ABSO104 Introduction to Business Organization II Course Notes

Instructor: Dr. Nina Gorovaia Zenios Assistant Professor of Business Administration Email: bus.gn@fit.ac.cy n.gorovaia@frederick.ac.cy Text book: Jones G., George J.(2006): Contemporary management, 4th edition, McGraw Hill.

Chapter 1: Managers and Managing After studying this chapter, you should be able to:

Describe what management is, why management is important, what managers do, and how managers utilize organizational resources efficiently and effectively to achieve organizational goals. Distinguish among planning, organizing, leading, and controlling (the four principal managerial functions), and explain how managers ability to handle each one can affect organizational performance. Differentiate among three levels of management, and understand the responsibilities of managers at different levels in the organizational hierarchy. Identify the roles managers perform, the skills they need to execute those roles effectively and the way new information technology is affecting these roles and skills. Discuss the principal challenges managers face in todays increasingly competitive global environment.

The Management Process Today I. What is management? Management is the planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently. A. Achieving High Performance: A Manager's Goal 1. Organizational performance is the measure of how efficiently and effectively managers use resources to satisfy customers and achieve organizational goals. 2. Efficiency is how well the resources are used. 3. Effectiveness is how well the organization has achieved its goals. B. Why study management? The more efficiently and effectively an organization can use its resources, the more profitable the organization will be. II. Managerial Functions A. Planning - the process of identifying and selecting goals and ways to accomplish these goals. B. Organizing - establishing a structure of working relationships used to accomplish the organization's goals. C. Leading - energizing and enabling workers toward the organization's goals. D. Controlling - evaluating the organization's performance and taking actions to improve its performance. III. Types of Managers A. Levels of management 1. First-line managers (also called supervisors) daily supervise non-managerial

employees. 2. Middle managers try to organize resources to achieve organizational goals. 3. Top managers are responsible for the performance of all departments (i.e., they have cross-departmental responsibility). B. Recent changes in Managerial Hierarchies 4. Restructuring - downsizing the organization by eliminating jobs. 5. Empowerment - expanding employee's knowledge, tasks, and responsibilities. 6. Self-managed teams - groups given responsibility for supervising their own activities and monitoring the quality of the goods and services they provide. IV. Managerial Roles and Skills - a role is a set of tasks a manager is expected to perform based on that manager's position in the organization. A. Managerial roles identified by Mintzberg 1. Decisional roles a. Entrepreneur - developing innovative goods and services or expanding markets b. Disturbance handler - dealing with both internal and external crises of the organization c. Resource allocator - sets budgets d. Negotiator - works with other organizations to establish agreements 2. Informational roles a. Monitor - evaluates managers and takes corrective action b. Disseminator - informs workers about changes in the internal and external environment c. Spokesperson - informs the local community about the organization's activities 3. Interpersonal roles a. Figurehead - explains the organization's goals to employees b. Leader - provides an example for employees to follow c. Liaison - coordinates the work of managers in different departments B. Being a Manager - managers learn both from their successes and their failures C. Managerial Skills 4. Conceptual skills - analyzing and diagnosing a situation 5. Human skills - understanding, leading, and controlling the behavior of individuals and groups 6. Technical skills - job-specific knowledge and techniques

V. Challenges for Management in a Global Environment A. Building a competitive advantage 1. Increasing efficiency - reducing the resources needed to produce goods 2. Increasing quality - total quality management (TQM) 3. Increasing speed, flexibility, and innovation B. Maintaining ethical standards - avoiding bribes and other unethical behavior Managing a diverse workforce - treating employees in a fair and equitable manner that does not discriminate based on age, gender, race, religion, sexual preference, or income level. WHAT IS MANAGEMENT? A manager is a person responsible for supervising the use of an organization's resources to meet its goals. An organization is a collection of people who work together and coordinate their actions to achieve a wide variety of goals. Management is the process of using organizational resources to achieve organizational goals effectively and efficiently through planning, organizing, leading, and controlling. An efficient organization makes the most productive use of its resources. An effective organization pursues appropriate goals and achieves these goals by using its resources to create the goods or services that customers want. MANAGERIAL FUNCTIONS The four principal managerial functions are planning, organizing, leading, and controlling. Managers at all levels of the organization and in all departments perform these functions. Effective management means managing these activities successfully. TYPES OF MANAGERS Organizations typically have three levels of management. Firstline managers are responsible for the day-to-day supervision of nonmanagerial employees. Middle managers are responsible for developing and utilizing organizational resources efficiently and effectively. Top managers have cross-departmental responsibility. The top managers' job is to establish appropriate goals for the entire organization and to verify that department managers are utilizing resources to achieve those goals. To increase efficiency and effectiveness, some organizations have altered their managerial hierarchies by restructuring, by empowering their workforces, utilizing self-managed teams, and utilizing new information technology. IT AND MANAGERIAL ROLES AND SKILLS According to Mintzberg, managers play 10 different roles: figurehead, leader, liaison, monitor, disseminator, spokesperson, entrepreneur, disturbance handler, resource allocator, and negotiator. Three types of skills help managers perform these roles effectively: conceptual, human, and technical skills. IT is changing both the way managers perform their roles and the skills they need to perform these roles because it provides richer and more meaningful information. CHALLENGES FOR MANAGEMENT IN A GLOBAL ENVIRONMENT Today's competitive global environment presents many interesting challenges to managers: to build a competitive advantage by increasing efficiency; quality; speed, flexibility, and

innovation; and customer responsiveness. To behave ethically toward people inside and outside the organization; to manage a diverse workforce; and to utilize new information systems and technologies. Chapter 2: The Evolution of Management Theory After studying this chapter, you should be able to:

Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management theory. Explain the principle of job specialization and division of labor, and tell why the study of person-task relationships is central to the pursuit of increased efficiency. Identify the principles of administration and organization that underlie effective organizations. Trace the changes in theories about how managers should behave to motivate and control employees. Explain the contributions of management science to the efficient use of organizational resources. Explain why the study of the external environment and its impact on an organization has become a central issue in management thought. Scientific Management Theory A. Job Specialization and the Division of Labor - job specialization creates a division of labor by having workers specialize in different tasks. B. F.W. Taylor and Scientific Management - F.W. Taylor defined scientific management to redesign tasks to increase efficiency. He defined four principles to increase efficiency: 1. Study the way workers perform their tasks. 2. Codify the new methods of performing tasks into written rules and standard operation procedures (SOPs). 3. Carefully select workers so that they possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures. 4. Establish a fair and acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level. C. The Gilbreths - Frank and Lillian Gilbreth filmed workers performing tasks to try to maximize efficiency to save time and effort. Administrative Management Theory - the study of how to create an organizational structure (i.e., the system of task and authority relationships that control how workers use resources) that is highly efficient and highly effective. A. The Theory of Bureaucracy - Max Weber defined a bureaucratic system based on five principles: 1. A manager's authority (the power to hold people accountable for their actions) is derived from the position he or she holds in the organization.

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People should occupy positions because of their performance ability. 3. The extent of each person's authority and task responsibilities should be specified. 4. Positions should be arranged hierarchically so that workers know to whom they report and also who reports to them. 5. Managers must create a system of rules (formal written instructions that specify what to do and when to do it), standard operating procedures (written instructions specifying how to perform a task), and norms (unwritten, informal codes of conduct that describe how workers should act in specific situations). B. Fayol's 14 Principles of Management 1. Division of labor - job specialization should increase efficiency 2. Authority and responsibility - managers have the right to give orders and to expect obedience from subordinates 3. Unity of command - A worker should receive orders from only one superior 4. Line of authority - the number of people in the "chain of command" from the top to the bottom of the organization should be limited 5. Centralization - authority should not be concentrated at the top management level 6. Unity of direction - the organization should have one plan of action to guide workers 7. Equity - all workers should be treated with justice and respect 8. Order - positions should be arranged to maximize efficiency and to provide workers with satisfying career opportunities 9. Initiative - managers should allow workers to be innovative and creative 10. Discipline - managers should create a workforce that strives to attain organizational goals 11. Remuneration of personnel - workers should be rewarded equitably 12. Stability of tenure of personnel - long-term workers develop skills that can improve efficiency 13. Subordination of individual interests to the common interest workers should understand how their performance affects the organization 14. Esprit de corps - managers should encourage comradeship and enthusiasm Behavioral Management Theory - the study of how managers should behave to motivate workers to perform at high levels. A. The Work of Mary Parker Follett - argued that workers should be included in job analysis (the human side of the organization). B. The Hawthorne Studies and Human Relations - researchers found that both increased and decreased levels of illumination increased worker productivity and called this phenomenon: "the Hawthorne effect." C. Theory X and Theory Y of Douglas McGregor

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Theory X assumes that workers are lazy, dislike work, and will try to do as little as possible. 2. Theory Y assumes that the work setting determines how workers feel about their jobs. Management Science Theory - uses quantitative techniques (quantitative management, operations management, and total quality management) to maximize resources Organizational Environment Theory - forces that operate outside of the organization that affect a manager's ability to acquire and use resources. A. The Open-systems View - an open system takes resources from the external environment and transforms them into goods that are then sent back to that environment where they are purchased by customers 1. Input stage - organization acquires resources (raw materials, money, workers) 2. Conversion stage - workforce transforms inputs into outputs of finished goods 3. Output staqe - organization releases finished goods to the external environment B. Contingency Theory - there is no one best way to organize

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Mechanistic and Organic Structures - mechanistic structures (authority is centralized at the top of the organization) make sense when the environment is stable, while organic structures (authority is decentralized to lower-level managers to encourage quick action) make sense when the environment is changing rapidly. SCIENTIFIC MANAGEMENT THEORY The search for efficiency started with the study of how managers could improve person-task relationships to increase efficiency. The concept of job specialization and division of labor remains the basis for the design of work settings in modern organizations. New developments such as lean production and total quality management are often viewed as advances on the early scientific management principles developed by Taylor and the Gilbreths. ADMINISTRATIVE MANAGEMENT THEORY Max Weber and Henri Fayol outlined principles of bureaucracy and administration that are as relevant to managers today as when they were written at the turn of the twentieth century. Much of modern management research refines these principles to suit contemporary conditions. For example, the increasing interest in the use of cross-departmental teams and the empowerment of workers are issues that managers also faced a century ago. BEHAVIORAL MANAGEMENT THEORY Researchers have described many different approaches to managerial behavior, including Theories X and Y. Often, the managerial behavior researchers suggest reflects the context of their own historical era and culture. Mary Parker Follett advocated managerial behaviors that did not reflect accepted modes of managerial behavior at the time, but her work was largely ignored until conditions changed.

