1) A manager coordinates work activities to accomplish organizational goals through and with other people. Managers are classified as first-line, middle, or top based on their level in a traditionally structured organization. 2) Management involves coordinating work through four primary functions: planning, organizing, leading, and controlling. The goal is to complete work efficiently and effectively. 3) Managers need technical, human, and conceptual skills. Technical skills are most important for lower-level managers, while human and conceptual skills are important at all levels.

1. Who Are Managers?
A manager is someone who works with and through other people by coordinating
their work activities in order to accomplish organizational goals. That may mean
coordinating the work of a departmental group, or it might mean supervising a
single person. It could involve coordinating the work activities of a team
composed of people from several different departments or even people outside
the organization such as temporary employees or employees who work for the
organization's suppliers.
Classification of Managers
For traditionally structured organizations—that is, those organizations in which
the number of employees is greater at the bottom than at the top (shaped like a
pyramid) managers are classified as first-line, middle, or top.
First-line managers are the lowest level of management and manage the work of
non-managerial individuals who are involved with the production or creation of
the organization's products. They're often called supervisors but may also be
called line managers, office managers, or even foremen.
Middle managers include all levels of management between the first-line level
and the top level of the organization. These managers manage the work of first-
line managers and may have titles such as department head, project leader,
plant manager, or division manager.
At or near the top of the organization are the top managers, who are responsible
for making organization-wide decisions and establishing the plans and goals that
affect the entire organization. These individuals typically have titles such as
executive vice president, president, managing director, chief operating officer,
chief executive officer, or chairman of the board.
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2. What is Management?
Management is a process of coordinating work activities so that they are
completed efficiently and effectively with and through other people.
The process represents the ongoing functions or primary activities engaged in by
managers. These functions are typically labeled planning, organizing, leading,
and controlling.
Management involves the efficient and effective completion of organizational
work activities, or at least that's what managers aspire to do.
Efficiency refers to getting the most output from the least amount of inputs.
Because managers deal with scarce inputs—including resources such as people,
money, and equipment—they are concerned with the efficient use of those
resources.
From this perspective, efficiency is often referred to as "doing things right"—that
is, not wasting resources. However, it's not enough just to be efficient.
Management is also concerned with being effective, completing activities so that
organizational goals are attained. Effectiveness is often described as "doing the
right things"—that is, those work activities that will help the organization reach its
goals. Management is concerned, then, not only with getting activities completed
and meeting organizational goals (effectiveness) but also with doing so as
efficiently as possible. In successful organizations, high efficiency and high
effectiveness typically go hand in hand. Poor management is most often due to
both inefficiency and ineffectiveness or to effectiveness achieved through
inefficiency.
Management Functions and Process
The management functions have been condensed down to four basic and very
important functions: planning, organizing, leading, and controlling. Let's briefly
define what each of these management functions encompasses.
The planning function involves the process of defining goals, establishing
strategies for achieving those goals, and developing plans to integrate and
coordinate activities.
Managers are also responsible for arranging work to accomplish the
organization's goals. We call this function organizing. It involves the process of
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.
Every organization includes people, and management's job is to work with and
through people to accomplish organizational goals. This is the leading function.
When managers motivate subordinates, influence individuals or teams as they
work, select the most effective communication channel, or deal in any way with
employee behavior issues, they are leading.
The final management function managers perform is controlling. After the goals
are set and the plans are formulated (planning), the structural arrangements
determined (organizing), and the people hired, trained, and motivated (leading),
there has to be some evaluation of whether things are going as planned. To
ensure that work is going as it should, managers must monitor and evaluate
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3. performance. Actual performance must be compared with the previously set
goals. If there are any significant deviations, it's management's job to get work
performance back on track. This process of monitoring, comparing, and
correcting is what we mean by the controlling function.
Management Skills
Managers need three essential skills or competencies.
Technical skills include knowledge of and proficiency in a certain specialized
field, such as engineering, computers, accounting, or manufacturing. These skills
are more important at lower levels of management since these managers are
dealing directly with employees doing the organization's work.
Human skills involve the ability to work well with other people both individually
and in a group. Because managers deal directly with people, this skill is crucial!
