Chapter TenMotivating EmployeesCopyright.docx

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Chapter Ten
Motivating Employees
Copyright © 2010 by the McGraw-Hill Companies, Inc. All
rights reserved.
McGraw-Hill/Irwin
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SERGEY BRIN & LARRY PAGE
GoogleFounded Google in 1998 in a friend’s garage.Their
success is a result of constant innovation and motivating
employees to pursue their own interests.
ProfileWalls are painted in bright colors, offices are open and
the Googleplex provides food and recreation activities for all
employees.

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INTRINSIC REWARDSIntrinsic Rewards -- Personal
satisfaction felt for a job well done. Kinds of Intrinsic Rewards:
The Value of MotivationPride in your performanceSense of
achievement
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See Learning Goal 1: Explain Taylor’s scientific management.
Intrinsic means from within; when you have a drive to succeed
and are motivated by purpose, passion, and mission.
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EXTRINSIC REWARDSExtrinsic Rewards -- Something given
as a recognition of good work. Kinds of Extrinsic Rewards:Pay
RaisesPromotionsAwards
The Value of Motivation
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Extrinsic rewards are often temporary and driven by money,
recognition and results.
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FRINGE BENEFITS
Perks Offered to Employees at Top 50 Employers
Source: Business Week, www.businessweek.com
Recognizing a Job Well Done
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Fringe Benefits This slide displays the most common perks or
rewards used by companies to motivate employees. Other
examples of extrinsic rewards include the
following:PayImproved working environment or
conditionsStatusSecurity While these rewards do offer some
value, there is much research that indicates many problems with
extrinsic motivation. Share with the students some of those
ideas:Extrinsic rewards do not produce permanent
changesExtrinsic rewards reduce intrinsic interestThe use of
extrinsic rewards can be controllingReinforcement of extrinsic
rewards can lead to expectations of permanence in the form of
job rewards.

Chart1Flexible Work HoursOver Two Weeks Vacation in First
YearPossible Promotions in First YearOver 5% 401(k)
MatchFull Health Insurance
Series 1
0.72
0.56
0.51
0.25
0.06
Sheet1Series 1Series 2Series 3Flexible Work
Hours72%2.42Over Two Weeks Vacation in First
Year56%4.42Possible Promotions in First Year51%1.83Over 5%
401(k) Match25%2.85Full Health Insurance6%To resize chart
data range, drag lower right corner of range.
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TAYLOR’S SCIENTIFIC
MANAGEMENTScientific Management -- Studying workers to
determine the most efficient ways of doing things and then
teaching those techniques. Three Key Elements to Increase
Productivity TimeMethods of WorkRules of Work
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Frederick Taylor: The Father of Scientific Management
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TAYLOR’S FOUR KEY
PRINCIPLESStudy how a job is performed.Gather time &
motion information.Check different methods.Codify the best
method into rules.Choose workers whose skill matches the
rules.Establish a fair level of performance and pay.
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Taylor was looking for the most efficient way or the one right
way to do something. Workers were, in a sense, thought of as
machines that could be fine tuned.
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TIME-MOTION STUDIESTime-Motion Studies -- Studies of
which tasks must be performed to complete a job and the time
needed to do each task.Led to the development of the Principle
of Motion Economy -- Every job can be broken down into a
series of elementary motions; developed by Frank and Lillian
Gilbreth.
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UPSET at UPS
(Legal Briefcase)UPS drivers work under strict rules and work
requirements.Performance pressure has taken a toll on drivers
who report increased stress, anxiety and back pain.UPS is
employing new technologies and planning to increase
productivity without overtaxing drivers.
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ARE YOU STRESSED?
Warnings of Employee Stress
Negative attitudes about workDrops in productivityChronic
latenessAbsenteeismCareless with detailsUnable to work with
othersWithdrawal from co-workersEasily upset or angered
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Are You Stressed? Employers can often spot impending stress
or on-the-job stress by understanding the signs listed. Ask the
students: Have you experienced any of these symptoms when
trying to juggle your academic, professional, and personal
lives? What did you do to cope with the rigors of stress? Share
the following tips for reducing stress: Learn to plan.
Recognize and accept limits. Be a positive person.
Learn to tolerate and forgive. Avoid unnecessary
competition. Get regular exercise. Learn a systematic,
drug-free method of relaxing. Change your thinking.
Source: UTexas.edu
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HAWTHORNE STUDIES:
PURPOSE AND RESULTSResearchers studied worker
efficiency under different levels of light.Productivity increased
regardless of light condition.
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Elton Mayo and the Hawthorne StudiesResearchers decided it
was a human or psychological factor at play.Hawthorne Effect -
- People act differently when they know they are being studied.
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See Learning Goal 2: Describe the Hawthorne studies and their

significance to management.
The Hawthorne studies were conducted in Cicero, Illinois at the
Western Electric plant over a six year period.
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MASLOW’S
THEORY of MOTIVATIONHierarchy of Needs -- Theory of
motivation based on unmet human needs from basic
physiological needs to safety, social and esteem needs to self-
actualization needs.Needs that have already been met do not
motivate.If a need is filled, another higher-level need emerges.
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Motivation and Maslow’s Hierarchy of Needs
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See Learning Goal 3: Identify the levels of Maslow’s hierarchy
of needs and apply them to employee motivation.
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MASLOW’S
HIERARCHY of NEEDS
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Motivation and Maslow’s Hierarchy of Needs
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See Learning Goal 3: Identify the levels of Maslow’s hierarchy
of needs and apply them to employee motivation.
Maslow’s Hierarchy of Needs This slide reproduces the
illustration of Maslow’s Hierarchy from the chapter. Most
people in the class, especially those that have taken basic
psychology, may be familiar with Maslow and the premise of
human needs hierarchy. Use this opportunity to relate Maslow’s
need theory to the work environment: Workers require
competitive salaries, benefits and clean work environments.
Employees have the need for security against termination
in their jobs and the feeling of being safe against bodily harm
while performing their job functions. On the job, workers
have the need to feel a part of a successful group, driven by
achievement. Employees seek opportunities for advancement,
empowerment, recognition, and responsibility through
additional work-related performance. Companies must attempt
to satisfy these needs through opportunities within the
organization.
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HERZBERG’S
MOTIVATING FACTORSHerzberg’s research centered on two
questions:
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Herzberg’s Motivating FactorsWhat factors controlled by
managers are most effective in increasing worker
motivation?How do workers rank job-related factors in order of
importance related to motivation?
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See Learning Goal 4: Distinguish between the motivators and
hygiene factors identified by Herzberg.
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JOB CONTENTHerzberg found job content factors were most
important to workers – workers like to feel they contribute to
the company.Motivators -- Job factors that cause employees to
be productive and that give them satisfaction.
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Herzberg’s Motivating Factors
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Herzberg’s article in the Harvard Business Review, “One More
Time: How Do You Motivate Employees?” is a classic and
explores his idea of job content in depth.

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JOB ENVIRONMENTJob environment factors maintained
satisfaction but did not motivate employees.Hygiene Factors --
Job factors that can cause dissatisfaction if missing but that do
not necessarily motivate employees if increased.
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HERZBERG’S MOTIVATORS and HYGIENE FACTORS
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administrationAchievementSupervisionRecognitionWorking
conditionsResponsibilityInterpersonal relationsGrowth and
advancementSalary, status and job security
Herzberg’s Theory This slide illustrates another “need” theory

regarding workers and their job needs. This theory is based on
what an organization can do to fulfill the individual needs of
workers while motivating them to excel. The key component of
Herzberg’s work was the opposite of “satisfaction” is “no
satisfaction.” If the basic hygiene factors were not in place, a
worker is not satisfied. To have a satisfied, motivated
workforce, a company needs to provide the
following:AchievementRecognitionWork
ItselfResponsibilityAdvancementGrowth
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COMPARISON of the THEORIES
of MASLOW and HERZBERG
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Comparison of the Theories of Maslow and Herzberg This slide
gives students a good starting point to see the relationship
between Maslow and Herzberg. To start a discussion ask
students if they are motivated by money? This question always
starts a discussion with most students stating that money is a
real motivating factor. Follow-up this discussion with the
following: If you dislike your current job and your boss offers
you more money will it change your feelings about your job in
the long run?

