Who Are Managers?A manager is someone who works with and through other people by coordinatingtheir work activities in orde...
What is Management?Management is a process of coordinating work activities so that they arecompleted efficiently and effec...
performance. Actual performance must be compared with the previously setgoals. If there are any significant deviations, it...
Management Roles             Henry Mintzberg, a prominent management researcher, says that what             managers do ca...
First, each organization has a distinct purpose. This purpose is typicallyexpressed in terms of a goal or a set of goals t...
Historical Background of ManagementOrganized endeavors directed by people responsible for planning, organizing,leading, an...
we present the contributions of four approaches. Scientific management lookedat management from the perspective of improvi...
situation by applying the scientific method to shop floor jobs. He spent more thantwo decades passionately pursuing the "o...
Henri FayolFayol, described management as a universal set of functions that includedplanning, organizing, commanding, coor...
Max WeberWeber (pronounced VAY-ber) was a German sociologist who studiedorganizational activity. Writing in the early 1900...
instance, is a technique that managers use to improve resource allocationdecisions. Work scheduling can be more efficient ...
The Hawthorne StudiesWithout question, the most important contribution to the developing OB fieldcame out of the Hawthorne...
dominant view at the time that employees were no different from any othermachines that the organization used.Current Trend...
managers recognize that diversity can be an asset because it brings a broadrange of viewpoints and problem-solving skills ...
Not every organization is or needs to be a total e-business. Below diagramillustrates three categories of e-business invol...
linkages to communicate with employees, customers, or suppliers and to supportthem with information. For instance, Levi St...
6.      Empowerment of employees. TQM involves the people on the line in the        improvement process. Teams are widely ...
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  1. 1. Who Are Managers?A manager is someone who works with and through other people by coordinatingtheir work activities in order to accomplish organizational goals. That may meancoordinating the work of a departmental group, or it might mean supervising asingle person. It could involve coordinating the work activities of a teamcomposed of people from several different departments or even people outsidethe organization such as temporary employees or employees who work for theorganizations suppliers.Classification of ManagersFor traditionally structured organizations—that is, those organizations in whichthe number of employees is greater at the bottom than at the top (shaped like apyramid) managers are classified as first-line, middle, or top.First-line managers are the lowest level of management and manage the work ofnon-managerial individuals who are involved with the production or creation ofthe organizations products. Theyre often called supervisors but may also becalled line managers, office managers, or even foremen.Middle managers include all levels of management between the first-line leveland the top level of the organization. These managers manage the work of first-line managers and may have titles such as department head, project leader,plant manager, or division manager.At or near the top of the organization are the top managers, who are responsiblefor making organization-wide decisions and establishing the plans and goals thataffect the entire organization. These individuals typically have titles such asexecutive vice president, president, managing director, chief operating officer,chief executive officer, or chairman of the board. 1
  2. 2. What is Management?Management is a process of coordinating work activities so that they arecompleted efficiently and effectively with and through other people.The process represents the ongoing functions or primary activities engaged in bymanagers. These functions are typically labeled planning, organizing, leading,and controlling.Management involves the efficient and effective completion of organizationalwork activities, or at least thats what managers aspire to do.Efficiency refers to getting the most output from the least amount of inputs.Because managers deal with scarce inputs—including resources such as people,money, and equipment—they are concerned with the efficient use of thoseresources.From this perspective, efficiency is often referred to as "doing things right"—thatis, not wasting resources. However, its not enough just to be efficient.Management is also concerned with being effective, completing activities so thatorganizational goals are attained. Effectiveness is often described as "doing theright things"—that is, those work activities that will help the organization reach itsgoals. Management is concerned, then, not only with getting activities completedand meeting organizational goals (effectiveness) but also with doing so asefficiently as possible. In successful organizations, high efficiency and higheffectiveness typically go hand in hand. Poor management is most often due toboth inefficiency and ineffectiveness or to effectiveness achieved throughinefficiency.Management Functions and ProcessThe management functions have been condensed down to four basic and veryimportant functions: planning, organizing, leading, and controlling. Lets brieflydefine what each of these management functions encompasses.The planning function involves the process of defining goals, establishingstrategies for achieving those