introduction to management by shas production

2014

Shas Production

11/3/2014

Introduction To Management

Shas Production

Shas Production

Typewritten text

Team Shas Production

INTRODUCTIONTO MANAGEMENT

ANDORGANIZATIONS

© 2003 Pearson Education Canada Inc. 1.1

You should be able to: Explain what a manager is and how the role of a

manager has changed Define management Distinguish between efficiency and effectiveness Describe the basic management functions and

the management process Identify the roles performed by managers

1.2

You should be able to: Describe the skills managers need Explain what managers do using the systems

perspective Identify what managers do using the contingency

perspective Describe what an organization is and how the

concept of an organization has changed Explain the value of studying management

1.3

Manager Someone who works with and through other people

by coordinating their work activities in order toaccomplish organizational goals

Changing nature of organizations and work hasblurred the clear lines of distinction betweenmanagers and non-managerial employees

1.4

Managerial Titles First-line managers - manage the work of non-

managerial individuals who are directly involved withthe production or creation of the organization’sproducts

Middle managers - all managers between the first-line level and the top level of the organization whomanage first line managers

Top managers - responsible for making organization-wide decisions and establishing the plans and goalsthat affect the entire organization

1.5

ORGANIZATIONAL LEVELS (Exhibit 1.1)

Non-managerial Employees

TopManagers

MiddleManagers

First-lineManagers

1.6© 2003 Pearson Education Canada Inc.

Management The process of coordinating work activities so that

they are completed efficiently and effectively withand through other people

Elements of definition

Process - represents ongoing functions orprimary activities engaged in by managers

Coordinating - distinguishes a managerialposition from a non-managerial one

1.7

Management (continued) Elements of definition (continued) Efficiency - getting the most output from the least

amount of inputs “doing things right” concerned with means

Effectiveness - completing activities so thatorganizational goals are attained “doing the right things” concerned with ends

1.8

EFFICIENCY AND EFFECTIVENESS INMANAGEMENT (Exhibit 1.2)

Management Strives For:Low resource waste (high efficiency)

High goal attainment (high effectiveness)

ResourceUsage

Efficiency (Means)

GoalAttainment

Effectiveness (Ends)

Low Waste High Attainment


Management Functions Planning - defining goals, establishing

strategies for achieving those goals, anddeveloping plans to integrate and coordinateactivities

Organizing - determining what tasks are to bedone, who is to do them, how the tasks are tobe grouped, who reports to whom, and wheredecisions are to be made

Leading - motivating subordinates andinfluencing individuals or teams

Controlling - monitoring actual performanceagainst goals

1.10

Management Process

Management processSet of ongoing decisions and work activities

in which managers engage as they plan,organize, lead, and control

Managerial activities are usually done in acontinuous manner

1.11

Management Roles Specific categories of managerial behaviour

Interpersonal - involve people and dutiesthat are ceremonial and symbolic in nature

Informational - involve receiving, collecting,and disseminating information

Decisional - revolve around making choices Emphasis that managers give to the various roles seems

to change with their organizational level

1.12

MINTZBERG’S MANAGERIAL ROLES(Exhibit 1.4)


Management Skills Technical - knowledge of and proficiency in a certain

specialized field Human - ability to work well with other people both

individually and in a group Conceptual - ability to think and to conceptualize

about abstract and complex situations see the organization as a whole understand the relationships among subunits visualize how the organization fits into its broader

environment

1.14

SKILLS NEEDED AT DIFFERENT MANAGEMENTLEVELS (Exhibit 1.5)


Managing Systems System - a set of interrelated and

interdependent parts arranged in a manner thatproduces a unified whole

Closed system - a system that is not influencedby and does not interact with its environment

Open system - dramatically interact with theirenvironment

1.16

System

THE ORGANIZATION AS AN OPEN SYSTEM (Exhibit 1.7)

TransformationEmployee’s work

activitiesManagement

activitiesTechnology and

operations methods

OutputsInputsRaw materials

Human resourcesCapital

TechnologyInformation

Products and servicesFinancial results

InformationHuman results

Environment

Environment

Feedback


Managing Systems (continued) Managers mustcoordinate various work activitiesensure that interdependent parts work

together recognize and understand the impact of

various external factors Decisions and actions taken in one

organizational area will affect other areasand vice versa

1.18

Managing in Different and Changing Situations Contingency perspective - differentways of managing are required indifferent organizations and differentcircumstances No simple or universal rule formanagers to follow Requires that managers’ actions beappropriate for the situation

1.19

POPULAR CONTINGENCY VARIABLES(Exhibit 1.8)


Organization Deliberate arrangement of people to accomplish

some specific purpose Characteristics of an organization distinct purpose deliberate structure people

Today’s organizations have adopted: flexible work arrangements open communications greater responsiveness to changes

1.21

Distinct Purpose

People

DeliberateStructure

1.22

THE CHANGING ORGANIZATION(Exhibit 1.10)


Universality of ManagementManagement is needed in all types and sizes of organizationsat all organizational levels in all work areasManagement functions must beperformed in all organizationsconsequently, have vested interest in

improving management

1.24

UNIVERSAL NEED FOR MANAGEMENT(Exhibit 1.11)


The Reality of Work Most people have some managerial responsibilities Most people work for a manager

Rewards of being a manager Create an environment that allows others to do their best

work Provide opportunities to think creatively Help others find meaning and fulfillment Meet and work with a variety of people

1.26

Challenges of being a manager- Being a manager is hard work- Must deal with a variety ofpersonalities

- Must motivate workers in theface of uncertainty

1.27

MANAGEMENTYESTERDAYAND TODAY

Chapter 2


LEARNING OBJECTIVES

You should be able to:– Discuss management’s relationship to other

academic fields of study– Explain the value of studying management history– Identify some major pre-twentieth-century

contributions to management– Summarize the contributions of the scientific

management advocates– Describe the contributions of the general

administrative theorists

2.2

LEARNING OBJECTIVES (continued)• You should be able to:

– Summarize the quantitative approach tomanagement

– Describe the contributions of the earlyorganizational behaviour advocates

– Explain the importance of the HawthorneStudies to management

– Describe the effects of: globalization,workforce diversity, entrepreneurship, e-business, need for innovation and flexibility,quality management, learning organizations,and knowledge management

2.3

MANAGEMENT’S CONNECTION TOOTHER FIELDS OF STUDY

Academic Disciplines that Affected Management– Anthropology - work on cultures and social

environments– Economics - concern about the allocation and

distribution of scarce resources– Philosophy - examines the nature of things– Political science - effect of political environment on

individuals and groups– Psychology - seeks to measure, explain, and change

human behavior– Sociology - studies people in relation to their fellow

human beings

2.4

DEVELOPMENT OF MAJORMANAGEMENT THEORIES

HistoricalBackground Scientific

ManagementGeneral

AdministrativeTheorists

QuantitativeApproach

Management Theories

IndustrialRevolution

Adam Smith

Early Advocates

Hawthorne Studies

OrganizationalBehaviour

Early Examplesof Management


HISTORICAL BACKGROUND OFMANAGEMENT

• Organizations Have Existed for Thousands of Years• Significant Pre-Twentieth-Century Events

– Adam Smith• division of labour - breakdown of jobs into narrow and repetitive

tasks increased productivity– Industrial Revolution

• substitution of machine power for human power• large organizations required formal management

2.6

SCIENTIFIC MANAGEMENT

• F.W. Taylor - Principles of Scientific Management– Use of scientific methods to define the “one best way” for

a job to be done– Perspective of improving the productivity and efficiency of

manual workers– Applied the scientific method to shop floor jobs

• Frank and Lillian Gilbreth– Use of motion pictures to study hand-and-body

movements

2.7

TAYLOR’S FOUR PRINCIPLES OFMANAGEMENT (Exhibit 2.2)

2.8

1. Develop a science for each element of an individual’s work,which will replace the old rule-of-thumb method.

2. Scientifically select and train, teach, and develop the worker.(Previously, workers chose their own work and trainedthemselves as best they could.)

3. Heartily cooperate with the worker so as to ensure that all workis done in accordance with the principles of the science that hasbeen developed.

4. Divide all work and responsibility equally between managementand workers. Management takes over all work for which it isbetter fitted than the workers. (Previously almost all the work andthe greater part of the responsibility were thrown on theworkers.)

GENERAL ADMINISTRATIVE THEORISTS

• Henri Fayol– Concerned with making the overall organization

more effective– Developed theories of what constituted good

management practice• proposed a universal set of management functions• published principles of management

– fundamental, teachable rules of management

2.9

PRINCIPLES OF MANAGEMENT(Exhibit 2.3)

2.10

GENERAL ADMINISTRATIVE THEORISTS(continued)

• Max Weber– Developed a theory of authority structures and

relations– Bureaucracy - ideal type of organization

• division of labour• clearly defined hierarchy• detailed rules and regulations• impersonal relationships

2.11

IDEAL BUREAUCRACY (Exhibit 2.4)

2.12

QUANTITATIVE APPROACH TOMANAGEMENT

• Operations Research (Management Science)– Use of quantitative techniques to improve

decision making• applications of statistics• optimization models• computer simulations of management activities

– Linear programming - improves resourceallocation decisions

– Critical-path scheduling analysis - improveswork scheduling

2.13

TOWARD UNDERSTANDINGORGANIZATIONAL BEHAVIOUR

• Organizational Behavior– Study of the actions of people at work

• Hawthorne Studies– Started in 1924 at Western Electric Company– Elton Mayo - studies of job design– Changed the dominant view that employees were

no different from any other machines

2.14

EARLY ADVOCATES OF OB (Exhibit2.5)

2.15

CURRENT TRENDS AND ISSUES• Globalization

– All organizations are faced with the opportunities andchallenges of operating in a global market

• Workforce Diversity– Heterogeneous workforce in terms of gender, race,

ethnicity, age, and other characteristics that reflectdifferences

• workforce is getting older• high degree of immigration in Canada

2.16

CURRENT TRENDS AND ISSUES(continued)

• Entrepreneurship– Three important themes

• pursuit of opportunities - capitalizing on environmentalchange to create value

• Innovation and uniqueness - introducing newapproaches to satisfy unfulfilled market needs

• growth - not content to remain small– Will continue to be important in all societies– Will influence profit and not-for-profit

organizations

2.17


• Managing in an E-Business World– E-business - comprehensive term describing the way an

organization does its work by using electronic (Internet-based) linkages with key constituencies

– E-business - any form of business exchange or transactionin which parties interact electronically

– Intranet - an internal organizational communicationsystem that uses Internet technology and is accessible onlyby organizational employees

2.18

TYPES OF E-COMMERCE TRANSACTIONS

E-CommerceBusiness-to-Consumer

(B2C)Electronic retailing

Government-to-Business(G2B)

All transactions betweencompanies and

government agencies

Business-to-Business(B2B)

All transactions between acompany and its suppliers

Consumer-to-Consumer(G2C)

Electronic markets formedby Web-based auctions


CATEGORIES OFE-BUSINESS INVOLVEMENT

E-business unitswithin

traditionalorganization

E-Business-EnhancedOrganization

E-business toolsand applications

used within tradi-tional organization

E-Business-EnabledOrganization

Organization’s entire workprocesses revolve around

e-business model

© 2003 Pearson Education Canada Inc.2.20

Total E-BusinessOrganization


Need for Innovation and Flexibility– Without a constant flow of new ideas, an organization is

doomed to obsolescence or even worse– Must be flexible to accommodate changing customers’

needs, appearance of new competitors, and shiftingemployees from project to project

– Quality Management– Total Quality Management (TQM) - philosophy of

management based on continual improvement andresponding to customer needs and expectations

– Customer - refers to internal and external entities thatinteract with the organization’s product or service

2.21

WHAT IS TQM? (Exhibit 2.8)

2.22


Learning Organizations and Knowledge Management– Learning organization - one that has developed the

capacity to continuously learn, adapt, and change– Create learning capabilities throughout the organization– Knowledge management - involves cultivating a

learning culture where organizational memberssystematically gather knowledge and share it withothers in the organization so as to achieve betterperformance

– managers must transform themselves from bosses toteam leaders--listening, coaching, motivating andnurturing

2.23

LEARNING ORGNAIZATION VERSUS TRADITIONALORGANIZATION

2.24

Chapter 3

ORGANIZATIONALCULTURE AND

ENVIRONMENT:THE CONSTRAINTS


© 2003 Pearson Education Canada Inc.

LEARNING OBJECTIVES

• You should be able to:– Differentiate the symbolic from the omnipotent

view of management– Define organizational culture– Identify the seven dimensions that make up an

organization’s culture– Explain how cultures can be strong or weak– Describe the various ways that employees learn

culture

3.2


LEARNING OBJECTIVES(continued)

• You should be able to:– Explain how culture constrains managers– Describe the various components in an

organization’s specific and general environments– Contrast certain and uncertain environments– Identify the various stakeholders with whom

managers have to deal– Clarify how managers manage relationships with

external stakeholders

3.3


THE MANAGER: OMNIPOTENTOR SYMBOLIC?

• Omnipotent View of Management– Managers are directly responsible for an organization’s

success

• Symbolic View of Management– The actual part that managers play in organizational

success or failure is minimal– Managers must create meaning out of randomness,

confusion, and ambiguity

• Reality Suggests a Synthesis– Managers are neither helpless nor all powerful

3.4

PARAMETERS OF MANAGERIALDISCRETION (Exhibit 3.1)

ManagerialDiscretion

Organization’s EnvironmentOrganizational Culture



WHAT IS ORGANIZATIONALCULTURE?

• A system of shared meaning and beliefs heldby organizational members that determines, inlarge degree, how they act

• Composite picture of organizational culturemay be derived from seven dimensions

• Organization’s personality often shaped by oneof these dimensions

3.6

DIMENSIONS OF ORGANIZATIONALCULTURE (Exhibit 3.2)



THE CULTURE OF ANORGANIZATION

• Strong Versus Weak Cultures– In strong cultures, key values are deeply held and widely

shared– Strong cultures have greater influence on employees than do

weak cultures– Employees more committed to organizations with strong

cultures– Strong cultures are associated with high organizational

performance– Most organizations have moderate to strong cultures

3.8


THE CULTURE OF ANORGANIZATION (continued)

• The Source of Culture– Usually reflects the vision or mission of the founder

• How Employees Learn Culture– Stories - a narrative of significant events or people

– Rituals - repetitive sequences of activities

– Material symbols – essential in creating anorganization’s personality.

– Language - organizations develop unique jargon

3.9


THE CULTURE OF ANORGANIZATION (continued)

• How Culture Affects Managers– Establishes appropriate managerial behavior

– Constrains decision making in all managementfunctions

• Planning - degree of risk that plans should contain

• Organizing - degree of autonomy given toemployees

• Leading - degree of concern for job satisfaction

• Controlling - reliance on external or internalcontrols

3.10

THE EXTERNAL ENVIRONMENT

Customers

Competitors

Suppliers

PublicPressureGroups

TheOrganization

GeneralEnvironment

SpecificEnvironment



THE EXTERNAL ENVIRONMENT(continued)

• Forces and institutions outside the organization thatmay affect organizational performance

– Specific environment - includes thoseconstituencies that have a direct and immediateimpact on managers’ decisions and actions

• customers - absorb organization’s outputs• suppliers - provide material and equipment• competitors - provide similar services/products• pressure groups - special-interest groups

3.12



• General environment - includes the broadconditions that may affect organizations– Economic conditions - interest rates,

changes in disposable income, and stage ofthe business cycle

– Political/legal conditions - federal,provincial, and local governments andgeneral stability of Canada

3.13



• General environment (continued)– Socio-cultural conditions - expectations of society

(values, customs and tastes)– Demographic conditions - trends in the physical

characteristics of a population– Technological conditions - most rapidly changing aspect

of the general environment– Global conditions - increasing number of global

competitors and consumer markets

3.14


HOW THE ENVIRONMENTAFFECTS MANAGERS

• Assessing environmental uncertainty– Degree of unpredictable change

• dynamic - frequent change• stable - minimal change

– Environmental complexity• the number of components in the environment• amount of information available or required about

those components– Managers attempt to minimize uncertainty

3.15


ENVIRONMENTAL UNCERTAINTY(Exhibit 3.6)

3.16


STAKEHOLDER RELATIONSHIPMANAGEMENT

• Who are stakeholders?– Any constituencies that are affected by

the organization’s decisions and actions• include internal and external groups

• can influence the organization

3.17


ORGANIZATIONALSTAKEHOLDERS (Exhibit 3.7)

3.18


STAKEHOLDER RELATIONSHIPMANAGEMENT (continued)

• Why is stakeholder relationshipmanagement important?– The more secure the relationship, the

more influence managers will have overorganizational outcomes

– It’s the “right” thing to do

3.19



• How can these relationships be managed?

– Four steps• identify the stakeholders

• determine real and potential concerns of eachstakeholder group

• determine whether stakeholder is critical

• determine specific approach to manage therelationship

– Approach to a stakeholder group based on theimportance of the group and the degree ofenvironmental uncertainty

3.20


MANAGING STAKEHOLDERRELATIONSHIPS (Exhibit 3.8)

3.21



• Boundary spanning– Important stakeholder and environmental

uncertainty– Interacting to gather and disseminate

information

• Stakeholder partnerships– Stakeholder is critical and environmental

uncertainty is high– Pursue common goal

3.22

Chapter 4

MANAGING INA GLOBAL

ENVIRONMENT© 2003 Pearson Education Canada Inc. 4.1


LEARNING OBJECTIVES

• You should be able to:– Explain the importance of viewing management

from a global perspective– Identify the three different attitudes towards global

business– Describe the different regional trading alliances– Explain why so many countries have become part

of regional trading alliances– Contrast multinational, transnational, and

borderless organizations

4.2



• You should be able to:– Describe the typical stages by which

organizations go global– Explain the four dimensions of country culture– Describe Canadian culture according to the four

dimensions of country culture– Identify the adjustment challenges faced by a

manager on global assignment

4.3


WHO OWNS WHAT?

• Global Environment

– National borders have becomeincreasingly irrelevant

– Has potential for dramatic expansion oforganizations

– Presents numerous challenges formanagers

4.4

COMPANIES THAT EXPORT MORE THAN50% OF TOTAL SALES

% of Sales100898585838179797676

CompanyMcDonnell DouglasCanadian Wheat BoardChrysler CanadaXCAN Grain PoolPratt & Whitney CanadaAvenor Inc.Donahue Inc.Domtar Inc.Weldwood of CanadaCanfor Corp.



