Introduction to Management by shas production

2014
Shas Production
11/3/2014
Introduction To Management

Shas Production
Team Shas Production

INTRODUCTION
TO MANAGEMENT
AND
ORGANIZATIONS
© 2003 Pearson Education Canada Inc. 1.1

 You should be able to:
 Explain what a manager is and how the role of a
manager has changed
 Define management
 Distinguish between efficiency and effectiveness
 Describe the basic management functions and
the management process
 Identify the roles performed by managers
1.2

 You should be able to:
 Describe the skills managers need
 Explain what managers do using the systems
perspective
 Identify what managers do using the contingency
perspective
 Describe what an organization is and how the
concept of an organization has changed
 Explain the value of studying management
1.3

 Manager
 Someone who works with and through other people
by coordinating their work activities in order to
accomplish organizational goals
 Changing nature of organizations and work has
blurred the clear lines of distinction between
managers and non-managerial employees
1.4

 Managerial Titles
 First-line managers - manage the work of non-
managerial individuals who are directly involved with
the production or creation of the organization’s
products
 Middle managers - all managers between the first-
line level and the top level of the organization who
manage first line managers
 Top managers - responsible for making organization-
wide decisions and establishing the plans and goals
that affect the entire organization
1.5

ORGANIZATIONAL LEVELS (Exhibit 1.1)
Non-managerial Employees
Top
Managers
Middle
Managers
First-line
Managers
1.6© 2003 Pearson Education Canada Inc.

 Management
 The process of coordinating work activities so that
they are completed efficiently and effectively with
and through other people
 Elements of definition
 Process - represents ongoing functions or
primary activities engaged in by managers
 Coordinating - distinguishes a managerial
position from a non-managerial one
1.7

 Management (continued)
 Elements of definition (continued)
 Efficiency - getting the most output from the least
amount of inputs
 “doing things right”
 concerned with means
 Effectiveness - completing activities so that
organizational goals are attained
 “doing the right things”
 concerned with ends
1.8

EFFICIENCY AND EFFECTIVENESS IN
MANAGEMENT (Exhibit 1.2)
Management Strives For:
Low resource waste (high efficiency)
High goal attainment (high effectiveness)
Resource
Usage
Efficiency (Means)
Goal
Attainment
Effectiveness (Ends)
Low Waste High Attainment

Management Functions
 Planning - defining goals, establishing
strategies for achieving those goals, and
developing plans to integrate and coordinate
activities
 Organizing - determining what tasks are to be
done, who is to do them, how the tasks are to
be grouped, who reports to whom, and where
decisions are to be made
 Leading - motivating subordinates and
influencing individuals or teams
 Controlling - monitoring actual performance
against goals
1.10

 Management Process
 Management process
 Set of ongoing decisions and work activities
in which managers engage as they plan,
organize, lead, and control
 Managerial activities are usually done in a
continuous manner
1.11

 Management Roles
 Specific categories of managerial behaviour
 Interpersonal - involve people and duties
that are ceremonial and symbolic in nature
 Informational - involve receiving, collecting,
and disseminating information
 Decisional - revolve around making choices
 Emphasis that managers give to the various roles seems
to change with their organizational level
1.12

MINTZBERG’S MANAGERIAL ROLES
(Exhibit 1.4)

 Management Skills
 Technical - knowledge of and proficiency in a certain
specialized field
 Human - ability to work well with other people both
individually and in a group
 Conceptual - ability to think and to conceptualize
about abstract and complex situations
 see the organization as a whole
 understand the relationships among subunits
 visualize how the organization fits into its broader
environment
1.14

SKILLS NEEDED AT DIFFERENT MANAGEMENT
LEVELS (Exhibit 1.5)

 Managing Systems
 System - a set of interrelated and
interdependent parts arranged in a manner that
produces a unified whole
 Closed system - a system that is not influenced
by and does not interact with its environment
 Open system - dramatically interact with their
environment
1.16

System
THE ORGANIZATION AS AN OPEN SYSTEM (Exhibit 1.7)
Transformation
Employee’s work
activities
Management
activities
Technology and
operations methods
OutputsInputs
Raw materials
Human resources
Capital
Technology
Information
Products and services
Financial results
Information
Human results
Environment
Environment
Feedback

 Managing Systems (continued)
 Managers must
 coordinate various work activities
 ensure that interdependent parts work
together
 recognize and understand the impact of
various external factors
 Decisions and actions taken in one
organizational area will affect other areas
and vice versa
1.18

 Managing in Different and Changing Situations
 Contingency perspective - different
ways of managing are required in
different organizations and different
circumstances
 No simple or universal rule for
managers to follow
 Requires that managers’ actions be
appropriate for the situation
1.19

POPULAR CONTINGENCY VARIABLES
(Exhibit 1.8)

 Organization
 Deliberate arrangement of people to accomplish
some specific purpose
 Characteristics of an organization
 distinct purpose
 deliberate structure
 people
 Today’s organizations have adopted:
 flexible work arrangements
 open communications
 greater responsiveness to changes
1.21

Distinct Purpose
People
Deliberate
Structure
1.22

THE CHANGING ORGANIZATION
(Exhibit 1.10)

 Universality of Management
 Management is needed
 in all types and sizes of organizations
 at all organizational levels
 in all work areas
 Management functions must be
performed in all organizations
 consequently, have vested interest in
improving management
1.24

UNIVERSAL NEED FOR MANAGEMENT
(Exhibit 1.11)

 The Reality of Work
 Most people have some managerial responsibilities
 Most people work for a manager
 Rewards of being a manager
 Create an environment that allows others to do their best
work
 Provide opportunities to think creatively
 Help others find meaning and fulfillment
 Meet and work with a variety of people
1.26

Challenges of being a manager
- Being a manager is hard work
- Must deal with a variety of
personalities
- Must motivate workers in the
face of uncertainty
1.27

MANAGEMENT
YESTERDAY
AND TODAY
Chapter 2

LEARNING OBJECTIVES
You should be able to:
– Discuss management’s relationship to other
academic fields of study
– Explain the value of studying management history
– Identify some major pre-twentieth-century
contributions to management
– Summarize the contributions of the scientific
management advocates
– Describe the contributions of the general
administrative theorists
2.2

LEARNING OBJECTIVES (continued)
• You should be able to:
– Summarize the quantitative approach to
management
– Describe the contributions of the early
organizational behaviour advocates
– Explain the importance of the Hawthorne
Studies to management
– Describe the effects of: globalization,
workforce diversity, entrepreneurship, e-
business, need for innovation and flexibility,
quality management, learning organizations,
and knowledge management
2.3

MANAGEMENT’S CONNECTION TO
OTHER FIELDS OF STUDY
Academic Disciplines that Affected Management
– Anthropology - work on cultures and social
environments
– Economics - concern about the allocation and
distribution of scarce resources
– Philosophy - examines the nature of things
– Political science - effect of political environment on
individuals and groups
– Psychology - seeks to measure, explain, and change
human behavior
– Sociology - studies people in relation to their fellow
human beings
2.4

DEVELOPMENT OF MAJOR
MANAGEMENT THEORIES
Historical
Background Scientific
Management
General
Administrative
Theorists
Quantitative
Approach
Management Theories
Industrial
Revolution
Adam Smith
Early Advocates
Hawthorne Studies
Organizational
Behaviour
Early Examples
of Management

HISTORICAL BACKGROUND OF
MANAGEMENT
• Organizations Have Existed for Thousands of Years
• Significant Pre-Twentieth-Century Events
– Adam Smith
• division of labour - breakdown of jobs into narrow and repetitive
tasks increased productivity
– Industrial Revolution
• substitution of machine power for human power
• large organizations required formal management
2.6

SCIENTIFIC MANAGEMENT
• F.W. Taylor - Principles of Scientific Management
– Use of scientific methods to define the “one best way” for
a job to be done
– Perspective of improving the productivity and efficiency of
manual workers
– Applied the scientific method to shop floor jobs
• Frank and Lillian Gilbreth
– Use of motion pictures to study hand-and-body
movements
2.7

TAYLOR’S FOUR PRINCIPLES OF
MANAGEMENT (Exhibit 2.2)
2.8
1. Develop a science for each element of an individual’s work,
which will replace the old rule-of-thumb method.
2. Scientifically select and train, teach, and develop the worker.
(Previously, workers chose their own work and trained
themselves as best they could.)
3. Heartily cooperate with the worker so as to ensure that all work
is done in accordance with the principles of the science that has
been developed.
4. Divide all work and responsibility equally between management
and workers. Management takes over all work for which it is
better fitted than the workers. (Previously almost all the work and
the greater part of the responsibility were thrown on the
workers.)

GENERAL ADMINISTRATIVE THEORISTS
• Henri Fayol
– Concerned with making the overall organization
more effective
– Developed theories of what constituted good
management practice
• proposed a universal set of management functions
• published principles of management
– fundamental, teachable rules of management
2.9

PRINCIPLES OF MANAGEMENT
(Exhibit 2.3)
2.10

GENERAL ADMINISTRATIVE THEORISTS
(continued)
• Max Weber
– Developed a theory of authority structures and
relations
– Bureaucracy - ideal type of organization
• division of labour
• clearly defined hierarchy
• detailed rules and regulations
• impersonal relationships
2.11

IDEAL BUREAUCRACY (Exhibit 2.4)
2.12

QUANTITATIVE APPROACH TO
MANAGEMENT
• Operations Research (Management Science)
– Use of quantitative techniques to improve
decision making
• applications of statistics
• optimization models
• computer simulations of management activities
– Linear programming - improves resource
allocation decisions
– Critical-path scheduling analysis - improves
work scheduling
2.13

TOWARD UNDERSTANDING
ORGANIZATIONAL BEHAVIOUR
• Organizational Behavior
– Study of the actions of people at work
• Hawthorne Studies
– Started in 1924 at Western Electric Company
– Elton Mayo - studies of job design
– Changed the dominant view that employees were
no different from any other machines
2.14

EARLY ADVOCATES OF OB (Exhibit
2.5)
2.15

CURRENT TRENDS AND ISSUES
• Globalization
– All organizations are faced with the opportunities and
challenges of operating in a global market
• Workforce Diversity
– Heterogeneous workforce in terms of gender, race,
ethnicity, age, and other characteristics that reflect
differences
• workforce is getting older
• high degree of immigration in Canada
2.16

(continued)
• Entrepreneurship
– Three important themes
• pursuit of opportunities - capitalizing on environmental
change to create value
• Innovation and uniqueness - introducing new
approaches to satisfy unfulfilled market needs
• growth - not content to remain small
– Will continue to be important in all societies
– Will influence profit and not-for-profit
organizations
2.17

(continued)
• Managing in an E-Business World
– E-business - comprehensive term describing the way an
organization does its work by using electronic (Internet-
based) linkages with key constituencies
– E-business - any form of business exchange or transaction
in which parties interact electronically
– Intranet - an internal organizational communication
system that uses Internet technology and is accessible only
by organizational employees
2.18

TYPES OF E-COMMERCE TRANSACTIONS
E-Commerce
Business-to-Consumer
(B2C)
Electronic retailing
Government-to-Business
(G2B)
All transactions between
companies and
government agencies
Business-to-Business
(B2B)
All transactions between a
company and its suppliers
Consumer-to-Consumer
(G2C)
Electronic markets formed
by Web-based auctions
2.19
© 2003 Pearson Education Canada Inc.

CATEGORIES OF
E-BUSINESS INVOLVEMENT
E-business units
within
traditional
organization
E-Business-Enhanced
Organization
E-business tools
and applications
used within tradi-
tional organization
E-Business-Enabled
Organization
Organization’s entire work
processes revolve around
e-business model
2.20
Total E-Business
Organization

(continued)
 Need for Innovation and Flexibility
– Without a constant flow of new ideas, an organization is
doomed to obsolescence or even worse
– Must be flexible to accommodate changing customers’
needs, appearance of new competitors, and shifting
employees from project to project
– Quality Management
– Total Quality Management (TQM) - philosophy of
management based on continual improvement and
responding to customer needs and expectations
– Customer - refers to internal and external entities that
interact with the organization’s product or service
2.21

WHAT IS TQM? (Exhibit 2.8)
2.22

(continued)
 Learning Organizations and Knowledge Management
– Learning organization - one that has developed the
capacity to continuously learn, adapt, and change
– Create learning capabilities throughout the organization
– Knowledge management - involves cultivating a
learning culture where organizational members
systematically gather knowledge and share it with
others in the organization so as to achieve better
performance
– managers must transform themselves from bosses to
team leaders--listening, coaching, motivating and
nurturing
2.23

LEARNING ORGNAIZATION VERSUS TRADITIONAL
ORGANIZATION
2.24

Chapter 3
ORGANIZATIONAL
CULTURE AND
ENVIRONMENT:
THE CONSTRAINTS

LEARNING OBJECTIVES
– Differentiate the symbolic from the omnipotent
view of management
– Define organizational culture
– Identify the seven dimensions that make up an
organization’s culture
– Explain how cultures can be strong or weak
– Describe the various ways that employees learn
culture
3.2

LEARNING OBJECTIVES
(continued)
– Explain how culture constrains managers
– Describe the various components in an
organization’s specific and general environments
– Contrast certain and uncertain environments
– Identify the various stakeholders with whom
managers have to deal
– Clarify how managers manage relationships with
external stakeholders
3.3

THE MANAGER: OMNIPOTENT
OR SYMBOLIC?
• Omnipotent View of Management
– Managers are directly responsible for an organization’s
success
• Symbolic View of Management
– The actual part that managers play in organizational
success or failure is minimal
– Managers must create meaning out of randomness,
confusion, and ambiguity
• Reality Suggests a Synthesis
– Managers are neither helpless nor all powerful
3.4

PARAMETERS OF MANAGERIAL
DISCRETION (Exhibit 3.1)
Managerial
Discretion
Organization’s EnvironmentOrganizational Culture

WHAT IS ORGANIZATIONAL
CULTURE?
• A system of shared meaning and beliefs held
by organizational members that determines, in
large degree, how they act
• Composite picture of organizational culture
may be derived from seven dimensions
• Organization’s personality often shaped by one
of these dimensions
3.6

DIMENSIONS OF ORGANIZATIONAL
CULTURE (Exhibit 3.2)

THE CULTURE OF AN
ORGANIZATION
• Strong Versus Weak Cultures
– In strong cultures, key values are deeply held and widely
shared
– Strong cultures have greater influence on employees than do
weak cultures
– Employees more committed to organizations with strong
cultures
– Strong cultures are associated with high organizational
performance
– Most organizations have moderate to strong cultures
3.8

THE CULTURE OF AN
ORGANIZATION (continued)
• The Source of Culture
– Usually reflects the vision or mission of the founder
• How Employees Learn Culture
– Stories - a narrative of significant events or people
– Rituals - repetitive sequences of activities
– Material symbols – essential in creating an
organization’s personality.
– Language - organizations develop unique jargon
3.9

THE CULTURE OF AN
ORGANIZATION (continued)
• How Culture Affects Managers
– Establishes appropriate managerial behavior
– Constrains decision making in all management
functions
• Planning - degree of risk that plans should contain
• Organizing - degree of autonomy given to
employees
• Leading - degree of concern for job satisfaction
• Controlling - reliance on external or internal
controls
3.10

THE EXTERNAL ENVIRONMENT
Customers
Competitors
Suppliers
Public
Pressure
Groups
The
Organization
General
Environment
Specific
Environment

(continued)
• Forces and institutions outside the organization that
may affect organizational performance
– Specific environment - includes those
constituencies that have a direct and immediate
impact on managers’ decisions and actions
• customers - absorb organization’s outputs
• suppliers - provide material and equipment
• competitors - provide similar services/products
• pressure groups - special-interest groups
3.12

(continued)
• General environment - includes the broad
conditions that may affect organizations
– Economic conditions - interest rates,
changes in disposable income, and stage of
the business cycle
– Political/legal conditions - federal,
provincial, and local governments and
general stability of Canada
3.13

(continued)
• General environment (continued)
– Socio-cultural conditions - expectations of society
(values, customs and tastes)
– Demographic conditions - trends in the physical
characteristics of a population
– Technological conditions - most rapidly changing aspect
of the general environment
– Global conditions - increasing number of global
competitors and consumer markets
3.14

HOW THE ENVIRONMENT
AFFECTS MANAGERS
• Assessing environmental uncertainty
– Degree of unpredictable change
• dynamic - frequent change
• stable - minimal change
– Environmental complexity
• the number of components in the environment
• amount of information available or required about
those components
– Managers attempt to minimize uncertainty
3.15

ENVIRONMENTAL UNCERTAINTY
(Exhibit 3.6)
3.16

STAKEHOLDER RELATIONSHIP
MANAGEMENT
• Who are stakeholders?
– Any constituencies that are affected by
the organization’s decisions and actions
• include internal and external groups
• can influence the organization
3.17

ORGANIZATIONAL
STAKEHOLDERS (Exhibit 3.7)
3.18

MANAGEMENT (continued)
• Why is stakeholder relationship
management important?
– The more secure the relationship, the
more influence managers will have over
organizational outcomes
– It’s the “right” thing to do
3.19

• How can these relationships be managed?
– Four steps
• identify the stakeholders
• determine real and potential concerns of each
stakeholder group
• determine whether stakeholder is critical
• determine specific approach to manage the
relationship
– Approach to a stakeholder group based on the
importance of the group and the degree of
environmental uncertainty
3.20

MANAGING STAKEHOLDER
RELATIONSHIPS (Exhibit 3.8)
3.21

• Boundary spanning
– Important stakeholder and environmental
uncertainty
– Interacting to gather and disseminate
information
• Stakeholder partnerships
– Stakeholder is critical and environmental
uncertainty is high
– Pursue common goal
3.22

Chapter 4
MANAGING IN
A GLOBAL
ENVIRONMENT

LEARNING OBJECTIVES
– Explain the importance of viewing management
from a global perspective
– Identify the three different attitudes towards global
business
– Describe the different regional trading alliances
– Explain why so many countries have become part
of regional trading alliances
– Contrast multinational, transnational, and
borderless organizations
4.2

LEARNING OBJECTIVES
(continued)
– Describe the typical stages by which
organizations go global
– Explain the four dimensions of country culture
– Describe Canadian culture according to the four
dimensions of country culture
– Identify the adjustment challenges faced by a
manager on global assignment
4.3

WHO OWNS WHAT?
• Global Environment
– National borders have become
increasingly irrelevant
– Has potential for dramatic expansion of
organizations
– Presents numerous challenges for
managers
4.4

COMPANIES THAT EXPORT MORE THAN
50% OF TOTAL SALES
% of Sales
100
89
85
85
83
81
79
79
76
76
Company
McDonnell Douglas
Canadian Wheat Board
Chrysler Canada
XCAN Grain Pool
Pratt & Whitney Canada
Avenor Inc.
Donahue Inc.
Domtar Inc.
Weldwood of Canada
Canfor Corp.