goals, and developing plans to integrate andcoordinate activities.Managers are also responsible for arranging work to accomplish theorganizations goals. We call this function organizing. It involves the process ofdetermining what tasks are to be done, who is to do them, how the tasks are tobe grouped, who reports to whom, and where decisions are to be made.Every organization includes people, and managements job is to work with andthrough people to accomplish organizational goals. This is the leading function.When managers motivate subordinates, influence individuals or teams as theywork, select the most effective communication channel, or deal in any way withemployee behavior issues, they are leading.The final management function managers perform is controlling. After the goalsare set and the plans are formulated (planning), the structural arrangementsdetermined (organizing), and the people hired, trained, and motivated (leading),there has to be some evaluation of whether things are going as planned. Toensure that work is going as it should, managers must monitor and evaluate 2
  3. 3. performance. Actual performance must be compared with the previously setgoals. If there are any significant deviations, its managements job to get workperformance back on track. This process of monitoring, comparing, andcorrecting is what we mean by the controlling function.Management SkillsManagers need three essential skills or competencies.Technical skills include knowledge of and proficiency in a certain specializedfield, such as engineering, computers, accounting, or manufacturing. These skillsare more important at lower levels of management since these managers aredealing directly with employees doing the organizations work.Human skills involve the ability to work well with other people both individuallyand in a group. Because managers deal directly with people, this skill is crucial!Managers with good human skills are able to get the best out of their people.They know how to communicate, motivate, lead, and inspire enthusiasm andtrust. These skills are equally important at all levels of management.Conceptual skills are the skills managers must have to think and toconceptualize about abstract and complex situations. Using these skills,managers must be able to see the organization as a whole, understand therelationships among various subunits, and visualize how the organization fits intoits broader environment. These skills are most important at the top managementlevels. Below diagram shows the relationship of these skills and the levels ofmanagement. 3
  4. 4. Management Roles Henry Mintzberg, a prominent management researcher, says that what managers do can best be described by looking at the roles they play at work. From his study of actual managers at work, Mintzberg developed a categorization scheme for defining what managers do. He concluded that managers perform 10 different but highly interrelated roles. The term management roles refers to specific categories of managerial behavior. As shown below, Mintzbergs 10 managerial roles can be grouped as those primarily concerned with interpersonal relationships, the transfer of information, and decision making .CATEGORY ROLE ACTIVITYINFORMATIONAL  MONITOR Seek and receive information, scan periodicals and reports, maintain  DISSEMENATOR personal contacts.  SPOKEPERSON Forward information to other organizational members, send memos and reports, make phone calls. Transmit information to outsiders through speeches, reports and memosINTERPERSONAL  FIGUREHEAD Perform ceremonial and symbolic duties such as greeting visitors,  LEADER signing legal documents.  LIAISON Direct and motivate subordinates, train, counsel, and communicates with subordinates. Maintain information links both inside and outside the organization; use emails, phone calls and meetings.DECISIONAL  ENTERPRENUER Initiates improvement projects, identify new ideas, delegate idea  DISTURBANCE responsibility to others HANDLER Take corrective actions during disputes or crises, resolves conflicts  RESOURCES Decide who gets resources, schedule, budget and set priorities ALLOCATOR Represent department during negotiation of union contracts, sales,  NEGOTIATOR purchases, budgets, represents departmental interests. What Is an Organization? An organization is a deliberate arrangement of people to accomplish some specific purpose. These are all organizations because they all share three common characteristics as shown 4
  5. 5. First, each organization has a distinct purpose. This purpose is typicallyexpressed in terms of a goal or a set of goals that the organization hopes toaccomplish. Second, each organization is composed of people. One personworking alone is not an organization, and it takes people to perform the workthats necessary for the organization to achieve its goals. Third, all organizationsdevelop some deliberate structure so that their members can do their work. 5
