Managers and Management

Managers and Management
Chapter 1 Managers and Management PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

L E A R N I N G O U T C O M E S After reading this chapter, I will be able to:
Describe the difference between managers and operative employees. Explain what is meant by the term management. Differentiate between efficiency and effectiveness. Describe the four primary processes of management. Classify the three levels of managers and identify the primary responsibility of each group. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

L E A R N I N G O U T C O M E S (cont’d) After reading this chapter, I will be able to:
Summarize the essential roles performed by managers. Discuss whether the manager’s job is generic. Describe the four general skills necessary for becoming a successful manager. Describe the value of studying management. Identify the relevance of popular humanities and social science courses to management practices. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organizations Organization Common characteristics
A systematic arrangement of people brought together to accomplish some specific purpose; applies to all organizations—for-profit as well as not-for-profit organizations. Where managers work (manage) Common characteristics Goals Structure People Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Common Characteristics of Organizations
Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 1.1

People Differences Operatives Managers
People who work directly on a job or task and have no responsibility for overseeing the work of others Managers Individuals in an organization who direct the activities of others Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organizational Levels

Identifying Managers First-line managers Middle managers Top managers
Supervisors responsible for directing the day-to-day activities of operative employees Middle managers Individuals at levels of management between the first-line manager and top management Top managers Individuals who are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Management Defined Management
The process of getting things done, effectively and efficiently, through and with other people Efficiency Means doing the thing correctly; refers to the relationship between inputs and outputs; seeks to minimize resource costs Effectiveness Means doing the right things; goal attainment Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Efficiency and Effectiveness

Management Process Activities
Management process: planning, organizing, leading, and controlling Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 1.4

Management Process Planning Organizing
Includes defining goals, establishing strategy, and developing plans to coordinate activities Organizing Includes determining what tasks 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 Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Management Process Leading Controlling
Includes motivating employees, directing the activities of others, selecting the most effective communication channel, and resolving conflicts Controlling The process of monitoring performance, comparing it with goals, and correcting any significant deviations Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Mintzberg’s Managerial Roles
Interpersonal Figurehead Leader Liaison Informational Monitor Disseminator Spokesperson Decisional Entrepreneur Disturbance hander Resource allocator Negotiator Source: Adapted from The Nature of Managerial Work (paperback) by H. Mintzberg, Table 2, pp.92–93. Copyright © 1973 Addison Wesley Longman. Reprinted by permission of Addison Wesley Longman. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 1.5

Is The Manager’s Job Universal?
Level in the organization Do managers manage differently based on where they are in the organization? Profit versus not-for-profit Is managing in a commercial enterprise different than managing in a non-commercial organization? Size of organization Does the size of an organization affect how managers function in the organization? Management concepts and national borders Is management the same in all economic, cultural, social and political systems? Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Distribution of Time per Activity by Organizational Level
Source: Adapted from T. A. Mahoney, T. H. Jerdee, and S. J. Carroll, “The Job(s) of Management,” Industrial Relations 4, No.2 (1965), p.103. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 1.6

Importance of Managerial Roles in Small and Large Businesses
Source: Adapted from J. G. P. Paolillo, “The Manager’s Self Assessments of Managerial Roles: Small vs. Large Firms,” American Journals of Small Business, January–March 1984, pp.61–62. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 1.7

General Skills for Managers
Conceptual skills A manager’s mental ability to coordinate all of the organization’s interests and activities Interpersonal skills A manager’s ability to work with, understand, mentor, and motivate others, both individually and in groups Technical skills A manager’s ability to use the tools, procedures, and techniques of a specialized field Political skills A manager’s ability to build a power base and establish the right connections Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Specific Skills for Managers
Behaviors related to a manager’s effectiveness: Controlling the organization’s environment and its resources. Organizing and coordinating. Handling information. Providing for growth and development. Motivating employees and handling conflicts. Strategic problem solving. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Management Charter Initiative Competencies for Middle Managers
Initiate and implement change and improvement in services, products, and systems Monitor maintain, and improve service and product delivery Monitor and control the use of resources Secure effective resource allocation for activities and projects Recruit and select personnel Develop teams, individuals, and self to enhance performance Plan, allocate, and evaluate work carried out by teams, individuals and self Create, maintain, and enhance effective working relationships Seek, evaluate, and organize information for action Exchange information to solve problems and make decisions EXHIBIT 1.8 Copyright © 2004 Prentice Hall, Inc. All rights reserved.

How Much Importance Does The Marketplace Put On Managers?
Good (effective) managerial skills are a scarce commodity. Managerial compensation packages are one measure of the value that organizations place on them. Management compensation reflects the market forces of supply and demand. Management superstars, like superstar athletes in professional sports, are wooed with signing bonuses, interest-free loans, performance incentive packages, and guaranteed contracts. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Why Study Management? We all have a vested interest in improving the way organizations are managed. Better organizations are, in part, the result of good management. You will eventually either manage or be managed Gaining an understanding of the management process provides the foundation for developing management skills and insight into the behavior of individuals and the organizations. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Contingency Approach
The situational approach to management that replaces more simplistic systems and integrates much of management theory Four popular contingency variables Organization size Routineness of task technology Environmental uncertainty Individual differences Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Managing in a Contemporary World
Chapter 2 Managing in a Contemporary World PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe the three waves in modern social history and their implications for organizations. Explain the importance of viewing management from a global perspective. Identify the ways in which technology is changing the manager’s job. Describe the difference between an e-business, e-commerce, and an e-organization. Define social responsibility and ethics. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain what is meant by the term entrepreneurship and identify the components of the entrepreneurial venture. Describe the management implications of a diversified workforce. Identify which work/life concepts are affecting employees. Explain why many corporations have downsized. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Three Waves That Changed the World
Agriculture Until the late nineteenth century, all economies were agrarian. Industrialization From the late 1800s until the 1960s, most developed countries moved from agrarian societies to industrial societies. Information Information technology is transforming society from its manufacturing focus to one of service. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Changing Economy Old Economy
National borders serve to limit competition Technology reinforces rigid hierarchies and limits access to information Job opportunities are for blue-collar industrial workers Population is relatively homogeneous Business is estranged from its environment Economy is driven by large corporations Customers get what business chooses to give them New Economy National borders no longer define an organization’s operating boundaries Technology opens up organizations and makes information more accessible Job opportunities are for knowledge workers Population is characterized by cultural diversity Business accepts its social responsibilities Economy is driven by small entrepreneurial firms Customer needs drive business Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 2.1

A Global Marketplace Global village Borderless organization
Refers to the concept of a boundaryless world; the production and marketing of goods and services worldwide. Borderless organization A management structure in which internal arrangements that impose artificial geographic barriers are broken down Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Global Competition Multinational corporations (MNCs)
Companies that maintain significant operations in two or more countries simultaneously but are based in one home country Transnational corporation (TNC) A company that maintains significant operations in more than one country simultaneously and decentralizes decision making in each operation to the local country Strategic alliances A domestic and a foreign firm share the cost of developing new products or building production facilities in a foreign country Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Stages of Going Global EXHIBIT 2.2

Globalization’s Effect On Managers
Parochialism A narrow focus in which one sees things solely through one’s own view and from one’s own perspective Hofstede’s framework for assessing cultures: Power distance Individualism versus collectivism Quantity of life versus quality of life Uncertainty avoidance Long-term versus short-term orientation Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Technology Any equipment, tools, or operating methods that are designed to make work more efficient Information Technology (IT) Benefits of IT Cost savings (e.g., inventory control) Freedom from fixed locations for operations Challenges Increased worker skill requirements A leveling of the the competitive playing field that increases competition Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Internet Business E-commerce E-organization E-business
Any computer transaction that occurs when data are processed and transmitted over the Internet E-organization The applications of e-business concepts offered to stakeholders. E-business The full breadth of activities included in a successful Internet-based enterprise Copyright © 2004 Prentice Hall, Inc. All rights reserved.