MANAGEMENT SCIENCE THEORY The various branches of management science theory provide rigorous quantitative techniques that give managers more control over each organization's use of resources to produce goods and services. ORGANIZATIONAL ENVIRONMENT THEORY The importance of studying the organization's external environment became clear after the development of open-systems theory and contingency theory during the 1960s. A main focus of contemporary management research is to find methods to help managers improve the ways they utilize organizational resources and compete successfully in the global environment. Strategic management and total quality management are two important approaches intended to help managers make better use of organizational resources. Chapter 3: Attitudes, Values, Ethics, and Culture: The Manager as a Person After studying this chapter, you should be able to:

Describe the various personality traits that affect how managers think, feel, and behave. Explain what values, attitudes, and moods and emotions are and describe their impact on managerial action. Illustrate how ethics help managers determine the right or proper way to behave when dealing with different stakeholder groups. Define organizational culture and explain the role managers play in creating it. Explain why managers should strive to create ethical organizational cultures. Enduring Characteristics: Personality Traits Personality traits are tendencies to feel, think, and act in certain ways. A. The Big Five Personality Traits 1. Extraversion - the tendency to experience positive emotions and moods and to feel good about oneself. 2. Negative affectivity - the tendency to experience negative emotions and moods. 3. Agreeableness - the tendency to get along well with others. 4. Conscientiousness - the tendency to be careful and persevering. 5. Openness to experience - the tendency to be original and to take risks. B. Other personality traits that affect managerial behavior 1. Locus of control a. Internal locus - people who believe that they are responsible for their own fate b. External locus - people who believe that outside forces are responsible for what happens to them 2. Self-esteem - the degree to which the person feels good about himself and his abilities 3. Need for achievement - the desire to perform challenging tasks well 4. Need for affiliation - concern for good interpersonal relations and being liked

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5. Need for power - desire to control others Values, Attitudes, and Moods and Emotions A. Values: Terminal and Instrumental 1. Terminal value - a personal conviction about lifelong goals 2. Instrumental value - a personal conviction about desired ways to behave B. Attitudes - a collection of feelings and beliefs 1. Job satisfaction - feelings and beliefs that managers have about their current jobs 2. Organizational commitment - feelings and beliefs managers have about their organization C. Moods and emotions 1. Mood - a feeling or state of mind 2. Emotions - more intense feelings linked to whatever caused the feelings 3. Emotional intelligence - the ability to understand one's own emotions and the emotions of others Ethics and Stakeholders Ethics are moral principles about what is right or wrong. Stakeholders include shareholders, managers, customers, suppliers that have an interest in the organization. What behaviors are ethical? Why should managers behave ethically? Sources of an organization's code of ethics 1. Societal ethics - standards that govern how people in a society deal with one another 2. Professional ethics - standards that govern the members of a profession in terms of how they should behave 3. Individual ethics - personal values and attitudes that govern how individuals interact with others Organizational culture - the shared values, norms, standards of behavior, and expectations that influence the ways in which people interact with each other. A. How managers influence organizational culture B. Schneider's attraction-selection-attrition framework - founders of new companies tend to hire employees with similar personalities C. Ethical organizational cultures A. B. C.

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D. Social responsibility PERSONALITY TRAITS Personality traits are enduring tendencies to feel, think, and act in certain ways. The Big Five general traits are extraversion, negative affectivity, agreeableness, conscientiousness, and openness to experience. Other personality traits that affect managerial behavior are locus of control, self-esteem, and the needs for achievement, affiliation, and power.

VALUES, ATTITUDES, AND MOODS AND EMOTIONS A terminal value is a personal conviction about lifelong goals or objectives; an instrumental value is a personal conviction about modes of conduct. Terminal and instrumental values have an impact on what managers try to achieve in their organization and the kinds of behaviors they engage in. An attitude is a collection of feelings and beliefs. Two attitudes important for understanding managerial behaviors include job satisfaction (the collection of feelings and beliefs that managers have about their jobs) and organizational commitment (the collection of feelings and beliefs that managers have about their organization). A mood is a feeling or state of mind; emotions are more intense feelings. Managers' moods, or how they feel at work on a day-to-day basis, have the potential to impact not only their own behavior and effectiveness but also their subordinates. Emotional intelligence is ability to understand and manage one's own and other people's moods and emotions. ETHICS AND STAKEHOLDERS Ethics are moral principles or beliefs about what is right or wrong. These beliefs guide people in their dealings with other individuals and groups (stakeholders) and provide a basis for deciding whether behavior is right and proper. Many organizations have a formal code of ethics derived primarily from societal ethics, professional ethics, and the individual ethics of the organization's top managers. Managers can apply ethical standards to help themselves decide on the proper way to behave toward organizational stakeholders. ORGANIZATIONAL CULTURE Organizational culture is the set of values, norms, standards for behavior, and shared expectations that influence the ways in which individuals, groups, and teams interact with each other and cooperate to achieve organizational goals. Founders of new organizations and managers play an important role in creating and maintaining organizational cultures. Ethical organizational cultures are those in which ethical values and norms are emphasized. Ethical organizational cultures can help organizations and their members behave in a socially responsible manner. Chapter 4: Managing Diverse Employees in a Diverse Environment After studying this chapter, you should be able to:

Appreciate the increasing diversity of the workforce and of the organization environment. Grasp the central role that managers play in the effective management of diversity. Understand why the effective management of diversity is both an ethical and a business imperative. Appreciate how perception and the use of schemas can result in unfair treatment. Appreciate the steps managers can take effectively manage diversity. Understand the two major forms of sexual harassment and how they can be eliminated. The Increasing Diversity of the Workforce and the Environment Diversity refers to differences among people due to age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, and capabilities. A. Age - according to the 2000 Census, the average age of a person in the US

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is just over 35 years. Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967 are the two major federal laws that prohibit age discrimination. B. Gender - About 54 percent of the US workforce is male and 46 percent is female. Women make up about half of the managerial and professional positions (49.5%). C. Race and ethnicity - ethnicity refers to whether or not a person is Hispanic. According to the 2000 Census, about 75% of the US population was white, 13% were African-Americans, 13% were Hispanic, and 4% were Asian. D. Religion - Title VII of the Civil Rights Act prohibits discrimination based on religion. E. Capabilities/Disabilities - The Americans with Disabilities Act of 1990 prohibits discrimination against people with disabilities. F. Socioeconomic background - a combination of social class factors and income factors. G. Sexual orientation - there is no federal law prohibiting discrimination based on sexual orientation, but at least eleven states have such laws, and the number will most likely increase. Managers and the Effective Management of Diversity A. Critical managerial roles - interpersonal (figurehead, leader, liaison), informational (monitor, disseminator, spokesperson), and decisional (entrepreneur, disturbance handler, resource allocator, and negotiator). B. The ethical imperative to manage diversity effectively - managing diversity effectively makes good business sense and it is also an ethical imperative in the US. 1. Distributive justice - the distribution of pay raises, promotions, job titles, job assignments, and office space among employees in a fair way. 2. Procedural justice - requires managers to use fair procedures in determining ways to distribute outcomes to employees. C. Effectively managing diversity makes good business sense - diversity can be a source of competitive advantage to an organization. Perception Perception refers to an individual's interpretation of a situation and his response to it. It is the process by which people select, organize, and interpret sensory input (what they see, hear, touch, smell, and taste) to give meaning to the world around them. A. Factors that influence managerial perception 1. Schemas - abstract knowledge structures stored in memory that allow people to organize and interpret information about a person, event, or a situation. 2. Gender schemas - preconceived notions about the nature of men and women.

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Perception as a determinant of unfair treatment 1. Stereotype - a simplistic and often inaccurate belief about the typical characteristics of a specific group of people (usually based on age, gender, or race. 2. Biases - tendency to use information about people in ways that create inaccurate perceptions. a. Similar-to-me effect - perceiving others who are similar to ourselves more positively than we perceive people who are different from us. b. Social status effect - perceiving others with high social status more positively than we perceive others with low social status. c. Salience effect - focusing attention on people who are different from ourselves. C. Overt discrimination - knowingly and willingly denying diverse people access to opportunities and outcomes in the organization. This is both unethical and illegal. How to Manage Diversity Effectively A. Steps in managing diversity effectively 1. Obtain top management commitment t diversity issues 2. Try to increase the accuracy of people's perceptions 3. Increase diversity awareness 4. Increase diversity skills 5. Encourage flexibility 6. Pay close attention to how employees are evaluated 7. Consider the numbers in terms of both women and minorities at different levels of the organization 8. Empower employees to challenge discriminatory behavior 9. Reward employees for effectively managing diversity 10. Provide training in diversity management 11. Encourage mentoring of diverse employees Sexual Harassment - is both illegal and unethical A. Forms of sexual harassment 1. Quid pro quo - a harasser asks or forces an employee to perform sexual favors to keep a job, receive a promotion or a raise, or avoid dismissal. 2. Hostile work environment - the organization creates or allows an intimidating, hostile, or offensive work environment based on sex. B. Steps managers can take to eradicate sexual harassment - communicate a sexual harassment policy supported by top management, use a fair complaint procedure to investigate sexual harassment, take corrective action, provide training to employees.

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MANAGERS' CRITICAL ROLE IN MANAGING DIVERSITY Both the workforce and the organizational environment are increasingly diverse and effectively managing this diversity is an essential component of management. In each of their managerial roles, managers can encourage the effective management of diversity which is both an ethical and a business imperative. PERCEPTION Perception is the process through which people select, organize, and interpret sensory input to give meaning and order to the world around them. It is inherently subjective. Schemas guide perception; when schemas are based on a single visible characteristic such as race or gender, they are stereotypes and highly inaccurate leading to unfair treatment. Unfair treatment also can result from biases and overt discrimination. HOW TO MANAGE DIVERSITY EFFECTIVELY There are a number of steps that managers can take to effectively manage diversity. The effective management of diversity is an ongoing process that requires frequent monitoring. SEXUAL HARASSMENT Two forms of sexual harassment are quid pro quo sexual harassment and hostile work environment sexual harassment. Steps that managers can take to eradicate sexual harassment include development and communication of a sexual harassment policy endorsed by top management, use of fair complaint procedures, prompt corrective action when harassment occurs, and sexual harassment training and education. Chapter 5: The Organizational Environment After studying this chapter you should be able to:

Explain why the ability to perceive, interpret, and respond appropriately to the organizational environment is crucial for managerial success. Identify the main forces in an organization's task and general environments, and describe the challenges that each force presents to managers. Discuss the main ways in which managers can manage the organizational environment. Explain why boundary-spanning activities are important.

What is the Organizational Environment? The organizational environment is a set of forces outside the organization's boundaries that have the potential to affect the way the organization operates. The Task Environment - the set of forces that originate with suppliers, distributors, customers, and competitors. 28998. Suppliers - provide the organization with input resources (raw materials, component parts, workers) to produce goods and services. 28999. Distributors - help organizations to sell their goods and services 29000. Customers - people and groups that buy goods and services from the organization.