  6. 6. Historical Background of ManagementOrganized endeavors directed by people responsible for planning, organizing,leading, and controlling activities have existed for thousands of years. TheEgyptian pyramids and the Great Wall of China, for instance, are tangibleevidence that projects of tremendous scope, employing tens of thousands ofpeople, were undertaken well before modern times. The pyramids are aparticularly interesting example. The construction of a single pyramid occupiedmore than 100,000 workers for 20 years.Who told each worker what to do? Who ensured that there would be enoughstones at the site to keep workers busy? The answer to such questions ismanagers. Regardless of what managers were called at the time, someone hadto plan what was to be done, organize people and materials to do it, lead anddirect the workers, and impose some controls to ensure that everything was doneas planned.Another example of early management can be seen during the 1400s in the cityof Venice, Italy, a major economic and trade center. The Venetians developed anearly form of business enterprise and engaged in many activities common totodays organizations. For instance, at the arsenal of Venice, warships werefloated along the canals and at each stop materials and riggings were added tothe ship. Doesnt that sound a lot like a car "floating" along an automobileassembly line and components being added to it? In addition to this assemblyline, the Venetians also had a warehouse and inventory system to monitor itscontents, personnel (human resource management) functions required tomanage the labor force, and an accounting system to keep track of revenues andcosts.Two pre-twentieth-century events played particularly significant roles inpromoting the study of management. First, in 1776, Adam Smith published aclassical economics doctrine, The Wealth of Nations, in which he argued theeconomic advantages that organizations and society would gain from the divisionof labor, the breakdown of jobs into narrow and repetitive tasks.The second, and possibly most important, pre-twentieth-century influence onmanagement was the Industrial Revolution.The major contribution of the Industrial Revolution was the substitution ofmachine power for human power, which, in turn, made it more economical tomanufacture goods in factories rather than at home. These large, efficientfactories using power-driven equipment required managerial skills. Why?Managers were needed to forecast demand, ensure that enough material was onhand to make products, assign tasks to people, direct daily activities, coordinatethe various tasks, ensure that the machines were kept in good working conditionand work standards were maintained, find markets for the finished products, andso forth. Planning, organizing, leading, and controlling became necessary, andthe development of large corporations would require formal managementpractices. The need for a formal theory to guide managers in running theseorganizations had arrived.The development of management theories has been characterized by differingbeliefs about what managers do and how they should do it. In the next sections 6
  7. 7. we present the contributions of four approaches. Scientific management lookedat management from the perspective of improving the productivity and efficiencyof manual workers. General administrative theorists were concerned with theoverall organization and how to make it more effective. Then a group of theoristsfocused on developing and applying quantitative models to managementpractices. Finally, a group of researchers emphasized human behavior inorganizations, or the "people" side of management.Development of Major Management TheoriesScientific ManagementIn 1911, Frederick Winslow Taylors Principles of Scientific Management waspublished. Its contents became widely accepted by managers around the world.The book described the theory of scientific management: the use of scientificmethods to define the "one best way" for a job to be doneImportant ContributionsImportant contributions to scientific management theory were made by FrederickW. Taylor and Frank and Lillian Gilbreth.Frederick W. TaylorTaylor did most of his work at the Midvale and Bethlehem Steel Companies inPennsylvania. As a mechanical engineer, he was continually appalled byworkers inefficiencies. Employees used vastly different techniques to do thesame job. They were inclined to "take it easy" on the job, and Taylor believedthat worker output was only about one-third of what was possible. Virtually nowork standards existed. Workers were placed in jobs with little or no concern formatching their abilities and aptitudes with the tasks they were required to do.Managers and workers were in continual conflict. He set out to correct the 7
  8. 8. situation by applying the scientific method to shop floor jobs. He spent more thantwo decades passionately pursuing the "one best way" for each job to be done.Probably the best known example of Taylors scientific management was the pigiron experiment. Workers loaded "pigs" of iron (each weighing 92 pounds) ontorail cars. Their daily average output was 12.5 tons. However, Taylor believed thatby scientifically analyzing the job to determine the "one best way" to load pig iron,output could be increased to 47 or 48 tons per day. After scientifically tryingdifferent combinations of procedures, techniques, and tools, Taylor succeeded ingetting that level of productivity. How? He put the right person on the job with thecorrect tools and equipment, had the worker follow his instructions exactly, andmotivated the worker with an economic incentive of a significantly higher dailywage. Using similar approaches to other jobs, Taylor was able to define the "onebest way" for doing each job. Overall, Taylor achieved consistent productivityimprovements in the range of 200 percent or more. Through his groundbreakingstudies of manual work using scientific principles, Taylor became known as the"father" of scientific management.Frank and Lillian GilbrethA construction contractor by trade, Frank Gilbreth gave up his contracting careerin 1912 to study scientific management after hearing Taylor speak at aprofessional meeting. Frank and his wife Lillian, a psychologist, studied work toeliminate wasteful hand-and-body motions. The Gilbreths also experimented withthe design and use of the proper tools and equipment for optimizing workperformance.Frank is probably best known for his experiments in