WHAT’S YOUR GLOBALPERSPECTIVE?

• Parochialism– Nation views the world solely through its own

eyes and perspectives– People do not recognize that other people have

different ways of living and working– Significant obstacle for global managers

• Ethnocentric Attitude– Parochial belief that the best work approaches

and practices are those of the home country– Lack trust in foreign employees with key

decisions or technology

4.6


WHAT’S YOUR GLOBALPERSPECTIVE? (continued)

• Polycentric Attitude– Belief that host-country managers know the best work

approaches and practices– Let foreign employees determine work practices

• Geocentric Attitude– Focuses on using the best approaches and people from

around the globe– Look for the best approaches and people regardless of

the country of origin

4.7

KEY INFORMATION ABOUT THREEGLOBAL ATTITUDES (Exhibit 4.2)



UNDERSTANDING THEGLOBAL ENVIRONMENT

• Regional Trading Alliances– Global competition is influenced by regional trading

and cooperation agreements– The European Union

• a unified economic and trade entity• a single market without barriers to travel,

employment, investment, and trade• common currency (Euro)• assertion of economic power against U.S. and Japan• created one of the world’s richest markets

4.9

EUROPEAN UNION COUNTRIES (Exhibit 4.4)



UNDERSTANDING THE GLOBALENVIRONMENT (continued)

• Regional Trading Alliances (continued)– North American Free Trade Agreement (NAFTA)

• links economies of Canada, Mexico and U.S.• since 1994, eliminated barriers to free trade such as

tariffs, import licensing requirements, customs userfees

– Other Latin American free-trade blocs• Free Trade Area of the Americas (FTAA)• Southern Cone Common Market (Mercosur)

4.11

MERCOUSUR MEMBERS (Exhibit 4.5)




• Regional Trading Alliances (continued)– Association of Southeast Asian Nations

(ASEAN)

• alliance of 10 Southeast Asian nations

• created in one of the fastest growingeconomic regions in the world

• could rival NAFTA and EU

4.13

ASEAN MEMBERS (Exhibit 4.6)




• Different Types of Global Organizations– Multinational corporation (MNC)

• maintain significant operations in multiple countriesbut are managed from a base in the home country

– Transnational corporation (TNC)• maintains significant operations in more than one

country but decentralizes management to the localcountry

• nationals hired to run operations in each country• marketing strategies tailored for each country

4.15



• Different Types of Global Organizations (continued)

– Borderless organization• eliminates structural divisions that impose

artificial geographical barriers• an attempt to increase efficiency and

effectiveness in a competitive globalmarketplace

• exemplifies the geocentric attitude

4.16

HOW ORGANIZATIONS GO GLOBAL (Exhibit 4.7)

Stage IPassive Response

Stage IIInitial Overt Entry

Stage IIIEstablished International

Operations

Exportingto foreigncountries

Importingfrom foreign

countries

Hiring foreignrepresentation orcontracting with

foreign manufacturers Licensing/Franchising

ForeignSubsidiary

JointVentures

StrategicAlliances



MANAGING IN A GLOBALENVIRONMENT

• The Legal-Political Environment– Canada has stable legal and political systems– Managers in foreign countries face greater uncertainty

• The Economic Environment– Global manager must be attentive to:

• strength of home currency versus foreign currency• differences in inflation rates around the world• tax rules differ from country to country

4.18


MANAGING IN A GLOBALENVIRONMENT (continued)

• The Cultural Environment– National culture

• the values and attitudes shared byindividuals from a specific country

• shapes behaviour and beliefs• has greater effect on employees than

organizational culture• getting information about a country’s

cultural differences is difficult

4.19



• The Cultural Environment (continued)– Four dimensions of national culture

• individualism versus collectivism

– individualism - loosely knit social framework

– collectivism - tightly knit social framework

• power distance - degree of acceptance of unequaldistributions of power in institutions andorganizations

4.20



• The Cultural Environment (continued)• uncertainty avoidance - degree to which

people tolerate risk and unconventionalbehaviour

• quantity versus quality– quantity of life - culture values

assertiveness and the acquisition ofmoney and material goods

– quality of life - value relationships

4.21

EXAMPLES OF CULTURAL DIMENSIONS (Exhibit 4.9)



IS A GLOBAL ASSIGNMENTFOR YOU?

• Criteria Used When Making Global Assignment

– Technical and human factors are considered

– Criteria used influenced by the company’sexperience and commitment to globaloperations

– Include technical skills, language fluency,flexibility, and family adaptability

4.23


IS A GLOBAL ASSIGNMENTFOR YOU? (continued)

• Factors That Determine Adjustment to Global Assignment– Preassignment adjustment--what are your expectations of

this assignment and what is your experience with similarcultures?

– In-country adjustment• individual factors--positive attitude and interaction

with co-workers• organization factors--social support systems

4.24

FACTORS THAT AFFECT GLOBAL ADJUSTMENT(Exhibit 4.11)


Chapter 5

SOCIALRESPONSIBILITY

AND MANAGERIALETHICS



LEARNING OBJECTIVES• You should be able to:

– Explain the classical and socioeconomic views of socialresponsibility

– List the arguments for and against business’s beingsocially responsible

– Differentiate among social obligation, socialresponsiveness, and social responsibility

– Explain the relationship between corporate socialresponsibility and economic performance

– Describe values-based management and how it isrelated to organizational culture

5.2



• You should be able to:– Explain what the “greening” of management is

and how organizations are “going green”– Differentiate among the four views of ethics

– Identify the factors that affect ethical behaviour

– Discuss various ways organizations canimprove the ethical behaviour of theiremployees

5.3


WHAT IS SOCIALRESPONSIBILITY?

• Two Opposing Views of SocialResponsibility– Classical view - management’s only social

responsibility is to maximize profits

• doing “social good” adds to the cost of doingbusiness

• costs have to be passed on to consumers

5.4


WHAT IS SOCIALRESPONSIBILITY? (continued)• Two Opposing Views of Social Responsibility (continued)

– Socioeconomic view - businesses are not just economicinstitutions

• management’s social responsibility goes beyondmaking profits to include protecting and improvingsociety’s welfare

• businesses have responsibility to a society

• more organizations around the world have increasedtheir social responsibility

5.5


WHAT IS SOCIALRESPONSIBILITY? (continued)

• From Obligations to Responsiveness

– Social responsibility - a business’s obligation topursue long-term goals that help society

– Social obligation - obligation of a business tomeet its economic and legal responsibilities

– Social responsiveness - capacity of a firm toadapt to changing societal conditions

5.6


LEVELS OF SOCIALINVOLVEMENT (Exhibit 5.2)

Social Obligation

SocialResponsibility

SocialResponsiveness

5.7


SOCIAL RESPONSIBILITY vs.SOCIAL RESPONSIVENESS

(Exhibit 5.3)

Major considerationFocusEmphasisDecision framework

SocialResponsibility

EthicalEndsObligationLong term

SocialResponsiveness

PragmaticMeansResponsesMedium and

short term

5.8


SOCIAL RESPONSIBILITY ANDECONOMIC PERFORMANCE

• Most Research Shows a Positive Relationship

• Evaluation of Socially Conscious Mutual StockFunds

– social screening - applying social criteria toinvestment

• Conclusion

– a company’s socially responsible actions do nothurt its long-term economic performance

5.9


VALUES-BASEDMANAGEMENT

• Definition– An approach to managing in which managers

establish, promote, and practice anorganization’s shared values

• Purposes of Shared Values– Act as guideposts for managerial decisions and

actions– Influence marketing efforts– Build team spirit

5.10

PURPOSES OF SHARED VALUES(Exhibit 5.4)

SharedOrganizational

Values

Guide Managers’Decisions and

Actions

InfluenceMarketing

Efforts

BuildTeamSpirit

ShapeEmployeeBehaviour



VALUES-BASEDMANAGEMENT (continued)

• Developing Shared Values

– It is difficult to establish shared values

– Managers are responsible for shaping theorganization so that its values, norms, andideals appeal strongly to employees

– Companies that practice values-basedmanagement have broad commitment to beingsocially responsible and socially responsive

5.12


SUGGESTIONS FOR CREATING AGOOD CORPORATE VALUES

STATEMENT (Exhibit 5.5)

5.13


THE “GREENING” OFMANAGEMENT

• Definition– Recognition of the close link between an organization’s

decisions and activities and its impact on the naturalenvironment

• Global Environmental Problems– There are many global environmental problems– Economically developed nations are blamed for the

problems– Problems expected to increase as emerging countries

become more developed

5.14


THE “GREENING” OFMANAGEMENT (continued)

• How Organizations Go Green– Products and production processes have become cleaner

– Shades of green - describe different approaches thatorganizations may take

• legal approach - follow legal obligations

• market approach - organizations respond to the environmentalpreferences of customers

• stakeholder approach - organization chooses to respond tomultiple demands made by stakeholders

• activist approach - looks for ways to respect and preserve theearth and its natural resources

5.15

APPROACHES TO BEINGGREEN (Exhibit 5.6)

LegalApproach

(Light Green)

MarketApproach

StakeholderApproach

ActivismApproach

(Dark Green)

Low HighEnvironmental Sensitivity




• Summing Up Social Responsibility– Four-stage progression of an organization’s

social responsibility• each stage implies an increasing level of managerial

discretion

• Stage 1 - promote stockholders’ interests by seekingto minimize costs and maximize profits

• Stage 2 - managers accept their responsibility toemployees and focus on human resource concerns

5.17



• Summing Up Social Responsibility(continued)– Four-stage progression (continued)

• Stage 3 - expand responsibilities to otherstakeholders

• Stage 4 - managers feel responsibility to society as awhole

5.18

TO WHOM IS MANAGEMENTRESPONSIBLE? (Exhibit 5.7)

Stage 1Owners andManagement

Stage 2Employees

Stage 3Constituents in the

Specific Environment

Stage 4BroaderSociety

Social ResponsibilityLesser Greater



MANAGERIAL ETHICS

• Ethics– Rules and principles that define right and

wrong conduct• Four Views of Ethics

– Utilitarian view - ethical decisions aremade on the basis of their outcomes orconsequences

5.20


MANAGERIAL ETHICS(continued)

• Four Views of Ethics (continued)– Rights view - respects and protects individual

liberties and privileges– Theory of justice view - managers impose and

enforce rules fairly and impartially– Integrative social contracts theory - decisions

should be based on empirical and normativefactors

5.21

FACTORS THAT AFFECT ETHICALAND UNETHICAL BEHAVIOUR

(Exhibit 5.8)

EthicalDilemma

Moderators

Stage of MoralDevelopment

Ethical/UnethicalBehaviour

OrganizationalCulture

StructuralVariables

IndividualCharacteristics

IssueIntensity


STAGES OF MORALDEVELOPMENT (Exhibit 5.9)




• Factors That Affect Managerial Ethics(continued)– Individual characteristics

• values - basic convictions about right andwrong

• ego strength - strength of a person’sconvictions

• locus of control - degree to which peoplebelieve that they control their own fate

5.24



• Factors That Affect Managerial Ethics (continued)

– Structural variables• design of organization affects ethical behaviour

• rules and regulations

• behaviour of superiors

• performance appraisal systems that focus on means aswell as ends

• reward systems that punish failure to achieve ends islikely to compromise ethics

5.25



• Factors That Affect Managerial Ethics (continued)

– Organizational culture• strong culture more influential than a weak culture

• high ethical standards result from a culture that is highin risk tolerance, control, and conflict tolerance

– Issue intensity• importance of an ethical issue

• more intense issues prompt greater ethical behaviour

5.26

DETERMINANTS OF ISSUEINTENSITY (Exhibit 5.10)




• Ethics in an International Context– social and cultural differences determine

ethical and unethical behaviour– Global Compact - United Nations

document containing principles for doingbusiness globally in the areas of humanrights, labour, and environment

5.28


THE GLOBAL COMPACTHuman Rights

Principle 1:support and respect the protection of international human rights within theirsphere of influence; and

Principle 2: make sure their own corporations are not complicit in human rights abuses.

Labour

Principle 3: freedom of association and the effective recognition of the right to collectivebargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;Principle 5: the effective abolition of child labour; andPrinciple 6: the elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: support a precautionary approach to environmental challenges;Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendly

technologies.5.29



• Toward Improving Ethical Behaviour

– Comprehensive ethics programs have thepotential to improve an organization’s ethicalclimate

– Employee selection - eliminate ethicallyquestionable applicants

– Codes of ethics - formal statement of anorganization’s primary values and ethical rules

5.30


MANAGERIAL ETHICS (continued)• Toward Improving Ethical Behaviour (continued)

– Top management’s leadership - what they do is farmore important than what they say

– Job goals and performance appraisal - goals should beclear and realistic and must focus on ethical standards

– Ethics training - an increasing number of organizationsuse training to encourage ethical behaviour

– Independent social audits - evaluation of decisions inrelation to code of ethics

– Formal protective mechanisms - protect employeeswho face ethical dilemmas

5.31

Chapter 6DECISION MAKING:

THE ESSENCE OFTHE MANAGER’S

JOB6.1© 2003 Pearson Education Canada Inc.


LEARNING OBJECTIVESl You should be able to:

– Outline the steps in the decision-making process– Explain why decision-making ability is so important for

a manager– Describe the rational decision maker– Contrast the perfectly rational and bounded rationality

approaches to decision making– Explain the role that intuition plays in the decision-

making process

6.2



l You should be able to: (continued)

– Identify the two types of decision problems andthe two types of decisions that are used to solvethem

– Differentiate the decision conditions ofcertainty, risk, and uncertainty

– Describe the different decision-making styles

6.3


DECISION MAKING

• Decisions

– Choices from two or more alternatives

– All organizational members make decisions

• Decision-Making Process

– Step 1 - Identifying a Problem

• problem - discrepancy between an existingand a desired state of affairs

6.4


DECISION MAKING (continued)• Decision-Making Process (continued)

– Step 2 - Identifying Decision Criteria• decision criteria - what’s relevant in making a

decision

– Step 3 - Allocating Weights to the Criteria• must weight the criteria to give them appropriate

priority in the decision

– Step 4 - Developing Alternatives• list the viable alternatives that could resolve the

problem without evaluating them

6.5


DECISION MAKING (continued)• Decision-Making Process (continued)

– Step 5 - Analyzing Alternatives• each alternative is evaluated against the criteria

– Step 6 - Selecting an Alternative• choosing the best alternative from among those

considered

– Step 7 - Implementing the Decision• implementation - conveying the decision to those

affected by it and getting their commitment to it

– Step 8 - Evaluating Decision Effectiveness• determine whether the problem is resolved

6.6


THE DECISION-MAKING PROCESS

Identifying aProblem

Identifyingthe Decision

Criteria

AllocatingWeights

To Criteria

•Price•Manufacturer and model•Warranties•Support•Reliability•Repair Record•Reliability•Service•Warranty Period•On-site Service•Price•Case Style

1085543

My salesrepresentatives

need newcomputers.

6.3

6.7

Exhibit 6.1


DevelopingAlternatives Fujitsu AST

Sharp IBM HP TI

NEC

AnalyzingAlternatives NEC

ASTHP

FujitsuIBM

SharpTI

Selecting anAlternative

ImplementingDecision

Evaluation ofDecision Effectiveness

•Reliability•Service•Warranty Period•On-site Service•Price•Case Style

The Fujitsuis the best.

Compaq

Compaq

6.8

Exhibit 6.1(continued)

ASSESSED VALUES OF NOTEBOOK COMPUTERALTERNATIVES AGAINST DECISION CRITERIA

(Exhibit 6.3)


EVALUATION OF LAPTOP COMPUTERALTERNATIVES AGAINST CRITERIA AND

WEIGHTS (Exhibit 6.4)


DECISIONS IN THE MANAGEMENTFUNCTIONS (Exhibit 6.5)



THE MANAGER AS DECISIONMAKER

• Rational (Balance) Decision Making– Decisions are consistent, value-maximizing choices

within specified constraints– Managers assumed to make rational decisions– Assumptions of Rationality - decision maker would:

– be objective and logical– carefully define a problem– have a clear and specific goal– select the alternative that maximizes the likelihood of

achieving the goal– make decision in the firm’s best economic interests

• Managerial decision making seldom meets all the tests6.12© 2003 Pearson Education Canada Inc.

THE MANAGER ASDECISION MAKER (continued)

• Bounded Rationality

– Behave rationally within the parameters of asimplified decision-making process that is limitedby an individual’s ability to process information

– Accept solutions that are “good enough”– Escalation of commitment - increased commitment

to a previous decision despite evidence that it mayhave been wrong


THE MANAGER AS ADECISION MAKER (continued)

• Types of Problems and Decisions

– Well-Structured Problems - straightforward, familiar,and easily defined

– Programmed Decisions - used to address structuredproblems

• procedure - series of interrelated sequential steps used torespond to a structured problem

• rule - explicit statement of what to do or not to do

• policy - guidelines or parameters for decision making


THE MANAGER AS ADECISION MAKER (continued)

• Decision-Making Styles– Two dimensions define the approach to decision making

• way of thinking - differs from rational to intuitive (sensitive)• tolerance for ambiguity - differs from a need for consistency

and order to the ability to process many thoughtssimultaneously

– Define four decision-making styles• Directive - fast, efficient, and logical• Analytic - careful and able to adapt or cope with new situations• Conceptual - able to find creative solutions• Behavioural - seek acceptance of decisions


DECISION-MAKING STYLES(Exhibit 6.12)

Analytic

Directive Behavioural

Rational IntuitiveWay of Thinking

Conceptual

High

Low

Tole

ranc

e fo

r A

mbi

guit

y


MANAGING WORKFORCEDIVERSITY

• Diversity in Decision Making– Advantages - diverse employees:

• provide fresh perspectives• offer differing interpretations of problem definition• increase the likelihood of creative and unique solutions

– Disadvantages - diverse employees:• require more time to reach a decision• may have problems of communication• may create a more complex, confusing, and ambiguous

decision-making process• may have difficulty in reaching agreement


Chapter 7FOUNDATIONSOF PLANNING



LEARNING OBJECTIVES

• You should be able to:

– Define planning

– Explain why managers plan

– Describe what role goals play in planning

– Distinguish among the different types of plans

– Tell how goals are established

– Describe the characteristics of well-designed goals

7.2



• You should learn to:– Identify three contingency factors in planning– Explain the approaches to developing plans– Discuss the criticisms of planning– Describe what it takes to effectively plan in a

dynamic environment

7.3


WHAT IS PLANNING?• Planning

– Involves defining the organization’s goals,establishing an overall strategy for achievingthose goals, and developing a comprehensiveset of plans to integrate and coordinateorganizational work

– Informal planning - nothing is written down

– Formal planning - written

7.4


WHY DO MANAGERS PLAN?• Purposes of Planning

– Planning is the primary management function thatestablishes the basis for all other management functionsas it gives direction

– Planning establishes coordinated effort– Planning reduces uncertainty– Planning reduces overlapping and wasteful activities– Planning establishes goals and standards used in

controlling

7.5


WHY DO MANAGERS PLAN?(continued)

• Planning and Performance– Generally speaking, formal planning is associated with

higher profits– Quality of the planning process and the appropriate

implementation of the plans probably contribute more tohigh performance than does the extent of planning

– External environment may undermine the effects offormal planning

– Planning/performance relationship is influenced by theplanning time frame

7.6


HOW DO MANAGERS PLAN?