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PROGRESS ASSESSMENTWhat are the similarities and
differences between Taylor’s time-motion studies and Mayo’s
Hawthorne studies?How did Mayo’s findings influence
scientific management?Explain the distinction between what
Herzberg called motivators and hygiene factors.
Progress Assessment
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What are the similarities and differences between Taylor’s time-
motion studies and Mayo’s Hawthorne studies? Frederick
Taylor’s time-motion studies measured output. Taylor inspired
the Hawthorne studies. Originally Elton Mayo wanted to
determine the optimal level of lighting necessary to increase
production on the factory floor which is a type of scientific
management. He later determined that people who were
empowered worked harder. Ultimately his study brought about
behavioral management.
How did Mayo’s findings influence scientific management?
The findings at Hawthorne plant in Cicero, Illinois completely
changed how people thought about employees and motivation.
One finding was that money was not a primary motivator.
These new assumptions led to to many theories about the human
side of motivation.
Explain the distinction between what Herzberg called
motivators and hygiene factors. As Herzberg studied the results
of his research study he concluded that motivators made
employees productive and gave them satisfaction. These factors
related to job content. Hygiene factors related to the job
environment and could, if left unattended, cause employee

dissatisfaction but would not provide long term motivation.
Hygiene factors include such things as pay and working
conditions.
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THEORY X and THEORY YDouglas McGregor proposed
managers had two different sets of assumptions concerning
workers.Their attitudes about motivating workers was tied to
these assumptions.McGregor called them Theory X and Theory
Y.
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McGregor’s Theory X and Theory Y
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See Learning Goal 5: Differentiate among Theory X, Theory Y,
and Theory Z.
McGregor’s TheoriesTheory X suggests that employees dislike
work, avoid responsibility, have little ambition, and are
motivated by threat and fear. Theory Y argues that people like
work, seek responsibility, and are motivated by empowerment.
If a manager believes theory X or Theory Y, s/he would tend to
treat the employees accordingly.
Ask the students: Would you be a Theory X or Y manager? How
do you believe employees should be treated? Would you prefer
to work for a Theory X or Y manager? (The majority if not all
would say they would rather work for a Theory Y manager. It
should be pointed out that how a manager treats employees is
often dictated by the situation. A manager may hold Theory Y
values but may have to use Theory X perspective depending

upon the situation with the employee.)
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ASSUMPTIONS of
THEORY X MANAGERSWorkers dislike work and seek to
avoid it.Workers must be forced or threatened with punishment
to get them to perform.Workers prefer to be directed and avoid
responsibilityOnly effective motivators are fear and money.
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and Theory Z.
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ASSUMPTIONS of
THEORY Y MANAGERSPeople like work, it’s a part of
life.Workers seek goals they are committed toward.Commitment
to goals depends on perceived rewards.People can use creativity
to solve problems.Intellectual capacity is only partially
realized.People are motivated by a variety of rewards.
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and Theory Z.
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THEORY ZWilliam Ouchi researched cultural differences
between the U.S. (Type A) and Japan (Type J).Type J
committed to the organization and group.
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Ouchi’s Theory ZType A focused on the individual.Theory Z is
the hybrid approach of Types A and J.
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and Theory Z.
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THEORY Z
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Ouchi’s Theory Z
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and Theory Z.
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GOAL-SETTING THEORYGoal-Setting Theory -- Setting
ambitious but attainable goals can motivate workers and
improve performance if the goals are accepted, accompanied by
feedback, and facilitated.
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Goal-Setting Theory and Management by Objectives
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See Learning Goal 6: Explain the key principles of goal-
setting, expectancy, reinforcement, and equity theories.
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APPLYING GOAL-SETTING
THEORYManagement by Objectives (MBO) -- Involves a cycle
of discussion, review and evaluation of objectives among top
and middle-level managers, supervisors and employees.
Managers formulate goals in cooperation with everyone.Need to
monitor results and reward achievement.
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Peter Drucker developed the idea of MBO in his 1954 book The
Practice of Management.
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ORGANIZATIONS USING MBOToyota Motor
CompanyEmerson Electric CompanyU.S. Department of
Defense
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Organizations Using MBO Management By Objectives (MBO)
was popularized by Peter Drucker in the 1950s. Ask students:
What are the benefits of MBO? (This theory is based on the
notion that setting attainable goals with all employees of the
organization will create more support for the goals leading to
greater motivation.) To better understand Peter Drucker visit the
following website: http://www.druckerinstitute.com/

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EXPECTANCY THEORY in MOTIVATIONExpectancy Theory
-- The amount of effort employees exert on a specific task
depends on their expectations of the outcome. Employees
ask:Can I accomplish the task?What’s my reward?Is the reward
worth the effort?Expectations can vary from person to person.
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Meeting Employee Expectations: Expectancy Theory
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Victor Vroom developed the expectancy theory.
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EXPECTANCY THEORY
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NADLER & LAWLER’S
MODIFICATIONResearchers Nadler and Lalwer modified
expectancy theory and suggested five steps for
managers:Determine what rewards employees value.Determine
worker’s performance standard.Make sure performance
standards are attainable.Tie rewards to performance.Be sure
employees feel rewards are adequate.
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USING
REINFORCEMENT THEORYReinforcement Theory -- Positive
and negative reinforcers motivate a person to behave in certain
ways.Positive reinforcement includes praise, pay increases and
recognition.Negative reinforcement includes reprimands,
reduced pay, and layoff or firing.Extinction is a way of trying
to stop behavior by not responding to it.
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Reinforcing Employee Performance: Reinforcement Theory
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REINFORCEMENT THEORY
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Reinforcing Employee Performance: Reinforcement Theory
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EQUITY THEORYEquity Theory -- Employees try to maintain
equity between inputs and outputs compared to others in similar
positions.Workers often base perception of their outcomes to a
specific person or group.Perceived inequities can lead to
reduced quality and productivity, absenteeism even resignation.
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Treating Employees Fairly: Equity Theory
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PROGRESS ASSESSMENTBriefly explain the managerial
attitudes behind Theories X, Y and Z.Explain goal-setting
theory.Evaluate expectancy theory. When could expectancy
theory apply to your efforts or lack of effort?Explain the
principles of equity theory.
Progress Assessment
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Briefly explain the managerial attitudes behind Theories X, Y
and Z. Douglas McGregor developed Theories X and Y after
observing that managers’ attitudes fall into one of two different
assumptions. Theory X assumes the following: People dislike
work and will avoid work. workers must be forced, controlled,
directed or threatened with punishment to make them work
towards the organization’s goals., average worker prefers to be
directed, wishes to avoid responsibility, has little ambition and
wants security, and the primary motivators are fear and money.
Theory Y managers have completely different views on
managing people. Theory Y managers believe: Most people like
to work, depth of a person’s commitment to goals depends on
the perceived rewards for achieving them., under certain
circumstances people will seek responsibility., employees tend
to be imaginative, creative, and clever, and employees are
motivated by a variety of rewards. Theory Z was developed by
William Ouchi of UCLA and is a blending of American

management style, Theory A, with Japanese management style,
Theory J into Theory Z.
2. Explain goal-setting theory. The idea behind goal-setting
theory is the process of setting attainable goals to motivate
employees and improve performance. The key to goal-setting
theory is that the goals must be accepted and accompanied by
feedback to truly be effective.
3. Evaluate expectancy theory. When could expectancy theory
apply to your efforts or lack of effort? Victor Vroom created
the expectancy theory. His central premise was the amount of
effort employees exert on a specific task depends on their
expectations of the outcome. He contends that employees will
ask three specific questions before committing maximum effort:
Can I accomplish the task? If I do accomplish it, what’s my
reward? Is the reward worth the effort? Like goal-setting theory
the key to expectancy theory is setting attainable goals. If the
goal is not attainable employees will simply give up, thus
reducing motivation.
4. Explain the principles of equity theory. Equity theory looks
at how employee’s perceptions of fairness affect their
willingness to perform. Employees will try to balance or
maintain equity between what they put into the job and what
they get out of it, comparing those inputs and outputs to those
of others in similar positions.
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ENRICHING JOBSJob Enrichment -- A motivational strategy
that emphasizes motivating the worker through the job itself.

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Motivation Through Job EnrichmentBased on Herzberg’s
motivators, such as responsibility, achievement and recognition.
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See Learning Goal 7: Show how managers put motivation
theories into action through such strategies as job enrichment,
open communication, and job recognition.
Herzberg argued factors such as responsibility, achievement and
recognition were more important motivational factors in the
long-run than pay. He believed that if you wanted to motivate
employees you should focus on enriching the job.
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KEY CHARACTERISTICS
of WORKSkill VarietyTask IdentityTask SignificanceAutonomy
Feedback
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Motivation Through Job Enrichment
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GREEN TEAM, GO!
(Thinking Green)Steve Sarowitz of Paylocity formed a “Green
Team” to make the business more eco-friendly.The “Green
Team” expanded company recycling, increased telecommuting
and switched from paper cups to ceramic cups.Employees were
excited by the challenge because it went beyond their traditional
jobs.
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TYPES of JOB ENRICHMENTJob Enlargement -- A job
enrichment strategy that involves combining a series of tasks
into one challenging and interesting assignment.Job Rotation --
A job enrichment strategy that involves moving employees from
one job to another.
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Motivation Through Job Enrichment
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USING OPEN COMMUNICATIONCreate a culture that rewards
listening.Train managers to listen.Use effective questioning
techniques.Remove barriers to open communication.Ask
employees what’s important to them.
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Motivating Through Open Communication
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BIG MOTIVATORS for
SMALL BUSINESS
(Spotlight on Small Business)Things like weekly trips to the
movies and after-work parties help keep employees
motivated.Communication, mentoring and group bonding are
key elements to success.Open communication and increased

responsibility for employees makes them feel a real part of the
firm.
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RECOGNIZING GOOD WORKRaises are not the only ways to
recognize an employee’s performance. Recognition can also
include:Paid time offFlexible schedulingWork from home
opportunitiesPaid child or elder careStock options or profit
sharingCompany awardsCompany events or teams
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Remember rewarding performance can come in different formats
than money. What are other ways to recognize good
performance?
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WORK WELL with OTHERS
Keys for Productive Teamwork
Have a common understanding of your task.Clarify roles and
responsibilities.Set rules.Get to know each other.Communicate
openly and often.
Source: Wall Street Journal Research, September 2007.
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High Performance Teams This slide presents characteristics of
high performance teams. This list is compiled from the Wall
Street Journal on high performance teams. Ask the students in
teams to explore these characteristics as they relate to teams
they have been on. Which of these characteristics apply to their
team and which are lacking? What modifications do they need
to make to move towards being a high performance team?
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WHAT’S GOOD for YOU