In What Ways Does Technology Alter A Manager’s Job?
Effectiveness and efficiency Managers have access to more complete and accurate information than before, enabling them to function as better managers. Place Telecommuting: the linking of a worker’s computer and modem with those of co-workers and management at an office Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Society and Business Social responsibility Social obligation
A firm’s obligation, beyond that required by the law and economics, to pursue long-term goals that are beneficial to society Social obligation The obligation of a business to meet its economic and legal responsibilities and no more Social responsiveness The ability of a firm to adapt to changing societal conditions Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Arguments for and against Social Responsibility
Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further government regulation Balance of responsibility and power Stockholder interests Possession of resources Superiority of prevention over cures Arguments against: Violation of profit maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability Lack of broad public support Source: Adapted from R. J. Monsen Jr., “The Social Attitudes of Management,” in J. M. McGuire, ed. Contemporary Management: Issues and Views (Upper Saddle River, NJ: Prentice Hall, 1974), p.616; and K. Davis and W. Frederick, Business and Society: Management, Public Policy, Ethics, 5th ed. (New York: McGraw-Hill, 1984), pp.28–41. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 2.4

Ethics and Business Ethics Code of ethics
A set of rules or principles that defines right and wrong conduct Code of ethics A formal document that states an organization’s primary values and the ethical rules it expects managers and operatives to follow Copyright © 2004 Prentice Hall, Inc. All rights reserved.

What Is Entrepreneurship?
The process of initiating a business venture, organizing the necessary resources, and assuming the risks and rewards Steps in the entrepreneurial process Exploring the entrepreneurial context. Identifying opportunities and possible competitive advantages Starting the venture. Managing the venture Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Diversity and the Workforce
Increasing workforce diversity More variation in the background of organizational members in terms of gender, race, age, sexual orientation, and ethnicity Characteristics of the future workforce More heterogeneous/diverse Increasingly older More multicultural Diversity will require more managerial sensitivity to individual differences. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Labor Supply and Demand Adjustments
Downsizing An activity in an organization designed to create a more efficient operation through extensive layoffs Rightsizing Linking staffing levels to organizational goals Outsourcing An organization’s use of outside firms for providing necessary products and services Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Workforces Core employees Contingent workforce
The small group of full-time employees of an organization who provide some essential job tasks for the organization Contingent workforce Part-time, temporary, and contract workers who are available for hire on an as-needed basis Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Contingent Workers Part-time employees Temporary employees
Work fewer than 40 hours a week Are a good source of staffing for peak hours. May be involved in job sharing Temporary employees Are generally employed during peak periods Can fill in for employees for an extended period of time Create a fixed labor cost during a specified period Contract workers Are hired by organizations to work on specific projects. Are paid when the firm receives particular deliverables. Are a labor cost that is fixed by contract Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 2.7

Making a Company’s Culture More Customer-responsive
Actions that create employees with the competence, ability, and willingness to solve customer problems as they arise: Selection: hiring the right personalities and attitudes Training: developing the customer-focus employees Organizing: creating customer-friendly controls Empowerment: allowing employees independence in relating to customers Leadership: demonstrating commitment to the customer-focus vision Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Shaping a Customer- Responsive Culture

Increased Concerns for Quality
Continuous improvement Organizational commitment to constantly improving the quality of a product or service Joseph Juran W. Edwards Deming Kaizen The Japanese term for an organization committed to continuous improvement Work process engineering Radical or quantum change in an organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Components of Continuous Improvement
Intense focus on the customer Concern for continuous improvement Improvement in the quality of everything the organization does Accurate measurement Empowerment of employees Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 2.9

Foundations of Planning
Chapter 3 Foundations of Planning PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Define planning. Explain the potential benefits of planning. Identify potential drawbacks to planning. Distinguish between strategic and tactical plans. Recognize when directional plans are preferred over specific plans. Define management by objectives and identify its common elements. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Outline the steps in the strategic management process. Describe the four grand strategies. Explain SWOT analysis. Describe how entrepreneurs identify a competitive advantage. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Planning Defined Defining the organization’s objectives or goals
Establishing an overall strategy for achieving those goals Developing a comprehensive hierarchy of plans to integrate and coordinate activities Planning is concerned with ends (what is to be done) as well as with means (how it is to be done). Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Reasons for Planning EXHIBIT 3.1

Criticisms Of Formal Planning
Planning may create rigidity. Plans can’t be developed for a dynamic environment. Formal plans can’t replace intuition and creativity. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival. Formal planning reinforces success, which may lead to failure. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Planning and Performance
Formal planning generally means higher profits, higher return on assets, and other positive financial results. Planning process quality and implementation probably contribute more to high performance than does the extent of planning. When external environment restrictions allowed managers few viable alternatives, planning did not lead to higher performance. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types of Plans Strategic Long term Directional Single use
BREADTH TIME SPECIFICITY FREQUENCY OF USE FRAME OF USE Strategic Long term Directional Single use Tactical Short term Specific Standing Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 3 .2

Planning: Focus and Time
Strategic plans Plans that are organization-wide, establish overall objectives, and position an organization in terms of its environment Tactical plans Plans that specify the details of how an organization’s overall objectives are to be achieved Short-term plans Plans that cover less than one year Long-term plans Plans that extend beyond five years Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Strategic Planning Strategic plans
Apply broadly to the entire organization Establish the organization’s overall objectives Seek to position the organization in terms of its environment Provide direction to drive an organization’s efforts to achieve its goals. Serve as the basis for the tactical plans. Cover extended periods of time Are less specific in their details Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Tactical Planning Tactical plans (operational plans)
Apply to specific parts of the organization. Are derived from strategic objectives Specify the details of how the overall objectives are to be achieved. Cover shorter periods of time Must be updated continuously to meet current challenges Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Directional versus Specific Plans
Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 3 .3

Specific and Directional Plans
Specific plans Plans that have clearly defined objectives and leave no room for misinterpretation “What, when, where, how much, and by whom” (process-focus) Directional plans Flexible plans that set out general guidelines “Go from here to there” (outcome-focus) Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Single-Use and Standing Plans
Single-use plans A plan that is used to meet the needs of a particular or unique situation Single-day sales advertisement Standing plan A plan that is ongoing and provides guidance for repeatedly performed actions in an organization Customer satisfaction policy Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Management by Objectives
Management by Objectives (MBO) A system in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of that progress. Links individual and unit performance objectives at all levels with overall organizational objectives Focuses operational efforts on organizationally important results. Motivates rather than controls Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Elements of MBO Goal specificity Participative decision making
Explicit time period for performance Performance feedback Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Setting Employee Objectives
Identify an employee’s key job tasks. Establish specific and challenging goals for each key task. Allow the employee to actively participate. Prioritize goals. Build in feedback mechanisms to assess goal progress. Link rewards to goal attainment. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Strategic Management Strategic Management Process
A nine-step process that involves strategic planning, implementation, and evaluation The organization’s current identity Mission statement Defines the purpose of the organization Objectives Strategic plan A document that explains the business founders vision and describes the strategy and operations of that business. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Strategic Management Process

Analyze the Environment
Environmental scanning Screening large amounts of information to detect emerging trends and create a set of scenarios Competitive intelligence Accurate information about competitors that allows managers to anticipate competitors’ actions rather than merely react to them Copyright © 2004 Prentice Hall, Inc. All rights reserved.