bricklaying. By carefullyanalyzing the bricklayers job, he reduced the number of motions in layingexterior brick from 18 to about 5, and on laying interior brick the motions werereduced from 18 to 2. Using Gilbreths techniques, the bricklayer could be moreproductive and less fatigued at the end of the day.The Gilbreths were among the first researchers to use motion pictures to studyhand-and-body motions. They invented a device called a microchronometer thatrecorded a workers motions and the amount of time spent doing each motion.Wasted motions missed by the naked eye could be identified and eliminated. TheGilbreths also devised a classification scheme to label 17 basic hand motions(such as search, grasp, hold), which they called therbligs (Gilbreth spelledbackward with the th transposed). This scheme allowed the Gilbreths a moreprecise way of analyzing a workers exact hand movements.General Administrative TheoristsAnother group of writers looked at the subject of management but focused on theentire organization, called as general administrative theorists. They developedmore general theories of what managers do and what constituted goodmanagement practice.Important ContributionsThe two most prominent theorists behind the general administrative approachwere Henri Fayol and Max Weber. 8
  9. 9. Henri FayolFayol, described management as a universal set of functions that includedplanning, organizing, commanding, coordinating, and controlling. Fayol wroteduring the same time period as Taylor. While Taylor was concerned withmanagement at the lowest organizational level and used the scientific method,Fayols attention was directed at the activities of all managers. He wrote frompersonal experience as a practitioner since he was the managing director of alarge French coal-mining firm.Fayol described the practice of management as something distinct fromaccounting, finance, production, distribution, and other typical business functions.He argued that management was an activity common to all human endeavors inbusiness, government, and even in the home. He then proceeded to state 14principles of management—fundamental rules of management that could betaught in schools and applied in all organizational situations. These principles areshown below,1. Division of work. Specialization increases output by making employees more efficient.2. Authority. Managers must be able to give orders. Authority gives them this right. Along with authority, however, goes responsibility.3. Discipline. Employees must obey and respect the rules that govern the organization.4. Unity of command. Every employee should receive orders from only one superior.5. Unity of direction. The organization should have a single plan of action to guide managers and workers.6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.7. Remuneration. Workers must be paid a fair wage for their services.8. Centralization. This term refers to the degree to which subordinates are involved in decision making.9. Scalar chain. The line of authority from top management to the lowest ranks is the scalar chain.10. Order. People and materials should be in the right place at the right time.11. Equity. Managers should be kind and fair to their subordinates.12. Stability of tenure of personnel. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort.14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization. 9
  10. 10. Max WeberWeber (pronounced VAY-ber) was a German sociologist who studiedorganizational activity. Writing in the early 1900s, he developed a theory ofauthority structures and relations. Weber described an ideal type of organizationhe called a bureaucracy—a form of organization characterized by division oflabor, a clearly defined hierarchy, detailed rules and regulations, and impersonalrelationships. Weber recognized that this "ideal bureaucracy" didnt exist inreality. Instead he intended it as a basis for theorizing about work and how workcould be done in large groups. His theory became the model structural design formany of todays large organizations. The features of Webers ideal bureaucraticstructure are outlined as follows,Quantitative Approach to ManagementThe quantitative approach involves the use of quantitative techniques to improvedecision making. This approach has also been labeled operations research ormanagement science.Important ContributionsThe quantitative approach evolved out of the development of mathematical andstatistical solutions to military problems during World War II. After the war wasover, many of the techniques that had been used for military problems wereapplied to the business sector. One group of military officers, nicknamed theWhiz Kids, joined Ford Motor Company in the mid-1940s and immediately beganusing statistical methods and quantitative models to improve decision making.What exactly does the quantitative approach do? This approach to managementinvolves applications of statistics, optimization models, information models, andcomputer simulations to management activities. Linear programming, for 10
