Follett's Management: Decision Making, Employee Empowerment, and Compensation - Prof. Tina, Study notes of Introduction to Business Management

Download Follett's Management: Decision Making, Employee Empowerment, and Compensation - Prof. Tina and more Study notes Introduction to Business Management in PDF only on Docsity! Chapter 1- The exceptional manager. 1.1 Management: What it is, what its Benefits are. Three qualities that brought Judy McGrath to the top were. A strong sense of community, she was smart// lucky when choosing good people. Perseverance. If you really want something you got to hang in there, this is undervalued. Creating an environment where failure is accepted. Falling flat is a great motivator, so is accident. Two important roles in the McGrath playbook are make change part of your DNA and Companies don’t innovate, people do. The Art of Management Defined. Management is the art of getting things done through people- Pioneer of management. Organization- a group of people who work together to achieve some specific purpose. Management- 1) the pursuit of organization goals efficiently and effectively by integrating the work of people through planning, organizing, leading, and controlling the organization’s resources. Efficiency- The means- To be efficient means to use resources- people, money, raw materials, and the like—wisely and cost effectively. Effectiveness- the ends. To be effective means to achieve results, to make the right decisions and to successfully carry them out so that they achieve the organization’s goals. Why organizations value managers: The multiplier effect. Much has been accomplished by people working individually, but more has been done through managers and groups. Top ten buildings in the world were built by more than one person. Good managers create value. This is due to the multiplier effect: your influence on the organization is multiplied far beyond the results that can be achieved by just one person acting alone. The greatest shortage of all is skilled effective managers. Financial Rewards of being a star manager. At the lower rungs of society, managers make between 25 and 50 thousand dollars. In the middle levels between 35 and 110 thousand dollars. There are also benefits and rewards that go with being a manager. These can range from health insurance to stock options to large offices. The higher your ascend tin the management hierarchy, the more privileges may come your way, personal parking space, better furniture, lunch in the executive dining room. The highest achieve personal company cars and private jets. What are the rewards of studying and practicing management? The rewards of studying management. You will understand how to deal with organizations from the outside. This allows us to help understand how organizations work and how the people in them make decisions, which allows defensive decisions to be made. You will understand how to relate to your supervisors. You’ll understand how your boss makes decisions and how they will respond to you. You will understand how to deal with co-workers. Management policies in play can affect how your co workers behave. Management can give you the understanding of teams, teamwork, cultural differences, conflict and stress, and negotiation and communication skills that will help you better understand your co-workers. You will understand how to manage yourself in the workplace. Management allows you to realize insights about yourself, your personality, emotions, values, perceptions, needs, and goals. We help you build your skills in areas such as self-management, listening, handling change, managing stress, avoiding groupthink, and coping with organization politics. The Rewards of practicing management You and your employees can experience a sense of accomplishment. Every goal achieved provides satisfaction to the all the employees who helped accomplished it. You can stretch your abilities and magnify your range. Every promotion up the hierarchy of an organization stretches your abilities, challenges your talents and skills, and magnifies the range of your accomplishments. You can build a catalog of successful products or services. Every product or service you provide- the personal Eiffel tower or empire state building you build, as it were—become a monument to your accomplishments. Indeed studying management may well help you in running your own business. Odette pollar, owner of Time management systems believes managers are able to view the business in a broader contest, to plan and grow personally. Manager can play more of a leadership role the implementing of systems and practices to increase the sharing of knowledge and information throughout an organization Challenge #5: managing for ethical standards. Ethical standards is the way we conduct ourselves at work, how much gifts should we give in order to land the deal, how much leeway should our employees have with knocking our competition. Ethical behavior is not just a nicety; it is a very important part of doing business. Not since sociologist Edwin Sutherland invented the term “white-collar crime” in the 1930’s were so many top level executive being hauled into court. Challenge #6: Managing for your own happiness & life goals. One must assess the correlation between happiness and meeting the organization’s challenges. Many people don’t find being a manager fulfilling. In the end, however, recall what Odette Pollar said: “if you truly like people and enjoy mentoring and helping other to grow and thrive, management is a great job.” “One’s experience in management is greatly affect by the company’s culture” 1.3 What managers do: The four principal functions? The management process (four management functions): planning, organizing, leading, and controlling. Planning: Discussed in part 3 of this book. Planning: setting goals and deciding how to achieve them. Organizing: Discussed in part 4 of this book. Organizing: defined as arranging tasks, people and other resources to accomplish the work. Leading: discussed in Part 5 of this book. Leading- motivating, directing and otherwise influencing people to work hard to achieve the organizations goals. Controlling: discussed in part 6 of this book. Controlling: Monitoring performance, comparing it with goals, and taking corrective action as needed. 1.4 Pyramid Power: levels and Areas of management. The workplace of the future may resemble a symphony orchestra, famed management theorist Peter Drucker said. The Traditional Management Pyramid: levels and areas. The picture that is drawn applies to all different kinds of organizations and describes them in ways the make sense. Three levels of Management Top managers- The top of pyramid, these jobs include titles such as CEO, COO, president, senior vice president. Top managers- make long-term decisions about the overall direction of the organization and establish the objectives, policies, and strategies for it. Middle management. Middle managers: implement the policies and plans of the top managers above them and supervise and coordinate the activates of the first-line manager below them. Titles include clinic director, dean of student services etc. their salaries may range from under 50$K to 110$K a year. First line management Supervisor is the name generally given to first-line mangers. Following the plans of middle and top managers, First line managers make short-term operating decision, directing the daily tasks of non-managerial personal. Areas of management- functional managers vs. general managers. Organizations are run by two types of managers, functional and general. These departments, in a profit organization might be Research and dev. Marketing, finance, production. In a non-profit they are, Faculty, student support staff, finance. A functional manager- responsible for just one organizational activity. A general manager- responsible for several organizational activities. Managers for three types of organizations: For-profit, nonprofit, mutual benefit. For profit organizations: for making money Organizations are formed to make money, or profits, by offering products or services. Nonprofit Organizations: for offering services Managers in non-profit organizations are often known as “administrators: Nonprofit organizations may be either in the public sector, such as public university, or a private sector, in a private college. Their purpose is to offer a service, not to make a profit. One particular type of nonprofit organization is a commonweal organization- an organization that offers services to all clients within their jurisdictions. (The army, the fire and police forces) Mutual benefits organizations: for aiding members. Voluntary collections of members- political parties, farm cooperatives, labor unions, trade associations, and clubs, who purpose is to advance members’ interests. Do managers manage differently for different types of organizations? Key differences- In a profit organization, success is measured in profit, in a nonprofit success is measures in the effectiveness of the services delivered. 1.5 Roles managers must play successfully. The Managers roles: Mintzberg’s useful findings. Henry Mintzberg’s- shadowed five chief executives around for a week and record their working lives. “There was no break in the pace of activity during office hours” “the mail, (36 pieces per day) telephone calls (5 per day) and meetings ( 8 per day) accounted for almost every minute from the moment these executives entered their offices in the morning until they departed in the evening” Mintzberg. Mintzberg’s findings A manager relies more on verbal than on written communication Spoken word was the choice of communication, but with email, spoken work and email go hand in hand. Manager works long hours at an intense pace. “A true break seldom occurred” wrote Mintzberg’s about his subjects. Coffee was taking during meetings, and lunchtime devoted to meetings. Long hours are not unheard of, with 50 hours being typical, and 90 hours not unheard of. John Kotter found that general managers worked an average 60 hours per week. There is a correlation between working longer hours and earning more money. A Managers work is characterized by Fragmentation, Brevity, and Variety. This applies more so to entrepreneurs. Not all entrepreneurs have faith in themselves. Necessity entrepreneurs are people who were laid off trying to make an income. They make up 11% of the entrepreneurs. Opportunity entrepreneurs the other 89% are those who start their burning desire rather than because they lost their job. 1.7 The skills star managers need. Robert Katz found that through education and experience managers acquire three principle skills- technical, conceptual, and human. Technical skills- the ability to perform a specific job Technical skills consist of the job-specific knowledge needed to perform well in a specialized field. This is important in the lower levels of management- that is among first line managers. Conceptual Skills- the ability to think analytically. Conceptual skills consist of the ability to think analytically, to visualize an organization as a whole and understand how the part works together. - This is important for top managers. Human skills- The ability to interact well with people. The most difficult set of skills to master. Human skills consist of the ability to work well in cooperation with other people to get things done. This is a necessary for managers of all levels. The Most value traits in managers. The ability to motivate and engage others. The ability to communicate Work experience outside the United States. High energy levels to meet the demands of global travel and a 24/7 world. Chapter 2, Management Theory 2.1 Evolving Viewpoint: How we got today’s management outlook. “The best way to predict the future is to create it”- Pete drucker. Peter Drucker was the creator and inventor of modern management- Tom peters. Drucker