WHAT’S YOUR GLOBAL
PERSPECTIVE?
• Parochialism
– Nation views the world solely through its own
eyes and perspectives
– People do not recognize that other people have
different ways of living and working
– Significant obstacle for global managers
• Ethnocentric Attitude
– Parochial belief that the best work approaches
and practices are those of the home country
– Lack trust in foreign employees with key
decisions or technology
4.6

WHAT’S YOUR GLOBAL
PERSPECTIVE? (continued)
• Polycentric Attitude
– Belief that host-country managers know the best work
approaches and practices
– Let foreign employees determine work practices
• Geocentric Attitude
– Focuses on using the best approaches and people from
around the globe
– Look for the best approaches and people regardless of
the country of origin
4.7

KEY INFORMATION ABOUT THREE
GLOBAL ATTITUDES (Exhibit 4.2)

UNDERSTANDING THE
GLOBAL ENVIRONMENT
• Regional Trading Alliances
– Global competition is influenced by regional trading
and cooperation agreements
– The European Union
• a unified economic and trade entity
• a single market without barriers to travel,
employment, investment, and trade
• common currency (Euro)
• assertion of economic power against U.S. and Japan
• created one of the world’s richest markets
4.9

EUROPEAN UNION COUNTRIES (Exhibit 4.4)

UNDERSTANDING THE GLOBAL
ENVIRONMENT (continued)
• Regional Trading Alliances (continued)
– North American Free Trade Agreement (NAFTA)
• links economies of Canada, Mexico and U.S.
• since 1994, eliminated barriers to free trade such as
tariffs, import licensing requirements, customs user
fees
– Other Latin American free-trade blocs
• Free Trade Area of the Americas (FTAA)
• Southern Cone Common Market (Mercosur)
4.11

MERCOUSUR MEMBERS (Exhibit 4.5)

• Regional Trading Alliances (continued)
– Association of Southeast Asian Nations
(ASEAN)
• alliance of 10 Southeast Asian nations
• created in one of the fastest growing
economic regions in the world
• could rival NAFTA and EU
4.13

ASEAN MEMBERS (Exhibit 4.6)

• Different Types of Global Organizations
– Multinational corporation (MNC)
• maintain significant operations in multiple countries
but are managed from a base in the home country
– Transnational corporation (TNC)
• maintains significant operations in more than one
country but decentralizes management to the local
country
• nationals hired to run operations in each country
• marketing strategies tailored for each country
4.15

• Different Types of Global Organizations (continued)
– Borderless organization
• eliminates structural divisions that impose
artificial geographical barriers
• an attempt to increase efficiency and
effectiveness in a competitive global
marketplace
• exemplifies the geocentric attitude
4.16

HOW ORGANIZATIONS GO GLOBAL (Exhibit 4.7)
Stage I
Passive Response
Stage II
Initial Overt Entry
Stage III
Established International
Operations
Exporting
to foreign
countries
Importing
from foreign
countries
Hiring foreign
representation or
contracting with
foreign manufacturers
Licensing/
Franchising
Foreign
Subsidiary
Joint
Ventures
Strategic
Alliances

MANAGING IN A GLOBAL
ENVIRONMENT
• The Legal-Political Environment
– Canada has stable legal and political systems
– Managers in foreign countries face greater uncertainty
• The Economic Environment
– Global manager must be attentive to:
• strength of home currency versus foreign currency
• differences in inflation rates around the world
• tax rules differ from country to country
4.18

• The Cultural Environment
– National culture
• the values and attitudes shared by
individuals from a specific country
• shapes behaviour and beliefs
• has greater effect on employees than
organizational culture
• getting information about a country’s
cultural differences is difficult
4.19

• The Cultural Environment (continued)
– Four dimensions of national culture
• individualism versus collectivism
– individualism - loosely knit social framework
– collectivism - tightly knit social framework
• power distance - degree of acceptance of unequal
distributions of power in institutions and
organizations
4.20

• The Cultural Environment (continued)
• uncertainty avoidance - degree to which
people tolerate risk and unconventional
behaviour
• quantity versus quality
– quantity of life - culture values
assertiveness and the acquisition of
money and material goods
– quality of life - value relationships
4.21

EXAMPLES OF CULTURAL DIMENSIONS (Exhibit 4.9)

IS A GLOBAL ASSIGNMENT
FOR YOU?
• Criteria Used When Making Global Assignment
– Technical and human factors are considered
– Criteria used influenced by the company’s
experience and commitment to global
operations
– Include technical skills, language fluency,
flexibility, and family adaptability
4.23

IS A GLOBAL ASSIGNMENT
FOR YOU? (continued)
• Factors That Determine Adjustment to Global Assignment
– Preassignment adjustment--what are your expectations of
this assignment and what is your experience with similar
cultures?
– In-country adjustment
• individual factors--positive attitude and interaction
with co-workers
• organization factors--social support systems
4.24

FACTORS THAT AFFECT GLOBAL ADJUSTMENT
(Exhibit 4.11)

Chapter 5
SOCIAL
RESPONSIBILITY
AND MANAGERIAL
ETHICS 5.1© 2003 Pearson Education Canada Inc.

LEARNING OBJECTIVES
– Explain the classical and socioeconomic views of social
responsibility
– List the arguments for and against business’s being
socially responsible
– Differentiate among social obligation, social
responsiveness, and social responsibility
– Explain the relationship between corporate social
responsibility and economic performance
– Describe values-based management and how it is
related to organizational culture
5.2

LEARNING OBJECTIVES
(continued)
– Explain what the “greening” of management is
and how organizations are “going green”
– Differentiate among the four views of ethics
– Identify the factors that affect ethical behaviour
– Discuss various ways organizations can
improve the ethical behaviour of their
employees
5.3

WHAT IS SOCIAL
RESPONSIBILITY?
• Two Opposing Views of Social
Responsibility
– Classical view - management’s only social
responsibility is to maximize profits
• doing “social good” adds to the cost of doing
business
• costs have to be passed on to consumers
5.4

WHAT IS SOCIAL
RESPONSIBILITY? (continued)
• Two Opposing Views of Social Responsibility (continued)
– Socioeconomic view - businesses are not just economic
institutions
• management’s social responsibility goes beyond
making profits to include protecting and improving
society’s welfare
• businesses have responsibility to a society
• more organizations around the world have increased
their social responsibility
5.5

WHAT IS SOCIAL
RESPONSIBILITY? (continued)
• From Obligations to Responsiveness
– Social responsibility - a business’s obligation to
pursue long-term goals that help society
– Social obligation - obligation of a business to
meet its economic and legal responsibilities
– Social responsiveness - capacity of a firm to
adapt to changing societal conditions
5.6

LEVELS OF SOCIAL
INVOLVEMENT (Exhibit 5.2)
Social Obligation
Social
Responsibility
Social
Responsiveness
5.7

SOCIAL RESPONSIBILITY vs.
SOCIAL RESPONSIVENESS
(Exhibit 5.3)
Major consideration
Focus
Emphasis
Decision framework
Social
Responsibility
Ethical
Ends
Obligation
Long term
Social
Responsiveness
Pragmatic
Means
Responses
Medium and
short term
5.8

SOCIAL RESPONSIBILITY AND
ECONOMIC PERFORMANCE
• Most Research Shows a Positive Relationship
• Evaluation of Socially Conscious Mutual Stock
Funds
– social screening - applying social criteria to
investment
• Conclusion
– a company’s socially responsible actions do not
hurt its long-term economic performance
5.9

VALUES-BASED
MANAGEMENT
• Definition
– An approach to managing in which managers
establish, promote, and practice an
organization’s shared values
• Purposes of Shared Values
– Act as guideposts for managerial decisions and
actions
– Influence marketing efforts
– Build team spirit
5.10

PURPOSES OF SHARED VALUES
(Exhibit 5.4)
Shared
Organizational
Values
Guide Managers’
Decisions and
Actions
Influence
Marketing
Efforts
Build
Team
Spirit
Shape
Employee
Behaviour

VALUES-BASED
• Developing Shared Values
– It is difficult to establish shared values
– Managers are responsible for shaping the
organization so that its values, norms, and
ideals appeal strongly to employees
– Companies that practice values-based
management have broad commitment to being
socially responsible and socially responsive
5.12

SUGGESTIONS FOR CREATING A
GOOD CORPORATE VALUES
STATEMENT (Exhibit 5.5)
5.13

THE “GREENING” OF
MANAGEMENT
• Definition
– Recognition of the close link between an organization’s
decisions and activities and its impact on the natural
environment
• Global Environmental Problems
– There are many global environmental problems
– Economically developed nations are blamed for the
problems
– Problems expected to increase as emerging countries
become more developed
5.14

• How Organizations Go Green
– Products and production processes have become cleaner
– Shades of green - describe different approaches that
organizations may take
• legal approach - follow legal obligations
• market approach - organizations respond to the environmental
preferences of customers
• stakeholder approach - organization chooses to respond to
multiple demands made by stakeholders
• activist approach - looks for ways to respect and preserve the
earth and its natural resources
5.15

APPROACHES TO BEING
GREEN (Exhibit 5.6)
Legal
Approach
(Light Green)
Market
Approach
Stakeholder
Approach
Activism
Approach
(Dark Green)
Low High
Environmental Sensitivity

• Summing Up Social Responsibility
– Four-stage progression of an organization’s
social responsibility
• each stage implies an increasing level of managerial
discretion
• Stage 1 - promote stockholders’ interests by seeking
to minimize costs and maximize profits
• Stage 2 - managers accept their responsibility to
employees and focus on human resource concerns
5.17

• Summing Up Social Responsibility
(continued)
– Four-stage progression (continued)
• Stage 3 - expand responsibilities to other
stakeholders
• Stage 4 - managers feel responsibility to society as a
whole
5.18

TO WHOM IS MANAGEMENT
RESPONSIBLE? (Exhibit 5.7)
Stage 1
Owners and
Management
Stage 2
Employees
Stage 3
Constituents in the
Specific Environment
Stage 4
Broader
Society
Social ResponsibilityLesser Greater

MANAGERIAL ETHICS
• Ethics
– Rules and principles that define right and
wrong conduct
• Four Views of Ethics
– Utilitarian view - ethical decisions are
made on the basis of their outcomes or
consequences
5.20

MANAGERIAL ETHICS
(continued)
• Four Views of Ethics (continued)
– Rights view - respects and protects individual
liberties and privileges
– Theory of justice view - managers impose and
enforce rules fairly and impartially
– Integrative social contracts theory - decisions
should be based on empirical and normative
factors
5.21

FACTORS THAT AFFECT ETHICAL
AND UNETHICAL BEHAVIOUR
(Exhibit 5.8)
Ethical
Dilemma
Moderators
Stage of Moral
Development
Ethical/Unethical
Behaviour
Organizational
Culture
Structural
Variables
Individual
Characteristics
Issue
Intensity

STAGES OF MORAL
DEVELOPMENT (Exhibit 5.9)

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics
(continued)
– Individual characteristics
• values - basic convictions about right and
wrong
• ego strength - strength of a person’s
convictions
• locus of control - degree to which people
believe that they control their own fate
5.24

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics (continued)
– Structural variables
• design of organization affects ethical behaviour
• rules and regulations
• behaviour of superiors
• performance appraisal systems that focus on means as
well as ends
• reward systems that punish failure to achieve ends is
likely to compromise ethics
5.25

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics (continued)
– Organizational culture
• strong culture more influential than a weak culture
• high ethical standards result from a culture that is high
in risk tolerance, control, and conflict tolerance
– Issue intensity
• importance of an ethical issue
• more intense issues prompt greater ethical behaviour
5.26

DETERMINANTS OF ISSUE
INTENSITY (Exhibit 5.10)

MANAGERIAL ETHICS
(continued)
• Ethics in an International Context
– social and cultural differences determine
ethical and unethical behaviour
– Global Compact - United Nations
document containing principles for doing
business globally in the areas of human
rights, labour, and environment
5.28

THE GLOBAL COMPACTHuman Rights
Principle 1:support and respect the protection of international human rights within their
sphere of influence; and
Principle 2: make sure their own corporations are not complicit in human rights abuses.
Labour
Principle 3: freedom of association and the effective recognition of the right to collective
bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly
technologies.
5.29

MANAGERIAL ETHICS
(continued)
• Toward Improving Ethical Behaviour
– Comprehensive ethics programs have the
potential to improve an organization’s ethical
climate
– Employee selection - eliminate ethically
questionable applicants
– Codes of ethics - formal statement of an
organization’s primary values and ethical rules
5.30

MANAGERIAL ETHICS (continued)
• Toward Improving Ethical Behaviour (continued)
– Top management’s leadership - what they do is far
more important than what they say
– Job goals and performance appraisal - goals should be
clear and realistic and must focus on ethical standards
– Ethics training - an increasing number of organizations
use training to encourage ethical behaviour
– Independent social audits - evaluation of decisions in
relation to code of ethics
– Formal protective mechanisms - protect employees
who face ethical dilemmas
5.31

Chapter 6
DECISION MAKING:
THE ESSENCE OF
THE MANAGER’S
JOB 6.1© 2003 Pearson Education Canada Inc.

LEARNING OBJECTIVES
l You should be able to:
– Outline the steps in the decision-making process
– Explain why decision-making ability is so important for
a manager
– Describe the rational decision maker
– Contrast the perfectly rational and bounded rationality
approaches to decision making
– Explain the role that intuition plays in the decision-
making process
6.2

LEARNING OBJECTIVES
(continued)
l You should be able to: (continued)
– Identify the two types of decision problems and
the two types of decisions that are used to solve
them
– Differentiate the decision conditions of
certainty, risk, and uncertainty
– Describe the different decision-making styles
6.3

DECISION MAKING
• Decisions
– Choices from two or more alternatives
– All organizational members make decisions
• Decision-Making Process
– Step 1 - Identifying a Problem
• problem - discrepancy between an existing
and a desired state of affairs
6.4

DECISION MAKING (continued)
• Decision-Making Process (continued)
– Step 2 - Identifying Decision Criteria
• decision criteria - what’s relevant in making a
decision
– Step 3 - Allocating Weights to the Criteria
• must weight the criteria to give them appropriate
priority in the decision
– Step 4 - Developing Alternatives
• list the viable alternatives that could resolve the
problem without evaluating them
6.5

DECISION MAKING (continued)
• Decision-Making Process (continued)
– Step 5 - Analyzing Alternatives
• each alternative is evaluated against the criteria
– Step 6 - Selecting an Alternative
• choosing the best alternative from among those
considered
– Step 7 - Implementing the Decision
• implementation - conveying the decision to those
affected by it and getting their commitment to it
– Step 8 - Evaluating Decision Effectiveness
• determine whether the problem is resolved
6.6

THE DECISION-MAKING PROCESS
Identifying a
Problem
Identifying
the Decision
Criteria
Allocating
Weights
To Criteria
•Price
•Manufacturer and model
•Warranties
•Support
•Reliability
•Repair Record
•Reliability
•Service
•Warranty Period
•On-site Service
•Price
•Case Style
10
8
5
5
4
3
My sales
representatives
need new
computers.
6.3
6.7
Exhibit 6.1

Developing
Alternatives Fujitsu AST
Sharp IBM HP TI
NEC
Analyzing
Alternatives NEC
AST
HP
Fujitsu
IBM
Sharp
TI
Selecting an
Alternative
Implementing
Decision
Evaluation of
Decision Effectiveness
•Reliability
•Service
•Warranty Period
•On-site Service
•Price
•Case Style
The Fujitsu
is the best.
Compaq
Compaq
6.8
Exhibit 6.1
(continued)

ASSESSED VALUES OF NOTEBOOK COMPUTER
ALTERNATIVES AGAINST DECISION CRITERIA
(Exhibit 6.3)

EVALUATION OF LAPTOP COMPUTER
ALTERNATIVES AGAINST CRITERIAAND
WEIGHTS (Exhibit 6.4)

DECISIONS IN THE MANAGEMENT
FUNCTIONS (Exhibit 6.5)

THE MANAGER AS DECISION
MAKER
• Rational (Balance) Decision Making
– Decisions are consistent, value-maximizing choices
within specified constraints
– Managers assumed to make rational decisions
– Assumptions of Rationality - decision maker would:
– be objective and logical
– carefully define a problem
– have a clear and specific goal
– select the alternative that maximizes the likelihood of
achieving the goal
– make decision in the firm’s best economic interests
• Managerial decision making seldom meets all the tests

THE MANAGER AS
DECISION MAKER (continued)
• Bounded Rationality
– Behave rationally within the parameters of a
simplified decision-making process that is limited
by an individual’s ability to process information
– Accept solutions that are “good enough”
– Escalation of commitment - increased commitment
to a previous decision despite evidence that it may
have been wrong

THE MANAGER AS A
• Types of Problems and Decisions
– Well-Structured Problems - straightforward, familiar,
and easily defined
– Programmed Decisions - used to address structured
problems
• procedure - series of interrelated sequential steps used to
respond to a structured problem
• rule - explicit statement of what to do or not to do
• policy - guidelines or parameters for decision making

THE MANAGER AS A
• Decision-Making Styles
– Two dimensions define the approach to decision making
• way of thinking - differs from rational to intuitive (sensitive)
• tolerance for ambiguity - differs from a need for consistency
and order to the ability to process many thoughts
simultaneously
– Define four decision-making styles
• Directive - fast, efficient, and logical
• Analytic - careful and able to adapt or cope with new situations
• Conceptual - able to find creative solutions
• Behavioural - seek acceptance of decisions

DECISION-MAKING STYLES
(Exhibit 6.12)
Analytic
Directive Behavioural
Rational Intuitive
Way of Thinking
Conceptual
High
Low
ToleranceforAmbiguity

MANAGING WORKFORCE
DIVERSITY
• Diversity in Decision Making
– Advantages - diverse employees:
• provide fresh perspectives
• offer differing interpretations of problem definition
• increase the likelihood of creative and unique solutions
– Disadvantages - diverse employees:
• require more time to reach a decision
• may have problems of communication
• may create a more complex, confusing, and ambiguous
decision-making process
• may have difficulty in reaching agreement

Chapter 7
FOUNDATIONS
OF PLANNING

LEARNING OBJECTIVES
– Define planning
– Explain why managers plan
– Describe what role goals play in planning
– Distinguish among the different types of plans
– Tell how goals are established
– Describe the characteristics of well-designed goals
7.2