Most Positive Remedies for Employee Moral
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What’s Good for You This slide offers simple tips for
motivating employees in your business. A motto to remember is
the Golden Rule: Treat others like you want to be treated. Ask
the students where the recommendations in the slide fit in
Maslow’s or Herzberg’s theories.
Chart1Open CommunicationRecognition ProgramsMonetary
AwardsUnexpected RewardsOther Categories
Column1
0.48
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0.13
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Sheet1Column1Open Communication48%Recognition
Programs19%Monetary Awards13%Unexpected
Rewards11%Other Categories9%To resize chart data range, drag
lower right corner of range.
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WHAT’S BAD for YOU

Most Negative Actions for Employee Morale
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What’s Bad for You This slide ties into the previous slide and
offers tips on what to avoid in order to enhance employee
morale. Ask students why these factors negatively impact
employee morale.
Chart1Lack of Open CommunicationFailure to Recognize
AchievementsMicromanagingExcessive WorkloadsOther Issues
Column1
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Sheet1Column1Lack of Open Communication33%Failure to
Recognize Achievements19%Micromanaging17%Excessive
Workloads16%Other Issues15%To resize chart data range, drag
lower right corner of range.
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MOTIVATING EMPLOYEES

ACROSS the GLOBECultural differences make worker
motivation a challenging task for global managers.High-Context
cultures require relationships and group trust before
performance.
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Motivating Employees Across the GlobeLow-Context cultures
believe relationship building distracts from tasks.
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See Learning Goal 8: Show how managers personalize
motivation strategies to appeal to employees across the global
and across generations.
In a globalized world managers must recognize that what is
appropriate in one culture might not work in another.
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MOTIVATING ACROSS the GENERATIONSBaby Boomers
(1946 – 1964)Experienced great economic prosperity, job
security, optimism about their future.Generation X (1965 –
1980)Raised in dual-career families, attended day care, feeling
of insecurity about jobsGeneration Y or Millenials (1980 –
2000)Raised by indulgent parents, used to many comforts like
computers and cell phones
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Motivating Employees Across Generations
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See Learning Goal 8: Show how managers personalize
motivation strategies to appeal to employees across the global
and across generations.
Managers must consider cultural differences, and they must also
contend with employees in different age groups. To start a
discussion ask students what issues they may encounter if they
managed employees from Baby Boomers, Generation X, and
Generation Y?
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…
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Chapter Eleven
Human Resource Management: Finding and Keeping the Best
Employees
rights reserved.
McGraw-Hill/Irwin

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SALLY MAINQUIST
Certes Financial ProsCertes finds financial professionals to fit
temporary, flexible work environments.Besides receiving
outstanding benefits, Mainquist’s workers gain a very broad
range of work experience.
Profile
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HUMAN RESOURCE MANAGEMENT
Working with People is Just the Beginning
LG1
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See Learning Goal 1: Explain the importance of human resource
management, and describe current issues in managing human
resources.
Human resource management is more than hiring employees it
now involves a multitude of task and responsibilities. This
slide gives some insight into the various roles the HR
department has now assumed. Business leaders in many

companies now understand the effect management of human
capital can have in creating a competitive advantage in the
marketplace.
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HUMAN RESOURCE
MANAGEMENT (HRM)Human Resource Management -- The
process of determining human resource needs and then
recruiting, selecting, developing, motivating, evaluating,
compensating and scheduling employees to achieve
organizational goals. HRM’s role has grown because:Increased
recognition of employees as a resource.Changes in law that
rewrote old workplace practices.
LG1
Working with People is Just the Beginning
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resources.
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DEVELOPING the FIRM’S

ULTIMATE RESOURCEService and high-tech manufacturing
requires employees with highly technical job skills.
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Developing the Firm’s Ultimate ResourceSuch workers are
scarce, making recruiting and retention more important and
more difficult.The human resource job is now the job of all
managers in an organization.
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resources.
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CHALLENGES in FINDING
HIGH-LEVEL WORKERSA shortage of trained workers in key
areasWorker shortage in skilled tradesChanges in employee
attitudes about workA declining economy with fewer full-time
jobsExpanding global markets with low-wage workersIncreasing
benefit demands and benefit costsA decreased sense of
employee loyalty
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The Human Resource Challenge
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resources.

Demographic changes are creating a challenging environment
for human resources management requiring these departments to
come up with creative ways to attract, develop and retain
employees.
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CIVIL RIGHTS ACT of 1964Title VII prohibits discrimination
in hiring, firing, compensation, apprenticeships, training, terms,
conditions or privileges of employment based
on:RaceReligionCreedSexAge National Origin
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Laws Affecting Human Resource Management
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See Learning Goal 2: Illustrate the effect of legislation on
human resource management.
The Civil Rights Act of 1964 was a significant piece of
legislation and directly brought the federal government into
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1972 EQUAL EMPLOYMENT OPPORTUNITY ACT
(EEOA)Strengthened the Equal Employment Opportunity

Commission (EEOC).Gave EEOC the right to issue workplace
guidelines for acceptable employer conduct.EEOC could
mandate specific recordkeeping procedures.EEOC was vested
with the power of enforcement.
LG2
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CONTROVERSIAL PROCEDURES
of the EEOCAffirmative Action -- Policy designed to “right
past wrongs” by increasing opportunities for minorities and
women in the workplace.Reverse Discrimination --
Discrimination against whites or males in hiring or
promoting.This policy has been at the center of many debates
and lawsuits.
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Ask the students: Did Affirmative Action create reverse
discrimination against whites and males by unfairly giving

preference to females and minorities?
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CIVIL RIGHTS ACT of 1991
and OFCCPCivil Rights Act of 1991Amended Title VII and
gave victims of discrimination the right to a jury trial and
possible damages.Office of Federal Contract Compliance
Programs (OFCCP)Ensures that employers doing business with
the federal government comply with the nondiscrimination and
affirmative action laws.
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LAWS PROTECTING
EMPLOYEES with DISABILITIESAmericans with Disabilities
Act of 1990 (ADA)Requires employers to give applicants with
physical or mental disabilities the same consideration for

employment as people without disabilities.
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Laws Protecting Employees with Disabilities and Older
EmployeesAlso requires “reasonable accommodations” for
employees with disabilities.Passage in 2008 of Americans with
Disabilities Amendments Act expanded protection.
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AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA)Age
Discrimination in Employment Act (ADEA)
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Laws Protecting Employees with Disabilities and Older
EmployeesProtects workers 40 and over from employment and
workplace discrimination in hiring, firing, promotion, layoff,
compensation, benefits, job assignments and training.
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MINDING the LAW in HRMEmployers must know the law and
act accordingly.Legislation affects all areas of HRM.Court
cases highlight that sometimes it’s proper to go beyond
providing equal rights.Changes in law and legislation occur
regularly.
LG2
Effects of Legislation
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PROGRESS ASSESSMENTWhat’s human resource
management?What did Title VII of the Civil Rights Act of 1964
achieve?What’s the EEOC and what was the intention of
affirmative action?What does “accommodations” mean in the
Americans with Disabilities Act of 1990?
Progress Assessment
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What’s human resource management? Human resource
management is the process of determining the needs of the
organization and then recruiting, selecting, developing,
motivating, evaluating, compensating, and scheduling
employees to achieve organizational goals.
What did Title VII of the Civil Rights Act of 1964 achieve?
Title VII prohibits discrimination in hiring, firing,
compensation, apprenticeships, training, terms, conditions, or

privileges of employment based on race, religion, creed, sex, or
national origin. At a later date age discrimination was added to
the act.
What’s the EEOC and what was the intention of affirmative
action? The Equal Employment Opportunity Commission was
created by the Civil Rights Act. The EEOC was permitted to
issue guidelines for acceptable employer conduct in
administering equal employment opportunity. Affirmative
action is the most controversial policy of the EEOC and was
designed to “right past wrongs” by increasing opportunities for
minorities and women.
What does “accommodations” mean in the American with
Disabilities Act of 1990? Employers are required to make
“reasonable accommodations” for employees with disabilities,
such as modifying equipment or widening doorways.
*
*
HUMAN RESOURCE PLANNING PROCESS
Determining a Firm’s Human Resource Needs
LG3Preparing a human resource inventory of
employees.Preparing a job analysis.Assessing future human
resource demand.Assessing future labor supply.Establishing a
strategic plan.
11-*
See Learning Goal 3: Summarize the five steps in human
resource planning.