was an Austrian trained in economics and international law. In 1954 he published the practice of management, in which he proposed that management was one of the major social innovations of the 20th century, Evidence-based management. Evidence based management- translating principles based on best evidence into organization practice; bring rationality to the decision-making process. Jeffery Pfeffer and Robert Sutton- evidence based management is based on the belief that “facing the hard face about what works and what doesn’t, understanding the dangerous half-truths that constitute so much conventional wisdom about management, and rejecting the total nonsense that too often passes for sound advice will help organizations perform better. Two overarching perspective of Management. Historical- includes three viewpoints, classical, behavioral, and quantitative. Contemporary- systems, contingency, and quality-management. Five practical reasons for studying this chapter Understanding the present. Understanding history will help you understand why some practices are still favors, whether for right or wrong reasons. Guide to action. Good theories help us make predictions and enable you to develop a set of principles that will guide your actions. Source of new ideas. It can also provide new ideas that may be useful to you when you come up against new situations Clues to meaning of your managers’ decisions. Helps you understand where the top managers are coming from. Clues to meaning of outside events. Helps you understand events outside of the organization that could affect you. 2.2 Classical viewpoint: scientific and administrative management. Therblig- phrase coined by Frank Gilbreth, its gilbreth spelled backwards with the T and H reversed. It refers to 1 of the 17 basic motions. The Gilbreths were a husband wife team of industrial engineers who were pioneers in one of the classical approach to management, part of the historical perspective. Three historical perspectives are- Classical, Behavioral, and Quantitative. The classical Viewpoint- emphasized finding ways to manage work more efficiently. It has two branches. Scientific and administrative. Classical management assumes that people are rational. Scientific Management: Pioneered by Taylor and gilbreths. Scientific Management- emphasized the scientific study of work methods to improve the productivity of individual workers. Two chief proponents were Frederick Taylor and the team of Frank and Lillian Gilbreth. Fred Taylor and the four principles of scientific Management. Taylor called under achieving and loafing- soldering. Taylor was known as the father of scientific management, he was an engineer from Philadelphia. He believed that soldering could be eliminated by four principles of science: 1) Evaluate a task by scientifically studying each part of the task 2) Carefully select workers with the right abilities for the task 3) Give workers the training and incentives to do the task with proper work methods 4) Use scientific principles to plan the work methods and ease the way for workers to do their jobs. Taylor based his system on motions studies- finding the best performing motions to increase productivity. Differential system- more efficient workers earned higher wages. Taylor is important because his principles can enhance productivity and innovations as motion and differential are still used today. Frank and Lillian Gilbreth and Industrial engineering. They built upon and expanded Taylor’s motion studies, in one instance using movie cameras to film works at work in order to isolate the parts of a job. Lillian had a PHD in psychology and was the first woman to contribute majorly to management science. Administrative Management: Pioneered by Fayol and Weber. Scientific management is concerned with the jobs of individuals. Administrative management is concerned with managing the total organization. The Pioneering theorists were Henri Fayol and Max Weber. Fayol was a French engineer and industrialist, he became known to American business when his most important work, general and industrial management, was translated into English in 1930. Theory X- a pessimistic, negative view of workers, in this view workers are considered irresponsible, to be resistant to change, to lack ambition and hate work. Want to be led then lead. Theory Y represents the human relations proponents. An optimistic, positive view of workers. This has workers capable of accepting responsibility, self direction, and self control and of being imaginative and creative. These theories are important because helps a manager avoid falling into the trap of the self- fulfilling prophecy. If a manager assumes an employee will act a certain way and the employee does, then his prophecy has been fulfilled. Behavior science Approach Behavior science- relies on scientific research for developing theories about human behavior that can be used to provide practical tools for managers. 2.4 Quantitative View points: Management science and operations research. (OR) operations- operations research used by the Americans in World War II on how deploy their forces most efficiently. These evolved into quantitative management. Quantitative management- the application to management of quantitative techniques, such as statistics and computer simulations. Two branches of Quantitative management are management science and operations management. Management Science: Using Mathematics to Solve Management Problems. Management science- focuses on using mathematics to aid in problem solving and decision making. - Also called operations research. Why management science is important- it stresses the use of rational, science based techniques and mathematical models to improve decision making and strategic planning. Operations Management: helping organizations deliver products or services more effectively. A less sophisticated version of management science, operations management focuses on managing the production and delivery of an organizations products or services more effectively. It is concerned with production planning, facilities location and design and decisions about the optimum levels of inventory a company should maintain. Why is operations management important? It helps make sure that business operations are efficient and effective thought the rational management of resources and distribution of goods. 2.5 Systems Viewpoint Contemporary perspective consists of three viewpoints. Systems Contingency Quality-management. The Systems Viewpoint A system- a set of interrelated parts that operate together to achieve a common purpose Systems viewpoint- regards the organization as a system of interrelated parts. By adopting this point of view, you can look at your organization both a Subsystem- parts making up the whole system and part of a larger environment. Example is a college, consists of faculty students etc, but also as a system outside of environment and has to be responsive to parents, alumni, legislators nearby town’s people and so on. The four parts of a system. Inputs- are the people, money, information, equipment, and materials required to produce an organizations goods or services. Outputs are the products, services, profits, losses, employee satisfaction or discontent, and the like that are produced by the organization. Transformation processes are the organizations capabilities in management and technology that are applied to converting inputs into outputs. Feedback is information about the reaction of the environment to the outputs that affects the inputs. Open and closed systems Nearly all organizations are, at least to some degree open systems rather then closed systems. An open system continually interacts with its environment. A closed system has little interaction with its environment; that is, it receives very little feedback from the outside. Why the systems viewpoint and the concept of open systems is important. The use of system viewpoints allows both inside and outside feedback on products to ensure that old mistakes are corrected and to avoid new ones. 2.6 contingency viewpoints. The contingency viewpoint- emphasizes that a manager’s approach should vary according to— that is, be contingent on--- the individual and the environmental situation. Manager following this2 view asks which method is best under the circumstances. It’s important because it addresses each problem on a case by case basis and varies the solution accordingly. 2.7 quality management viewpoint Quality management viewpoint- includes quality control, quality assurance, and total quality management. Quality Control and Quality Assurance Quality refers to the total ability of a product or service to meet customer needs. One of the most important ways of adding value to produces and services. Quality control- defined as the strategy for minimizing errors by managing each stage of production- developed by Walter Shewart. Quality Assurance- focuses on the performance of workers, urging employees to strive for “zero defects” Total Quality Management: Creating an organization dedicated to continuous improvement W. Edwards Deming and Joseph M. Juran. Deming 85% system is at fault, 15% worker is at fault. Juran Defined quality as “fitness for use” TQM: What is it? TQM- Total quality management is a comprehensive approach—led by top management and supported throughout the organization—dedicated to continuous quality improvement, training, and customer satisfaction. Managers operate in two organizational environments, consisting of two types of stakeholders, Internal and external. Internal stakeholder Internal stakeholders consist of employees, owners, and the board of directors, if any. Employees are considered to be stockholders, managers, partners in cutting-edge kinds of companies. Owners Owners of an organization consist of all those who can claim it as their legal property. Board of Directors. Elected by stockholders to oversee that the company is running smoothly. 3.2 The community of stakeholders outside the organization External stakeholders- people or groups in the organization’s external environment that are affected by it Consists of the task and general environment. Task environment The task environment consists of 11 groups that present you with daily tasks to handle: customers, competitors, suppliers, distributors, strategic allies, employee organizations, local communities, financial institutions, government regulators, special-interest groups, and mass media. 1) Customers. First law of business is taking care of customer. Customers are those who pay to use an organizations goods or services 2) Competitors- people or organizations that compete for customers or resources. 3) Suppliers- A supplier is a person or an organization that provides supplies—that is, raw materials, services, equipment, labor, or energy—to another organization. 4) Distributors- A distributor is a person or an organization that helps another organization sell its goods and services to customers. 5) Strategic allies- describes the relationship of two organizations who join forces to achieve advantages neither can perform as well alone. 6) Employee organizations: unions and associations- no longer are they having strikes and violence; they are more focused on benefits, stock ownership, and campaigns for living wage. 7) Local communities- Local communities depend on the corporation for its tax base. It provides financial support to the community. 8) Financial institutions- Credit unions such as banks, insurance companies, investment banks that help out companies when revenue is down or to finance expansion. 9) Government Regulators- regulatory agencies that establish ground rules under which organizations operate. They are external stake holders because the relationship they hold is mutual, if a company wants to produce more products, and then the government will have to purchase more testers to make sure the product is approved. 