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29001. Competitors - organizations that produce similar goods and services and compete for the same customers. 1. Economies of scale - cost advantages associated with large-scale operations. 2. Brand loyalty - customers prefer the organization's products 29002. The Industry Life Cycle - changes that occur in the industry as the product moves from birth to decline. 1. Birth - organizations experiment with ways to promote and distribute a product 2. Growth - the product gains customer acceptance 3. Shakeout - the least-efficient companies exit the industry 4. Maturity - a few large companies dominate the industry 5. Decline - the final stage of an industry 29003. The Culture of the Industry Environment - the values, norms, and beliefs of the organization's managers. The General Environment 1. Economic forces - interest rates, inflation, unemployment, and economic growth. 2. Technological forces - tools, machines, computers, and skills managers use to design, produce, and distribute goods and services. 3. Sociocultural forces - pressure coming from the social structure of a country 1. Social structure - the relationships between individuals and groups 2. National culture - the values and norms considered important by the society 4. Demographic forces - characteristics of people, such as age, gender, ethnic origin, and social class 5. Political and legal forces - laws and regulations 6. Global forces - changes in international relationships Managing the Organizational Environment - managing opportunities and threats in the organization's environment 1. Reducing the impact of environmental forces - taking advantages of opportunities and countering threats in the general and task environments 2. Creating an organizational structure - designing the structure of the organization and its control systems 3. Utilizing IT and the Internet - to deals with the task environment 4. Boundary-spanning roles - interacting with individuals and groups outside of the organization to obtain important information from the task and general environments

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5. Managers as agents of change - actions taken by managers to change the environment WHAT IS THE ORGANIZATIONAL ENVIRONMENT? The organizational environment is the set of forces and conditions that operate beyond an organization's boundaries but affect a manager's ability to acquire and utilize resources. The organizational environment has two components, the task environment and the general environment. The task environment is the set of forces and conditions that originate with suppliers, distributors, customers, and competitors that influence managers on a daily basis. The general environment is wider-ranging economic, technological, sociocultural, demographic, political and legal, and global forces that affect an organization and its task environment. MANAGING THE ORGANIZATIONAL ENVIRONMENT Two factors affect the nature of the opportunities and threats that organizations face: (1) the level of complexity in the environment and (2) the rate of change in the environment. Managers must learn how to analyze the forces in the environment in order to respond effectively to opportunities and threats. ORGANIZATIONAL-ENVIRONMENT RELATIONSHIPS The principal ways in which managers increase their organizations' ability to manage the environment is (1) by creating an organizational structure and control systems to allow managers throughout the organization to deal with the specific parts of the environment for which they are responsible; (2) by utilizing IT and the Internet to obtain more and better information and (3) by engaging in boundary-spanning activities that lead managers to have a better appreciation for their environments so that they can avoid management mistakes. Chapter 6: Managing the Global Environment After studying this chapter, you should be able to:

Explain why the global environment is becoming more open and competitive and why barriers to the global transfer of goods and services are falling, increasing the opportunities, complexities, and challenges that managers face. Identify each of the forces in the global task environment, and explain why they create opportunities and threats for global managers. Describe the way in which political and legal, economic, and sociocultural forces in the general environment can affect managers and the way in which global organizations operate. List the impediments to the development of a more open global environment. The Changing Global Environment C. Declining barriers to trade and investment 1. Tariff -- a government tax on imports (and sometimes exports also)

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2. Free trade doctrine - predicts that if each country produces goods and services that it can produce the most efficiently, that global prices will fall. D. Declining barriers of distance and culture - modern technologies have reduced the distance between countries and their cultures E. Effects of free trade on managers 3. Many companies import low-cost goods from foreign manufacturers. 4. NAFTA - aims to abolish tariffs between the U.S., Mexico, and Canada II. The Global Task Environment A. Suppliers - many companies manufacture their products abroad at lower costs ("global outsourcing") B. Distributors - some countries permit companies to purchase directly from manufacturers instead of using distributors C. Customers - the prospect of selling goods and services to customers abroad D. Competitors - the global environment increases both local for foreign competition III. The Global General Environment A. Political and legal forces 1. Representative democracies - citizens elect representatives who make decisions on behalf of the electorate (U.S., Britain, Canada, Germany) 2. Totalitarian regimes - a single political part or individual or group holds all of the political power B. Economic forces 1. Free-market economy - production of goods and services is left to private enterprise based on supply and demand forces 2. Command economy - the types of goods and services provided, their quantity, and their price are determined by the government 3. Mixed economy - some sectors are left to private ownership while others have significant government ownership and planning C. Changes in political and legal and economic forces 1. One shift is away from totalitarian rule towards more democratic systems 2. Another shift is toward representative democracy D. Sociocultural forces

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1. National culture - the values, norms, knowledge, and customs that unite the citizens of a country 2. Values - ideas about what the society believes to be good, right, or beautiful 3. Norms - unwritten rules and codes of conduct that prescribe behavior in certain situations 4. Folkways - routine social conventions such as proper attire, manners 5. Mores - norms that are very important to a society 6. Hofstede's model of national culture e. Individualism versus collectivism - individualism values individual freedom and self-expression, while collectivism values the goals of the group f. Power distance - the degree to which inequalities in power are due to differences in physical and mental capabilities g. Achievement versus nurturing -- achievement orientation values assertiveness, success, competition, and results while nurturing orientation values the quality of life and personal relationships h. Uncertainty avoidance - some societies value diversity, while others stress behavior to the norms of the society i. Long-term versus short-term orientation - long-term values saving for the future while short-term values living for the present j. National culture and global management - practices that work in one country may not work in another II. Choosing a Way to Expand Internationally A. Importing and exporting - an export company makes products at home and sells them abroad, while an import company sells products that are made abroad at home B. Licensing and franchising - licensing allows a foreign partner to do manufacturing and distribution of its products for a fee, while franchising allows a foreign company to use a company's brand name and know-how in return for a fee plus a percentage of profits C. Strategic alliance - a home company and a foreign company pool their managers and resources in a new venture ("joint venture") D. Wholly-owned subsidiaries - a company has its own production facilities in a foreign country without foreign direct involvement III. Impediments to an Open Global Environment E. Government imposed impediments - "administrative barriers" are government policies that limit the import of goods 17

F. Self-imposed ethical impediments - sometimes managers refuse to do business internationally because of human rights violations, workers' rights violations, or environmental concerns Chapter 7: The manager as a decision maker After studying this chapter, you should be able to:

Differentiate between programmed and nonprogrammed decisions, and explain why nonprogrammed decision making is a complex, uncertain process. Describe the six steps that managers should take to make the best decisions. Explain how cognitive biases can affect decision making and lead managers to make poor decisions. Identify the advantages and disadvantages of group decision making, and describe techniques that can improve it. Explain the role that organizational learning and creativity play in helping managers to improve their decisions. The Nature of Managerial Decision Making A. Programmed and nonprogrammed decision making 1. Programmed decision making involves making a routine decision that has been made before many times. 2. Nonprogrammed decision making involves making a decision in response to novel opportunities or threats. B. The classical model - specifies how decisions should be made C. The administrative model - March and Simon believed that decision making is always a risky and uncertain process. 1. Bounded rationality - the amount of information and the number of possible alternatives is so large that the manager cannot evaluate all of them before making a decision. 2. Incomplete information - the full range of alternatives is unknowable and the consequences are uncertain. a. Risk and uncertainty 1. Risk - managers know the possible outcomes of a decision and can assign probabilities to each of them. 2. Uncertainty - the probabilities of different outcomes are unknown, and the future outcomes are unknown. b. Ambiguous information - the meaning of the information can be interpreted in a number of conflicting ways. c. Time constraints and information costs - managers do not have either the time or the funds to search for all alternatives and to evaluate all alternatives. 3. Satisficing - exploring a limited range of alternatives and choosing a "satisfactory" decision. Steps in the Decision-making Process A. Recognize the need for a decision

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Generate alternatives Evaluate alternatives 1. Legality - is this course of action legal? 2. Ethicalness - will this decision harm anyone? 3. Economic feasibility - what are the costs and benefits of this decision? 4. Practicality - can we implement these alternatives? D. Choose among alternatives E. Implement the chosen alternative F. Learning from feedback after the decision Cognitive Biases and Decision Making A. Prior hypothesis bias - managers seek and use information that is consistent with their prior beliefs and ignore information that contradicts these beliefs. B. Representative bias - managers incorrectly generalize from a small amount of information. C. Illusion of control - some managers overestimate their ability to control events. D. Escalating commitment - managers sink more resources into the project even though feedback indicates that the project is failing. E. Be aware of your biases Group Decision Making A. The perils of groupthink - group members strive for agreement and ignore important and relevant information that they cannot agree on. B. Devil's advocacy and dialectical inquiry 1. Devil's advocacy - one group member challenges the group's alternatives 2. Dialectical inquiry - two groups present their suggested solution to the problem, the other group critiques it, and the group then tries to find a better alternative. C. Diversity among decision makers - bring together managers from different genders, ethnic groups, age levels, and so forth. Organizational Learning and Creativity A learning organization is one in which managers maximize the ability of workers to think and act creatively. Creativity is the ability to discover original and novel ideas for the solution of a problem. A. Creating a learning organization - five principles developed by Senge 1. Empower workers and allow them to experiment 2. Encourage workers to use complex mental models 3. Promote group creativity 4. Emphasize building a shared vision 5. Encourage systems thinking Promoting individual creativity - give workers the freedom to generate new ideas Promoting group creativity - use group problem-solving techniques

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Brainstorming - generate a wide variety of alternatives in a group situation Nominal group technique - each member writes out his own ideas and solutions and the group then discusses possible solutions. Delphi technique - managers generate possible solutions by means of a survey, and then the results are presented to the group members, and this process continues until the group reaches a consensus.

D.

Promoting creativity at the global level

THE NATURE OF MANAGERIAL DECISION MAKING Programmed decisions are routine decisions made so often that managers have developed decision rules to be followed automatically. Nonprogrammed decisions are made in response to situations that are unusual or novel; they are nonroutine decisions. The classical model of decision making assumes that decision makers have complete information; are able to process that information in an objective, rational manner; and make optimum decisions. March and Simon argue that managers are boundedly rational, rarely have access to all the information they need to make optimum decisions, and consequently satisfice and rely on their intuition and judgment when making decisions. STEPS IN THE DECISION-MAKING PROCESS When making decisions, managers should take these six steps: recognizing the need for a decision, generating alternatives, assessing alternatives, choosing among alternatives, implementing the chosen alternative, and learning from feedback. COGNITIVE BIASES AND DECISION MAKING Most of the time, managers are fairly good decision makers. On occasion, however, problems can result because human judgment can be adversely affected by the operation of cognitive biases that result in poor decisions. Cognitive biases are caused by systematic errors in the way decision makers process information and make decisions. Sources of these errors include prior hypotheses, representativeness, the illusion of control, and escalating commitment. Managers should undertake a personal decision audit to become aware of their biases to improve their decision making. GROUP DECISION MAKING Many advantages are associated with group decision making, but there are also several disadvantages. One major source of poor decision making is groupthink. Afflicted decision makers collectively embark on a dubious course of action without questioning the assumptions that underlie their decision. Managers can improve the quality of group decision making by using techniques such as devil's advocacy and dialectic inquiry and by increasing diversity in the decision-making group. ORGANIZATIONAL LEARNING AND CREATIVITY Organizational learning is the process through which managers seek to improve employees' desire and ability to understand and manage the organization and its task environment so that employees can make decisions that continuously raise organizational effectiveness. Managers must take

20

steps to promote organizational learning and creativity at the individual and group levels to improve the quality of decision making. Chapter 8: Manager as Planner and Strategist After studying this chapter, you should be able to:

Describe the three steps of the planning process. Explain the relationship between planning and strategy. Explain the role of planning in predicting the future and in mobilizing organizational resources to meet future contingencies. Outline the main steps in SWOT analysis. Differentiate among corporate-, business-, and functional-level strategies. Describe the vital role played by strategy implementation in determining managers' ability to achieve an organization's mission and goals. An Overview of the Planning Process -- planning is the process of identifying and selecting goals and courses of action for an organization. A. Levels of planning 1. Corporate level - top management 2. Business (division) level - business units that compete in an industry 3. Department (functional) level - manufacturing, R&D, marketing, etc. B. Who plans? 1. Corporate level - top management 2. Business level - divisional managers 3. Department level - department managers C. Time horizons of plans 1. Long-term - five or more years 2. Intermediate - one to five years 3. Short-term - up to one year D. Standing plans and single-use plans - standing plans are used in programmed decision situations, while single-use plans are used in unusual situations 1. Policy - a general guide to action 2. Rule - a formal, written guide to action 3. Standing operating procedure - a written instruction describing the steps to be followed in a specific situation 4. Projects - specific action plans for part of a program E. Why planning is important 1. It gets managers to participate in decision-making 2. It gives the organization a sense of direction and purpose 3. It helps managers to coordinate their actions 4. It can be used to control the performance of managers F. Scenario planning - generating several forecasts of the future and analyzing how to respond appropriately for each forecast Determining the Organization's Mission and Goals

I.