*
*
WHAT’S a JOB ANALYSIS?
Determining a Firm’s Human Resource Needs
LG3Job Analysis -- A study of what employees who holds
various job titles do. Job Description -- Specifies the objectives
of the job, the type of work, the responsibilities and duties,
working conditions and relationship to other jobs. Job
Specifications -- A summary of the minimal education and skills
needed to do a particular job.
11-*
See Learning Goal 3: Summarize the five steps in human
resource planning.
*
*
RECRUITING EMPLOYEES
Recruiting Employees from a Diverse Population
LG4Recruitment -- The set of activities for obtaining the right
number of qualified people at the right time. Human resource
managers use both internal and external sources to recruit
employees.Small businesses often make use of web sources like
CareerBuilder and Monster to recruit employees.
11-*
See Learning Goal 4: Describe methods that companies use to
recruit new employees, and explain some of the issues that

make recruitment challenging.
*
*
IT’S NOT EASY BEING SMALL
(Spotlight on Small Business)To survive, small businesses
must recruit and retain qualified workers.Unfortunately, they
lack the resources of larger companies to compete for
employees.Small businesses need innovations like:Letting staff
help recruit and select candidates.“Test-Drive” an
employee.Seek out publicity through local media.
11-*
*
*
EMPLOYEE SOURCES
LG4
Recruiting Employees from a Diverse Population
11-*

Job candidates can come from internal and external sources. In
order to attract qualified employees from external sources many
employers offer referral bonuses to employees who refer a new
employee to the company.
*
*
SELECTION
Selecting Employees Who Will be Productive
LG5Selection -- The process of gathering information and
deciding who should be hired, under legal guidelines, to fit the
needs of the organization and individuals.
11-*
*
*
STEPS in the
SELECTION PROCESS

LG5Obtaining complete application formsConducting initial and
follow-up interviewsGiving employment testsConducting
background investigationsObtaining results from physical
examsEstablishing trial (probationary) work periods
11-*
See Learning Goal 5: Outline the six steps in selecting
employees.
*
*
OOPS!
Areas Where Job Applicants Make Mistakes
Source: USA Today, www.usatoday.com.
LG5
11-*
employees.
Applicants’ Mistakes This slide presents the job application
areas where the applicants make the most mistakes. The results
are based on the survey of over 1,400 CFOs of US companies
with 20 or more employees. The top two areas where applicants
make the most mistakes are interviews and resumes. Ask the
students: What are your experiences with interviews or resume
errors? How many of you follow-up after an interview?
(Source: USA Today)

Chart1InterviewResumeCover LetterReference ChecksFollow
Up InterviewScreening CallOther/Don't Know
Sales
0.32
0.21
0.09
0.09
0.07
0.06
0.16
Sheet1SalesInterview32%Resume21%Cover Letter9%Reference
Checks9%Follow Up Interview7%Screening Call6%Other/Don't
Know16%
*
*
HIRING CONTINGENT WORKERS
Hiring Contingent Workers
LG5Contingent Workers -- Include part-time and temporary
workers, seasonal workers, independent contractors, interns and
co-op students. There are about 5.7 million contingent workers
in the U.S.
11-*
employees.

*
*
WHY HIRE
CONTINGENT WORKERS?
Hiring Contingent Workers
LG5Companies hire contingent workers:When full-time workers
are on leaveDuring periods of peak demandIn uncertain
economic timesTo save on employee benefitsTo screen
candidates for future employment
11-*
employees.
*
*
MOTIVATING TEMPORARY EMPLOYEES
(Making Ethical Decisions)Contingent workers perform well if
the promise of full-time employment is a possibility.Highbrow’s
has no intention of hiring any temporary workers full-time.But
the company feels if they imply two workers will be hired full
time, it may improve employee performance. What is the
ethical thing for them to do?
11-*

employees.
Is this an ethical way to try to motivate employees? What are
the dangers of using this tactic?
*
*
*
PROGRESS ASSESSMENT
Progress AssessmentWhat are the five steps in human resource
planning?What factors make it difficult to recruit qualified
employees?What are the six steps in the selection process?Who
is considered a contingent worker and why do company hire
such workers?
11-*
What are the five steps in human resource planning? The five
steps in human resource planning are: Preparing a human
resource inventory of the organization’s employees, preparing a
job analysis, assessing future human resource demand, assessing
future labor supply and establishing a strategic plan.What
factors make it difficult to recruit qualified employees? Some
factors that make it difficult to recruit qualified employees
include: organizational policies that demand promotions from
within, union regulations, and low wages.
What are the six steps in the selection process? (1) Obtaining
complete application forms, (2) conducting initial and follow-up
interviews, (3) giving employment tests, (4) conducting
background investigations, (5) obtaining results from physical
exams, and (6) establishing trial period.
Who is considered a contingent worker and why do company’s
hire such workers? Contingent workers include part-time

workers, temporary workers, seasonal workers, independent
contractors, interns, and co-op students. Contingent workers
are sometimes hired in an uncertain economic climate, when
full-time workers are on leave, when there is peak demand for
labor or products and finally when quick service is necessary.
*
*
*
TRAINING and DEVELOPING EMPLOYEES
Training and Developing Employees for Optimum Performance
LG6Training and Development -- All attempts to improve
productivity by increasing an employee’s ability to
perform.Training focuses on short-term skills.Development
focuses on long-term abilities.
11-*
See Learning Goal 6: Illustrate employee training and
development methods.
*
*
THREE STEPS of TRAINING and DEVELOPMENT
LG6Assessing organization needs and employee skills to
develop appropriate training needs.Designing training activities
to meet identified needs.Evaluating the training’s effectiveness.

11-*
*
*
MOST COMMONLY USED TRAINING
and DEVELOPMENT ACTIVITIES
LG6OrientationOn-the-Job TrainingApprenticeshipsOff-the-Job
TrainingOnline TrainingVestibule TrainingJob Simulation
11-*
*
*
DEVELOPING EFFECTIVE
MANAGERS
Management Development
LG6Management Development -- The process of training and
educating employees to become good managers and tracking the

progress of their skills over time.Management training
includes:On-the-job coachingUnderstudy positionsJob
rotationOff-the-job courses and training
11-*
*
*
WHY GOOD EMPLOYEES QUIT
LG6
Management Development
Source: Robert Half International
11-*
Why Good Employees Quit This slide presents some of the
reasons why good employees quit. Ask the students: Why is it
important for managers to understand why employees leave a
company? (It translates directly into the bottom line of the
organization. The higher the turnover, the higher the costs for
recruiting, selecting, training and development, etc.) Ask the
students: What are other reasons why employee retention is
important? (Some other reasons may be morale of the workers,
ability to recruit, reputation and image of the company, etc.)
Ask the students: Would you like to work at a place that feels
like it has a revolving door?

Chart1Unhappy with ManagementLimited AdvancementNo
RecognitionInadequate Salary/BenefitsBoredomNo Specific
Reason
%
0.35
0.33
0.13
0.13
0.01
0.05
Sheet1%Unhappy with Management35%Limited
Advancement33%No Recognition13%Inadequate
Salary/Benefits13%Boredom1%No Specific Reason5%To resize
chart data range, drag lower right corner of range.
*
*
USING NETWORKS and
MENTORING
Networking
LG6Networking -- Establishing and maintaining contacts with
key managers in and out of the organization and using those
contacts to develop relationships.Mentors -- Managers who
supervise, coach and guide selected lower-level employees by
acting as corporate sponsors.Networking and mentoring go
beyond the work environment.
11-*

Many students are familiar with social networking but are
unfamiliar with career networking. Ask the students: How can
you use sites like Facebook, YouTube, and Twitter to establish
and maintain contacts with key managers in and out of the
organization?
*
*
APPRAISING PERFORMANCE
on the JOB
Appraising Employee Performance to Get Optimum Results
LG7Performance Appraisal -- An evaluation that measures
employee performance against established standards in order to
make decisions about promotions, compensation, training or
termination.A 360-degree review gives managers opinions from
people at different levels to get a more accurate idea of the
worker’s ability.
11-*
See Learning Goal 7: Trace the six steps in appraising employee
compensation programs.
*
*

SIX STEPS of PERFORMANCE APPRAISALS
LG7Establishing performance standards that are understandable,
measurable and reasonable.Clearly communicating those
standards.Evaluating performance against the
standards.Discussing the results with employees.Taking
corrective action.Using the results to make decisions.
11-*
*
*
MAJOR USES of
PERFORMANCE APPRAISALS
LG7
Appraising Employee Performance to Get Optimum
ResultsIdentify training needsUse as a promotion toolRecognize
worker’s achievementsEvaluate the firm’s hiring processJudge
the effectiveness of the firm’s orientation processUse as a basis
for possible termination of a worker
11-*
Major Uses of Performance Appraisals This slide gives students
insight as to the importance of regular performance appraisals.

To start a discussion on performance appraisals ask students to
discuss the 360-degree review. After the discussion use the next
slide to walk students through some of the problems associated
with performance appraisals.
*
*
PERFORMANCE APPRAISAL MISTAKES
Common Problems Made While Reviewing EmployeesContrast
Effect - Comparing one employee to another.Halo/Horn Effect -
Allowing performances in specific areas to unfairly influence
overall performance evaluation.Similar-to-Me Effect -
Generosity to those you feel are more like you.
LG7
11-*
Performance Appraisal Mistakes This slide highlights some of
the problems made while reviewing employees. Ask the
students: How can managers avoid some of the issues discussed
in this slide? To start a discussion about performance
appraisals and teams ask students: Do you think it is fair to
have your own performance appraised based on the work of
others on your team?