SWOT: Identifying Organizational Opportunities
SWOT analysis Analysis of an organization’s strengths, weaknesses, opportunities, and threats in order to identify a strategic niche that the organization can exploit Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 3.6

SWOT Analysis Strengths (strategic) Weaknesses
Internal resources that are available or things that an organization does well Core competency: a unique skill or resource that represents a competitive edge Weaknesses Resources that an organization lacks or activities that it does not do well Opportunities (strategic) Positive external environmental factors Threats Negative external environmental factors Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Grand Strategies Growth strategy Retrenchment strategy
A strategy in which an organization attempts to increase the level of its operations; Retrenchment strategy A strategy characteristic of a company that is reducing its size, usually in an environment of decline Combination strategy The simultaneous pursuit by an organization of two or more of growth, stability, and retrenchment strategies Stability strategy A strategy that is characterized by an absence of significant change Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Growth Strategies Merger Acquisition
Occurs when two companies, usually of similar size, combine their resources to form a new company Acquisition Occurs when a larger company buys a smaller one and incorporates the acquired company’s operations into its own Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Competitive Strategies
Strategies that position an organization in such a way that it will have a distinct advantage over its competition Cost-leadership strategy Becoming the lowest-cost producer in an industry Differentiation strategy Attempting to be unique in an industry within a broad market Focus strategy Attempting to establish an advantage (cost/differentiation) in a narrow market segment Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Benchmarking Benchmarking ISO 9000 series
The search for the best practices among competitors or noncompetitors that lead to their superior performance ISO 9000 series Standards designed by the International Organization for Standardization that reflect a process whereby independent auditors attest that a company’s factory, laboratory, or office has met quality management standards Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identifying A Competitive Advantage
Environmental sources of entrepreneurial opportunity The unexpected The incongruous The process need Industry and market structures Demographics Changes in perception New knowledge Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Foundations of Decision Making
Chapter 4 Foundations of Decision Making PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe the steps in the decision-making process. Identify the assumptions of the rational decision-making model. Explain the limits to rationality. Define certainty, risk, and uncertainty as they relate to decision making. Describe the actions of the bounded-rational decision maker. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identify the two types of decision problems and the two types of decisions that are used to solve them. Define heuristics and explain how they affect the decision-making process. Identify four decision-making styles. Describe the advantages and disadvantages of group decisions. Explain three techniques for improving group decision making. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Decision-making Decision-making process Problem Decision criteria
A set of eight steps that includes identifying a problem, selecting a solution, and evaluating the effectiveness of the solution Problem A discrepancy between an existing and a desired state of affairs Decision criteria Factors that are relevant in a decision Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Examples of Planning-Function Decisions
What are the organization’s long-term objectives? What strategies will best achieve those objectives? What should the organization’s short-term objectives be? What is the most efficient means of completing tasks? What might the competition be considering? What budgets are needed to complete department tasks? How difficult should individual goals be? Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 4.1

The Decision-Making Process

Criteria and Weight in Car-Buying Decision (Scale of 1 to 10)
CRITERION WEIGHT Price 10 Interior comfort 8 Durability 5 Repair record 5 Performance 3 Handling 1 Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 4.3

Assessment of Car Alternatives
INITIAL INTERIOR DURA- REPAIR ALTERNATIVES PRICE COMFORT BILITY RECORD PERFORMANCE HANDLING TOTAL Jeep Cherokee Ford Mustang Mercedes C Pontiac Grand Am Mazda Tribute Dodge Durango Volvo S Isuzu Axiom BMW Audi A Toyota Camry Volkswagen Passat Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 4.4

Weighting of Vehicles (Assessment Criteria X Criteria Weight)

Decision-making (cont’d)
Decision implementation Putting a decision into action; includes conveying the decision to the persons who will be affected by it and getting their commitment to it Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Making Decisions: The Rational Model
Certainty The implication that the outcome of every possible alternative is known Uncertainty A condition under which there is not full knowledge of the problem and reasonable probabilities for alternative outcomes cannot be determined. Risk The probability that a particular outcome will result from a given decision Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Assumptions of Rationality

Making Decisions: The Rational Model
Describes choices that are consistent and value-maximizing within specified constraints Bounded rationality Behavior that is rational within the parameters of a simplified model that captures the essential features of a problem Satisfice Making a “good enough” decision Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Three Elements of Creativity
Creativity The ability to produce novel and useful ideas Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 4.7 Source: T. M. Amabile, “Motivating Creativity in Organizations,” California Management Review (Fall 1997): 43.

Common Decision-making Errors
Heuristics: Using judgmental shortcuts Availability heuristic the tendency for people to base their judgments on information that is readily available to them Representative heuristic The tendency for people to base judgments of probability on things with which they are familiar Escalation of commitment An increased commitment to a previous decision despite negative information Copyright © 2004 Prentice Hall, Inc. All rights reserved.

How Do Problems Differ? Well-structured problems
Straightforward, familiar, easily defined problems Ill-structured problems New problems in which information is ambiguous or incomplete Programmed decision A repetitive decision that can be handled by a routine approach Nonprogrammed decisions Decisions that must be custom-made to solve unique and nonrecurring problems Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Programmed Decision-Making Aids
Policy A general guide that establishes parameters for making decisions about recurring problems Procedure A series of interrelated sequential steps that can be used to respond to a well-structured problem (policy implementation) Rule An explicit statement that tells managers what they ought or ought not to do (limits on procedural actions) Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types of Problems, Types of Decisions, and Level in the Organization

Technology And Decision Making
Expert systems Software that acts like an expert in analyzing and solving ill-structured problems Use specialized knowledge about a particular problem area rather than general knowledge Use qualitative reasoning rather than numerical calculations Perform at a level of competence higher than that of nonexpert humans. Neural networks Software that is designed to imitate the structure of brain cells and connections among them Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Decision Making: Styles
Directive style Characterizes the low tolerance for ambiguity and a rational way of thinking of individuals who are logical and efficient and typically make fast decisions that focus on the short term. Analytic style Characterizes the high tolerance for ambiguity combined with a rational way of thinking of individuals who prefer to have complete information before making a decision. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Decision Making: Styles (cont’d)
Conceptual style Individuals who tend to be very broad in outlook, to look at many alternatives, and to focus on the long run and often look for creative solutions. Behavioral style Individuals who think intuitively but have a low tolerance for uncertainty; they work well with others, are open to suggestions, and are concerned about the individuals who work for them. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Decision-Making Styles