10) Special interest groups- groups who members try to influence specific issues. The way a business conducts itself may have special groups- mothers against drunken driving etc at its door boycotting the product. 11) Mass Media- an incident will receive global coverage due to the increase in media technology; therefore a business must conduct itself in a safe manner. The General Environment General environment or (Macro-E) includes six forces: economic, technological, sociocultural, demographic, political-legal, and international. 1) Economic forces- consist of the general economic conditions and trends- unemployment, inflation, interest rates, economic growth, that may affect an organizations performance. 2) Technological forces- are new developments in methods for transforming resources into goods or services. 3) Sociocultural forces-are influences and trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect an organization. 4) Demographic forces- influences on an organization arising from change in the characteristics of a population, such as age, gender, or ethnic origin. 5) Political legal forces- changes in the way politics shape laws and laws shape the opportunities for and threats to an organization. 6) International Forces- changes in the economic, political, legal, and technological global system that may affect an organization. 3.3 The Ethical responsibilities required of you as a manager. Ethical dilemma- a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal. Defining ethics and Values. 73% of employees have seen ethical misconduct at work, and 36% have been distracted by it. Ethics- The standards of right and wrong that influence behavior. Ethical behavior is behavior that is accepted as “right” as opposed to “wrong” according to those standards. Values- the relatively permanent and deeply held beliefs and attitudes that help determine a person’s behavior. Value system- the pattern of values with an organization Four approaches to deciding ethical dilemmas 1) The Utilitarian approach: for the greatest good. This approach is guided by what will result in the greatest good for the greatest number of people. 2) The individual approach- for your greatest self-interest long term, which will help others. This is guided by what will result in the individual’s best long-term interests, which ultimately are in everyone’s self-interests. 3) The Moral-rights approach- Respecting fundamental rights shared by everyone- this is guided by respect for the fundamental rights of human beings. 4) The justice approach: respecting impartial standards of fairness- guided by respect for impartial standards of fairness and equity. Enron, SarbOx and Ethical Training. Public outrage and Sarbanes-Oxley reform act Sar-Oxley reform act of 2002- known as Sarbox or SOX establishes requirements for proper financial record keeping for public companies and penalties for non-compliance. How do people learn ethics- Kohlberg’s theories? He proposed three levels of personal moral development 1) Pre-conventional- follows rules. 2) Conventional- follows expectations of others. 3) Post conventional- guided by internal values. How organizations can promote ethics Support by top managers of a strong ethical climate. Race and Ethnicity: More minorities are working in the work force. There is an increase in illegal’s and an unspoken glass ceiling for minorities as well. Sexual orientation- Gays and lesbians become more visible. Gay employees tend to suffer more stress and also have to deal with a lower income per dollar. People with differing physical and mental abilities, American’s with disabilities act- prohibits discrimination against the disabled. Educational levels: mismatches between education and workforce needs. Under-employed- working at jobs that require less education than they have. High school dropout and others may not have the literacy skills needed for many jobs. Barriers to diversity Stereotypes and Prejudices: Ethnocentrism is the belief that one native country culture language abilities or behavior is superior to those of another culture. Fear of Reverse Discrimination- the minorities will achieve promotions over whites due to increase in diversity Resistance to diversity program priorities Unsupportive social atmosphere Lack of support for family demands. Lack of support for Career-building steps. Chapter 4 Globalization: The collapse of time and distance. Globalization- The trend of the world economy toward becoming a more interdependent system. The rise of the “global Village” and electronic commerce From transport to communication- increase in the technological means of communicating. Global village- Shrinking of time and space as air travel and electronic media have made it easier for people of the globe to communicate with one another. The Net, the Web, and the World- an increase in business due to the internet and E commerce. E-commerce- or electronic commerce, the buying and selling of products and services through computer networks. One Big World Market: The Global Economy. Global economy refers to the increasing tendency of the economies of the world to interact with one another as one market instead of many national markets. Positive effects. Medium to long term benefits are beneficial to everybody. Negative effects. Financial crises can affect the world, Housing market crisis in America is an example. Outsourcing occurs. Cross-border business: the rise of both megamergers and Minifirms worldwide. – Two types of company’s huge mergers into even larger companies, and small fast moving startup companies. Megamergers operating worldwide- corporations are trying to get bigger and cross border Minifirms operating worldwide: two important results. 1) Small companies can get started more easily 2) Small companies can maneuver faster. 4.2 You and the international Management. Why learn about international Management? – It’s management overseeing corporations overseas. Multinational Corporation, or multinational enterprise, a business firm with operations in several countries. Multinational Organization is a nonprofit organization with operations in several countries. You may deal with foreign customers or partners. Knowing the practices of business in a foreign country is key in order to be successful You may deal with foreign suppliers- knowing the practices of business is key again. You may work for a foreign firm in the united states- knowing the way companies are run in foreign countries results in better relations. You may work for an American firm outside the united state- or for a foreign one. The successful international manager: Geocentric, not ethnocentric or polycentric. Ethnocentric managers, “we know best” Ethnocentric managers believe that their native country, culture, language, and behavior are superior to all others. Parochialism- a narrow view in which people see things solely through their own perspective. Polycentric Managers- “they know best” Polycentric managers take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone. Geocentric Managers-“what’s best is what’s effective, regardless of origin” Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective. 4.3 Why and how companies expand internationally. Why companies expand internationally. Availability of supplies New Markets. Lower labor costs Maquiladoras- manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens. Access to Finance Capital Avoidance of Tariffs and Important Quota’s. How companies expand internationally. Global outsourcing Outsourcing is defined as using suppliers outside the company to provide goods and services. CAFTA- Seven countries of central America- the newest trade agreement you’ll hear about. Includes United States, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. Most favored Nation trading Status Most favored nation trading status describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties. 4.5 The importance of understanding cultural differences. Culture- a shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people. Cultural dimensions: The Hofstede and Globe Project Models Low context culture- shared meanings are primarily derived from written and spoken words. High context culture- in which people rely heavily on situation cues for meaning when communicating. Hofstede’s model of four cultural Dimensions. Individualism//collectivism—how loosely or tightly are people socially bound. Power distance- how much do people accept inequality in power Uncertainty avoidance- how strongly do people desire certainty. Masculinity/Femininity- how much do people embrace stereotypical male or female traits. Globe projects nine cultural dimensions. Power distance- how much unequal distribution of power should there be in organizations and society Uncertainty avoidance- how much should people rely on social norms and rules to avoid uncertainty. Institutional collectivism- how much should leaders encourage and reward loyalty to the social unit. In-group collectivism- how much pride and loyalty should people have for their family or organization Gender Egalitarianism- how much should society maximize gender role differences. Assertiveness- how confrontational and dominant should individuals be in social relationships Future orientations- how much should people delay gratification by planning and saving for the future. Performance orientation—how much should individuals be rewards for improvement and excellence. Humane Orientation- how much should society encourage and reward people for being kind, fair, friendly, and generous. Monochronic time- preference for doing one thing at a time Polychronic time- preference for doing multiple things at a time. Expatriates- people living or working in a foreign country. Chapter 5 Chapter 5.1 Planning and Uncertainty. Planning- setting goals and deciding on how to achieve them. Planning- coping with uncertainty by formulating future course of action to achieve specified results. Planning and strategic management Why not plan? Planning requires you to set aside the time to do it. You may have to make some decision without a lot of time to plan. How planning help you: four benefits. Planning helps you check your progress Planning helps you coordinate activities. Planning helps you think ahead. Planning helps you cope with uncertainty. How Organizations respond to Uncertainty. Four basic Strategy types- Raymond Miles and Charles Snow Defenders- let’s stick with what we do best, avoid other involvements Defenders are expert at producing and selling narrowly defined products and services. Prospectors- lets create our own opportunities, not wait for them to happen Prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen. Analyzers- let others take the risks of innovating and we’ll imitate what works best. Analyzers let other organizations take the risks of product development and marketing and then imitate, or improve slightly, on what seems to work best. Reactors- Let’s wait until there’s a crisis, then we’ll react. Reactors make adjustments only when finally forced to by environmental pressures. Adaptive cycle- entrepreneurial- engineering- administrative. 