Managers with good human skills are able to get the best out of their people.
They know how to communicate, motivate, lead, and inspire enthusiasm and
trust. These skills are equally important at all levels of management.
Conceptual skills are the skills managers must have to think and to
conceptualize about abstract and complex situations. Using these skills,
managers must be able to see the organization as a whole, understand the
relationships among various subunits, and visualize how the organization fits into
its broader environment. These skills are most important at the top management
levels. Below diagram shows the relationship of these skills and the levels of
management.
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4. Management Roles
Henry Mintzberg, a prominent management researcher, says that what
managers do can best be described by looking at the roles they play at work.
From his study of actual managers at work, Mintzberg developed a
categorization scheme for defining what managers do. He concluded that
managers perform 10 different but highly interrelated roles. The term
management roles refers to specific categories of managerial behavior. As
shown below, Mintzberg's 10 managerial roles can be grouped as those primarily
concerned with interpersonal relationships, the transfer of information, and
decision making
.
CATEGORY ROLE ACTIVITY
INFORMATIONAL  MONITOR Seek and receive information, scan periodicals and reports, maintain
 DISSEMENATOR personal contacts.
 SPOKEPERSON Forward information to other organizational members, send memos
and reports, make phone calls.
Transmit information to outsiders through speeches, reports and
memos
INTERPERSONAL  FIGUREHEAD Perform ceremonial and symbolic duties such as greeting visitors,
 LEADER signing legal documents.
 LIAISON Direct and motivate subordinates, train, counsel, and communicates
with subordinates.
Maintain information links both inside and outside the organization;
use emails, phone calls and meetings.
DECISIONAL  ENTERPRENUER Initiates improvement projects, identify new ideas, delegate idea
 DISTURBANCE responsibility to others
HANDLER Take corrective actions during disputes or crises, resolves conflicts
 RESOURCES Decide who gets resources, schedule, budget and set priorities
ALLOCATOR Represent department during negotiation of union contracts, sales,
 NEGOTIATOR
purchases, budgets, represents departmental interests.
What Is an Organization?
An organization is a deliberate arrangement of people to accomplish some
specific purpose. These are all organizations because they all share three
common characteristics as shown
4

5. First, each organization has a distinct purpose. This purpose is typically
expressed in terms of a goal or a set of goals that the organization hopes to
accomplish. Second, each organization is composed of people. One person
working alone is not an organization, and it takes people to perform the work
that's necessary for the organization to achieve its goals. Third, all organizations
develop some deliberate structure so that their members can do their work.
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6. Historical Background of Management
Organized endeavors directed by people responsible for planning, organizing,
leading, and controlling activities have existed for thousands of years. The
Egyptian pyramids and the Great Wall of China, for instance, are tangible
evidence that projects of tremendous scope, employing tens of thousands of
people, were undertaken well before modern times. The pyramids are a
particularly interesting example. The construction of a single pyramid occupied
more than 100,000 workers for 20 years.
Who told each worker what to do? Who ensured that there would be enough
stones at the site to keep workers busy? The answer to such questions is
managers. Regardless of what managers were called at the time, someone had
to plan what was to be done, organize people and materials to do it, lead and
direct the workers, and impose some controls to ensure that everything was done
as planned.
Another example of early management can be seen during the 1400s in the city
of Venice, Italy, a major economic and trade center. The Venetians developed an
early form of business enterprise and engaged in many activities common to
today's organizations. For instance, at the arsenal of Venice, warships were
floated along the canals and at each stop materials and riggings were added to
the ship. Doesn't that sound a lot like a car "floating" along an automobile
assembly line and components being added to it? In addition to this assembly
line, the Venetians also had a warehouse and inventory system to monitor its
contents, personnel (human resource management) functions required to
manage the labor force, and an accounting system to keep track of revenues and
costs.
Two pre-twentieth-century events played particularly significant roles in
promoting the study of management. First, in 1776, Adam Smith published a
classical economics doctrine, The Wealth of Nations, in which he argued the
economic advantages that organizations and society would gain from the division
of labor, the breakdown of jobs into narrow and repetitive tasks.
The second, and possibly most important, pre-twentieth-century influence on
management was the Industrial Revolution.