II.

21

III.

IV.

V.

Defining the business 1. Who are our customers? 2. What customer needs are we satisfying? 3. How are we satisfying customer needs? B. Establishing major goals - to give the organization a sense of direction Formulating Strategy - analyzing the current situation and developing strategies to accomplish the organization's mission and goals. A. SWOT analysis - identifying the internal strengths, internal weaknesses, external opportunities, and external threats to the organization B. Michael Porter's Five Forces Model 1. Rivalry among organizations in the industry 2. Potential for entry into the industry 3. Power of suppliers 4. Power of customers 5. Threat of substitute products Formulating Corporate-level Strategies - in which industries and in which countries should we do business? A. Concentration on a single business - focusing on one business or one industry B. Diversification - expanding into a new business or a new industry in order to produce new goods or new services 1. Related diversification - entering a new business in order to create a competitive advantage in one of the organization's existing businesses. 2. Unrelated diversification - entering a new industry that are not related to the organization's current businesses C. International expansion - what strategy should we use? 1. Global strategy - selling the same product in each country with the same marketing approach 2. Multidomestic strategy - customizing products or marketing strategies to fit each country D. Vertical integration - an organization either produces its own inputs (e.g. raw materials) or distributes it products through its own outlets (e.g. Firestone retail tire stores) Formulating Business-level Strategies - Michael Porter's theory A. Low-cost strategy - focus on driving costs below those of competitors B. Differentiation strategy - focus on distinguishing the organization's products from those of competitors C. "Stuck in the Middle" - inability to decide between a low-cost and a differentiation strategy D. Focused low-cost and focused differentiation strategies 1. Focused low-cost strategy - aiming at one or a few segments of the market and trying to be the low-cost company serving those markets 2. Focused differentiation strategy - trying to be the most differentiated company serving one or a few segments of the market

A.

22

VI.

VII.

Formulating Functional-level Strategies - trying to focus on improving the ability of the organization's departments to create value for customers A. To obtain superior efficiency B. To attain superior quality C. To attain superior innovation D. To attain superior responsiveness to customers Planning and Implementing Strategy - 5 steps A. Allocating responsibility for implementation of plans B. Preparing detailed actions plans that specify how strategy will be implemented C. Establishing a timetable for implementing the plans D. Allocating resources needed to implement the plans E. Holding individuals and groups responsible for achieving the goals of the plan

23

PLANNING Planning is a three-step process: (1) determining an organization's mission and goals; (2) formulating strategy; (3) implementing strategy. Managers use planning to identify and select appropriate goals and courses of action for an organization and to decide how to allocate the resources they need to attain those goals and carry out those actions. A good plan builds commitment for the organization's goals, gives the organization a sense of direction and purpose, coordinates the different functions and divisions of the organization, and controls managers by making them accountable for specific goals. In large organizations planning takes place at three levels: corporate, business or divisional, and functional or department. Although planning is typically the responsibility of a well-defined group of managers, the subordinates of those managers should be given every opportunity to have input into the process and to shape the outcome. Long-term plans have a time horizon of five years or more; intermediate-term plans, between one and five years; and short-term plans, one year or less. DETERMINING MISSION AND GOALS AND FORMULATING STRATEGY Determining the organization's mission requires managers to define the business of the organization and establish major goals. Strategy formulation requires managers to perform a SWOT analysis and then choose appropriate strategies at the corporate, business, and functional levels. At the corporate level, organizations use strategies such as concentration on a single business, diversification, international expansion, and vertical integration to help increase the value of the goods and services provided to customers. At the business level, managers are responsible for developing a successful low-cost or differentiation strategy, either for the whole market or for a particular segment of it. At the functional level, departmental managers strive to develop and use their skills to help the organization either to add value to its products by differentiating them or to lower the costs of value creation. IMPLEMENTING STRATEGY Strategy implementation requires managers to allocate responsibilities to appropriate individuals or groups, draft detailed action plans that specify how a strategy is to be implemented, establish a timetable for implementation that includes precise, measurable goals linked to the attainment of the action plan, allocate appropriate resources to the responsible individuals or groups, and hold individuals or groups accountable for the attainment of goals. Chapter 9: Managing organizational structure After studying this chapter, you should be able to:

Identify the factors that influence managers' choice of an organizational structure. Explain how managers group tasks into jobs that are motivating and satisfying for employees. Describe the types of organizational structures managers can design, and explain why they choose one structure over another. Explain why there is a need to both centralize and decentralize authority. Explain why managers must coordinate and integrate between jobs, functions, and divisions as an organization grows. 24

Explain why managers who seek new ways to increase efficiency and effectiveness are using strategic alliances and network structures. Designing Organizational Structure - the formal system of task and job reporting relationships that result in creating an organizational structure. A. The organizational environment - the more quickly the external environment is changing and the greater the uncertainty within it, the greater the problems facing managers in trying to obtain scarce resources. B. Strategy - different strategies require different organizational structures C. Technology - the skills, knowledge, tools, machines, computers, and equipment that are used to design, produce, and distribute products. 1. Small-batch technology - used to produce small quantities of customized products 2. Mass-production technology - automated machines produce the same operations over and over 3. Continuous-process technology - automated machines produce almost totally mechanized products D. Human resources - affect an organization's choice of structure Grouping Tasks into Jobs: Job Design - the process by which jobs are divided into separate tasks A. Job enlargement and job enrichment 1. Job enlargement - increasing the number of tasks in a job 2. Job enrichment - increasing the responsibility of the worker B. Hackman and Oldham's Job Characteristics Model 1. Skill variety - the extent to which different skills, abilities, or knowledge is required in the job 2. Task identity - the extent to which the worker performs all of the tasks required in the job 3. Task significance - the degree to which the worker feels his job is meaningful 4. Autonomy - the degree to which the worker can schedule tasks and how to perform them 5. Feedback - the extent to which the job gives the worker clear information about the quality of his performance Grouping Jobs into Functions and Divisions A. Functional Structure - the structure required of all the departments B. Divisional structures: product, market, and geographic - a collection of departments that work together 1. Product structure - each product line is placed in its own division 2. Geographic structure - divisions are assigned by geographic region 3. Market structure - functions are grouped by the type of customer C. Matrix and product team designs 1. Matrix structure - managers group people in two ways: by function, and by product in the same group 2. Product team structure - no "two-boss" relationships, and workers are permanently assigned to a cross-functional team of workers from

I.

II.

III.

25

IV.

different departments D. Hybrid structure - the organizations uses many different structures at the same time Coordinating functions and divisions A. Allocating authority - the power vested in the position to make decisions 1. Span of control - the number of subordinates who report to a manager 2. Line manager - a manger in the chain of command who has authority over people and resources 3. Staff manager - a manager who manages a function (e.g. finance, marketing, etc.) 4. Tall and flat organizations a. Tall - many levels of managers in the organization b. Flat - few levels of managers in the organization 5. Minimum chain of command - designing the minimum number of managers needed B. Types of integrating mechanisms - the greater the complexity of the organizational structure, the greater the need for coordination 1. Direct contact - managers from different functions/divisions work together 2. Liaison roles - one manager has coordination responsibility between functions 3. Task forces - one manager from each function meets as part of a team that is set up to solve a problem 4. Cross-functional teams managers from different functions work together 5. Integrating roles - a manager tries to increase coordination between the different functions 6. Matrix structures - "two-boss" managers Strategic Alliances, B2B Network Structures, and IT - two or more companies exchange resources to market a product

V.

26

DESIGNING ORGANIZATIONAL STRUCTURE The four main determinants of organizational structure are the external environment, strategy, technology, and human resources. In general, the higher the level of uncertainty associated with these factors, the more appropriate is a flexible, adaptable structure as opposed to a formal, rigid one. GROUPING TASKS INTO JOBS Job design is the process by which managers group tasks into jobs. To create more interesting jobs, and to get workers to act flexibly, managers can enlarge and enrich jobs. The job characteristics model provides a tool managers can use to measure how motivating or satisfying a particular job is. GROUPING JOBS INTO FUNCTIONS AND DIVISIONS Managers can choose from many kinds of organizational structures to make the best use of organizational resources. Depending on the specific organizing problems they face, managers can choose from functional, product, geographic, market, matrix, product team, and hybrid structures. COORDINATING FUNCTIONS AND DIVISIONS No matter which structure managers choose, they must decide how to distribute authority in the organization, how many levels to have in the hierarchy of authority, and what balance to strike between centralization and decentralization to keep the number of levels in the hierarchy to a minimum. As organizations grow, managers must increase integration and coordination among functions and divisions. Six integrating mechanisms are available to facilitate this: direct contact, liaison roles, task forces, cross-functional teams, integrating roles, and the matrix structure. STRATEGIC ALLIANCES AND NETWORK STRUCTURE To avoid many of the communications and coordination problems that emerge as organizations grow, managers are attempting to use IT to develop new ways of organizing. In a strategic alliance, managers enter into an agreement with another organization to provide inputs or to perform a functional activity. If managers enter into a series of these agreements they create a network structure. A network structure, most commonly based on some shared form of IT, can be formed around one company, or a number of companies can join together to create an industry B2B network.

Chapter 10: Organizational Control and Culture After studying this chapter, you should be able to:

Define organizational control, and describe the four steps of the control process. Identify the main output controls, and discuss their advantages and disadvantages as means of coordinating and motivating employees. 27

Identify the main behavior controls, and discuss their advantages and disadvantages as means of coordinating and motivating employees. Explain the role of organizational culture in creating an effective organizational architecture. What is Organizational Control? Managers monitor and evaluate the organization's strategy to try to improve the performance of the organization The importance of organizational control - to determine how efficiently the organization is using its resources B. Control systems and IT - formal target-setting, monitoring, evaluation, and feedback systems that provide information about how efficiently the organization is functioning 1. Feedforward control - anticipating problems before they arise 2. Concurrent control - immediate feedback so that problems can be solved as they arise 3. Feedback control - feedback at the output stage used to correct problems C. The control process 1. Establish the performance standards 2. Measure performance 3. Compare performance to the standards 4. Initiate corrective action if necessary Output Control A. Financial measures of performance 1. Profit ratios - measure how efficiently are using the organization's resources a. Return on investment - net income before taxes divided by total assets b. Gross profit margin - revenue for the product minus the resources used to produce the product 2. Liquidity ratios - measure how well managers can meet short-term obligations a. Current ratio - current assets divided by current liabilities b. Quick ratio - whether liabilities can be paid without selling inventory 3. Leverage ratios - how much managers use debt or equity to finance ongoing operations 4. Activity ratios - measure how well managers create value from assets B. Organizational goals - each division has specific goals to pursue C. Operating budgets - a blueprint for use of resources to achieve goals D. Problems with output control -- goals need to be realistic and achievable Behavior Control A.

I.

II.

III.

28

IV.

