GLOBAL PARKS CEOCHIEF OPERATIONS OFFICER (COO)CHIEF

GLOBAL PARKS CEO
CHIEF OPERATIONS
OFFICER (COO)
CHIEF FINANCIAL
OFFICER (CFO)
CHIEF MARKETING
OFFICER (CMO)
CHIEF COMPLIANCE
OFFICER (CCO)
CHIEF PEOPLE
OFFICER (CPO)
CHIEF STRATEGY
OFFICER (CSO)
CHIEF SALES OFFICER
(CSO)
PARK US SE PARK US SE PARK US SE PARK US SE
PARK US SE PARK US SE PARK US SE
VP OF PARK
OPERATIONS
PARK CONTROLLER MARKETING
DIRECTOR
LEGAL DIRECTOR HR DIRECTOR STRATEGY &

BUSINESS INTEL
SALES DIRECTOR
PARK US WEST PARK US WEST PARK US WEST PARK
US WEST PARK US WEST PARK US WEST PARK US WEST
VP OF PARK
OPERATIONS
DIRECTOR
BUSINESS INTEL
SALES DIRECTOR
PARK GERMANY PARK GERMANY PARK GERMANY
PARK GERMANY PARK GERMANY PARK GERMANY
PARK GERMANY
VP OF PARK
OPERATIONS
DIRECTOR
BUSINESS INTEL
SALES DIRECTOR
PARK JAPAN PARK JAPAN PARK JAPAN PARK JAPAN
PARK JAPAN PARK JAPAN PARK JAPAN
VP OF PARK

OPERATIONS
DIRECTOR
BUSINESS INTEL
SALES DIRECTOR
• PEOPLE
• SAFETY
• TRAINING
• FINANCIAL
• CONTROLS
• AUDIT
• BRANDING
• MARKETING
• PUBLIC RELATIONS
• ADVERTISING
• COMMUNICATIONS
• LEGAL
• ETHICAL
• STAKEHOLDERS
• CSR
• PUBLIC AFFAIRS
• HIRING
• BENEFITS MGT
• OMBUDS
• LABOR RELATIONS

• STRATEGY MGT
• BUSINESS INTEL
• SALES
• CUSTOMER RELATIONSHIP
MANAGEMENT
• VENDOR RELATIONS
• AFTER-SALES SERVICES
Sheet1
CHAPTER 13
Effective Communication
© 2021 McGraw Hill. All rights reserved. Authorized only for
instructor use in the classroom.
No reproduction or further distribution permitted without the
prior written consent of McGraw Hill.
Because learning changes everything.®
1
Learning Objectives 1
1. Explain why effective communication helps an
organization gain competitive advantage.
2. Describe the communication process.
3. Explain the information richness of communication media
available to managers.
4. Describe the communication networks that exist in
organizations.
5. Describe important communication skills that managers

needs as senders and receivers of messages.
© McGraw Hill
1. Explain why effective communication helps an
organization gain competitive advantage.
2. Describe the communication process.
3. Explain the information richness of communication media
available to managers.
4. Describe the communication networks that exist in
organizations.
5. Describe important communication skills that managers
needs as senders and receivers of messages.
2
Communication and Management
Communication:
The sharing of information between two or more individuals or
groups to reach a common understanding.
Tom Merton/age fotostock
© McGraw Hill
Be it email, electronic reports, Twitter, or Facebook, humans
are the common ingredient—people either individually or in
groups, sharing information. However, communication has not
been accomplished until an understanding is reached.

3
Importance of Good Communication
In order to gain a competitive advantage, managers should:
Increase efficiency in new technologies and skills.
Improve quality of products and services.
Increase responsiveness to customers.
Create more innovation through effective communication.
© McGraw Hill
Communication is extremely important to an organization. It
lets all members know what the goals are and how to get
achieve them. How else would subordinates know what their
tasks are? How would management know of problems and
challenges at all levels? How would members of a team ask for
needed resources? There must be communication, effective
communication, in order for an organization to work properly.
4
The Communication Process 1
Transmission Phase:
Information is shared by two or more individuals or groups.
Feedback Phase:
A common understanding is assured.
Christopher Robbins/Digital Vision/Getty Images

© McGraw Hill
5
In both phases, a number of distinct stages must occur for
communication to take place.
Transmission Phase:
Sender sends message.
Message is encoded and sent through a medium.
The receiver decodes the message.
Feedback Phase:
The process is essentially reversed.
See following slide for figure.
Sender:
Person or group wishing to share information.
Message:
Information that a sender wants to share.
Encoding:
Translating a message into understandable symbols or language.
Noise:
Anything that hampers any stage of the communication process.
© McGraw Hill
6
Starting the transmission phase, the sender, the person or group
wishing to share information with some other person or group,
decides on the message, what information to communicate. Then
the sender translates the message into symbols or language, a
process called encoding; often messages are encoded into
words. Noise is a general term that refers to anything that
hampers any stage of the communication process.

Receiver:
Person or group for which a message is intended.
Medium:
Pathway through which an encoded message is transmitted to a
receiver.
Decoding:
Interpreting and trying to make sense of a message.
© McGraw Hill
Once encoded, a message is transmitted through a medium to
the receiver, the person or group for which the message is
intended. A medium is simply the pathway, such as a phone
call, a letter, a memo, or face-to-face communication in a
meeting, through which an encoded message is transmitted to a
receiver. At the next stage, the receiver interprets and tries to
make sense of the message, a process called decoding. This is a
critical point in communication.
7
Figure 13.1
Access the text for the slide image.
Copyright © McGraw-Hill Education. Permission required for
reproduction or display.

© McGraw Hill
A sender encodes and sends a message through a medium.
The receiver receives and decodes the message.
In the feedback phase, the receiver becomes the sender and
encodes and sends the message through a medium, and the
initial sender, now the receiver, decodes the message.
8
Verbal Communication:
The encoding of messages into words, either written or spoken.
Nonverbal Communication:
The encoding of messages by means of facial expressions, body
language, and styles of dress.
© McGraw Hill
9
Nonverbal communication:
Facial expressions.
Body language.
Style of dress.
Other examples?
Ask students for some goals of nonverbal communication and
how to achieve them, without verbal communication.
The Dangers of Ineffective Communication
Managers spend 80% of their time in communication.
Managers should help employees to be good communicators too.
Ineffective communication leads to:
Poor performance.
Loss of competitive advantage.
Dangerous situations.

Harvard study:
When doctors changed communication process during shift
changes, risk was reduced risk by 30%.
There was a 25% reduction in medical errors when
communication was improved.
© McGraw Hill
10
Managers need to make sure that their employees also
communicate efficiently and effectively. Doing so will lead to a
better performance and greater competitive advantage.
Information Richness and Communication
Media 1
Information Richness:
The amount of information that a communication medium can
carry and the extent to which the medium enables the sender
and receiver to reach a common understanding.
Managers and their subordinates can become effective
communicators by:
Selecting an appropriate medium for each message—there is no
one “best” medium.
Considering information richness.
A medium with high richness can carry much more information
to aid understanding.
© McGraw Hill
11
Each circumstance needs an appropriate communication device,
or medium, determined by management.

How should promotions or new hires be communicated to the
members of the organization?
What is the best medium of communication when a company
announces layoffs?
When are emails appropriate and when are they not?
The Information Richness of Communication Media 2
Figure 13.2
Access the text alternative for slide image.
© McGraw Hill
Managers need to consider information richness, what time
allows, and the need or not for a paper or electronic trail when
deciding on which form of communication to use.
12
Face-to-Face Communication:
Has highest information richness.
Can take advantage of verbal and nonverbal signals.
Provides for
instant feedback.
Digital Vision/Getty Images
© McGraw Hill
13

Face-to-face communications often help a manager to cut to the
quick; it is much faster than the exchange of a number of emails
and could well avoid any misunderstandings that might happen
with emails. Emails, and even emails with emojis—which are
discouraged in business—are devoid of valuable nonverbal
human signs: smiles, frowns, knitted brows of concern.
Management by Wandering Around:
Face-to-face communication technique in which a manager
walks around a work area and talks informally with employees
about issues and concerns.
Gary Burchell/Getty Images
© McGraw Hill
A manager might take a stroll through a cubicle-laden floor or
walk among the workers on the factory floor. Doing so not only
opens up the manager and employees to better relationships but
allows employees the chance to informally address concerns or
issues. The manager gains information on the workings at the
lower levels, and employees to get to know the manager better.
However, increasingly people are working remotely, decreasing
the chance for “wandering around.” The weekly check-in call,
or even video call, might be advisable.
14
Topics for Discussion1
Why is face-to-face communication between managers still

important in an organization? [LO 13-2, 13-3 ]
© McGraw Hill
Face-to-face communication is the medium that is highest in
information richness. When managers communicate face-to-
face, they not only can take advantage of verbal communication,
but they also can interpret each other’s nonverbal signals such
as facial expressions and body language. Managers can respond
to these nonverbal signals on the spot. Face-to-face
communication also enables managers to receive instant
feedback. Points of confusion, ambiguity, or misunderstanding
can be resolved, and managers can cycle through the
communication process as many times as they need to, to reach
a common understanding.
State-of-the art information systems can improve the
competitiveness of an organization. Indeed, the search for
competitive advantage is driving much of the rapid development
and adoption of IT systems. By improving the decision-making
capability of managers, management information systems
should help an organization enhance its competitive position.
15
Spoken Communication Electronically Transmitted.
Has the second-highest information richness.
Telephone conversations are information rich with tone of
voice, sender’s emphasis, and quick feedback, but provide no
visual nonverbal cues.
Andrey_Popov/Shutterstock

© McGraw Hill
16
Even though employees often work from home now, or even if
management works at one site and employees at another, face-
to-face communication is not lost. Companies often use apps
such as Skype or Facetime for a face-to-face communication.
Many job interviews are now conducted remotely as well.
Personally Addressed Written Communication:
Has a lower richness than the verbal forms of communication
but still is directed at a given person.
Excellent media for complex messages requesting follow -up
actions by receiver.
© McGraw Hill
17
This low-richness form of communication can enhance a face-
to-face communication. With a follow-up written letter, a
manager can solidify the essence of the meeting and reiterate
the details discussed. Written communication is often preferred
for complex instructions or reports.
The text gives the example of Karen Stracker, a hospital
administrator and how she communicated new instructions for
denial of insurance benefits.