The major contribution of the Industrial Revolution was the substitution of
machine power for human power, which, in turn, made it more economical to
manufacture goods in factories rather than at home. These large, efficient
factories using power-driven equipment required managerial skills. Why?
Managers were needed to forecast demand, ensure that enough material was on
hand to make products, assign tasks to people, direct daily activities, coordinate
the various tasks, ensure that the machines were kept in good working condition
and work standards were maintained, find markets for the finished products, and
so forth. Planning, organizing, leading, and controlling became necessary, and
the development of large corporations would require formal management
practices. The need for a formal theory to guide managers in running these
organizations had arrived.
The development of management theories has been characterized by differing
beliefs about what managers do and how they should do it. In the next sections
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7. we present the contributions of four approaches. Scientific management looked
at management from the perspective of improving the productivity and efficiency
of manual workers. General administrative theorists were concerned with the
overall organization and how to make it more effective. Then a group of theorists
focused on developing and applying quantitative models to management
practices. Finally, a group of researchers emphasized human behavior in
organizations, or the "people" side of management.
Development of Major Management Theories
Scientific Management
In 1911, Frederick Winslow Taylor's Principles of Scientific Management was
published. Its contents became widely accepted by managers around the world.
The book described the theory of scientific management: the use of scientific
methods to define the "one best way" for a job to be done
Important Contributions
Important contributions to scientific management theory were made by Frederick
W. Taylor and Frank and Lillian Gilbreth.
Frederick W. Taylor
Taylor did most of his work at the Midvale and Bethlehem Steel Companies in
Pennsylvania. As a mechanical engineer, he was continually appalled by
workers' inefficiencies. Employees used vastly different techniques to do the
same job. They were inclined to "take it easy" on the job, and Taylor believed
that worker output was only about one-third of what was possible. Virtually no
work standards existed. Workers were placed in jobs with little or no concern for
matching their abilities and aptitudes with the tasks they were required to do.
Managers and workers were in continual conflict. He set out to correct the
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8. situation by applying the scientific method to shop floor jobs. He spent more than
two decades passionately pursuing the "one best way" for each job to be done.
Probably the best known example of Taylor's scientific management was the pig
iron experiment. Workers loaded "pigs" of iron (each weighing 92 pounds) onto
rail cars. Their daily average output was 12.5 tons. However, Taylor believed that
by scientifically analyzing the job to determine the "one best way" to load pig iron,
output could be increased to 47 or 48 tons per day. After scientifically trying
different combinations of procedures, techniques, and tools, Taylor succeeded in
getting that level of productivity. How? He put the right person on the job with the
correct tools and equipment, had the worker follow his instructions exactly, and
motivated the worker with an economic incentive of a significantly higher daily
wage. Using similar approaches to other jobs, Taylor was able to define the "one
best way" for doing each job. Overall, Taylor achieved consistent productivity
improvements in the range of 200 percent or more. Through his groundbreaking
studies of manual work using scientific principles, Taylor became known as the
"father" of scientific management.
Frank and Lillian Gilbreth
A construction contractor by trade, Frank Gilbreth gave up his contracting career
in 1912 to study scientific management after hearing Taylor speak at a
professional meeting. Frank and his wife Lillian, a psychologist, studied work to
eliminate wasteful hand-and-body motions. The Gilbreths also experimented with
the design and use of the proper tools and equipment for optimizing work
performance.
Frank is probably best known for his experiments in bricklaying. By carefully
analyzing the bricklayer's job, he reduced the number of motions in laying
exterior brick from 18 to about 5, and on laying interior brick the motions were
reduced from 18 to 2. Using Gilbreth's techniques, the bricklayer could be more
productive and less fatigued at the end of the day.
The Gilbreths were among the first researchers to use motion pictures to study
hand-and-body motions. They invented a device called a microchronometer that
recorded a worker's motions and the amount of time spent doing each motion.
Wasted motions missed by the naked eye could be identified and eliminated. The
Gilbreths also devised a classification scheme to label 17 basic hand motions
(such as search, grasp, hold), which they called therbligs (Gilbreth spelled
backward with the th transposed). This scheme allowed the Gilbreths a more
precise way of analyzing a worker's exact hand movements.