*
*
PROGRESS ASSESSMENT
Progress AssessmentName and describe four training
techniques.What’s the primary purpose of a performance
appraisal?What are the six steps in a performance appraisal?
11-*
Name and describe four training techniques. Off-the-job
training occurs away from the workplace and consists of
internal or external programs to develop any of a variety of
skills or to foster personal development. An apprenticeship
program involves a student or apprentice working alongside an
experienced employee to master the skills and procedures of a
craft. Vestibule training or near-the-job training is done in a
classroom with equipment similar to that used on the job so
employees learn proper methods and safety procedures before
assuming a specific job assignment. Job simulation is the use of
equipment that duplicates job conditions and tasks so trainees
can learn skills before attempting them on the job.
What’s the primary purpose of a performance appraisal? The
primary purpose of a performance appraisal is to determine
whether workers are doing an effective and efficient job, with a
minimum of errors and disruptions.
What are the six steps in a performance appraisal? (1)
Establishing performance standards, (2) communicating those
standards, (3) evaluating performance, (4) discussing results
with employees, (5) taking corrective action, and (6) using the
results to make decisions.
*

*
*
COMPENSATION PROGRAMS
Compensating Employees: Attracting and Keeping the Best
LG8A managed and competitive compensation program
helps:Attract the kinds of employees the business needs.Build
employee incentive to work efficiently and productively.Keep
valued employees from going to competitors or starting their
own firm.Maintain a competitive market position by keeping
costs low due to high productivity from a satisfied
workforce.Provide employee financial security through wages
and fringe benefits.
11-*
See Learning Goal 8: Summarize the objectives of employee
compensation programs, and evaluate pay systems and fringe
benefits.
*
*
TYPES of PAY SYSTEMS
Pay Systems
LG8SalaryHourly Wage/Day WorkPiecework
SystemCommission PlansBonus PlansProfit Sharing PlansGain-
Sharing PlansStock Options
11-*

benefits.
Students should be aware when accepting a job offer to consider
not just the salary but the entire compensation package.
*
*
COMPENSATING TEAMS
Compensating Teams
LG8Team-based pay programs are more challenging than
individual pay systems.The two most common methods for
teams involve:Skill-Based: Pay is increased as skill increases.
(Eastman Chemical uses this system.)Gain-Sharing: Pay is
increased as performance increases. (Nucor Steel uses this
system.)
11-*
benefits.
Skill-based pay is increased when teams learn and apply new
skills. Gain sharing bases team bonuses on improvements over
previous performance.
*

*
*
FRINGE BENEFITS on the JOB
Fringe Benefits
LG8Fringe Benefits -- Sick leave, vacation pay, pension and
health plans that provide additional compensation to employees
beyond base wages.In 1929, Fringe benefits accounted for less
than 2% of payroll cost. Today it’s about 30%.Healthcare has
been the most significant increase in fringe benefit cost.
11-*
benefits.
The rising cost of healthcare and the cost of employer provided
health insurance is unsustainable in the long term. This
requires both management and employees to create systems that
keep cost down, but still provide meaningful coverage. This
could include employee wellness programs and/or higher
deductibles.
*
*
*
The RANGE of
FRINGE BENEFITS
Fringe Benefits
LG8Fringe benefits include incentives like:Company

carsCountry club membershipsRecreation facilitiesSpecial home
mortgage ratesPaid and unpaid sabbaticalsDay-care and elder
care servicesDental and eye careLegal counselingShort or
compressed work weeks
11-*
benefits.
*
*
*
LG8
SPECIAL PERKS at
DREAMWORKS
Fringe BenefitsFree DVDs and screenings of current films.Free
breakfast and lunch plus dinner when working late.Free snack
rooms on every floor.Profit sharing.Ping-Pong and poker
tournaments during work hours.
11-*
benefits.
Special Perks at Dreamworks Employee perks can take different
shapes. Companies like Dreamworks try to offer benefits to

keep the work environment loose and creative. Have students
read this article from Entrepreneur.com
(http://www.entrepreneur.com/humanresources/compensationan
dbenefits/article171630.html) with ideas for twenty low-cost
employee perks.
*
*
CAFETERIA-STYLE and
SOFT BENEFITS
Fringe Benefits
LG8Cafeteria-Style Fringe Benefits -- Allow employees to
choose the benefits they want (up to a certain dollar
amount).Soft Benefits include:Onsite haircuts and shoe
repairConcierge servicesFree meals at workDoggie
daycareOnsite farmer’s markets
11-*
benefits.
The name of the game today regarding employee benefits is
creativity!
*

*
*
LG8
CHANGING TIMES,
CHANGING EMPLOYEE BENEFITS
Fringe Benefits
Source: National Study of Emplyees (2008), Family & Work
Institute.
11-*Employer Benefits19982008Provide Pension
Plans48%29%Offer Wellness Programs51%60%Retirement Plan
Contribution91%81%Permit Some Flexible Work Hours68%80%
benefits.
Changing Times This slide shows how employees have moved
away from monetary based employee benefits to non-monetary
based employee benefits. Discuss with students the implication
of this trend. Ask the students: Why has this shift occurred?
(Answers will vary but will should include competition and
globalization.)
*
*
LET’S GO to the BEACH!

Average Vacation Days by Country
Fringe Benefits
LG8
11-*
benefits.
Vacation Days Per Year This slide presents a comparison of
number of vacation days per year in different countries. Italy
leads with an average of 42 vacation days per year where as the
U.S. comes in last with just 13 days. Even though the U.S.
comes in last with only 13 days, an interesting fact to share
with the students is that most American don’t even use these 13
days. Ask the students: What impact does this benefit of
number of days of vacation have on recruiting at an
international level? (Most should be able to identify that
domestically, it may not have much of an impact. However
internationally, potential candidates would be comparing
between different countries. Especially if they are from one of
the ones that offer a much higher number of vacation days, such
as Italy, France, or Germany. This may have an impact on the
ability of an organization to recruit.)
Chart1USAJapanCanadaUKBrazilGermanyFranceItaly
Series 1
13
25
26
28
34
35
37

42
Sheet1Series 1Series 2Series
3USA132.42Japan254.42Canada261.83UK282.85Brazil34Germa
ny35France37Italy42
*
*
WORKING WORLDWIDE
(Reaching Beyond Our Borders)Managers need to understand
the business needs of each country they operate
in.Compensation: Conversion to foreign currencies and special
allowances often are needed.Health and Pension Standards:
Benefits are different country-by-country.Paid Time Off:
Vacation time, sick and personal leave vary.Taxation: Tax
policies vary.Communication: Employees can feel …
*
*
Chapter Nine
Production and Operations Management of Goods and Services
rights reserved.
McGraw-Hill/Irwin

*
*
*
Profile
Current CEO and President of IBM, he started in the company
in 1973.The company invested $16 billion in acquiring 60 other
companies.Switching the company’s focus from production to
service, Palmisano has led IBM to enter the emerging global
market.
SAMUEL J. PALMISANO
IBM
9-*
*
*
*
Manufacturing and Services in Perspective
From 2001 to 2009, manufacturing output in the U.S. rose 4%
each year. The U.S. is still the world’s leading manufacturer.
MANUFACTURING in the U.S.
LG1Almost 25% of all goods produced each year come from the
U.S.

9-*
See Learning Goal 1: Describe the current state of U.S.
manufacturing and what manufacturers have done to become
more competitive.
Students are often surprised to read that the United States is the
world’s leading manufacturer, producing 25 percent of all goods
produced worldwide. To start a discussion ask students: What
items do companies in the United States produce?
*
*
Source: Parade Magazine, www.parade.com/intel, April 19,
2009.
LG1
WHAT’S MADE in the USA?
Leading U.S. Manufactured Goods
9-*ProductsValueNumber of Employees Chemicals –
Pharmaceuticals, cosmetics, soaps, paints, fertilizers$250
Billion830,000 AmericansTransportation Equipment – Cars,
planes, trains, ships$195 BillionOver 1.4 Million
AmericansProcessed Foods, Beverages and Tobacco – Cookies,
coffee, cigarettes, prepared meals$175 Billion1.7 Million
AmericansComputers and Electronics – Computers and
communication equipment$146 Billion1.2 Million Americans
more competitive.