Impersonal Written Communication:
Has the lowest information richness.
Good for messages to many receivers where little or no
feedback is expected (such as newsletters, reports).
© McGraw Hill
18
IBM’s employee communications typically comes through the
company’s intranet, known internally as W3, and it has led a
transformation from professional to user-generated content
within the company.
Impersonal Written Communication 1
Information Overload:
A superabundance of information that increases the likelihood
that important information is ignored or overlooked, and
tangential information receives attention.
© McGraw Hill
One of the challenges for today’s managers and employees is
determining which emails to access first and which can sit in
the inbox longer, and for how long, and which can even be
deleted. Most email applications are addressing these challenges

with how they are organized.
19
Impersonal Written Communication 2
Blog:
A website on which an individual, group, or organization posts
information, commentary, and opinions and to which readers
can often respond with their own comme ntary and opinions.
Social Networking Site:
A website that enables people to communicate with others with
whom they have some common interest or connection.
© McGraw Hill
Blogs can be written by managers and intended for company
use, and corporations can also sponsor their own blogs intended
for intra-company use. A corporate blog might tout a new
advancement for the company, introduce new employees, or
highlight employees’ accomplishments.
Social networking sites have become an integral part of today’ s
society, but one of the concerns it brings for managers is the
possibility of “loafing” by employees.
20
Topics for Discussion 2
Which medium (or media) do you think would be appropriate
for each of the following kinds of messages a subordinate could
receive from his or her boss:
a raise.

not receiving a promotion.
an error in a report prepared by a subordinate.
additional job responsibilities.
the schedule for company holidays for the upcoming year?
© McGraw Hill
a. A raise should be communicated face-to-face and then
followed up in writing.
b. Not receiving a promotion should be communicated face-to-
face.
c. An error in a report should be communicated face-to-face
because nonverbal cues are important in this case.
d. Additional job responsibilities should be originally
communicated face-to-face to ensure that the subordinate
understands the change and then followed up in writing.
e. The holiday schedule should be sent to employees by email or
memo, enabling them to keep the document for further
reference.
21
Communication Networks
Formal Networks:
Organizational chart.
Communication also can be informal.
Vertical communication:
Up and down.
Corporate hierarchy.
Horizontal communication:
Sideways.
Communication between employees at same level.
© McGraw Hill

22
Informal Networks
Grapevines.
Flows quickly, but not always accurately.
Ingram Publishing
© McGraw Hill
Distortion can be accidental or deliberate. Some might distort
information to make themselves or their groups look good.
23
External Communication Networks
Interest-oriented networks:
People meet up who share interests.
Helpful in:
Changing jobs.
Recruiting.
Locating new suppliers.
Finding a job after a layoff.
© McGraw Hill
24
Communication Skills for Managers
Table 13.1

Seven Communication Skills for Managers as Senders of
MessagesSend messages that are clear and complete. Encode
messages in symbols that the receiver understands. Select a
medium that is appropriate for the message. Use a medium that
the receiver monitors. Avoid filtering and information
distortion. Ensure that a feedback mechanism is built into
messages. Provide accurate information to ensure that
misleading rumors are not spread.
© McGraw Hill
25
12
A receiver must understand and be able to interpret the
information for messages to be clear and complete.
Avoid jargon. It should not be used especially when
communicating with people outside the organization.
When considering the medium, a manager should consider the
nature of the message.
A manager must consider what medium the receiver uses. Do
they prefer email, phone calls, face-to-face communication?
Filtering is when the sender withholds part of a message.
Distortion occurs when the meaning changes from sender to
receiver.
Getting feedback lets the manage know that the message was
received and understood.
Avoiding rumors is essential, and managers can curb these by
giving accurate information.

Communication Skills for Managers as Receivers
Pay Attention.
Be a Good Listener.
Be Empathetic.
© McGraw Hill
26
12
BE THE MANAGER
As an expert in communication, how would you advise Chen?
© McGraw Hill
Perhaps you are not using your technological communication
tools to the fullest extent. Email can be sent with an urgent
notice or it can be sent as a task assignment with a required
response. Using the task assignment feature would allow you to
receive feedback from your employees and monitor where they
are at any given time on a project. You also need to meet
personally with your employees to set up a prioritizing system
and seek more opportunities for face-to-face communication.
Your employees appear to respond well to direct communication
and may feel isolated from you if you only use email.
27
End of Main Content

www.mheducation.com
Accessibility Content: Text Alternatives for Images
© McGraw Hill
The Communication Process 2, Text Alternative
Return to slide.
The chart shows the flow of information during the
communication process. During the transmission phase, the
message is encoded using a medium and is then decoded by the
receiver. During the feedback phase, the receiver (now sender)
sends a message back by encoding it using a medium. The
original sender (now receiver) decodes this message. Noise can
affect all aspects of the communication process.
Copyright McGraw-Hill Education. Permission required for
Return to slide containing image.
© McGraw Hill
30

The Information Richness of Communication Media 2, Text
Alternative
Return to slide.
A graphic shows forms of communication on a scale from high-
information richness to low-information richness. From high to
low, the forms of communication are face-to-face
communication, spoken communication electronically
transmitted, personally addressed written communication, and
impersonal written communication.
© McGraw Hill
CHAPTER 14
Operations Management:
Managing Vital Operations
and Processes
Learning Objectives

1. Explain the role of operations management in achieving
superior quality, efficiency, and responsiveness to customers.
2. Describe what customers want, and explain why it is so
important for managers to be responsive to their needs.
3. Explain why achieving superior quality is so important.
4. Explain why achieving superior efficiency is so important.
© McGraw Hill
Operations Management and Competitive Advantage1
Operations Management.
The management of any aspect of the production system that
transforms inputs into finished goods and services.
Tom Merton/age fotostock
© McGraw Hill
3
Production System.
The system that an organization uses to acquire inputs, convert
inputs into outputs, and dispose of the outputs.
© McGraw Hill
An organization strives to create a good product at a low cost;
an efficient production system helps to achieve this goal.

4
Operations Manager.
Manager who is responsible for managing an organization’s
production system and for determining where operating
improvements might be made.
© McGraw Hill
Three stages of production
Acquisition of inputs
Control of conversion processes
Disposal of goods and services
An operations manager will make the decisions affecting
production to improve quality, efficiency, and customer
service—always in the service of the organization’s competitive
advantage.
5
Quality.
Goods and services that are reliable, dependable, or
psychologically satisfying.
Efficiency.
Amount of inputs required to produce a given output.
Responsiveness to Customers.
Action taken to meet the demands and needs of customers.

© McGraw Hill
Being responsive to customers means working for quality in an
organization’s goods and services in an efficient way.
6
Why is it important for managers to pay close attention to their
organization’s production system if they wish to be responsive
to their customers? [LO 14-1]
© McGraw Hill
The attributes of an organization’s outputs—their quality, cost,
and features—are determined by the organization’s production
system. The ability of an organization to satisfy the demands of
its customers is derived from its production system. By
monitoring this system, managers can find ways to improve
quality while keeping prices low, as well as find ways to
increase efficiency. Customers want value for money, and an
organization whose efficient operating system creates high-
quality, low-cost products is best able to deliver this value.
7
The Purpose of Operations Management
Figure 14.1
Access the text alternative for this slide.

© McGraw Hill
Improving Responsiveness to Customers
Without customers, organizations would cease to exist.
Nonprofit and for-profit firms all have customers.
Managers need to identify who the customers are and their
wants or needs.
© ZUMA Press, Inc/Alamy
© McGraw Hill
9
5
Organizations exist for customers; therefore, it is essential to
identify who the customers are and then determine how best to
meet their needs.
What Do Customers Want?
Most customers prefer:
A lower price to a higher price.
High-quality products to low-quality products.
Quick service to slow service.
Many features over few features.
Products that are customized or tailored to their specific needs.
© McGraw Hill

10
5
All of these customer preferences seem obvious, especially the
desire for a high-quality product at a low cost. However, these
demands often mean a higher-price. Some will pay the extra
cost for a high-quality product with many features that might be
adapted to the owner’s needs. The Apple iPhone comes to mind.
“Total customer service is the goal toward which most
organizations should strive.” To what degree is this statement
correct? [LO 14-2]
© McGraw Hill
Without customers, most organizations would cease to exist. It
is important for managers to correctly identify and promote
organizational strategies that respond to customer needs. To this
extent, the above statement is correct. Yet organizations should
not strive to have total customer service at the expense of other
important factors in the production process. If an organization
offers a level of responsiveness that is more than that
production system can profitably sustain, the entire system will
suffer in terms of efficiency and cost effectiveness. A company
that customizes every product to the unique demands of the
individual customers will likely see its cost structure become so
high that the cost of production exceeds revenues. Also,
efficiency will suffer because time and effort is required to
customize and provide total customer service. To this extent,
total customer service should be balanced with focus on
efficiency and effectiveness.