General Administrative Theorists
Another group of writers looked at the subject of management but focused on the
entire organization, called as general administrative theorists. They developed
more general theories of what managers do and what constituted good
management practice.
Important Contributions
The two most prominent theorists behind the general administrative approach
were Henri Fayol and Max Weber.
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9. Henri Fayol
Fayol, described management as a universal set of functions that included
planning, organizing, commanding, coordinating, and controlling. Fayol wrote
during the same time period as Taylor. While Taylor was concerned with
management at the lowest organizational level and used the scientific method,
Fayol's attention was directed at the activities of all managers. He wrote from
personal experience as a practitioner since he was the managing director of a
large French coal-mining firm.
Fayol described the practice of management as something distinct from
accounting, finance, production, distribution, and other typical business functions.
He argued that management was an activity common to all human endeavors in
business, government, and even in the home. He then proceeded to state 14
principles of management—fundamental rules of management that could be
taught in schools and applied in all organizational situations. These principles are
shown below,
1. Division of work. Specialization increases output by making employees
more efficient.
2. Authority. Managers must be able to give orders. Authority gives them
this right. Along with authority, however, goes responsibility.
3. Discipline. Employees must obey and respect the rules that govern the
organization.
4. Unity of command. Every employee should receive orders from only one
superior.
5. Unity of direction. The organization should have a single plan of action to
guide managers and workers.
6. Subordination of individual interests to the general interest. The interests
of any one employee or group of employees should not take precedence
over the interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralization. This term refers to the degree to which subordinates are
involved in decision making.
9. Scalar chain. The line of authority from top management to the lowest
ranks is the scalar chain.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. Management should provide orderly
personnel planning and ensure that replacements are available to fill
vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will
exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within
the organization.
9

10. Max Weber
Weber (pronounced VAY-ber) was a German sociologist who studied
organizational activity. Writing in the early 1900s, he developed a theory of
authority structures and relations. Weber described an ideal type of organization
he called a bureaucracy—a form of organization characterized by division of
labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal
relationships. Weber recognized that this "ideal bureaucracy" didn't exist in
reality. Instead he intended it as a basis for theorizing about work and how work
could be done in large groups. His theory became the model structural design for
many of today's large organizations. The features of Weber's ideal bureaucratic
structure are outlined as follows,
Quantitative Approach to Management
The quantitative approach involves the use of quantitative techniques to improve
decision making. This approach has also been labeled operations research or
management science.
Important Contributions
The quantitative approach evolved out of the development of mathematical and
statistical solutions to military problems during World War II. After the war was
over, many of the techniques that had been used for military problems were
applied to the business sector. One group of military officers, nicknamed the
Whiz Kids, joined Ford Motor Company in the mid-1940s and immediately began
using statistical methods and quantitative models to improve decision making.
What exactly does the quantitative approach do? This approach to management
involves applications of statistics, optimization models, information models, and
computer simulations to management activities. Linear programming, for
10

11. instance, is a technique that managers use to improve resource allocation
decisions. Work scheduling can be more efficient as a result of critical-path
scheduling analysis. Decisions on determining a company's optimum inventory
levels have been significantly influenced by the economic order quantity model.
Each of these is an example of quantitative techniques being applied to improve
managerial decision making.
Understanding Organizational Behavior
As we know, managers get things done by working with people. This explains
why some writers and researchers have chosen to look at management by
focusing on the organization's human resources. The field of study concerned
with the actions (behavior) of people at work is called organizational behavior
(OB). Much of what currently makes up the field of human resources
management and contemporary views on motivation, leadership, trust,
teamwork, and conflict management have come out of organizational behavior
research.