5.2 Fundamentals of planning. Mission and vision statements The mission statement- What is our reason for being. An organizations “mission” is its purpose or reason for being. Mission statement- expresses the purpose of the organization. Vision statement- what do we want to become? A vision is a long term goal describing what an organization wants to become. It is a clear sense of the future and the actions needed to get there. Vision statement- expresses what the organization should become, where it wants to go strategically. Three types of planning for three levels of management: Strategic, Tactical, Operational. Strategic planning by top management Strategic planning- they determine what the organizations long term goals should be for the next 1-5 years with the resources they expect to have available. Target dates- should specify when the due dates are. 5.4 The planning control cycle The planning control cycle has two planning steps and two control steps, it goes as follows, one make the plan, two carry out the plan, 3 control the direction by comparing results with the plan, 4, control the direction by taking corrective action in two ways- correcting deviations in the plan and improving future plans 5.5 Project Planning- Project planning is the preparation of single use plans or projects. This is followed by Project management- achieving a set of goals through planning, scheduling, and maintaining progress of the activities that compromise the project. Skunk works- a term given to a project team who members are separated from the normal operation of an organization and asked to produce a new, innovative product. The Project life cycle: Predictable evolution of a project. A Project life cycle has four stages from start to finish- definition, planning, execution, closing. Definition stage you look at the big picture Planning stage you consider the details needed to make the big picture happen. Execution stage is the actual work stage. Closing state occurs when the project is accepted by the client. CHAPTER 6 Business plan- a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success -embody a firm’s strategy -Brian allman didn’t have a big picture Strategy- a large-scale action plan that sets the direction for an organization -an educated guess about what must be done in the long term for the survival or the prosperity of the organization. “find out what customers want, then provide it to them as cheaply and quickly as possible” – wall mart strategy Strategic management- a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals Strategic planning- determines not only the organization’s long-term goals for the next 1-5 years regarding growths and profits but also the ways the organization should achieve them Why strategic management and planning are important - Provide direction and momentum - Encourage new ideas - Above all, develop a sustainable competitive advantage- occurs when an organization is able to get and stay ahead in four areas: in being responsive to customers, in innovating, in quality, and in effectiveness. Michael Porter, Harvard business school professor.”single most important strategist working today and maybe of all time” -most influential living strategist, by the strategic management society Poter said, strategic positions- attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. “it means performing different activities from rivals, or performing similar activities in different ways” Three Key principles of Strategic management 1. Strategy is the creation of a unique and valuable position Strategic position emerges from-few needs, many customers. Broad needs, few customers. Broad needs many customers 6.2 Five steps of the Strategic-Management process 1. Establish the mission and vision -good mission statement- states the organization’s purpose or reason for being -good vision statement- describes long-term direction and strategic intent (PAGE 175) 2. Establish the grand strategy- explains how the organization’s mission is to be accomplished Three common grand strategies i. Growth strategy- a grand strategy that involves expansion—in sales revenues, market share, number of employees, or number of customers or (for non profits) clients served ii. Stability Strategy- a grand strategy that involves little or no significant change iii. Defensive strategy- (retrenchment)- is a grand strategy that involves reduction in the organization’s efforts. 3. Formulate strategic plans- determine what the organization’s long-term goals should be for the next 1-5 years. Should include general goals and how to be achieved. Should be SMART too. -strategy formulation- the process of choosing among different strategies and altering them to best fit the organization’s needs. 4. Carry out the strategic plans- Strategic implementation- putting strategic plans into effect. 5. Maintain strategic control- consists of monitoring the execution of strategy and making adjustments, if necessary - to keep a strategic plan on track= engage people, keep it simple, stay focused, keep moving. (towards your vision of the future) 6.3 2. Growth stage- the most profitable stage, is the period in which customer demand increases, the product’s sales grow, and (later) competitors may enter the market 3. Maturity stage- the period in which the product starts to fall out of favor and sales and profits begin to fall off (must reduce cost and institute efficiencies to maintain product’s profitability) 4. Decline stage- the period in which the product falls out of favor and the organization withdraws from the marketplace. Single-product strategy- a company makes and sells only one product within its market. -benefit = focus, risk= vulnerability Diversification- operating several businesses in order to spread the risk - Unrelated diversification- operating several businesses under one ownership that are not related to one another (Gen Elect… has gone into broadcasting and financial services) - Related diversification- an organization under one ownership operates separate businesses that are related to one another (grocery store) - Related diversification advantages - Reduced risk- because it’s more than one product - Management efficiencies- administration spread over several businesses - Synergy- the sum is greater than the parts (PepsiCo, markets pepsi cola and mountain dew) Synergy- the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately Competitive intelligence- gaining information about one’s competitors’ activities so that you can anticipate their moves and react appropriately -The public prints and advertising, Investor information, Informal sources 6.5 Larry Bossidy, Ceo of alliedsignal, and ran charan, are authors of the discipline of getting things done.. they say execution is- not simply tactics, it is a central part of any company’s strategy; it consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised. Three core processes of business -a company’s overall ability to execute is a function of effectively executing in terms of its people processes, strategic processes, and operational processes. PEOPLE PROCESS ACCORDING TO BOSSIDY AND CHARAN IS MOST IMPORTANT The first core process: People - If you don’t get the people process right, you will never fulfill the potential of your business- bossidy and charan - An effective leader tries to evaluate talent by linking people to particular strategic milestones, developing future leaders, dealing with the nonperformers, and transforming the mission and operations of the human resources department The second core process: Strategy -most strategies fail to consider the “how of execution” -a leader must take a realistic and critical view of its capabilities and competencies A strong strategic plan must ask (PAGE 191) Third core process: Operations Defines where an organization wants to do, and the people process defines who’s going to get it. -provides the path for people to follow, should address all major activities in which the company will engage Managers are advised to engage in: Know your people & your business, Insist on realism, set clear goals & priorities, Follow through, Reward the doers, Expand people’s capabilities, know yourself CHAPTER 7 Decision - A choice made from among available alternatives Decision making – The process of identifying and choosing alternative courses of action Identifying and sorting out alternatives Risk Propensity – The willingness to gamble or to undertake risk for the possibility of gaining an increased payoff  Another name for this is competitiveness  Women seem to shy away from competition; men seem to enjoy it too much Decision-making style – reflects the combination of how an individual perceives and responds to information Styles vary along to different dimensions 1. Value orientation – reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions 2. Tolerance for ambiguity – indicates the extent to which a person has a high need for structure or control in his or her life Directive – people with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions. They are efficient, logical, practical, and systematic in their approach to solving problems. They are action oriented and decisive and like to focus on facts. They tend to be autocratic, to exercise power and control, and to focus on the short run. Analytical- Much higher tolerance for ambiguity. Characterized by the tendency to overanalyze a situation. They like to consider more information and alternatives. They are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations. Conceptual- High tolerance for ambiguity. Focus on social aspects of a work situation. They take a broad perspective to problem solving and like to consider many options and possibilities. Adopt a long- term perspective and rely on intuition and discussions with others to acquire information. They are willing to take risks and are good at finding creative solutions to problems. However, a conceptual style can foster an indecisive approach to decision making. Behavioral- Most people oriented of the four styles. Work well with others and enjoy social interactions in which opinions are openly exchanged. Receptive to suggestions. Prefer verbal to written information. Have a tendency to avoid conflict and to be concerned about others. This can lead to behavioral types to adopt a wishy-washy approach to decision making and to have a hard time saying no. Very few people have only one decision-making style.  Knowledge of styles helps you to understand yourself.  You can increase your ability to influence others by being aware of styles.  Knowledge of styles gives you an awareness of how people can take the same information and yet arrive at different decisions by using a variety of decision-making strategies. Stems from Expertise- a person’s explicit and tacit knowledge about a person, situation, object, or decision opportunity. Which is known as a holistic hunch Benefits of intuition: 1. Can speed up decision making, useful when deadlines are tight 2. It can be helpful to managers when resources are limited You must convince others that your hunch makes sense. 7.3 Jeffrey Pfeffer and Robert Sutton say that too many managers make decisions based on beliefs in what ought to work rather than what actually works. Evidence-Based Decision Making - The translation of principles based on best evidence into organizational practice Seven implementation principles 1. Treat your organization as an unfinished prototype 2. No brag, just facts 3. See yourself and your organization as outsiders do 4. Evidence-Based management is not just for senior executives 5. Like everything else, you still need to sell it 6. If all else fails, slow the spread of bad practice 7. The best diagnostic question: what happens when people fail? What makes it hard? 1. There’s too much evidence. 2. There’s not enough good evidence. 3. The evidence doesn’t quite apply. 4. People are trying to mislead you. 5. You are trying to mislead you. 6. The side effects outweigh the cure. 7. Stories are more persuasive anyway Purest application of evidence-based management is the use of Analytics Analytics- the term for sophisticated forms of business data analysis Three Key attributes among analytics competitors 1. The use of modeling: Going beyond simple descriptive statistics Predictive Modeling- a data mining technique used to predict future behavior and anticipate the consequences of change. 2. Having multiple applications, not just one 3. Support from the top 7.4 Ethics officer- someone trained about matters of ethics in the workplace, particularly about resolving dilemmas. Decision Tree- A graph of decisions and their possible consequences; it is used to create a plan to reach a goal. When confronted with any proposed action for which a decision is required, a manager should ask: 1. Is the proposed action legal? 