  11. 11. instance, is a technique that managers use to improve resource allocationdecisions. Work scheduling can be more efficient as a result of critical-pathscheduling analysis. Decisions on determining a companys optimum inventorylevels have been significantly influenced by the economic order quantity model.Each of these is an example of quantitative techniques being applied to improvemanagerial decision making.Understanding Organizational BehaviorAs we know, managers get things done by working with people. This explainswhy some writers and researchers have chosen to look at management byfocusing on the organizations human resources. The field of study concernedwith the actions (behavior) of people at work is called organizational behavior(OB). Much of what currently makes up the field of human resourcesmanagement and contemporary views on motivation, leadership, trust,teamwork, and conflict management have come out of organizational behaviorresearch.Early AdvocatesAlthough there were a number of people in the late 1800s and early 1900s whorecognized the importance of the human factor to an organizations success, fourindividuals stand out as early advocates of the OB approach. They are RobertOwen, Hugo Munsterberg, Mary Parker Follett, and Chester Barnard. Thecontributions of these individuals were varied and distinct, yet they all had incommon a belief that people were the most important asset of the organizationand should be managed accordingly. Their ideas provided the foundation forsuch management practices as employee selection procedures, employeemotivation programs, employee work teams, and organization-externalenvironment management techniques. Below is the summary of most importantideas of these early advocates 11
  12. 12. The Hawthorne StudiesWithout question, the most important contribution to the developing OB fieldcame out of the Hawthorne Studies, a series of studies conducted at the WesternElectric Company Works in Cicero, Illinois. These studies, started in 1924 andcontinued through the early 1930s, were initially designed by Western Electricindustrial engineers as a scientific management experiment. They wanted toexamine the effect of various illumination levels on worker productivity. Controland experimental groups were set up with the experimental group being exposedto various lighting intensities, and the control group working under a constantintensity. If you were one of the industrial engineers in charge of this experiment,what would you have expected to happen? That individual output in theexperimental group would be directly related to the intensity of the light? Seemsperfectly logical, doesnt it? However, they found that as the level of light wasincreased in the experimental group, output for both groups increased. Then,much to the surprise of the engineers, as the light level was decreased in theexperimental group, productivity continued to increase in both groups. In fact, aproductivity decrease was observed in the experimental group only when thelevel of light was reduced to that of a moonlit night. What would explain theseunexpected results? The engineers couldnt explain what they had witnessed butconcluded that illumination intensity was not directly related to group productivity,and that something else must have contributed to the results. However, theywerent able to pinpoint what that "something else" was.In 1927, the Western Electric engineers asked Harvard professor Elton Mayo andhis associates to join the study as consultants. Thus began a relationship thatwould last through 1932 and encompass numerous experiments in the redesignof jobs, changes in workday and workweek length, introduction of rest periods,and individual versus group wage plans. For example, one experiment wasdesigned to evaluate the effect of a group piecework incentive pay system ongroup productivity. The results indicated that the incentive plan had less effect ona workers output than did group pressure, acceptance, and the accompanyingsecurity. The researchers concluded that social norms or group standards werethe key determinants of individual work behavior.Scholars generally agree that the Hawthorne Studies had a dramatic impact onthe direction of management beliefs about the role of human behavior inorganizations. Mayo concluded that behavior and sentiments are closely related,that group influences significantly affect individual behavior, that group standardsestablish individual worker output, and that money is less a factor in determiningoutput than are group standards, group sentiments, and security. Theseconclusions led to a new emphasis on the human behavior factor in thefunctioning of organizations and the attainment of their goals.However, the conclusions from the Hawthorne Studies werent without criticism.Critics attacked the research procedures, analyses of findings, and theconclusions. From a historical standpoint, however, its of little importancewhether the studies were academically sound or their conclusions justified. Whatis important is that they stimulated an interest in human behavior inorganizations. The Hawthorne Studies played a significant role in changing the 12
  13. 13. dominant view at the time that employees were no different from any othermachines that the organization used.Current Trends and IssuesWhere are we today? What current management concepts and practices areshaping "tomorrows history"? In this section, well attempt to answer thosequestions by introducing several trends and issues that we believe are changingthe way managers do their jobs: globalization, workforce diversity,entrepreneurship, managing in an e-business world, need for innovation andflexibility, quality management, learning organizations and knowledgemanagement, and workplace spirituality. Throughout the text we focus moreclosely on many of these themes in various boxes, examples, and exercisesincluded in each chapter.GlobalizationManagement is no longer constrained by national borders. BMW, a German firm,builds cars in South Carolina. McDonalds, a U.S. firm, sells hamburgers inChina. Toyota, a Japanese firm, makes cars in Kentucky. Australias leading realestate company, Lend Lease Corporation, built the Bluewater shopping complexin Kent, England, and has contracts with Coca-Cola to build all the soft-drinkmakers bottling plants in Southeast Asia. Swiss