Group Decision Making Advantages Disadvantages
Make more accurate decisions Provides more complete information Offers a greater diversity of experiences and perspectives Generates more alternatives Increases acceptance of a solution Increases the legitimacy of a decision. Disadvantages Is more time-consuming and less efficient Minority domination can influence decision process Increased pressures to conform to the group’s mindset (groupthink) Ambiguous responsibility for the outcomes of decisions Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Improving Group Decision Making
Brainstorming An idea-generating process that encourages alternatives while withholding criticism Nominal group technique A decision-making technique in which group members are physically present but operate independently Electronic meeting A type of nominal group technique in which participants are linked by computer Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Basic Organization Designs
Chapter 5 Basic Organization Designs PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identify and define the six elements of organization structure. Describe the advantages and disadvantages of work specialization. Contrast authority and power. Identify the five different ways by which management can departmentalize. Contrast mechanistic and organic organizations. Summarize the effect of strategy, size, technology, and environment on organization structures. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Contrast the divisional and functional structures. Explain the strengths of the matrix structure. Describe the boundaryless organization and what elements have contributed to its development. Explain what is meant by the term learning organization. Describe what is meant by the term organization culture. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organization Design and Structure
A process in which managers develop or change their organization’s structure Work specialization A component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organizational Structure: Control
Chain of command The management principle that no person should report to more than one boss Span of control The number of subordinates a manager can direct efficiently and effectively Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organizational Structure: Control (cont’d)
Authority The rights inherent in a managerial position to give orders and expect them to be obeyed Power An individual’s capacity to influence decisions Responsibility An obligation to perform assigned activities Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types of Organizational Authority
Line authority The position authority (given and defined by the organization) that entitles a manager to direct the work of operative employees Staff authority Positions that have some authority (e.g., organization policy enforcement) but that are created to support, assist, and advise the holders of line authority Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Chain of Command EXHIBIT 5.2

Line Versus Staff Authority

Authority Versus Power
Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.4a

Authority Versus Power (cont’d)
Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.4b

Centralization And Decentralization
A function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made Decentralization The pushing down of decision-making authority to the lowest levels of an organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types of Power Coercive power Power based on fear.
Reward power Power based on the ability to distribute something that others value. Legitimate power Power based on one’s position in the formal hierarchy. Expert power Power based on one’s expertise, special skill, or knowledge. Referent power Power based on identification with a person who has desirable resources or personal traits. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.5

Types of Departmentalization
Functional Product Customer Geographic Process Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5 .6

Departmentalization Functional departmentalization
The grouping of activities by functions performed Product departmentalization The grouping of activities by product produced Customer departmentalization The grouping of activities by common customers Geographic departmentalization The grouping of activities by territory Process departmentalization The grouping of activities by work or customer flow Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Mechanistic and Organic Organizations
Mechanistic organization The bureaucracy; a structure that is high in specialization, formalization, and centralization Organic organization An adhocracy; a structure that is low in specialization, formalization, and centralization Structure follows strategy Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Mechanistic versus Organic Organizations
Rigid hierarchical relationships Fixed duties Many rules Formalized communication channels Centralized decision authority Taller structures Collaboration (both vertical and horizontal) Adaptable duties Few rules Informal communication Decentralized decision authority Flatter structures Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.7

Technology and Structure
Unit production Production in terms of units or small batches Mass production Production in terms of large batch manufacturing Process production Production in terms of continuous processing Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organization Design Applications
Simple structure An organization that is low in specialization and formalization but high in centralization Functional structure An organization in which similar and related occupational specialties are grouped together Divisional structure An organization made up of self-contained units Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Functional Structure EXHIBIT 5.8

Divisional Structure EXHIBIT 5.9

Other Organizational Structures
Matrix structure An organization in which specialists from functional departments are assigned to work on one or more projects led by a project manager Team-based structure An organization that consists entirely of work groups or teams Boundaryless organization An organization that is not defined or limited by boundaries or categories imposed by traditional structures Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Learning Organization
An organization that has developed the capacity to continuously adapt and change because all members take an active role in identifying and resolving work-related issues. Organization design Information sharing Leadership Organizational culture Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Characteristics of a Learning Organization
Source: Based on P.M. Senge. The Fifth Discipline: The Art and Practice of Learning Organizations (New York: Doubleday, 1990); and R. M. Hodgetts, F. Luthans and S. M. Lee. “New Paradigm Organizations: From Total Quality to Learning to World Class,” Organizational Dynamics (Winter 1994) pp. 4–19 Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.11

Organization Culture Organization culture
A system of shared meaning within an organization that determines, to a large degree, how employees act Shared values are shown in cultural elements: Stories, rituals, material symbols, and language unique to the organization Results from the interaction between: The founders’ biases and assumptions What the first employees learn subsequently from their own experiences. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Ten Characteristics of Organization Culture
Member identity Group emphasis People focus Unit integration Control Risk tolerance Reward criteria Conflict tolerance Means-end orientation Open-systems focus Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 5.12

Staffing and Human Resource Management
Chapter 6 Staffing and Human Resource Management PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe the human resources management process. Identify the influence of government regulations on human resource decisions. Differentiate between job descriptions and job specifications. Contrast recruitment and downsizing options. Explain the importance of validity and reliability in selection. Describe the selection devices that work best with various kinds of jobs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identify various training methods. Explain the various techniques managers can use in evaluating employee performance. Describe the goals of compensation administration and factors that affect wage structures. Explain what is meant by the terms sexual harassment, labor-management cooperation, workplace violence, and layoff-survivor sickness. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Human Resources Management (HRM)
The management function that is concerned with getting, training, motivating, and keeping competent employees Balancing the supply of employees with the demand for employees. Matching the talents and skills of employees with those required by the organization Creating a working environment that fosters high employee performance Meeting the pay and benefits needs of employees Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Strategic Human Resources Management Process

The Legal Environment Of HRM
The impact of federal, state and local laws on HRM practices Affirmative action programs Programs that ensure that decisions and practices enhance the employment, upgrading, and retention of members of protected groups Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Legal Environment Of HRM
The globalization of business HR practices and laws of other countries that differ from the U.S. Work councils Nominated or elected employees who must be consulted when management makes decisions involving personnel Board representatives Employees who sit on a company’s board of directors and represent the interests of employees. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Major U.S. Federal Laws and Regulations Related to HRM
YEAR LAW OR REGULATION 1963 Equal Pay Act 1964 Civil Rights Act, Title VII (amended in 1972) 1967 Age Discrimination in Employment Act (amended in 1978) 1973 Vocational Rehabilitation Act 1974 Privacy Act 1978 Pregnancy Discrimination Act, Title VII 1978 Mandatory Retirement Act 1986 Immigration Reform and Control Act 1988 Polygraph Protection Act 1988 Worker Adjustment and Retraining Notification Act 1990 Americans with Disabilities Act 1991 Civil Rights Act 1993 Family and Medical Leave Act Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.2