LEARNING OBJECTIVES
(continued)
• You should learn to:
– Identify three contingency factors in planning
– Explain the approaches to developing plans
– Discuss the criticisms of planning
– Describe what it takes to effectively plan in a
dynamic environment
7.3

WHAT IS PLANNING?
• Planning
– Involves defining the organization’s goals,
establishing an overall strategy for achieving
those goals, and developing a comprehensive
set of plans to integrate and coordinate
organizational work
– Informal planning - nothing is written down
– Formal planning - written
7.4

WHY DO MANAGERS PLAN?
• Purposes of Planning
– Planning is the primary management function that
establishes the basis for all other management functions
as it gives direction
– Planning establishes coordinated effort
– Planning reduces uncertainty
– Planning reduces overlapping and wasteful activities
– Planning establishes goals and standards used in
controlling
7.5

WHY DO MANAGERS PLAN?
(continued)
• Planning and Performance
– Generally speaking, formal planning is associated with
higher profits
– Quality of the planning process and the appropriate
implementation of the plans probably contribute more to
high performance than does the extent of planning
– External environment may undermine the effects of
formal planning
– Planning/performance relationship is influenced by the
planning time frame
7.6

HOW DO MANAGERS PLAN?
• The Role of Goals and Plans in Planning
– Goals - desired outcomes
• provide direction for all management
decisions
• represent the criteria against which actual
work accomplishments can be measured
– Plans - outline how goals are going to be met
7.7

STATED OBJECTIVES FROM
LARGE COMPANIES (Exhibit 7.1)
7.8

(continued)
• The Role of Goals and Plans in Planning (continued)
– Types of Goals
• all organizations have multiple objectives
• no single measure can evaluate whether an
organization is successful
• stated goals - official statements of the organization’s
goals
• real goals - those goals that an organization actually
pursues
7.9

(continued)
(continued)
– Types of Plans
• strategic plans - apply to the entire
organization
– establish organization’s overall goals
– seek to position the organization in terms of
its environment
• operational plans - specify the details of
how the overall goals are to be achieved
– tend to cover short time periods
7.10

TYPES OF PLANS
Breadth
Strategic
Operational
Time Frame
Long term
Short term
Specificity
Directional
Specific
Frequency
of Use
Single use
Standing
7.11

(continued)
• The Role of Goals and Plans in Planning (continued)
– Types of Plans (continued)
• long-term plans - time frame beyond three
years
• short-term plans - cover one year or less
• specific plans - clearly defined with little room
for interpretation
• directional plans - flexible plans that set out
general guidelines
7.12

SPECIFIC VERSUS DIRECTIONAL
PLANS (Exhibit 7.3)

HOW DO MANAGERS PLAN
(continued)
(continued)
– Types of Plans (continued)
• single-use plans - one-time plans
specifically designed to meet the needs of a
unique situation
• standing plans - ongoing plans that provide
guidance for activities performed repeatedly
7.14

(continued)
• Establishing Goals
– Approaches to Establishing Goals
• traditional goal setting - overall goals established at
the top of the organization
– overall goals broken down into sub-goals for
each level of the organization
• network of goals creates a means-ends chain
– sub-goals constrain subordinates’ behaviour
• assumes that top managers know what is
best for the organization
7.15

TRADITIONAL OBJECTIVE SETTING
(Exhibit 7.4)
Individual
Employee’s
Objective
Top
Management’s
Objective
Department
Manager’s
Objective
Division
Manager’s
Objective
“Increase profits, regardless
of the means”
“I want to see a
significant improvement
in this division’s profits”
“We need to improve
the company’s performance”
“Don’t worry about
quality: just work fast”

(continued)
• Establishing Goals (continued)
– Approaches to Establishing Goals (continued)
• management by objectives (MBO) - specific performance goals are
jointly determined by employees and their managers
– progress toward accomplishing these goals is periodically
reviewed
– rewards are allocated on the basis of this progress
– MBO consists of four elements
• goal specificity
• participative decision making
• explicit time period
• performance feedback
7.17

STEPS IN A TYPICAL MBO
PROGRAM (Exhibit 7.5)

(continued)
– Approaches to Establishing Goals (continued)
• management by objectives (continued)
– increases employee performance and
organizational productivity
– problems with MBO
• can be useless in times of dynamic change
• overemphasis on personal rather than
organizational goals
• may be viewed simply as an annual exercise in
paperwork
7.19

(continued)
– Characteristics of Well-Designed Goals
• written in terms of outcomes
• measurable and quantifiable
• clear as to a time frame
• challenging but attainable
• written down
• communicated to all organization members who need to
know the goals
7.20

(continued)
– Steps in Goal Setting
• 1 - Review the organization’s mission
• 2 - Evaluate available resources
• 3 - Determine the goals individually or with input
from others
• 4 - Write down the goals and communicate them
to all who need to know them
• 5 - Review results and whether goals are being
met
7.21

(continued)
• Developing Plans
– Contingency Factors in Planning
• level in the organization
– operational planning dominates
managers’ planning efforts at lower levels
– strategic planning more characteristic of
planning at higher levels
7.22

PLANNING IN THE HIERARCHY
OF ORGANIZATIONS (Exhibit 7.7)
Strategic
Planning
Operational
Planning
Top
Executives
Middle-Level
Managers
First-Level
Managers

(continued)
• Developing Plans (continued)
– Contingency Factors in Planning (continued)
• degree of environmental uncertainty
• length of future commitments
– commitment concept - plans should
extend far enough to meet those
commitments made when the plans were
developed
7.24

(continued)
– Approaches to Planning
• traditional, top-down approach
– planning done by top managers
– formal planning department - specialists whose
sole responsibility is to help to write
organizational plans
– plans flowed down to lower levels
– most effective if plan is a workable document
used by organizational members for direction
and guidance
7.25

(continued)
– Approaches to Planning (continued)
• inclusive approach
– employees at each level develop plans suited
to their needs
– employees acquire greater sense of the
importance of planning when they participate
in the process
– plans more likely to be used in directing and
coordinating work
7.26

CONTEMPORARY ISSUES IN
PLANNING
• Criticisms of Planning
1. Planning may create rigidity
• unwise to force a course of action when the environment
is fluid
2. Plans can’t be developed for a dynamic environment
• flexibility required in a dynamic environment
• can’t be tied to a formal plan
3. Formal plans can’t replace intuition and creativity
• mechanical analysis reduces the vision to some type of
programmed routine
7.27

PLANNING (continued)
• Criticisms of Planning (continued)
4. Planning focuses managers’ attention on today’s competition,
not on tomorrow’s survival
• plans concentrate on capitalizing on existing
business opportunities
• hinders managers who consider creating or
reinventing an industry
5. Formal planning reinforces success, which may lead
to failure
• success may breed failure in an uncertain
environment
7.28

• Effective Planning in Dynamic Environments
– develop plans that are specific, but flexible
– recognize that planning is an ongoing
process
– change directions if environmental
conditions warrant
– stay alert to environmental changes
7.29

Chapter 8
STRATEGIC
MANAGEMENT

LEARNING OBJECTIVES
– Explain the importance of strategic
management
– Describe the steps in the strategic
management process
– Explain SWOT analysis
– Differentiate corporate-, business-, and
functional-level strategies
8.2

LEARNING OBJECTIVES
(continued)
• You should be able to (continued):
– Explain what competitive advantage is
and why it’s important to organizations
– Describe the five competitive forces
– Identify the various competitive strategies
8.3

THE IMPORTANCE OF
STRATEGIC MANAGEMENT
• What Is Strategic Management?
– A set of managerial decisions and actions that determines
the long-run performance of an organization
• Purposes of Strategic Management
– Involved in many decisions that managers make
– Companies with formal strategic management systems
have higher financial returns than companies with no such
system
Important in profit and not-for-profit organizations
8.4

THE STRATEGIC
MANAGEMENT PROCESS
(Exhibit 8.1)
8.5

THE STRATEGIC
MANAGEMENT PROCESS
• Step 1: Identifying the Organization’s
Current Mission, Objectives, and Strategies
– Mission
• statement of the purpose of an organization
• important in profit and not-for-profit
organizations
• important to identify the goals currently in
place and the strategies currently being
pursued
8.6

COMPONENTS OF A MISSION
STATEMENT (Exhibit 8.2)
8.7

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 2: Analyzing the Environment
– successful strategies are aligned with the environment
– examine both the specific and general environments
to determine what trends and changes are occurring
• 3. Identifying Opportunities and Threats
– opportunities - positive trends in the external
environmental
– threats - negative trends in the external environment
8.8

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 4: Analyzing the Organization’s Resources
and Capabilities
– examine the inside of the organization
– available resources and capabilities always
constrain the organization in some way
– core competencies - major value-creating skills,
capabilities and resources that determine the
organization’s competitive weapons
8.9

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 5: Identifying Strengths and Weaknesses
– Strengths - activities the organization does well or
any unique resource
– Weaknesses - activities the organization does not
do well or resources it needs but does not possess
– organization’s culture has its strengths and
weaknesses
– SWOT analysis - analysis of the organization’s
strengths, weaknesses, opportunities, and threats
8.10

IDENTIFYING THE
ORGANIZATION’S
OPPORTUNITIES (Exhibit 8.3)
Organization’s
Opportunities
Organization’s
Resources/Abilities
Opportunities in
the Environment

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 6: Formulating Strategies
– Require strategies at the corporate, business, and
functional levels of the organization
– Strategy formulation follows the decision-making
process
• Step 7: Implementing Strategies
– A strategy is only as good as its implementation
• Step 8: Evaluating Results
– Control process to determine the effectiveness of a
strategy
8.12

TYPES OF ORGANIZATIONAL
STRATEGIES
• Corporate-Level Strategy
– Determines
• what businesses a company should be in or
wants to be in
• the direction that the organization is going
• the role that each business unit will play
8.13

LEVELS OF ORGANIZATIONAL
STRATEGY (Exhibit 8.4)

STRATEGIES (continued)
• Corporate-level Strategy (continued)
– Grand Strategy - Stability
• no significant change is proposed
• organization’s performance is satisfactory
• environment appears to be stable and
unchanging
8.15

• Corporate-level Strategy (continued)
– Grand Strategy - Growth
• seeks to increase the level of the organization’s operations
• related diversification - grow by merging with or acquiring
firms in different but related industries
• unrelated diversification - grow by merging with or
acquiring firms in different and unrelated industries
– Grand Strategy - Retrenchment - designed to address
organizational weaknesses that are leading to performance
declines
8.16

SWOT ANALYSIS AND GRAND
STRATEGIES (Exhibit 8.5)
Corporate
Growth
Strategies
Corporate
Stability
Strategies
Corporate
Retrenchment
Strategies
Abundant
Environmental
Opportunities
Critical
Environmental
Threats
Corporate
Stability
Strategies
Critical
Weaknesses
Valuable
Strengths
Environmental Status
FirmStatus

• Corporate-Level Strategy (continued)
– Corporate Portfolio Analysis - used when
corporate strategy involves a number of
business
• Boston Consulting Group (BCG) matrix--
strategy tool that guides resource allocation
decisions on basis of market share and
growth rate of SBU
8.18

THE BCG MATRIX (Exhibit 8.6)
Stars
Cash
Cows
Dogs
Question
Marks
Market Share
High Low
HighLow
Anticipated
Growth
Rate

• Corporate-Level Strategy (continued)
– BCG matrix (continued)
• strategic implications of the matrix
– cash cows - “milk”
– stars - require heavy investment
– question marks - attractive but hold a
small market share
– dogs - sold off or liquidated
8.20

• Business-Level Strategy
– Determines how an organization should compete in
each of its businesses
– Strategic business units - independent businesses that
formulate their own strategies
– Role of Competitive Advantage
• competitive advantage - sets an organization apart by
providing a distinct edge
– comes from the organization’s core competencies
– not every organization can transform core competencies into
a competitive advantage
– once created, must be able to sustain it
8.21

• Business-Level Strategy (continued)
– Competitive Strategies
• industry analysis based on five competitive forces
– Threat of new entrants - affected by barriers to
entry
– Threat of substitutes - affected by buyer loyalty
and switching costs
– Bargaining power of buyers - affected by number
of customers, availability of substitute products
8.22

– Competitive Strategies (continued)
• industry analysis based on five
competitive forces
– Bargaining power of suppliers - affected
by degree of supplier concentration
– Existing rivalry - affected by industry
growth rate, demand for firm’s product or
service, and product differences
8.23

Current Rivalry
Industry
Competitors
FORCES IN THE INDUSTRY
ANALYSIS (Exhibit 8.7)
Suppliers
New
Entrants
Buyers
Substitutes
Threat of
New Entrants
Threat of
Substitutes
Bargaining
Power or
Buyers
Bargaining
Power or
Suppliers

– Competitive strategies (continued)
• Porter’s three generic strategies
– cost leadership - goal is to become the
lowest-cost producer in the industry
– differentiation - offer unique products
that are widely valued by customers
– focus - aims at a cost advantage or
differentiation advantage in a narrow
segment
8.25

REQUIREMENTS FOR SUCCESSFULLY
PURSUING PORTER’S COMPETITIVE
STRATEGIES (Exhibit 8.8)
8.26

• Functional-Level Strategy
– used to support the business-level
strategy
– creates an appropriate supporting role for
each functional area of the organization
8.27

Chapter 9
PLANNING TOOLS
AND
TECHNIQUES

LEARNING OBJECTIVES
– Describe three techniques for assessing the
environment
– Describe four techniques for allocating
resources
– Tell why budgets are popular planning tools
– Differentiate Gantt and load charts
– Identify the steps in developing a PERT
network
9.2

LEARNING OBJECTIVES
(continued)
– State the factors that determine the breakeven
point
– Describe the requirements for using linear
programming
– Explain the concept of project management
– Tell how managers might use scenarios in
planning
9.3

TECHNIQUES FOR ASSESSING
THE ENVIRONMENT
• Environmental Scanning
– The screening of information to anticipate and
interpret changes in the environment
– Competitor intelligence - gathering information
about one’s competitors
– Global scanning - screening of information on
global forces that might affect an organization
that has global interests
9.4

THE ENVIRONMENT (continued)
• Forecasting
– Used to predict future events to facilitate
decision making
– Techniques
• quantitative - applies a set of mathematical rules to
a series of past data to predict outcomes
• qualitative - uses the judgment and opinions of
knowledgeable individuals to predict outcomes
9.5

FORECASTING TECHNIQUES
(Figure 9.1)
9.6

• Forecasting (continued)
– Effectiveness - managers have had mixed
success
• forecasts are most accurate in relatively stable
environments
• forecasts are relatively ineffective in predicting
nonseasonal events, unusual occurrences, and the
actions of competitors
• to improve forecasts - use simple forecasting
methods
9.7

• Benchmarking
– The search for the best practices in other organizations
that lead to superior performance
– Standard tool of many organizations in quest for
performance improvement
– Analyze and then copy the methods used by leaders in
various fields
– Important to identify appropriate targets for
benchmarking
– Organizations may share benchmarking information
9.8

STEPS IN BENCHMARKING
(Exhibit 9.2)
Form a benchmarking
planning team
Prepare and
implement
action plan
Gather internal and
external data
Analyze data to
identify performance
gaps
BEST
PRACTICES

TECHNIQUES FOR
ALLOCATING RESOURCES
• Resources
– The assets of the organization
– take many forms, including financial, physical,
human, intangible, and structural/cultural
• Budgeting
– Budgets - numerical plans for allocating
resources to specific activities
9.10

TYPES OF BUDGETS (Exhibit 9.4)
Cash Budget
Forecasts cash on hand and
how much will be
needed
Revenue Budget
Projects Future Sales Expense
Budget
Lists primary
activities
and allocates
dollar amount to
each
Profit Budget
Combines revenue and expense budgets of
various units to determine each unit’s profit
Variable Budget Fixed Budget
Takes into account Assumes fixed
the costs that vary level of sales
with volume or projection
9.11

TECHNIQUES FOR ALLOCATING
RESOURCES (continued)
9.12
• Budgeting (continued)
– Ways to improve budgeting process:
• Be flexible
• Goals should drive budgets
• Coordinate budgeting throughout the
organization
• Use budgeting/planning software when
appropriate
• Remember that budgets are tools
• Remember that profits result from smart
management, not because you budgeted for
them

9.13
• Scheduling
– Detailing what activities have to be done, the
order in which they are to be completed, who is
to do each, and when they are to be completed
– Gantt Charts
• show when tasks are supposed to be done
• actual and planned output over period of time

A GANTT CHART (Exhibit 9.6)
MonthActivity
Copyedit manuscript
Design sample pages
Draw artwork
Print galley proofs
Print page proofs
Design cover
1 432
Reporting DateGoals
Actual Progress

• Scheduling (continued)
– Load Charts - modified Gantt Chart
• schedule capacity by work areas
– vertical axis lists either entire departments or
specific resources
• allow managers to plan and control capacity
utilization
9.15

5
A LOAD CHART (Exhibit 9.7)
MonthEditors
Anne
Antonio
Kim
Maurice
Dave
Penny
1
Work scheduled
2 3 4 6

– PERT (Program Evaluation and Review
Technique) Network Analysis
• used to schedule complex projects
• flowchart diagram that depicts the sequence of
activities needed to complete a project
• indicates the time or costs associated with each
activity
• can compare the effects alternative actions might
have on scheduling and costs
9.17

– PERT (continued)
• events - end points that represent the completion of
major activities
• activities - time or resources required to progress
from one event to another
• slack time - amount of time an activity can be
delayed without delaying the entire project
• critical path - the most time-consuming sequence of
events and activities in a PERT network
9.18

STEPS IN DEVELOPING A
PERT NETWORK (Exhibit 9.8)
9.19

A PERT NETWORK FOR
CONSTRUCTING AN OFFICE
BUILDING (Exhibit 9.10)
A EB
D
F
C H
I
G
J K
Start
10 6 14
6
3
3 5
5 5
3
4
3
15
9.20© 2003 Pearson Education Canada

• Breakeven Analysis - used to determine
how many units must be sold to have
neither profit nor loss
– Used to make profit projections
– Points out relationships between revenues,
costs, and profits
9.21

BREAKEVEN ANALYSIS
(Exhibit 9.11)
$90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
Revenue/Cost($)
100 200 300 400 500 600
Output (in thousands)
Breakeven Point
Total Revenue
Total Costs
Loss
Area
Profit
Area
Variable
Costs
Fixed
Costs

• Breakeven Analysis (continued)
– P - unit price of product
– VC - variable cost per unit
– TFC - total fixed costs
– Fixed costs - costs that do not change as volume
increases
– Variable costs - costs that change in proportion to
output
9.23