11
Designing Production Systems to Be Responsive to Customers
The attributes of an organization’s outputs—their quality, cost,
and features—are determined by the organization’s production
system.
Since the ability of an organization to satisfy the demands of its
customers derives from its production system, managers need to
devote considerable attention to constantly improving
production systems.
© McGraw Hill
The text gives the example of Southwest Airlines and it’s
successful low-cost production system.
12
Customer Relationship Management
Customer Relationship Management (CRM).
Technique that uses IT to develop an ongoing relationship with
customers to maximize the value an organization can deliver to
them over time.
© McGraw Hill
Three parts of CRM systems:
sales and selling
after-sales service and support
marketing
A manager employs IT to determine if all parts of this system

are working efficiently and effectively; and if not, to figure out
what is failing and how to improve it.
13
What is CRM, and how can it help improve responsiveness to
customers? [LO 14-2]
© McGraw Hill
CRM is a technique that uses IT to develop an ongoing
relationship with customers to maximize the value an
organization can deliver to them over time. CRM IT monitors,
controls, and links each of the functional activities involved in
marketing, selling, and delivering products to customers, such
as monitoring the delivery of products through the distribution
channel, monitoring salespeople’s selling activities, setting
product pricing, and coordinating after-sales service.
When a company implements after-sales service and support
CRM software, salespeople are required to input detailed
information about their follow-up visits to customers. Because
the system tracks and documents every customer’s case history,
salespeople have instant access to a record of everything that
occurred during previous phone calls or visits. They are in a
much better position to respond to customers’ needs and build
customer loyalty, so a company’s after-sales service improves.
A CRM system can also identify the top 10 reasons for customer
complaints. Finally, as a CRM system processes information
about changing customer needs, this improves marketing in
many ways. Marketing managers, for example, have access to
detailed customer profiles, including data about purchases and
the reasons why individuals were or were not attracted to a

company’s products.
14
Improving Quality
A firm that provides higher quality than others at the same price
is more responsive to customers.
Higher quality can also lead to better efficiency through lower
operating costs.
© McGraw Hill
15
9
The text gives the example of Lexus (in 2017) and it’s higher -
priced yet high-quality, dependable vehicles.
Impact of Increased Quality on Organizational Performance
Figure 14.2
© McGraw Hill
Improving Efficiency1
The fewer the inputs required to produce a given output, the
higher the efficiency of a production system.
© McGraw Hill

17
15
Improving efficiency is at the heart of an organization. An
efficient organization has lower production costs, creating more
profit and attracting more customers.
The text gives the example of personal computers: . . . in 1990
the price of the average personal computer sold in the United
States was $3,000, by 1995 the price was around $1,800, and in
2017 it was around $350.35 This decrease occurred despite the
fact that the power and capabilities of the average personal
computer increased dramatically during this time period
(microprocessors became more powerful, memory increased,
and multimedia capability was added).
Total Factor Productivity.
Looks at how well an organization utilizes all of its resources—
such as labor, capital, materials, or energy—to produce its
outputs.
© McGraw Hill
One of the disadvantages of this formula is that inputs could be
hours worked or materials used.
18
Partial Productivity.
Specific measure of productivity that measures the efficiency of

an individual unit.
© McGraw Hill
This formula can be used to determine if a company is using
labor efficiently. In 1994, research found that a Japanese
company’s labor was more efficient than in a British company.
19
Facilities Layout, Flexible Manufacturing, and Efficiency1
Facilities Layout.
The operations management strategy whose goal is to design the
machine-worker interface to increase production system
efficiency.
© McGraw Hill
20
16
Another consideration in designing a work space is the cost of
setting up the equipment needed.
Three Facilities Layouts
Figure 14.3
Jump to Appendix 3 for long image description.

© McGraw Hill
Facilities Layout1
Product Layout.
Machines are organized so that each operation is performed at
work stations arranged in a fixed sequence.
Example: Mass production systems are set up where workers are
stationary and a belt moves work to them.
© McGraw Hill
22
18
Example: car production, food production.
Modular assembly lines: computers allow the production in
small batches.
Facilities Layout2
Process Layout.
Self-contained work stations not organized in a fixed sequence.
Provides flexibility in making a wide variety of products
tailored to customers.
© McGraw Hill
23
18

The text cites a custom furniture manufacturer and a hospital:
A custom furniture manufacturer might use a process layout so
that different teams of workers can produce different styles of
chairs or tables made from different kinds of woods and
finishes. Such a layout also describes how a patient might go
through a hospital from emergency room to X-ray department,
to operating room, to recovery, and so on.
Facilities Layout3
Fixed-Position Layout.
The product stays in a fixed spot and components that are
produced at remote stations are brought to the product for final
assembly.
The assembly of large jet aircraft uses this type of layout.
© McGraw Hill
24
18
Complex products are more likely to require a fixed-position
layout. In addition to airplanes, mainframe computers and gas
turbines are examples.
Facilities Layout, Flexible Manufacturing, and Efficiency2
Flexible Manufacturing.
Operations management technique that attempts to reduce the
setup costs associated with a production system.

© McGraw Hill
25
16
With flexible manufacturing, a company might be able to create
variations on a product, but in the same time as a static system.
Facilities Manufacturing
Flexible manufacturing aims to reduce the time required to set
up production equipment.
Redesigning the manufacturing process so that production
equipment geared for manufacturing one product can be quickly
replaced with equipment geared to make another product can
dramatically reduce setup times and costs.
Flexible manufacturing increases a company’s ability to be
responsive to its customers.
© McGraw Hill
26
19
The text discusses the Lansing, Michigan General Motors
plant—a small, flexible, successful plant.

Just-in-Time Inventory and Efficiency1
Inventory.
The stock of raw materials, inputs, and component parts that an
organization has on hand at a particular time.
© McGraw Hill
A company might employ a just-in-time (JIT) inventory system
to locate defects in inputs. See next slide.
27
Just-in-Time (JIT) Inventory.
A system in which parts or supplies arrive at an organization
when they are needed, not before.
Robert Clay/Alamy Stock Photo
© McGraw Hill
28
19
In a JIT system, inventory holding costs are reduced. This
includes the cost of warehousing, or storage.
One drawback of JIT systems is that they leave an organization

without a buffer stock of inventory.
Although buffer stocks of inventory can be expensive to store,
they can help an organization when it is affected by shortages of
inputs brought about by a disruption among suppliers.
© McGraw Hill
29
19
Without a buffer stock, a company might be caught off guard if
a sudden customer demand occurs.
Self-Managed Work Teams
The use of empowered self-managed teams can increase
productivity and efficiency.
Cost savings arise from eliminating supervisors and creating a
flatter organizational hierarchy, which further increases
efficiency.
© McGraw Hill
30
A company can see a 30% increase in efficiency if they use
self-managed teams. The text mentions the success of the GE
Aviation plant in Durham, North Carolina.

Process Reengineering and Efficiency1
Process Reengineering.
The fundamental rethinking and radical redesign of the business
process to achieve dramatic improvement in critical measures of
performance such as cost, quality, service, and speed
© McGraw Hill
31
The text gives the example of the Ford manager discovering the
efficient, yet small accounts payable department at Mazda in
Japan. The discovery led Ford to reengineer their procurement
process.
Process Reengineering and Efficiency2
Process reengineering can boost efficiency because it eliminates
the time devoted to activities that do not add value.
Top management’s role is to encourage efficiency improvements
by emphasizing the need for continuous improvement or
reengineering.
© McGraw Hill
32
What is efficiency, and what are some of the techniques that

managers can use to increase it? [LO 14-4]
© McGraw Hill
Efficiency refers to the amount of inputs required to produce a
given output. Inputs may include labor, component parts, skills,
knowledge, or time. Outputs can be any goods and services that
the customer wants. These may be products or they may be
intangible things, like customer service.
Managers can increase efficiency in several ways. One is to
improve quality. When quality rises, less employee time is spent
making defective products that have to be discarded or repaired.
Designing products with fewer parts can increase efficiency
since fewer parts to assemble reduces the total assembly time
and makes products easier to assemble (e.g. less effor t.)
Managers can also change their facilities layout, or the way in
which machines, robots, and people are grouped together. One
layout may be more effective than another, depending on the
product. Flexible manufacturing can also increase efficiency by
reducing the time required to set up production equipment. Yet
another tactic is just-in-time inventory, which reduces inventory
holding costs and frees capital that would otherwise be tied up
in inventory. Another way is to implement self-managed teams.
33
Operations Management: Some Remaining Issues
Achieving superior responsiveness to customers through quality
and efficiency often requires a profound shift in management
operations and in the culture of an organization.
Making JIT work can pose a significant challenge.
By using JIT, employees may see the demands of their job
increase or they may see themselves reengineered out of a job.