Early Advocates
Although there were a number of people in the late 1800s and early 1900s who
recognized the importance of the human factor to an organization's success, four
individuals stand out as early advocates of the OB approach. They are Robert
Owen, Hugo Munsterberg, Mary Parker Follett, and Chester Barnard. The
contributions of these individuals were varied and distinct, yet they all had in
common a belief that people were the most important asset of the organization
and should be managed accordingly. Their ideas provided the foundation for
such management practices as employee selection procedures, employee
motivation programs, employee work teams, and organization-external
environment management techniques. Below is the summary of most important
ideas of these early advocates
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12. The Hawthorne Studies
Without question, the most important contribution to the developing OB field
came out of the Hawthorne Studies, a series of studies conducted at the Western
Electric Company Works in Cicero, Illinois. These studies, started in 1924 and
continued through the early 1930s, were initially designed by Western Electric
industrial engineers as a scientific management experiment. They wanted to
examine the effect of various illumination levels on worker productivity. Control
and experimental groups were set up with the experimental group being exposed
to various lighting intensities, and the control group working under a constant
intensity. If you were one of the industrial engineers in charge of this experiment,
what would you have expected to happen? That individual output in the
experimental group would be directly related to the intensity of the light? Seems
perfectly logical, doesn't it? However, they found that as the level of light was
increased in the experimental group, output for both groups increased. Then,
much to the surprise of the engineers, as the light level was decreased in the
experimental group, productivity continued to increase in both groups. In fact, a
productivity decrease was observed in the experimental group only when the
level of light was reduced to that of a moonlit night. What would explain these
unexpected results? The engineers couldn't explain what they had witnessed but
concluded that illumination intensity was not directly related to group productivity,
and that something else must have contributed to the results. However, they
weren't able to pinpoint what that "something else" was.
In 1927, the Western Electric engineers asked Harvard professor Elton Mayo and
his associates to join the study as consultants. Thus began a relationship that
would last through 1932 and encompass numerous experiments in the redesign
of jobs, changes in workday and workweek length, introduction of rest periods,
and individual versus group wage plans. For example, one experiment was
designed to evaluate the effect of a group piecework incentive pay system on
group productivity. The results indicated that the incentive plan had less effect on
a worker's output than did group pressure, acceptance, and the accompanying
security. The researchers concluded that social norms or group standards were
the key determinants of individual work behavior.
Scholars generally agree that the Hawthorne Studies had a dramatic impact on
the direction of management beliefs about the role of human behavior in
organizations. Mayo concluded that behavior and sentiments are closely related,
that group influences significantly affect individual behavior, that group standards
establish individual worker output, and that money is less a factor in determining
output than are group standards, group sentiments, and security. These
conclusions led to a new emphasis on the human behavior factor in the
functioning of organizations and the attainment of their goals.
However, the conclusions from the Hawthorne Studies weren't without criticism.
Critics attacked the research procedures, analyses of findings, and the
conclusions. From a historical standpoint, however, it's of little importance
whether the studies were academically sound or their conclusions justified. What
is important is that they stimulated an interest in human behavior in
organizations. The Hawthorne Studies played a significant role in changing the
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13. dominant view at the time that employees were no different from any other
machines that the organization used.
Current Trends and Issues
Where are we today? What current management concepts and practices are
shaping "tomorrow's history"? In this section, we'll attempt to answer those
questions by introducing several trends and issues that we believe are changing
the way managers do their jobs: globalization, workforce diversity,
entrepreneurship, managing in an e-business world, need for innovation and
flexibility, quality management, learning organizations and knowledge
management, and workplace spirituality. Throughout the text we focus more
closely on many of these themes in various boxes, examples, and exercises
included in each chapter.
Globalization
Management is no longer constrained by national borders. BMW, a German firm,
builds cars in South Carolina. McDonald's, a U.S. firm, sells hamburgers in
China. Toyota, a Japanese firm, makes cars in Kentucky. Australia's leading real
estate company, Lend Lease Corporation, built the Bluewater shopping complex
in Kent, England, and has contracts with Coca-Cola to build all the soft-drink
maker's bottling plants in Southeast Asia. Swiss company ABB Ltd. has
constructed power generating plants in Malaysia, South Korea, China, and
Indonesia. The world has definitely become a global village!
Managers in organizations of all sizes and types around the world are faced with
the opportunities and challenges of operating in a global market..
Workforce Diversity
One of the major challenges facing managers in the twenty-first century will be
coordinating work efforts of diverse organizational members in accomplishing
organizational goals. Today's organizations are characterized by workforce
diversity—a workforce that's more heterogeneous in terms of gender, race,
ethnicity, age, and other characteristics that reflect differences.