• Linear Programming
– Mathematical technique that solve resource allocation
problems
– Requirements
• resources are limited
• outcome optimization is the goal
• alternative methods exist for combining resources to produce a
number of output mixes
• a linear relationship exists between variables
– technique has a variety of applications
9.24

CONTEMPORARY
PLANNING TECHNIQUES
• Project Management
– The task of getting a project’s activities done on
time, within budget, and according to
specifications
• project - a one-time-only set of activities that has a
definite beginning and ending point in time
– Standardized planning procedures often are not
appropriate for projects
9.25

CONTEMPORARY PLANNING
TECHNIQUES (continued)
• Project Management (continued)
– Project Management Process
• team created from appropriate work areas
• team reports to a project manager
• project manager coordinates activities
• team disbands when project is completed
9.26

PROJECT MANAGEMENT
PROCESS (Exhibit 9.14)Define
objectives
Establish
sequences
Identify activities
and resources
Compare with
objectives
Estimate time
for activities
Determine
project
completion date
Determine
additional
resource
requirements

• Project Management (continued)
– Role of the Project Manager
• role is affected by the one-shot nature of the
project
• role is difficult because team members still
linked to their permanent work areas
• managers must rely on their communication
skills and powers of persuasion
9.28

• Scenario Planning
– Scenario - an imagined sequence of future
events
– Contingency planning - “if this happens, then
these are the actions to take”
– Intent is to reduce uncertainty by playing out
potential situations under different specified
conditions
9.28

Chapter 10
ORGANIZATIONAL
STRUCTURE
AND DESIGN

LEARNING OBJECTIVES
– Define organizational structure and organizational
design
– Explain why structure and design are important to an
organization
– Describe the six key elements of organizational
structure
– Differentiate mechanistic and organic organizational
design
– Identify the four contingency factors that influence
organizational design
10.2

LEARNING OBJECTIVES
(continued)
– Describe a simple structure, a functional structure, and
a divisional structure
– Explain team-based structures and why organizations
are using them
– Describe matrix structures, project structures,
autonomous internal units, and boundaryless
organizations
– Explain the concept of a learning organization and how
it influences organizational design
10.3

DEFINING ORGANIZATIONAL
STRUCTURE
• Organizing - the process of creating an
organization’s structure
• Organizational structure - the formal
framework by which job tasks are divided,
grouped, and coordinated
• Organizational design - process of
developing or changing an organization’s
structure
10.4

KEY ELEMENTS
OF ORGANIZATIONAL DESIGN
Centralization and
Decentralization
Formalization
Work
Specialization
Chain
of Command
Departmentalization
Span
of Control
10.5

ELEMENTS OF
ORGANIZATIONAL DESIGN
• Work Specialization
– The degree to which tasks in an organization
are divided into separate jobs
– Too much specialization has created human
diseconomies
– An important organizing mechanism, though
not a source of ever-increasing productivity
10.6

ELEMENTS OF
(continued)
• Departmentalization
– The basis by which jobs are grouped together
• functional - groups jobs by functions performed
• geographical - groups jobs on the basis of territory
or geography
• product - groups jobs by product line
• process - groups jobs on the basis of product or
customer flow
• customer - groups jobs on the basis of common
customers
10.7

ELEMENTS OF
(continued)
• Departmentalization (continued)
– Large organizations combine most or all forms
of departmentalization
– Trends
• customer departmentalization is increasingly being
used
– better able to monitor and respond to customer
needs
– cross-functional teams are becoming popular
10.8

FUNCTIONAL
DEPARTMENTALIZATION
(Exhibit 10.2)
Manager,
Engineering
Manager,
Manufacturing
Manager,
Human Resources
Manager,
Purchasing
Manager,
Accounting
Plant Manager

GEOGRAPHICAL
DEPARTMENTALIZATION
(Exhibit 10.2)
Sales Director,
Western Region
Sales Director,
Southern Region
Sales Director,
Eastern Region
Vice President
for Sales
Sales Director,
Midwestern Region

PRODUCT DEPARTMENTALIZATION
(Exhibit 10.2)
Mass Transit
Division
Bombardier-Rotax
(Vienna)
Mass Transit
Sector
Recreational Products
Division
Logistic Equipment
Division
Industrial Equipment
Division
Bombardier-Rotax
(Gunskirchen)
Recreational and Utility
Vehicles Sector
Rail Products
Sector
Bombardier, Ltd.

PROCESS DEPARTMENTALIZATION
(Exhibit 10.2)
Assembling
Department
Manager
Plant
Superintendent
10.12
Sawing
Department
Manager
Planning
and Milling
Department
Lacquering
and Sanding
Department
Manager
Finishing
Department
Manager
Inspection
and Shipping
Department
Manager

CUSTOMER
DEPARTMENTALIZATION
(Exhibit 10.2)
Manager,
Retail Accounts
Director
Of Sales
Manager,
Wholesale Accounts
Manager,
Government Accounts

ELEMENTS OF
(continued)
• Chain of Command
– Continuous line of authority that extends from upper
organizational levels to the lowest levels and clarifies who
reports to whom
– authority - the rights inherent in a managerial position to tell
people what to do and to expect them to do it
• responsibility - the obligation to perform any assigned duties
• unity of command - a person should report to only one manager
– These concepts are less relevant today due to information
technology and employee empowerment
10.14

ELEMENTS OF
(continued)
• Span of Control
– Number of employees that a manager can efficiently
and effectively manage
– Determines the number of levels and managers in an
organization
– The wider the span, the more efficient the
organization
10.15

CONTRASTING SPANS OF
CONTROL (Exhibit 10.3)
1
4
16
64
256
1024
4096
1
8
64
512
4096
Span of 4
Operatives = 4,096
Managers (levels 1-6) =
1,365
Assuming Span of 4
Assuming Span of 8
Span of 8
Operatives = 4,096
Managers (levels 1-4) = 585
1
2
3
4
5
6
7
1
2
3
4
5
10.16

ELEMENTS OF
(continued)• Centralization
– The degree to which decision making is concentrated at
a single point in the organization
• Decentralization
– The degree to which decisions are made by lower-level
employees
– Distinct trend toward decentralized decision making
10.17

FACTORS INFLUENCING DEGREE
OF CENTRALIZATION OR
DECENTRALIZATION (Exhibit 10.4)
10.18

ELEMENTS OF
(continued)
• Formalization
– The degree to which jobs within the
organization are standardized
– Extent to which employee behaviour is guided
by rules and procedures
10.19

DECISIONS
• Mechanistic Organization
– Rigidly and tightly controlled structure
– Tries to minimize the impact of differing human traits
– Most large organizations have some mechanistic
characteristics
• Organic Organization
– Highly adaptive and flexible structure
– Permits organization to change when the need arises
– Employees are highly trained and empowered to handle
diverse job activities
– Minimal formal rules and little direct supervision
10.20

MECHANISTIC VERSUS
ORGANIC STRUCTURES
Mechanistic Organic
• High Specialization
• Rigid Departmentalization
• Clear Chain of Command
• Narrow Spans of Control
• Centralization
• High Formalization
• Cross-Hierarchical Teams
• Free Flow of Information
• Wide Spans of Control
• Decentralization
• Low Formalization
10.21

DECISIONS (continued)
• Contingency Factors
– Strategy and Structure - structure should
facilitate the achievement of goals
– Size and Structure - size affects structure at a
decreasing rate
10.22

• Contingency Factors (continued)
– Technology and Structure
• unit production - production of items in units or
small batches
• mass production - production of items in large
batches
• process production - production of items in
continuous process
– Mechanistic structure supports routine
technology
– Organic structure supports non-routine
technology
10.23

TECHNOLOGY, STRUCTURE, AND
EFFECTIVENESS (Exhibit 10.6)
Mass
Production
Moderate vertical
differentiation
High horizontal
differentiation
High formalization
Process
Production
High vertical
differentiation
Low horizontal
differentiation
Low formalization
Unit
Production
Low vertical
differentiation
Low horizontal
differentiation
Low formalization
Structural
Characteristics
Most effective
structure
Organic Mechanistic Organic

• Contingency Factors (continued)
– Environmental Uncertainty and Structure
• one way to reduce environmental uncertainty is
to adjust the organization’s structure
– with greater stability, mechanistic structures
are more effective
– the greater the uncertainty, the greater the
need for an organic structure
– organizations are being designed to be more
organic nowadays
10.25

COMMON
ORGANIZATIONAL DESIGNS
• Traditional Organizational Designs
– Simple Structure - low departmentalization,
wide spans of control, authority centralized in a
single person, and little formalization
– Functional Structure - groups similar or
related occupational specialties together
– Divisional Structure - composed of separate
divisions
10.26

COMPARISON OF COMMON
TRADITIONAL DESIGNS (Figure 10.7)
10.27

COMMON ORGANIZATIONAL
DESIGNS (continued)
• Contemporary Organizational Designs
– Team-Based Structures - entire
organization is made up of work teams
• employee empowerment is crucial
• teams responsible for all work activity and
performance
• complements functional or divisional
structures in large organizations
10.28

DESIGNS (continued)
(continued)
– Matrix Structure - assigns specialists from different
functional departments to work on projects led by
project managers
• adds vertical dimension to the traditional horizontal
functional departments
• creates a dual chain of command
10.29

A MATRIX ORGANIZATION IN AN
AEROSPACE FIRM (Exhibit 10.8)

DESIGNS (continued)
(continued)
– Project Structure - employees work
continuously on projects
• employees do not return to a functional
department at the conclusion of a project
• all work performed by teams comprised of
employees with appropriate skills and abilities
• tends to be very fluid and flexible
10.31

DESIGNS (continued)
(continued)
– Autonomous Internal Units –
independent, decentralized business units
• each has its own products, clients,
competitors, and profit goals
• business units are autonomous
10.32

DESIGNS (continued)
• Contemporary Organizational Designs (continued)
– Boundary less Organization - design is not defined by, or
limited to, the horizontal, vertical, or external boundaries
imposed by a predefined structure
• strategic alliances break down barriers between the company and its
customers and suppliers
• seeks to eliminate the chain of command, to have limitless spans of
control, and to replace departments with empowered teams
• flattens the hierarchy by removing vertical boundaries
• horizontal boundaries removed by organizing work around processes
instead of functional departments
10.33

DESIGNS (continued)
• Contemporary Organizational Designs (continued)
– Learning Organization - an organizational mind-set rather
than a specific organizational design
• has developed the capacity to continuously adapt
• all members take an active role in identifying and resolving
work-related issues
• practice knowledge management by continually acquiring
and sharing new knowledge
• environment is conducive to open communication
• empowered teams are important
• leadership creates a shared vision for the future
• organizational culture provides sense of community
10.34

CHARACTERISTICS OF A LEARNING
ORGANIZATION (Exhibit 10.9)
Organizational Design
• Boundaryless
• Teams
• Empowerment
Organizational Culture
• Strong Mutual
Relationships
• Sense of Community
• Caring
• Trust
Information Sharing
• Open
• Timely
• Accurate
Leadership
• Shared Vision
• Collaboration
The
Learning
Organization

Chapter 11
MANAGERIAL
COMMUNICATION
AND INFORMATION
TECHNOLOGY

LEARNING OBJECTIVES
– Define communication
– Explain the interpersonal communication process
– Describe the criteria on which the different
communication methods can be evaluated and on what
the choice of communication method depends
– Explain how nonverbal communication affects
managers
11.2

LEARNING OBJECTIVES
(continued)
• You should learn to:
– Explain the barriers to effective interpersonal
communication and how to overcome them
– Contrast the different organizational communication
flows and networks
– Describe two developments in information technology
that have had a significant impact on managerial
communication
– Discuss how information technology affects
organizations
11.3

UNDERSTANDING MANAGERIAL
COMMUNICATIONS
• What is Communication?
– The transfer and understanding of meaning
– Everything that a manager does involves
communicating
– Interpersonal communication - occurs
between people
– Organizational communication - all the
patterns, networks, and systems of
communication in an organization
11.4

PROCESS OF INTERPERSONAL
COMMUNICATION
• Message - a purpose to be conveyed
• Encoding - converting the message in
symbolic form
• Channel - medium a message travels along
• Decoding - retranslating a sender’s message
• Noise - disturbances that interfere with the
transmission, receipt, or feedback of a
message
11.5

THE INTERPERSONAL
COMMUNICATION PROCESS
(Exhibit 11.1)
Sender
Message Medium Receiver
Encoding Noise
Feedback
Message
Decoding

COMMUNICATION (continued)
• Methods of Communicating Interpersonally
– A wide variety of communication
methods exist
– Choice of a method should reflect:
– the needs of the sender
– the needs of the receiver
– the attributes of the message
– the attributes of the channel
11.7

EVALUATING COMMUNICATION
METHODS
1. Feedback - how quickly can the receiver respond to the message?
2. Complexity capacity - can the method effectively process complex messages?
3. Breadth potential - how many different messages can be transmitted using this
method?
4. Confidentiality - can communicators be reasonably sure their messages are received
only by those intended?
5. Encoding ease - can sender easily and quickly use this channel?
6. Decoding ease - can receiver easily and quickly decode messages?
7. Time-space constraint - do senders and receivers need to communicate at the same
time and in the same space?
8. Cost - how much does it cost to use this method?
9. Interpersonal warmth - how well does this method convey interpersonal warmth?
10. Formality - does this method have the needed amount of formality?
11. Scanability - does this method allow the message to be easily browsed or scanned
for relevant information?
12. Time of consumption - does sender or receiver exercise the most control over when
the message is dealt with?

COMPARISON OF
COMMUNICATION METHODS
(Exhibit 11.2)
11.9

• Methods of Communicating Interpersonally
(continued)
– Nonverbal communication - communication
without words
• body language - gestures, facial expressions,
and other body movements that convey
meaning
• verbal intonation - emphasis given to words
or phrases that conveys meaning
• nonverbal component usually carries the
greatest impact
11.10

• Barriers to Effective Interpersonal
Communication
– Filtering - the deliberate manipulation of
information to make it appear more favourable
to the receiver
– Selective Perception - what people see or hear
on the basis of their interests, background,
experience, and attitudes
11.11

Communication (continued)
– Emotions - interpretation of a message
affected by the way the receiver feels
– Information Overload - information
available exceeds processing capacity
11.12

– Defensiveness - behaviours that result from
feeling threatened
– Language - meaning of words differs among
people with diverse backgrounds
• jargon - specialized terminology used by a group
– National Culture - cultural values affect the
way people communicate
11.13

• Overcoming the Barriers to Effective
Interpersonal Communication
– Use Feedback - ask a set of questions about a
message to determine whether it was understood as
intended
– Simplify Language - tailor the language to the
audience for whom the message is intended
– Listen Actively - listen for full meaning
11.14

ACTIVE LISTENING
BEHAVIOURS (Exhibit 11.3)
Paraphrase
Don’t overtalk
Be empathetic Make eye
contact
Exhibit affirmative
head nods and
appropriate
facial expressions
Active
Listening
Avoid distracting
actions or
gestures
Avoid interrupting
the speaker
Ask questions

• Overcoming the Barriers to Effective
Interpersonal Communication (continued)
– Constrain Emotions - emotions severely
cloud and distort the transference of meaning
– Watch Nonverbal Cues - actions should be
aligned with words
11.16

ORGANIZATIONAL
COMMUNICATION
• Formal Communication
– Communication that follows the official chain of
command or is communication required to do one’s
job
– Takes place within prescribed organizational work
arrangements
• Informal Communication
– Not defined by the organization’s structural
hierarchy
11.17

ORGANIZATIONAL
• Direction of Communication Flow
– Downward - flows from a manager to subordinates
• used to inform, direct, coordinate, and evaluate
employees
– Upward - flows from subordinates to managers
• keeps managers aware of employees’ feelings
• source for ideas on improving operations
• amount of upward communication affected by the
culture of the organization
11.18

ORGANIZATIONAL
• Direction of Communication Flow (continued)
– Lateral - takes place among any employee on the
same organizational level
– Diagonal - cuts across both work areas and
organizational levels
• benefits efficiency and speed
• e-mail facilitates diagonal communication
11.19

ORGANIZATIONAL
• Organizational Communication Networks
– Combination of vertical and horizontal flows into a
variety of patterns
– Types of Networks
• chain - communication flows according to the formal
chain of command
• wheel - flows between a clearly identifiable and strong
leader and others in a work group or team
• all-channel - flows freely among all members of a work
team
– No single network is best for all situations
11.20

THREE COMMON ORGANIZATIONAL
COMMUNICATION NETWORKS AND HOW
THEY RATE ON EFFECTIVENESS CRITERIA
(Exhibit 11.4)

ORGANIZATIONAL
• Organizational Communication Networks (continued)
– Grapevine - an informal network that is active in
almost every organization
• important source of information
• identifies issues that employees consider important
and anxiety producing
• can use the grapevine to disseminate important
information
• grapevine cannot be abolished
11.22

UNDERSTANDING
INFORMATION TECHNOLOGY
• How Technology Affects Managerial Communication
– Information technology has changed organizational
communication
• disseminates more complete information
• provides more opportunities for collaboration
• employees are fully accessible
– Networked Computer Systems - linking computers through
compatible hardware and software
• e-mail - instantaneous transmission of written messages
11.23

UNDERSTANDING
(continued)
• How Technology Affects Managerial Communication (continued)
– Networked Computer Systems (continued)
• instant messaging (IM) - interactive real-time communication
• voice-mail - digitizes a spoken message
• fax - allows transmission of documents containing both text
and graphics over ordinary telephone lines
• electronic data interchange (EDI) - permits the exchange of
standard business transaction documents
11.24

UNDERSTANDING
(continued)
• How Technology Affects Managerial Communication (continued)
– Networked Computer Systems (continued)
• Teleconferencing - permits simultaneous conferral using telephone
or e-mail group communications software
– videoconferencing - participants can see each other
• Intranet - Internet technology that links organizational employees
• Extranet - Internet technology that links an organization with
customers and suppliers
11.25

UNDERSTANDING
(continued)
• How Technology Affects Managerial
– Wireless Capabilities - depends on signals sent through
space without any physical connection
• based on microwave signals, satellites, radio waves,
or infrared light rays
11.26

UNDERSTANDING
(continued)
• How Information Technology Affects
Organizations
– Communications among organizational
members are no longer constrained by
geography or time
• psychological drawback - personal costs associated
with being constantly accessible
11.27

Chapter 12
HUMAN
RESOURCE
MANAGEMENT

LEARNING OBJECTIVES
– Explain the strategic importance of human
resource management
– Describe the human resource management
process
– Differentiate between job descriptions and job
specifications
– Contrast recruitment and decruitment options
– Describe the selection devices that work best
with various kinds of jobs
12.2