Employment Planning The process by which management ensures it has the right number and kinds of people in the right places at the right time, who are capable of helping the organization achieve its goals Steps in the planning process: Assessing current human resources. Assessing future human resources needs and developing a program to meet those needs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Employee Assessment Human resource inventory report Job analysis
A report listing the name, education, training, prior employer, languages spoken, and other information about each employee in the organization Job analysis An assessment of the kinds of skills, knowledge, and abilities needed to successfully perform each job in an organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Job Analysis Components
Job description A written statement of what a job holder does, how it is done, and why it is done Tasks, duties and responsibilities that the job entails Job specification A statement of the minimum acceptable qualifications that an incumbent must possess to perform a given job successfully Knowledge, skills, and abilities required of the job holder Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Recruitment And Selection
The process of locating, identifying, and attracting capable applicants Selection process The process of screening job applicants to ensure that the most appropriate candidates are hired Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Traditional Recruiting Sources
Internal searches Advertisements Employee referrals Public employment agencies Private employment agencies School placement Temporary help services Employee leasing and independent contractors Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.3

Downsizing Options Firing Layoffs Attrition Transfers
Reduced workweeks Early retirements Job sharing Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.4

Selection Devices Written tests Performance-simulation tests
Intelligence, aptitude, ability, and interest test batteries Performance-simulation tests Selection devices that are based on actual job behaviors; work sampling and assessment centers Interviews Effective if conducted correctly Realistic job preview (RJP) Providing positive and negative information about the job and the company during the job interview Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Potential Biases in Interviews
Prior knowledge about the applicant will bias the interviewer’s evaluation. The interviewer tends to hold a stereotype of what represents a good applicant. The interviewer tends to favor applicants who share his or her own attitudes. The order in which applicants are interviewed will influence evaluations. The order in which information is elicited during the interview will influence evaluations. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Potential Biases in Interviews (cont’d)
Negative information is given unduly high weight. The interviewer may make a decision concerning the applicant’s suitability within the first four or five minutes of the interview. The interviewer may forget much of the interview’s content within minutes after its conclusion. The interview is most valid in determining an applicant’s intelligence, level of motivation, and interpersonal skills. Structured and well-organized interviews are more reliable than unstructured and unorganized ones. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Employee Orientation Orientation Objectives of orientation
The introduction of a new employee to the job and the organization Objectives of orientation To reduce the initial anxiety all new employees feel as they begin a new job To familiarize new employees with the job, the work unit, and the organization as a whole To facilitate the outsider–insider transition. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Training Employee training
A learning experience in that it seeks a relatively permanent change in employees such that their ability to perform on the job improves. Changing skills, knowledge, attitudes, or behavior. Changing what employees know, how they work; or their attitudes toward their jobs, co-workers, managers, and the organization. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Typical Training Methods
On-the-Job Training Methods Job rotation Understudy assignments Off-the-Job Training Methods Classroom lectures Films and videos Simulation exercises Vestibule training Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.7

Performance Management
Performance management system A process of establishing performance standards and evaluating performance in order to arrive at objective human resource decisions and to provide documentation to support personnel actions. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Other Appraisal Methods
Adjective rating scales Rating an individual on each job performance factor on an incremental scale. 360-degree appraisal An appraisal device that seeks feedback from a variety of sources for the person being rated. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Direct Comparison Methods
Group-order ranking Requires the evaluator to place employees into a particular classification such as “top fifth” or “second fifth.” Individual ranking approach requires the evaluator merely to list the employees in order from highest to lowest. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Direct Comparison Methods (cont’d)
Paired comparison approach Each employee is compared with every other employee in the comparison group and rated as either the superior or weaker member of the pair. Each employee is assigned a summary ranking based on the number of superior scores achieved. MBO Employees are evaluated by how well they accomplish a specific set of objectives determined to be critical in the successful completion of their jobs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Performance Appraisal Methods
METHOD ADVANTAGE DISADVANTAGE Written essay Simple to use More a measure of evaluator’s writing ability than of employee’s actual performance Critical incidents Rich examples Time-consuming; lack behaviorally based quantification Graphic rating Provide quantitative Do not provide depth of job scales data; less time- behavior assessed consuming than others BARS Focus on specific Time-consuming; difficult to and measurable job develop measures behaviors Multiperson Compares employees Unwieldy with large number of with one another employees MBO Focuses on end goals; Time-consuming results oriented 360°Appraisal More thorough Time-consuming Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.8

When Performance Falls Short
Performance impediments Mismatched skills Inadequate training Employee’s personal problems Discipline Actions taken by a manager to enforce an organization’s standards and regulations Employee counseling A process designed to help employees overcome performance-related problems Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Performance Matters EXHIBIT 6.9
Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 6.9 Source: Dilbert reprinted by permission of United Features Syndicate, Inc.

Compensation And Benefits
Compensation administration Determining a cost-effective pay structure that will attract and retain competent employees, provide an incentive for them to work hard, and ensure that pay levels will be perceived as fair. Factors influencing pay levels Employee’s job Kind of business Environment surrounding the job Geographic location Employee performance levels and seniority. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Benefits Employee benefits Types of benefits
Nonfinancial rewards designed to enrich employees’ lives Types of benefits Social Security Workers’ and unemployment compensations Paid time off from work Life and disability insurance Retirement programs health insurance Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Workforce Diversity Improving workforce diversity
Widen the recruiting net to broaden the pool of applicants. Ensure the selection process is nondiscriminatory Assist new employees in assimilating into the firm’s culture. Conduct specialized orientations and workshops for new employees Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Sexual Harassment Sexual harassment
Sexually suggestive remarks, unwanted touching and sexual advances, requests for sexual favors, or other verbal and physical conduct of a sexual nature Creates an intimidating, offensive, or hostile environment; Unreasonably interferes with an individual’s work; or Adversely affects an employee’s employment opportunities. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Sexual Harassment (cont’d)
Hostile (or offensive) environment Meritor Savings Bank v. Vincent Organization can be held liable for harassment Harassing act (not subsequent outcome) is deciding factor Protecting the organization Educating employees about sexual harassment Having a sexual harassment policy in place that is enforced fairly Taking action on the first instance of a sexual harassment complaint Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Labor Relations and Unions
Labor–management cooperation Involves mutual efforts on the part of a labor union and the management of an organization. Successful efforts to increase productivity, improve quality, and lower costs require employee involvement and commitment. Labor unions have come to recognize that they can help their members more by cooperating with management than fighting it. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Violence in the Workplace
Workplace violence The increase in violent crimes being committed at the work site. Preventing violence in the workplace Training supervisory personnel to identify troubled employees before the problem results in violence. Designing employee assistance programs (EAPs) specifically to help individuals in need. Implementing stronger security mechanisms. Preventing violence paraphernalia from entering facilities altogether. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Layoffs and Downsizing
Layoff-survivor sickness The set of attitudes, perceptions, and behaviors of employees who remain after involuntary staff reductions. Dealing with the “Survivor Syndrome” Provide opportunities for employees to talk to counselors about their guilt, anger, and anxiety. Provide group discussions for the survivors to vent their feelings. Implement employee participation programs such as empowerment and self-managed work teams. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Managing Change, Stress, and Innovation
Chapter 7 Managing Change, Stress, and Innovation PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe what change variables are within a manager’s control. Identify external and internal forces for change. Explain how managers can serve as change agents. Contrast the calm waters and white-water rapids metaphors for change. Explain why people are likely to resist change. Describe techniques for reducing resistance to change. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identify what is meant by the term organization development (OD) and specify four popular OD techniques. Explain the causes and symptoms of stress. Differentiate between creativity and innovation. Explain how organizations can stimulate innovation. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