• The Role of Goals and Plans in Planning

– Goals - desired outcomes

• provide direction for all managementdecisions

• represent the criteria against which actualwork accomplishments can be measured

– Plans - outline how goals are going to be met

7.7


STATED OBJECTIVES FROMLARGE COMPANIES (Exhibit 7.1)

7.8


HOW DO MANAGERS PLAN?(continued)

• The Role of Goals and Plans in Planning (continued)

– Types of Goals• all organizations have multiple objectives

• no single measure can evaluate whether anorganization is successful

• stated goals - official statements of the organization’sgoals

• real goals - those goals that an organization actuallypursues

7.9



• The Role of Goals and Plans in Planning(continued)– Types of Plans

• strategic plans - apply to the entireorganization

– establish organization’s overall goals– seek to position the organization in terms of

its environment

• operational plans - specify the details ofhow the overall goals are to be achieved

– tend to cover short time periods

7.10


TYPES OF PLANS

Breadth

StrategicOperational

Time Frame

Long termShort term

Specificity

DirectionalSpecific

Frequencyof Use

Single useStanding

7.11



• The Role of Goals and Plans in Planning (continued)– Types of Plans (continued)

• long-term plans - time frame beyond threeyears

• short-term plans - cover one year or less• specific plans - clearly defined with little room

for interpretation• directional plans - flexible plans that set out

general guidelines

7.12

SPECIFIC VERSUS DIRECTIONALPLANS (Exhibit 7.3)



HOW DO MANAGERS PLAN(continued)

• The Role of Goals and Plans in Planning(continued)

– Types of Plans (continued)• single-use plans - one-time plans

specifically designed to meet the needs of aunique situation

• standing plans - ongoing plans that provideguidance for activities performed repeatedly

7.14



• Establishing Goals– Approaches to Establishing Goals

• traditional goal setting - overall goals established atthe top of the organization

– overall goals broken down into sub-goals foreach level of the organization

• network of goals creates a means-ends chain– sub-goals constrain subordinates’ behaviour

• assumes that top managers know what isbest for the organization

7.15

TRADITIONAL OBJECTIVE SETTING(Exhibit 7.4)

IndividualEmployee’sObjective

TopManagement’s

Objective

DepartmentManager’sObjective

DivisionManager’sObjective

“Increase profits, regardlessof the means”

“I want to see asignificant improvementin this division’s profits”

“We need to improvethe company’s performance”

“Don’t worry aboutquality: just work fast”




• Establishing Goals (continued)– Approaches to Establishing Goals (continued)

• management by objectives (MBO) - specific performance goals arejointly determined by employees and their managers

– progress toward accomplishing these goals is periodicallyreviewed

– rewards are allocated on the basis of this progress– MBO consists of four elements

• goal specificity• participative decision making• explicit time period• performance feedback

7.17

STEPS IN A TYPICAL MBOPROGRAM (Exhibit 7.5)




• Establishing Goals (continued)– Approaches to Establishing Goals (continued)

• management by objectives (continued)– increases employee performance and

organizational productivity– problems with MBO

• can be useless in times of dynamic change• overemphasis on personal rather than

organizational goals• may be viewed simply as an annual exercise in

paperwork

7.19



• Establishing Goals (continued)

– Characteristics of Well-Designed Goals• written in terms of outcomes• measurable and quantifiable• clear as to a time frame• challenging but attainable• written down• communicated to all organization members who need to

know the goals

7.20



• Establishing Goals (continued)– Steps in Goal Setting

• 1 - Review the organization’s mission• 2 - Evaluate available resources• 3 - Determine the goals individually or with input

from others• 4 - Write down the goals and communicate them

to all who need to know them• 5 - Review results and whether goals are being

met

7.21



• Developing Plans

– Contingency Factors in Planning• level in the organization

– operational planning dominatesmanagers’ planning efforts at lower levels

– strategic planning more characteristic ofplanning at higher levels

7.22

PLANNING IN THE HIERARCHYOF ORGANIZATIONS (Exhibit 7.7)

StrategicPlanning

OperationalPlanning

TopExecutives

Middle-LevelManagers

First-LevelManagers




• Developing Plans (continued)

– Contingency Factors in Planning (continued)

• degree of environmental uncertainty

• length of future commitments

– commitment concept - plans shouldextend far enough to meet thosecommitments made when the plans weredeveloped

7.24



• Developing Plans (continued)– Approaches to Planning

• traditional, top-down approach– planning done by top managers– formal planning department - specialists whose

sole responsibility is to help to writeorganizational plans

– plans flowed down to lower levels– most effective if plan is a workable document

used by organizational members for directionand guidance

7.25



• Developing Plans (continued)– Approaches to Planning (continued)

• inclusive approach– employees at each level develop plans suited

to their needs– employees acquire greater sense of the

importance of planning when they participatein the process

– plans more likely to be used in directing andcoordinating work

7.26


CONTEMPORARY ISSUES INPLANNING

• Criticisms of Planning1. Planning may create rigidity

• unwise to force a course of action when the environmentis fluid

2. Plans can’t be developed for a dynamic environment• flexibility required in a dynamic environment• can’t be tied to a formal plan

3. Formal plans can’t replace intuition and creativity• mechanical analysis reduces the vision to some type of

programmed routine

7.27


CONTEMPORARY ISSUES INPLANNING (continued)

• Criticisms of Planning (continued)4. Planning focuses managers’ attention on today’s competition,

not on tomorrow’s survival• plans concentrate on capitalizing on existing

business opportunities• hinders managers who consider creating or

reinventing an industry5. Formal planning reinforces success, which may lead

to failure• success may breed failure in an uncertain

environment

7.28


CONTEMPORARY ISSUES INPLANNING (continued)

• Effective Planning in Dynamic Environments

– develop plans that are specific, but flexible

– recognize that planning is an ongoingprocess

– change directions if environmentalconditions warrant

– stay alert to environmental changes

7.29

Chapter 8

STRATEGICMANAGEMENT




– Explain the importance of strategicmanagement

– Describe the steps in the strategicmanagement process

– Explain SWOT analysis– Differentiate corporate-, business-, and

functional-level strategies

8.2



• You should be able to (continued):

– Explain what competitive advantage isand why it’s important to organizations

– Describe the five competitive forces– Identify the various competitive strategies

8.3


THE IMPORTANCE OFSTRATEGIC MANAGEMENT

• What Is Strategic Management?

– A set of managerial decisions and actions that determinesthe long-run performance of an organization

• Purposes of Strategic Management

– Involved in many decisions that managers make

– Companies with formal strategic management systemshave higher financial returns than companies with no suchsystem

Important in profit and not-for-profit organizations

8.4


THE STRATEGICMANAGEMENT PROCESS

(Exhibit 8.1)

8.5



• Step 1: Identifying the Organization’sCurrent Mission, Objectives, and Strategies– Mission

• statement of the purpose of an organization• important in profit and not-for-profit

organizations• important to identify the goals currently in

place and the strategies currently beingpursued

8.6


COMPONENTS OF A MISSIONSTATEMENT (Exhibit 8.2)

8.7



(continued)• Step 2: Analyzing the Environment

– successful strategies are aligned with the environment

– examine both the specific and general environmentsto determine what trends and changes are occurring

• 3. Identifying Opportunities and Threats

– opportunities - positive trends in the externalenvironmental

– threats - negative trends in the external environment

8.8



(continued)• Step 4: Analyzing the Organization’s Resources

and Capabilities– examine the inside of the organization– available resources and capabilities always

constrain the organization in some way– core competencies - major value-creating skills,

capabilities and resources that determine theorganization’s competitive weapons

8.9



(continued)• Step 5: Identifying Strengths and Weaknesses

– Strengths - activities the organization does well orany unique resource

– Weaknesses - activities the organization does notdo well or resources it needs but does not possess

– organization’s culture has its strengths andweaknesses

– SWOT analysis - analysis of the organization’sstrengths, weaknesses, opportunities, and threats

8.10

IDENTIFYING THEORGANIZATION’S

OPPORTUNITIES (Exhibit 8.3)

Organization’sOpportunities

Organization’sResources/Abilities

Opportunities inthe Environment




(continued)• Step 6: Formulating Strategies

– Require strategies at the corporate, business, andfunctional levels of the organization

– Strategy formulation follows the decision-makingprocess

• Step 7: Implementing Strategies– A strategy is only as good as its implementation

• Step 8: Evaluating Results– Control process to determine the effectiveness of a

strategy8.12


TYPES OF ORGANIZATIONALSTRATEGIES

• Corporate-Level Strategy– Determines

• what businesses a company should be in orwants to be in

• the direction that the organization is going

• the role that each business unit will play

8.13

LEVELS OF ORGANIZATIONALSTRATEGY (Exhibit 8.4)



TYPES OF ORGANIZATIONALSTRATEGIES (continued)

• Corporate-level Strategy (continued)– Grand Strategy - Stability

• no significant change is proposed

• organization’s performance is satisfactory• environment appears to be stable and

unchanging

8.15



• Corporate-level Strategy (continued)– Grand Strategy - Growth

• seeks to increase the level of the organization’s operations• related diversification - grow by merging with or acquiring

firms in different but related industries

• unrelated diversification - grow by merging with oracquiring firms in different and unrelated industries

– Grand Strategy - Retrenchment - designed to addressorganizational weaknesses that are leading to performancedeclines

8.16

SWOT ANALYSIS AND GRANDSTRATEGIES (Exhibit 8.5)

CorporateGrowth

Strategies

CorporateStability

Strategies

CorporateRetrenchment

Strategies

AbundantEnvironmentalOpportunities

CriticalEnvironmental

Threats

CorporateStability

Strategies

Cri

tical

Wea

knes

ses

Val

uabl

eSt

reng

ths

Environmental Status

Firm

Sta

tus




• Corporate-Level Strategy (continued)

– Corporate Portfolio Analysis - used whencorporate strategy involves a number ofbusiness

• Boston Consulting Group (BCG) matrix--strategy tool that guides resource allocationdecisions on basis of market share andgrowth rate of SBU

8.18

THE BCG MATRIX (Exhibit 8.6)

Stars

CashCows

Dogs

QuestionMarks

Market Share

High Low

Hig

hL

ow

AnticipatedGrowth

Rate




• Corporate-Level Strategy (continued)– BCG matrix (continued)

• strategic implications of the matrix

– cash cows - “milk”– stars - require heavy investment

– question marks - attractive but hold asmall market share

– dogs - sold off or liquidated

8.20



• Business-Level Strategy– Determines how an organization should compete in

each of its businesses– Strategic business units - independent businesses that

formulate their own strategies– Role of Competitive Advantage

• competitive advantage - sets an organization apart byproviding a distinct edge

– comes from the organization’s core competencies– not every organization can transform core competencies into

a competitive advantage– once created, must be able to sustain it

8.21



• Business-Level Strategy (continued)

– Competitive Strategies• industry analysis based on five competitive forces

– Threat of new entrants - affected by barriers toentry

– Threat of substitutes - affected by buyer loyaltyand switching costs

– Bargaining power of buyers - affected by numberof customers, availability of substitute products

8.22



• Business-Level Strategy (continued)– Competitive Strategies (continued)

• industry analysis based on fivecompetitive forces

– Bargaining power of suppliers - affectedby degree of supplier concentration

– Existing rivalry - affected by industrygrowth rate, demand for firm’s product orservice, and product differences

8.23

Current Rivalry

IndustryCompetitors

FORCES IN THE INDUSTRYANALYSIS (Exhibit 8.7)

Suppliers

NewEntrants

Buyers

Substitutes

Threat ofNew Entrants

Threat ofSubstitutes

BargainingPower orBuyers

BargainingPower orSuppliers




• Business-Level Strategy (continued)– Competitive strategies (continued)

• Porter’s three generic strategies– cost leadership - goal is to become the

lowest-cost producer in the industry– differentiation - offer unique products

that are widely valued by customers– focus - aims at a cost advantage or

differentiation advantage in a narrowsegment

8.25


REQUIREMENTS FOR SUCCESSFULLYPURSUING PORTER’S COMPETITIVE

STRATEGIES (Exhibit 8.8)

8.26



• Functional-Level Strategy

– used to support the business-levelstrategy

– creates an appropriate supporting role foreach functional area of the organization

8.27

Chapter 9

PLANNING TOOLSAND

TECHNIQUES© 2003 Pearson Education Canada Inc. 9.1


LEARNING OBJECTIVES

• You should be able to:– Describe three techniques for assessing the

environment– Describe four techniques for allocating

resources– Tell why budgets are popular planning tools– Differentiate Gantt and load charts– Identify the steps in developing a PERT

network

9.2




– State the factors that determine the breakevenpoint

– Describe the requirements for using linearprogramming

– Explain the concept of project management

– Tell how managers might use scenarios inplanning

9.3


TECHNIQUES FOR ASSESSINGTHE ENVIRONMENT

• Environmental Scanning– The screening of information to anticipate and

interpret changes in the environment– Competitor intelligence - gathering information

about one’s competitors– Global scanning - screening of information on

global forces that might affect an organizationthat has global interests

9.4


TECHNIQUES FOR ASSESSINGTHE ENVIRONMENT (continued)

• Forecasting

– Used to predict future events to facilitatedecision making

– Techniques• quantitative - applies a set of mathematical rules to

a series of past data to predict outcomes

• qualitative - uses the judgment and opinions ofknowledgeable individuals to predict outcomes

9.5


FORECASTING TECHNIQUES(Figure 9.1)

9.6


TECHNIQUES FOR ASSESSINGTHE ENVIRONMENT (continued)• Forecasting (continued)

– Effectiveness - managers have had mixedsuccess

• forecasts are most accurate in relatively stableenvironments

• forecasts are relatively ineffective in predictingnonseasonal events, unusual occurrences, and theactions of competitors

• to improve forecasts - use simple forecastingmethods

9.7


TECHNIQUES FOR ASSESSINGTHE ENVIRONMENT (continued)• Benchmarking

– The search for the best practices in other organizationsthat lead to superior performance

– Standard tool of many organizations in quest forperformance improvement

– Analyze and then copy the methods used by leaders invarious fields

– Important to identify appropriate targets forbenchmarking

– Organizations may share benchmarking information

9.8

STEPS IN BENCHMARKING(Exhibit 9.2)

Form a benchmarkingplanning team

Prepare andimplementaction plan

Gather internal andexternal data

Analyze data toidentify performance

gaps

BESTPRACTICES



TECHNIQUES FORALLOCATING RESOURCES

• Resources

– The assets of the organization

– take many forms, including financial, physical,human, intangible, and structural/cultural

• Budgeting

– Budgets - numerical plans for allocatingresources to specific activities

9.10


TYPES OF BUDGETS (Exhibit 9.4)

Cash BudgetForecasts cash on hand and

how much will beneeded

Revenue BudgetProjects Future Sales Expense

BudgetLists primary

activitiesand allocates

dollar amount toeach

Profit BudgetCombines revenue and expense budgets ofvarious units to determine each unit’s profit

Variable Budget Fixed BudgetTakes into account Assumes fixedthe costs that vary level of saleswith volume or projection

9.11


TECHNIQUES FOR ALLOCATINGRESOURCES (continued)

9.12

• Budgeting (continued)– Ways to improve budgeting process:

• Be flexible• Goals should drive budgets• Coordinate budgeting throughout the

organization• Use budgeting/planning software when

appropriate• Remember that budgets are tools• Remember that profits result from smart

management, not because you budgeted forthem



9.13

• Scheduling– Detailing what activities have to be done, the

order in which they are to be completed, who isto do each, and when they are to be completed

– Gantt Charts• show when tasks are supposed to be done

• actual and planned output over period of time

A GANTT CHART (Exhibit 9.6)MonthActivity

Copyedit manuscript

Design sample pages

Draw artwork

Print galley proofs

Print page proofs

Design cover

1 432

Reporting DateGoalsActual Progress




• Scheduling (continued)

– Load Charts - modified Gantt Chart• schedule capacity by work areas

– vertical axis lists either entire departments orspecific resources

• allow managers to plan and control capacityutilization

9.15

5

A LOAD CHART (Exhibit 9.7)MonthEditors

Anne

Antonio

Kim

Maurice

Dave

Penny

1

Work scheduled

2 3 4 6




• Scheduling (continued)– PERT (Program Evaluation and Review

Technique) Network Analysis• used to schedule complex projects• flowchart diagram that depicts the sequence of

activities needed to complete a project• indicates the time or costs associated with each

activity• can compare the effects alternative actions might

have on scheduling and costs

9.17



• Scheduling (continued)– PERT (continued)

• events - end points that represent the completion ofmajor activities

• activities - time or resources required to progressfrom one event to another

• slack time - amount of time an activity can bedelayed without delaying the entire project

• critical path - the most time-consuming sequence ofevents and activities in a PERT network

9.18


STEPS IN DEVELOPING APERT NETWORK (Exhibit 9.8)

9.19

A PERT NETWORK FORCONSTRUCTING AN OFFICE

BUILDING (Exhibit 9.10)

A EB

D

F

C H

I

G

J K

Start10 6 14

6

3

3 5

5 53

4

315

9.20© 2003 Pearson Education Canada



• Breakeven Analysis - used to determinehow many units must be sold to haveneither profit nor loss– Used to make profit projections

– Points out relationships between revenues,costs, and profits

9.21

BREAKEVEN ANALYSIS(Exhibit 9.11)

$90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

Rev

enue

/Cos

t($)

100 200 300 400 500 600Output (in thousands)

Breakeven Point

Total Revenue

Total Costs

LossArea

ProfitArea

VariableCosts

FixedCosts




• Breakeven Analysis (continued)

– P - unit price of product

– VC - variable cost per unit

– TFC - total fixed costs

– Fixed costs - costs that do not change as volumeincreases

– Variable costs - costs that change in proportion tooutput

9.23



• Linear Programming– Mathematical technique that solve resource allocation

problems– Requirements

• resources are limited• outcome optimization is the goal• alternative methods exist for combining resources to produce a

number of output mixes• a linear relationship exists between variables

– technique has a variety of applications

9.24


CONTEMPORARYPLANNING TECHNIQUES

• Project Management

– The task of getting a project’s activities done ontime, within budget, and according tospecifications

• project - a one-time-only set of activities that has adefinite beginning and ending point in time

– Standardized planning procedures often are notappropriate for projects

9.25


CONTEMPORARY PLANNINGTECHNIQUES (continued)

• Project Management (continued)– Project Management Process

• team created from appropriate work areas• team reports to a project manager• project manager coordinates activities• team disbands when project is completed

9.26

PROJECT MANAGEMENTPROCESS (Exhibit 9.14)Define

objectives

Establishsequences

Identify activitiesand resources

Compare withobjectives

Estimate timefor activities

Determineproject

completion date

Determineadditionalresource

requirements9.27© 2003 Pearson Education Canada Inc.