© McGraw Hill
34
A manager may need to balance the ethics of using JIT, flexible
manufacturing, and reengineering when it impacts costs to
employees, such as being reengineered out of their jobs.
BE THE MANAGER
What kinds of techniques discussed in the chapter can help
these managers to increase efficiency?
© McGraw Hill
When hiring people, it will be important to screen for teamwork
skills and the ability to work in a cross-functional type of team
setting. The production facility should be designed to
incorporate flexible manufacturing technologies and to use a
just-in-time inventory system in order to adapt to changing
market conditions and customer demands.
35
McGraw-Hill
www.mheducation.com
Accessibility Content: Text Alternatives for Images
© McGraw Hill

The Purpose of Operations Management, Text Alternative
Return to slide.
The graphic shows the production system at the top of the chart.
The three stages underneath are input stage, conversion stage,
and output stage. The input stage includes raw materials,
component parts, and labor. The conversion stage includes
skills, machines, and computers. And the output stage includes
goods and services. Operations management techniques are used
during each stage of production to increase efficiency, quality,
and responsiveness to customers in order to give the
organization a competitive advantage.
© McGraw Hill
Impact of Increased Quality on Organizational Performance,
Text Alternative
Return to slide.
A flow chart shows the impact of increased quality on
organizational performance. Increased quality can lead to
increased reliability, higher prices, and higher profit, or it can
lead to increased productivity, lower costs, and higher profits.
Return to slide containing the image.
© McGraw Hill
Three Facilities Layouts, Text Alternative

Return to slide.
A group of three diagrams is shown, with each diagram showing
a facility layout. Diagram A shows a product layout, diagram B
show a process layout, and diagram C shows a fixed-position
layout.
Diagram A, the product layout, is linear, showing 3 items that
lead to a final product.
Diagram B, the process layout, is square, showing 4 items that
relate in a linear fashion and diagonally with each other. They
all result in the final product.
Diagram C, the fixed-position layout, has the final product in
the middle and four items relating to it.
Return to slide containing the image.
© McGraw Hill
CHAPTER 12
Building and Managing Human Resources

1
1. Explain why strategic human resource management can
help an organization gain a competitive advantage.
2. Describe the steps managers take to recruit and select
organizational members.
3. Discuss the training and development options that ensure
organization members can effectively perform their jobs.
© McGraw Hill
12-1. Explain why strategic human resource management
can help an organization gain a competitive advantage.
12-2. Describe the steps managers take to recruit and select
organizational members.
12-3. Discuss the training and development options that
ensure organization members can effectively perform their jobs.
2
4. Explain why performance appraisal and feedback are such
crucial activities and list the choices managers must make in
designing effective performance appraisal and feedback
procedures.
5. Explain the issues managers face in determining levels of
pay and benefits.
6. Understand the role that labor relations play in the
effective management of human resources.

© McGraw Hill
12-4. Explain why performance appraisal and feedback are
such crucial activities and list the choices managers must make
in designing effective performance appraisal and feedback
procedures.
12-5. Explain the issues managers face in determining
levels of pay and benefits.
12-6. Understand the role that labor relations play in the
effective management of human resources.
3
Strategic Human Resource Management 1
Human Resource Management (HRM)
Activities that managers engage in to attract and retain
employees and to ensure that they perform at a high level and
contribute to the accomplishment of organizational goals.
David Lees/Digital Vision/Getty Images
© McGraw Hill
4
The most important resources in all organizations are human
resources. Irrespective of the level, from top to entry-level, all
are a resource.
Strategic Human Resource Management 2
The process by which managers design the components of a
human resource management (HRM) system to be consistent
with each other, with other elements of organizational

architecture, and with the organization’s strategy and goals.
© McGraw Hill
5
HRM system should enhance the organization’s efficiency,
quality, innovation, and responsiveness to customers.
“Six Sigma” quality improvement plans ensure that an
organization’s products and services are as free of errors or
defects as possible through a variety of human resource-related
initiatives.
Discuss why it is important for human resources management
systems to be in sync with an organization's strategy and goals
and with each other. [LO 12-1]
© McGraw Hill
Human resources management systems include recruitment and
selection, training and development, performance appraisal and
feedback, pay and benefits, and labor relations. These systems
need to be consistent with an organization's strategy and goals
so that the organization can increase efficiency and
effectiveness, quality, innovation, and responsiveness to
customers.
These objectives are the building blocks of competitive
advantage and contribute to an organization's success and
survival. If an organization chooses to pursue a low-cost
strategy, the human resources system needs to be responsive to

this strategy and needs to contain costs and find ways to do
more with less. If an organization, instead, pursues a
differentiation strategy and wishes to distinguish itself from the
competition, human resources must attract, select, and retain the
employees that will enable the organization to achieve its goal.
Employees in every organization must be trained with the skills
and abilities they need and must be rewarded and motivated to
ensure high performance at all levels.
6
Components of a Human Resource Management System
Figure 12.1
Access the text alternative for slide images.
© McGraw Hill
Recruitment and Selection:
Used to attract and hire new employees who have the abilities,
skills, and experiences that will help an organization achieve its
goals.
Training and Development:
Ensures that organizational members develop the skills and
abilities that will enable them to perform their jobs effectively
in the present and the future.
Changes in technology and the environment require that
organizational members learn new techniques and ways of
working.
Performance Appraisal and Feedback:
Provides managers with the information they need to make good
human resources decisions about how to train, motivate, and
reward organizational members.

Feedback from performance appraisal serves a developmental
purpose for members of an organization.
Pay and Benefits:
Rewarding high performing organizational members with raises,
bonuses and recognition.
Increased pay provides additional incentive.
Benefits, such as health insurance, reward membership in firm.
Labor relations:
Steps that managers take to develop and maintain good working
relationships with the labor unions that may represent their
employees’ interests.
7
The Legal Environment of HRM 1
Equal Employment Opportunity (EEO):
The equal right of all citizens to the opportunity to obtain
employment regardless of their gender, age, race, country of
origin, religion, or disabilities.
Equal Employment Opportunity Commission (EEOC) enforces
employment laws.
© McGraw Hill
8
The Legal Environment of HRM 2
Contemporary challenges for managers:
How to eliminate sexual harassment.
How to make accommodations for employees with disabilities.
How to deal with employees who have substance abuse
problems.
How to manage HIV-positive employees and employees with

AIDs.
© McGraw Hill
Although the stigma of AIDS has lessened some in society,
unfair treatment of those affected still occurs. It is one of the
roles of management to guarantee that those with AIDs are not
discriminated against. Many companies have AIDS awareness
programs, guiding others to treat those with the HIV virus
fairly, allowing them to continue to be productive members of
the organization.
9
Major EEO Laws
Table 12.1 Major Equal Employment Opportunity Laws
Affecting HRMYearLawDescription (Affecting Human
Resources Management)1963Equal Pay Act.Requires that men
and women be paid equally if they are performing equal
work.1964Title VII of the Civil Rights Act.Prohibits
employment discrimination on the basis of race, religion, sex,
color, or national origin; covers a wide range of employment
decisions, including hiring, firing, pay, promotion, and working
conditions.1967Age Discrimination in Employment
Act.Prohibits discrimination against workers over the age of 40
and restricts mandatory retirement.1978Pregnanc y
Discrimination Act.Prohibits employment discrimination against
women on the basis of pregnancy, childbirth, and related
medical decisions.1990Americans with Disabilities
Act.Prohibits employment discrimination against individuals
with disabilities and requires that employers make
accommodations for such workers to enable them to perform
their jobs.1991Civil Rights Act.Prohibits discriminations (as
does Title VII) and allows the awarding of punitive and
compensatory damages, in addition to back pay in cases of

international discrimination.1993Family and Medical Leave
Act.Requires that employers provide 12 weeks of unpaid leave
for medical and family reasons, including paternity and illness
of a family member.
© McGraw Hill
Recruitment and Selection
Recruitment:
Activities that managers engage in to develop a pool of
qualified candidates for open positions.
Selection:
The process that managers use to determine the relative
qualifications of job applicants and their potential for
performing well in a particular job.
© McGraw Hill
11
The Recruitment and Selection System
Figure 12.2
© McGraw Hill

Human Resource Planning 1
Human Resource Planning (HRP):
Activities that managers engage in to forecast their current and
future needs for human resources.
Consider supply and demand forecasts.
© McGraw Hill
13
Part of a manager’s planning includes demand forecasts,
estimates of the qualifications and numbers of employees an
organization needs, and supply forecasts, estimates of the
availability and qualifications of current and future employees,
as well as the supply of qualified workers in the external labor
market.
Human Resource Planning 2
Outsource:
To use outside suppliers and manufacturers to produce goods
and services.
Use of contract workers rather than hiring them.
Two reasons why human resource planning sometimes leads
managers to outsource are flexibility and cost.
© McGraw Hill
14
The textbook you are reading has most likely been copyedited
by a freelance editor. If a company finds itself in need of short-

term assistance, places such as Kelly Services are available to
supply them with temporary employees.
Job Analysis 1
The analysis identifies the tasks, duties, and responsibilities
that make up a job and the knowledge, skills, and abilities
needed to perform the job.
The analysis should be done for each job in the organization.
© McGraw Hill
Flexible jobs have become popular with some organizati ons.
When hiring, they may look more at a potential employee’s
overall skills and knowledge and less on specific duties that the
employee might perform, hoping to obtain workers who can
adapt to changing tasks and responsibilities.
15
Job Analysis 2
Job analysis methods include:
Observing what current workers do.
Having workers and managers fill out questionnaires.
© McGraw Hill
Possible questions for workers and/or managers:
What are your skills? Abilities?
What specific tasks do you perform?
How much time does it take?