Direct supervision - the most immediate form of behavior control Management by Objectives - a system for evaluating the performance of subordinates 1. Establish specific goals and objectives 2. Managers and subordinates agree on the subordinates' goals 3. Managers and subordinates periodically review subordinates' progress C. Bureaucratic control - a system of rules and operating procedures that shape behavior D. Problems with bureaucratic control 1. Establishing rules is easier than discarding them 2. People may follow the rules instead of thinking creatively Organizational Culture and Clan Control 1. 2. A. 1. 2. 3. Organizational culture - the values, norms, standards of behavior, and expectations that control the ways individuals interact Clan control - control exerted on individuals by shared values, norms, standards of behavior, and expectations Values and norms: creating a strong organizational culture Values of the founder - the personal values and beliefs of the organization's founder influence behavior over time Socialization - new employees learn the organization's values and norms needed to do their jobs successfully Ceremonies and rites a. Rites of passage - determine how new workers begin, advance, and leave the organization b. Rites of integration - shared experiences of organizational success c. Rites of enhancement - awards, promotion d. Stories and language - stories about organizational heroes and villains B. Culture and managerial action Planning - whether or not all managers participate actively in the organization's planning process Organizing - the types of managerial structure created Leading - how managers lead subordinates Controlling - systems used to influence and shape behavior

A. B.

1. 2. 3. 4.

Chapter 11: Human Resource Management After studying this chapter, you should be able to:

Explain why strategic human resource management can help an organization gain a competitive advantage.

29

Describe the steps managers take to recruit and select organizational members. Discuss the training and development options that ensure organizational members can effectively perform their jobs. Explain why performance appraisal and feedback is such a crucial activity, and list the choices managers must make in designing effective performance appraisal and feedback procedures. Explain the issues managers face in determining levels of pay and benefits. Strategic Human Resource Management 1. Human resource management includes activities needed to attract and retain workers 2. Strategic human resource management is the process by which managers design an HRM system A. Overview of the components of HRM 1. Recruitment and selection -- attracting and hiring new employees 2. Training and development - ensuring that employees develop the skills and abilities that are needed to perform their jobs B. Legal environment of HRM - the U.S. government's equal employment opportunity (EEO) laws Recruitment and Selection - recruitment includes developing a set of qualified candidates for a position, while selection deals with the decision of which applicant to hire. 1. 2. 3. Human resource planning - forecasting current and future human resource needs Job analysis - determining the job description and the job specifications External and internal recruitment A. B. C. 1. External recruitment deals with hiring workers who have not worked with the organization yet Internal recruiting deals with hiring current employees for new positions Honesty in recruiting deals with giving applicants a realistic job preview of the job's advantages and disadvantages

I.

II.

The selection process

1. Background information - education, work experience, etc. 2. Interviews - applicants are asked questions and are expected to answer them appropriately 3. Paper-and-pencil tests -ability tests and personality tests 4. Physical ability tests - for jobs that require physical effort and skill 5. Performance tests - measure performance on job tasks 6. References - recommendations from former employers

30

7. 8. II.

Reliability - the degree to which the test measures the same thing over time Validity - the degree to which the test measures what it is supposed to measure Training and Development

1. Training deals with teaching workers how to perform their current jobs 2. Development focuses on developing the abilities and skills needed for future jobs 3. Needs assessment deals with determining which employees need which type of skills or knowledge to do their jobs 1. Types of training 1. Classroom instruction - acquiring knowledge and skills in a classroom setting 2. On-the-job training - learning that occurs as the worker performs the job Types of development 1. Varied work experience - different types of job experiences 2. Formal education - college courses and college degrees Transfer of training and development - to the actual work situation

2.

3. III.

Performance Appraisal and Feedback 1. Types of performance appraisal

1. Trait appraisals - personal characteristics that are relevant to job performance 2. Behavior appraisals - assessing how managers perform their jobs 3. Result appraisals - the results managers obtain in their jobs 4. Objective and subjective appraisals - objective appraisals are based on facts, while subjective appraisals are based on the manager's perception of the subordinate's traits, behaviors, or results A. Who appraises performance? 1. Self, peers (co-workers), subordinates, and clients 2. 360-degree appraisals - the manager's performance is evaluated by himself, his peers, his subordinates, his superiors, and sometimes even by customers B. Effective performance feedback - formal appraisals are conducted at fixed times during the year IV. Pay and Benefits - pay includes base salary, raises, and bonuses, while benefits include sick days, vacation days, and medical and life insurance. 0. Pay level - how the worker's pay relates to the pay of other workers in the same industry who perform similar tasks on the job A. Pay structure - categories of jobs within the organization that require similar levels of skills B. Benefits - workers' compensation, social security, unemployment insurance, health insurance, dental insurance, vacation time, pension plans, life insurance, flexible working hours

31

V.

Labor Relations - the relationship between labor unions and the organization

0. Unions - represent workers' interests in the organization Collective bargaining - negotiations between labor unions and managers to resolve conflicts and disputes on work-related issues

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STRATEGIC HUMAN RESOURCE MANAGEMENT Human resource management (HRM) includes all the activities that managers engage in to ensure that their organizations are able to attract, retain, and effectively utilize human resources. Strategic HRM is the process by which managers design the components of a human resource management system to be consistent with each other, with other elements of organizational architecture, and with the organization's strategies and goals. RECRUITMENT AND SELECTION Before recruiting and selecting employees, managers must engage in human resource planning and job analysis. Human resource planning includes all the activities managers engage in to forecast their current and future needs for human resources. Job analysis is the process of identifying (1) the tasks, duties, and responsibilities that make up a job and (2) the knowledge, skills, and abilities needed to perform the job. Recruitment includes all the activities that managers engage in to develop a pool of qualified applicants for open positions. Selection is the process by which managers determine the relative qualifications of job applicants and their potential for performing well in a particular job. TRAINING AND DEVELOPMENT Training focuses on teaching organizational members how to perform effectively in their current jobs. Development focuses on broadening organizational members' knowledge and skills so that they will be prepared to take on new responsibilities and challenges. PERFORMANCE APPRAISAL AND FEEDBACK Performance appraisal is the evaluation of employees' job performance and contributions to their organization. Performance feedback is the process through which managers share performance appraisal information with their subordinates, give them an opportunity to reflect on their own performance, and develop with them plans for the future. Performance appraisal provides managers with useful information for decision making purposes. Performance feedback can encourage high levels of motivation and performance. PAY AND BENEFITS Pay level is the relative position of an organization's pay incentives in comparison with those of other organizations in the same industry employing similar workers. A pay structure clusters jobs into categories according to their relative importance to the organization and its goals, the levels of skills required, and other characteristics. Pay ranges are then established for each job category. Organizations are legally required to provide certain benefits to their employees; other benefits are provided at the discretion of employers. LABOR RELATIONS Labor relations includes all the activities managers engage in to ensure that they have effective working relationships with the labor unions that may represent their employees' interests. The National Labor Relations Board oversees union activity. Collective bargaining is the process through which labor unions and managers resolve conflicts and disputes and negotiate agreements. Chapter 12: Motivation After studying this chapter, you should be able to:

33

Explain what motivation is and why managers need to be concerned about it. Describe from the perspectives of expectancy theory and equity theory what managers should do to have a highly motivated workforce. Explain how goals and needs motivate people and what kinds of goals are especially likely to result in high performance. Identify the motivation lessons that managers can learn from operant conditioning theory and social learning theory. Explain why and how managers can use pay as a major motivation tool. The Nature of Motivation Motivation determines the direction of an individual's behavior, his effort, and his persistence when facing obstacles. Intrinsically motivated behavior -- the motivation comes from doing the work for its own sake B. Extrinsically motivated behavior - the behavior is based on the rewards (social or material), not from the behavior itself Expectancy Theory Expectancy theory (Vroom) assumes that workers believe that high effort will lead to high performance and that high performance will lead to desired outcomes. Expectancy - the degree to which effort will result in a certain level of performance B. Instrumentality - the degree to which a certain level of performance will lead to desired outcomes C. Valence - the desirability of each outcome to the worker D. Bringing it all together - the theory assumes that high motivation results from high expectancy, high instrumentality, and high valence Need Theories A need is a requirement for survival and well-being. A. B. C. Maslow's Hierarchy of Needs - all people try to satisfy five basic needs: physiological, safety, belongingness, esteem, and self-actualization. Alderfer's ERG Theory - three categories: existence, relatedness, and growth Herzberg's Motivator-Hygiene Theory 1. Motivator needs - related to the nature of the work itself (challenge, autonomy, responsibility, growth and development, a sense of accomplishment) 2. Hygiene needs - related to the context in which the work is performed (working conditions, pay, job security, relationships with coworkers, type of supervision) A. A.

I.

II.

III.

34

IV.

McClelland's Needs for Achievement (personal standards for excellence), Affiliation (concern for good interpersonal relationships), and Power (the desire to influence others Equity Theory Equity theory concentrates on people's perceptions of the fairness of their work outcomes relative to their work inputs. Equity - exists when a person perceives that his outcome/input ratio is equal to that of a referent B. Inequity - a lack of fairness exists when a person's outcome/input ratio is perceived as not equal to that of a referent 1. Underpayment inequity - a person's outcome/input ratio is perceived as less than that of a referent 2. Overpayment inequity - a person's outcome/input ratio is perceived as greater than that of a referent C. Ways to restore equity - reduce one's working hours, change one's perception of his own or the referent's inputs or outcomes Goal-setting Theory Goal-setting theory focuses on motivating workers to contribute inputs to their jobs. A.

D.

V.

VI.

Learning Theories Learning is a relatively permanent change in knowledge or behavior as the result of practice or experience. A. Operant conditioning theory (B.F. Skinner) - people learn to do behaviors that lead to desired consequences or learn not to do behaviors that lead to undesirable consequences. 1. Positive reinforcement - produces outcomes people want when they perform behaviors that contribute to organizational effectiveness. 2. Negative reinforcement - remove undesired outcomes once functional behavior is exhibited. 3. Identify the right behaviors for reinforcement - choose behaviors over which subordinates have control and which contribute to organizational effectiveness 4. Extinction - eliminate whatever is reinforcing the behaviors. 5. Punishment - administering a negative consequence when an undesirable behavior is performed 6. Organizational behavior modification (OB MOD) - promote functional behaviors and discourage dysfunctional behaviors. Social learning theory - motivation results from rewards and punishments and also from the individual's thoughts and beliefs. 1. Vicarious learning - becoming motivated by watching another person perform a behavior and being positively reinforced for doing

B.