company ABB Ltd. hasconstructed power generating plants in Malaysia, South Korea, China, andIndonesia. The world has definitely become a global village!Managers in organizations of all sizes and types around the world are faced withthe opportunities and challenges of operating in a global market..Workforce DiversityOne of the major challenges facing managers in the twenty-first century will becoordinating work efforts of diverse organizational members in accomplishingorganizational goals. Todays organizations are characterized by workforcediversity—a workforce thats more heterogeneous in terms of gender, race,ethnicity, age, and other characteristics that reflect differences.Workforce diversity is an issue facing managers of organizations in Japan,Australia, Germany, Italy, and other countries. For instance, as the level ofimmigration increases in Italy, the number of women entering the workforce risesin Japan, and the population ages in Germany, managers are finding they needto effectively manage diversity.Does the fact that workforce diversity is a current issue facing managers meanthat organizations werent diverse before? No. They were, but diverse individualsmade up a small percentage of the workforce, and organizations, for the mostpart, ignored the issue. We assumed that people who were "different" wouldsomehow automatically want to assimilate. But we now recognize thatemployees dont set aside their cultural values and lifestyle preferences whenthey come to work. The challenge for managers, therefore, is to make theirorganizations more accommodating to diverse groups of people by addressingdifferent lifestyles, family needs, and work styles. The melting pot assumptionhas been replaced by the recognition and celebration of differences. Smart 13
  14. 14. managers recognize that diversity can be an asset because it brings a broadrange of viewpoints and problem-solving skills to a company. An organizationthat uses all of its human resources will enjoy a powerful competitive advantage.EntrepreneurshipEntrepreneurship is the process whereby an individual or a group of individualsuses organized efforts and means to pursue opportunities to create value andgrow by fulfilling wants and needs through innovation and uniqueness, no matterwhat resources are currently controlled. It involves the discovery of opportunitiesand the resources to exploit them. Three important themes stick out in thisdefinition of entrepreneurship. First is the pursuit of opportunities.Entrepreneurship is about pursuing environmental trends and changes that noone else has seen or paid attention to.The second important theme in entrepreneurship is innovation. Entrepre-neurship involves changing, revolutionizing, transforming, and introducing newapproaches—that is, new products or services or new ways of doing business.The final important theme in entrepreneurship is growth. Entrepreneurs pursuegrowth. They are not content to stay small or to stay the same in size.Entrepreneurs want their businesses to grow and work very hard to pursuegrowth as they continually look for trends and continue to innovate new productsand new approaches.Managing in an E-Business WorldOrganizations (small to large, all types, global and domestic, and in all industries)are becoming e-businesses. Todays managers must manage in an e-businessworld! In fact, as a student, your learning may increasingly be taking place in anelectronic environment. What do we know about this e-business world?E-business (electronic business) is a comprehensive term describing the wayan organization does its work by using electronic (Internet-based) linkages withits key constituencies (employees, managers, customers, suppliers, andpartners) in order to efficiently and effectively achieve its goals. Its more than e-commerce, although e-business can include e-commerce.E-commerce (electronic commerce) is any form of business exchange ortransaction in which the parties in-teract electronically. Firms such as Dell(computers), Varsitybooks (textbooks), and PC Flowers and Gifts (flowers andother gifts) are engaged in e-commerce because they sell products over theInternet. Given are the main forms of e-commerce transactions. Although e-commerce applications will continue to grow in volume, they are only one part ofan e-business. 14
  15. 15. Not every organization is or needs to be a total e-business. Below diagramillustrates three categories of e-business involvement.The first type is what were going to call an e-business enhanced organization, atraditional organization that sets up e-business capabilities, usually e-commerce,while maintaining its traditional structure. Many Fortune 500 type organizationsare evolving into e-businesses using this approach. They use the Internet toenhance (not to replace) their traditional ways of doing business. For instance,Sears, a traditional bricks-and-mortar retailer with thousands of physical storesworldwide started an Internet division whose goal is to make Sears "the definitiveonline source for the home." Although Sears Internet division, Sears.com,represents a radical departure for an organization founded in 1886 as a catalog-sales company, its intended to expand, not replace, the companys main sourceof revenue. Many other traditional organizations—for instance, Merrill Lynch,Office Depot, Starbucks, Tupperware, and Whirlpool—have become e-businessenhanced organizations.Another category of e-business involvement is an e-business enabledorganization. In this type of e-business, an organization uses the Internet toperform its traditional business functions better but not to sell anything. In otherwords, the Internet enables organizational members to do their work moreefficiently and effectively. There are numerous organizations using electronic 15