What supervisory activities are involved?
What equipment do you use?
Do you prepare reports?
What decisions fall to you?
16
Recruitment 1
External Recruiting:
Looking outside the organization for people who have not
worked at the firm previously.
Newspapers advertisements, open houses, on-campus recruiting,
and the Internet.
© McGraw Hill
17
Advantages of External Recruiting:
Having access to a potentially large applicant pool.
Being able to attract people who have the skills, knowledge, and
abilities an organization needs.
Bringing in newcomers who may have a fresh approach to
problems and be up to date on the latest technology.
Disadvantages of External Recruiting:
Relatively high costs.
Candidates may lack knowledge about the inner workings of the
organization.
May need to receive more training.
Uncertainty concerning whether they will actually be good
performers.
Recruitment 2
Internal Recruiting:

Managers turn to existing employees to fill open positions.
Benefits of internal recruiting:
Internal applicants are already familiar with the organization.
Managers already know candidates.
Can help boost levels of employee motivation and morale.
© McGraw Hill
18
Disadvantages of internal recruiting:
A limited pool of candidates.
A tendency among candidates to be set in the organization’s
ways.
No suitable internal candidates.
External recruiting can bring in new perspectives and
approaches.
Recruitment 3
Lateral Move:
Job change that entails no major changes in responsibility or
authority levels.
Ariel Skelley/Getty Images
© McGraw Hill
19
It is possible that an employee might be looking to change jobs
(a lateral move), not looking for a promotion or more
responsibility.

Selection Tools
Figure 12.3
© McGraw Hill
Background Information:
Helpful to screen out applicants who are lacking key
qualifications.
Determine which qualified applicants are more promising than
others.
Interviews:
Structured interviews where managers ask each applicant the
same job-related questions.
Unstructured interviews that resemble normal conversations.
Usually structured interviews preferred; bias is possible in
unstructured interviews.
Paper-and-Pencil Tests:
Ability tests assess the extent to which applicants possess the
skills necessary for job performance.
Managers must have sound evidence that the tests are good
predictors of performance.
Physical ability tests:
Measures of dexterity, strength, and stamina for physically
demanding jobs.
Measures must be job related to avoid discrimination.
Performance tests:
Tests that measure an applicant’s current ability to perform the
job or part of the job such as requiring an applicant to take
typing speed test.
Assessment centers are facilities where managerial candidates
are assessed on job-related activities over a period of a few
days.

References:
Knowledgeable sources who know the applicants’ skills,
abilities, and other personal characteristics.
Many former employers are reluctant to provide negative
information.
20
The Selection Process
Selection Process:
Managers find out whether each applicant is qualified for the
position and likely to be a good performer.
© McGraw Hill
Possible selection tools:
Interviews.
Paper-and-pencil tests.
Physical ability tests.
Performance tests.
References.
Background information.
21
Reliability and Validity
Reliability:
The degree to which the tool or test measures the same thing
each time it is used.
Validity:
The degree to which a tool or test measures what it is supposed
to measure.

© McGraw Hill
22
Managers should be aware of the reliability and validity (or not)
of their selection tools. For example, to increase the reliability
of an interview, a manager could invite different people to
interview the prospects.
Training and Development 1
Training:
Teaching organizational members how to perform current jobs
and helping them to acquire the knowledge and skills they need
to be effective performers.
Development:
Building the knowledge and skills of organizational members so
they are prepared to take on new responsibilities and
challenges.
© McGraw Hill
23
Training is focused on skill acquisition = lower levels of an
organization.
Development is focused on knowledge acquisition =
professionals and managers.

Discuss why training and development are ongoing activities for
all organizations. [LO 12-3]
© McGraw Hill
Training focuses primarily on teaching organizational members
how to perform their current jobs and helping them acquire the
knowledge and skills they need to be effective performers.
Development focuses on building organizational members'
knowledge and skills so that they will be prepared to take on
new responsibilities and challenges. Organizations need to
continuously train and develop their human resources,
especially in today's global environment. Training is more
frequently used in lower levels of an organization, for example,
with new hires and entry-level positions. In today's economy,
these positions experience high turnover, and employees tend to
move quickly between jobs and organizations, requiring new
skills and knowledge in different industries and settings.
Development tends to be utilized at higher levels in
organizations. People who know their jobs find they need new
skills when they are given more responsibility, as is the case
when jobs are enriched and organizations become decentralized.
The speed of business is increasing every day, and new
technology and competition make training and development
necessary ongoing activities in organizations that want to
survive and succeed.
24
Needs Assessment:
An assessment of which employees need training or
development and what type of skills or knowledge they need to

acquire.
© McGraw Hill
25
Types of Training
Classroom Instruction:
Employees acquire skills in a classroom setting.
Includes use of videos, role-playing, and simulations.
On-the-Job Training:
Training that takes place in the work setting as
employees perform their job tasks.
© McGraw Hill
26
Videos can be used to model job behaviors; learning to deal
with unruly customers.
Role-playing: McDonald’s Hamburger University for
franchisees to learn the restaurant.
On-the-job training pairs an experienced employee with a
newcomer.
Types of Development
Varied Work Experiences:
Top managers need to develop an understanding of, and
expertise in, a variety of functions, products and services, and

markets.
Formal Education:
College courses.
Tuition reimbursement is common for managers taking classes
for MBA or job-related degrees.
© McGraw Hill
27
Mentoring: an experienced member of an organization provides
advice and guidance to a less experienced member (protégé.)
Having a mentor can help managers seek out work experiences
and assignments that will contribute to their development and
can enable them to gain the most possible from varied work
experiences.
Describe the type of development activities that you think
middle managers are most in need of. [LO 12-3]
© McGraw Hill
Managers need development activities to help them adjust to
new responsibilities and challenges in today's organizations.
Many organizations have downsized, and managers need to be
able to perform many duties and functions within an
organization. For this reason, managers need to be exposed to a
variety of work experiences. Top managers need to develop

understanding of and expertise in a variety of functions,
products and services, and markets. A manager cannot narrow
his or her focus to only their product line or region of the
country. An opportunity to experience different roles in an
organization can help a manager to understand how each
function fits into the organization as a whole.
Managers can also benefit from formal education, such as
executive MBA programs, where they can learn the latest in
business and management techniques and practices.
Whether managers receive development on-the-job or in a
classroom, transfer of knowledge and skills to the workplace is
crucial. A manager must be able to successfully apply what he
or she has learned and use the development experience in ways
that benefit the organization and allow it to reach its goals.
28
Figure 12.4
© McGraw Hill
Classroom Instruction:
Employees acquire skills in a classroom setting.
Includes use of videos, role-playing, and simulations.
On-the-Job Training:
Employee learning occurs in the work setting as new worker
does the job.
Training is given by co-workers and can be done continuously

to update the skills of current employees.
Varied Work Experiences:
Top managers have need to and must build expertise in many
areas.
Employees identified as possible top managers are assigned
different tasks and a variety of positions in an organization.
Formal Education:
Tuition reimbursement is common for managers taking classes
for MBA or job-related degrees.
Long-distance learning can also be used to reduce travel and
other expenses for managerial training.
29
Performance Appraisal and Feedback
Performance Appraisal:
The evaluation of employees’ job performance and
contributions to their organization.
Traits, behaviors, results.
Objective and subjective appraisals.
mavo/Shutterstock
© McGraw Hill
30
At an annual review, a manager might share the appraisal with
the employee. The employee then has a chance to reflect on and
discuss his or her performance with the manager. Together, the
manager and subordinate can develop a plan for the future. This
is performance feedback.
Who Appraises Performance? 1

Figure 12.5
© McGraw Hill
Self: Self-appraisals can supplement manager view.
Peer appraisal: Coworkers provide appraisal; common in team
settings.
360 Degree: A performance appraisal by peers, subordinates,
superiors, and clients who are in a position to evaluate a
manager’s performance.
31
Who Appraises Performance? 2
360-Degree Appraisal:
Performance appraisal by peers, subordinates, superiors, and
sometimes clients who are in a position to evaluate a manager’s
performance.
© McGraw Hill
32
360-degree appraisals rely on trust. In fact, trust is a critical
ingredient in any performance appraisal and feedback
procedure. As research has indicated, 360-degree appraisals
should concentrate on behaviors and not traits or results. It is
also important that managers select appropriate raters.

Evaluate the pros and cons of 360-degree performance
appraisals and feedback. Would you like your performance to be
appraised in this manner? Why or why not? [LO 12-4]
© McGraw Hill
Performance appraisal and feedback are vital components of
human resources management systems. Through appraisal and
feedback, performance is evaluated and information is provided
to employees that enables them to reflect on their performance
and develop plans for the future. The 360-degree approach
allows a wider range of people to evaluate and give feedback on
an employee’s performance. A manager might conduct a self-
appraisal, as well as receive feedback from peers, subordina tes,
superiors, and even customers and clients.
Some advantages of 360-degree appraisal are that employees are
able to get more than one perspective, and that people who work
closely with the employee on a day-to-day basis can give
feedback on overall performance, not just once a month or once
a year. It is also a useful technique for meeting customer needs.
It is sometimes easy for members within an organization to lose
sight of the customers' perspectives, and 360-degree appraisal
brings the customers' viewpoints into the larger picture.
Some disadvantages include the possibility of spiteful
evaluations from disgruntled subordinates, especially if
evaluations are anonymous, coerced positive evaluations from
intimidated employees, or misguided evaluations from
employees who are not knowledgeable enough about the job
they are evaluating.