• Project Management (continued)

– Role of the Project Manager• role is affected by the one-shot nature of the

project

• role is difficult because team members stilllinked to their permanent work areas

• managers must rely on their communicationskills and powers of persuasion

9.28



• Scenario Planning– Scenario - an imagined sequence of future

events– Contingency planning - “if this happens, then

these are the actions to take”– Intent is to reduce uncertainty by playing out

potential situations under different specifiedconditions

9.28

Chapter 10

ORGANIZATIONALSTRUCTUREAND DESIGN




– Define organizational structure and organizationaldesign

– Explain why structure and design are important to anorganization

– Describe the six key elements of organizationalstructure

– Differentiate mechanistic and organic organizationaldesign

– Identify the four contingency factors that influenceorganizational design

10.2




– Describe a simple structure, a functional structure, anda divisional structure

– Explain team-based structures and why organizationsare using them

– Describe matrix structures, project structures,autonomous internal units, and boundarylessorganizations

– Explain the concept of a learning organization and howit influences organizational design

10.3


DEFINING ORGANIZATIONALSTRUCTURE

• Organizing - the process of creating anorganization’s structure

• Organizational structure - the formalframework by which job tasks are divided,grouped, and coordinated

• Organizational design - process ofdeveloping or changing an organization’sstructure

10.4


KEY ELEMENTSOF ORGANIZATIONAL DESIGN

Centralization andDecentralization

Formalization

WorkSpecialization

Chainof Command

Departmentalization

Spanof Control

10.5


ELEMENTS OFORGANIZATIONAL DESIGN

• Work Specialization

– The degree to which tasks in an organizationare divided into separate jobs

– Too much specialization has created humandiseconomies

– An important organizing mechanism, thoughnot a source of ever-increasing productivity

10.6



(continued)• Departmentalization

– The basis by which jobs are grouped together• functional - groups jobs by functions performed• geographical - groups jobs on the basis of territory

or geography• product - groups jobs by product line• process - groups jobs on the basis of product or

customer flow• customer - groups jobs on the basis of common

customers

10.7



(continued)• Departmentalization (continued)

– Large organizations combine most or all formsof departmentalization

– Trends• customer departmentalization is increasingly being

used– better able to monitor and respond to customer

needs– cross-functional teams are becoming popular

10.8

FUNCTIONALDEPARTMENTALIZATION

(Exhibit 10.2)

Manager,

Engineering

Manager,

Manufacturing

Manager,

Human Resources

Manager,

PurchasingManager,

Accounting


Plant Manager

GEOGRAPHICALDEPARTMENTALIZATION

(Exhibit 10.2)

Sales Director,Western Region

Sales Director,Southern Region

Sales Director,Eastern Region

Vice Presidentfor Sales

Sales Director,Midwestern Region


PRODUCT DEPARTMENTALIZATION(Exhibit 10.2)

Mass TransitDivision

Bombardier-Rotax(Vienna)

Mass TransitSector

Recreational ProductsDivision

Logistic EquipmentDivision

Industrial EquipmentDivision

Bombardier-Rotax(Gunskirchen)

Recreational and UtilityVehicles Sector

Rail ProductsSector

Bombardier, Ltd.



PROCESS DEPARTMENTALIZATION(Exhibit 10.2)

AssemblingDepartmentManager

PlantSuperintendent

10.12

SawingDepartmentManager

Planningand MillingDepartment

Lacqueringand SandingDepartmentManager

FinishingDepartmentManager

Inspectionand ShippingDepartmentManager

CUSTOMERDEPARTMENTALIZATION

(Exhibit 10.2)

Manager,Retail Accounts

DirectorOf Sales


Manager,Wholesale Accounts

Manager,Government Accounts



(continued)• Chain of Command

– Continuous line of authority that extends from upperorganizational levels to the lowest levels and clarifies whoreports to whom

– authority - the rights inherent in a managerial position to tellpeople what to do and to expect them to do it

• responsibility - the obligation to perform any assigned duties• unity of command - a person should report to only one manager

– These concepts are less relevant today due to informationtechnology and employee empowerment

10.14



(continued)• Span of Control

– Number of employees that a manager can efficientlyand effectively manage

– Determines the number of levels and managers in anorganization

– The wider the span, the more efficient theorganization

10.15


CONTRASTING SPANS OFCONTROL (Exhibit 10.3)

14166425610244096

18645124096

Span of 4Operatives = 4,096Managers (levels 1-6) =1,365

Assuming Span of 4Assuming Span of 8

Span of 8Operatives = 4,096Managers (levels 1-4) = 585

1234567

12345

10.16



(continued)• Centralization

– The degree to which decision making is concentrated ata single point in the organization

• Decentralization

– The degree to which decisions are made by lower-levelemployees

– Distinct trend toward decentralized decision making

10.17


FACTORS INFLUENCING DEGREEOF CENTRALIZATION OR

DECENTRALIZATION (Exhibit 10.4)

10.18



(continued)• Formalization

– The degree to which jobs within theorganization are standardized

– Extent to which employee behaviour is guidedby rules and procedures

10.19


ORGANIZATIONAL DESIGNDECISIONS

• Mechanistic Organization– Rigidly and tightly controlled structure– Tries to minimize the impact of differing human traits– Most large organizations have some mechanistic

characteristics

• Organic Organization– Highly adaptive and flexible structure– Permits organization to change when the need arises– Employees are highly trained and empowered to handle

diverse job activities– Minimal formal rules and little direct supervision

10.20


MECHANISTIC VERSUSORGANIC STRUCTURES

Mechanistic Organic

• High Specialization• Rigid Departmentalization• Clear Chain of Command• Narrow Spans of Control• Centralization• High Formalization

• Cross-Hierarchical Teams• Free Flow of Information• Wide Spans of Control• Decentralization• Low Formalization

10.21


ORGANIZATIONAL DESIGNDECISIONS (continued)

• Contingency Factors– Strategy and Structure - structure should

facilitate the achievement of goals

– Size and Structure - size affects structure at adecreasing rate

10.22



• Contingency Factors (continued)– Technology and Structure

• unit production - production of items in units orsmall batches

• mass production - production of items in largebatches

• process production - production of items incontinuous process

– Mechanistic structure supports routinetechnology

– Organic structure supports non-routinetechnology

10.23

TECHNOLOGY, STRUCTURE, ANDEFFECTIVENESS (Exhibit 10.6)

MassProduction

Moderate verticaldifferentiation

High horizontaldifferentiation

High formalization

ProcessProduction

High verticaldifferentiation

Low horizontaldifferentiation

Low formalization

UnitProduction

Low verticaldifferentiation

Low horizontaldifferentiation

Low formalization

Stru

ctur

alC

hara

cter

isti

cs

Most effectivestructure

Organic Mechanistic Organic




• Contingency Factors (continued)– Environmental Uncertainty and Structure

• one way to reduce environmental uncertainty isto adjust the organization’s structure

– with greater stability, mechanistic structuresare more effective

– the greater the uncertainty, the greater theneed for an organic structure

– organizations are being designed to be moreorganic nowadays

10.25


COMMONORGANIZATIONAL DESIGNS• Traditional Organizational Designs

– Simple Structure - low departmentalization,wide spans of control, authority centralized in asingle person, and little formalization

– Functional Structure - groups similar orrelated occupational specialties together

– Divisional Structure - composed of separatedivisions

10.26


COMPARISON OF COMMONTRADITIONAL DESIGNS (Figure 10.7)

10.27


COMMON ORGANIZATIONALDESIGNS (continued)

• Contemporary Organizational Designs

– Team-Based Structures - entireorganization is made up of work teams

• employee empowerment is crucial

• teams responsible for all work activity andperformance

• complements functional or divisionalstructures in large organizations

10.28



• Contemporary Organizational Designs(continued)– Matrix Structure - assigns specialists from different

functional departments to work on projects led byproject managers

• adds vertical dimension to the traditional horizontalfunctional departments

• creates a dual chain of command

10.29

A MATRIX ORGANIZATION IN ANAEROSPACE FIRM (Exhibit 10.8)




• Contemporary Organizational Designs(continued)– Project Structure - employees work

continuously on projects• employees do not return to a functional

department at the conclusion of a project• all work performed by teams comprised of

employees with appropriate skills and abilities• tends to be very fluid and flexible

10.31



• Contemporary Organizational Designs(continued)

– Autonomous Internal Units –independent, decentralized business units

• each has its own products, clients,competitors, and profit goals

• business units are autonomous

10.32



• Contemporary Organizational Designs (continued)

– Boundary less Organization - design is not defined by, orlimited to, the horizontal, vertical, or external boundariesimposed by a predefined structure

• strategic alliances break down barriers between the company and itscustomers and suppliers

• seeks to eliminate the chain of command, to have limitless spans ofcontrol, and to replace departments with empowered teams

• flattens the hierarchy by removing vertical boundaries

• horizontal boundaries removed by organizing work around processesinstead of functional departments

10.33



• Contemporary Organizational Designs (continued)– Learning Organization - an organizational mind-set rather

than a specific organizational design• has developed the capacity to continuously adapt• all members take an active role in identifying and resolving

work-related issues• practice knowledge management by continually acquiring

and sharing new knowledge• environment is conducive to open communication• empowered teams are important• leadership creates a shared vision for the future• organizational culture provides sense of community

10.34

CHARACTERISTICS OF A LEARNINGORGANIZATION (Exhibit 10.9)

Organizational Design• Boundaryless• Teams• Empowerment

Organizational Culture• Strong Mutual

Relationships• Sense of Community• Caring• Trust

Information Sharing• Open• Timely• Accurate

Leadership• Shared Vision• Collaboration

TheLearning

Organization


Chapter 11MANAGERIAL

COMMUNICATIONAND INFORMATION

TECHNOLOGY© 2003 Pearson Education Canada Inc. 11.1



– Define communication

– Explain the interpersonal communication process

– Describe the criteria on which the differentcommunication methods can be evaluated and on whatthe choice of communication method depends

– Explain how nonverbal communication affectsmanagers

11.2



• You should learn to:

– Explain the barriers to effective interpersonalcommunication and how to overcome them

– Contrast the different organizational communicationflows and networks

– Describe two developments in information technologythat have had a significant impact on managerialcommunication

– Discuss how information technology affectsorganizations

11.3


UNDERSTANDING MANAGERIALCOMMUNICATIONS

• What is Communication?– The transfer and understanding of meaning– Everything that a manager does involves

communicating– Interpersonal communication - occurs

between people– Organizational communication - all the

patterns, networks, and systems ofcommunication in an organization

11.4


PROCESS OF INTERPERSONALCOMMUNICATION

• Message - a purpose to be conveyed• Encoding - converting the message in

symbolic form• Channel - medium a message travels along• Decoding - retranslating a sender’s message• Noise - disturbances that interfere with the

transmission, receipt, or feedback of amessage

11.5

THE INTERPERSONALCOMMUNICATION PROCESS

(Exhibit 11.1)

Sender

Message Medium Receiver

Encoding Noise

Feedback

Message

Decoding



PROCESS OF INTERPERSONALCOMMUNICATION (continued)

• Methods of Communicating Interpersonally– A wide variety of communication

methods exist– Choice of a method should reflect:

– the needs of the sender– the needs of the receiver– the attributes of the message– the attributes of the channel

11.7

EVALUATING COMMUNICATIONMETHODS

1. Feedback - how quickly can the receiver respond to the message?2. Complexity capacity - can the method effectively process complex messages?3. Breadth potential - how many different messages can be transmitted using this

method?4. Confidentiality - can communicators be reasonably sure their messages are received

only by those intended?5. Encoding ease - can sender easily and quickly use this channel?6. Decoding ease - can receiver easily and quickly decode messages?7. Time-space constraint - do senders and receivers need to communicate at the same

time and in the same space?8. Cost - how much does it cost to use this method?9. Interpersonal warmth - how well does this method convey interpersonal warmth?10. Formality - does this method have the needed amount of formality?11. Scanability - does this method allow the message to be easily browsed or scanned

for relevant information?12. Time of consumption - does sender or receiver exercise the most control over when

the message is dealt with?



COMPARISON OFCOMMUNICATION METHODS

(Exhibit 11.2)

11.9


PROCESS OF INTERPERSONALCOMMUNICATION (continued)• Methods of Communicating Interpersonally

(continued)– Nonverbal communication - communication

without words• body language - gestures, facial expressions,

and other body movements that conveymeaning

• verbal intonation - emphasis given to wordsor phrases that conveys meaning

• nonverbal component usually carries thegreatest impact

11.10


PROCESS OF INTERPERSONALCOMMUNICATION (continued)• Barriers to Effective Interpersonal

Communication– Filtering - the deliberate manipulation of

information to make it appear more favourableto the receiver

– Selective Perception - what people see or hearon the basis of their interests, background,experience, and attitudes

11.11



Communication (continued)

– Emotions - interpretation of a messageaffected by the way the receiver feels

– Information Overload - informationavailable exceeds processing capacity

11.12



Communication (continued)– Defensiveness - behaviours that result from

feeling threatened

– Language - meaning of words differs amongpeople with diverse backgrounds

• jargon - specialized terminology used by a group

– National Culture - cultural values affect theway people communicate

11.13



• Overcoming the Barriers to EffectiveInterpersonal Communication– Use Feedback - ask a set of questions about a

message to determine whether it was understood asintended

– Simplify Language - tailor the language to theaudience for whom the message is intended

– Listen Actively - listen for full meaning

11.14

ACTIVE LISTENINGBEHAVIOURS (Exhibit 11.3)

ParaphraseDon’t overtalk

Be empathetic Make eyecontact

Exhibit affirmativehead nods and

appropriatefacial expressions

ActiveListening

Avoid distractingactions orgestures

Avoid interruptingthe speaker

Ask questions




• Overcoming the Barriers to EffectiveInterpersonal Communication (continued)

– Constrain Emotions - emotions severelycloud and distort the transference of meaning

– Watch Nonverbal Cues - actions should bealigned with words

11.16


ORGANIZATIONALCOMMUNICATION

• Formal Communication

– Communication that follows the official chain ofcommand or is communication required to do one’sjob

– Takes place within prescribed organizational workarrangements

• Informal Communication

– Not defined by the organization’s structuralhierarchy

11.17


ORGANIZATIONALCOMMUNICATION (continued)

• Direction of Communication Flow– Downward - flows from a manager to subordinates

• used to inform, direct, coordinate, and evaluateemployees

– Upward - flows from subordinates to managers

• keeps managers aware of employees’ feelings• source for ideas on improving operations

• amount of upward communication affected by theculture of the organization

11.18



• Direction of Communication Flow (continued)

– Lateral - takes place among any employee on thesame organizational level

– Diagonal - cuts across both work areas andorganizational levels

• benefits efficiency and speed

• e-mail facilitates diagonal communication

11.19



• Organizational Communication Networks– Combination of vertical and horizontal flows into a

variety of patterns– Types of Networks

• chain - communication flows according to the formalchain of command

• wheel - flows between a clearly identifiable and strongleader and others in a work group or team

• all-channel - flows freely among all members of a workteam

– No single network is best for all situations

11.20

THREE COMMON ORGANIZATIONALCOMMUNICATION NETWORKS AND HOWTHEY RATE ON EFFECTIVENESS CRITERIA

(Exhibit 11.4)




• Organizational Communication Networks (continued)

– Grapevine - an informal network that is active inalmost every organization

• important source of information

• identifies issues that employees consider importantand anxiety producing

• can use the grapevine to disseminate importantinformation

• grapevine cannot be abolished

11.22


UNDERSTANDINGINFORMATION TECHNOLOGY

• How Technology Affects Managerial Communication– Information technology has changed organizational

communication• disseminates more complete information• provides more opportunities for collaboration• employees are fully accessible

– Networked Computer Systems - linking computers throughcompatible hardware and software

• e-mail - instantaneous transmission of written messages

11.23



(continued)• How Technology Affects Managerial Communication (continued)

– Networked Computer Systems (continued)

• instant messaging (IM) - interactive real-time communication

• voice-mail - digitizes a spoken message

• fax - allows transmission of documents containing both textand graphics over ordinary telephone lines

• electronic data interchange (EDI) - permits the exchange ofstandard business transaction documents

11.24



(continued)• How Technology Affects Managerial Communication (continued)

– Networked Computer Systems (continued)• Teleconferencing - permits simultaneous conferral using telephone

or e-mail group communications software

– videoconferencing - participants can see each other

• Intranet - Internet technology that links organizational employees

• Extranet - Internet technology that links an organization withcustomers and suppliers

11.25



(continued)

• How Technology Affects ManagerialCommunication (continued)– Wireless Capabilities - depends on signals sent through

space without any physical connection

• based on microwave signals, satellites, radio waves,or infrared light rays

11.26



(continued)• How Information Technology Affects

Organizations

– Communications among organizationalmembers are no longer constrained bygeography or time

• psychological drawback - personal costs associatedwith being constantly accessible