What’s Made in the USA? This slide presents the leading
goods manufactured in the United States. Ask students: Why
are the goods on the slide manufactured in the United States?
(Student’s answers will vary but should focus on the abundance
of certain factors of production and the United States’
comparative advantage in the production of capital intensive
products, topics that were covered earlier in the text) To
determine what goods are manufactured in a particular state use
the Bureau of Economic Analysis website (www.bea.gov).
*
*
Source: BusinessWeek, www.businessweek.com, November 12,
2007.
Exporters Extraordinaire
Top Ten States that Manufacture Goods for Export
LG1
9-*State Thousands of
WorkersCalifornia206.1Texas108.9Ohio95.6Michigan79.8New
York77.2Illinois76.6Pennsylvania71.8Washington71.3North
Carolina60.1Indiana59.6
more competitive.
Leading US Manufacturing States This slide identifies the ten
leading manufacturing states in terms of jobs created in the U.S
for exports. Ask the students if they are surprised about any of

the states listed being among the largest employers in
manufacturing.
3. As mentioned in the previous slide it might be useful to
explore what items are being produced in each of the states
mentioned in this slide by visiting www.bea.gov.
*
*
Source: Industry Week, www.industryweek.com.
MASSIVE MANUFACTURERS
The Top Ten U.S. Manufacturers
LG1
9-*RankCompany1Exxon-
Mobil2Chevron3ConocoPhillips4General Electric5General
Motors6Ford Motor7Valero Energy8Hewlett-
Packard9IBM10Procter & Gamble
more competitive.
Top Ten Manufacturers This slide presents the top ten
manufacturers according to the 2009 Industry Week’s US 500
largest publicly held manufacturing companies based on
revenues. The list represents companies from 33 industries, 40
states, and boasts a combined revenue of nearly $4.9 trillion.
One quick observation from this slide – it is dominated by oil
and energy companies. Ask the students: How much do you pay
per gallon of gas? Does that have any impact on this listing?
(Answer is obvious – higher the gas price, more money the oil

companies are making in both revenues and profits.) On this
list, ExxonMobil had revenue of $466 billion, Chevron had
revenue of $267billion, ConocoPhillips revenue was $241
billion whereas Valero Energy had revenue of $119billion.
(Source: Industry Week, May 20, 2009.)
*
*
*The Green Economy is worth more than $200 billion annually
and is expected to reach $1 trillion by 2020.Consumers like
products that say “all natural,” “locally grown,” “energy
efficient,” etc.The market for new green products and services
is almost endless.The Green Movement, however, is only
beginning.
The “GREEN” MOVEMENT
IMPROVES the ECONOMY
(Thinking Green)
9-*
more competitive.
*
*
*The U.S. economy is no longer manufacturing based.85% of

jobs are in the service sector.The top-paying service jobs in the
U.S. are in:Legal servicesMedical
servicesEntertainmentAccountingFinanceManagement
consulting
TOP PAYING SERVICE JOBS
LG1
9-*
more competitive.
*
*
Manufacturers
and Service Organizations Become More CompetitiveU.S. is
still the leader in nanotechnology and biotechnology.How can
U.S. businesses maintain a competitive edge?Focusing on
customersPracticing continuous improvementFocusing on
qualityRelying on the Internet to unite companiesAdopting new
production techniques.
REMAINING COMPETITIVE in
GLOBAL MARKETS
LG1
9-*
more competitive.

The famous economist Joseph Schumpeter believed in
continuous improvement and discussed capitalism as a force for
creative destruction. If the United States is to remain
competitive the nation as a whole must continually innovate
eschewing old inefficient industries in favor of capital intensive
knowledge driven industries.
*
*
From Production to Operations ManagementProduction -- The
creation of goods using land, labor, capital, entrepreneurship
and knowledge (the factors of production).
PRODUCTION and
PRODUCTION MANAGEMENT
LG2Production Management -- All the activities managers do to
help firms create goods.
9-*
See Learning Goal 2: Describe the evolution from production to
operations management.
*
*
*
From Production to Operations ManagementOperations
Management -- A specialized area in management that converts
or transforms resources into goods and services.Operations

management includes:Inventory managementQuality
controlProduction schedulingFollow-up services
OPERATIONS MANAGEMENT
LG2
9-*
See Learning Goal 2: Describe the evolution from production to
operations management.
*
*
Progress AssessmentWhat have U.S. manufacturers done to
regain a competitive edge?What must U.S. companies do to
continue to strengthen the country’s manufacturing base?What
led companies to focus on operations management rather than
production?
PROGRESS ASSESSMENT
9-*
What have U.S. manufacturers done to regain a competitive
edge? Manufacturers have regained a competitive advantage by
focusing on the following: he needs of customers, maintaining a
close relationship with suppliers to make sure they are meeting
customer needs, practicing continuous improvement, focusing
on quality, saving on costs through better site selection, using
new technologies such as the internet, adopting new production
techniques.
What must U.S. companies do to continue to strengthen the
country’s manufacturing base? To strengthen the nation’s
manufacturing base will require an adjustment and recognition
of the new realities in manufacturing. This will require
focusing on new technologies such as the green ventures
discussed in your textbook.

What led companies to focus on operations management rather
than production? The nature of business has changed
dramatically in the past twenty years forcing companies to focus
on operations management. One change is the shift from a
manufacturing economy to one dominated by the service
industry. Operations management is a more specialized area of
management that converts resources into useful outputs.
*
*
Production Processes
The PRODUCTION PROCESS
LG3
9-*
See Learning Goal 3: Identify various production processes and
describe techniques that improve productivity, including
computer-aided design and manufacturing, flexible
manufacturing, lean manufacturing, and mass customization.
*
*
Production ProcessesForm Utility -- The value producers add to
materials in the creation of finished goods and services.
FORM UTILITY
LG3
9-*

*
*To build and deliver products in response to the demands of
the customer.To provide an acceptable quality level.To provide
everything at the lowest possible cost.
GROVE’S BASIC PRODUCTION REQUIREMENTS
LG3
9-*
Andrew Grove is the former chairman of computer chip
manufacturer Intel.
*
*Process Manufacturing -- The part of production that
physically or chemically changes materials.Assembly Process --
The part of the production process that puts together
components.
PROCESS and ASSEMBLY in PRODUCTION

LG3
9-*
*
*Production processes are either continuous or
intermittent.Continuous Process -- Long production runs turn
out finished goods over time.Intermittent Process -- Production
runs are short and the producer adjusts machines frequently to
make different products.
KEY PRODUCTION PROCESSES
LG3
9-*
*
*
MADE in a MINUTE

Production of Some of America’s Favorite Products
LG3
9-*Product Number of Items
Made in a MinuteKrispy Kreme Doughnuts5,208Chips Ahoy!
Cookies4,000Twinkies972Jello Boxes764LifeSavers100 rolls
Production Efficiency This slide presents the production
efficiency of various products. Before introducing this slide, it
would be interesting to ask the students to take a guess: How
many Krispy Kreme Doughnuts or Chips Ahoy! Cookies are
made every minute? Again it is important to reinforce the point
that production efficiency directly translates into cost savings
and therefore profits.
*
*
*
The Need to Improve Production Techniques and Cut Costs
DEVELOPMENTS MAKING U.S. COMPANIES MORE
COMPETITIVE
LG3Computer-aided design and manufacturingFlexible
manufacturingLean manufacturingMass customization
9-*

*
*
Computer-Aided Design and Manufacturing
COMPUTER-AIDED DESIGN and MANUFACTURING
LG3Computer-Aided Design (CAD) -- The use of computers in
the design of products.Computer-Aided Manufacturing (CAM) -
- The use of computers in the manufacturing of products.
9-*
*
*
Flexible Manufacturing
FLEXIBLE MANUFACTURING
LG3Flexible Manufacturing -- Designing machines to do
multiple tasks so they can produce a variety of products.
9-*

*
*
*
Lean Manufacturing
LEAN MANUFACTURING
LG3Lean Manufacturing -- Using less of everything than in
mass production.Compared to others, lean companies:Take half
the human effort.Have half the defects in finished
products.Require one-third the engineering effort.Use half the
floor space.Carry 90% less inventory.
9-*
*
*
Mass Customization
MASS CUSTOMIZATION
LG3Mass Customization -- Tailoring products to meet the needs
of a large number of individual customers.More manufacturers
are learning to customize.Mass customization exists in the
service sector too.

9-*
*
*
Progress AssessmentWhat’s form utility?Define and
differentiate the following: process manufacturing, assembly
process, continuous process and intermittent process.What do
you call the integration of CAD and CAM?What’s mass
customization?
PROGRESS ASSESSMENT
9-*
What’s form utility? Form utility is the value producers add to
materials in the creation of finished goods and services. For
example, when a company transforms raw steel into the body of
an automobile they are creating form utility.
Define and differentiate the following: process manufacturing,
assembly process, continuous process and intermittent process.
Process manufacturing physically or chemically changes
materials such as turning sand into glass or computer chips.
The assembly process puts together components to create a
product. For example, cars are made through an assembly
process that puts together the frame, engine and other parts.
Continuous process involves long production runs turning out
finished goods over time. For example, a plant that makes
plastic cups is run on a continuous process. Rather than using
long runs, an intermittent process involves short runs that
respond directly to specific customer orders. An example of this

process would include manufacturers of men’s custom business
suits.
What do you call the integration of CAD and CAM? The
integration of CAD and CAM is referred to computer-integrated
manufacturing or CIM.
What’s mass customization? Mass customization is the process
of tailoring products to meet the demands of a large number of
individual customers. One example of this process is NIKEiD
which allows customers to design athletic shoes by choosing
from a variety of colors and designs. For more information on
this process go to www.nike.com.
*
*
Operations Management PlanningOperations management
planning helps solve problems like:Facility locationFacility
layoutMaterials requirement planningPurchasingInventory
controlQuality control
LG4
9-*
See Learning Goal 4: Describe operations management
planning issues including facility location, facility layout,
materials requirement planning, purchasing, just-in-time
inventory control, and quality control.
*

