company will make a profit or even survive Maintaining productivity depends on control 162 Control When Managers monitor performance Control is making something happen the way it was planned to happen Controlling is defined as monitoring performance comparing it with goals and taking corrective action as needed Planning setting goals and deciding how to achieve them Organizing arranging task people and other resources to accomplish the work Leading motivating people to work hard to accomplish goals Controlling concerned with seeing that the right things happen at the right time in the right way Why is control needed Six reasons why To adapt to change and uncertainty markets shift consumers taste change you have to be able to adapt to remain profitable To discover irregularities and errors small problems can start off as a ripple and form in to a large wave that engulfs the organization and ultimately deems it To reduce costs increase productivity or add value To detect opportunities a mark down on certain grocery store items may result in a rush of customer demand for those products To deal with complexity Macy s merger had problems with the one size fits all mentality wasn t working so the issue was dealt with by finding a mentality that fit the taste of particular organization To decentralize decision making and facilitate team work Alfred Sloan chairman of GM set the level of return on investment he expected his divisions to achieve enabling him to push decision making authority down to lower levels while maintaining authority Steps in the control process The four control process steps are establish standards measure performance compare performance to standards and take corrective action if necessary Establish standards what is the outcome we want A control standard or performance standard or simply standard is the desired performance level for a given goal Measure the performance What is the actual outcome we got Performance measures are usually obtained from three sources written reports including computerized printouts oral reports and personal observation as when a manager takes a stroll of the factory floor Compare performance to standards How do the desire and actual outcomes differ How much deviation from what39s desired to actual outcome is acceptable This depends on the range of variation Management by exception is a control principle that states that managers should be informed of a situation only if data show a significant deviation from the standards Take corrective action if necessary What changes should we make to obtain desirable outcomes Three possibilities Make no changes recognize and reinforce positive performance take action to correct negative performance 163 The balanced scorecard strategy maps and measurement management The balanced scorecard Kaplan and Norton developed the balanced scorecard which gives top managers a fast but comprehensive view of the organization via four indicators customer satisfaction internal 39 39 and 39 activities and financial measures The balanced score card four perspectives Financial perspective how do we look to shareholders Customer perspective How do customers see us Internal Business perspective What must we excel at This translates to what the company must do internally to meet customer s expectations Innovation and learning perspective Can we continue to improve and create value The Visual Balanced scorecard Strategy Maps Kaplan and Norton improved the balanced scorecard called the strategy map A strategy map is a visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization Measurement management Two types Measurement managed and non measurement managed Why measurement managed firms succeed Top executives agree on strategy Communication is clear There is a better focus and alignments The organizational culture emphasizes teamwork and allows risk taking The barriers to effective management Objectives are fuzzy unclear customer satisfaction goals are usually not clear etc Managers put too much trust in informal feedback systems This would managers believing all the complaints given by customers about the company Employees resist new measurement systems Companies focus too much on measuring activities instead of results Are there areas that cannot be measured 164 Levels and Areas of Control Levels of control Strategic tactical and operational Strategic control by top managers Strategic control is monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed Tactical control by middle managers Tactical control is monitoring performance to ensure that tactical plans those at the divisional or departmental level are being implement and taking corrective action as needed Done by middle managers with titles such as division head or plant manager Operation control by first level managers Operation control is monitoring performance to ensure that operation plans day to day goals are being implemented and taking corrective action as needed Six areas of control Physical area included building equipment and tangible products Human resources are the control used to monitor employees include personality tests and drug testing for hiring performance tests performance evaluations and employee Surveys Information area Production schedules sales forecast environmental impact statements analyses of competition PR briefings Financial area Are bills being paid on time How much money is owed by customers Structural Area how the organization is arranged from a hierarchical or structural standpoint two examples are Bureaucratic control is an approach to organization control that is characterized by use of rules regulation and formal authority to guide performance Decentralized control is an approach to organizational control that is characterized by informal and organic structural arrangements Cultural Area an informal method of control it influences the work process and levels of performance by the values and beliefs the company holds An innovative company will innovate more than a noninnovative company 165 Some