33
Effective Performance Feedback
Formal Appraisals:
An appraisal conducted at a set time during the year and based
on performance dimensions and measures that were specified in
advance.
Informal Appraisals:
An unscheduled appraisal of ongoing progress and areas for
improvement.
© McGraw Hill
34
Most large organizations rely on fixed schedules for appraisals,
perhaps annually.
At an appraisal, the manager gives the employee feedback on
his or her performance, where does she excel and where does
she fall short.
The manager should also give guidance on how the employee
can improve. New responsibilities often require informal
appraisals, giving timely feedback.
Effective Feedback Tips 1
Be specific and focus on behaviors or outcomes that are
correctable and within a worker’s ability to improve.
Approach performance appraisal as an exercise in problem
solving and solution finding, not criticizing.
Express confidence in a subordinate’s ability to improve.

Provide performance feedback both formally and informally.
© McGraw Hill
35
Although difficult, it is important to give negative feedback.
Effective Feedback Tips 2
Praise instances of high performance and areas of a job in which
a worker excels.
Avoid personal criticisms and treat subordinates with respect.
Agree to a timetable for performance improvements.
© McGraw Hill
36
The goal of performance feedback is to enhance motivation and
performance. It also informs pay raises and bonuses.
Pay and Benefits 1
Pay:
Includes employees’ base salaries, pay raises, and bonuses.
Determined by characteristics of the organization, the job, and
levels of performance.
Benefits are based on membership in an organization.
© McGraw Hill

Pay, of course, can be a great motivator, but it is important to
tie it to an employee’s behavior or results, all with the goal of
improving an organization’s effectiveness.
37
Pay and Benefits 2
Pay Level:
The relative position of an organization’s pay incentives in
comparison with those of other organizations in the same
industry employing similar kinds of workers.
© McGraw Hill
38
High wages improve recruiting but raise costs.
Low wages provide a company with a cost advantage but can
negatively affect recruitment.
Discuss why two restaurants in the same community might have
different pay levels. [LO 12-5]

© McGraw Hill
A pay level is a broad term that refers to how an organization's
pay incentives compare, in general, to those of other
organizations in the same industry, employing similar kinds of
workers.
Two restaurants in the same community might have different
pay levels if they are pursuing different organizational
strategies. An expensive French restaurant may value the
competitive advantage that is gained through superior, quality
food and excellent service. This restaurant would likely adopt a
high pay level, paying its chefs, servers, and staff
comparatively more than other restaurants. Though high pay
levels raise costs, they also help ensure that the restaurant
managers will be able to recruit, select, and retain high
performers. A neighborhood diner, on the other hand, may adopt
a low-cost strategy, and pay its cooks, wait staff, and managers
relatively low wages in order to keep costs down. The diner may
gain a cost advantage, but the disadvantages may include the
inability to select and recruit high performers or motivate
current employees to perform at a high level.
39
Pay and Benefits 3
Pay Structure:
The arrangement of jobs into categories reflecting their relative
importance to the organization and its goals, level of skill
required, and other characteristics.
© McGraw Hill
40

Not only do U.S. companies pay large salaries and bonuses to
top-management, but the gap between them and the lowest-level
employee in the company is much greater than European or
Japanese companies.
According the Economic Policy Institute, “. . . in 2016 CEOs in
America’s largest firms made an average of $15.6 million in
compensation, or 271 times the annual average pay of the
typical worker.”
Mishel, L. and Schieder, J. 2017. “CEO Pay Remains High
Relative to the Pay of Typical Workers and High-Wage
Earners.” Economic Policy Institute. Accessed November 14,
2017.
http://www.epi.org/publication/ceo-pay-remains-high-relative-
to-the-pay-of-typical-workers-and-high-wage-earners/
Pay and Benefits 4
Benefits:
Legally required: social security, workers’ compensation,
unemployment insurance.
Voluntary: health insurance, retirement, day care.
Cafeteria-Style Benefit Plan:
A plan from which employees can choose the benefits they
want.
© McGraw Hill
41
The Health Care Reform Bill signed by President Obama in
March 2010, starting in 2014.
Employers with 50 or more employees may face fines if they

don’t provide their employees with health insurance coverage.
Benefits enabling workers to balance the demands of their jobs
and of their lives away from the office or factory are of growing
importance for many workers who have competing demands on
their scarce time and energy.
Labor Relations
These are the activities managers engage in to ensure they have
effective working relationships with the labor unions that
represent their employees’ interests.
© McGraw Hill
42
Unions represent the workers when negotiating with
management, looking after the employees pay and benefits. The
U.S. government has also addressed unethical and unfair
treatment of workers.
Unions 1
Unions represent worker’s interests to management in
organizations.
A union might be able to ensure a worker’s interests are fairly
represented.
© McGraw Hill

43
Some workers perceive negatives in joining unions:
Corrupt leadership.
Cost of dues.
Strikes.
Unions 2
Collective Bargaining:
Negotiation between labor unions and managers to resolve
conflicts and disputes about issues, such as working hours,
wages, benefits, working conditions, and job security.
© McGraw Hill
44
Strikes (cessation of work) are called to bring bargaining chi ps
to the table for the unions. After negotiations, the terms of the
collective bargaining agreement are spelled out in a contract.
BE THE MANAGER
What are you going to do?
© McGraw Hill
Apparently, you tried to develop this system in a vacuum. You
need to solicit input from the other managers regarding the
behaviors to be rated by the 20-item scale. Now that you have
some feedback, you might want to do the following:
Send an e-mail to all employees and managers in the

organization apologizing for any confusion and ill will that
might have been created by your actions. You can explain that
you were only trying to improve the system for everyone but
apparently did not communicate that very well.
Next, you could ask the managers how to improve the 20-item
scale. You do not need to back down from using the 360-degree
or the new performance system. However, you need to educate
the managers about how it could work better using their own
ideas, asking for their input now and in the future and training
them in how to use the instruments fairly.
Having gathered the information, you can now revise the form’s
instructions, make appropriate changes, and send out a
prototype of the new forms for comments by all managers.
Once changes are incorporated, you should conduct training
sessions on using the new forms. Training sessions should
include the guidelines for giving effective performance
feedback.
45
End of Main Content
www.mheducation.com
Appendix: Image Descriptions for Unsighted Students

© McGraw Hill
Components of a Human Resource Management System, Text
Alternative
Return to slide.
The cluster diagram demonstrates how components of a human
resource management system interrelate. The components
include recruitment and selection, training and development,
performance appraisal and feedback, pay and benefits, and labor
relations. Each component of a human resources management
system influences the others, and all five must fit together.
© McGraw Hill
48
Training and Development 3, Text Alternative
Return to slide.
The chart breaks down needs assessment into training and
development. Training is broken down into classroom
instruction, on-the-job training, and apprenticeships, which can
include classroom instruction and on-the-job training.
Development is broken down into classroom instruction, on-the-
job training, varied work experiences, and formal education.

© McGraw Hill
CHAPTER 10
Leaders and Leadership
Learning Objectives
1. Explain what leadership is, when leaders are effective and
ineffective, and the sources of power that enable managers to be
effective leaders.
Identify the traits that show the strongest relationship to
leadership, the behaviors leaders engage in, and the limitations
of the trait and behavioral models of leadership.
3. Explain how contingency models of leadership enhance our
understanding of effective leadership and management in
organizations.
4. Describe what transformational leadership is and explain
how managers can engage in it.
5. Characterize the relationship between gender and
leadership and explain how emotional intelligence may
contribute to leadership effectiveness.

© McGraw Hill
1. Explain what leadership is, when leaders are effective and
ineffective, and the sources of power that enable managers to be
effective leaders.
Identify the traits that show the strongest relationship to
leadership, the behaviors leaders engage in, and the limitations
of the trait and behavioral models of leadership.
3. Explain how contingency models of leadership enhance our
understanding of effective leadership and management in
organizations.
4. Describe what transformational leadership is and explain
how managers can engage in it.
5. Characterize the relationship between gender and
leadership and explain how emotional intelligence may
contribute to leadership effectiveness.
2
The Nature of Leadership 2
Leader:
An individual who exerts influence over other people to help
achieve group or organizational goals.
Leadership:
The process by which a person (the leader) exerts influence
over other people and inspires, motivates and directs their
activities to help achieve group or organizational goals.

© McGraw Hill
An ineffective leader’s influence can detract from achieving a
company’s goals.
3
The Nature of Leadership 3
Personal Leadership Style:
The specific ways in which a manager chooses to influence
others shapes the way that manager approaches the other tasks
of management.
The challenge is for managers at all levels to develop an
effective personal management
style.
© McGraw Hill
4
The text uses the example of Michael Kraus, owner and manager
of a dry-cleaning store in the northeastern United States, to
describe a hands-on approach to leadership.
Leadership Styles across Cultures
Leadership styles may vary among different countries or
cultures.
European managers tend to be more people-oriented than
American or Japanese managers.
Japanese managers are group-oriented.

U.S managers focus more on short-term profitability.
Time horizons also are affected by cultures.
© McGraw Hill
5
Time horizon differences: The United States focuses on short-
term profit orientation unlike in Japan where their leadership
styles emphasize long-term performance.
Types of Managerial Power
Figure 10.1
© McGraw Hill
Power: The Key to Leadership 1
Legitimate Power:
The authority that a manager has by virtue of his or her position
in an organizational hierarchy.
Reward Power:
The ability of a manager to give or withhold tangible and
intangible rewards.