What Is Change? Change Change agent
An alteration of an organization’s environment, structure, technology, or people A constant force An organizational reality An opportunity or a threat Change agent A person who initiates and assumes the responsibility for managing a change in an organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Three Categories of Change

Forces For Change External forces Internal forces
Marketplace competition Government laws and regulations New technologies Labor market shifts Cycles in the economy Social change Internal forces Strategy modifications New equipment New processes Workforce composition Restructured jobs Compensation and benefits Labor surpluses and shortages Employee attitudes Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Two Views Of The Change Process
“Calm waters” metaphor A description of traditional practices in and theories about organizations that likens the organization to a large ship making a predictable trip across a calm sea and experiencing an occasional storm “White-water rapids” metaphor A description of the organization as a small raft navigating a raging river Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Change in “Calm Waters”
Kurt Lewin’s Three-Step Process Unfreezing The driving forces, which direct behavior away from the status quo, can be increased. The restraining forces, which hinder movement from the existing equilibrium, can be decreased. The two approaches can be combined. Implementation of change Refreezing Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Change Process EXHIBIT 7.2

Change In “White-water Rapids”
Change is constant in a dynamic environment. The only certainty is continuing uncertainty. Competitive advantages do not last. Managers must quickly and properly react to unexpected events. Be alert to problems and opportunities Become change agents in stimulating, implementing and supporting change in the organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Why People Resist Change

Techniques for Reducing Resistance to Change
TECHNIQUE WHEN USED Education and When resistance is due to misinformation communication Participation When resisters have the expertise to make a contribution Facilitation and When resisters are fearful and anxiety-ridden support Negotiation Necessary when resistance comes from a powerful group Manipulation When a powerful group’s cooperation and an endorsement is is needed Coercion When a powerful group’s endorsement is needed Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 7.4

Making Changes In The Organization
Changing structure Alterations in authority relationships, coordination mechanisms, degree of centralization, job design, or similar organization structure variables. Changing technology Modifications in the way work is processed or the methods and equipment used. Changes in people Changes in employee attitudes, expectations, perceptions, or behaviors. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Implementing Planned Changes
Organization development (OD) An activity (intervention) designed to facilitate planned, long-term organization-wide change Focuses on the attitudes and values of organizational members; Is essentially an effort to change an organization’s culture. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Typical OD Techniques Survey feedback Process consultation
A method of assessing employees’ attitudes toward and perceptions of a change they are encountering by asking specific questions Process consultation The use of consultants from outside an organization to help change agents within the organization assess process events such as workflow, informal intraunit relationships, and formal communications channels Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Typical OD Techniques (cont’d)
Team-building An activity that helps work groups set goals, develop positive interpersonal relationships, and clarify the roles and responsibilities of each team member Intergroup development An activity that attempts to make several work groups become more cohesive Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Stress: The Aftermath Of Organizational Change
Occurs when individuals confront a situation related to their desires for which the outcome is perceived to be both uncertain and important. Positive stress: when the situation offers an opportunity for one to gain something Negative stress: when constraints or demands are placed on individuals Stressors A factor that causes stress Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Sources of Stress Constraints Demands
Barriers that keep us from doing what we desire. Inhibit individuals in ways that take the control of a situation out of their hands Demands Cause persons to give up something they desire. Demands preoccupy your time and force you to shift priorities. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Major Stressors EXHIBIT 7.6

Stressors Personal Organizational Family issues
Personal economic problems Inherent personality characteristics. Organizational Task demands Role ambiguity Role conflict Role overload Technological advancements Work process engineering Downsizing Restructuring Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Personality Types Type A personality Type B personality
People who have a chronic sense of urgency and an excessive competitive drive Type B personality People who are relaxed and easygoing and accept change easily Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Symptoms Of Stress Psychological symptoms Behavior-related symptoms
Increased tension Anxiety Boredom Procrastination Behavior-related symptoms Changes in eating habits Increased smoking Substance consumption Rapid speech Sleep disorders Copyright © 2004 Prentice Hall, Inc. All rights reserved.

REDUCING STRESS Person-job fit Concerns
Match employees to their jobs, clarify expectations, redesign jobs, and increase employee involvement and participation Employee assistance programs (EAPs) Programs that help employees overcome personal and health-related problems Wellness programs Programs that help employees prevent health problems Copyright © 2004 Prentice Hall, Inc. All rights reserved.

HR Variables Affecting Innovation
HR practices that foster innovation Promotion of training and development so employee knowledge remains current Offer employees high job security to reduce fear of making mistakes and taking risks Encourage employees to become champions of change Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Foundations of Individual and Group Behavior
Chapter 8 Foundations of Individual and Group Behavior PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Define the focus and goals of organizational behavior. Identify and describe the three components of attitudes. Explain cognitive dissonance. Describe the Myers-Briggs personality-type framework and its use in organizations. Define perception and describe the factors that can shape or distort perception. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain how managers can shape employee behavior. Contrast formal and informal groups. Explain why people join groups. State how roles and norms influence employees’ behavior. Describe how group size affects group behavior. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Organizational Behavior (OB) Defined
The study of the actions of people at work The focus of OB Individual behaviors Personality, perception, learning, and motivation Group behaviors Norms, roles, team-and conflict The goals of OB To explain To predict behavior Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Organization as an Iceberg Metaphor