financial Tools for Control Budgets formal financial projections A budget is a formal financial projection Two budget approach incremental and zero based Incremental budgeting using the last budget period as reference point Traditional form of budgeting Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as reference point only incremental changes in the budget request are reviewed Zerobased budgeting starting over at each budget period ZZB forces each department to start from zero in projecting its funding needs for the coming budget period One difficulty with ZBB is that it requires managers to spend more time rationalizing the need for more funds Fixed versus Variable budgets Fixed budgets where resources are allocated on a single estimate of costs also known as static budget A fixed budget allocates resources on the basis of a single estimate of costs Variable budgets where resources are varied in proportion with various levels of activity also known as flexible budget Variable budget allows the allocation of resources to vary in proportion with various levels of activity Financial statements Summarizing the organizations financial status A financial statement is a summary of some aspect of an organization financial status There are two types the balance sheet and the income statement A balance sheet summarizes organizations overall financial worth that is assets and liabilities at a specific point in time The income statement Picture of organization financial results for a specified period of time The income statement summarizes and organizations financial results revenues and expenses over a specified period of time Bottom line is the profit or loss resulted from an income statement Ratio analysis indicators of an organizations financial health Ratio analysis the practice of evaluating financial rations to determine an organizations financial health Liquidity ration indicate how easily assets convert to cash Debt management ratios indicate the degree to what an organization can meet its long term debts Asset management ratio is how a company handles its assets whether obsolete or excess inventories Return rations indicate how well it s making a profit off its assets Audits external vs Internal Audits are formal verifications of an organizations financial and operation system External audit a formal verification of an organizations financial accounts and statements by outside experts Internal audit is a verification of an organizations financial accounts and statements by the organizations own professional staff 166 Total Quality management Deming management The contributions ofW Edwards deeming to improved quality W Edwards Deming helped improve the quality of Japanese products Deming management proposed ideas for making organizations more responsive more democratic and less wasteful Quality should be aimed at the needs of the consumer Companies should aim at improving the system not blaming Improved quality leads to increased market share increase company prospects and increased employment Quality can be improved on the basis of Hard Date Using the PDCA Cycle PDCA cycle a plan do check act cycle using observed data for continuous improvement Core TQM principles Total quality management TQM is defined as a comprehensive approach led by top management and support throughout the organization dedicated to continuous quality improvement training and customer satisfaction Four components are make continuous improvement a priority Get every employee involved Listen to and learn from customers and employees Use accurate standards to identify and eliminate problems Two core principles of TQM people orientation everyone involved with the organization should focus on delivering value to customers and 2 improvement orientations everyone should work on 39 39 39 lthe work People orientation Delivering customer value is most important People will focus on quality if given empowerment TQM requires training teamwork and cross functional efforts Improvement orientation Continuous improvement is defined as ongoing small incremental improvements in all parts of an organization This improvement orientation has the following assumptions It s less expensive to do it right the first time It s better to do small improvements all the time Accurate standards must be followed to eliminate small variations There must be strong commitment from top management The Rater Dimensions The RATER scale enables customers to rate the quality of a service along five dimensions Reliability assurance tangible empathy and responsiveness Each scale is a point scale of 1 to 10 Reliability ability to perform desired service Assurance employee39s knowledge and ability to convey trust and confidence Tangible physical facilities and equipment and appearance of personnel Empathy provision of caring and understanding Responsiveness willingness to provide prompt service to help customers Some TQM techniques Three means for implementing employee involvement are Quality circles Self managed teams Special purpose teams Special purpose team to meet to a solve a special or onetime problem Benchmarking learning from the best performers Outsourcing let outsiders handle it so 9000 series Meeting standards of Independent Auditors ISO 9000 series consists of qualitycontrol procedures companies must install from purchasing to manufacturing to inventory to shipping that can be audited by independent quality control experts or registrars Reduced Cycle time reduction in steps in a work process Statistical process control Taking periodic random samples Statistical process control a statistical technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability Six Sigma and Lean Six sigma date driven way to eliminate defects Six sigma is a rigorous statistical analysis process that reduces defects in manufacturing and servicerelated processes Lean Six Sigma which focuses on problem solving and performance improvement speed with excellence of a well defined project


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