  16. 16. linkages to communicate with employees, customers, or suppliers and to supportthem with information. For instance, Levi Strauss & Co. uses its Web site tointeract with customers, providing them the latest information about the companyand its products, but they cant buy Levis there. It also uses an intranet, aninternal organizational communication system that uses Internet technology andis accessible only by organizational employees, to communicate with its globalworkforce.The last category of e-business involvement is when an organization becomes atotal e-business. Many organizations—such as Amazon.com, Yahoo, E*Trade,and eBay—started as total e-business organizations. Their whole existence ismade possible by and revolves around the Internet. Other organizations, such asCharles Schwab & Company, have evolved into e-business organizations thatseamlessly integrate traditional and e-business functions. When an organizationbecomes a total e-business, theres a complete transformation in the way it doesits work.Quality ManagementA quality revolution swept through both the business and public sectors duringthe 1980s and 1990s. The generic term used to describe this revolution was totalquality management, or TQM for short. It was inspired by a small group ofquality experts, the most famous being W. Edwards Deming and Joseph M.Juran. The ideas and techniques espoused by these two men in the 1950s hadfew supporters in the United States but were enthusiastically embraced byJapanese organizations. As Japanese manufacturers began beating out U.S.competitors in quality comparisons, Western managers soon began taking amore serious look at TQM. Demings and Jurans ideas became the basis fortodays organizational quality management programs.TQM is a philosophy of management driven by continual improvement andresponding to customer needs and expectations.1. Intense focus on the customer. The customer includes not only outsiders who buy the organizations products or services but also internal customers (such as shipping or accounts payable personnel) who interact with and serve others in the organization.2. Concern for continual improvement. TQM is a commitment to never being satisfied. "Very good" is not good enough. Quality can always be improved.3. Process-focused. TQM focuses on work processes as the quality of goods and services is continually improved.4. Improvement in the quality of everything the organization does. TQM uses a very broad definition of quality. It relates not only to the final product but also to how the organization handles deliveries, how rapidly it responds to complaints, how politely the phones are answered, and the like.5. Accurate measurement. TQM uses statistical techniques to measure every critical variable in the organizations operations. These are compared against standards or benchmarks to identify problems, trace them to their roots, and eliminate their causes. 16
  17. 17. 6. Empowerment of employees. TQM involves the people on the line in the improvement process. Teams are widely used in TQM programs as empowerment vehicles for finding and solving problems.The term customer in TQM has expanded beyond the original definition of thepurchaser outside the organization to include anyone who interacts with theorganizations product or services internally or externally. It encompassesemployees and suppliers as well as the people who purchase the organizationsgoods or services. The objective is to create an organization committed tocontinuous improvement in work processes.TQM is a departure from earlier management theories that were based on thebelief that low costs were the only road to increased productivity.Learning Organizations and Knowledge ManagementTodays managers confront an environment in which change takes place at anunprecedented rate. Constant innovations in information and computertechnologies combined with the globalization of markets have created a chaoticworld. As a result, many of the past management guidelines and principles—created for a world that was more stable and predictable—no longer apply.Successful organizations of the twenty-first century must be able to learn andrespond quickly.These organizations will be led by managers who can effectively challengeconventional wisdom, manage the organizations knowledge base, and makeneeded changes. In other words, these organizations will need to be learningorganizations. A learning organization is one that has developed the capacity tocontinuously learn, adapt, and change.Part of a managers responsibility in fostering an environment conducive tolearning is to create learning capabilities throughout the organization—fromlowest level to highest level and in all areas. How can managers do this? Animportant step is understanding the value of knowledge as an importantresource, just like cash, raw materials, or office equipment.But in an organization, just recognizing the value of accumulated knowledge orwisdom isnt enough. Managers must deliberately manage that base ofknowledge. Knowledge management involves cultivating a learning culture inwhich organizational members systematically gather knowledge and share it withothers in the organization so as to achieve better performance. For instance,accountants and consultants at Ernst & Young, one of the Big Five professionalservices firms, document best practices they have developed, unusual problemsthey have dealt with, and other work information. This "knowledge" is thenshared with all employees through computer-based applications and throughCOIN (community of interest) teams that meet regularly throughout the company. 17