Behaviors of Interest to OB
Employee productivity The efficiency and effectiveness of employees Absenteeism The election by employees to attend work Turnover The exit of an employee from an organization Organizational citizenship Employee behaviors that promote the welfare of the organization Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Understanding Employees
Attitudes Valuative statements concerning objects, people, or events Cognitive component The beliefs, opinions, knowledge, and information held by a person Affective component The emotional, or feeling, segment of an attitude Behavioral component An intention to behave in a certain way toward someone or something Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Job-related Attitudes
Job satisfaction An employee’s general attitude toward his or her job. Job involvement The degree to which an employee identifies with his or her job, actively participates in it, and considers his or her job performance important for self-worth. Organizational commitment An employee’s orientation toward the organization in terms of his or her loyalty to, identification with, and involvement in the organization. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Cognitive Dissonance Theory
Any incompatibility between two or more attitudes or between behavior and attitudes Inconsistency is uncomfortable and individuals will seek a stable state with a minimum of dissonance. The desire to reduce dissonance is determined by: The importance of the elements creating the dissonance The degree of influence the individual believes he or she has over the elements The rewards that may be involved. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Big Five Model of Personality
Extroversion A personality dimension that describes the degree to which someone is sociable, talkative, and assertive. Agreeableness A personality dimension that describes the degree to which someone is good-natured, cooperative, and trusting. Conscientiousness A personality dimension that describes the degree to which someone is responsible, dependable, persistent, and achievement oriented. Emotional stability A personality dimension that describes the degree to which someone is calm, enthusiastic, and secure (positive) or tense, nervous, depressed, and insecure (negative). Openness to experience A personality dimension that describes the degree to which someone is imaginative, artistically sensitive, and intellectual. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Emotional intelligence (EI)
An assortment of non-cognitive skills, capabilities, and competencies that influence a person’s ability to cope with environmental demands and pressures Dimensions of EI Self-awareness own feelings Self-management of own emotions Self-motivation in face of setbacks Empathy for others’ feelings Social skills to handle others’ emotions Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Personality Traits And Work-related Behaviors
Locus of control A personality attribute that measures the degree to which people believe that they are masters of their own fate Machiavellianism (“Mach”) A measure of the degree to which people are pragmatic, maintain emotional distance, and believe that ends can justify means Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Personality Traits And Work-related Behaviors (cont’d)
Self-esteem (SE) An individual’s degree of life dislike for him- or herself Self-monitoring A measure of an individual’s ability to adjust his or her behavior to external, situational factors Propensity for risk taking The willingness to take chances—a preference to assume or avoid risk Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Matching Personalities And Jobs
Performance Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Holland’s Typology of Personality and Sample Occupations
Realistic Prefers physical activities that require skill, strength, and coordination Investigative Prefers activities involving thinking, organizing, and understanding Social Prefers activities that involve helping and developing others Conventional Prefers rule-regulated, orderly and unambiguous activities Enterprising Prefers verbal activities where there are opportunities to influence others and attain power Artistic Prefers ambiguous and unsystematic activities that allow creative expression Source: Reproduced by special permission of the publisher, Psychological Assessment Resources, Inc., Making Vocational Choices, 3rd ed., copyright 1973, 1985, 1992, 1997 by Psychological Assessment Resources, Inc. All rights reserved. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 8.3

Key Points of Holland’s Model
There do appear to be intrinsic differences in personality among individuals; There are different types of jobs People in job environments congruent with their personality types should be more satisfied and less likely to resign voluntarily than people in incongruent jobs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Perception Perception
A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Influences on Perception
Personal characteristics Attitudes Personality Motives Interests Past experiences Expectations Target characteristics Relationship of a target to its background Closeness and/or similarity to other things The context in objects is seen Other situational factors. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Perceptual Challenges: What Do You See?

How Managers Judge Employees
Attribution theory A theory based on the premise that we judge people differently depending on the meaning we attribute to a given behavior Internally caused behavior is believed to be under the control of the individual. Externally caused behavior results from outside causes; that is, the person is seen as having been forced into the behavior by the situation. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Interpreting Behavior
Distinctiveness Whether an individual displays a behavior in many situations or whether it is particular to one situation. Consensus If the individual responds in the same way as everyone else faced with a similar situation responds. Consistency The individual engages in the same behaviors regularly and consistently over time. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Judgment Errors Fundamental attribution error Self-serving bias
The tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors when making judgments about the behavior of others. Self-serving bias The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Distortions in Shortcut Methods in Judging Others
Selectivity Assumed similarity Stereotyping Halo effect Self-fulfilling prophecy Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 8.7

Learning Learning defined Operant conditioning (B. F. Skinner)
Any relatively permanent change in behavior that occurs as a result of experience Operant conditioning (B. F. Skinner) A behavioral theory that argues that voluntary, or learned, behavior is a function of its consequences Reinforcement increases the likelihood that behavior will be repeated; behavior that is not rewarded or is punished is less likely to be repeated. Rewards are most effective if they immediately follow the desired response. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Learning (cont’d) Social learning theory Modeling processes
The theory that people can learn through observation and direct experience; by modeling the behavior of others Modeling processes Attentional processes. Retention processes Motor reproduction processes Reinforcement processes Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Shaping Behavior Shaping behavior
Systematically reinforcing each successive step that moves an individual closer to a desired behavior Four ways in which to shape behavior: Positive reinforcement Negative reinforcement Punishment Extinction. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Foundations Of Group Behavior
Two or more interacting and interdependent individuals who come together to achieve particular objectives Role A set of expected behavior patterns attributed to someone in a given position in a social unit Norms Acceptable standards (e.g., effort and performance, dress, and loyalty) shared and enforced by the members of a group Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Foundations Of Group Behavior (cont’d)
Status A prestige grading, position, or rank within a group May be informally conferred by characteristics such as education, age, skill, or experience. Anything can have status value if others in the group admire it. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Reasons Why People Join Groups
Security Status Self-esteem Affiliation Power Goal achievement Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 8.8

Examples of Cards Used in Asch Study
Solomon Asch and Group Conformity: Does the desire to be accepted as a part of a group leave one susceptible to conforming to the group’s norms? Will the group exert pressure that is strong enough to change a member’s attitude and behavior? According to the research by Solomon Asch, the answer appears to be yes. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 8.9

Group Effects Social loafing Group cohesiveness
The tendency of an individual in a group to decrease his or her effort because responsibility and individual achievement cannot be measured Group cohesiveness The degree to which members of a group are attracted to each other and share goals Size, work environment, length of time in existence, and group-organization goal congruency affect the degree of group cohesiveness. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Relationship Between Group Cohesiveness and Productivity

Understanding Work Teams
Chapter 9 Understanding Work Teams PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain the growing popularity of work teams in organizations. Describe the five stages of team development. Contrast work groups with work teams. Identify four common types of work teams. Explain what types of teams entrepreneurial organization use. List the characteristics of high-performing work teams. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Discuss how organizations can create team players. Explain how managers can keep teams from becoming stagnant. Describe the role of teams in continuous process improvement programs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Popularity Of Teams
Teams typically outperform individuals when tasks require multiple skills, judgment, and experience. Teams are a better way to utilize individual employee talents. The flexibility and responsiveness of teams is essential in a changing environment Empowered teams increase job satisfaction and morale, enhance employee involvement, and promote workforce diversity. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Stages of Team Development

The Stages Of Team Development
Stage 1: Forming The team experiences uncertainty about its purpose, structure, and leadership. Stage 2: Storming Intragroup conflict predominates within the group Stage 3: Norming Close relationships develop and group members begin to demonstrate cohesiveness. Stage 4: Performing The team develops a structure that is fully functional and accepted by team members. Stage 5: Adjourning The team prepares for its disbandment. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Work Groups And Work Teams
A group that interacts primarily to share information and to make decisions that will help each member perform within his or her area of responsibility Work team A group that engages in collective work that requires joint effort and generates a positive synergy. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Comparing Work Teams and Work Groups

Types of Work Teams EXHIBIT 9.3

Types Of Work Teams Functional team Problem-solving team
A work team composed of a manager and the employees in his or her unit and involved in efforts to improve work activities or to solve specific problems within particular functional unit Problem-solving team 5 to 12 hourly employees from the same department who meet each week to discuss ways of improving quality, efficiency, and the work environment Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types Of Work Teams (cont’d)
Quality circle 8 to 10 employees and supervisors who share an area of responsibility and who meet regularly to discuss quality problems, investigate the causes of the problem, recommend solutions, and take corrective actions but who have no authority Self-managed work team A formal group of employees that operates without a manager and is responsible for a complete work process or segment that delivers a product or service to an external or internal customer Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types Of Work Teams (cont’d)
Cross-functional work team A team composed of employees from about the same hierarchical level but form different work areas in an organization who are brought together to accomplish a particular task Virtual team A team that meets electronically; allows groups to meet without concern for space or time Copyright © 2004 Prentice Hall, Inc. All rights reserved.