*
Facility LocationFacility Location -- The process of selecting a
geographic location for a company’s operations.
FACILITY LOCATION
LG4Rising numbers of Internet businesses means brick-and-
mortar retailers must find great locations.
9-*
*
*Potential of low-cost labor is very attractive to companies
hoping to remain competitive.However, shuttering operations
and moving can often cause severe economic problems in
dependent areas.What would you do if you were the CEO of
ChildrenWear Industries faced with this problem?
STAY or LEAVE
(Making Ethical Decisions)
9-*

*
*
Taking Operations Management to the InternetSometimes
businesses outsource engineering, design and manufacturing to
other companies.Often these relationships are managed through
the Internet.Many companies are developing Internet-focused
strategies.
on the INTERNET
LG4
9-*
*
*
Facility Location in the FutureInformation technology gives
firms increased flexibility in terms of location.Telecommuting -
- Working from home via computer and modem.
FUTURE FACILITY LOCATION
LG4
9-*

*
*
*Dain Hancock of Lockheed Martin had the formidable task of
uniting 80 companies into a single production unit.
PARTNERING BEYOND
COUNTRY BORDERS
(Reaching Beyond Our Borders)Using the Internet and tech
tools, like electronic white boards, kept the companies in touch
in real time.
9-*
*
*
Facility LayoutFacility Layout -- The physical arrangement of
resources, including people, to most efficiently produce goods
and provide services.Facility layout depends on the processes
performed:Service: Help customers find productsManufacturing:
Improve efficiency
SETTING UP the FACILITY
LG4

9-*
*
*
Facility LayoutAssembly Line Layout – Workers do only a few
tasks at a time.Modular Layout – Teams of workers produce
more complex units of the final product.Fixed-Position Layout –
Allows workers to congregate around the product.Process
Layout – Similar equipment and functions are grouped together.
FACILITY LAYOUT OPTIONS
LG4
9-*
*
*
LG4
Facility Layout
ASSEMBLY LINE LAYOUT

9-*
*
*
*
LG4
Facility Layout
MODULAR LAYOUT
9-*
*
*
LG4
Facility Layout
PROCESS LAYOUT
9-*

*
*
LG4
Facility Layout
FIXED-POSITION LAYOUT
9-*
*
*
Materials Requirement PlanningMaterials Requirement Planning
(MRP) -- A computer-based operations management system that
uses sales forecasts to make sure parts and materials are
available when needed.Enterprise Resource Planning (ERP) -- A
newer version of MRP, combines computerized functions into a
single integrated software program using a single database.
MRP and ERP
LG4
9-*

*
*
PurchasingPurchasing -- The function that searches for high-
quality material resources, finds the best suppliers and
negotiates the best price for goods and services.
PURCHASING
LG4The Internet has transformed purchasing.
9-*
*
*
*
Just-in-Time Inventory ControlJust-in-Time (JIT) Inventory
Control -- The production process in which a minimum of
inventory is kept and parts, supplies and other needs are
delivered just in time to go on the assembly line.To work
effectively, the process requires excellent coordination with
suppliers.

INVENTORY CONTROL
LG4
9-*
A JIT system makes sure the right materials are at the right
place at the right time at the cheapest cost to meet both
customer and production needs. To start a discussion with
students ask the following question: While the benefits of the
JIT system are obvious what are some of the drawbacks?
*
*
*
Quality ControlQuality -- Consistently producing what the
customer wants while reducing errors before and after
delivery.Six Sigma Quality -- A quality measure that allows
only 3.4 defects per million opportunities.
QUALITY CONTROL
LG4
9-*

*
*
Quality ControlStatistical Quality Control -- A process used to
continually monitor all phases of the production
process.Statistical Process Control -- A process of testing
statistical samples of product components at each stage of
production. Measuring quality along the production process
reduces the need for quality-control at the end.
STATISTICAL QUALITY CONTROL & STATISTICAL
PROCESS CONTROL
LG4
9-*
*
*
The Baldrige AwardsCompanies can apply for awards in these
areas:ManufacturingServicesSmall
BusinessesEducationHealthcare
The BALDRIGE AWARDS
LG4
9-*

*
*
Source: National Institute of Standards and Technology,
www.quality.nist.gov. Cargill Corn Milling North America
Wayzata, Minnesota (Manufacturing)Poudre Valley Health
System
Fort Collins, Colorado (Healthcare)Iredell-Statesville Schools
Statesville, North Carolina (Education)
THE WINNERS ARE…
2008 Baldrige Award Recipients
The Baldrige Awards
LG4
9-*
Baldrige Award Recipients This slide presents 2008 Baldrige
National Quality Award recipients. Awardees included one
manufacturer, one health care system, and one educational
institution. The 2008 Baldrige award recipients were selected
from a pool of 85 applicants and evaluated in seven areas:
leadership; strategic planning; customer and market focus;
measurement, analysis and knowledge management; human
resource focus; process management; and results.

(Source: NIST News Release, November 25, 2008)
4. To better understand the process have students spend time
reviewing the www.nist.gov website.
*
*
*
ISO 9000 and ISO 14000 StandardsThe International
Organization for Standardization (ISO) is a worldwide
federation of national standards bodies.ISO 9000 -- The
common name given to quality management and assurance
standards.ISO 14000 -- A collection of the best practices for
managing an organization’s impact on the environment.
WHAT is the ISO?
LG4
9-*
The ISO is the world’s largest developer and publisher of
international standards. The purpose of the the ISO is to form a
bridge between the public and private sectors. The ISO is
based in Switzerland.
*

*
Progress AssessmentWhat are the major criteria for facility
location?What’s the difference between MRP and ERP?What’s
just-in-time inventory control?What are Six Sigma quality, the
Baldrige Award, ISO 9000 and ISO 14000?
PROGRESS ASSESSMENT
9-*
What are the major criteria for facility location? Like most
business related decisions managers must always consider the
customer and the impact on customers ability to use the
company’s services and to communicate about their needs.
Other criteria that need to be considered include: labor costs,
availability of resources, access to transportation, proximity to
customers, suppliers, crime rates, quality of life for employees
and the cost of living to mention but a few.
What’s the difference between MRP and ERP? Materials
requirement planning or (MRP) is a computer-based operations
management system that uses sales forecasts to make sure
needed parts and materials are available at the right time and
place. Enterprise resource planning (ERP), a newer version of
MRP, combines the computerized functions of all the divisions
and subsidiaries of the firm into a single integrated software
program that uses a single database.
What’s just-in-time inventory control? One major expense in
the production process is the holding of parts. The goal of just-
in-time inventory is to eliminate or reduce that cost. Just-in-
time inventory system keepss a minimum of inventory on the
premises and only delivers parts just as they are needed on the
factory floor.
What are Six Sigma quality, the Baldrige Award, ISO 9000 and
ISO 14000? Six Sigma is a quality-control standard which sets
a benchmark of no more than 3.4 defects per million
opportunities. The Baldrige Award was created in 1987 to
promote a standard for overall quality in the following areas:
manufacturing, services, small business, education, and health
care. The award was named after Malcolm Baldrige the late

U.S. secretary of commerce. The International Organization for
Standardization or ISO is a worldwide federation of national
standards bodies from more than 140 countries. This
nongovernmental organization establishes global measures for
the quality of individual products. ISO 9000 is the common
name given to quality management and assurance standards,
while ISO 14000 is a collection of the best practices for
managing an organization’s environmental impact.
*
*
Control Procedures: PERT and GANTT ChartsProgram
Evaluation and Review Technique (PERT) -- A method for
analyzing the tasks involved in completing a given project and
estimating the time needed.
PERT
LG5
9-*
*

*
Chapter Eight
Adapting Organizations to Today’s Markets
rights reserved.
McGraw-Hill/Irwin
*
*
Profile
Started as a field sales representative and moved up through
Xerox.When she was chosen as the new CEO, Xerox was in bad
shape.She cut the debt and built up cash reserves.Follows her
motto - “Work hard. Measure the results. Tell the truth.”
ANNE MULCAHY
Xerox
8-*
*
*
*
Everyone’s Organizing

Many companies are reorganizing, especially those in decline.
Including:Auto makersHomebuildersBanksAdjusting to
changing markets is normal in capitalist economies. Companies
must go back to basic organizational principles and firm up the
foundation.
REORGANIZATION is for
EVERYONE
LG1
8-*
See Learning Goal 1: Outline the basic principles of
organization management.
Changing economic times require businesses to alter their
approach via reorganization. Using organizational principles is
an important aspect to this reorganization.
*
*General Electric (GE) must restructure due to the financial
crisis.Some international units, like the GE Money unit, may
need to be sold to cut costs.Reorganized from six business
segments to four.Technology InfrastructureEnergy
InfrastructureGE CapitalNBC Universal
GE LOOKS for MORE PROFITS
(Reaching Beyond Our Borders)
8-*
*