11.27

Chapter 12HUMAN

RESOURCEMANAGEMENT




– Explain the strategic importance of humanresource management

– Describe the human resource managementprocess

– Differentiate between job descriptions and jobspecifications

– Contrast recruitment and decruitment options– Describe the selection devices that work best

with various kinds of jobs

12.2




– Identify the various training categories

– Explain the various approaches to performanceappraisal

– Describe what an organization’s compensationsystem should include

– Discuss the current issues affecting humanresource management

12.3


WHY HUMAN RESOURCEMANAGEMENT IS IMPORTANT• All Managers Engage in Human Resource Management

Activities– interview job candidates– orient new employees– evaluate work performance

• Achieving competitive success through people requires afundamental change in how manages think about employees

• High performance work practices--work practices that lead toboth high individual and high organizational performance

12.4


EXAMPLES OF HIGH-PERFORMANCE WORK PRACTICES

(Exhibit 12.1)

12.5


HUMAN RESOURCEMANAGEMENT PROCESS

• Necessary for staffing the organization and sustaining highemployee performance

– Identify and select competent employees– Provide up-to-date knowledge and skills– Retain competent, high performing employees

• Influenced by the external environment– Labour union - represents workers and protects their

interests through collective bargaining– Government regulations to assure equal employment

opportunities

12.6


HUMAN RESOURCE MANAGEMENTPROCESS (Exhibit 12.2)

Compensationand

Benefits

CareerDevelopment

PerformanceManagement

HumanResourcePlanning

Recruitment

Decruitment

SelectionIdentification and selection

of competent employees

Orientation TrainingAdapted and competent

employees with up-to-dateskills and knowledge

Competent employees whoare capable of sustaining high

performance over the long term

Environment

Environment12.7


HUMAN RESOURCEPLANNING

• Ensures:– That organization has the right number

and kind of people in the right places andat the right time

– Employees are capable of effectively andefficiently performing their assignedtasks

12.8


HUMAN RESOURCEPLANNING (continued)

• Current Assessment– Job analysis - defines jobs and the behaviors

necessary to perform them– Job description - statement of what job holder

does, how it is done, and why it is done– Job specification - statement of the minimum

qualifications that a person must possess toperform a given job

12.9


JOB ANALYSIS PROCESS

Employeediaries

Job ‘experts’identify major

job characteristics

JobAnalysis

Direct observationof the worker

Structuredquestionnaire

Filming workerson the job

Interviewingemployeesin groups

Interviewingemployees

individually

12.10


HUMAN RESOURCEPLANNING (continued)

• Meeting Future Human Resource Needs– Determined by the organization’s goals and

strategies

– Demand for employees is a result of demandfor the organization’s products and services

– Comparison of current HR capabilities andfuture needs determines areas of overstaffing orunderstaffing

12.11


RECRUITMENT ANDDECRUITMENT

• Recruitment– Process of locating, identifying, and attracting

capable applicants– Choice of recruiting source determined by:

• local labour market• type or level of position• size of the organization

– Employee referrals typically produce the bestapplicants

12.12


MAJOR SOURCES OF POTENTIALJOB CANDIDATES (Exhibit 12.4)

12.13


RECRUITMENT ANDDECRUITMENT (continued)

• Decruitment– Process of reducing the size of the

organization’s workforce or restructuring itsskill base

– Used to meet the demands of a dynamicenvironment

12.14


DECRUITMENT OPTIONS(Exhibit 12.5)

OPTION DESCRIPTION

FiringLayoffsAttritionTransfersReduced workweeksEarly retirements

Job sharing

Permanent involuntary terminationTemporary involuntary terminationNot filling openingsMoving employees to job openingsWorking fewer hours per weekProviding incentives for people to

retire before normal retirementHaving employees share one full-

time job

12.15


SELECTION• Selection Process

– Screening job applicants to ensure that the mostappropriate candidates are hired

– Prediction exercise to determine whichapplicants will be successful if hired

– Selection decisions may be correct or incorrect

12.16

CorrectDecision

AcceptError

CorrectDecision

RejectError

SELECTION DECISIONOUTCOMES (Exhibit 12.6)

Accept Reject

Selection DecisionL

ater

Job

Per

form

ance

Uns

ucce

ssfu

lSu

cces

sful



SELECTION(continued)

• Validity– Degree to which there is a proven relationship between the

selection device and some relevant criterion

– Law prohibits the use of selection devices unless there isevidence that, once on the job, individuals with high testscores outperform those with low test scores

– Organization has burden to provide evidence of validity

• Reliability– Degree to which a selection device provides consistent

measures

– No selection device can be effective if it has low reliability

12.18


SUGGESTIONS FORINTERVIEWING (Exhibit 12.8)

1. Structure a fixed set of questions for all applicants

2. Have detailed information about the job

3. Minimize any prior knowledge about the applicant

4. Ask questions that require detailed answers about actual jobbehaviors

5. Use a standardized evaluation form

6. Take notes during he interview

7. Avoid short interviews that encourage premature decisionmaking

12.19


QUALITY OF SELECTION DEVICESAS PREDICTORS (Exhibit 12.10)

12.20


ORIENTATION• Work Unit Orientation

– Familiarizes new employee with goals of thework unit

• Organization orientation– Informs new employee about the organization’s

objectives, history, procedure, and rules• Successful orientation

– May be formal or informal– Makes new member feel comfortable, lowers

likelihood of poor performance andresignations

12.21


TRAINING• Skill Categories

– As jobs change, employee skills have to beupdated

– Technical skills - basic and job-specificcompetencies

– Interpersonal skills - ability to interacteffectively

– Problem-solving skills - useful in non-routinejobs

12.22


PERFORMANCE• Performance Management System

– Process of establishing standards andappraising employee performance

• Performance Appraisal Methods– Each method has advantages and disadvantages– Written essay - written description of

employee’s strengths and weaknesses– Critical incidents - focus is behaviour that

defines effective and ineffective performance

12.23


PERFORMANCE(continued)

• Performance Appraisal Methods(continued)– Graphic rating scale - list of performance

factors

– Behaviourally anchored rating scale (BARS) -critical incident and graphic rating scaleapproaches combined

– Multiple comparisons - compares one person’sperformance with that of one or more others

12.24


PERFORMANCE(continued)

• Performance Appraisal Methods (continued)

– Objectives - employees evaluated by how wellthey accomplish a specific set of goals

– Management By Objectives (MBO) - preferredmethod of appraising managers andprofessional employees

– 360 degree feedback - utilizes feedback fromsupervisors, employees, and coworkers

12.25


COMPENSATION(WAGES AND BENEFITS)

• Goals of Compensation Programs– Attract and retain competent and talented individuals– Positively impact organization’s strategic performance

• Skill-based pay– Rewards employees for their job skills and competencies– Job title doesn’t define pay category– Mesh nicely with the changing nature of jobs

• Trends in compensation– Make pay systems more flexible– Reduce the number of pay levels

12.26

FACTORS THAT INFLUENCECOMPENSATION/BENEFITS

(Exhibit 12.13)

Unionization

Level ofCompensation

andBenefits

Employee’stenure and

performance Kind of jobperformed

Size ofcompany

Managementphilosophy

Kind ofbusiness

Geographicallocation

Labour orcapital-intensive

Companyprofitability



CAREER DEVELOPMENT• Career

– Sequence of positions held by a person duringher or his lifetime

• The Way It Was– Employees advanced their work lives within a

single organization– Career development was a way to attract and

retain quality employees– Uncertainty brought organizational changes that

undermine principles of traditional careerdevelopment

12.28


CAREER DEVELOPMENT(continued)

• You and Your Career Today

– Boundaryless career - individual, notorganization, responsible for career

– Career choice - optimally offers the bestmatch between person’s aspirations andher or his abilities and marketopportunities

12.29

SOME SUGGESTIONS FOR ASUCCESSFUL MANAGEMENT

CAREER (Exhibit 12.14)



CURRENT ISSUES IN HUMANRESOURCE MANAGEMENT

• Managing Workforce Diversity

– Recruitment - recruiting net must be widened• Use nontraditional recruitment sources

• Outreach will broaden applicant pool

– Selection - process must not discriminate• Must accommodate needs of diverse applicants

– Orientation and training - transition oftenmore challenging for some groups

• Workshops to raise diversity awareness issues

12.31



(continued)• Sexual Harassment

– Any unwanted activity of a sexual nature thataffects an individual’s employment

– Harassment creates an unpleasant workenvironment and undermines workers’ abilityto perform their jobs

– Illegal behaviour includes verbal or physicalconduct toward an individual

12.32



(continued)• Work-life Balance

– Employees can’t (and don’t) leave their families andpersonal lives when they walk into work

– Managers can’t be sympathetic with every detail ofan employee’s family life

– Family-friendly benefits - provide some help indealing with family problems

– Dual-career couples - both partners haveoccupations

12.33

Chapter 13MANAGING

CHANGE ANDINNOVATION




– Contrast the calm waters and white-water rapidsmetaphors of change

– Describe what managers can change in organizations

– Explain why people are likely to resist change

– List techniques for reducing resistance to change

– Describe the situational factors that facilitate culturalchange

13.2




– Explain how process reengineering is related tochange

– Describe techniques for reducing employeestress

– Differentiate between creativity and innovation

– Explain how organizations can stimulate andnurture innovation

13.3


WHAT IS CHANGE?

• Organizational Change

– Alterations in people, structure, ortechnology

– Change is an organizational reality

– Managing change is an integral part ofevery manager’s job

13.4


FORCES FOR CHANGE

• External Forces

– Marketplace - adapt to changing consumer desires

– Governmental laws and regulations - frequent impetus forchange

– Technology - source of change in almost all industries

– Labour markets - ability to attract and retain skilledemployees in the areas of greatest need

– Economic - uncertainties about interest rates, budgetdeficits, and currency exchange rates

13.5


FORCES FOR CHANGE(continued)

• Internal Forces– Originate from the operations of the organization

– Forces may include strategy, workforce, newequipment, or employee attitudes

• Manager as change agent– Change agents - act as catalysts and assume

responsibility for change

13.6


TWO VIEWS OF THECHANGE PROCESS

• The Calm Waters Metaphor– Unfreezing - preparing for the needed change by:

• increasing the driving forces that direct behaviour awayfrom the status quo

• decreasing the restraining forces that push behaviourtowards the status quo

– Changing - move to another equilibrium level

– Refreezing - make change permanent

– Change is a break in the organization’s equilibriumstate

13.7


THE CHANGE PROCESS(Exhibit 13.1)

13.8


TWO VIEWS OF THE CHANGEPROCESS (continued)

• White-Water Rapids Metaphor

– Consistent with uncertain and dynamic environments

– Consistent with a world increasingly dominated byinformation, ideas, and knowledge

– Managers must continually maneuver in uninterruptedrapids

– Today, managers must be ready to efficiently andeffectively manage the changes facing theirorganizations or their work areas

13.9


CATEGORIES OF CHANGE(Exhibit 13.2)

Work specialization,departmentalization,chain of command, span of control,centralization, formalization,job redesign, or actual design

Structure

Attitudes, expectations,perceptions, andbehavior

People

Work processes, methods,and equipment

Technology

13.10


MANAGING CHANGE• Initiating Change:

– Identifying what organizational areasmight need to be changed

– Putting the change process in motion– Managing employee resistance to change

• Types of Change– Changing structure - organization’s

formal design, centralization, degree offormalization, and work specialization

13.11


MANAGING CHANGE(continued)

• Types of Change (continued)– Changing technology - modifications in

the way work is performed– Changing people - changes in employee

attitudes, expectations, perceptions, andbehaviour• organizational development (OD) -

techniques or programs to change people andthe nature and quality of interpersonal workrelationships

13.12


ORGANIZATIONAL DEVELOPMENTTECHNIQUES (Exhibit 13.3)

MOREEFFECTIVE

INTERPERSONALWORK

ENVIRONMENT

ProcessConsultation

IntergroupDevelopment

SensitivityTraining

SurveyFeedback

TeamBuilding

13.13


MANAGING CHANGE(continued)

• Dealing with Resistance to Change

– Why people resist change• change replaces the known with ambiguity and

uncertainty

• change threatens investments in the status quo

• belief that change is incompatible with the goals andinterests of the organization

– Techniques for reducing resistance• a variety of actions available to managers to deal

with dysfunctional resistance

13.14


WAYS TO REDUCE RESISTANCETO CHANGE (Exhibit 13.4)

13.15


CONTEMPORARY ISSUES INMANAGING CHANGE

• Changing Organizational Culture

– Culture resistant to change because it is made up ofrelatively stable and permanent characteristics

– Strong cultures are particularly resistant to change

– Understanding the situational factors - makes culturalchange more likely

• dramatic crisis occurs

• leadership changes hands

• organization is young and small

• culture is weak

13.16


CONTEMPORARY ISSUES INMANAGING CHANGE (continued)

• Changing Organizational Culture (continued)

– How Can Cultural Change Be Accomplished?• requires a comprehensive and coordinated strategy

– unfreeze the current culture

– implement new “ways of doing things”– reinforce those new values

• change, if it comes, is likely to be slow

• protect against any return to old, familiar practices andtraditions

13.17


THE ROAD TO CULTURALCHANGE (Exhibit 13.5)

13.18


CONTINUOUS QUALITYIMPROVEMENT VERSUS

REENGINEERING (Exhibit 13.6)Continuous Quality Improvement• Continuous, incremental change

• Fixing and improving

• Mostly “as is”

• Works from bottom up inorganization

Reengineering• Radical change

• Redesigning - starting over

• Mostly “what can be”

• Initiated by topmanagement

13.19


CONTEMPORARY ISSUES INMANAGING CHANGE (continued)• Continuous Quality Improvement Programs

– Continuous, small, incremental changes– Fix and improve current work activities– Rely on participative decision making from the

bottom levels• Process reengineering

– Dramatic shift in the way an organization does itswork

– Begins with the redesign of work– Requires participation from managers and workers

13.20


CONTEMPORARY ISSUES INMANAGING CHANGE (continued)• Handling Employee Stress

– What is Stress?• a dynamic condition a person faces when confronted

with an opportunity, constraint, or demand related towhat s/he desires

• stress is not necessarily bad

• potential stress becomes actual stress when:

– outcome is both uncertain

– outcome is important

13.21


CONTEMPORARY ISSUES INMANAGING CHANGE (continued)• Handling Employee Stress (continued)

– Causes of Stress• found in organizational and personal factors

• change of any kind is potentially stressful

• uncertainty around important matters

13.22


CAUSES OF STRESS

STRESS Job-RelatedPersonal Factors

13.23


SYMPTOMS OF STRESS(Exhibit 13.7)

Symptomsof Stress

Physiological

Behavioural

Psychological

13.24



– Reducing stress• controlling certain organizational factors

– employee’s abilities should match job requirements– improve organizational communications

• reduce ambiguity– performance planning program

• clarify job responsibilities• provide performance feedback

– job redesign• reduce boredom or work overload

13.25



– Reducing stress (continued)• offering help for personal stress

– general considerations– available approaches

• employee counseling• time management program• sponsored wellness programs

13.26


STIMULATING INNOVATION

• Creativity versus Innovation– Creativity - ability to combine ideas in a

unique way or to make unusualassociations between ideas

– Innovation - process of transformingcreative ideas into a useful product,service, or method of operation

13.27

SYSTEMS VIEW OFINNOVATION (Exhibit 13.8)

Creative individuals,groups,organizations

Creative processCreative situation

Creative product(s)

Inputs Transformation Outputs



STIMULATING INNOVATION(continued)

• Stimulating and Nurturing Innovation– Must focus on inputs

– Requires appropriate environment

• structural variables cultural variables

– encourage experimentation

– reward success and failures

– celebrate mistakes

13.29


STIMULATING INNOVATION(continued)

• Stimulating and Nurturing Innovation (continued)– Appropriate environment (continued)

• cultural variables– encourage experimentation– reward success and failures– celebrate mistakes

• human resource variables– promote training and development of employees– offer high job security– encourage individuals to become idea champions

13.30

INNOVATION VARIABLES(Exhibit 13.9)


Chapter 14FOUNDATIONS

OFBEHAVIOUR




– Define the focus and goals of organizationalbehaviour

– Describe the three components of an attitude– Identify the role that consistency plays in

attitudes– Explain the relationship between satisfaction

and productivity– Tell how managers can use the Myers-Briggs

personality type framework and the big-fivemodel of personality

14.2



• You should be able to:– Define emotional intelligence– Describe attribution theory and its use in

explaining individual behaviour– Identify the types of shortcuts managers use in

judging others– Explain how managers can shape employee

behaviour

14.3


WHY LOOK AT INDIVIDUALBEHAVIOUR?