35

VII.

so 2. Self-reinforcement - desirable outcomes that people give to themselves for good performance. 3. Self-efficacy - the individual's belief about his ability to perform a behavior successfully. Pay and Motivation A. Basing merit pay on individual, group, or organizational performance B. Salary increase of Bonus? C. Examples of merit pay plans 1. Piece-rate pay - pay is based on the number of units produced by each worker 2. Commission pay - pay is based on a percentage of sales (e.g. real estate brokers) 3. Scanlon Plan - cost-savings accomplished are shared with the workers

36

THE NATURE OF MOTIVATION Motivation encompasses the psychological forces within a person that determine the direction of a person's behavior in an organization, a person's level of effort, and a person's level of persistence in the face of obstacles. Managers strive to motivate people to contribute their inputs to an organization, to focus these inputs in the direction of high performance, and to ensure that people receive the outcomes they desire when they perform at a high level. EXPECTANCY THEORY According to expectancy theory, managers can promote high levels of motivation in their organizations by taking steps to ensure that expectancy is high (people think that if they try, they can perform at a high level), instrumentality is high (people think that if they perform at a high level, they will receive certain outcomes), and valence is high (people desire these outcomes). NEED THEORIES Need theories suggest that to motivate their workforces, managers should determine what needs people are trying to satisfy in organizations and then ensure that people receive outcomes that satisfy these needs when they perform at a high level and contribute to organizational effectiveness. EQUITY THEORY According to equity theory, managers can promote high levels of motivation by ensuring that people perceive that there is equity in the organization or that outcomes are distributed in proportion to inputs. Equity exists when a person perceives that his or her own outcome/input ratio equals the outcome/input ratio of a referent. Inequity motivates people to try to restore equity. GOAL-SETTING THEORY Goal-setting theory suggests that managers can promote high motivation and performance by ensuring that people are striving to achieve specific, difficult goals. It also is important for people to accept the goals, be committed to them, and receive feedback about how they are doing. LEARNING THEORIES Operant conditioning theory suggests that managers can motivate people to perform highly by using positive reinforcement or negative reinforcement (positive reinforcement being the preferred strategy). Managers can motivate people to avoid performing dysfunctional behaviors by using extinction or punishment. Social learning theory suggests that people can also be motivated by observing how others perform behaviors and receive rewards, by engaging in selfreinforcement, and by having high levels of self-efficacy. PAY AND MOTIVATION Each of the motivation theories discussed in this chapter alludes to the importance of pay and suggests that pay should be based on performance. Merit pay plans can be individual-, group-, or organization-based and can entail the use of salary increases or bonuses. Chapter 13: Leadership After studying this chapter, you should be able to:

37

Describe what leadership is, when leaders are effective and ineffective, and the sources of power that enable managers to be effective leaders. Identify the traits that show the strongest relationship to leadership, the behaviors leaders engage in, and the limitations of the trait and behavior models of leadership. Explain how contingency models of leadership enhance our understanding of effective leadership and management in organizations. Describe what transformational leadership is, and explain how managers can engage in it. Characterize the relationship between gender and leadership. The Nature of Leadership Leadership is the process by which one person exerts influence over another person and inspires, motivates, and directs their activities to achieve organizational goals. Personal leadership style and managerial tasks - the specific ways managers choose to influence others B. Leadership styles across cultures - European managers tend to be more people-oriented than American managers. C. Power: the key to leadership 1. Legitimate power - authority that accompanies the position in the organization. 2. Reward power - the ability to give or withhold tangible and intangible rewards 3. Coercive power - the ability to punish others. 4. Expert power - derived from knowledge, skills, and expertise. 5. Referent power - derived from the respect that subordinates hold for a superior Trait and Behavior Models of Leadership A. The Trait Model - attempts to identify personal characteristics that are related to effective leadership. B. The Behavior Model 1. Consideration - a leader shows trust, respect, and care toward subordinates 2. Initiating structure - a leader makes sure that the work gets done and that the organization is efficient and effective. Contingency Models of Leadership - take into account the situation A. Fiedler's Contingency Model - leaders may be effective in one situation and ineffective in a different situation 1. Relationship-oriented leaders - concerned with developing good relationships with subordinates and being liked by them 2. Task-oriented leaders - concerned with a high level of performance by subordinates 3. Leadership style is an enduring characteristic a. Leader-member relations - the extent to which followers A.

I.

II.

III.

38

IV.

like, trust, and are loyal to their leader b. Task structure - the extent to which the tasks of the work are clear to the workers c. Position power - the amount of legitimate, reward, and coercive power a leader has in terms of his position in the organizational chart d. Combining leader style and the situation - task-oriented leaders are most successful in either very favorable or very unfavorable situations e. Putting the contingency model into practice B. House's Path-Goal Theory - focuses on what leaders can do to motivate subordinates 1. Find out what subordinates are trying to obtain from their jobs 2. Reward subordinates for high performance with outcomes they want 3. Clarify the paths to goal attainment for subordinates, remove obstacles, and express confidence in their capability C. The Leader Substitutes Model - sometimes leadership is unnecessary D. Bringing it all together - effective leaders lead in appropriate ways given the situation and the subordinates that they are leading Transformational Leadership Transformational leaders make subordinates aware of how important their jobs are to the organization, make subordinates aware of their own needs for growth, development, and accomplishment, and motivate subordinates to work for the good of the organization. Being a charismatic leader - being excited about one's vision for the organization B. Stimulating subordinates intellectually - helping subordinates to view problems as challenges that they can meet successfully C. Engaging in developmental consideration - supporting and encouraging subordinates D. The distinction between transformational and transactional leadership transactional leadership involves using reward power and coercive power to encourage high performance in subordinates Gender and Leadership - there are still relatively few women in top management positions in the U.S. A. Subordinates may try to resist the leadership of female managers B. Sometimes female managers are more participative than male managers Emotional Intelligence and Leadership - the degree of emotional intelligence in a leader may be important to the leader's success A.

V.

VI.

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THE NATURE OF LEADERSHIP Leadership is the process by which a person exerts influence over other people and inspires, motivates, and directs their activities to help achieve group or organizational goals. Leaders are able to influence others because they possess power. The five types of power available to managers are legitimate power, reward power, coercive power, expert power, and referent power. Many managers are using empowerment as a tool to increase their effectiveness as leaders. TRAIT AND BEHAVIOR MODELS OF LEADERSHIP The trait model of leadership describes personal characteristics or traits that contribute to effective leadership. However, some managers who possess these traits are not effective leaders, and some managers who do not possess all the traits are nevertheless effective leaders. The behavior model of leadership describes two kinds of behavior that most leaders engage in: consideration and initiating structure. CONTINGENCY MODELS OF LEADERSHIP Contingency models take into account the complexity surrounding leadership and the role of the situation in determining whether a manager is an effective or ineffective leader. Fiedler's contingency model explains why managers may be effective leaders in one situation and ineffective in another. According to Fiedler's model, relationship-oriented leaders are most effective in situations that are moderately favorable for leading, and taskoriented leaders are most effective in situations that are very favorable or very unfavorable for leading. House's path-goal theory describes how effective managers motivate their subordinates by determining what outcomes their subordinates want, rewarding subordinates with these outcomes when they achieve their goals and perform at a high level, and clarifying the paths to goal attainment. Managers can engage in four different kinds of behaviors to motivate subordinates: directive behaviors, supportive behaviors, participative behaviors, or achievement-oriented behaviors. The leader substitutes model suggests that sometimes managers do not have to play a leadership role because their subordinates perform highly without the manager having to exert influence over them. TRANSFORMATIONAL LEADERSHIP Transformational leadership occurs when managers have dramatic effects on their subordinates and on the organization as a whole and inspire and energize subordinates to solve problems and improve performance. These effects include making subordinates aware of the importance of their own jobs and high performance, making subordinates aware of their own needs for personal growth, development, and accomplishment, and motivating subordinates to work for the good of the organization and not just their own personal gain. Managers can engage in transformational leadership by being charismatic leaders, by intellectually stimulating subordinates, and by engaging in developmental consideration. Transformational managers also often engage in transactional leadership by using their reward and coercive powers to encourage high performance. GENDER AND LEADERSHIP Female and male managers do not differ in the leadership behaviors that they perform, contrary to stereotypes suggesting that women are more relationship oriented and men more task oriented. Female managers sometimes are more participative than male managers, however. Research has found that women and men are equally effective as managers and leaders. EMOTIONAL INTELLIGENCE AND LEADERSHIP The moods and emotions leaders experience on the job may affect their leadership effectiveness. Moreover, emotional intelligence has the potential to contribute to leadership effectiveness in multiple ways.

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Chapter 14: Groups and Teams After studying this chapter, you should be able to:

Explain why groups and teams are key contributors to organizational effectiveness. Identify the different types of groups and teams that help managers and organizations achieve their goals. Explain how different elements of group dynamics influence the functioning and effectiveness of groups and teams. Explain why it is important for groups and teams to have a balance of conformity and deviance and a moderate level of cohesiveness. Describe how managers can motivate group members to achieve organizational goals and reduce social loafing in groups and teams. Groups, Teams, and Organizational Effectiveness A group consists of two or more people who interact with each other to accomplish goals. A team is a group whose members work intensely with each other to achieve a common goal. Groups and teams as performance enhancers - synergy occurs when a group accomplishes more than would be accomplished by members working individually. B. Groups, teams, and responsiveness to customers C. Teams and innovation - innovation is the creative development of new products, new technologies, or new services. D. Groups and teams as motivators Types of Groups and Teams Formal groups are formed by managers to try to achieve organizational goals. Informal groups are formed because members want to achieve their own goals. A. B. C. D. The top-management team - is responsible for developing strategies that will give the organization a competitive advantage. Research and development teams - develop new products. Command groups - are composed of subordinates to report to the same manager (also called departments or units). Task forces - accomplish specific goals in a given time period. A.

I.

II.

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Self-managed work teams - members have the responsibility and autonomy to finish specific pieces of work. F. Virtual teams - members rarely meet face-to-face but interact using email, phone, fax, and video conferences. G. Friendship groups - informal groups of workers who enjoy each other's company H. Interest groups - seek to accomplish a common goal in which they are interested. Group Dynamics A. Group size, tasks, and roles 1. Group size can influence motivation and commitment to the group. 2. Task interdependence is the degree to which the work of one member is dependent on the work of another member. a. Pooled task interdependence occurs when group performance is the sum of the performance of individual members. b. Sequential task interdependence occurs when group members must perform specific tasks in a certain sequence. c. Reciprocal task interdependence occurs when the work of one member is dependent on the work performed by other members. 3. Group roles are the behaviors that members are expected to perform based on their position in the group. B. Group leadership - effective groups need effective leadership. C. Group development over time - self-managed work teams sometimes take months, or even years, to reach their capabilities. The five stages of group development typically are: 1. Forming - members try to get to know one another and to develop a common understanding of what the group is to accomplish and how members should behave. 2. Storming - conflict occurs over what the group is to accomplish or how members should act. 3. Norming - close ties develop between members. 4. Performing - the real work of the group is done. 5. Adjourning - applies to groups that cease to exist when they accomplish their goals. D. Group norms - shared guidelines for the behavior of group members. E. Group cohesiveness - the degree to which group members are attracted to the group and are loyal to the group. 1. Consequences of group cohesiveness - level of participation within the group, level of conformity to group norms, and emphasis on group goal accomplishment. 2. Level of participation - as cohesiveness increases, participation increases. 3. Level of conformity to group norms - as cohesiveness increases, conformity to group norms increases.

E.

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Emphasis on group goal accomplishment - as cohesiveness increases, emphasis on group goal accomplishment increases. 5. Factors leading to group cohesiveness a. Group size - members of small groups tend to be more motivated than members of large groups. b. Effectively managed diversity - diversity can help the organization achieve a competitive advantage. c. Group identity and healthy competition - cohesiveness can be increased by helping the group to develop its own identity and to engage in healthy competition with other groups. d. Success - successful groups are more attractive to their members. Managing Groups and Teams for High Performance A. Motivating group members to achieve organizational goals B. Reducing social loafing (putting out less effort in a group than when alone) 1. Make individual contributions identifiable. 2. Emphasize the valuable contributions of individual members. 3. Keep group size at an appropriate level. C. Helping groups to manage conflict effectively.

4.