Workforce diversity is an issue facing managers of organizations in Japan,
Australia, Germany, Italy, and other countries. For instance, as the level of
immigration increases in Italy, the number of women entering the workforce rises
in Japan, and the population ages in Germany, managers are finding they need
to effectively manage diversity.
Does the fact that workforce diversity is a current issue facing managers mean
that organizations weren't diverse before? No. They were, but diverse individuals
made up a small percentage of the workforce, and organizations, for the most
part, ignored the issue. We assumed that people who were "different" would
somehow automatically want to assimilate. But we now recognize that
employees don't set aside their cultural values and lifestyle preferences when
they come to work. The challenge for managers, therefore, is to make their
organizations more accommodating to diverse groups of people by addressing
different lifestyles, family needs, and work styles. The melting pot assumption
has been replaced by the recognition and celebration of differences. Smart
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14. managers recognize that diversity can be an asset because it brings a broad
range of viewpoints and problem-solving skills to a company. An organization
that uses all of its human resources will enjoy a powerful competitive advantage.
Entrepreneurship
Entrepreneurship is the process whereby an individual or a group of individuals
uses organized efforts and means to pursue opportunities to create value and
grow by fulfilling wants and needs through innovation and uniqueness, no matter
what resources are currently controlled. It involves the discovery of opportunities
and the resources to exploit them. Three important themes stick out in this
definition of entrepreneurship. First is the pursuit of opportunities.
Entrepreneurship is about pursuing environmental trends and changes that no
one else has seen or paid attention to.
The second important theme in entrepreneurship is innovation. Entrepre-
neurship involves changing, revolutionizing, transforming, and introducing new
approaches—that is, new products or services or new ways of doing business.
The final important theme in entrepreneurship is growth. Entrepreneurs pursue
growth. They are not content to stay small or to stay the same in size.
Entrepreneurs want their businesses to grow and work very hard to pursue
growth as they continually look for trends and continue to innovate new products
and new approaches.
Managing in an E-Business World
Organizations (small to large, all types, global and domestic, and in all industries)
are becoming e-businesses. Today's managers must manage in an e-business
world! In fact, as a student, your learning may increasingly be taking place in an
electronic environment. What do we know about this e-business world?
E-business (electronic business) is a comprehensive term describing the way
an organization does its work by using electronic (Internet-based) linkages with
its key constituencies (employees, managers, customers, suppliers, and
partners) in order to efficiently and effectively achieve its goals. It's more than e-
commerce, although e-business can include e-commerce.
E-commerce (electronic commerce) is any form of business exchange or
transaction in which the parties in-teract electronically. Firms such as Dell
(computers), Varsitybooks (textbooks), and PC Flowers and Gifts (flowers and
other gifts) are engaged in e-commerce because they sell products over the
Internet. Given are the main forms of e-commerce transactions. Although e-
commerce applications will continue to grow in volume, they are only one part of
an e-business.
14

15. Not every organization is or needs to be a total e-business. Below diagram
illustrates three categories of e-business involvement.
The first type is what we're going to call an e-business enhanced organization, a
traditional organization that sets up e-business capabilities, usually e-commerce,
while maintaining its traditional structure. Many Fortune 500 type organizations
are evolving into e-businesses using this approach. They use the Internet to
enhance (not to replace) their traditional ways of doing business. For instance,
Sears, a traditional bricks-and-mortar retailer with thousands of physical stores
worldwide started an Internet division whose goal is to make Sears "the definitive
online source for the home." Although Sears Internet division, Sears.com,
represents a radical departure for an organization founded in 1886 as a catalog-
sales company, it's intended to expand, not replace, the company's main source
of revenue. Many other traditional organizations—for instance, Merrill Lynch,
Office Depot, Starbucks, Tupperware, and Whirlpool—have become e-business
enhanced organizations.
Another category of e-business involvement is an e-business enabled
organization. In this type of e-business, an organization uses the Internet to
perform its traditional business functions better but not to sell anything. In other
words, the Internet enables organizational members to do their work more
efficiently and effectively. There are numerous organizations using electronic
15

16. linkages to communicate with employees, customers, or suppliers and to support
them with information. For instance, Levi Strauss & Co. uses its Web site to
interact with customers, providing them the latest information about the company
and its products, but they can't buy Levis there. It also uses an intranet, an
internal organizational communication system that uses Internet technology and
is accessible only by organizational employees, to communicate with its global
workforce.