• Organizational Behaviour (OB)– Concerned specifically with the actions of

people at work– Addresses issues that are not obvious

• Focus of OB– Individual behaviour - attitudes, personality,

perception, learning, and motivation– Group behaviour - norms, roles, team building,

leadership, and conflict

14.4


THE ORGANIZATION AS ANICEBERG (Exhibit 14.1)

14.5


WHY LOOK AT INDIVIDUALBEHAVIOUR? (continued)

• Goals of OB

– Explain, predict, and influence behaviour

– Manager’s success depends on gettingthings done through other people

14.6


ATTITUDES

• Evaluative statements concerningobjects, people, or events– Three components

• cognitive - beliefs, opinions, knowledge, orinformation held by a person

• affective - emotion or feeling• behavioural - intention to behave in a certain

way toward someone or something

14.7


ATTITUDES (continued)• Job-Related Attitudes

– Job satisfaction - employee’s general attitudetoward her or his job

– Job involvement - degree to which anemployee identifies with her or his job

– Organizational commitment - employee’sloyalty to, identification with, and involvementin the organization

– Organizational citizen behaviour (OCB) -discretionary behaviour that is not part of theformal job requirements

14.8


ATTITUDES (continued)• Attitudes and Consistency

– People seek consistency:• among their attitudes

• between their attitudes and behaviour

– Inconsistency gives rise to steps toachieve consistency• alter attitudes or behaviour

• develop rationalization for the inconsistency

14.9


ATTITUDES (continued)• Cognitive Dissonance Theory

– Cognitive dissonance - any incompatibility betweenattitudes or between attitudes and behaviour

– Effort to reduce dissonance related to:• importance of factors causing dissonance• perceived degree of influence over these factors• rewards that may be involved in dissonance

• Attitude Surveys– Present employee with questions that elicit how they feel

about their jobs, work groups, supervisors, or theorganization

– Attitude score is the sum of responses to individual items

14.10


SAMPLE ATTITUDE SURVEY(Exhibit 14.2)

14.11


ATTITUDES (continued)

• Satisfaction-Productivity Controversy

– Traditional belief was that happy workers wereproductive workers

– Research evidence suggests that if satisfaction hasa positive influence on productivity, it is small

– Contingency factors have clarified the relationshipbetween satisfaction and productivity

– Research designs do not permit conclusions aboutcause and effect

14.12


PERSONALITY

• The unique combination of the psychological traitswe use to describe a person

• Personality Traits– Myers-Briggs Type Indicator (MBTI) - four dimensions

• social interaction: Extrovert or Introvert

• preference for gathering data: Sensing or Intuitive

• preference for decision making: Feeling or Thinking

• style of making decisions: Perceptive or Judgmental

• lack of evidence to support the MBTI’s validity

14.13


EXAMPLES OF MBTIPERSONALITY TYPES (Exhibit 14.3)

14.14


PERSONALITY (continued)• Personality Traits (continued)

– Big-Five Model of Personality - traits includedegree of:

• extraversion - sociability, talkativeness, assertiveness• agreeableness - good-natured, cooperative, trusting• conscientiousness - responsibility, dependability,

persistence, and achievement orientation• emotional stability - calmness, enthusiasm, security• openness to experience - imaginativeness, artistic

sensitivity, and intellectualism

14.15


PERSONALITY (continued)• Emotional Intelligence (EI)

– Assortment of non-cognitive skills, capabilities, andcompetencies that influence a person’s ability tosucceed in coping with environmental demands andpressures

– self-awareness - aware of what you’re feeling• self-management - ability to manage one’s emotions• self-motivation - persistence in the face of setbacks• empathy - ability to sense how others are feeling• social skills - ability to handle the emotions of others

– EI related to performance at all organizational levels

14.16


PERSONALITY (continued)• Predicting Behaviour from Personality Traits

– Locus of Control• internals - believe that they control their own destiny

• externals - believe their lives are controlled byoutside forces

– Machiavellianism• are pragmatic, maintain emotional distance, believe

that ends can justify the means

• are productive in jobs that require bargaining andhave high rewards for success

14.17



(continued)– Self-Esteem - degree of liking for oneself

• related to expectations for success• high self-esteem individuals

– will take risks in job selection– more satisfied with their jobs

• low self-esteem individuals susceptible to socialinfluence

– Self-Monitoring - ability to adjust one’s behaviour tosituational factors

14.18



(continued)

– Risk-Taking - affects time required to make adecision

• Personality Types in Different Cultures– A country’s culture can influence dominant

personality characteristics of its people

• Implications for managers– Must fit personality to the demands of the job

14.19


PERCEPTION• Process by which individuals give meaning to their

environment by organizing and interpreting their sensoryimpressions

– None of us sees reality--we interpret what we see andcall it reality

• Factors That Influence Perception

– perceiver - individual’s personal characteristics--attitudes, personality, experience, expectations

– target - relationship of target to its background

– situation - time, location, light, color, and otherenvironmental factors

14.20


WHAT DO YOU SEE (Exhibit 14.5)

14.21


PERCEPTION (continued)• Attribution Theory

– Used to explain how we judge people differentlydepending on what meaning we attribute to a givenbehaviour

– Cause of behaviour determined by:• distinctiveness - whether person displays a behaviour in

many situations or whether it is particular to one situation

• consensus - behaviour of others in same situation

• consistency - regularity with which person engages in thebehaviour

14.22


PERCEPTION (continued)• Attribution Theory (continued)

– Errors and biases may distort attributions

• fundamental attribution error - tendency toexplain behaviour of others by:

– overestimating the influence of internal factors

– underestimating the influence of external factors

• self-serving bias - personal success attributed tointernal factors

– personal failure attributed to external factors

14.23


PERCEPTION (continued)• Shortcuts Frequently Used in Judging Others

– Make perceptual task easier

– Selectivity - portions of stimuli bombarding one’ssenses are selected based on interests, background, andattitudes of the perceiver

– Assumed similarity - “like me” effect– Stereotyping - base perceptions of an individual on

one’s impressions of the group to which s/he belongs– Halo effect - general impression about a person is

forged on the basis of a single characteristic

14.24


LEARNING• Any relatively permanent change in

behaviour that occurs as a result ofexperience

• Operant conditioning– Argues that behaviour is a function of its

consequences

– Describes voluntary or learned behaviourreinforcement strengthens a behaviour andincreases the likelihood that it will be repeated

14.25


LEARNING (continued)• Social Learning Theory

– Learning by observing other people and directexperience

– Influence of model determined by:• attentional processes - must recognize and attend to critical

features of the model

• retention processes - must remember the model’s actions• motor reproduction processes - performing actions

observed in the model

• reinforcement processes - positive incentives necessary tomotivate performance of the model’s actions

14.26


LEARNING (continued)• Shaping: A Managerial Tool

– Shape behaviour by systematically reinforcing eachsuccessive step that moves the individual closer to thedesired behaviour

– Shaping accomplished by:• positive reinforcement - desired response is followed by

something pleasant• negative reinforcement - desired response followed by

eliminating or withdrawing something unpleasant• punishment - undesirable behavior followed by

something unpleasant• extinction - no rewards follow undesired response

14.27


LEARNING (continued)• Implications for Managers

– Manage employee learning by means of rewards• positive and negative reinforcement strengthen a

desired behaviour

• punishment and extinction weaken an undesiredbehaviour

– Managers should serve as models• set examples of the desired behaviour

14.28

Chapter 15

UNDERSTANDINGGROUPS AND

TEAMS© 2003 Pearson Education Canada Inc. 15.1



– Differentiate between formal and informalgroups

– Describe the five stages of group development– Identify how roles and norms influence an

employee’s behaviour– Describe the key components in the group

behaviour model– Identify the advantages and disadvantages of

group decision making

15.2



• You should be able to:– Explain the increased popularity of teams in

organizations– Describe the four most common types of teams

in organizations– List the characteristics of effective teams– Identify how managers can build trust

15.3


UNDERSTANDING GROUPBEHAVIOUR

• Group– Two or more interacting and

interdependent individuals who cometogether to achieve particular goals• formal groups - established by the

organization• informal groups - occur naturally in the

workplace in response to the need for socialcontact

15.4


UNDERSTANDING GROUPBEHAVIOUR (continued)

• Stages of Group Development– Forming - people join the group either because of a

work assignment or for some other benefit• begin to define the group’s purpose, structure, and

leadership• stage marked by much uncertainty

– Storming - acceptance of the group’s existence• conflict over who will control the group

– Norming - relationships and a sense of group identitydevelop

• group assimilates a common set of expectations ofwhat defines correct member behaviour

15.5



• Stages of Group Development (continued)– Performing - group structure is functional and

accepted• group energy has moved to task performance

– Adjourning - group prepares to disband• attention devoted to wrapping up activities

– Group does not necessarily become moreeffective as it moves through the first fourstages

15.6

STAGES OF GROUPDEVELOPMENT (Exhibit 15.2)

Prestage Stage IForming

Stage IIStorming

Stage IIINorming Stage V

AdjourningStage IV

Performing© 2003 Pearson Education Canada Inc. 15.7



• Basic Group Concepts– Role - set of expected behavior patterns

attributed to someone who occupies a givenposition in a social unit• group members have particular roles• individuals play multiple roles

– role conflict - individual confronted bydifferent role expectations

15.8



• Basic Group Concepts (continued)

– Norms - acceptable standards or expectationsthat are shared by the group’s members

– Conformity - acceptance by group makes somemembers susceptible to conformity pressures

– Status - a prestige grading, position, or rank ina group

15.9



• Basic Group Concepts (continued)

– Group Size - effect on behaviour of group dependsupon the type of outcome

• Free rider tendency - group phenomenon inwhich individual members reduce their individualefforts as the size increases

– Group Cohesiveness - degree to which members areattracted to a group and share the group’s goals

15.10

Strong Increasein Productivity

Decrease inProductivity

No Significant Effecton Productivity

Moderate Increasein Productivity

RELATIONSHIP BETWEEN COHESIVENESSAND PRODUCTIVITY (Exhibit 15.4)

High Low

CohesivenessA

lignm

ent

of G

roup

and

Org

aniz

atio

nal G

oals

Low

Hig

h




• Basic Group Concepts (continued)– Conflict Management

• conflict - perceived incompatible differencesresulting in some form of interference oropposition

• traditional view - conflict must be avoided

• human relations view - conflict is a naturaland inevitable outcome in any group

15.13



• Basic Group Concepts (continued)– Conflict Management (continued)

• interactionist view - some conflict isabsolutely necessary

• functional conflict - supports the goals of thework group and improves its performance

• dysfunctional conflict - prevents group fromachieving its goals

15.14



• Basic Group Concepts (continued)– Conflict Management (continued)

• type of conflict– task conflict - content and goals of the

work– relationship conflict - interpersonal

relationships– process conflict - how work gets done

• conflict may be resolved in five ways

15.15


CONFLICT AND GROUPPERFORMANCE (Exhibit 15.5)

15.16

CONFLICT-RESOLUTIONTECHNIQUES (Exhibit 15.6)

Uncooperative CooperativeCooperativeness

Ass

erti

vene

ss

Una

sser

tive

Ass

erti

ve


Resolving conflicts bysatisfying one’sown needs at the

expense of another’s

Forcing

Resolving conflicts byeach party giving upsomething of valueCompromising

Rewarding conflict byseeking an advantageoussolution for all parties

Collaborating

Resolving conflicts bywithdrawing from or

suppressing them

Resolving conflicts byplacing another’s needs

and concerns above yourown

Avoiding Accommodating



• Group Decision Making– Advantages

• Provide more complete information• Generate more alternatives• Increase acceptance of solution• Increase legitimacy

– Disadvantages• Time consuming• Minority domination• Pressures to conform• Ambiguous responsibility

15.18



• Group Decision Making (continued)

– Effectiveness and Efficiency of Group Decisions• effectiveness depends on criteria of success

• size of group affects effectiveness

– Techniques for Improving Group DecisionMaking

• steps must be taken to avoid groupthink - conformitymarked by withholding different or unpopular viewsin order to give the appearance of agreement

15.19


TECHNIQUES FOR MAKING MORECREATIVE GROUP DECISIONS (Exhibit 15.8)

15.20



• Understanding Work Group Behaviour– External Conditions Imposed on the Group

• formal group is a subsystem of a larger system• group affected by the overall strategy, authority

structures, formal regulations, resources, performancemanagement system, and organization culture

• Group Member Resources - task-relevant and intellectual abilitiesof individual members

• abilities set parameters on effectiveness of performancein a group

• positive attributes - sociability and self-reliance• negative attributes - dominance and unconventionality

15.21


UNDERSTANDING ORUPBEHAVIOUR (continued)

• Understanding Work Group Behaviour (continued)

– Group Structure - structural variables include roles,norms, status, and group size

– Group Processes - include communication, decisionmaking, leadership, and conflict

• process factors created in the group may have apositive or negative effect on group performance

– Group Tasks• complexity - simple tasks are routine and standardized

– complex tasks are novel and non-routine

15.22

GROUP BEHAVIOUR MODEL(Exhibit 15.9)

ExternalConditionsImposed onthe Group

GroupMember

Resources

GroupStructure

GroupProcesses

Performanceand Satisfaction

GroupTasks



TURNING GROUPS INTOEFFECTIVE TEAMS

• What Is a Team?

– work team - formal group made up ofinterdependent individuals who areresponsible for the attainment of a goal

– work teams are popular in organizations

15.24

WHY ARE WORK TEAMSPOPULAR? (Exhibit 15.10)

WHY USETEAMS?

Createsesprit de corps

Takes advantageof workforce

diversity

Increasesflexibility

Increasesperformance

Allows managersto do more strategic

Management



TURNING GROUPS INTOEFFECTIVE TEAMS (continued)

• Types of Teams– Teams differ in terms of membership

• functional teams - composed of a managerand her or his employees from onefunctional area

• cross-functional teams - members comedifferent from functional areas

15.26


TURNING GROUPS INTOEFFECTIVE TEAMS (continued)• Types of Teams (continued)

– Teams differ in terms of structure

• supervised - under the direction of a manager

• self-managed - operate without a manager

– responsible for a complete work process orsegment

– assumes the responsibilities of managing itself

– organizations plan to expand their use in thefuture

15.27

CATEGORIES OF TEAMS(Exhibit 15.11)

• Product development• Problem solving• Reengineering• Any other organizationalpurposes desired

Purpose

• Functional• Cross-functional

Membership

• Supervised• Self-managed

Structure

• Permanent• Temporary

Duration



TURNING GROUPS INTOEFFECTIVE TEAMS (continued)

• Types of Teams (continued)

– Virtual team - physically dispersedmembers are linked by computertechnology• miss the normal give-and-take of face-to-

face discussions

• tend to be task oriented

15.29


DEVELOPING AND MANAGINGEFFECTIVE TEAMS

• Characteristics of Effective Teams– Clear Goals - members understand and support

the goals to be achieved– Relevant Skills - members have the necessary

technical and interpersonal skills– Mutual Trust - members are confident in each

others’ ability, character, and integrity– Unified Commitment - loyalty and dedication

to the team

15.30


DEVELOPING AND MANAGINGEFFECTIVE TEAMS (continued)

• Characteristics of Effective Teams (continued)– Good Communication - messages are readily

understood– Negotiating Skills - flexibility requires

members to possess these skills– Appropriate Leadership - provide help in

difficult situations– Internal and External Support - team requires

a sound infrastructure

15.31

CHARACTERISTICS OF EFFECTIVETEAMS (Exhibit 15.12)



DEVELOPING AND MANAGINGEFFECTIVE TEAMS (continued)• Managing Teams

– Planning - goal determination• members understand and accept the team’s

goals

– Organizing - clarify authority andstructural issues• support in the organization’s culture for

employee involvement and autonomy• must resolve issues of leadership, tasks to be

performed, and assignment of tasks

15.33


DEVELOPING AND MANAGINGEFFECTIVE TEAMS (continued)• Managing Teams (continued)

– Leading - determine the role that leader will play

– Controlling - performance criteria must reflectteamwork behaviors

• reward system must reflect team efforts andperformance

– gainsharing - incentive program that sharesthe gains of the efforts of employees withthose employees

15.34

Chapter 16

MOTIVATINGEMPLOYEES



LEARNING OBJECTIVES

• You should be able to:– Define the motivation process– Describe three early motivation theories– Explain how goals motivate people– Differentiate reinforcement theory from goal-

setting theory– Identify ways to design motivating jobs

16.2



• You should be able to: (continued)– Describe the motivational implications of

equity theory– Explain the key relationships in expectancy

theory– Describe current motivation issues facing

managers– Identify management practices that are likely to

lead to more motivated employees

16.3


WHAT IS MOTIVATION?• Motivation

– The willingness to exert high levels of effort to reachorganizational goals, conditioned by the effort’s ability tosatisfy some individual need

– effort - a measure of intensity or drive• goals - effort should be directed toward, and consistent

with, organizational goals

– Need - an internal state that makes certain outcomesappear attractive

• unsatisfied needs create tensions that stimulate drives• drives lead to search behavior

16.4

THE MOTIVATION PROCESS(Exhibit 16.1)

UnsatisfiedNeed

SatisfiedNeed

SearchBehavior

DrivesTensionReductionof Tension



EARLY THEORIES OFMOTIVATION

• Maslow’s Hierarchy of Needs Theory– Lower-order needs - largely satisfied externally

• physiological - food, drink, shelter, sexual satisfaction• safety - security and protection from physical and

emotional harm– assurance that physiological needs will be satisfied

– Higher-order needs - largely satisfied internally• social - affection, belongingness, acceptance• esteem - internal factors like self-respect, autonomy

– external factors like status, recognition, attention• self-actualization - achieving one’s potential

16.6

MASLOW’S HIERARCHY OFNEEDS (Exhibit 16.2)

Physiological

Safety

Social

Esteem

Self-Actualization



EARLY THEORIES OFMOTIVATION (continued)

• McGregor’s Theory X and Theory Y– Theory X - assumes that workers have little ambition,

dislike work, want to avoid responsibility, and need tobe closely controlled

– Theory Y - assumes that workers can exercise self-direction, accept and actually seek out responsibility,and consider work to be a natural activity

– No evidence that either set of assumptions is valid

– No evidence that managing on the basis of theory Ymakes employees more motivated

16.8


EARLY THEORIES OFMOTIVATION (continued)

• Herzberg’s Motivation-Hygiene Theory– Intrinsic characteristics consistently related to job

satisfaction• Motivator factors increase job satisfaction and

motivation– Extrinsic characteristics consistently related to job

dissatisfaction• Hygiene factors don’t motivate employees

– Proposed dual continua for satisfaction anddissatisfaction

– Theory enjoyed wide popularity– Theory was roundly criticized

16.9


HERZBERG’S MOTIVATION-HYGIENE THEORY (Exhibit 16.3)

16.10

CONTRASTING VIEWS OFSATISFACTION-DISSATISFACTION

(Exhibit 16.4)

Satisfaction No Satisfaction No Dissatisfaction Dissatisfaction

Motivators Hygienes

Satisfaction Dissatisfaction

Herzberg’s View

Traditional View



CONTEMPORARY THEORIES OFMOTIVATION

• Three-Needs Theory - McClelland– Need for achievement (nach) - drive to excel, to achieve in relation

to a set of standards, and to strive to succeed

– Need for power (npow) - need to make others behave ina way that they would not have behaved otherwise

– Need for affiliation (naff) - desire for friendly andclose interpersonal relationships

– Best managers tend to be high in the need for powerand low in the need for affiliation

16.12


CONTEMPORARY THEORIES OFMOTIVATION (continued)

• Goal-Setting Theory– Intention to work toward a goal is a major source of job

motivation– Specific goals increase performance– When accepted, lead to higher performance– Participation in goal setting is useful– Feedback is useful

• helps identify discrepancies between what has beenaccomplished and what needs to be done

• self-generated feedback is a powerful motivator• goal commitment - theory presupposes that individual is

determined to accomplish the goal

16.13


CONTEMPORARY THEORIES OFMOTIVATION (continued)

• Goal-Setting Theory (continued)

– Contingencies in goal-setting theory

• goal commitment - theory presupposes that individual isdetermined to accomplish the goal

• self-efficacy - an individual’s belief that s/he is capable ofperforming a task

– higher self-efficacy, greater motivation to attain goals

• national culture - theory is culture bound

– main ideas align with North American cultures

– goal setting may not lead to higher performance in othercultures

16.14


GOAL-SETTING THEORY(Exhibit 16.5)