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GROUPS, TEAMS, AND ORGANIZATIONAL EFFECTIVENESS A group is two or more people who interact with each other to accomplish certain goals or meet certain needs. A team is a group whose members work intensely with each other to achieve a specific common goal or objective. Groups and teams can contribute to organizational effectiveness by enhancing performance, increasing responsiveness to customers, increasing innovation, and being a source of motivation for their members. TYPES OF GROUPS AND TEAMS Formal groups are groups that managers establish to achieve organizational goals; they include cross-functional teams, crosscultural teams, top-management teams, research and development teams, command groups, task forces, self-managed work teams, and virtual teams. Informal groups are groups that employees form because they believe that the groups will help them achieve their own goals or meet their needs; they include friendship groups and interest groups. GROUP DYNAMICS Key elements of group dynamics are group size, tasks, and roles; group leadership; group development; group norms; and group cohesiveness. The advantages and disadvantages of large and small groups suggest that managers should form groups with no more members than are needed to provide the group with the human resources it needs to achieve its goals and use a division of labor. The type of task interdependence that characterizes a group's work gives managers a clue about the appropriate size of the group. A group role is a set of behaviors and tasks that a member of a group is expected to perform because of his or her position in the group. All groups and teams need leadership. Five stages of development that many groups pass through are forming, storming, norming, performing, and adjourning. Group norms are shared rules for behavior that most group members follow. To be effective, groups need a balance of conformity and deviance. Conformity allows a group to control its members' behavior to achieve group goals; deviance provides the impetus for needed change. Group cohesiveness is the attractiveness of a group or team to its members. As group cohesiveness increases, so, too, do the level of participation and communication within a group, the level of conformity to group norms, and the emphasis on group goal accomplishment. Managers should strive to achieve a moderate level of group cohesiveness in the groups and teams they manage. MANAGING GROUPS AND TEAMS FOR HIGH PERFORMANCE To make sure that groups and teams perform highly, managers need to motivate group members to work toward the achievement of organizational goals, reduce social loafing, and help groups to effectively manage conflict. Managers can motivate members of groups and teams to work toward the achievement of organizational goals by making sure that members personally benefit when the group or team performs highly. Chapter 15: Communication After studying this chapter, you should be able to:

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Explain why effective communication helps an organization gain a competitive advantage. Describe the communication process, and explain the role of perception in communication. Define information richness, and describe the information richness of communication media available to managers. Describe the communication networks that exist in groups and teams. Explain how advances in technology have given managers new options for managing communication. Describe important communication skills that managers need as senders and as receivers of messages. Communication and Management Communication is the sharing of information between two or more people to reach a common understanding. A. B. The importance of good communication - good communication can improve the organization's efficiency, responsiveness to its customers, innovation, and quality. The communication process Information is shared between two or more people in the transmission phase, and a common understanding is reached in the feedback phase. The sender encodes a message and sends information over a medium to a receiver who decodes the message and sends feedback back to the sender. Anything that interferes with the communication is termed noise. Verbal communication consists of words (both written or spoken). Nonverbal communication through facial expressions, body language, and style of dress is another form of communication. C. The role of perception in communication - perception plays a central role in communication. D. The dangers of ineffective communication - managers spend most of their time communicating. Information Richness and Communication Media Information richness refers to the amount of information that a communication medium can carry to a receiver. A. Face-to-face communication - is highest in information richness B. Spoken communication electronically transmitted (e.g. phone) C. Personally addressed written communication (e.g. memos, letters, e-mail) D. Impersonal written communication (e.g. company newsletters) Communication Networks - pathways through which information flows 1. 2.

I.

II.

III.

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IV.

V.

Communication networks in groups and teams 1. Wheel - information flows to and from one central member of the group 2. Chain - group members communicate in a fixed sequence 3. Circle - group members communicate with others similar to themselves 4. All-channel - all members communicate with one another B. Organizational communication networks - the organization chart summarizes only the formal reporting relationships of managers 1. Vertical communication - occurs both up and down the corporate chain of command. 2. Horizontal communication - occurs among managers at the same level on the organizational chart. 3. The grapevine is an informal network along which unofficial information flows. Technological Advances in Communication A. The Internet - a global system of computer networks used by workers to communicate both inside and outside of their companies. B. Intranets - are used by workers to share information within their own companies. C. Groupware - computer software that allows workers to share information Communication Skills for Managers A. Communication skills for managers as senders 1. Send clear and complete messages 2. Encode messages in symbols that receivers will understand 3. Select a medium appropriate for the message 4. Select a medium that the receiver monitors 5. Avoid filtering (withholding part of a message) and information distortion (the meaning of the message changes as it is passed along by receivers) 6. Include a feedback mechanism 7. Provide accurate information and avoid rumors B. Communication skills for managers as receivers 1. Pay attention to messages 2. Be a good listener 3. Be empathetic 4. Be sensitive to cross-cultural differences 5. Be sensitive to gender differences Managing differences in linguistic styles

A.

COMMUNICATION AND MANAGEMENT Communication is the sharing of information between two or more individuals or groups to reach a common understanding. Good communication is necessary for an organization to gain a competitive advantage. Communication occurs in a cyclical process that entails two phases, transmission and feedback.

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INFORMATION RICHNESS AND COMMUNICATION MEDIA Information richness is the amount of information a communication medium can carry and the extent to which the medium enables the sender and receiver to reach a common understanding. Four categories of communication media in descending order of information richness are faceto-face communication (includes video conferences), spoken communication electronically transmitted (includes voice mail), personally addressed written communication (includes email), and impersonal written communication. COMMUNICATION NETWORKS Communication networks are the pathways along which information flows in an organization. Four communication networks found in groups and teams are the wheel, the chain, the circle, and the all-channel network. An organizational chart summarizes formal pathways of communication, but communication in organizations is often informal, as is true of communication through the grapevine. TECHNOLOGICAL ADVANCES IN COMMUNICATION The Internet is a global system of computer networks that managers around the world use to communicate within and outside their companies. The World Wide Web is the multimedia business district on the Internet. Intranets are internal communication networks that managers can create to improve communication, performance, and customer service. Intranets use the same technology that the Internet and World Wide Web are based on. Groupware is computer software that enables members of groups and teams to share information with each other to improve their communication and performance. COMMUNICATION SKILLS FOR MANAGERS There are various barriers to effective communication in organizations. To overcome these barriers and effectively communicate with others, managers must possess or develop certain communication skills. As senders of messages, managers should send messages that are clear and complete, encode messages in symbols the receiver understands, choose a medium appropriate for the message and monitored by the receiver, avoid filtering and information distortion, include a feedback mechanism in the message, and provide accurate information to ensure that misleading rumors are not spread. Communication skills for managers as receivers of messages include paying attention, being a good listener, and being empathetic. Understanding linguistic styles is also an essential communication skill for managers. Linguistic styles can vary by geographic region, gender, and country or culture. When these differences are not understood, ineffective communication can occur. Chapter 16: Organizational Conflict, Negotiation, Politics, and Change After studying this chapter, you should be able to:

Explain why conflict arises, and identify the types and sources of conflict in organizations. Describe conflict management strategies that managers can use to resolve conflict effectively.

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Describe negotiation strategies that managers can use to resolve conflict through integrative bargaining. Explain why managers need to be attuned to organizational politics, and describe the political strategies that managers can use to become politically skilled. Identify the main steps in the organizational change process. Organizational Conflict Organizational conflict is discord that arises when the goals, interests, or values of individuals are incompatible and they attempt to block one another from achieving their objectives. A. Types of conflict 1. Interpersonal conflict - occurs between workers in an organization because of differences in their goals. 2. Intragroup conflict - arises within the group. 3. Intergroup conflict - occurs between groups. 4. Interorganizational conflict - arises across different organizations. B. Sources of conflict 1. Incompatible goals and time horizons 2. Overlapping authority 3. Task interdependence 4. Incompatible evaluation or reward systems 5. Scarce resources 6. Status inconsistencies C. Conflict management strategies Functional conflict resolution means that the conflict is resolved through compromise. Collaboration resolves conflict by creating a better way to resolve the conflict without making concessions. Strategies focuses on individuals a. Increasing awareness of the sources of conflict b. Increasing diversity awareness and skills c. Practicing job rotation or temporary assignments d. Using permanent transfers or dismissals when necessary 2. Strategies focused on the whole organization a. Creating an organization's structure or culture b. Altering the sources of conflict Negotiation strategies for integrative bargaining 1. Distributive negotiation -- the two parties think that they need to divide up a fixed resources between each other 2. Integrative bargaining - the two parties believe that they can each receive more by creating a new solution to the conflict a. Emphasizing superordinate goals - goals that both parties can agree on b. Focusing on the problem instead of the personalities 1.

I.

D.

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Focusing on interests (why someone wants something) and not demands (what the person wants) d. Creating new options for joint gain e. Focusing on what is fair - distributive justice emphasizes the fair distribution of outcomes based on the contributions that workers make to the organization Organizational Politics Organizational politics are activities that managers perform to increase their power and to use it to achieve their goals. Political strategies are the tactics that managers use to increase their power and to use it to gain the support of other managers. The importance of organizational politics - can often be a positive force Political strategies for increasing power 1. Controlling uncertainty 2. Making oneself irreplaceable 3. Being in a central position 4. Generating resources 5. Building alliances C. Political strategies for exercising power 1. Relying on objective information 2. Bringing in an outside expert 3. Controlling the agenda 4. Making everyone a winner Managing Organizational Change A. Assessing the need for change B. Deciding on the change to make C. Implementing the change D. Evaluating the change A. B.

c.

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ORGANIZATIONAL CONFLICT Organizational conflict is the discord that arises when the goals, interests, or values of different individuals or groups are incompatible and those individuals or groups block or thwart each other's attempts to achieve their objectives. Four types of conflict arising in organizations are interpersonal conflict, intragroup conflict, intergroup conflict, and interorganizational conflict. Sources of conflict in organizations include incompatible goals and time horizons, overlapping authority, task interdependencies, incompatible evaluation or reward systems, scarce resources, and status inconsistencies. Conflict management strategies focused on individuals include increasing awareness of the sources of conflict, increasing diversity awareness and skills, practicing job rotation or temporary assignments, and using permanent transfers or dismissals when necessary. Strategies focused on the whole organization include changing an organization's structure or culture and altering the source of conflict. NEGOTIATION STRATEGIES FOR INTEGRATION BARGAINING Negotiation is a conflict resolution technique used when parties to a conflict have approximately equal levels of power and try to come up with an acceptable way to allocate resources to each other. In distributive negotiation, the parties perceive that there is a fixed level of resources for them to allocate, and they compete to receive as much as possible at the expense of the other party, not caring about their relationship in the future. In integrative bargaining, both parties perceive that they may be able to increase the resource pie by coming up with a creative solution to the conflict, trusting each other, and cooperating with each other to achieve a win-win resolution. Five strategies that managers can use to facilitate integrative bargaining are to emphasize superordinate goals; focus on the problem, not the people; focus on interests, not demands; create new options for joint gain; and focus on what is fair. ORGANIZATIONAL POLITICS Organizational politics are the activities that managers (and other members of an organization) engage in to increase their power and to use power effectively to achieve their goals and overcome resistance or opposition. Effective managers realize that politics can be a positive force that enables them to make needed changes in an organization. Five important political strategies for increasing power are controlling uncertainty, making oneself irreplaceable, being in a central position, generating resources, and building alliances. Political strategies for effectively exercising power focus on how to use power unobtrusively and include relying on objective information, bringing in an outside expert, controlling the agenda, and making everyone a winner. MANAGING ORGANIZATIONAL CHANGE Managing organizational change is one of managers' most important and difficult tasks. Four steps in the organizational change process are assessing the need for change, deciding on the change to make, implementing the change, and evaluating how successful the change effort has been.