2. If “yes,” Does the proposed action maximize shareholder value? 3. If “yes,” Is the Proposed Action Ethical? 4. If “No,” Would it be ethical not to take the proposed action? General Moral Principles for Managers 1. Dignity of Human life: The lives of people are to be respected 2. Autonomy: All persons are intrinsically valuable and have the right to self- determination 3. Honesty: The truth should be told to those who have a right to know it 4. Loyalty: Promises, contracts, and commitments should be honored 5. Fairness: People should be treated justly 6. Humaneness: 1. Our actions ought to accomplish good 2. We should avoid doing evil 7. The common good: Actions should accomplish the “greatest good for the greatest number” of people 7.5 Advantages of Group Decision Making - Greater pool of knowledge - Different perspectives - Intellectual stimulation - Better understanding of decision rationale - Deeper commitment to the decision Disadvantages of Group Decision making - A few people dominate or intimidate - Groupthink- when group members agree for the sake of unanimity and thus avoid accurately assessing the decision situation - Satisficing - Goal Displacement- occurs when the primary goal is subsumed by a secondary goal What managers need to know about Groups & Decision making - They are less efficient - Their size Affects decision quality - They may be too confident - Knowledge counts A group can help in decision making when.. 1. When it can increase quality 2. When is can increase acceptance 3. When it can increase development Participative management- The process of involving employees in (a) setting goals, (b) making decisions, (c) solving problems, and (d) making changes in the organization -predicted to increase motivation, innovation and performance because it fulfills three basic needs: autonomy, meaningfulness of work, and interpersonal contact -The effect of PM is small. What makes PM work? - Top management is continually involved - Middle and supervisory managers are supportive Three Effective Reactions Deciding to Decide- A manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps. Three ways to help you to decide whether to decide - Importance “How high priority is this situation?” - Credibility “How believable is the information about the situation?” - Urgency- “How quickly must I act on the information about the situation?” Six common Decision-Making Biases Heuristics- strategies that simplify the process of making decisions 1. The availability Bias- Managers use information readily available from memory to make judgments Readily available info may not present a picture of a situation 2. The confirmation Bias- when people seek information to support their point of view and discount data that do not 3. The representativeness Bias- the tendency to generalize from a small sample or single event -just because something happened once, doesn’t mean it’s representative, that it will happen again or to you. 4. The sunk cost bias- When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it. -sometimes called the concorde effect. 5. The anchoring and adjustment bias- The tendency to make decision based on an initial figure -paying an employee based on whatever works they made the previous year. 6. Escalation of commitment bias- Whereby decision makers increase their commitment to a project despite negative information about it. -if you really hate to admit you’re wrong. Prospect theory- decision makers find the notion of an actual loss more painful than giving up the possibility of a gain. CHAPTER 8 Organizational Culture- A system of shared beliefs and values that develops within an organization and guides the behavior of it’s members -also called corporate culture -the “social glue” that binds members of the organization together Four types of Organizational Culture 1. Clan Culture- has an internal focus and values flexibility rather than stability and control -Family-type organization, collaboration among employees. Devote considerable resources to hiring and developing their employees. They view customers as partners. South West Airlines 2. Adhocracy Culture- has an external focus and values flexibility -create innovative products by being adaptable, creative, and quick to respond to changes in the market place. Employees are encouraged to take risks and experiment. Well suited for start-up companies. W.L. Gore 3. Market Culture- has a strong external focus and values stability and control -focused on external environment and driven by competition. Strong desire to deliver results, customer, productivity, and profits take precedence over employee development and satisfaction. Employees must work hard, and react fast. Those who deliver results are rewarded. Merrill Lynch 4. Hierarchy Culture- has an internal focus and values stability and control over flexibility -formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. Dell Computer The Three Levels of Organizational Culture Level 1: Observable Artifacts-physical manifestations such as manner of dress, awards, myths, and stories about the company. Rituals, ceremonies, and decorations. As well as visible behavior exhibited by managers. JC PENNEY is trying to revamp itself from a traditional, hierarchal culture by having business-casual dress on weekdays and jeans on Friday Level 2: Espoused Values- The explicitly stated values and norms preferred by an organization. -i.e. Hewlett Packard’s “HP Way” -more often influenced by enacted values- represent the values and norms actually exhibited in the organization Level 3: Basic Assumptions- represent the core values of an organization’s culture -Aren’t observable -Those that are taken for granted and, as a result, are highly resistant to change How employees learn culture 1. Symbols- an object, act, quality, or event that conveys meaning to others -they represent an organizations most important values.. 3m has a trophy (gold step award) (achieving significant revenue) 2. Stories- Narrative based on true events, which is repeated and sometimes embellished upon to emphasize a particular value. Nonprofit organizations- formed to offer services to some clients, not to make a profit (Hospitals, Colleges) Mutual-Benefit Organizations- Voluntary collectives whose purpose is to advance members’ interests (examples: Unions, trade associations) Organization chart- A box-and-lines illustration showing the formal lines of authority and the organization’s official positions or work specializations Organizational charts reveal The Vertical Hierarchy of authority- who reports to whom (The chain of command. Who talks to whom) The horizontal specialization- who specializes in what work (The different jobs or work specialization) 8.4 Edgar scheine proposed the four common elements of common purpose, coordinated effort, division of labor, and hierarchy of authority 1. Common purpose- unifies employees or members and gives everyone and understanding of the organization’s reason for being 2 .Coordinated effort- The coordination of individual efforts into a group or organization-wide effort -common purpose is realized through coordinated effort. Individuals can’t do everything by themselves. 3. Division of labor- the arrangement of having discrete parts of a task done by different people -also called work specialization 4. Hierarchy of authority- a control mechanism for making sure the right people do the right things at the right time. -also called a chain of command. -authority is most effective when arranged in a hierarchy Unity of command- an employee should report to no more than one manager (in order to avoid conflicting priorities and demands) 5. Span of control- the number of people reporting directly to a given manager An organization is said to be flat when there are only a few levels with wide spans of control 6. Authority- refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources Authority means… Accountability- managers must report and justify work results to managers above them (means you have the responsibility for performing assigned tasks) Responsibility- the obligation you have to perform the tasks assigned to you. -managers could have too much authority and too little responsibility or vice versa., which would make the job difficult. Delegation- The process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy -to be more efficient most managers are expected to delegate as much of their work as possible. Line managers- have the authority to make decisions and usually have people reporting to them ( the president, VP, head of acct., line positions are indicated on the organization chart by a solid line (usually a vertical line)) Staff personnel- have authority functions; they provide advice, recommendations, and research to line managers. (legal counsels, special advisors) (indicated by a horizontal dotted line) Centralized Authority- Important decisions are made by higher-level managers -very small companies tend to be the most centralized. Kmart and McDonald’s are examples of companies. And advantage is that there is less duplication of work, because fewer employees perform the same task; rather the tasks is performed by a department of specialists. Also procedures are uniform and thus easier to control. Decentralized authority- Important decisions are made by middle-level and supervisory-level managers -power is delegated throughout the organization. General Motors and Harley-Davidson are good examples. An Advantage is that managers are encouraged to solve their own problems rather than buck the decision to a higher level. In addition, decisions are made more quickly, which increases the organization’s flexibility and efficiency. 8.5 1. Simple structure- has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization -most small mom and pop firms are simple structure’s -apple and Hewlett Packard became as two-man garage startups 2. Functional structure- people with similar occupational specialties are put together in formal groups -group people with similar skills in different departments such as maintenance or admissions 3. Divisional structure- people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions Product divisions- group activities around similar products or services -Time warner has different divisions for magazines, movies. Warner Bros. has divisions spanning movies, cable television and so on Customer Divisions- tend to group activities around common customer or clients -means for achieving this are a fomal chain of command, standardization of rules and procedures, and use of cross-functional teams and computer networks so there is frequent communication and coordination of the parts 3. Size: The larger the organization, the more mechanistic Organizational size- usually measured by the number of full-time employees. -Larger organizations (those with 2,00 or more full-time employees) tend to have more rules, regulations, and procedures and more job specialization, as well as greater decentralization. -Larger firms are more mechanistic. -Small organizations tend to be informal, to have fewer rules and regulations, and to have less work specialization. Small firms tend to be organic. -“Bigger is better” – because the per-unit cost of production decreases as the organization grows. -“small is beautiful” because large organizations tend to breed apathy, alienations, absenteeism, and turn over. Conglomerate- a large company would do business in different, quite unrelated areas. -Used to be this way in the 1960’s. Now management consultant and business schools are promulgating the idea of “core competencies” in which companies are supposed to focus only on businesses that best fit their skills and distribution channels. -Tyco sold off electronics and health care businesses focusing on its product roster of safety equipment, valves and controls. The Dutch company Philips, is seeling off some divisions narrowing its focus to consumer technology, lighting and health care. 4. Technology: Small-Batch, Large-Batch, or Continuous Process—The woodward model Technology- Consists of all the tools and ideas for transforming materials, data, or labor (inputs) into goods and services (outputs). -hand-cranked ice cream machine. Classroom, the blackboard, lectures, are all technologies that deliver education about management. -Small-batch technology- often the least complex technology, goods are custom-made to customer specifications in small quantities. -The Columbia space shuttle, The one-of-a-kind portrait painting. -Often informal and flexible—organic Large-Batch technology- mass-production, assembly-line technology. -Clothes bought at macy’s, Kenmore washer and dryers. -Tend to have a higher level of specialization and to be more bureaucratic, according to woodward. Continuous-process technology- highly routinized technology in which machines do all the work. -Vodka distilleries, Nuclear power plants, steel mills. Human operators mainly read dials and repair machine breakdowns -Successful continuous-process organizations tend to be more organic than mechanistic—less rigid and formal. 