LEARNING OBJECTIVES
(continued)
– Identify the various training categories
– Explain the various approaches to performance
appraisal
– Describe what an organization’s compensation
system should include
– Discuss the current issues affecting human
resource management
12.3

WHY HUMAN RESOURCE
MANAGEMENT IS IMPORTANT
• All Managers Engage in Human Resource Management
Activities
– interview job candidates
– orient new employees
– evaluate work performance
• Achieving competitive success through people requires a
fundamental change in how manages think about employees
• High performance work practices--work practices that lead to
both high individual and high organizational performance
12.4

EXAMPLES OF HIGH-
PERFORMANCE WORK PRACTICES
(Exhibit 12.1)
12.5

HUMAN RESOURCE
MANAGEMENT PROCESS
• Necessary for staffing the organization and sustaining high
employee performance
– Identify and select competent employees
– Provide up-to-date knowledge and skills
– Retain competent, high performing employees
• Influenced by the external environment
– Labour union - represents workers and protects their
interests through collective bargaining
– Government regulations to assure equal employment
opportunities
12.6

HUMAN RESOURCE MANAGEMENT
PROCESS (Exhibit 12.2)
Compensation
and
Benefits
Career
Development
Performance
Management
Human
Resource
Planning
Recruitment
Decruitment
Selection
Identification and selection
of competent employees
Orientation Training
Adapted and competent
employees with up-to-date
skills and knowledge
Competent employees who
are capable of sustaining high
performance over the long term
Environment
Environment
12.7

HUMAN RESOURCE
PLANNING
• Ensures:
– That organization has the right number
and kind of people in the right places and
at the right time
– Employees are capable of effectively and
efficiently performing their assigned
tasks
12.8

HUMAN RESOURCE
• Current Assessment
– Job analysis - defines jobs and the behaviors
necessary to perform them
– Job description - statement of what job holder
does, how it is done, and why it is done
– Job specification - statement of the minimum
qualifications that a person must possess to
perform a given job
12.9

JOB ANALYSIS PROCESS
Employee
diaries
Job ‘experts’
identify major
job characteristics
Job
Analysis
Direct observation
of the worker
Structured
questionnaire
Filming workers
on the job
Interviewing
employees
in groups
Interviewing
employees
individually
12.10

HUMAN RESOURCE
• Meeting Future Human Resource Needs
– Determined by the organization’s goals and
strategies
– Demand for employees is a result of demand
for the organization’s products and services
– Comparison of current HR capabilities and
future needs determines areas of overstaffing or
understaffing
12.11

RECRUITMENT AND
DECRUITMENT
• Recruitment
– Process of locating, identifying, and attracting
capable applicants
– Choice of recruiting source determined by:
• local labour market
• type or level of position
• size of the organization
– Employee referrals typically produce the best
applicants
12.12

MAJOR SOURCES OF POTENTIAL
JOB CANDIDATES (Exhibit 12.4)
12.13

RECRUITMENT AND
DECRUITMENT (continued)
• Decruitment
– Process of reducing the size of the
organization’s workforce or restructuring its
skill base
– Used to meet the demands of a dynamic
environment
12.14

DECRUITMENT OPTIONS
(Exhibit 12.5)
OPTION DESCRIPTION
Firing
Layoffs
Attrition
Transfers
Reduced workweeks
Early retirements
Job sharing
Permanent involuntary termination
Temporary involuntary termination
Not filling openings
Moving employees to job openings
Working fewer hours per week
Providing incentives for people to
retire before normal retirement
Having employees share one full-
time job
12.15

SELECTION
• Selection Process
– Screening job applicants to ensure that the most
appropriate candidates are hired
– Prediction exercise to determine which
applicants will be successful if hired
– Selection decisions may be correct or incorrect
12.16

Correct
Decision
Accept
Error
Correct
Decision
Reject
Error
SELECTION DECISION
OUTCOMES (Exhibit 12.6)
Accept Reject
Selection DecisionLaterJobPerformance
UnsuccessfulSuccessful

SELECTION
(continued)
• Validity
– Degree to which there is a proven relationship between the
selection device and some relevant criterion
– Law prohibits the use of selection devices unless there is
evidence that, once on the job, individuals with high test
scores outperform those with low test scores
– Organization has burden to provide evidence of validity
• Reliability
– Degree to which a selection device provides consistent
measures
– No selection device can be effective if it has low reliability
12.18

SUGGESTIONS FOR
INTERVIEWING (Exhibit 12.8)
1. Structure a fixed set of questions for all applicants
2. Have detailed information about the job
3. Minimize any prior knowledge about the applicant
4. Ask questions that require detailed answers about actual job
behaviors
5. Use a standardized evaluation form
6. Take notes during he interview
7. Avoid short interviews that encourage premature decision
making
12.19

QUALITY OF SELECTION DEVICES
AS PREDICTORS (Exhibit 12.10)
12.20

ORIENTATION
• Work Unit Orientation
– Familiarizes new employee with goals of the
work unit
• Organization orientation
– Informs new employee about the organization’s
objectives, history, procedure, and rules
• Successful orientation
– May be formal or informal
– Makes new member feel comfortable, lowers
likelihood of poor performance and
resignations
12.21

TRAINING
• Skill Categories
– As jobs change, employee skills have to be
updated
– Technical skills - basic and job-specific
competencies
– Interpersonal skills - ability to interact
effectively
– Problem-solving skills - useful in non-routine
jobs
12.22

PERFORMANCE
• Performance Management System
– Process of establishing standards and
appraising employee performance
• Performance Appraisal Methods
– Each method has advantages and disadvantages
– Written essay - written description of
employee’s strengths and weaknesses
– Critical incidents - focus is behaviour that
defines effective and ineffective performance
12.23

PERFORMANCE
(continued)
• Performance Appraisal Methods
(continued)
– Graphic rating scale - list of performance
factors
– Behaviourally anchored rating scale (BARS) -
critical incident and graphic rating scale
approaches combined
– Multiple comparisons - compares one person’s
performance with that of one or more others
12.24

PERFORMANCE
(continued)
• Performance Appraisal Methods (continued)
– Objectives - employees evaluated by how well
they accomplish a specific set of goals
– Management By Objectives (MBO) - preferred
method of appraising managers and
professional employees
– 360 degree feedback - utilizes feedback from
supervisors, employees, and coworkers
12.25

COMPENSATION
(WAGES AND BENEFITS)
• Goals of Compensation Programs
– Attract and retain competent and talented individuals
– Positively impact organization’s strategic performance
• Skill-based pay
– Rewards employees for their job skills and competencies
– Job title doesn’t define pay category
– Mesh nicely with the changing nature of jobs
• Trends in compensation
– Make pay systems more flexible
– Reduce the number of pay levels
12.26

FACTORS THAT INFLUENCE
COMPENSATION/BENEFITS
(Exhibit 12.13)
Unionization
Level of
Compensation
and
Benefits
Employee’s
tenure and
performance Kind of job
performed
Size of
company
Management
philosophy
Kind of
business
Geographical
location
Labour or
capital-intensive
Company
profitability

CAREER DEVELOPMENT
• Career
– Sequence of positions held by a person during
her or his lifetime
• The Way It Was
– Employees advanced their work lives within a
single organization
– Career development was a way to attract and
retain quality employees
– Uncertainty brought organizational changes that
undermine principles of traditional career
development
12.28

CAREER DEVELOPMENT
(continued)
• You and Your Career Today
– Boundaryless career - individual, not
organization, responsible for career
– Career choice - optimally offers the best
match between person’s aspirations and
her or his abilities and market
opportunities
12.29

SOME SUGGESTIONS FOR A
SUCCESSFUL MANAGEMENT
CAREER (Exhibit 12.14)

CURRENT ISSUES IN HUMAN
RESOURCE MANAGEMENT
• Managing Workforce Diversity
– Recruitment - recruiting net must be widened
• Use nontraditional recruitment sources
• Outreach will broaden applicant pool
– Selection - process must not discriminate
• Must accommodate needs of diverse applicants
– Orientation and training - transition often
more challenging for some groups
• Workshops to raise diversity awareness issues
12.31

RESOURCE MANAGEMENT
(continued)
• Sexual Harassment
– Any unwanted activity of a sexual nature that
affects an individual’s employment
– Harassment creates an unpleasant work
environment and undermines workers’ ability
to perform their jobs
– Illegal behaviour includes verbal or physical
conduct toward an individual
12.32

RESOURCE MANAGEMENT
(continued)
• Work-life Balance
– Employees can’t (and don’t) leave their families and
personal lives when they walk into work
– Managers can’t be sympathetic with every detail of
an employee’s family life
– Family-friendly benefits - provide some help in
dealing with family problems
– Dual-career couples - both partners have
occupations
12.33

Chapter 13
MANAGING
CHANGE AND
INNOVATION

LEARNING OBJECTIVES
– Contrast the calm waters and white-water rapids
metaphors of change
– Describe what managers can change in organizations
– Explain why people are likely to resist change
– List techniques for reducing resistance to change
– Describe the situational factors that facilitate cultural
change
13.2

LEARNING OBJECTIVES
(continued)
– Explain how process reengineering is related to
change
– Describe techniques for reducing employee
stress
– Differentiate between creativity and innovation
– Explain how organizations can stimulate and
nurture innovation
13.3

WHAT IS CHANGE?
• Organizational Change
– Alterations in people, structure, or
technology
– Change is an organizational reality
– Managing change is an integral part of
every manager’s job
13.4

FORCES FOR CHANGE
• External Forces
– Marketplace - adapt to changing consumer desires
– Governmental laws and regulations - frequent impetus for
change
– Technology - source of change in almost all industries
– Labour markets - ability to attract and retain skilled
employees in the areas of greatest need
– Economic - uncertainties about interest rates, budget
deficits, and currency exchange rates
13.5

FORCES FOR CHANGE
(continued)
• Internal Forces
– Originate from the operations of the organization
– Forces may include strategy, workforce, new
equipment, or employee attitudes
• Manager as change agent
– Change agents - act as catalysts and assume
responsibility for change
13.6

TWO VIEWS OF THE
CHANGE PROCESS
• The Calm Waters Metaphor
– Unfreezing - preparing for the needed change by:
• increasing the driving forces that direct behaviour away
from the status quo
• decreasing the restraining forces that push behaviour
towards the status quo
– Changing - move to another equilibrium level
– Refreezing - make change permanent
– Change is a break in the organization’s equilibrium
state
13.7

THE CHANGE PROCESS
(Exhibit 13.1)
13.8

TWO VIEWS OF THE CHANGE
PROCESS (continued)
• White-Water Rapids Metaphor
– Consistent with uncertain and dynamic environments
– Consistent with a world increasingly dominated by
information, ideas, and knowledge
– Managers must continually maneuver in uninterrupted
rapids
– Today, managers must be ready to efficiently and
effectively manage the changes facing their
organizations or their work areas
13.9

CATEGORIES OF CHANGE
(Exhibit 13.2)
Work specialization,
departmentalization,
chain of command, span of control,
centralization, formalization,
job redesign, or actual design
Structure
Attitudes, expectations,
perceptions, and
behavior
People
Work processes, methods,
and equipment
Technology
13.10

MANAGING CHANGE
• Initiating Change:
– Identifying what organizational areas
might need to be changed
– Putting the change process in motion
– Managing employee resistance to change
• Types of Change
– Changing structure - organization’s
formal design, centralization, degree of
formalization, and work specialization
13.11

MANAGING CHANGE
(continued)
• Types of Change (continued)
– Changing technology - modifications in
the way work is performed
– Changing people - changes in employee
attitudes, expectations, perceptions, and
behaviour
• organizational development (OD) -
techniques or programs to change people and
the nature and quality of interpersonal work
relationships
13.12

ORGANIZATIONAL DEVELOPMENT
TECHNIQUES (Exhibit 13.3)
MORE
EFFECTIVE
INTERPERSONAL
WORK
ENVIRONMENT
Process
Consultation
Intergroup
Development
Sensitivity
Training
Survey
Feedback
Team
Building
13.13

MANAGING CHANGE
(continued)
• Dealing with Resistance to Change
– Why people resist change
• change replaces the known with ambiguity and
uncertainty
• change threatens investments in the status quo
• belief that change is incompatible with the goals and
interests of the organization
– Techniques for reducing resistance
• a variety of actions available to managers to deal
with dysfunctional resistance
13.14

WAYS TO REDUCE RESISTANCE
TO CHANGE (Exhibit 13.4)
13.15

MANAGING CHANGE
• Changing Organizational Culture
– Culture resistant to change because it is made up of
relatively stable and permanent characteristics
– Strong cultures are particularly resistant to change
– Understanding the situational factors - makes cultural
change more likely
• dramatic crisis occurs
• leadership changes hands
• organization is young and small
• culture is weak
13.16

MANAGING CHANGE (continued)
• Changing Organizational Culture (continued)
– How Can Cultural Change Be Accomplished?
• requires a comprehensive and coordinated strategy
– unfreeze the current culture
– implement new “ways of doing things”
– reinforce those new values
• change, if it comes, is likely to be slow
• protect against any return to old, familiar practices and
traditions
13.17

THE ROAD TO CULTURAL
CHANGE (Exhibit 13.5)
13.18

CONTINUOUS QUALITY
IMPROVEMENT VERSUS
REENGINEERING (Exhibit 13.6)
Continuous Quality Improvement
• Continuous, incremental change
• Fixing and improving
• Mostly “as is”
• Works from bottom up in
organization
Reengineering
• Radical change
• Redesigning - starting over
• Mostly “what can be”
• Initiated by top
management
13.19

• Continuous Quality Improvement Programs
– Continuous, small, incremental changes
– Fix and improve current work activities
– Rely on participative decision making from the
bottom levels
• Process reengineering
– Dramatic shift in the way an organization does its
work
– Begins with the redesign of work
– Requires participation from managers and workers
13.20

• Handling Employee Stress
– What is Stress?
• a dynamic condition a person faces when confronted
with an opportunity, constraint, or demand related to
what s/he desires
• stress is not necessarily bad
• potential stress becomes actual stress when:
– outcome is both uncertain
– outcome is important
13.21

• Handling Employee Stress (continued)
– Causes of Stress
• found in organizational and personal factors
• change of any kind is potentially stressful
• uncertainty around important matters
13.22

CAUSES OF STRESS
STRESS Job-RelatedPersonal Factors
13.23

SYMPTOMS OF STRESS
(Exhibit 13.7)
Symptoms
of Stress
Physiological
Behavioural
Psychological
13.24

– Reducing stress
• controlling certain organizational factors
– employee’s abilities should match job requirements
– improve organizational communications
• reduce ambiguity
– performance planning program
• clarify job responsibilities
• provide performance feedback
– job redesign
• reduce boredom or work overload
13.25

– Reducing stress (continued)
• offering help for personal stress
– general considerations
– available approaches
• employee counseling
• time management program
• sponsored wellness programs
13.26

STIMULATING INNOVATION
• Creativity versus Innovation
– Creativity - ability to combine ideas in a
unique way or to make unusual
associations between ideas
– Innovation - process of transforming
creative ideas into a useful product,
service, or method of operation
13.27

SYSTEMS VIEW OF
INNOVATION (Exhibit 13.8)
Creative individuals,
groups,
organizations
Creative process
Creative situation
Creative product(s)
Inputs Transformation Outputs

(continued)
• Stimulating and Nurturing Innovation
– Must focus on inputs
– Requires appropriate environment
• structural variables cultural variables
– encourage experimentation
– reward success and failures
– celebrate mistakes
13.29

(continued)
• Stimulating and Nurturing Innovation (continued)
– Appropriate environment (continued)
• cultural variables
– encourage experimentation
– reward success and failures
– celebrate mistakes
• human resource variables
– promote training and development of employees
– offer high job security
– encourage individuals to become idea champions
13.30

INNOVATION VARIABLES
(Exhibit 13.9)

Chapter 14
FOUNDATIONS
OF
BEHAVIOUR

LEARNING OBJECTIVES
– Define the focus and goals of organizational
behaviour
– Describe the three components of an attitude
– Identify the role that consistency plays in
attitudes
– Explain the relationship between satisfaction
and productivity
– Tell how managers can use the Myers-Briggs
personality type framework and the big-five
model of personality
14.2

LEARNING OBJECTIVES
(continued)
– Define emotional intelligence
– Describe attribution theory and its use in
explaining individual behaviour
– Identify the types of shortcuts managers use in
judging others
– Explain how managers can shape employee
behaviour
14.3

WHY LOOK AT INDIVIDUAL
BEHAVIOUR?
• Organizational Behaviour (OB)
– Concerned specifically with the actions of
people at work
– Addresses issues that are not obvious
• Focus of OB
– Individual behaviour - attitudes, personality,
perception, learning, and motivation
– Group behaviour - norms, roles, team building,
leadership, and conflict
14.4

THE ORGANIZATION AS AN
ICEBERG (Exhibit 14.1)
14.5

WHY LOOK AT INDIVIDUAL
BEHAVIOUR? (continued)
• Goals of OB
– Explain, predict, and influence behaviour
– Manager’s success depends on getting
things done through other people
14.6

ATTITUDES
• Evaluative statements concerning
objects, people, or events
– Three components
• cognitive - beliefs, opinions, knowledge, or
information held by a person
• affective - emotion or feeling
• behavioural - intention to behave in a certain
way toward someone or something
14.7

ATTITUDES (continued)
• Job-Related Attitudes
– Job satisfaction - employee’s general attitude
toward her or his job
– Job involvement - degree to which an
employee identifies with her or his job
– Organizational commitment - employee’s
loyalty to, identification with, and involvement
in the organization
– Organizational citizen behaviour (OCB) -
discretionary behaviour that is not part of the
formal job requirements
14.8

• Attitudes and Consistency
– People seek consistency:
• among their attitudes
• between their attitudes and behaviour
– Inconsistency gives rise to steps to
achieve consistency
• alter attitudes or behaviour
• develop rationalization for the inconsistency
14.9

• Cognitive Dissonance Theory
– Cognitive dissonance - any incompatibility between
attitudes or between attitudes and behaviour
– Effort to reduce dissonance related to:
• importance of factors causing dissonance
• perceived degree of influence over these factors
• rewards that may be involved in dissonance
• Attitude Surveys
– Present employee with questions that elicit how they feel
about their jobs, work groups, supervisors, or the
organization
– Attitude score is the sum of responses to individual items
14.10