© McGraw Hill
7
The text uses the example of Carol Loray to describe legitimate
power. Reward power is common in sales departments where
commissions are disbursed based on sales or quality of customer
service.
Coercive Power:
The ability of a manager to punish others.
Expert Power:
Power that is based on special knowledge, skills, and expertise
that a leader possesses.
© McGraw Hill
8
Coercive power includes frequent verbal criticisms, personal
attacks, and manipulation. The text uses the example of William
J. Fife who was fired from Giddings and Lewis Inc. for this type
of behavior.
Referent Power:

Power that comes from subordinates’ and coworkers’ respect,
admiration, and loyalty.
© McGraw Hill
9
When a manager is revered, respected, or produces a feeling of
affection from subordinates, it is more likely employees will be
motivated. The text gives the example of Sally Carruthers and
her ability to project a warm and caring nature, making each of
her subordinates feel special.
Describe the steps managers can take to increase their power
and ability to be effective leaders. [LO 10-1]
© McGraw Hill
A manager should ensure that he or she has sufficient levels of
power. For example, in order to use their legitimate power they
must be given the authority or necessary responsibilities within
the organization. The other sources of power that help a
manager to be an effective leader include reward power,
coercive power, expert power, and referent power. A manager
needs to use the power that he or she has in beneficial ways and
not abuse it. For example, when using reward power, managers
need to give or withhold tangible and intangible rewards to their
subordinates. When using coercive power, they need to punish
employees when necessary. This would include verbal
reprimands, reductions in pay or working hours, or actual
dismissal. When using their expert power, managers must show
that they have gained significant knowledge from their

experience. And to maintain or increase referent power, a
manager should behave in ways that encourage respect,
admiration and loyalty from subordinates and coworkers.
10
Empowerment: An Ingredient in Modern Management
Empowerment gives employees at all levels the authority to
make decisions, be responsible for their outcomes, improve
quality, and cut costs.
Increases a manager’s ability to get things done.
Increases workers’ involvement, motivation, and commitment.
Gives managers more time to concentrate on their pressing
concerns.
© McGraw Hill
11
Trait and Behavior Models of Leadership
Trait Model:
This model focuses on identifying personal characteristics that
cause effective leadership.
Many “traits” are the result of skills and knowledge and
effective leaders do not necessarily possess all of these traits.
Traits including energetic, charismatic, confident, having
integrity, high intellect, honest, etc.
© McGraw Hill

12
Research shows that certain personal characteristics do appear
to be connected to effective leadership.
The Behavior Model 1
Identifies the two basic types of behavior that many leaders
engage in to influence their subordinates: consideration and
initiating structure.
© McGraw Hill
13
Ohio State University studies (1940s and 1950s).
The Behavior Model 2
Consideration:
Behavior indicating that a manager trusts, respects, and cares
about subordinates.
Initiating Structure:
Behavior that managers engage in to ensure that work gets done,
subordinates perform their jobs acceptably, and the organization
is efficient and effective.
© McGraw Hill
14
The text uses the example of Michael Teckel, a manager of an
upscale shoe store, to describe consideration behavior and an
initiating structure.

Think of specific situations in which it might be especially
important for a manager to engage in consideration and
initiating structure. [LO 10-2]
© McGraw Hill
Leaders engage in consideration when they show their
subordinates that they trust, respect, and care about them. A
manager is performing consideration behaviors when he or she
takes steps that will benefit the well-being of his or her
subordinates. It is always important for managers to show their
subordinates respect, an example of consideration behavior. Due
to the increasing importance of customer service, organizations
are beginning to realize that if they are considerate and
respectful to their employees, their employees in turn will be
considerate and respectful to their customers.
Leaders engage in initiating structure when they take steps to
make sure that the work gets done, subordinates perform their
jobs acceptably, and the organization is efficient and effective.
Delegating responsibilities is an example of initiating structure.
When a manager assigns projects to subordinates or schedules
their working hours and break times, he or she is initiating
structure in the organization.
15
Contingency Models of Leadership
Contingency Models:
Whether or not a manager is an effective leader is the result of
the interplay between what the manager is like, what he or she

does, and the situation in which leadership takes place.
Fiedler’s Model:
Personal characteristics can influence leader effectiveness.
Leader style is the manager’s characteristic approach to
leadership.
© McGraw Hill
16
Fred E. Fiedler—1960s:
A manager might be effective in one situation and ineffective in
another. This model helps explain why that might be.
Discuss why managers might want to change the behaviors they
engage in, given their situation, their subordinates, and the
nature of the work being done. Do you think managers are able
to readily change their leadership behaviors? Why or why not?
[LO 10-3]
© McGraw Hill
Because different types of leading behaviors work best in
different situations, the manager must understand of the nature
of the situation. Subordinates are people with varied
personalities, and people respond differently to different
leadership behaviors and styles. A manager must also be
cognizant of the different types of tasks performed by his or her
subordinates. Some leadership behaviors are more appropriate

for certain tasks more so than for others. It is very important for
managers to develop a way for determining what kinds of leader
behaviors are likely to work in different situations in order to
be effective and efficient managers.
17
Contingency Models of Leadership 3
Relationship-Oriented Leaders:
Leaders whose primary concern is to develop good relations
with their subordinates and to be liked by them.
Task-Oriented Leaders:
Leaders whose primary concern is to ensure that subordinates
perform at a high level and focus on task accomplishment.
© McGraw Hill
18
Fiedler’s Model 1
Leader–Member Relations:
The extent to which followers like, trust, and are loyal to their
leader; a determinant of how favorable a situation is for leading.
Task Structure:
The extent to which work is clear-cut so that a leader’s
subordinates know what needs to be accomplished and how to
go about doing it.

© McGraw Hill
19
The text uses the example of Geraldine Laybourne of
Nickelodeon to discuss task structure. Being in an industry that
is in flux (children’s tastes) or is creative in its nature, might
prove to have low task structure.
Fiedler’s Model 2
Position Power:
The amount of legitimate, reward, and coercive power leaders
have by virtue of their position.
Leadership situations more favorable for leading when position
power is strong.
© McGraw Hill
Research suggests that Fiedler’s model needs some
modifications. What does the LPC scale really measure? Is it
true that leaders cannot alter their styles?
20
Fiedler’s Contingency Theory of Leadership
Figure 10.2

© McGraw Hill
House’s Path-Goal Theory 1
Path-Goal Theory states that effective leaders motivate
subordinates to achieve goals by:
Clearly identifying the outcomes that subordinates are trying to
obtain.
Rewarding workers with these outcomes for high-performance
and goal attainment.
Clarifying the paths to the attainment of the goals.
© McGraw Hill
22
This theory is contingent upon the nature of subordinates and
the nature of their work.
Directive Behaviors:
Setting goals, assigning tasks, showing subordinates how to
complete tasks, and taking concrete steps to improve
performance.
Supportive Behavior:
Expressing concern for subordinates and looking out for their
best interests.
© McGraw Hill

23
Directive behaviors:
Beneficial when employees having difficulty completing
assigned tasks.
Detrimental if employees are independent or creative.
Supportive behaviors:
Beneficial when high levels of stress are present.
Participative Behavior:
Giving subordinates a say in matters that affect them.
Achievement-Oriented Behavior:
Setting very challenging goals, believing in workers’ abiliti es.
Stockbyte/Getty Images
© McGraw Hill
Participative behaviors:
Beneficial when subordinates’ support of a decision is required.
Achievement-oriented behaviors:
Beneficial when motivation is needed to spur subordinates with
challenges.
Detrimental if subordinates are already pushed to their limit.
24
Discuss why substitutes for leadership can contribute to
organizational effectiveness. [LO 10-3]

© McGraw Hill
A leadership substitute is something that acts in place of the
influence of a leader and makes leadership unnecessary. An
organization may be fortunate to have extremely motivated
employees who are able to perform the majority of their
responsibilities without guidance from their managers. If
employees are not in need of constant leadership then those who
usually perform these functions are then able to spend their time
doing other things required to increase the effectiveness of the
organization.
25
The Leader Substitutes Model 1
A characteristic of a subordinate or characteristic of a situation
or context that acts in place of the influence of a leader and
makes leadership unnecessary. A high degree of self-direction
on the part of the subordinate is required.
© McGraw Hill
26
It is possible for some employees to perform at high levels
without the influence of a manager.
The Leader Substitutes Model 2
Possible substitutes can be found in:
Characteristics of the subordinates:
Skills, experience, motivation.

Characteristics of context:
The extent to which work is interesting and fun.
© McGraw Hill
At times it might be necessary for a manager to have the time
and space to work on new developments or processes to increase
efficiency and effectiveness. Substitutes for leadership would
be beneficial in these circumstances.
27
Transformational Leadership
Makes subordinates aware of the importance of their jobs and
performance to the organization.
Makes subordinates aware of their own needs for personal
growth and development.
Motivates workers to work for the good of the organization, not
just themselves.
© McGraw Hill
28
The text uses the example of Sue Nokes of T-Mobile as a
transformation leader. Nokes dramatically turned around sales
and customer service for T-Mobile.
Transactional Leadership

Transactional leaders motivate subordinates by rewarding them
for high performance and reprimanding them for low
performance.
© McGraw Hill
29
Often transformational leaders and transactional leadership are
closely linked. While envisioning a better future, a
transformational leader will reward employees for good
performance, as well as responding to substandard work.
Servant Leadership
Servant Leader:
Leader who has a strong desire to serve and work for the benefit
of others.
Shares power with followers.
Strives to ensure that followers’ most important needs are met.
© McGraw Hill
The text uses the example of Robert Greenleaf, who founded a
nonprofit organization called the Greenleaf Center for Servant
Leadership.
30