5. Life Cycle: Four stages in the Life of an organization Organizational life cycle- has a natural sequence of stages: Birth, youth, midlife, and maturity. -as an organization moves through these stages, it becomes not only larger, but more mechanistic, specialized, decentralized, and bureaucratic. Stage 1: The Birth stage Birth stage- the nonbureaucratic stage, the stage in which the organization is created. -no written rules and little if any supporting staff. Maybe a secretary. Stage 2: Youth Stage Youth stage- the organization is in a prebureaucratic stage, a stage of growth and expansion -product that is making headway in the market place and people are being added on the payroll, and some division of labor and setting of rules are being instituted. -For Apple, this stage occurred during the years 1978-1981, with the establishment of the Apple II line. Stage 3: The midlife stage Midlife stage- the organization becomes bureaucratic, a period of growth evolving into stability -formalized bureaucratic structure, staffs of specialists, decentralization of functional divisions, and many rules -1980’s Apple computer became a large company with many of these attributes. -1983, Pepsi-cola marketer John Scully was hired as a professional manager. Jobs became chairman; wozniak left. Stage 4: The maturity stage Maturity stage- The organization becomes very bureaucratic, large, and mechanistic -danger at this point is lack of flexibility and innovation -1997, Jobs was brought back as a “temporary” chairman, and apples fortunes began to revive When organizations jump the gun and institute structures before they are appropriate, some expanding companies in effect never grow up, holding on to the prebureaucratic way of life for too long, hindering the ability to deliver goods or services in relation to their size. Chapter 9 Human resource management (HR)- consists of the activities managers perform to plan for, attract, develop, and retain and effective workforce. -people are an organization’s most important resource 3. Health & Safety -beginning with the occupational safety and health act of 1970 (OSHA), there has grown a body of law requiring organizations to provide employees with nonhazardous working conditions. Later laws extend health coverage 4. Equal Employment Opportunity -Equal employment opportunity commission- enforce antidiscrimination and other employment-related laws -The effort to reduce discrimination in employment based on racial, ethnic and religious bigotry and gender stereotypes began with Title VII of the Civil Rights Act of 1964 - Title VII applies to all organizations or their agents engaged in an industry affecting interstate commerce that employs 15 or more employees. -Three important concepts covered by EEO laws are  Discrimination- occurs when people are hired or promoted—or denied hiring or promotions—for reasons not relevant to the jobs -doesn’t require an employer to extend preferential treatment because of race, color, religion, and so on  Affirmative Action- focuses on achieving equality of opportunity within an organization -tries to make up for past discrimination in employment by actively finding, hiring, and developing the talents of people from groups traditionally discriminated against. -EEO’s do NOT allow use of hiring quotas. -More successful when employees view them as being fair and equitable and when whites are not prejudiced against people of color -women and minorities hired on the basis of affirmative action felt stigmatized and unqualified and incompetent and experienced lower job satisfaction and more stress than employees supposedly selected on the base of merit  Sexual Harassment- unwanted sexual attention that creates and adverse work environment -quid pro quo- tangible economic injury -the person to whom the unwanted sexual attention is directed is put in the position of jeopardizing being hired for a job or obtaining job benefits or opportunities unless he or she implicitly or explicitly acquiesces -hostile environment- offensive work environment -the person being sexually harassed doesn’t risk economic harm but experiences and offensive or intimidating work environment 9.3 “hiring great people is brutally hard,” –Jack and Suzy Welch (Jack former gen electr. CEO) Recruiting- the process of locating and attracting qualified applicants for jobs open in the organization -you want to find people whose skills, abilities, and characteristics are best suited to your organization  Internal recruiting- making people already employed by the organization aware of job openings  -Most vacant positions in organizations are filled through internal recruiting, mainly through Job Posting- placing information about job vacancies and qualifications on bulletin boards, in newsletters, and on the organizations intranet  External recruiting- attracting job applicants from outside the organization  Placed though newspapers, employment agencies, executive recruiting firms, union hiring halls, college-job placement offices, technical training schools, and word of mouth through professional associations. Many are also advertising jobs on the internet  ADVANTAGES AND DISAVANTAGES OF INTERNAL AND EXTERNAL RECRUITING ARE ON PAGE 285  The most effective sources are employee referrals because to protect their on reputations, employees are fairly careful about who they recommend. Realistic job preview- gives a candidate a picture of both positive and negative features of the job and the organization before he or she is hired. -people with realistic expectations tend to quit less frequently and be more satisfied than those with unrealistic expectations The selection process- the screening of job applicants to hire the best candidate The three types of selection tools are background information, interviewing, and employment tests 1. Background information -radioshack CEO david Edmondson falsely claimed to hold degrees in psychology and theology -Carolyn doran , chief operating officer of Wikipedia, hadn’t had a background check and she had been convicted of drunken driving and fleeing a car accident -Many employers don’t give honest assessments of former employees because 1. They fear that if they say anything negative, they can be sued by the former employee 2. They fear if they say anything positive, and the job candidate doesn’t pan out, they can be sued by the new employer 2. Interviewing -the most commonly used employee-selection technique  -Unstructured interview- involves asking probing questions to find out what the applicant is like  -like an ordinary conversation  -no fixed set of questions asked and no systematic scoring procedure  -Compared with a structure interview, an unstructured interview provides a more accurate assessment of an applicant’s Job-related personality traits  -Structure interview type 1- involved asking each applicant the same questions and comparing their responses to a standardized set of answers - On the job training- takes place in the work setting while employees are performing job- related tasks. Coaching, training positions, job rotation, planned work activities -Off the job training- consists of classroom programs, videotapes, workbooks, and the like. (good for learning facts) Computer-assisted instruction (CAI)- computers are used to provide additional help or to reduce instructional time managers need to find out whether training offered fits with the majority of employee developmental goals. 9.5 Performance management- the continuous cycle of improving job performance through goal setting, feedback and coaching, and rewards and positive reinforcement -performance appraisals need to be fair and accurate because its essential to performance management. -the purpose is to focus employees on attaining goals that are tied to the organization’s strategic goals and vision, and to evaluate how successful they were in accomplishing those goals Performance appraisal- Assessing an employee’s performance and providing him or her with feedback. Judge then counsel 1. Objective appraisal- based on facts and are often numerical -keep track of number of products the employee sold in a month, customer complaints filed against the employee. Etc.  They measure results  They are harder to challenge legally 2. Subjective appraisal- based on a manager’s perceptions of an employee’s traits or behaviors. -few employees can be adequately measured just by objective appraisals  Trait appraisal- ratings of such subjective attributes such as attitude, initiative, and leadership. The evaluator’s personal bias can affect the ratings  Behavioral appraisals- Measure specific, observable aspects of performance. Being on time for work, etc.]  Behaviorally anchored rating scale (BARS)- rates employee gradations in performance according to scales of specific behaviors Who should make performance appraisals? Peers and subordinates Customers and clients Self-appraisals 360-degree assessment- employees are appraised not only by their managerial superiors but also by their peers, subordinates, and sometimes clients -using 360 confidentially, for developmental purposes, builds trust; using it to trigger pay and personnel decisions puts trust at risk. Forced ranking performance review systems- all employees within a business unit are ranked against one another and grades are distributed along some sort of bell curve. -as many as a quarter of the fortune 500 companies have instituted forced ranking performance review systems -top performers are rewarded with bonuses and promotions, worst performers are rehabilitated or dismissed. -if implemented overnight = shock to morale, productivity, and loyalty. - can have legal ramifications with law suits alleging that they have a disparate effect on particular groups of employees Effective performance feedback -Bossidy recommends an appraisal take up half a page and cover just three topics: what the boss like about your performance, what you can improve, and how you and your boss are going to make that happen. To increase employee performance, a manager can use two kings of appraisals—formal and informal Formal appraisal- conducted at specific times throughout the year and are based on performance measures that have been established in advance. -weeks may go by in which you are unaware of how well you’re doing -manager should give feedback describing how he or she is performing well and not so well and giving examples. Facts should always be used rather than impressions Informal appraisal- conducted on an unscheduled basis and consist of less rigorous indications of employee performance -equivalent of pop quizzes and short papers, or drop-ins to the professors office. How to give performance feedback to employees  Take a problem-solving approach, avoid criticism, and treat employees with respect  Be specific in describing the employee’s present performance and in the improvement you desire  Get the employee’s input 9.6 Compensation- has three parts: Wages or salaries, incentives, and benefits -in different organizations one may take on more importance than another Wages or Salaries Base Pay- consists of the basic wage or salary paid employees in exchange for doing their jobs -determined by the prevailing pay levels in a particular industry and location, what competitors are paying, whether the jobs are unionized, if the jobs are hazardous, what the individual’s level is in the organization, how much experience he or she has Incentives -to induce employees to be more productive or to attract and retain top performers, many organizations offer incentives, such as commissions, bonuses, profit-sharing plans, and stock options. Benefits -Benefits- Are additional nonmonetary forms of compensation -designed to enrich the lives of all employees in the organization  “They offer enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent”  Overseas firms now look to the United States for talented workers, especially in technology and finance, as has been the case with information-technology companies in Ireland 5. Knowledge, not information, is becoming the new competitive advantage  Karl Albrecht, “Information is rapidly becoming a profitless commodity, and knowledge is becoming the new competitive advantage”  Knowledge work is analytic and involves problem solving and abstract reasoning.  