*
*
Building an Organization from the Bottom UpCreate a division
of laborSet up teams or departmentsAllocate resourcesAssign
tasksEstablish proceduresAdjust to new realities
STRUCTURING an ORGANIZATION
LG1
8-*
*
*
You own a lawn-mowing business and are aware of the hazards
in the job. But, you’ve seen other companies save money by
eliminating safety equipment. You’d also like to make more
money.
SAFETY vs. PROFIT
(Making Ethical Decisions)What do you do? Save money with
less safety precautions? What are the consequences?
8-*
*

*
*
The Changing OrganizationOften change in organizations is due
to evolving business environments:More global
competitionDeclining economyFaster technological
changePressure to protect the environmentCustomer
expectations have also changed --Consumers today want high-
quality products with fast, friendly service and all at low cost.
THE CHANGING ORGANIZATION
LG2
8-*
See Learning Goal 2: Compare the organizational theories of
Fayol and Weber.
*
*
*
The Development of Organization DesignMass production of
goods led to complexities in organizing businesses.
PRODUCTION CHANGED
ORGANZIATION DESIGN
LG2Economies of Scale -- Companies can reduce their
production costs by purchasing raw materials in bulk.The
average cost of goods decrease as production levels rise.
8-*

Fayol and Weber.
*
*
*
Fayol’s Principles of OrganizationUnity of commandHierarchy
of authorityDivision of laborSubordination of individual
interests to the general interestAuthority
FAYOL’S PRINCIPLES
LG2Degree of centralizationClear communication
channelsOrderEquityEsprit de corps
8-*
Fayol and Weber.
This slide presents Fayol’s principles of organization. Fayol
published General and Industrial Management in 1919. Unity of
command and Hierarchy of authority suggest that each
employee reports to one and only one boss. Management
courses throughout the world teach these principles and
organizations are designed accordingly. When these principles
become rules, policies, and regulations, they create inflexibility
which hampers organizations ability to respond quickly to
situations. An example of this inflexibility or a slower response
time can be seen in FEMA’s response to Hurricane Katrina.
*

*
*
Fayol’s Principles of OrganizationOrganizations in which
employees have no more than one boss; lines of authority are
clear.
ORGANIZATIONS BASED on
FAYOL’S PRINCIPLES
LG2Rigid organizations that often don’t respond to customers
quickly.
8-*
Fayol and Weber.
*
*
*
Max Weber and Organizational TheoryEmployees just need to
do what they’re told.In addition to Fayol’s principles, Weber
emphasized:Job descriptions.Written rules, decision guidelines
and detailed records.Consistent procedures, regulations and
policies.Staffing and promotion based on qualifications.
WEBER’S PRINCIPLES
LG2
8-*
Fayol and Weber.

Weber, a German sociologist and economist, wrote The Theory
of Social and Economic Organizations. Weber’s principles were
similar to Fayol’s. He emphasized job descriptions, written
rules, consistent policies, regulations, and procedures, and
staffing and promotions based on qualifications. Weber was in
favor of bureaucracy and believed that these principles were
necessary for large organizations’ effective functioning.
However, in today’s corporate world, these rules and
bureaucracy do not necessarily work. Organizations need to
respond to customers and other environmental factors quickly
which calls for a creative, flexible, and a quick decision making
process contrary to a bureaucratic process.
*
*
*
Turning Principles into Organization DesignWhen following
Fayol and Weber, managers control workers.Hierarchy -- A
system in which one person is at the top of an organization and
there is a ranked or sequential ordering from the top
down.Chain of Command -- The line of authority that moves
from the top of the hierarchy to the lowest level.
HIERARCHIES and COMMAND
LG2
8-*
Fayol and Weber.
*

*
*
Turning Principles into Organization Design
LG2
TYPICAL ORGANIZATION CHART
8-*
Fayol and Weber.
*
*
Turning Principles into Organization DesignBureaucracy -- An
organization with many layers of managers who set rules and
regulations and oversee all decisions.It can take weeks or
months to have information passed down to lower-level
employees.Bureaucracies can annoy customers.
BUREAUCRATIC ORGANIZATIONS
LG2
8-*
Fayol and Weber.
*
*

*
Choosing Centralized or Decentralized AuthorityCentralized
Authority -- When decision-making is concentrated at the top
level of management.
CENTRALIZATION or DECENTRALIZATION?
LG3Decentralized Authority -- When decision-making is
delegated to lower-level managers and employees more familiar
with local conditions than headquarters.
8-*
See Learning Goal 3: Evaluate the choices managers make in
structuring organizations.
Centralization can be defined as an organizational structure that
focuses on retaining control of authority with higher level
managers. One of the disadvantages of this type of management
style is slower decisions because of layers of management. Ask
the students: What specific problems you see with this type of
management? (Slower decision-making means the company is
less responsive to both internal an external customers needs.)
Share with the students a simple rule to follow when dealing
with centralized authority: Decisions regarding overall company
policy and establishment of goals and strategies should be made
at the top.
Decentralization is an organizational structure that focuses on
delegating authority throughout the organization to middle and
lower-level managers. The most significant advantage of this
form of management style is the empowerment of the
employees. Statistics indicate when delegation is practiced in a
company, absenteeism, injuries, loyalty and production
improve. Share with the students a simple rule to follow when
dealing with decentralized authority: The closer an employee
interacts with the customer, the more decentralized the
decision-making should be. For example, a customer service
manager must have the authority to make a decision that will

satisfy a customer immediately, not wait until the home office
makes a decision.
*
*
*
Choosing the Appropriate Span of ControlSpan of Control --
The optimal number of subordinates a manager supervises or
should supervise.When work is standardized, broad spans of
control are possible.Appropriate span narrows at higher levels
of the organization.The trend today is to reduce middle
managers and hire better low-level employees.
SPAN of CONTROL
LG3
8-*
*
*
Choosing Tall versus Flat Organization StructuresStructures
determine the way the company responds to employee and
customer needs.Tall Organization Structures -- An
organizational structure in which the organization chart would
be tall because of the various levels of management. Flat
Organization Structures -- An organizational structure that has
few layers of management and a broad span of control.

ORGANIZATIONAL STRUCTURES
LG3
8-*
Many organizations have moved from tall organizations to flat
organizations in an effort to increase nimbleness in the
marketplace.
*
*
Choosing Tall versus Flat Organization Structures
FLAT ORGANIZATIONAL
STRUCTURE
LG3
8-*
*
*
Weighing the Advantages and Disadvantages of
DepartmentalizationDepartmentalization -- Divides
organizations into separate units.Workers are grouped by skills

and expertise to specialize their skills.
DEPARTMENTALIZATION
LG3
8-*
*
*
*
DepartmentalizationEmployees develop skills and progress
within a department as they master skills.The company can
achieve economies of scale.Employees can coordinate work
within the function and top management can easily direct
activities.
ADVANTAGES of DEPARTMENTALIZATION
LG3
8-*
*
*
*

DepartmentalizationDepartments may not communicate
well.Employees may identify with their department’s goals
rather than the organization’s.The company’s response to
external changes may be slow.People may not be trained to take
different managerial responsibilities, instead they become
specialists.Department members may engage in groupthink and
may need outside input.
DISADVANTAGES of DEPARTMENTALIZATION
LG3
8-*
*
*
Looking at Alternate Ways to Departmentalize
LG3
WAYS to DEPARTMENTALIZE
8-*
*
*
Looking at Alternate Ways to Departmentalize
LG3

WAYS to DEPARTMENTALIZE
8-*
*
*
Progress AssessmentWhy are organizations becoming
flatter?What are some reasons for having a narrow span of
control in an organization?What are the advantages and
disadvantages of departmentalization?What are the various ways
a firm can departmentalize?
PROGRESS ASSESSMENT
8-*
Why are organizations becoming flatter? Over the last 25 years
businesses have adopted flatter organizations with fewer layers
of management and a broader span of control in order to quickly
respond to customer demands. A flatter organization gives
lower-level employees the authority and responsibility to make
decisions directly affecting customers.
What are some reasons for having a narrow span of control in an
organization? Span of control refers to the number of
subordinates a manager supervises. Generally, the span of
control narrows at higher levels of the organization, because
work becomes less standardized and managers need more face-
to face communication.
What are the advantages and disadvantages of
departmentalization?
The advantages of departmentalization include:
Departmentalization may reduce costs, since employees should
be more efficient, employees can develop skills in depth and

progress within a department as they master more skills; the
company can achieve economies of scale by centralizing all the
resources it needs and locating various experts in that particular
area; employees can coordinate work within the function, and
top management can easily direct and control various
departments’ activities.
The disadvantages of departmentalization include:
Communication is inhibited; employee’s may identify with their
department’s goals rather than the organization’s; the
company’s response may be slowed by departmentalization;
employee’s tend to be narrow specialists; department members
may engage in groupthink and may need input from the outside
to become more competitive.
4. What are the various ways a firm can departmentalize? An
organization can elect to departmentalize in the following ways:
customer group, product, functional, geographic, process, and
hybrid.
*
*
Organization ModelsLine OrganizationsLine-and-Staff
OrganizationsMatrix-Style OrganizationsCross-Functional Self-
Managed Teams
FOUR WAYS to STRUCTURE an ORGANIZATION
LG4
8-*
See Learning Goal 4: Contrast the various organizational
models.

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