SAMPLE ATTITUDE SURVEY
(Exhibit 14.2)
14.11

• Satisfaction-Productivity Controversy
– Traditional belief was that happy workers were
productive workers
– Research evidence suggests that if satisfaction has
a positive influence on productivity, it is small
– Contingency factors have clarified the relationship
between satisfaction and productivity
– Research designs do not permit conclusions about
cause and effect
14.12

PERSONALITY
• The unique combination of the psychological traits
we use to describe a person
• Personality Traits
– Myers-Briggs Type Indicator (MBTI) - four dimensions
• social interaction: Extrovert or Introvert
• preference for gathering data: Sensing or Intuitive
• preference for decision making: Feeling or Thinking
• style of making decisions: Perceptive or Judgmental
• lack of evidence to support the MBTI’s validity
14.13

EXAMPLES OF MBTI
PERSONALITY TYPES (Exhibit 14.3)
14.14

PERSONALITY (continued)
• Personality Traits (continued)
– Big-Five Model of Personality - traits include
degree of:
• extraversion - sociability, talkativeness, assertiveness
• agreeableness - good-natured, cooperative, trusting
• conscientiousness - responsibility, dependability,
persistence, and achievement orientation
• emotional stability - calmness, enthusiasm, security
• openness to experience - imaginativeness, artistic
sensitivity, and intellectualism
14.15

• Emotional Intelligence (EI)
– Assortment of non-cognitive skills, capabilities, and
competencies that influence a person’s ability to
succeed in coping with environmental demands and
pressures
– self-awareness - aware of what you’re feeling
• self-management - ability to manage one’s emotions
• self-motivation - persistence in the face of setbacks
• empathy - ability to sense how others are feeling
• social skills - ability to handle the emotions of others
– EI related to performance at all organizational levels
14.16

• Predicting Behaviour from Personality Traits
– Locus of Control
• internals - believe that they control their own destiny
• externals - believe their lives are controlled by
outside forces
– Machiavellianism
• are pragmatic, maintain emotional distance, believe
that ends can justify the means
• are productive in jobs that require bargaining and
have high rewards for success
14.17

(continued)
– Self-Esteem - degree of liking for oneself
• related to expectations for success
• high self-esteem individuals
– will take risks in job selection
– more satisfied with their jobs
• low self-esteem individuals susceptible to social
influence
– Self-Monitoring - ability to adjust one’s behaviour to
situational factors
14.18

(continued)
– Risk-Taking - affects time required to make a
decision
• Personality Types in Different Cultures
– A country’s culture can influence dominant
personality characteristics of its people
• Implications for managers
– Must fit personality to the demands of the job
14.19

PERCEPTION
• Process by which individuals give meaning to their
environment by organizing and interpreting their sensory
impressions
– None of us sees reality--we interpret what we see and
call it reality
• Factors That Influence Perception
– perceiver - individual’s personal characteristics--
attitudes, personality, experience, expectations
– target - relationship of target to its background
– situation - time, location, light, color, and other
environmental factors
14.20

WHAT DO YOU SEE (Exhibit 14.5)
14.21

PERCEPTION (continued)
• Attribution Theory
– Used to explain how we judge people differently
depending on what meaning we attribute to a given
behaviour
– Cause of behaviour determined by:
• distinctiveness - whether person displays a behaviour in
many situations or whether it is particular to one situation
• consensus - behaviour of others in same situation
• consistency - regularity with which person engages in the
behaviour
14.22

• Attribution Theory (continued)
– Errors and biases may distort attributions
• fundamental attribution error - tendency to
explain behaviour of others by:
– overestimating the influence of internal factors
– underestimating the influence of external factors
• self-serving bias - personal success attributed to
internal factors
– personal failure attributed to external factors
14.23

• Shortcuts Frequently Used in Judging Others
– Make perceptual task easier
– Selectivity - portions of stimuli bombarding one’s
senses are selected based on interests, background, and
attitudes of the perceiver
– Assumed similarity - “like me” effect
– Stereotyping - base perceptions of an individual on
one’s impressions of the group to which s/he belongs
– Halo effect - general impression about a person is
forged on the basis of a single characteristic
14.24

LEARNING
• Any relatively permanent change in
behaviour that occurs as a result of
experience
• Operant conditioning
– Argues that behaviour is a function of its
consequences
– Describes voluntary or learned behaviour
reinforcement strengthens a behaviour and
increases the likelihood that it will be repeated
14.25

LEARNING (continued)
• Social Learning Theory
– Learning by observing other people and direct
experience
– Influence of model determined by:
• attentional processes - must recognize and attend to critical
features of the model
• retention processes - must remember the model’s actions
• motor reproduction processes - performing actions
observed in the model
• reinforcement processes - positive incentives necessary to
motivate performance of the model’s actions
14.26

• Shaping: A Managerial Tool
– Shape behaviour by systematically reinforcing each
successive step that moves the individual closer to the
desired behaviour
– Shaping accomplished by:
• positive reinforcement - desired response is followed by
something pleasant
• negative reinforcement - desired response followed by
eliminating or withdrawing something unpleasant
• punishment - undesirable behavior followed by
something unpleasant
• extinction - no rewards follow undesired response
14.27

• Implications for Managers
– Manage employee learning by means of rewards
• positive and negative reinforcement strengthen a
desired behaviour
• punishment and extinction weaken an undesired
behaviour
– Managers should serve as models
• set examples of the desired behaviour
14.28

Chapter 15
UNDERSTANDING
GROUPS AND
TEAMS

LEARNING OBJECTIVES
– Differentiate between formal and informal
groups
– Describe the five stages of group development
– Identify how roles and norms influence an
employee’s behaviour
– Describe the key components in the group
behaviour model
– Identify the advantages and disadvantages of
group decision making
15.2

LEARNING OBJECTIVES
(continued)
– Explain the increased popularity of teams in
organizations
– Describe the four most common types of teams
in organizations
– List the characteristics of effective teams
– Identify how managers can build trust
15.3

UNDERSTANDING GROUP
BEHAVIOUR
• Group
– Two or more interacting and
interdependent individuals who come
together to achieve particular goals
• formal groups - established by the
organization
• informal groups - occur naturally in the
workplace in response to the need for social
contact
15.4

UNDERSTANDING GROUP
BEHAVIOUR (continued)
• Stages of Group Development
– Forming - people join the group either because of a
work assignment or for some other benefit
• begin to define the group’s purpose, structure, and
leadership
• stage marked by much uncertainty
– Storming - acceptance of the group’s existence
• conflict over who will control the group
– Norming - relationships and a sense of group identity
develop
• group assimilates a common set of expectations of
what defines correct member behaviour
15.5

UNDERSTANDING GROUP
• Stages of Group Development (continued)
– Performing - group structure is functional and
accepted
• group energy has moved to task performance
– Adjourning - group prepares to disband
• attention devoted to wrapping up activities
– Group does not necessarily become more
effective as it moves through the first four
stages
15.6

STAGES OF GROUP
DEVELOPMENT (Exhibit 15.2)
Prestage Stage I
Forming
Stage II
Storming
Stage III
Norming Stage V
Adjourning
Stage IV
Performing

UNDERSTANDING GROUP
• Basic Group Concepts
– Role - set of expected behavior patterns
attributed to someone who occupies a given
position in a social unit
• group members have particular roles
• individuals play multiple roles
– role conflict - individual confronted by
different role expectations
15.8

UNDERSTANDING GROUP
• Basic Group Concepts (continued)
– Norms - acceptable standards or expectations
that are shared by the group’s members
– Conformity - acceptance by group makes some
members susceptible to conformity pressures
– Status - a prestige grading, position, or rank in
a group
15.9

UNDERSTANDING GROUP
– Group Size - effect on behaviour of group depends
upon the type of outcome
• Free rider tendency - group phenomenon in
which individual members reduce their individual
efforts as the size increases
– Group Cohesiveness - degree to which members are
attracted to a group and share the group’s goals
15.10

Strong Increase
in Productivity
Decrease in
Productivity
No Significant Effect
on Productivity
Moderate Increase
in Productivity
RELATIONSHIP BETWEEN COHESIVENESS
AND PRODUCTIVITY (Exhibit 15.4)
High Low
Cohesiveness
AlignmentofGroupand
OrganizationalGoals
LowHigh

UNDERSTANDING GROUP
– Conflict Management
• conflict - perceived incompatible differences
resulting in some form of interference or
opposition
• traditional view - conflict must be avoided
• human relations view - conflict is a natural
and inevitable outcome in any group
15.13

UNDERSTANDING GROUP
– Conflict Management (continued)
• interactionist view - some conflict is
absolutely necessary
• functional conflict - supports the goals of the
work group and improves its performance
• dysfunctional conflict - prevents group from
achieving its goals
15.14

UNDERSTANDING GROUP
– Conflict Management (continued)
• type of conflict
– task conflict - content and goals of the
work
– relationship conflict - interpersonal
relationships
– process conflict - how work gets done
• conflict may be resolved in five ways
15.15

CONFLICT AND GROUP
PERFORMANCE (Exhibit 15.5)
15.16

CONFLICT-RESOLUTION
TECHNIQUES (Exhibit 15.6)
Uncooperative Cooperative
Cooperativeness
Assertiveness
UnassertiveAssertive
15.17
Resolving conflicts by
satisfying one’s
own needs at the
expense of another’s
Forcing
each party giving up
something of valueCompromising
Rewarding conflict by
seeking an advantageous
solution for all parties
Collaborating
withdrawing from or
suppressing them
placing another’s needs
and concerns above your
own
Avoiding Accommodatin
g

UNDERSTANDING GROUP
• Group Decision Making
– Advantages
• Provide more complete information
• Generate more alternatives
• Increase acceptance of solution
• Increase legitimacy
– Disadvantages
• Time consuming
• Minority domination
• Pressures to conform
• Ambiguous responsibility
15.18

UNDERSTANDING GROUP
• Group Decision Making (continued)
– Effectiveness and Efficiency of Group Decisions
• effectiveness depends on criteria of success
• size of group affects effectiveness
– Techniques for Improving Group Decision
Making
• steps must be taken to avoid groupthink - conformity
marked by withholding different or unpopular views
in order to give the appearance of agreement
15.19

TECHNIQUES FOR MAKING MORE
CREATIVE GROUP DECISIONS (Exhibit 15.8)
15.20

UNDERSTANDING GROUP
• Understanding Work Group Behaviour
– External Conditions Imposed on the Group
• formal group is a subsystem of a larger system
• group affected by the overall strategy, authority
structures, formal regulations, resources, performance
management system, and organization culture
• Group Member Resources - task-relevant and intellectual abilities
of individual members
• abilities set parameters on effectiveness of performance
in a group
• positive attributes - sociability and self-reliance
• negative attributes - dominance and unconventionality
15.21

UNDERSTANDING ORUP
• Understanding Work Group Behaviour (continued)
– Group Structure - structural variables include roles,
norms, status, and group size
– Group Processes - include communication, decision
making, leadership, and conflict
• process factors created in the group may have a
positive or negative effect on group performance
– Group Tasks
• complexity - simple tasks are routine and standardized
– complex tasks are novel and non-routine
15.22

GROUP BEHAVIOUR MODEL
(Exhibit 15.9)
External
Conditions
Imposed on
the Group
Group
Member
Resources
Group
Structure
Group
Processes
Performance
and Satisfaction
Group
Tasks

TURNING GROUPS INTO
EFFECTIVE TEAMS
• What Is a Team?
– work team - formal group made up of
interdependent individuals who are
responsible for the attainment of a goal
– work teams are popular in organizations
15.24

WHY ARE WORK TEAMS
POPULAR? (Exhibit 15.10)
WHY USE
TEAMS?
Creates
esprit de corps
Takes advantage
of workforce
diversity
Increases
flexibility
Increases
performance
Allows managers
to do more strategic
Management

TURNING GROUPS INTO
EFFECTIVE TEAMS (continued)
• Types of Teams
– Teams differ in terms of membership
• functional teams - composed of a manager
and her or his employees from one
functional area
• cross-functional teams - members come
different from functional areas
15.26

TURNING GROUPS INTO
• Types of Teams (continued)
– Teams differ in terms of structure
• supervised - under the direction of a manager
• self-managed - operate without a manager
– responsible for a complete work process or
segment
– assumes the responsibilities of managing itself
– organizations plan to expand their use in the
future
15.27

CATEGORIES OF TEAMS
(Exhibit 15.11)
• Product development
• Problem solving
• Reengineering
• Any other organizational
purposes desired
Purpose
• Functional
• Cross-functional
Membership
• Supervised
• Self-managed
Structure
• Permanent
• Temporary
Duration

TURNING GROUPS INTO
• Types of Teams (continued)
– Virtual team - physically dispersed
members are linked by computer
technology
• miss the normal give-and-take of face-to-
face discussions
• tend to be task oriented
15.29

DEVELOPING AND MANAGING
EFFECTIVE TEAMS
• Characteristics of Effective Teams
– Clear Goals - members understand and support
the goals to be achieved
– Relevant Skills - members have the necessary
technical and interpersonal skills
– Mutual Trust - members are confident in each
others’ ability, character, and integrity
– Unified Commitment - loyalty and dedication
to the team
15.30

• Characteristics of Effective Teams (continued)
– Good Communication - messages are readily
understood
– Negotiating Skills - flexibility requires
members to possess these skills
– Appropriate Leadership - provide help in
difficult situations
– Internal and External Support - team requires
a sound infrastructure
15.31

CHARACTERISTICS OF EFFECTIVE
TEAMS (Exhibit 15.12)

• Managing Teams
– Planning - goal determination
• members understand and accept the team’s
goals
– Organizing - clarify authority and
structural issues
• support in the organization’s culture for
employee involvement and autonomy
• must resolve issues of leadership, tasks to be
performed, and assignment of tasks
15.33

• Managing Teams (continued)
– Leading - determine the role that leader will play
– Controlling - performance criteria must reflect
teamwork behaviors
• reward system must reflect team efforts and
performance
– gainsharing - incentive program that shares
the gains of the efforts of employees with
those employees
15.34

Chapter 16
MOTIVATING
EMPLOYEES

LEARNING OBJECTIVES
– Define the motivation process
– Describe three early motivation theories
– Explain how goals motivate people
– Differentiate reinforcement theory from goal-
setting theory
– Identify ways to design motivating jobs
16.2

LEARNING OBJECTIVES
(continued)
• You should be able to: (continued)
– Describe the motivational implications of
equity theory
– Explain the key relationships in expectancy
theory
– Describe current motivation issues facing
managers
– Identify management practices that are likely to
lead to more motivated employees
16.3

WHAT IS MOTIVATION?
• Motivation
– The willingness to exert high levels of effort to reach
organizational goals, conditioned by the effort’s ability to
satisfy some individual need
– effort - a measure of intensity or drive
• goals - effort should be directed toward, and consistent
with, organizational goals
– Need - an internal state that makes certain outcomes
appear attractive
• unsatisfied needs create tensions that stimulate drives
• drives lead to search behavior
16.4

THE MOTIVATION PROCESS
(Exhibit 16.1)
Unsatisfied
Need
Satisfied
Need
Search
Behavior
DrivesTension
Reduction
of Tension

EARLY THEORIES OF
MOTIVATION
• Maslow’s Hierarchy of Needs Theory
– Lower-order needs - largely satisfied externally
• physiological - food, drink, shelter, sexual satisfaction
• safety - security and protection from physical and
emotional harm
– assurance that physiological needs will be satisfied
– Higher-order needs - largely satisfied internally
• social - affection, belongingness, acceptance
• esteem - internal factors like self-respect, autonomy
– external factors like status, recognition, attention
• self-actualization - achieving one’s potential
16.6

MASLOW’S HIERARCHY OF
NEEDS (Exhibit 16.2)
Physiological
Safety
Social
Esteem
Self-
Actualization

EARLY THEORIES OF
MOTIVATION (continued)
• McGregor’s Theory X and Theory Y
– Theory X - assumes that workers have little ambition,
dislike work, want to avoid responsibility, and need to
be closely controlled
– Theory Y - assumes that workers can exercise self-
direction, accept and actually seek out responsibility,
and consider work to be a natural activity
– No evidence that either set of assumptions is valid
– No evidence that managing on the basis of theory Y
makes employees more motivated
16.8

EARLY THEORIES OF
• Herzberg’s Motivation-Hygiene Theory
– Intrinsic characteristics consistently related to job
satisfaction
• Motivator factors increase job satisfaction and
motivation
– Extrinsic characteristics consistently related to job
dissatisfaction
• Hygiene factors don’t motivate employees
– Proposed dual continua for satisfaction and
dissatisfaction
– Theory enjoyed wide popularity
– Theory was roundly criticized
16.9

HERZBERG’S MOTIVATION-
HYGIENE THEORY (Exhibit 16.3)
16.10

CONTRASTING VIEWS OF
SATISFACTION-DISSATISFACTION
(Exhibit 16.4)
Satisfaction No Satisfaction No Dissatisfaction Dissatisfaction
Motivators Hygienes
Satisfaction Dissatisfaction
Herzberg’s View
Traditional View

CONTEMPORARY THEORIES OF
MOTIVATION
• Three-Needs Theory - McClelland
– Need for achievement (nach) - drive to excel, to achieve in relation
to a set of standards, and to strive to succeed
– Need for power (npow) - need to make others behave in
a way that they would not have behaved otherwise
– Need for affiliation (naff) - desire for friendly and
close interpersonal relationships
– Best managers tend to be high in the need for power
and low in the need for affiliation
16.12

• Goal-Setting Theory
– Intention to work toward a goal is a major source of job
motivation
– Specific goals increase performance
– When accepted, lead to higher performance
– Participation in goal setting is useful
– Feedback is useful
• helps identify discrepancies between what has been
accomplished and what needs to be done
• self-generated feedback is a powerful motivator
• goal commitment - theory presupposes that individual is
determined to accomplish the goal
16.13

• Goal-Setting Theory (continued)
– Contingencies in goal-setting theory
• goal commitment - theory presupposes that individual is
determined to accomplish the goal
• self-efficacy - an individual’s belief that s/he is capable of
performing a task
– higher self-efficacy, greater motivation to attain goals
• national culture - theory is culture bound
– main ideas align with North American cultures
– goal setting may not lead to higher performance in other
cultures
16.14

GOAL-SETTING THEORY
(Exhibit 16.5)
16.15

CONTEMPORARY THEORIES
OF MOTIVATION (continued)
• Reinforcement Theory
– Behaviour is solely a function of its
consequences
• Behaviour is externally caused
– Reinforcers - consequences that, when given
immediately following a behaviour, affect the
probability that the behaviour will be repeated
• managers can influence employees’ behaviour by
reinforcing actions deemed desirable
• emphasis in on positive reinforcement, not
punishment
16.16