Knowledge drives the future and creates wealth – Alvin and Heidi Toffler Two types of change: Reactive versus Proactive Reactive change- making changes in response to problems or opportunities as they arise -when managers talk about putting out fires, they are talking about reactive change Proactive change- involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities. Forces originating outside the organization (external) Demographic Characteristics, Market Changes, Technological Advancements, Social & Political pressures Forces originating inside the organization (internal) Employee problems, Manager’s behavior Areas in which change is needed 1. Changing people  Perceptions- employees may feel they are underpaid for what they do, manager can they compare pay to those offered by competitors  Attitudes- Break the traditional adversarial relationship between employees and managers  Performance  Skills- Altering or improving skills is an ongoing challenge 2. Changing technology Technology- isn’t just computer technology; it is any machine or process that enables and organization to gain competitive advantage in changing materials used to produce a finished product 3. Changing structure -recent trend is toward, “flattening the hierarchy,” eliminating sever middle layers of management, and using work teams linked by electronic networks 4. Changing strategy 10.2 Organization development (OD)- is a set of techniques for implementing planned change to make people and organizations more effective.  focuses specifically on people in the change process  often put into practice by a change agent- a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways  Can be used to 1. Manage conflict 2. Revitalizing Organizations 3. Adapting to mergers  -OD managers and consultants follow a medical-like model. They approach the organization as if it were a sick patient using,  Diagnosis- use questionnaires, surveys, interviews, meetings, direct observation to attain attitudes  Intervention- the attempt to correct the diagnosed problems. “treatment”.  Evaluation- OD needs objective evaluation to see if it has done good. -American Airlines, B.F. Goodrich, General Electric, Honeywell, ITT, Polaroid, Procter & Gamble, Prudential, Texas instruments, Westinghouse Canada…. All use OD OD is most successful under the following circumstances 1. Multiple interventions 2. Management support- expectations for change shouldn’t be unrealistic 3. Goals geared to both Short-& Long-term results 4. OD is affected by culture- OD that worked in one country should not be blindly applied to a similar situation in another country 10.3 Innovation- the activity of creating new ideas and converting them into useful applications— specifically new goods and services Larry Seldon and Ian MacMillan argue that firms are focusing their innovation efforts in the wrong way. We must start working to understand what the customer wants and then use the understanding to drive innovation Cynthia Barton Rabe, Intel, Too much knowledge and experience can actually kill innovation Jack and Suzy Welch, organizations must create and innovation mindset or culture in order to effectively innovate Open-Source idea- taps masses of people for inspiration. Linus Torvalds, Linux. -Time O’Reilly “architecture of participation” – which companies make it easy, interesting, and rewarding for a wide range of contributors to offer ideas, solve problems, and improve products. Culture of innovation- a big part of what makes innovation happen is a country and a corporation’s culture. Americans are more comfortable with taking risks than Europeans. -Most theories of organizational change originated with the landmark work of psychology Kurt lewin. -it explains how to initiate, manage, and stabilize unplanned change. 1. Unfreezing stage- Instill in employees the motivation to change, and let go of attitude and behaviors that are resistance to innovation. Managers also need to reduce the barriers to change during this stage. -Benchmarking- a process by which a company compares its performance with that of high-performing organizations (many professional sports teams do this. 2. Changing stage- employees need to be given new tools for change: new Information, new perspectives, new models of behavior. Use mentoring or training. Advisable to convey the idea that change is a continuous learning process, not just a one-time event. 3. Refreezing- Employees need to be helped to integrate the changed attitudes and behavior into their normal ways of doing things John Kotter’s Eight steps for leading organizational change. - He believes that to be successful, organizational change needs to follow eight steps to avoid the eight common errors senior management usually commits. - The steps correspond to Lewins change model. 1-4 represent unfreezing (establish a sense of urgency, create the guiding coalition, develop a vision and a strategy, and communicate the change vision.), 5-7 changing (empower broad- based action, generate short-term wins, consolidate gains and produce more change), step 8 is refreezing (Anchor new approaches in the culture) - -They provide specific recommendations about behaviors that managers need to exhibit to successfully lead organizational change. YOU CAN’T SKIP A STEP. And successful organizational change is 70-90% leadership, 10-30% managing change. Chapter 11 Personality- Consists of the stable psychological traits and behavioral attributes that give a person his or her identity. -they affect how people perceive and act within the organization, there for it is important to understand Big five personality dimensions- 1. Extroversion (outgoing, talkative, sociable), best for managers and sales 2. Agreeableness (trusting, good-natured, soft-hearted), 3. Conscientiousness (dependable personality, strong work ethic, achievement oriented, persistent) strongest positive correlation with job performance and training performance 4. Emotional Stability (relaxed, secure, unworried) 5. Openness to experience (intellectual, imaginative, curious, broad-minded) Use professionals, Don’t fire on the basis of personality tests alone, be alert for gender, racial, and ethnic bias, graphology tests don’t work, but integrity tests do. Proactive personality- someone who is more apt to take initiative and persevere to influence the environment - -most likely scores well on the Big 5 for conscientiousness - -They act on opportunities, which makes them associated with success, and ENTREPRENEURSHP Five traits important in organizations 1. Locus of control- indicates how much people believe they control their fate through their own efforts.  Internal= you control your destiny, less anxiety, greater work motivation, stronger expectation that effort leads to performance. Also have higher salaries  Internal resist close managerial supervision, should be placed in jobs requiring high initiative and lower compliance.  External do better in highly structure jobs requiring greater compliance 2. Self-efficacy- belief in one’s personal ability to do a task -reduced anxiety, successful. -Low self-efficacy is associate with learned helplessness- the debilitating lack of faith in one’s ability to control one’s environment 3. Self-esteem- the extent to which people like or dislike themselves, their overall self-evaluation High= handle failure better, emphasize positive, take more risks, choose more unconventional jobs. When faced with pressure situations become egotistical and boastful. Some are aggressive and violent - Low= focus on weaknesses and have primarily negative thoughts. Dependent on others and are more apt to be influenced by them and to be less likely to take independent positions. How can managers build self-esteem  Reinforce employees’ positive attributes and skills  Provide positive feedback whenever possible  Break larger projects into smaller tasks and projects  Express confidence in employees’ abilities to complete their tasks 4. Self-Monitoring- the extent to which people are able to observe their own behavior and adapt it to external situations. 5. Emotional Intelligence- Daniel goleman, argues that the most important attribute in a leader is emotional intelligence- the ability to cope, empathize with others, and be self-motivated.  Traits of emotional intelligence are: Self-awareness, Self- management, Social awareness, Relationship management. 11.2 Organizational Behavior (OB)- is dedicated to better understanding and management of people at work. Explain and predict workplace behavior. -it’s focus are the informal aspects …(formal are goals, policies, structure) - It looks at Individual Behavior and Group behavior Values- abstract ideals that guide one’s thinking and behavior across all situations (global) - -compensation, recognition and status are common values in the workplace - -can be changed by life-changing events. Attitude- a learned predisposition toward a given object. (specific) - -affective component of attitude- consists of the feelings or emotions one has about a situation - -Cognitive component of attitude- consists of beliefs and knowledge one has about a situation -managers can distort problem solving through selective perception 2. Stereotyping- The tendency to attribute to an individual the characteristics one believes are typical of the group to which that individual belongs - sex-role stereotypes-belief that differing traits and abilities make males and females particularly well suited to different roles - Age stereotypes- depict older workers as less involved in their work, less satisfied, less motivated, and less committed than younger workers. Michael Debakey- worked until his 90’s - Race/ethnicity stereotypes- not many Hispanic and African American managers in the USA. 3.Halo effect – we form an impression of an individual based on a single trait, also called horn and halo -attractive people are treated better, paid more, have higher expectations 4. Casual attribution- The activity of inferring causes for observed behavior - Fundamental attribution bias- people attribute another person’s behavior to his or her personal characteristics rather than to situational factors - -manger attributing back pain to workers when worker attributed