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Chapter 17: Managing Information Systems and Technologies After studying this chapter, you should be able to:

Differentiate between data and information, and list the attributes of useful information. Describe three reasons why managers must have access to information to perform their tasks and roles effectively. Describe the computer hardware and software innovations that have created the information technology revolution. Differentiate among five kinds of management information systems. Explain how advances in information systems can give an organization a competitive advantage. Information and the Manager's Job Data are unsummarized facts while information is data that has been organized into meaningful form. Attributes of useful information 1. Quality - accuracy and reliability of the information 2. Timeliness - available when it is needed for managerial decisionmaking 3. Completeness - all the information a manager needs to make a decision 4. Relevance - useful for the manager's needs B. Information systems and technology C. Information and decisions D. Information and control E. Information and coordination The Information Technology Revolution A. The tumbling price of information - the language of computers is a digital language of zeros and ones. B. Wireless communications - there are more than 110 million cell phone subscribers in the U.S. C. Computer networks - a group of interlinked computers D. Software developments 1. Operating system software - tell the computer hardware what to do 2. Applications software - programs developed for a specific task (e.g. spreadsheets, word processing) 3. Artificial intelligence - machine actions that would be called "intelligent" if they were performed by a human being. Types of Management Information Systems A. The organizational hierarchy: the traditional information system B. Transaction-processing systems - designed to handle large volumes of routine transactions A.

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Operations information systems - gather comprehensive data, organize it, and summarize it in a form valuable to managers D. Decision support systems -- interactive computer-based systems that provide models that help managers to make better nonprogrammed decisions. 1. Executive support system - a decision support system that is designed to meet the needs of top managers 2. Group decision support system - links top managers so that they can work as a team E. Expert systems and artificial intelligence -- expert systems - use human knowledge in a computer to solve problems that usually require human expertise IV. The Impact and Limitations of Information Systems and Technology INFORMATION AND THE MANAGER'S JOB Computer-based information A. Information systems and organizational structure systems are central to the operation of most organizations. By providing managers 1. Flattening organizations - MIS reduces the need for tall management with high-quality, timely, relevant, and relatively complete information, properly structures implemented information systems can improve managers' ability to coordinate and 2. Horizontal information flows - e-mail and intranets to share control the operations of an organization and to make effective decisions. Moreover, information information systems can help the organization to attain a competitive advantage B. Information systems and competitive advantage - IT systems can develop a through their beneficial impact on productivity, quality, innovation, and competitive advantage for a company responsiveness to customers. Thus, modern information systems are an indispensable management tool. C. Limitations of information systems - the human aspect of communication may be lost THE INFORMATION TECHNOLOGY REVOLUTION Over the last 30 years there have been rapid advances in the power, and rapid declines in the cost, of information technology. Falling prices, wireless communication, computer networks, and software developments have all radically improved the power and efficacy of computer-based information systems. TYPES OF MANAGEMENT INFORMATION SYSTEMS Traditionally managers used the organizational hierarchy as the main system for gathering the information they needed to coordinate and control the organization and to make effective decisions. Today, managers use four main types of computer-based information systems. Listed in ascending order of sophistication, they are transaction-processing systems, operations information systems, decision support systems, and expert systems. THE IMPACT AND LIMITATIONS OF INFORMATION SYSTEMS AND TECHNOLOGY Modern information systems and technology have changed organizational structure by making it flatter and by encouraging more cross-functional communication. In turn, this has helped organizations achieve a competitive advantage.

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Chapter 18: Operations Management: Managing Quality, Efficiency, and Responsiveness to Customers After studying this chapter, you should be able to:

Explain the role of operations management in achieving superior quality, efficiency, and responsiveness to customers. Describe what customers want, and explain why it is so important for managers to be responsive to their needs. Explain why achieving superior quality is so important. Describe the main features of total quality management. Describe the challenges facing managers and organizations that seek to implement total quality management. Explain why achieving superior efficiency is so important. Differentiate among facilities layout, flexible manufacturing, just-in-time inventory, and process reengineering. Operations Management and Competitive Advantage Operations management deals with transforming inputs into outputs. A. Quality - reliable, dependable, and satisfying goods and services B. Efficiency - the amount of inputs required to produce outputs C. Responsiveness to customers - actions taken to meet the needs of customers Improving Responsiveness to Customers A. What do customers want? 1. A lower price 2. Higher quality goods 3. Quick service 4. Products with many features 5. Products customized to their needs B. Designing production systems that are responsive to customers Improving Quality - high quality products are reliable, dependable, and satisfying A. Total quality management - focuses on improving products in ten steps: 1. Build organizational commitment to quality. 2. Focus on the customer. 3. Find ways to measure quality. 4. Set goals and create incentives. 5. Solicit input from employees. 6. Identify defects and trace them to their source. 7. Introduce just-in-time inventory systems. 8. Work closely with suppliers. 9. Design for ease of manufacture. 10. Break down barriers between functions. Improving Efficiency - the fewer the inputs required, the higher the efficiency of

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the production system A. Facilities layout, flexible manufacturing, and efficiency Facilities layout tries to increase production efficiency by the physical layout of the production process. Flexible manufacturing tries to reduce the setup costs associated with the production system. Facilities layout - the way in which machines and people are grouped together a. Product layout - each operation is performed at a workstation in a fixed sequence (also called mass production) b. Process layout - the product goes to each workstation for the next operation c. Fixed-position layout - the product stays, and the component parts come to it to be assembled 2. Flexible manufacturing - a major production cost is in equipment setup for production Just-in-time inventory and efficiency - raw materials and components arrive in production just when they are needed Self-managed work teams and efficiency - the team produces the entire product Process reengineering and efficiency - radical redesign of the production process to improve performance 1.

B. C. D.

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OPERATIONS MANAGEMENT AND COMPETITIVE ADVANTAGE To achieve high performance, managers try to improve their responsiveness to customers, the quality of their products, and the efficiency of their organization. To achieve these goals, managers can use a number of operations management techniques to improve the way an organization's production system operates. IMPROVING RESPONSIVENESS TO CUSTOMERS To achieve high performance in a competitive environment, it is imperative that the production system of an organization respond to customer demands. Managers try to design production systems that produce outputs that have the attributes customers desire. One of the central tasks of operations management is to develop new and improved production systems that enhance the ability of the organization to economically deliver more of the product attributes that customers desire for the same price. Techniques such as TQM, JIT, flexible manufacturing, and process reengineering are popular because they promise to do this. Managers should carefully analyze the links between responsiveness to customers and the production system of an organization. The ability of an organization to satisfy the demands of its customers for lower prices, acceptable quality, better features, and so on, depends critically on the nature of the organization's production system. As important as responsiveness to customers is, however, managers need to recognize that there are limits to how responsive an organization can be and still cover its costs. IMPROVING QUALITY Managers seek to improve the quality of their organization's output because it enables them to better serve customers, to raise prices, and to lower production costs. Total quality management focuses on improving the quality of an organization's products and services and stresses that all of an organization's operations should be directed toward this goal. Putting TQM into practice requires an organizationwide commitment to TQM, a strong customer focus, finding ways to measure quality, setting quality improvement goals, soliciting input from employees about how to improve product quality, identifying defects and tracing them to their source, introducing just-in-time inventory systems, getting suppliers to adopt TQM practices, designing products for ease of manufacture, and breaking down barriers between functional departments. IMPROVING EFFICIENCY Improving efficiency requires one or more of the following: the introduction of a TQM program, the adoption of flexible manufacturing technologies, the introduction of just-in-time inventory systems, the establishment of self-managed work teams, and process reengineering. Top management is responsible for setting the context within which efficiency improvements can take place by, for example, emphasizing the need for continuous improvement. Functional-level managers bear prime responsibility for identifying and implementing efficiencyenhancing improvements in production systems. Chapter 19: The Management of Innovation, Product Development, and Entrepreneurship

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After studying this chapter, you should be able to:

Explain managers' role in facilitating product development. Identify the factors that shorten the product life cycle, and explain why reducing product development time increases the level of industry competition. Identify the goals of product development, and explain the relationships among them. Explain the principles of product development, and describe the way in which managers can encourage and promote innovation. Describe how managers can encourage and promote entrepreneurship to help create a learning organization. Innovation, Technological Change, and Competition Quantum technological change is a fundamental shift in technology that results in innovation of new kinds of goods. Incremental technological change refines existing technology and leads to gradual product improvements over time. The effects of technological change - offer both an opportunity and a threat Product life cycles and product development - the changes in demand for a product over time 1. Embryonic stage - demand for the product is small 2. Growth stage - demand increases rapidly 3. Mature stage - market demand peaks 4. Decline stage - demand for the product falls Product Development - the process of bringing new products to the marketplace A. Goals of product development - to reduce development time, to maximize the fit to the customers' needs, to maximize product quality, and to maximize the efficiency and ease of production 1. Reducing development time - the time from conception of the product idea to the introduction of the product into the marketplace 2. Maximizing the fit with customer needs - products should be designed with the needs of customers in mind 3. Maximizing product quality - poor quality can result from rushing the product into the marketplace 4. Maximizing manufacturability and efficiency - the production process can either shorten or lengthen the development time needed B. Principles of product development 1. Establish a stage-gate development funnel - a model that forces managers to make choices among competing projects so that the organization is not spread too thin 2. Establish cross-functional teams - managers come from different functional departments into a team 3. Use concurrent engineering - simultaneous design of the product A. B.

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and of the manufacturing process to be used to make the product 4. Involve both customers and suppliers C. Problems with product development - its track record is relatively poor Entrepreneurship Entrepreneurs notice opportunities in the marketplace and take responsibility for producing new products. Intrapreneurs are existing employees who notice opportunities and take responsibility for product development. Entrepreneurship and new ventures 1. Characteristics of entrepreneurs a. High openness to experience and internal locus of control b. High self-esteem and high need for achievement 2. Entrepreneurship and management - they are not the same thing INNOVATION, TECHNOLOGICAL CHANGE, AND COMPETITION The high 3. Developing a plan for a new business - the purpose of a business level of technological change in today's world creates new opportunities for managers plan is to guide the development of a new business to market new products but can destroy the market for older products. Rapid B. Intrapreneurship and organizational learning technological change and changing fads and fashions can shorten product life cycles. 1. Product champions - take ownership of a project and lead it from the The shorter a product life cycle is, the greater is the importance of product idea stage to the marketplace. development as a competitive weapon. 2. Skunkworks and new venture divisions - a team of intrapreneurs who spend all of their time developing new products PRODUCT DEVELOPMENT Successful product development requires managers to pursue four goals: reducing development time and maximizing the product's fit with 3. Rewards for innovation - bonuses, stock options customer needs, its quality, and its manufacturability. To meet these goals, managers should follow four principles of product development: (1) establish a structured stagegate development funnel for evaluating and controlling different product development efforts; (2) establish cross-functional teams composed of individuals from different functional departments, and give each team a leader who can rise above his or her functional background; (3) use concurrent engineering, the simultaneous design of the product and of the process for manufacturing the product, to reduce development time and increase manufacturability and product quality; (4) involve both customers and suppliers in the development process. ENTREPRENEURSHIP Entrepreneurship is the mobilization of resources to take advantage of an opportunity to provide customers with new or improved goods and services. Entrepreneurs find new ventures of their own. Intrapreneurs work inside organizations and manage the product development process. Organizations need to encourage intrapreneurship because it leads to organizational learning and innovation. A.

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