• Designing Motivating Jobs
– Job Design - the way tasks are combined to
form complete jobs
– Job Enlargement - horizontal expansion of job
• job scope - the number of different tasks required in
a job and the frequency with which these tasks are
repeated
• provides few challenges, little meaning to workers’
activities
• only addresses the lack of variety in specialized jobs
16.17

• Designing Motivating Jobs (continued)
– Job Enrichment - vertical expansion of
job
• job depth - degree of control employees have
over their work
• research evidence has been inconclusive
about the effect of job enrichment on
performance
16.18

– Job Characteristics Model (JCM) - conceptual
framework for analyzing jobs
• jobs described in terms of five core characteristics
– skill variety - degree to which job requires a variety
of activities
– task identity - degree to which job requires
completion of an identifiable piece of work
– task significance - degree to which job has
substantial impact on the lives of other people
– these three characteristics create meaningful work
16.19

– Job Characteristics Model (JCM) (continued)
• jobs described in terms of five core characteristics
(continued)
– autonomy - degree to which job provides
substantial freedom, independence, and discretion
in performing the work
– feedback - degree to which carrying out the job
results in receiving clear information about the
effectiveness with which it has been performed
16.20

JOB CHARACTERISTICS MODEL(Exhibit 16.6)
Core Job
Dimension
s
Skill Variety
Task Identity
Task Significance
Autonomy
Feedback
Experienced
meaningfulness
of the work
Experienced responsibility
for outcomes of work
Knowledge of the actual
results of the work
Critical
Psychological States
High Internal
Work Motivation
High-Quality
Work
Performance
High Satisfaction
with the Work
Low Absenteeism
and Turnover
Personal and
Work Outcomes
Strength of Employee Growth
Need
16.21

GUIDELINES FOR JOB REDESIGN (Exhibit 16.7)
Core Job
Dimensions
Suggested
Actions
Opening Feedback
Channels
Combining Tasks
Task Identity
Skill Variety
Forming Natural
Work Units
Task Significance
Load Vertically Autonomy
Forming Natural
Work Units
Feedback

• Equity Theory
– Proposes that employees perceive what they get from a
job (outcomes) in relation to what they put into it
(inputs)
– Input/outcome ratio compared with the ratios of
relevant others
– Referent (relevant other) may be:
• other - individuals with similar jobs
• a system - includes organizational pay policies and
administrative systems
• self - past personal experiences and contacts
16.23

EQUITY THEORY (Exhibit 16.8)
16.24

• Equity Theory (continued)
– When inequities are perceived, employees act
to correct the situation
• distort either their own or others’ inputs or outputs
• behave in a way to induce others to change their
inputs or outputs
• behave in a way to change their own inputs or
outputs
• choose a different comparison person
• quit their jobs
– Theory leaves some issues unclear
16.25

• Expectancy Theory
– Theory states that an individual tends to act in a certain way based on
the expectation that the act will be followed by a given outcome and
on the attractiveness of that outcome to the individual
– Expectancy (effort-performance linkage) - perceived
probability that exerting a given amount of effort will lead
to a certain level of performance
– Instrumentality (performance-reward linkage) - strength
of belief that performing at a particular level is
instrumental in attaining an outcome
– Valence - attractiveness or importance of the potential
outcome
16.26

SIMPLIFIED EXPECTANCY
MODEL (Exhibit 16.9)
Individual
Effort
Individual
Performance
A
Organizational
Rewards
B
Individual
Goals
C
A = Effort-performance linkage
B = Performance-reward linkage
C = Attractiveness

• Expectancy Theory (continued)
– Theory emphasizes rewards
– No universal principle for explaining what
motivates individuals
• managers must understand why employees view
certain outcomes as attractive or unattractive
– Most comprehensive and widely accepted
explanation of employee motivation
16.28

INTEGRATING CONTEMPORARY
THEORIES OF MOTIVATION (Exhibit 16.10)
16.29

CURRENT ISSUES IN
MOTIVATION
• Motivating a Diverse Workforce
– Flexibility is the key to motivating a diverse
workforce
• Diverse array of rewards necessary to satisfy diverse
personal needs and goals
– Flexible Working Schedule
• compressed workweek - employees work longer
hours per day but fewer days per week
16.30

CURRENT ISSUES IN
• Motivating a Diverse Workforce (continued)
– Flexible work hours (flextime) - employees required to
work a specific number of hours a week but are free to
vary those hours within certain limits
– Job sharing - two or more people split a full-time job
– Telecommuting - employees work at home and are linked to
the workplace by computer and modem
16.31

CURRENT ISSUES IN
• Motivating a Diverse Workforce (continued)
– Cultural Differences in Motivation
• motivation theories developed in the U.S. and validated with
American workers
• may be some cross-cultural consistencies
• Pay-for-Performance
– instead of paying for time on the job, pay is adjusted to reflect some
performance measure
– compatible with expectancy theory
– programs are gaining in popularity
16.32

CURRENT ISSUES IN
• Open-Book Management
– Involve employees in workplace decisions by opening up
the financial statements
– Workers treated as business partners
– Get workers to think like an owner
– May also provide bonuses based on profit improvements
• Motivating the “new workforce”
– Motivating professionals - professionals tend to derive
intrinsic satisfaction from their work and receive high pay
16.33

CURRENT ISSUES IN
• Motivating the “new workforce”
– Motivating Contingent Workers - part-time, contract, or temporary
workers
• less security and stability than permanent employees
• display little identification or commitment to their employers
• hard to motivate contingent workers
• repercussions of mixing permanent and contingent workers when pay
differentials are significant
– Motivating Low-Skilled, Minimum-Wage Employees
• difficult challenge to keep performance levels high
• employee recognition programs
• in service industries, empower front-line employees to address
customers’ problems
16.34

FROM THEORY TO PRACTICE
Recognize
individual
differences
Ensure that goals
are perceived as
attainable
Check the system
for equity
Individualize
rewards
Link rewards
to performance
Suggestions
for
Motivating
Employees
Use goals
Don’t ignore
money
Match people
to jobs

Chapter 17
LEADERSHIP

LEARNING OBJECTIVES
– Explain the difference between managers and
leaders
– Describe the trait and behavioural theories of
leadership
– Explain the Fiedler contingency model
– Contrast the Hersey-Blanchard and leader
participation models of leadership
– Summarize the path-goal model
17.2

LEARNING OBJECTIVES
(continued)
– Contrast transactional and transformational
leaders
– Describe the main characteristics of charismatic,
visionary, and team leaders
– Explain the various sources of power a leader
might possess
– Describe how leaders can create a culture of trust
– Explain gender and cultural differences in
leadership
17.3

LEADERSHIP
• Leader
– Someone who can influence others and who has
managerial authority
• Leadership
– Process of influencing a group toward the
achievement of goals
– A heavily researched topic
17.4

EARLY LEADERSHIP
THEORIES
• Trait Theories
– Characteristics that might be used to
differentiate leaders from non-leaders
– Proved to be impossible to identify a set of
traits that would always differentiate leaders
from non-leaders
17.5

EARLY LEADERSHIP
THEORIES (continued)
• Behavioural Theories
– Identified behaviours that differentiated effective leaders
from ineffective leaders
– University of Iowa Studies - Kurt Lewin
• explored three leadership styles
– autocratic - leader dictated work methods
– democratic - involved employees in decision making
• used feedback to coach employees
– laissez-faire - gave the group complete freedom
17.6

EARLY LEADERSHIP
• Behavioural Theories (continued)
– Ohio State Studies - identified two dimensions of
leadership
• initiating structure - extent to which a leader was likely to
define and structure her/his role and the roles of group
members to seek goal attainment
• consideration - extent to which a leader had job
relationships characterized by mutual trust and respect
for group members’ ideas and feelings
• findings - high-high leaders achieved high group task
performance and satisfaction
17.7

EARLY LEADERSHIP
– University of Michigan Studies - identified two
dimensions of leadership
• employee oriented - emphasized interpersonal
relationships
• production oriented - emphasized the technical or
task aspects of the job
17.8

EARLY LEADERSHIP
– Managerial Grid - two-dimensional grid that provides a
framework for conceptualizing leadership style
• dimensions are concern for people and concern for
production
• five management styles described
– impoverished (1,1) - minimum effort to reach goals
and sustain organization membership
– task (9,1) - arrange operations to be efficient with
minimum human involvement
– middle-of-the-road (5,5) - adequate performance by
balancing work and human concerns
17.9

THE MANAGERIAL GRID
(Exhibit 17.3)
5,5
1,9
ConcernforPeople
9,9
9,11,
1
Country
Club
Team
Management
Impoverished
Management
Middle-of-the
Road
Management
Task
Management
17.10

EARLY LEADERSHIP
– Managerial Grid (continued)
• five management styles (continued)
– country club (1,9) - attention to human needs and
creation of comfortable work environment
– team (9,9) - committed people motivated by a
common purpose, trust, and mutual respect
• concluded that managers should use (9,9) style
17.11

CONTINGENCY THEORIES
OF LEADERSHIP
• Basic Assumptions
– leader effectiveness depends on the
situation
– must isolate situational conditions or
contingencies
17.12

OF LEADERSHIP (continued)
• Fiedler Model
– Effective group performance depends on
matching the leader’s style and the degree to
which the situation permits the leader to control
and influence
– Least-Preferred Coworker (LPC) - measures the
leader’s style of interacting with subordinates
• high LPC - least preferred coworker described
in relatively favorable terms
• low LPC - least preferred coworker described
in relatively unfavourable terms
17.13

• Fiedler Model (continued)
– Model assumes that leader’s style was always the same and
could not change in different situations
– Three contingency factors that identify eight possible
leadership situations that vary in favourability
• leader-member relations - degree of confidence, trust,
and respect members had for leader
• task structure - degree to which job assignments were
formalized and had procedures
• position power - degree of influence a leader had over
power-based activities
17.14

FINDINGS OF THE FIEDLER MODEL (Exhibit 17.4)
Category
Leader-Member
Relations
Task Structure
Position Power
I II III IV V VI VII VIII
Good Good Good Good Poor Poor Poor Poor
High High Low Low High High Low Low
Strong Weak Strong Weak Strong Weak Strong Weak
Favourable UnfavourableModerate
Good
Poor
Performance
Relationship
Oriented
Task
Oriented
17.15© 2003 Pearson Education Canada In.c

• Fiedler Model (continued)
– Results indicated that:
• task-oriented leaders performed better in
situations that are very favourable to them and
in situations that are very unfavourable
• relationship-oriented leaders performed better in
situations that are moderately favourable
– Implications for improving leadership
• place leaders in situations suited to their style
• change the situation to fit the leader
17.16

• Hersey and Blanchard’s Situational Leadership Theory
– appropriate leadership style is contingent on the
followers’ readiness
• readiness - extent to which people have the ability and
willingness to accomplish a specific task
– reflects the reality that it is followers who accept or
reject the leader
– based on two leadership dimensions
• task behaviours
• relationship behaviours
17.17

• Situational Leadership Theory (continued)
– Four leadership styles defined by the two
dimensions
• Telling - leader defines roles and tells people how to do
their jobs
• Selling - leader is both directive and supportive
• Participating - leader and follower make decisions
• Delegating - leader provides little direction or support
– Tests of the theory have yielded disappointing
results
17.18

HERSEY AND BLANCHARD’S SITUATION
LEADERSHIP MODEL (Exhibit 17.5)
17.19

• Leader-Participation Model
– Victor vroom and associates - relate leadership
behavior and participation to decision making
– Provides a sequential set of rules to follow in
determining the form and amount of participation in
decision making
– Provides an excellent guide to help managers
choose an appropriate leadership style to fit the
situation
17.20

• Leader-Participation Model (continued)
– Five leadership styles
• Decide - leader makes decision alone, either announcing or selling to
group
• Consult Individually - leader makes decision after obtaining feedback
from group members individually
• Consult Group - leader makes decision after obtaining feedback from
group members in meeting
• Facilitate - leader, acting as facilitator, defines problem and
boundaries for decision-making after presenting it to group
• Delegate - leader permits group to make decision within prescribed
limits
17.21

• Path-Goal Model
– Robert House - leader’s job is to assist followers in attaining
their goals that are compatible with the overall objectives of
the group or organization
– Leader behaviour is:
• acceptable to the degree that group views it as a source of
immediate or future satisfaction
• motivational to the extent that it:
– makes satisfaction of subordinates’ needs contingent
on effective performance
– provides the coaching, guidance, support, and rewards
necessary for effective performance
17.22

PATH-GOAL THEORY (Exhibit 17.8)
Environmental
Contingency Factors
• Task Structure
• Formal Authority System
• Work Group
Leader
Behaviour
• Directive
• Supportive
• Participative
• Achievement oriented
Outcomes
•Performance
• Satisfaction
Subordinate
Contingency Factors
• Locus of Control
• Experience
• Perceived Ability

• Path-Goal Model (continued)
– Identifies four leadership behaviours
• Directive - describes tasks, sets schedules, and
offers guidance on task performance
• Supportive - shows concern for subordinates
• Participative - relies on subordinates’ suggestions
when making a decision
• Achievement oriented - sets challenging goals
– Assumes that a leader can display any or all of
the behaviours depending on the situation
17.24

CUTTING-EDGE APPROACHES
TO LEADERSHIP
• Transformational-Transactional Leadership
– Transactional - leaders who guide or motivate
their followers in the direction of established
goals by clarifying role and task requirements
– Transformational - inspire followers to
transcend their own self-interests for the good
of the organization
17.25

TO LEADERSHIP (continued)
• Charismatic-Visionary Leadership
– Charismatic - enthusiastic, self-confident
leader whose personality and actions influence
people
– Visionary - ability to create and articulate a
realistic, credible, and attractive vision that
improves the present situation
17.26

• Team Leadership
– Role of team leader different from the traditional
leadership role
– Requires skills such as:
• patience to share information
• ability to trust others and give up authority
• understanding when to intervene
– Team leader’s job focuses on:
• managing the team’s external boundary
• facilitating the team process
17.27

• Team Leadership (continued)
– Team leaders serve as:
• liaisons with external constituencies - clarify others’
expectations of the team, gather information from the outside,
and secure needed resources
• troubleshooters - ask penetrating questions, help team talk
through problems, and gather needed resources
• conflict managers - identify source of conflict, who is involved,
and find resolution options
• coaches - clarify role expectations, teach, offer support, and
whatever else is necessary to keep performance levels high
17.28

SPECIFIC TEAM LEADERSHIP
ROLES (Exhibit 17.9)
Coach
Troubleshooter
Conflict
manager
Team
Leadership
Roles
Liaison with
external
constituencies

LEADERSHIP
• Leaders and Power
– Five sources of power
• legitimate - authority associated with a position
• coercive - ability to punish or control
• reward - ability to give positive benefits
• expert - influence based on special skills or
knowledge
• referent - arises because of a person’s desirable
resources or personal traits
17.30

LEADERSHIP (continued)
• Creating a Culture of Trust
– Credibility - honesty, competence, and ability to inspire
• Honesty is the number one characteristic of admired leaders
– Trust - belief in the integrity, character, and ability of the leader
• confident that rights and interests will not be abused
• important for empowering subordinates
• trend toward expanding non-authority relationships within and
between organizations widens the need for trust
17.31

BUILDING TRUST
Practice
openness
Tell the
truth
Maintain
confidences
Show
consistency
Fulfill your
promises
Trust
Speak your
feelings
Demonstrate
competence
Be fair

• Leading Through Empowerment
– Managers increasingly leading by empowerment
• Gender and Leadership
– Gender provides behavioural tendencies in leadership
– Women adopt more democratic style, share power and
information, and attempt to enhance followers’ self-
worth
– Men more directive, command-in-control style
17.33

• Gender and Leadership (cont.)
– Is different better?
• when rated by peers, employees, and bosses, women
executives score better than male counterparts
• explanations of difference in effectiveness include:
– flexibility, teamwork, trust, and information sharing
are replacing rigid structures, competitive
individualism, control, and secrecy
– best managers listen, motivate, and provide support
– women do the above better than men
• there is still no “one best” leadership style
17.34

• Leadership Styles in Different Countries
– Effectiveness of leadership style influenced by national
culture
• leaders constrained by the cultural conditions their followers
have come to expect
– Most leadership theories developed in the U.S.
• emphasize follower responsibilities rather than rights
• assume self-gratification rather than commitment to duty
• assume centrality of work and democratic value orientation
• stress rationality rather than spirituality
17.35

• Sometimes Leadership is Irrelevant!
– Leader behaviours may be irrelevant in some situations
– Factors that reduce leadership importance include:
• follower characteristics - experience, training,
professional orientation, or need for independence
replace the need for leader support and ability to reduce
ambiguity
• job characteristics - unambiguous and routine tasks, or
tasks that are intrinsically satisfying, place fewer
demands on leaders
• organizational characteristics - explicit goals, rigid rules
and procedures, and cohesive work groups can substitute
for formal leadership
17.36

Chapter 18
FOUNDATIONS
OF
CONTROL

LEARNING OBJECTIVES
– Define control
– Describe the three approaches to control
– Explain why control is important
– Describe the control process
– Distinguish among the three types of control
– Describe the qualities of an effective control
system
18.2

LEARNING OBJECTIVES
(continued)
– Discuss the contingency factors that influence
the design of an organization’s control system
– Identify how controls need to be adjusted for
cultural differences
– Explain how three contemporary issues -
workplace privacy, employee theft, and
workplace violence - affect control
18.3

WHAT IS CONTROL?
• Control
– The process of monitoring activities to ensure
that they are being accomplished as planned
and of correcting significant deviations
– Control systems are judged in terms of how
well they facilitate goal achievement
• Three basic approaches to control
– Market control - emphasizes the use of external
market mechanisms to establish standards of
performance
18.4

WHAT IS CONTROL?
(continued)
• Three basic approaches to control
(continued)
– Bureaucratic control - emphasizes
organizational authority and relies on
administrative rules and procedures
– Clan control - behaviour regulated by shared
values, traditions, and other aspects of
organizational culture
18.5

WHY IS CONTROL IMPORTANT?
• Control is the Final Link in the Management
Process
– Provides the critical link back to planning
– Only way managers know whether
organizational goals are being met
• Permits delegation of authority
– Fear that employees will do something wrong
for which the manager will be held responsible
– Provides information and feedback on employee
performance
18.6

Structure
Human Resource
Management
Organizing
THE PLANNING-CONTROLLING
LINK (Exhibit 18.2)
Standards
Measurements
Comparisons
Actions
Controlling
Goals
Objectives
Strategies
Plans
Planning
Motivation
Leadership
Communication
Individual and
Group Behaviour
Leading