16.15


CONTEMPORARY THEORIESOF MOTIVATION (continued)

• Reinforcement Theory– Behaviour is solely a function of its

consequences• Behaviour is externally caused

– Reinforcers - consequences that, when givenimmediately following a behaviour, affect theprobability that the behaviour will be repeated

• managers can influence employees’ behaviour byreinforcing actions deemed desirable

• emphasis in on positive reinforcement, notpunishment

16.16



• Designing Motivating Jobs– Job Design - the way tasks are combined to

form complete jobs

– Job Enlargement - horizontal expansion of job• job scope - the number of different tasks required in

a job and the frequency with which these tasks arerepeated

• provides few challenges, little meaning to workers’activities

• only addresses the lack of variety in specialized jobs

16.17



• Designing Motivating Jobs (continued)

– Job Enrichment - vertical expansion ofjob• job depth - degree of control employees have

over their work

• research evidence has been inconclusiveabout the effect of job enrichment onperformance

16.18



• Designing Motivating Jobs (continued)– Job Characteristics Model (JCM) - conceptual

framework for analyzing jobs• jobs described in terms of five core characteristics

– skill variety - degree to which job requires a varietyof activities

– task identity - degree to which job requirescompletion of an identifiable piece of work

– task significance - degree to which job hassubstantial impact on the lives of other people

– these three characteristics create meaningful work

16.19



• Designing Motivating Jobs (continued)– Job Characteristics Model (JCM) (continued)

• jobs described in terms of five core characteristics(continued)

– autonomy - degree to which job providessubstantial freedom, independence, and discretionin performing the work

– feedback - degree to which carrying out the jobresults in receiving clear information about theeffectiveness with which it has been performed

16.20

JOB CHARACTERISTICS MODEL(Exhibit 16.6)

Core JobDimension

sSkill VarietyTask IdentityTask Significance

Autonomy

Feedback

Experiencedmeaningfulnessof the work

Experienced responsibilityfor outcomes of work

Knowledge of the actualresults of the work

CriticalPsychological States

High InternalWork Motivation

High-QualityWorkPerformance

High Satisfactionwith the Work

Low Absenteeismand Turnover

Personal andWork Outcomes

Strength of Employee GrowthNeed


GUIDELINES FOR JOB REDESIGN (Exhibit 16.7)

Core JobDimensions

SuggestedActions

Opening FeedbackChannels

Combining Tasks

Task Identity

Skill Variety

Forming NaturalWork Units

Task Significance

Load Vertically Autonomy

Forming NaturalWork Units

Feedback




• Equity Theory– Proposes that employees perceive what they get from a

job (outcomes) in relation to what they put into it(inputs)

– Input/outcome ratio compared with the ratios ofrelevant others

– Referent (relevant other) may be:• other - individuals with similar jobs• a system - includes organizational pay policies and

administrative systems• self - past personal experiences and contacts

16.23


EQUITY THEORY (Exhibit 16.8)

16.24



• Equity Theory (continued)– When inequities are perceived, employees act

to correct the situation• distort either their own or others’ inputs or outputs• behave in a way to induce others to change their

inputs or outputs• behave in a way to change their own inputs or

outputs• choose a different comparison person• quit their jobs

– Theory leaves some issues unclear

16.25



• Expectancy Theory– Theory states that an individual tends to act in a certain way based on

the expectation that the act will be followed by a given outcome andon the attractiveness of that outcome to the individual

– Expectancy (effort-performance linkage) - perceivedprobability that exerting a given amount of effort will leadto a certain level of performance

– Instrumentality (performance-reward linkage) - strengthof belief that performing at a particular level isinstrumental in attaining an outcome

– Valence - attractiveness or importance of the potentialoutcome

16.26

SIMPLIFIED EXPECTANCYMODEL (Exhibit 16.9)

IndividualEffort

IndividualPerformance

AOrganizational

RewardsB

IndividualGoals

C

A = Effort-performance linkage

B = Performance-reward linkage

C = Attractiveness




• Expectancy Theory (continued)– Theory emphasizes rewards

– No universal principle for explaining whatmotivates individuals

• managers must understand why employees viewcertain outcomes as attractive or unattractive

– Most comprehensive and widely acceptedexplanation of employee motivation

16.28


INTEGRATING CONTEMPORARYTHEORIES OF MOTIVATION (Exhibit 16.10)

16.29


CURRENT ISSUES INMOTIVATION

• Motivating a Diverse Workforce

– Flexibility is the key to motivating a diverseworkforce

• Diverse array of rewards necessary to satisfy diversepersonal needs and goals

– Flexible Working Schedule• compressed workweek - employees work longer

hours per day but fewer days per week

16.30


CURRENT ISSUES INMOTIVATION (continued)

• Motivating a Diverse Workforce (continued)– Flexible work hours (flextime) - employees required to

work a specific number of hours a week but are free tovary those hours within certain limits

– Job sharing - two or more people split a full-time job

– Telecommuting - employees work at home and are linked tothe workplace by computer and modem

16.31



• Motivating a Diverse Workforce (continued)– Cultural Differences in Motivation

• motivation theories developed in the U.S. and validated withAmerican workers

• may be some cross-cultural consistencies

• Pay-for-Performance– instead of paying for time on the job, pay is adjusted to reflect some

performance measure

– compatible with expectancy theory

– programs are gaining in popularity

16.32



• Open-Book Management– Involve employees in workplace decisions by opening up

the financial statements

– Workers treated as business partners

– Get workers to think like an owner

– May also provide bonuses based on profit improvements

• Motivating the “new workforce”– Motivating professionals - professionals tend to derive

intrinsic satisfaction from their work and receive high pay

16.33



• Motivating the “new workforce”– Motivating Contingent Workers - part-time, contract, or temporary

workers• less security and stability than permanent employees• display little identification or commitment to their employers• hard to motivate contingent workers• repercussions of mixing permanent and contingent workers when pay

differentials are significant– Motivating Low-Skilled, Minimum-Wage Employees

• difficult challenge to keep performance levels high• employee recognition programs• in service industries, empower front-line employees to address

customers’ problems

16.34

FROM THEORY TO PRACTICERecognizeindividualdifferences

Ensure that goalsare perceived as

attainable

Check the systemfor equity

Individualizerewards

Link rewardsto performance

Suggestionsfor

MotivatingEmployees

Use goalsDon’t ignore

money

Match peopleto jobs


Chapter 17

LEADERSHIP



LEARNING OBJECTIVES

• You should be able to:– Explain the difference between managers and

leaders– Describe the trait and behavioural theories of

leadership– Explain the Fiedler contingency model– Contrast the Hersey-Blanchard and leader

participation models of leadership– Summarize the path-goal model

17.2



• You should be able to:– Contrast transactional and transformational

leaders– Describe the main characteristics of charismatic,

visionary, and team leaders– Explain the various sources of power a leader

might possess– Describe how leaders can create a culture of trust– Explain gender and cultural differences in

leadership

17.3


LEADERSHIP

• Leader– Someone who can influence others and who has

managerial authority

• Leadership– Process of influencing a group toward the

achievement of goals

– A heavily researched topic

17.4


EARLY LEADERSHIPTHEORIES

• Trait Theories– Characteristics that might be used to

differentiate leaders from non-leaders

– Proved to be impossible to identify a set oftraits that would always differentiate leadersfrom non-leaders

17.5


EARLY LEADERSHIPTHEORIES (continued)

• Behavioural Theories– Identified behaviours that differentiated effective leaders

from ineffective leaders

– University of Iowa Studies - Kurt Lewin

• explored three leadership styles

– autocratic - leader dictated work methods

– democratic - involved employees in decision making

• used feedback to coach employees

– laissez-faire - gave the group complete freedom

17.6



• Behavioural Theories (continued)– Ohio State Studies - identified two dimensions of

leadership• initiating structure - extent to which a leader was likely to

define and structure her/his role and the roles of groupmembers to seek goal attainment

• consideration - extent to which a leader had jobrelationships characterized by mutual trust and respectfor group members’ ideas and feelings

• findings - high-high leaders achieved high group taskperformance and satisfaction

17.7



• Behavioural Theories (continued)

– University of Michigan Studies - identified twodimensions of leadership

• employee oriented - emphasized interpersonalrelationships

• production oriented - emphasized the technical ortask aspects of the job

17.8



• Behavioural Theories (continued)– Managerial Grid - two-dimensional grid that provides a

framework for conceptualizing leadership style• dimensions are concern for people and concern for

production• five management styles described

– impoverished (1,1) - minimum effort to reach goalsand sustain organization membership

– task (9,1) - arrange operations to be efficient withminimum human involvement

– middle-of-the-road (5,5) - adequate performance bybalancing work and human concerns

17.9


THE MANAGERIAL GRID(Exhibit 17.3)

5,5

1,9C

once

rn f

or P

eopl

e9,9

9,11,1

CountryClub

TeamManagement

ImpoverishedManagement

Middle-of-theRoadManagement

TaskManagement

17.10



• Behavioural Theories (continued)– Managerial Grid (continued)

• five management styles (continued)– country club (1,9) - attention to human needs and

creation of comfortable work environment– team (9,9) - committed people motivated by a

common purpose, trust, and mutual respect• concluded that managers should use (9,9) style

17.11


CONTINGENCY THEORIESOF LEADERSHIP

• Basic Assumptions

– leader effectiveness depends on thesituation

– must isolate situational conditions orcontingencies

17.12


CONTINGENCY THEORIESOF LEADERSHIP (continued)

• Fiedler Model– Effective group performance depends on

matching the leader’s style and the degree towhich the situation permits the leader to controland influence

– Least-Preferred Coworker (LPC) - measures theleader’s style of interacting with subordinates• high LPC - least preferred coworker described

in relatively favorable terms• low LPC - least preferred coworker described

in relatively unfavourable terms

17.13



• Fiedler Model (continued)– Model assumes that leader’s style was always the same and

could not change in different situations– Three contingency factors that identify eight possible

leadership situations that vary in favourability• leader-member relations - degree of confidence, trust,

and respect members had for leader• task structure - degree to which job assignments were

formalized and had procedures• position power - degree of influence a leader had over

power-based activities

17.14

FINDINGS OF THE FIEDLER MODEL (Exhibit 17.4)

CategoryLeader-MemberRelations

Task Structure

Position Power

I II III IV V VI VII VIII

Good Good Good Good Poor Poor Poor Poor

High High Low Low High High Low Low

Strong Weak Strong Weak Strong Weak Strong Weak

Favourable UnfavourableModerate

Good

Poor

Per

form

ance

RelationshipOriented

TaskOriented

17.15© 2003 Pearson Education Canada In.c



• Fiedler Model (continued)– Results indicated that:

• task-oriented leaders performed better insituations that are very favourable to them andin situations that are very unfavourable

• relationship-oriented leaders performed better insituations that are moderately favourable

– Implications for improving leadership• place leaders in situations suited to their style• change the situation to fit the leader

17.16



• Hersey and Blanchard’s Situational Leadership Theory– appropriate leadership style is contingent on the

followers’ readiness• readiness - extent to which people have the ability and

willingness to accomplish a specific task– reflects the reality that it is followers who accept or

reject the leader– based on two leadership dimensions

• task behaviours

• relationship behaviours

17.17



• Situational Leadership Theory (continued)

– Four leadership styles defined by the twodimensions

• Telling - leader defines roles and tells people how to dotheir jobs

• Selling - leader is both directive and supportive

• Participating - leader and follower make decisions

• Delegating - leader provides little direction or support

– Tests of the theory have yielded disappointingresults

17.18


HERSEY AND BLANCHARD’S SITUATIONLEADERSHIP MODEL (Exhibit 17.5)

17.19



• Leader-Participation Model

– Victor vroom and associates - relate leadershipbehavior and participation to decision making

– Provides a sequential set of rules to follow indetermining the form and amount of participation indecision making

– Provides an excellent guide to help managerschoose an appropriate leadership style to fit thesituation

17.20



• Leader-Participation Model (continued)– Five leadership styles

• Decide - leader makes decision alone, either announcing or selling togroup

• Consult Individually - leader makes decision after obtaining feedbackfrom group members individually

• Consult Group - leader makes decision after obtaining feedback fromgroup members in meeting

• Facilitate - leader, acting as facilitator, defines problem andboundaries for decision-making after presenting it to group

• Delegate - leader permits group to make decision within prescribedlimits

17.21



• Path-Goal Model– Robert House - leader’s job is to assist followers in attaining

their goals that are compatible with the overall objectives ofthe group or organization

– Leader behaviour is:• acceptable to the degree that group views it as a source of

immediate or future satisfaction• motivational to the extent that it:

– makes satisfaction of subordinates’ needs contingenton effective performance

– provides the coaching, guidance, support, and rewardsnecessary for effective performance

17.22

PATH-GOAL THEORY (Exhibit 17.8)Environmental

Contingency Factors

• Task Structure• Formal Authority System• Work GroupLeader

Behaviour

• Directive• Supportive• Participative• Achievement oriented

Outcomes

•Performance• Satisfaction

SubordinateContingency Factors

• Locus of Control• Experience• Perceived Ability




• Path-Goal Model (continued)

– Identifies four leadership behaviours• Directive - describes tasks, sets schedules, and

offers guidance on task performance• Supportive - shows concern for subordinates• Participative - relies on subordinates’ suggestions

when making a decision• Achievement oriented - sets challenging goals

– Assumes that a leader can display any or all ofthe behaviours depending on the situation

17.24


CUTTING-EDGE APPROACHESTO LEADERSHIP

• Transformational-Transactional Leadership– Transactional - leaders who guide or motivate

their followers in the direction of establishedgoals by clarifying role and task requirements

– Transformational - inspire followers totranscend their own self-interests for the goodof the organization

17.25


CUTTING-EDGE APPROACHESTO LEADERSHIP (continued)

• Charismatic-Visionary Leadership– Charismatic - enthusiastic, self-confident

leader whose personality and actions influencepeople

– Visionary - ability to create and articulate arealistic, credible, and attractive vision thatimproves the present situation

17.26



• Team Leadership– Role of team leader different from the traditional

leadership role– Requires skills such as:

• patience to share information• ability to trust others and give up authority• understanding when to intervene

– Team leader’s job focuses on:• managing the team’s external boundary• facilitating the team process

17.27



• Team Leadership (continued)

– Team leaders serve as:• liaisons with external constituencies - clarify others’

expectations of the team, gather information from the outside,and secure needed resources

• troubleshooters - ask penetrating questions, help team talkthrough problems, and gather needed resources

• conflict managers - identify source of conflict, who is involved,and find resolution options

• coaches - clarify role expectations, teach, offer support, andwhatever else is necessary to keep performance levels high

17.28

SPECIFIC TEAM LEADERSHIPROLES (Exhibit 17.9)

Coach

TroubleshooterConflictmanager

TeamLeadership

Roles

Liaison withexternal

constituencies



CONTEMPORARY ISSUES INLEADERSHIP

• Leaders and Power– Five sources of power

• legitimate - authority associated with a position

• coercive - ability to punish or control

• reward - ability to give positive benefits

• expert - influence based on special skills orknowledge

• referent - arises because of a person’s desirableresources or personal traits

17.30


CONTEMPORARY ISSUES INLEADERSHIP (continued)

• Creating a Culture of Trust– Credibility - honesty, competence, and ability to inspire

• Honesty is the number one characteristic of admired leaders

– Trust - belief in the integrity, character, and ability of the leader

• confident that rights and interests will not be abused

• important for empowering subordinates

• trend toward expanding non-authority relationships within andbetween organizations widens the need for trust

17.31

BUILDING TRUSTPracticeopenness

Tell thetruth

Maintainconfidences

Showconsistency

Fulfill yourpromises

Trust

Speak yourfeelings

Demonstratecompetence

Be fair




• Leading Through Empowerment– Managers increasingly leading by empowerment

• Gender and Leadership– Gender provides behavioural tendencies in leadership

– Women adopt more democratic style, share power andinformation, and attempt to enhance followers’ self-worth

– Men more directive, command-in-control style

17.33



• Gender and Leadership (cont.)– Is different better?