it to the environment - Self-serving bias- people tend to take more personal responsibility for success than for failure -Ken lay, ENRON, The wall street journal, Andrew Fastow Self-fulfilling prophecy- (Pygmalion)- describes the phenomenon in which people’s expectations of themselves or others lead them to behave in ways that make those expectations come true. 11.5 -workplace stress is negatively related to positive emotions, job satisfaction, organizational commitment, and job performance and positively associated with alcohol and illicit drug use, overeating, and turnover. Historically, they believed, Inverted U shape between stress and performance. Optimal performance, results when people are subjected to moderate levels of stress Stress- the tension people feel when they are facing or enduring extraordinary demands, constraints, or opportunities and are uncertain about their ability to handle them effectively. - -It’s the feeling of tension and pressure, the source of stress is called a stressor (can be crises or hassles, and can be negative or positive) - -Hans selye, father of modern concept of stress “stress is the non specific response of the body to any demand made upon it” also called good stress “eustress” - -emotionally it’s the feeling of being overwhelmed The sources of job-related stress - Demands created by individual differences- Type A behavior pattern- involved in a chronic, determined struggle to accomplish more in less time (higher blood pressure) - Individual task demands- worry about being laid off (job security) - Individual role demands- role- sets of behaviors people expect of occupants of a position. Stress may come because of Role overload- when others’ expectations exceed one’s ability, or Role Conflict- when one feels torn by the different expectations of important people in one’s life or Role ambiguity- when others’ expectations are unknown - Group demands - Organizational demands - Nonwork demands- money, divorce, elderly relatives. -People with lower incomes, education level, and work status are particularly apt to have higher stress Consequences of stress Positive stress- can energize you, increase your effort, creativity, and performance Negative stress- destructive, poorer quality of work, dissatisfaction, errors, absenteeism, and turnover Symptoms of stress physiological signs= sweaty palms, restlessness, back-aches, headaches, upset stomach, and nausea. More serious signs are hypertension and heart attacks Psychological signs= boredom, irritability, nervousness, anger, anxiety, hostility, and depression Behavioral signs= sleeplessness, changes in eating habits, increased smoking/alcohol/drug abuse. Stress may be revealed through reduced performance and satisfaction Burnout- a state of emotional, mental, and even physical exhaustion - -expressed as listlessness, indifference, or frustration - -Alcoholism shows up in absenteeism, accidents, slipshod work, or significant use of a company’s medical benefits. It’s the most common drug of abuse - -workplace drug use has declined over the past 15 years. Buffer- administrative changes, that managers can make to reduce the stressors that lead to employee burnout - Extra staff at peak periods, increased freedom to make decisions, time off, sabbatical leaves to replenish energy and desire to work. Strategies for reducing unhealthy stressors are - Employee assistance programs- a host of programs aimed at helping employees cope with stress, burnout, substance abuse, health-related problems, family and marital issues, and any general problem that negatively influences performance - Holistic wellness program- focuses on self-responsibility, nutritional awareness, relaxation techniques, physical fitness, and environmental awareness - -encourages employees to strive for, “a harmonious and productive balance of physical, metal, and social well-being brought about by the acceptance of one’s personality for developing and adhering to a health promotion program.” - Create a supportive environment - Make jobs interesting - Make career counseling available Chapter 12 Affiliation “I need close relationships” Power- “I need to control others” ----- 2 forms Personal power- desire to dominate others and manipulating people for one’s own gratification Institutional power- the need to solve problems that further organizational goals ****** has no classification for lower-level needs********** Using acquired needs theory to motivate -High need for achievement= don’t mind working alone, willing to take risks, accomplishment of a task= rewarding…….prefer work with feedback on performance, challenging but achievable goals, individual responsibility for results. - High need for affiliation- Not an efficient managers, at times make decisions where people will resent you, work such as sales is good. Two-factor theory- Work satisfaction and dissatisfaction arise from two different factors- work satisfaction from motivating factors, and work dissatisfaction from hygiene factors -Made by Frederick Herzberg Hygiene factors- “why are my people dissatisfied”- The lower level needs, factors associated with job dissatisfaction, such as salary, working conditions, interpersonal relationships, and company policy- all of which affect the job context in which people work (In between is NEUTRAL) Motivating factors- “What will make my people satisfied?”- the higher level needs, motivating factors, factors associated with job satisfaction- such as achievement, recognition, responsibility, and advancement- all of which affect the job content or the rewards of work performance. Using two-factor theory to motivate ***- basically lesson is that managers should first eliminate dissatisfaction… working conditions, pay levels etc., then concentrate on spurring motivation by providing opportunities for achievement, recognition and personal growth. 12.3 Process Perspectives- Concerned with the thought processes by which people dictate how to act Equity Theory- Focuses on employee perceptions as to how fairly they think they are being treated compared to others -Developed by J.Stacy Adams. - Some people think this is the cause for the $50 billion stole a year from employee theft -The key elements in equity theory are 1. Inputs- “What do you think your putting into the job? (Creativity, time, experience) 2. Outputs or rewards- “What do you think your getting out of the job? (pay, promotion etc.) 3. Comparison- “How do you think your ratio of inputs and rewards compares with those of otheres?” (people compares their ration of inputs and outputs) -Using equity theory to motivate employees- if dissatisfied= 1. Reduce inputs 2. Try to change outputs or rewards received 3. Distort the inequity 4. Change object of comparison 4. Leave the situation 3 practical lessons = 1. Employee perceptions are what count 2. Employee Participation helps 3. Having an appeal process helps Expectancy theory- Suggests that people are motivated by two things: How much they want something and 2. How likely they are to get it Made by Victor Vroom, Expectancy- “Will I be able to perform at the desired level on a task” Instrumentality- “What outcome will I receive if I perform at this level? Valence- “How much do I want the outcome” (If bonus is impt to you, you have high level of valence) Using Expectancy theory to motivate employees- 1. What rewards to employees value? 2. What are the job objectives and performance level you desire? 3. Are the rewards linked to performance? 4. Do employees believe you will deliver the right rewards for the right performance?—credibility Goal setting theory- Employees can be motivated by goals that are specific and challenging but achievable. Edwin Locke and Gary Latham Theory is only useful is people understand and accept the goals. Goals should be specific Goals should be challenging Goals should be achievable Using it to motivate employees Below are for not improved performance Extinction (withholding rewards): The withholding or withdrawal of positive rewards for desirable behavior, so that behavior is less likely to occur in the future. Punishment (Applying Negative consequences): the application of negative consequences to stop or change undesirable behavior. Using Reinforcement to motivate employees Positive reinforcement- 1. Reward only desirable behavior 2. Give rewards asap 3. Be clear about what behavior is desired 4. Have different rewards and recognize individual differences Punishment- 1.Punish only undesirable behavior 2. Give reprimands or disciplinary actions asap 3. Be clear about what behavior is undesirable 4. Administer punishment in private 5. Combine punishment and positive reinforcement (Also say what they are doing right and what rewards they might be eligible for) 12.6 Employee engagement- A heightened emotional connection that an employee feels for his or her organization, which influences him or her to exert greater discretionary effort in his or her work Pay for performance- pay based on one’s results Piece rate- employees are paid according to much output they produce(farm workers) Sales commission- Sales representatives are paid a percentage of the earnings the company made from their sales Bonuses- Cash awards given to employees who achieve specific performance objectives Profit Sharing- The distribution to employees of a percentage of the company’s profits Gain Sharing: The distribution of savings or “gains” to groups of employees who reduced costs and increased measurable productivity Stock Options: certain employees are given the right to buy stock at a future date for a discounted price. (work hard to make stock rise) Pay for knowledge: ties employee pay to the number of job-relevant skills or academic degrees they earn Thoughtfulness: The value of being nice Work-life benefits (used by employers to increase productivity and commitment by removing certain barriers that make it hard for people to strike a balance between work and their personal lives) Surroundings (Cubicle stops creativity) Skill building and education opportunities (workers matched with coworkers from which they can learn, part time study at a college) Sabbatical- (Paid break) enables employees to recharge themselves, and connect loyalty to organization 13.1 Group versus Team  Management Philosopher Peter Drucker predicted that future organizations would not only be flatter and information based but also organized around team work.  General Electric Ceo Jeffrey Immelt “You lead today by building teams and placing others first  Teamwork is key in organizations, it’s no longer about being the lone genius or even working as the lone wolf, and you’ll be working in situations demanding teamwork. Why Team work is important.  Increased Productivity  Increased speed  Reduced costs  Improved Quality  Reduced destructive internal competition  Improved workplace cohesiveness What a group is  A group is defined as two or more freely interacting individuals who share collective norms, share collective goals, and have a common identity.  It differs from a crowd in the fact that a crowd doesn’t interact with each other.  It also differs from an organization on the basis that the organization is so large the members don’t interact.  An example of a work group would be 10 employees meeting to exchange information about various companies polices on wages and hours. What a team is.  McKinsey and Company management consultants Jon Katzenbach and Douglas Smith say it is a mistake to use the terms group and team interchangeably. Successful teams take on a life of their own.  A team is defined as a small group of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable.  The essence of a team is common commitment.  An example of a team would be a collection of 2-10 employee’s who are studying industry pay scales with the goal of making recommendations for adjusting pay grades within their company. Formal vs. Informal Groups Formal groups