Describe what transformational leadership is and explain how
managers can engage in it. [LO 10-4]
© McGraw Hill
Transformational leadership occurs when a manager has an
extremely dramatic effect on his or her subordinates and/or
organizations. Transformational leadership occurs when
managers change, or transform, their subordinates in three
important ways:
The manager makes subordinates aware of how important their
jobs are for the organization and how important it is that they
perform them as best as they can, so that the organization can
obtain its goals.
The manager makes their subordinates aware of the
subordinates’ own needs for personal growth, development, and
accomplishment.
The manager motivates their subordinates to work for the good
of the organization, not just for their own personal gain or
benefit.
31
Being a Charismatic Leader
Charismatic Leader:
An enthusiastic, self-confident transformational leader who is
able to clearly communicate his or her vision of how good
things could be.
© McGraw Hill

32
A charismatic leader is able to see beyond the usual and
envision a better future. The process to achieve this future
might include dramatic changes in an organization’s structure,
culture, strategy, decision making, and other critical processes
and factors.
Stimulating Employees Intellectually
Intellectual Stimulation:
Behavior a leader engages in to make followers be aware of
problems and view these problems in new ways, consistent with
the leader’s vision.
© McGraw Hill
Transformational managers can help subordinates see things
differently by supplying them with the needed information that
helps them focus on the problem and the need for change.
33
Engaging in Developmental Consideration
Developmental Consideration:
Behavior a leader engages in to support and encourage
followers and help them develop and grow on the job.
© McGraw Hill
The text uses the example of Nokes at T-Mobile, relating how
she was able to inspire employees to make desired changes to

propel their departments to success.
34
Gender and Leadership
The number of women managers is rising but is still relatively
low in the top levels of management.
Stereotypes suggest women are supportive and concerned with
interpersonal relations.
Men are stereotypically viewed as being directive and focused
on task accomplishment.
Male and female tend to be equally effective leaders.
nd3000/Shutterstock
© McGraw Hill
35
There is no difference between men and women when it comes
to effectiveness in leading.
Women tend to be more participative than men and have better
interpersonal skills.
Emotional Intelligence and Leadership 1
The Moods of Leaders:
Groups whose leaders experienced positive moods had better
coordination.
Groups whose leaders experienced negative moods exerted more
effort.
© McGraw Hill

If the manager at your local Wendy’s has a positive mood, it is
likely that the experience you have with the person at the
counter will also be pleasant.
36
Emotional Intelligence and Leadership 2
Emotional Intelligence:
Helps leaders develop a vision for their firm.
Helps motivate subordinates to commit to the vision.
Energizes subordinates to work to achieve the vision.
© McGraw Hill
High emotional intelligence:
An understanding of emotions involved in creative actions.
Ability to awaken and support subordinates.
Able to foster a flourishing creativity.
37
Imagine that, upon graduation, you are working in an
organization in an entry-level position and have come up with
what you think is a great idea for improving a critical process in
the organization that relates to your job. In what ways might
your supervisor encourage you to implement your idea? How
might your supervisor discourage you from even sharing your
idea with others? [LO 10-4, 10-5]

© McGraw Hill
Effectively managing workers with creative ideas is quite
challenging for some leaders. A supportive, uncritical
leadership style that offers positive feedback will encourage a
creative worker to implement his or her idea. Too much
initiating structure often inhibits creativity and has the opposite
effect.
38
BE THE MANAGER
What are you going to do to improve the performance and
effectiveness of your company?
© McGraw Hill
The manager could adapt the transformational leadership
approach. The managers should make the subordinates aware of
how important their jobs are for the organization and how
necessary it is for them to perform those jobs as best they can
so the organization can attain its goals. Transformational
managers make their subordinates aware of the subordinates’
own needs for personal growth, development, and
accomplishment. Transformational managers motivate their
subordinates to work for the good of the organization as a
whole, not just for their own personal gain or benefit.
As a manager one should not sit on the sidelines; it appears that
nothing will change. The current leadership strength has been in
the area of initiating structure, demonstrated by the
implementation of the new action plans. But now, the manager
must focus on transforming his subordinates. He can also work
on engaging in developmental consideration by going out of his
way to support and encourage subordinates and giving them

opportunities to enhance their skills and grow and excel on the
job.
39
McGraw-Hill
www.mheducation.com
Appendix: Image Descriptions for Unsighted Students
© McGraw Hill
Fiedler’s Contingency Theory of Leadership, Text Alternative
Return to slide.
The graphic displays Fiedler's Contingency Theory of
Leadership by dividing it into leader-member relations, task
structure, and position power. The graphic measures these
categories to determine favorable or unfavorable situations for
relationship-oriented leaders and task-oriented leaders.
Relationship-oriented leaders are most effective in moderately
favorable situations for leading. For example, good leader -
member relations have a high task structure and a strong
position power. Very unfavorable situations have poor leader-
member relations, low task structure, and a weak position
power.

© McGraw Hill
42
Please answer the prompt listed below. Your answermust
contain a minimum of 150 words each questionand must be in
your own words. Failure to do so or properly cite your sources
can result in possible failure of the course as this would be a
violation of the College's academic integrity policy.
1) Explain why group roles and the stages of group development
are so important in developing a high performance
team. (chapter 11)
2) Choose one of the major laws that have affected employees'
rights (Civil Rights Act of 1964, Americans with Disabilities
Act of 1990, etc.) and explain how the law benefits employees
as well as the organization as a whole. (chapter 12)
3) Explain the various methods of communication within an
organization and the pros and cons of each. Also explain which
method you prefer to use and why. (chapter 13)
4) Why is operations management a critical component to
management in the 21st century? Provide an example in your
response. (chapter 14)

MBA 645 CMO MEMO
From: Chief Marketing Officer
To: Marketing Director, U.S. Park Southeast
Re: Park Reopenings
Good day.
As you know, we recently closed our theme parks globally due
to a serious safety incident
resulting in serious injury to several of our guests and two
employees. This has resulted in the
closing of the parks and all associated services. We are
confident that the safety issues have
been addressed and are preparing to reopen the parks, beginning
with the U.S. Park Southeast.
We have made every effort to ensure extensive safety measures
are in place at this time.
I am asking you, given your extensive background in marketing
and strategic development, to
take the lead in planning a marketing strategy for the U.S. Park
Southeast’s reopening, including
plans for a phased reopening of all parks. You will need to
consider critical objectives such as
maximum safety, crisis communication, customer satisfaction,
and optimal profit potential. You
will be coordinating the marketing strategy with corporate
strategy to ensure our brand is both
protected and optimized.
A brand analysis and the identification of critical marketing and

communications factors must
be included in your planning to successfully reopen the parks.
Please consider the alignment
with our other functional departments in your efforts. It w ill
take all of us to successfully
relaunch the parks and to protect and optimize our brand.
I would like a presentation made to all marketing directors of
our global brand within 10 weeks
from today.
MBA 645 Memo From Legal Team
To: Chief Marketing Officer—Global Theme Parks
From: Corporate Legal Department
CC: U.S. Directors of Marketing, U.S. Parks
Re: Legal and Ethical Considerations in Marketing the Parks’
Reopenings
Below you will find a list of considerations to take into account
in the development of the
marketing plans to support the reopening of our U.S. parks. We
are asking you to review all
plans and messaging with the legal teams at your specific parks,
given that local and state
statutes will vary. Broadly, these are considerations to keep top
of mind as you develop your
plans.

Ethical considerations:
• There are growing corporate social responsibility (CSR) trends
addressing people,
planet, and profit. Commonly called the triple bottom line or
TBL, these trends are
becoming the expected norms for businesses.
• Ensure your efforts align with our company’s TBL efforts and
CSR initiatives.
• Ensure you engage critical stakeholder groups as required in
both the marketing
initiatives and communications.
• We understand a significant portion of our target audience is
comprised of families with
young children, young adults, and teenagers. This audience is
particularly sensitive to
the CSR of businesses they consider supporting.
Here are six unethical and illegal practices to avoid:
1. False advertising
2. Selective marketing
3. Unethical data collection
4. Stereotyping
5. Negative advertising
6. Pricing strategies (predatory pricing or “bait and switch”
pricing)
With consumers able to access transparent details of businesses'
operational policies and
philosophies, any questionable marketing approaches are sure to

come to light and must be
avoided.
MBA 645 CMO Memo for Target Audience
To: Director of Marketing, U.S. Park Southeast
From: Chief Marketing Officer, Global Theme Parks
Re: Target Audience Identification
This memorandum is intended to confirm our recent
presentation to the marketing directors of our
global theme parks. A target audience is a group of consumers
within a predefined target market that
have been identified as the best recipients for a particular
marketing message. And a target market
broadly describes consumers who care about our theme parks,
products, and services. Under the right
conditions, they are most likely to be our customers, and our
marketing efforts should focus on this
target audience.
For the U.S. Park Southeast, working with market research and
our business intelligence group, we have
identified the primary target audience of families with children
ages 6–18 and an average annual income
of more than $75,000 per year. A secondary target audience of

teens ages 15–18 has also been
identified. These two target audiences will likely create a
diverse marketing plan as we re-engage with
them through our reopening efforts.
MBA 645
Exemplar Communication Grid
Stakeholders Stakeholder's
Interest in the
Park Reopening
Assessment of
the Impact on
Stakeholder
(Low/Medium/
High)
Information and
Communication
Needs of the
Stakeholder
Communication
Methods With the
Stakeholder

Example:
Lenders
Knowing the
status of the
return to opening
and possible
investment costs
Medium Regular updates on
the reopening and
any investment
cost needs
• Virtual meetings
on a quarterly
basis
• Emails

GLOBAL PARKS CEOCHIEF OPERATIONS OFFICER (COO)CHIEF

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