THE CONTROL PROCESS
(Exhibit 18.3)
18.8

THE CONTROL PROCESS
• Controlling is a three-step process
• Assumes that performance standards already exist
– specific goals are created in the planning
process
• Measuring
– How We Measure
• personal observation - permits intensive
coverage
– Management By Walking Around
(MBWA)
– drawbacks - subject to personal biases
18.9

THE CONTROL PROCESS
(continued)
• Measuring (continued)
– How We Measure (continued)
• statistical reports - numerical data are easy to visualize and
effective for showing relationships
– drawbacks - not all operations can be measured
• oral reports - includes meetings, telephone calls
– may be best way to control work in a virtual
environment
– technology permits creation of written record from
oral report
– drawbacks - filtering of information
18.10

THE CONTROL PROCESS
(continued)
– How We Measure (continued)
– written reports - often more comprehensive
and concise than oral reports
• usually easy to file and retrieve
– comprehensive control efforts should use all
four approaches
18.11

THE CONTROL PROCESS
(continued)
– What We Measure
• what we measure more critical than how we measure
• control criteria applicable to any management
situation:
– employee satisfaction, absenteeism, and turnover
– keeping costs within budgets
– Control system needs to recognize the diversity of
activities
– Some activities difficult to measure in quantifiable
terms
18.12

THE CONTROL PROCESS
(continued)
• Comparing
– Determines the degree of variation between
actual performance and standard
– Acceptable range of variation - deviations that
exceed this range become significant
18.13

DEFINING THE ACCEPTABLE
RANGE OF VARIATION (Exhibit 18.4)
Acceptable
Upper Limit
Standard
Acceptable
Lower Limit
MeasurementofPerformance
Acceptable
Range of
Variation
t t+1 t+2 t+3 t+4 t+5
Time Period (t)

CANUCKBREW’S SALES
PERFORMANCE FOR JULY (Exhibit 18.5)
Brand
Alexander Keith
Big Rock Warthog
Okanagan Spring
Moosehead
Olands Export Ale
McAuslan’s
Granville Island
Unibroue’s
Nelson After Dark
Total cases
Standard*
1,075
630
800
620
540
160
225
80
170
4,300
Actual*
913
634
912
622
672
140
220
65
286
4,464
Over (under)*
(162)
4
112
2
132
(20)
(5)
(15)
116
164
* hundreds of cases

THE CONTROL PROCESS
(continued)
• Taking Managerial Action
– Correct Actual Performance - action taken
when the performance variation is
unsatisfactory
• immediate corrective action - corrects problems
at once to get performance back on track
• basic corrective action - identifies reason for
performance variation
– Revise the Standard - variance results from an
unrealistic standard
• standard, not performance, needs correction
18.16

MANAGERIAL DECISIONS IN THE
CONTROL PROCESS (Exhibit 18.6)
18.17

TYPES OF CONTROL
• Feedforward Control
– prevents anticipated problems
– most desirable type of control
– requires timely and accurate information
that often is difficult to get
• Concurrent Control
– takes place while activity is in progress
– corrects problem before it becomes too
costly
– best-known form is direct supervision
18.18

TYPES OF CONTROL
(continued)
• Feedback Control
– Takes place after the activity is done
– Problems may already have caused damage
or waste
– The most popular type of control
– Feedback has two advantages
• provides meaningful information on the
effectiveness of planning
• can enhance employee motivation
18.19

TYPES OF CONTROL (Exhibit 18.7)
Input OutputProcesses
Anticipates
problems
Feedforward
Control
Corrects
problems after
they occur
Feedback
Control
Corrects
problems as
they happen
Concurrent
Control

Flexibility
QUALITIES OF AN EFFECTIVE
CONTROL SYSTEM (Exhibit 18.8)
Strategic
Placement
Understandability
Reasonable
Criteria
EFFECTIVE
CONTROL
SYSTEM
TimelinessMultiple
Criteria
Corrective
Action Accuracy
Economy
Emphasis on
Exceptions

CONTINGENCY FACTORS IN THE DESIGN
OF CONTROL SYSTEMS (Exhibit 18.9)
18.22

IMPLICATIONS FOR
MANAGERS
• Adjusting Controls for Cultural Differences
– Methods of controlling people and work can be quite
different in other countries
– In technologically advanced nations, controls are
indirect
– In less technologically advanced nations, controls are
more direct
– Laws in different countries provide different constraints
on corrective action
– Data used for controlling may not be comparable in
different countries
18.23

CONTROL
• Workplace Privacy
– Employers have the right to monitor employee
communications, examine employee computers
and files, and use surveillance cameras
– Reasons for monitoring include prevention of:
• recreational on-the-job Web surfing
• creation of hostile work environments with e-mail
• security leaks of critical information
18.24

CONTROL (continued)
• Workplace Privacy (continued)
– Companies are developing and enforcing
workplace monitoring policies
• develop unambiguous computer usage policy
• inform employees that computers may be
monitored
• provide clear guidelines on acceptable use of
company e-mail system and the Web
18.25

WORKPLACE MONITORING
(Exhibit 18.10)
Track telephone calls (numbers and time spent) 39%
Store and review employee e-mail messages 27%
Store and review computer files 21%
Log computer time and keystrokes entered 15%
Record and review telephone conversations 11%
Store and review voice-mail messages 6%
18.26

CONTROL (continued)
• Employee Theft
– Unauthorized taking of company property by
employees for their personal use
– Is an escalating problem in all types of
organizations
– Different proposals to explain employee theft
18.27

CONTROL MEASURES FOR DETERRING OR
REDUCING EMPLOYEE THEFT (Exhibit 18.11)
18.28

CONTROL (continued)
• Workplace Violence
– Many factors contribute to workplace violence including:
• employee work driven by time, numbers, and crises
• rapid and unpredictable change
• destructive communication style of manager
• authoritarian leadership
• defensive attitude
• double standards
• unresolved grievances
• emotionally troubled employees
• repetitive, boring work
18.29

Chapter 19
OPERATIONS
AND VALUE CHAIN
MANAGEMENT

LEARNING OBJECTIVES
– Describe the role of the transformation process
in operations management
– Explain why operations management is
important to all types of organizations
– Define value chain management
– Discuss the goal of value chain management
– Explain the organizational and managerial
requirements for value chain management
19.2

LEARNING OBJECTIVES
(continued)
– Describe the benefits of and obstacles to value
chain management
– Discuss technology’s role in operations
management
– Describe how quality affects operations
management
– Explain ISO 9000 and Six Sigma
19.3

WHAT IS OPERATIONS
MANAGEMENT?
• Operations Management
– The design, operation, and control of the
transformation process that converts such
resources as labor and raw materials into goods
and services that are sold to customers
– Every organization has an operations system
that creates value by transforming inputs into
outputs
19.4

THE OPERATIONS SYSTEM
(Exhibit 19.1)
• People
• Technology
• Capital
• Equipment
• Materials
• Information
Inputs Outputs
• Goods
• ServicesTransformation
Process

WHY IS OPERATIONS
MANAGEMENT IMPORTANT?
• Encompasses Services and Manufacturing
– Manufacturing organization - produces physical
goods
– Service organization - produces non-physical outputs
in the form of services
• Managing productivity
– Productivity - overall output of goods or services
divided by the inputs needed to generate that output
– Increasing productivity is key to global competitiveness
– Productivity is a composite of people and operations
variables
19.6

DEMING’S 14 POINTS FOR
IMPROVING PRODUCTIVITY
(Exhibit 19.2)
19.7

VALUE CHAIN MANAGEMENT
• What is Value Chain Management?
– Value - performance characteristics,
features, and attributes, and any other
aspects of goods and services for which
customers are willing to give up
resources
– organizations must provide value to
attract and keep customers
• value provided through the transformation of raw
materials into some product or service that end-users
need where, when, and how they want it
19.8

(continued)
• What is Value Chain Management? (continued)
– value chain - entire series of work activities that add
value at each step of the transformation process
– value chain management - process of managing an
entire sequence of activities along the entire value chain
• is externally oriented
• is effectiveness oriented and aims to create the
highest value for customers
– supply chain management - is internally oriented
19.9

(continued)
• Goal of Value Chain Management
– Create a value chain strategy that meets and exceeds customers’
needs
• Recognizes that ultimately customers are the ones with power
– Create a full and seamless integration among all members of the
chain
• sequence of participants work together as a team
• each adds a component of value to the overall process
• the better the collaboration among chain participants, the better
the customer solutions
19.10

(continued)
• Requirements for Value Chain Management
– Business model - strategic design for how a company
intends to profit from its broad array of strategies,
processes, and activities
– Coordination and Collaboration - comprehensive and
seamless integration among all members of the chain
– Technology Investment - information technology can
be used to restructure the value chain to serve end-users
19.11

(continued)
• Requirements for Value Chain Management (continued)
– Organizational Processes - the way that organizational work is
done
• must examine core competencies to determine where value is
being added
• non-value-adding activities should be eliminated
• processes must change in the following ways:
– better demand forecasting is necessary
– selected functions may need to be done collaboratively
– new metrics required for evaluating performance along the
chain
19.12

(continued)
(continued)
– Leadership - outlines expectations for organization’s
pursuit of value chain management
– Employees/Human Resources
• flexibility in the design of jobs
– jobs should be designed around work processes
that link functions involved in creating value
• hiring of workers who have the ability to learn and
adapt
• significant investments in continual and ongoing
employee training
19.13

(continued)
(continued)
– Organizational Culture and Attitudes - important for
employees to have favorable attitudes regarding
sharing, collaborating, openness, flexibility, mutual
respect, and trust
– Benefits of Value Chain Management
– improved customer service - the major benefit
– cost savings
– accelerated delivery times
– improved quality
19.14

THE REQUIREMENTS FOR SUCCESSFUL VALUE
CHAIN MANAGEMENT
Technology
Investment
Organizational
Culture and
Attitudes
Employees
Organizational
Processes
Leadership
Value
Chain
Strategy
Coordination and
Collaboration

(continued)
• Obstacles to Value Chain Management
– Organizational Barriers - among the most difficult
• include refusal or reluctance to share information,
shake up the status quo, and deal with security issues
– Cultural Attitudes
• lack of trust - reluctance to share information,
capabilities, and processes
• too much trust - leads to theft of intellectual property
– intellectual property - proprietary company
information that is critical to competitiveness
• collaboration results in a loss of control
19.16

(continued)
• Obstacles to Value Chain Management (continued)
– Required Capabilities - essential to capturing and
exploiting the value chain
• coordination and collaboration
• ability to configure products to satisfy customers
• ability to educate internal and external partners
– People - must be committed to value chain management
• must be flexible
• must be willing to expend incredible amounts of
time and energy
• experienced managers a critical resource
19.17

OBSTACLES TO SUCCESSFUL VALUE
CHAIN MANAGEMENT (Exhibit 19.5)
Cultural
Attitudes
Organizational
Barriers
Required
Capabilities
People
Obstacles to
Value Chain
Management

CURRENT ISSUES IN
OPERATIONS MANAGEMENT
• Technology’s Role in E-Manufacturing
– Smart companies trying to harness web
technology to improve operations management
– Link plant-floor automation with enterprise-
wide business network systems
– Technology is helping to reduce manufacturing
costs
19.19

CURRENT ISSUES IN
(continued)
• Quality Initiatives
– Strategic initiatives that promote quality and continuous
improvement are critical to manufacturing excellence
– Quality - the ability of a product or service to reliably
do what it’s supposed to do and to satisfy customer
expectations
– Planning for quality - need quality improvement goals
and strategies to achieve those goals
– Organizing and Leading for Quality - cross-functional
and self-directed work teams
19.20

CURRENT ISSUES IN
(continued)
• Quality Initiatives (continued)
– Controlling for Quality - monitor and
evaluate the progress of quality
improvement efforts
• e.g., standards for inventory control, defect
rate, and raw materials procurement
• defect prevention rather than defect detection
is a priority
– quality is the responsibility of all employees
19.21

CURRENT ISSUES IN
(continued)
• Quality Goals
– ISO 9000 - series of international quality
management standards proposed by the
International Organization for
Standardization
• uniform guidelines for processes to ensure
that products conform to customer
requirements
• internationally recognized
19.22

REASONS FOR PURSUING ISO
9000 CERTIFICATION
Competitive
pressures
Customer
demands and
expectations
Corporate
strategy
Production
costs
Quality
ISO 9000
certification
useful for:
Market
advantage

CURRENT ISSUES IN
(continued)
• Quality Goals (continued)
– Six Sigma - a quality standard that
establishes a goal of no more than 3.4
defects per million units or procedures
– Is essentially a zero-defects standard
• quality-driven businesses use it to judge their
suppliers
19.24

Chapter 20
CONTROLLING FOR
ORGANIZATIONAL
PERFORMANCE

LEARNING OBJECTIVES
– Define organizational performance
– Explain why measuring organizational performance
is important
– Describe the different organizational performance
measures
– Identify financial control tools used to monitor and
measure organizational performance
– Explain how a management information system can
be used as a tool for monitoring and measuring
organizational performance
20.2

LEARNING OBJECTIVES
(continued)
– Describe the balanced scorecard approach to
monitoring and measuring organizational
performance
– Tell how benchmarking of best practices can be
used for monitoring and measuring organizational
performance
– Discuss the manager’s role in helping organizations
achieve a high level of performance
20.3

ORGANIZATIONAL
PERFORMANCE
• What is Organizational Performance?
– Performance - the end result of an activity
– Organizational performance - accumulated
end results of all the organization’s work
processes and activities
20.4

ORGANIZATIONAL
PERFORMANCE (continued)
• Why is Measuring Organizational Performance
Important?
– Managers need to understand the factors that
contribute to high organizational performance
– Better Asset Management
• asset management - process of acquiring,
managing, renewing, and disposing of assets
20.5

ORGANIZATIONAL
• Why is Measuring Organizational
Performance Important? (continued)
– Increased Ability to Provide Customer Value - must
monitor value obtained by customers
– Impact on Organizational Reputation - strong
reputation leads to greater consumer trust and
ability to command premium pricing
– Improved Measures of Organizational Knowledge
• organizational knowledge - knowledge created by
collaborative information sharing and social
interaction leading to appropriate action
20.6

WHY IS MEASURING ORGANIZATIONAL
PERFORMANCE IMPORTANT? (Exhibit 20.1)
Increased Ability
To Provide
Customer Value
Better
Asset
Management
Impact on
Organizational
Reputation
Improved
Measures of
Organizational
Knowledge
Why
Measure
Organizational
Performance?

ORGANIZATIONAL
• Measures of Organizational Performance
– Organizational Productivity
• productivity - overall output of goods or
services produced divided by the inputs needed
to generate that output
• organizational productivity - a measure of how
efficiently employees do their work
20.8

ORGANIZATIONAL
• Measures of Organizational Performance
(continued)
– Organizational Effectiveness - measure of how
appropriate organizational goals are and how well
an organization is achieving those goals
– Industry Rankings - numerous industry and
company rankings
20.9

TYPES OF PERFORMANCE
CONTROL TOOLS
Information
Controls
Financial
Controls
Balanced
Scorecard
Approach
Benchmarking
Best Practices
Approach
Performance
Control
Tools

TOOLS FOR MONITORING AND
MEASURING ORGANIZATIONAL
PERFORMANCE
• Financial Controls
– Traditional Financial Control Measures
• taken from organization’s main financial statements
• a number of financial ratios used in organizations
– liquidity ratios - organization’s ability to meet its current debt
obligations
– leverage ratios - use of debt to finance assets and ability to meet
interest payments
– activity ratios - efficiency of use of firm’s assets
– profitability ratios - effectiveness with which assets used to
generate profits
20.11

POPULAR FINANCIAL
RATIOS (Exhibit 20.2)
20.12

• Financial Controls (continued)
– Traditional Financial Control Measures (continued)
• budgets provide quantitative standards against which to
measure and compare resource consumption
– Other Financial Control Measures - increasing popularity
• Economic Value Added (EVA) - economic value created
with the firm’s assets less any capital investments made by
the firm in its assets
• Market Value Added (MVA) - stock market’s estimate of
the value of the firm’s past and expected capital investment
projects
20.13

• Information Controls
– Management Information Systems - used to provide
management with needed information on a regular
basis
• provides information, not merely data
– data - raw, unanalyzed facts
– information - analyzed and processed data
• organizes data in a meaningful way
• can access the information in a reasonable amount of
time
20.14

• Information Controls (continued)
– How Are Information Systems Used in Controlling?
• managers need information about:
– what is happening
– what are performance standards
– acceptable ranges of variation
– appropriate courses of action
20.15

• Balanced Scorecard Approach
– Performance measurement tool that examines four areas
• financial
• customer
• internal processes
• people/innovation/growth assets
– Determine whether goals in each area are being met
– Focus is still on areas that drive the organization’s success
• scorecards reflect organizational strategies
20.16

• Benchmarking of Best Practices
– Benchmarking - search for the best practices among
other organizations that lead to their superior
performance
– Used to identify performance gaps and potential areas
of improvement
– Look for internal best practices that can be shared
20.17

STEPS TO SUCCESSFULLY IMPLEMENTING AN
INTERNAL BENCHMARKING BEST PRACTICES
PROGRAM
Connect best practices
to strategies and goals
Identify best practices
throughout the organization
Develop best practices
reward and recognition systems
Communicate best practices
throughout the organization
Create best practices
knowledge sharing system
Nurture best practices
on an ongoing basis

MANAGER’S ROLE IN HELPING
ORGANIZATIONS ACHIEVE
HIGH PERFORMANCE
• Help Members Make Right Choices During
Change
– Provide direction by answering employees’
questions
– Define what change means for employees
– Describe how performance will be evaluated
– Describe tools and support that will be provided
20.19

HIGH PERFORMANCE (continued)
• Design Performance Management Systems
– Identify appropriate performance measures
– Addresses common performance measurement
problems
– What gets measured gets done
– Address common problems that plague
performance measurement
20.20

COMMON PERFORMANCE MEASURING
AND REPORTING PROBLEMS
Conflicting
reports
Failure
to
customize
No links between
performance
data and goals
Unrelated
sources of
data
Common
Problems
Overly
complex
measures
Confusing
charts and
graphs
Too
much
detail

HIGH PERFORMANCE (continued)
• Move From Ideas To Action
– Develop great ideas
– Think of these ideas as things that can
actually be done
– Map out the entire implementation
process from conception to delivery
20.22

MANAGER’S ROLE IN
ACHIEVING HIGH
PERFORMANCE (Exhibit 20.4)
Help employees
move from
ideas to
action
Achieving High
Levels of
Performance
Help organizational
members make
right choices
during change
Design an
appropriate
performance
management
system

Introduction to Management by shas production

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