The last category of e-business involvement is when an organization becomes a
total e-business. Many organizations—such as Amazon.com, Yahoo, E*Trade,
and eBay—started as total e-business organizations. Their whole existence is
made possible by and revolves around the Internet. Other organizations, such as
Charles Schwab & Company, have evolved into e-business organizations that
seamlessly integrate traditional and e-business functions. When an organization
becomes a total e-business, there's a complete transformation in the way it does
its work.
Quality Management
A quality revolution swept through both the business and public sectors during
the 1980s and 1990s. The generic term used to describe this revolution was total
quality management, or TQM for short. It was inspired by a small group of
quality experts, the most famous being W. Edwards Deming and Joseph M.
Juran. The ideas and techniques espoused by these two men in the 1950s had
few supporters in the United States but were enthusiastically embraced by
Japanese organizations. As Japanese manufacturers began beating out U.S.
competitors in quality comparisons, Western managers soon began taking a
more serious look at TQM. Deming's and Juran's ideas became the basis for
today's organizational quality management programs.
TQM is a philosophy of management driven by continual improvement and
responding to customer needs and expectations.
1. Intense focus on the customer. The customer includes not only outsiders
who buy the organization's products or services but also internal
customers (such as shipping or accounts payable personnel) who interact
with and serve others in the organization.
2. Concern for continual improvement. TQM is a commitment to never being
satisfied. "Very good" is not good enough. Quality can always be
improved.
3. Process-focused. TQM focuses on work processes as the quality of goods
and services is continually improved.
4. Improvement in the quality of everything the organization does. TQM uses
a very broad definition of quality. It relates not only to the final product but
also to how the organization handles deliveries, how rapidly it responds to
complaints, how politely the phones are answered, and the like.
5. Accurate measurement. TQM uses statistical techniques to measure
every critical variable in the organization's operations. These are
compared against standards or benchmarks to identify problems, trace
them to their roots, and eliminate their causes.
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17. 6. Empowerment of employees. TQM involves the people on the line in the
improvement process. Teams are widely used in TQM programs as
empowerment vehicles for finding and solving problems.
The term customer in TQM has expanded beyond the original definition of the
purchaser outside the organization to include anyone who interacts with the
organization's product or services internally or externally. It encompasses
employees and suppliers as well as the people who purchase the organization's
goods or services. The objective is to create an organization committed to
continuous improvement in work processes.
TQM is a departure from earlier management theories that were based on the
belief that low costs were the only road to increased productivity.
Learning Organizations and Knowledge Management
Today's managers confront an environment in which change takes place at an
unprecedented rate. Constant innovations in information and computer
technologies combined with the globalization of markets have created a chaotic
world. As a result, many of the past management guidelines and principles—
created for a world that was more stable and predictable—no longer apply.
Successful organizations of the twenty-first century must be able to learn and
respond quickly.
These organizations will be led by managers who can effectively challenge
conventional wisdom, manage the organization's knowledge base, and make
needed changes. In other words, these organizations will need to be learning
organizations. A learning organization is one that has developed the capacity to
continuously learn, adapt, and change.
Part of a manager's responsibility in fostering an environment conducive to
learning is to create learning capabilities throughout the organization—from
lowest level to highest level and in all areas. How can managers do this? An
important step is understanding the value of knowledge as an important
resource, just like cash, raw materials, or office equipment.
But in an organization, just recognizing the value of accumulated knowledge or
wisdom isn't enough. Managers must deliberately manage that base of
knowledge. Knowledge management involves cultivating a learning culture in
which organizational members systematically gather knowledge and share it with
others in the organization so as to achieve better performance. For instance,
accountants and consultants at Ernst & Young, one of the Big Five professional
services firms, document best practices they have developed, unusual problems
they have dealt with, and other work information. This "knowledge" is then
shared with all employees through computer-based applications and through
COIN (community of interest) teams that meet regularly throughout the company.
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