• when rated by peers, employees, and bosses, womenexecutives score better than male counterparts

• explanations of difference in effectiveness include:– flexibility, teamwork, trust, and information sharing

are replacing rigid structures, competitiveindividualism, control, and secrecy

– best managers listen, motivate, and provide support– women do the above better than men

• there is still no “one best” leadership style

17.34



• Leadership Styles in Different Countries– Effectiveness of leadership style influenced by national

culture• leaders constrained by the cultural conditions their followers

have come to expect

– Most leadership theories developed in the U.S.• emphasize follower responsibilities rather than rights• assume self-gratification rather than commitment to duty• assume centrality of work and democratic value orientation• stress rationality rather than spirituality

17.35



• Sometimes Leadership is Irrelevant!– Leader behaviours may be irrelevant in some situations– Factors that reduce leadership importance include:

• follower characteristics - experience, training,professional orientation, or need for independencereplace the need for leader support and ability to reduceambiguity

• job characteristics - unambiguous and routine tasks, ortasks that are intrinsically satisfying, place fewerdemands on leaders

• organizational characteristics - explicit goals, rigid rulesand procedures, and cohesive work groups can substitutefor formal leadership

17.36


LEARNING OBJECTIVES


– Define control

– Describe the three approaches to control

– Explain why control is important

– Describe the control process

– Distinguish among the three types of control

– Describe the qualities of an effective controlsystem

18.2




– Discuss the contingency factors that influencethe design of an organization’s control system

– Identify how controls need to be adjusted forcultural differences

– Explain how three contemporary issues -workplace privacy, employee theft, andworkplace violence - affect control

18.3


WHAT IS CONTROL?• Control

– The process of monitoring activities to ensurethat they are being accomplished as plannedand of correcting significant deviations

– Control systems are judged in terms of howwell they facilitate goal achievement

• Three basic approaches to control– Market control - emphasizes the use of external

market mechanisms to establish standards ofperformance

18.4


WHAT IS CONTROL?(continued)

• Three basic approaches to control(continued)– Bureaucratic control - emphasizes

organizational authority and relies onadministrative rules and procedures

– Clan control - behaviour regulated by sharedvalues, traditions, and other aspects oforganizational culture

18.5


WHY IS CONTROL IMPORTANT?• Control is the Final Link in the Management

Process– Provides the critical link back to planning– Only way managers know whether

organizational goals are being met• Permits delegation of authority

– Fear that employees will do something wrongfor which the manager will be held responsible

– Provides information and feedback on employeeperformance

18.6

StructureHuman ResourceManagement

Organizing

THE PLANNING-CONTROLLINGLINK (Exhibit 18.2)

StandardsMeasurementsComparisonsActions

Controlling

GoalsObjectivesStrategiesPlans

Planning

MotivationLeadershipCommunicationIndividual andGroup Behaviour

Leading



THE CONTROL PROCESS(Exhibit 18.3)

18.8


THE CONTROL PROCESS• Controlling is a three-step process• Assumes that performance standards already exist

– specific goals are created in the planningprocess

• Measuring– How We Measure

• personal observation - permits intensivecoverage

– Management By Walking Around(MBWA)

– drawbacks - subject to personal biases

18.9


THE CONTROL PROCESS(continued)

• Measuring (continued)

– How We Measure (continued)• statistical reports - numerical data are easy to visualize and

effective for showing relationships

– drawbacks - not all operations can be measured

• oral reports - includes meetings, telephone calls

– may be best way to control work in a virtualenvironment

– technology permits creation of written record fromoral report

– drawbacks - filtering of information

18.10



• Measuring (continued)– How We Measure (continued)

– written reports - often more comprehensiveand concise than oral reports• usually easy to file and retrieve

– comprehensive control efforts should use allfour approaches

18.11



• Measuring (continued)– What We Measure

• what we measure more critical than how we measure• control criteria applicable to any management

situation:– employee satisfaction, absenteeism, and turnover– keeping costs within budgets

– Control system needs to recognize the diversity ofactivities

– Some activities difficult to measure in quantifiableterms

18.12



• Comparing

– Determines the degree of variation betweenactual performance and standard

– Acceptable range of variation - deviations thatexceed this range become significant

18.13

DEFINING THE ACCEPTABLERANGE OF VARIATION (Exhibit 18.4)

AcceptableUpper Limit

Standard

AcceptableLower Limit

Mea

sure

men

t of

Per

form

ance

AcceptableRange ofVariation

t t+1 t+2 t+3 t+4 t+5Time Period (t)


CANUCKBREW’S SALESPERFORMANCE FOR JULY (Exhibit 18.5)

BrandAlexander KeithBig Rock WarthogOkanagan SpringMooseheadOlands Export AleMcAuslan’sGranville IslandUnibroue’sNelson After DarkTotal cases

Standard*1,075

63080062054016022580

1704,300

Actual*91363491262267214022065

2864,464

Over (under)*(162)

4112

2132(20)(5)

(15)116164

* hundreds of cases




• Taking Managerial Action– Correct Actual Performance - action taken

when the performance variation isunsatisfactory

• immediate corrective action - corrects problemsat once to get performance back on track

• basic corrective action - identifies reason forperformance variation

– Revise the Standard - variance results from anunrealistic standard

• standard, not performance, needs correction

18.16


MANAGERIAL DECISIONS IN THECONTROL PROCESS (Exhibit 18.6)

18.17


TYPES OF CONTROL• Feedforward Control

– prevents anticipated problems– most desirable type of control– requires timely and accurate information

that often is difficult to get• Concurrent Control

– takes place while activity is in progress– corrects problem before it becomes too

costly– best-known form is direct supervision

18.18


TYPES OF CONTROL(continued)

• Feedback Control– Takes place after the activity is done

– Problems may already have caused damageor waste

– The most popular type of control

– Feedback has two advantages• provides meaningful information on the

effectiveness of planning

• can enhance employee motivation18.19

TYPES OF CONTROL (Exhibit 18.7)

Input OutputProcesses

Anticipatesproblems

FeedforwardControl

Correctsproblems after

they occur

FeedbackControl

Correctsproblems asthey happen

ConcurrentControl


Flexibility

QUALITIES OF AN EFFECTIVECONTROL SYSTEM (Exhibit 18.8)

StrategicPlacement

UnderstandabilityReasonable

Criteria

EFFECTIVECONTROLSYSTEM

TimelinessMultipleCriteria

CorrectiveAction Accuracy

EconomyEmphasis onExceptions



CONTINGENCY FACTORS IN THE DESIGNOF CONTROL SYSTEMS (Exhibit 18.9)

18.22


IMPLICATIONS FORMANAGERS

• Adjusting Controls for Cultural Differences– Methods of controlling people and work can be quite

different in other countries– In technologically advanced nations, controls are

indirect– In less technologically advanced nations, controls are

more direct– Laws in different countries provide different constraints

on corrective action– Data used for controlling may not be comparable in

different countries

18.23


CONTEMPORARY ISSUES INCONTROL

• Workplace Privacy– Employers have the right to monitor employee

communications, examine employee computersand files, and use surveillance cameras

– Reasons for monitoring include prevention of:• recreational on-the-job Web surfing• creation of hostile work environments with e-mail• security leaks of critical information

18.24


CONTEMPORARY ISSUES INCONTROL (continued)

• Workplace Privacy (continued)

– Companies are developing and enforcingworkplace monitoring policies• develop unambiguous computer usage policy

• inform employees that computers may bemonitored

• provide clear guidelines on acceptable use ofcompany e-mail system and the Web

18.25


WORKPLACE MONITORING(Exhibit 18.10)

Track telephone calls (numbers and time spent) 39%Store and review employee e-mail messages 27%Store and review computer files 21%Log computer time and keystrokes entered 15%Record and review telephone conversations 11%Store and review voice-mail messages 6%

18.26



• Employee Theft– Unauthorized taking of company property by

employees for their personal use

– Is an escalating problem in all types oforganizations

– Different proposals to explain employee theft

18.27


CONTROL MEASURES FOR DETERRING ORREDUCING EMPLOYEE THEFT (Exhibit 18.11)

18.28



• Workplace Violence– Many factors contribute to workplace violence including:

• employee work driven by time, numbers, and crises

• rapid and unpredictable change

• destructive communication style of manager

• authoritarian leadership

• defensive attitude

• double standards

• unresolved grievances

• emotionally troubled employees

• repetitive, boring work

18.29


LEARNING OBJECTIVES

• You should be able to:– Describe the role of the transformation process

in operations management– Explain why operations management is

important to all types of organizations– Define value chain management– Discuss the goal of value chain management– Explain the organizational and managerial

requirements for value chain management

19.2




– Describe the benefits of and obstacles to valuechain management

– Discuss technology’s role in operationsmanagement

– Describe how quality affects operationsmanagement

– Explain ISO 9000 and Six Sigma

19.3


WHAT IS OPERATIONSMANAGEMENT?

• Operations Management– The design, operation, and control of the

transformation process that converts suchresources as labor and raw materials into goodsand services that are sold to customers

– Every organization has an operations systemthat creates value by transforming inputs intooutputs

19.4

THE OPERATIONS SYSTEM(Exhibit 19.1)

• People

• Technology

• Capital

• Equipment

• Materials

• Information

Inputs Outputs

• Goods

• ServicesTransformationProcess



WHY IS OPERATIONSMANAGEMENT IMPORTANT?• Encompasses Services and Manufacturing

– Manufacturing organization - produces physicalgoods

– Service organization - produces non-physical outputsin the form of services

• Managing productivity– Productivity - overall output of goods or services

divided by the inputs needed to generate that output– Increasing productivity is key to global competitiveness– Productivity is a composite of people and operations

variables

19.6


DEMING’S 14 POINTS FORIMPROVING PRODUCTIVITY

(Exhibit 19.2)

19.7


VALUE CHAIN MANAGEMENT• What is Value Chain Management?

– Value - performance characteristics,features, and attributes, and any otheraspects of goods and services for whichcustomers are willing to give upresources

– organizations must provide value toattract and keep customers

• value provided through the transformation of rawmaterials into some product or service that end-usersneed where, when, and how they want it

19.8


VALUE CHAIN MANAGEMENT(continued)

• What is Value Chain Management? (continued)– value chain - entire series of work activities that add

value at each step of the transformation process

– value chain management - process of managing anentire sequence of activities along the entire value chain

• is externally oriented

• is effectiveness oriented and aims to create thehighest value for customers

– supply chain management - is internally oriented

19.9



• Goal of Value Chain Management– Create a value chain strategy that meets and exceeds customers’

needs

• Recognizes that ultimately customers are the ones with power

– Create a full and seamless integration among all members of thechain

• sequence of participants work together as a team

• each adds a component of value to the overall process

• the better the collaboration among chain participants, the betterthe customer solutions

19.10



• Requirements for Value Chain Management– Business model - strategic design for how a company

intends to profit from its broad array of strategies,processes, and activities

– Coordination and Collaboration - comprehensive andseamless integration among all members of the chain

– Technology Investment - information technology canbe used to restructure the value chain to serve end-users

19.11



• Requirements for Value Chain Management (continued)

– Organizational Processes - the way that organizational work isdone

• must examine core competencies to determine where value isbeing added

• non-value-adding activities should be eliminated

• processes must change in the following ways:

– better demand forecasting is necessary

– selected functions may need to be done collaboratively

– new metrics required for evaluating performance along thechain

19.12



• Requirements for Value Chain Management(continued)

– Leadership - outlines expectations for organization’spursuit of value chain management

– Employees/Human Resources• flexibility in the design of jobs

– jobs should be designed around work processesthat link functions involved in creating value

• hiring of workers who have the ability to learn andadapt

• significant investments in continual and ongoingemployee training

19.13



• Requirements for Value Chain Management(continued)

– Organizational Culture and Attitudes - important foremployees to have favorable attitudes regardingsharing, collaborating, openness, flexibility, mutualrespect, and trust

– Benefits of Value Chain Management

– improved customer service - the major benefit– cost savings– accelerated delivery times– improved quality

19.14

THE REQUIREMENTS FOR SUCCESSFUL VALUECHAIN MANAGEMENT

TechnologyInvestment

OrganizationalCulture and

Attitudes

Employees

OrganizationalProcesses

Leadership

ValueChain

Strategy

Coordination andCollaboration




• Obstacles to Value Chain Management– Organizational Barriers - among the most difficult

• include refusal or reluctance to share information,shake up the status quo, and deal with security issues

– Cultural Attitudes• lack of trust - reluctance to share information,

capabilities, and processes• too much trust - leads to theft of intellectual property

– intellectual property - proprietary companyinformation that is critical to competitiveness

• collaboration results in a loss of control

19.16



• Obstacles to Value Chain Management (continued)– Required Capabilities - essential to capturing and

exploiting the value chain• coordination and collaboration• ability to configure products to satisfy customers• ability to educate internal and external partners

– People - must be committed to value chain management• must be flexible• must be willing to expend incredible amounts of

time and energy• experienced managers a critical resource

19.17

OBSTACLES TO SUCCESSFUL VALUECHAIN MANAGEMENT (Exhibit 19.5)

CulturalAttitudes

OrganizationalBarriers

RequiredCapabilitiesPeople

Obstacles toValue ChainManagement



CURRENT ISSUES INOPERATIONS MANAGEMENT• Technology’s Role in E-Manufacturing

– Smart companies trying to harness webtechnology to improve operations management

– Link plant-floor automation with enterprise-wide business network systems

– Technology is helping to reduce manufacturingcosts

19.19


CURRENT ISSUES INOPERATIONS MANAGEMENT

(continued)• Quality Initiatives

– Strategic initiatives that promote quality and continuousimprovement are critical to manufacturing excellence

– Quality - the ability of a product or service to reliablydo what it’s supposed to do and to satisfy customerexpectations

– Planning for quality - need quality improvement goalsand strategies to achieve those goals

– Organizing and Leading for Quality - cross-functionaland self-directed work teams

19.20



(continued)• Quality Initiatives (continued)

– Controlling for Quality - monitor andevaluate the progress of qualityimprovement efforts• e.g., standards for inventory control, defect

rate, and raw materials procurement• defect prevention rather than defect detection

is a priority– quality is the responsibility of all employees

19.21



(continued)• Quality Goals

– ISO 9000 - series of international qualitymanagement standards proposed by theInternational Organization forStandardization• uniform guidelines for processes to ensure

that products conform to customerrequirements

• internationally recognized19.22

REASONS FOR PURSUING ISO9000 CERTIFICATION

Competitivepressures

Customerdemands andexpectations

Corporatestrategy

Productioncosts

Quality

ISO 9000certificationuseful for:

Marketadvantage




(continued)• Quality Goals (continued)

– Six Sigma - a quality standard thatestablishes a goal of no more than 3.4defects per million units or procedures

– Is essentially a zero-defects standard• quality-driven businesses use it to judge their

suppliers

19.24



– Define organizational performance– Explain why measuring organizational performance

is important– Describe the different organizational performance

measures– Identify financial control tools used to monitor and

measure organizational performance– Explain how a management information system can

be used as a tool for monitoring and measuringorganizational performance

20.2



• You should be able to:– Describe the balanced scorecard approach to

monitoring and measuring organizationalperformance

– Tell how benchmarking of best practices can beused for monitoring and measuring organizationalperformance

– Discuss the manager’s role in helping organizationsachieve a high level of performance

20.3


ORGANIZATIONALPERFORMANCE

• What is Organizational Performance?– Performance - the end result of an activity

– Organizational performance - accumulatedend results of all the organization’s workprocesses and activities

20.4


ORGANIZATIONALPERFORMANCE (continued)

• Why is Measuring Organizational PerformanceImportant?– Managers need to understand the factors that

contribute to high organizational performance– Better Asset Management

• asset management - process of acquiring,managing, renewing, and disposing of assets

20.5



• Why is Measuring OrganizationalPerformance Important? (continued)

– Increased Ability to Provide Customer Value - mustmonitor value obtained by customers

– Impact on Organizational Reputation - strongreputation leads to greater consumer trust andability to command premium pricing

– Improved Measures of Organizational Knowledge• organizational knowledge - knowledge created by

collaborative information sharing and socialinteraction leading to appropriate action

20.6

WHY IS MEASURING ORGANIZATIONALPERFORMANCE IMPORTANT? (Exhibit 20.1)

Increased AbilityTo Provide

Customer Value

BetterAsset

Management

Impact onOrganizational

Reputation

ImprovedMeasures of

OrganizationalKnowledge

WhyMeasure

OrganizationalPerformance?




• Measures of Organizational Performance

– Organizational Productivity• productivity - overall output of goods or

services produced divided by the inputs neededto generate that output

• organizational productivity - a measure of howefficiently employees do their work

20.8



• Measures of Organizational Performance(continued)– Organizational Effectiveness - measure of how

appropriate organizational goals are and how wellan organization is achieving those goals

– Industry Rankings - numerous industry andcompany rankings

20.9

TYPES OF PERFORMANCECONTROL TOOLS

InformationControls

FinancialControls

BalancedScorecardApproach

BenchmarkingBest Practices

Approach

PerformanceControl

Tools



TOOLS FOR MONITORING ANDMEASURING ORGANIZATIONAL

PERFORMANCE• Financial Controls

– Traditional Financial Control Measures

• taken from organization’s main financial statements• a number of financial ratios used in organizations

– liquidity ratios - organization’s ability to meet its current debtobligations

– leverage ratios - use of debt to finance assets and ability to meetinterest payments

– activity ratios - efficiency of use of firm’s assets– profitability ratios - effectiveness with which assets used to

generate profits

20.11


POPULAR FINANCIALRATIOS (Exhibit 20.2)

20.12



PERFORMANCE (continued)• Financial Controls (continued)

– Traditional Financial Control Measures (continued)• budgets provide quantitative standards against which to

measure and compare resource consumption– Other Financial Control Measures - increasing popularity

• Economic Value Added (EVA) - economic value createdwith the firm’s assets less any capital investments made bythe firm in its assets

• Market Value Added (MVA) - stock market’s estimate ofthe value of the firm’s past and expected capital investmentprojects

20.13



PERFORMANCE (continued)• Information Controls

– Management Information Systems - used to providemanagement with needed information on a regularbasis

• provides information, not merely data– data - raw, unanalyzed facts– information - analyzed and processed data

• organizes data in a meaningful way• can access the information in a reasonable amount of

time20.14



PERFORMANCE (continued)• Information Controls (continued)

– How Are Information Systems Used in Controlling?

• managers need information about:

– what is happening

– what are performance standards

– acceptable ranges of variation

– appropriate courses of action

20.15



PERFORMANCE (continued)• Balanced Scorecard Approach

– Performance measurement tool that examines four areas• financial• customer• internal processes• people/innovation/growth assets

– Determine whether goals in each area are being met– Focus is still on areas that drive the organization’s success

• scorecards reflect organizational strategies20.16



PERFORMANCE (continued)• Benchmarking of Best Practices

– Benchmarking - search for the best practices amongother organizations that lead to their superiorperformance

– Used to identify performance gaps and potential areasof improvement

– Look for internal best practices that can be shared

20.17

STEPS TO SUCCESSFULLY IMPLEMENTING ANINTERNAL BENCHMARKING BEST PRACTICES

PROGRAM

Connect best practicesto strategies and goals

Identify best practicesthroughout the organization

Develop best practicesreward and recognition systems

Communicate best practicesthroughout the organization

Create best practicesknowledge sharing system

Nurture best practiceson an ongoing basis



MANAGER’S ROLE IN HELPINGORGANIZATIONS ACHIEVE

HIGH PERFORMANCE• Help Members Make Right Choices During

Change– Provide direction by answering employees’

questions

– Define what change means for employees

– Describe how performance will be evaluated

– Describe tools and support that will be provided

20.19



HIGH PERFORMANCE (continued)• Design Performance Management Systems

– Identify appropriate performance measures– Addresses common performance measurement

problems– What gets measured gets done– Address common problems that plague

performance measurement

20.20

COMMON PERFORMANCE MEASURINGAND REPORTING PROBLEMS

Conflictingreports

Failureto

customize

No links betweenperformance

data and goals

Unrelatedsources of

data

CommonProblems

Overlycomplexmeasures

Confusingcharts and

graphs

Toomuchdetail




HIGH PERFORMANCE (continued)• Move From Ideas To Action

– Develop great ideas

– Think of these ideas as things that canactually be done

– Map out the entire implementationprocess from conception to delivery

20.22

MANAGER’S ROLE INACHIEVING HIGH

PERFORMANCE (Exhibit 20.4)

Help employeesmove from

ideas toaction

Achieving HighLevels of

Performance

Help organizationalmembers make

right choicesduring change

Design anappropriateperformancemanagement

system


introduction to management by shas production

Education

line managers

work of

managers responsible

middle managers

skills managers

management functions

managerial individuals

managerial employees1