ENTREPRENEURS’ USE TEAMS
Empowered functional teams Teams that have authority to plan and implement process improvements Self-directed teams Teams that are nearly autonomous and responsible for many activities that were once the jurisdiction of managers Cross-functional teams Teams that include a hybrid grouping of individuals who are experts in various specialties and who work together on various tasks Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Why Entrepreneurs Use Teams
Teams facilitate the technology and market demands the organization is facing. Teams help the organization to make products faster, cheaper, and better. Teams permit entrepreneurs to tap into the collective wisdom of the venture’s employees. Teams empower employees to make decisions. Team culture can improve the overall workplace environment and worker morale. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Characteristics of High-performing Work Teams

Challenges to Creating Team Players
Managers attempting to introduce teams into organization face the most difficulty when: When individual employee resistance to teams is strong. Where the national culture is individualistic rather than collectivist. When an established organization places high values on and significantly rewards individual achievement. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Shaping Team Behavior Proper selection Employee training
Hire employees who have both the technical skills and the interpersonal skills required to fulfill team roles. Employee training Provide training that involves employees in learning the behaviors required to become team players. Rewarding the appropriate team behaviors Create a reward system that encourages cooperative efforts rather than competitive ones. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

How to Reinvigorate Mature Teams

Teams And Continuous Process Improvement Programs
Teams provide the natural vehicle for employees to share ideas and implement improvements. Teams are well suited to the high levels of communication and contact, response, adaptation, and coordination and sequencing in work environments where continuous process improvement programs are in place. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Workforce Diversity’s Effects on Teams
Fresh and multiple perspectives on issues help the team identify creative or unique solutions and avoid weak alternatives. The difficulty of working together may make it harder to unify a diverse team and reach agreements. Although diversity’s advantages dissipate with time, the added-value of diverse teams increases as the team becomes more cohesive. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Motivating and Rewarding Employees
Chapter 10 Motivating and Rewarding Employees PowerPoint Presentation by Charlie Cook Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe the motivation process. Define needs. Explain the hierarchy of needs theory. Differentiate Theory X from Theory Y. Explain the motivational implications of the motivation hygiene theory. Describe the motivational implications of equity theory. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain the key relationships in expectancy theory. Describe how managers can design individual jobs to maximize employee performance. Explain the effect of workforce diversity on motivational practices. Describe how entrepreneurs motivate their employees. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Motivation And Individual Needs
The willingness to exert high levels of effort to reach organizational goals, conditioned by the effort’s ability to satisfy some individual need Need An internal state that makes certain outcomes appear attractive Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Motivation Process

Early Theories Of Motivation
Hierarchy of needs theory (Maslow) there is a hierarchy of five human needs; as each need becomes satisfied, the next need becomes dominant. Physiological: food, drink, shelter, sex Safety: physical safety Social: affiliation with others, affection, friendship Esteem: Internal (self-respect, autonomy, and achievement); external (status, recognition, and attention) Self-actualization: personal growth and fulfillment Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Maslow’s Hierarchy of Needs
Source: Motivation and Personality, 2nd ed., by A. H. Maslow, Reprinted by permission of Prentice Hall, Inc., Upper Saddle River, New Jersey. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 10.2

Early Theories Of Motivation (cont’d)
Theory X (McGregor) The assumption that employees dislike work, are lazy, seek to avoid responsibility, and must be coerced to perform Theory Y The assumption that employees are creative, seek responsibility, and can exercise self-direction Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Theory X Premises A manager who views employees from a Theory X (negative) perspective believes: Employees inherently dislike work and, whenever possible, will attempt to avoid it Because employees dislike work, they must be coerced, controlled, or threatened with punishment to achieve desired goals Employees will shirk responsibilities and seek formal direction whenever possible Most workers place security above all other factors associated with work and will display little ambition Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 10.3a

Theory Y Premises A manager who views employees from a Theory Y (positive) perspective believes: Employees can view work as being as natural as rest or play Men and women will exercise self-direction and self-control if they are committed to the objectives The average person can learn to accept, even seek, responsibility The ability to make good decisions is widely dispersed throughout the population and is not necessarily the sole province of managers Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 10.3b

Early Theories Of Motivation (cont’d)
Motivation-Hygiene theory (Herzberg) intrinsic factors are related to job satisfaction and extrinsic factors are related to job dissatisfaction Hygiene factors Factors, such as working conditions and salary, that, when adequate, may eliminate job dissatisfaction but do not necessarily increase job satisfaction Motivators Factors, such as recognition and growth, that increase job satisfaction Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Herzberg’s Motivation-Hygiene Theory

Job Design And Motivation
Job characteristics model (JCM) Hackman and Oldham’s job description model: The five core job dimensions are skill variety, task identity, task significance, autonomy, and feedback. Internal rewards are obtained when: An employee learns (knowledge of results) through feedback) that he or she personally (experienced responsibility through autonomy of work) has performed well on a task that he or she cares about (experienced meaningfulness through skill variety, task identity, and/or task significance). Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Core Job Dimensions Skill variety Task identity Task significance
The degree to which the job requires a variety of activities so the worker can use a number of different skills and talents Task identity The degree to which the job requires completion of a whole and identifiable piece of work Task significance The degree to which the job affects the lives or work of other people Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Core Job Dimensions (cont’d)
Autonomy The degree to which the job provides freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out Feedback The degree to which carrying out the work activities required by the job results in the individual’s obtaining direct and clear information about the effectiveness of his or her performance Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Guidelines for Job Redesign
Source: J. R. Hackman and J. L. Suttle eds., Improving Life at Work (Glenview. IL: Scott. Foresman. 1977). With permission of the authors. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 10.9

Expectancy theory (Vroom)
A comprehensive theory of motivation that an individual tends to act in a certain way, in the expectation that the act will be followed by given outcome, and according to the attractiveness of that outcome to the individual. The extent to which individuals are motivated to perform to get a reward of value to them is based on their belief that their performance will result in the reward they want. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Expectancy theory (Vroom)
Emphasizes self interest in the alignment of rewards with employee wants. Addresses why employees view certain outcomes (rewards) as attractive or unattractive. Emphasizes the connections among expected behaviors, rewards, and organizational goals. Is concerned with individual perceptions and the provision of feedback. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Expectancy Relationships (Linkages)
Effort–performance The perceived probability that exerting a given amount of effort will lead to performance Performance–reward The belief that performing at a particular level will lead to the attainment of a desired outcome Attractiveness The importance placed on the potential outcome or reward that can be achieved on the job. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Flexibility: The Key To Motivating A Diverse Workforce
Recognizing the different personal needs and goals of individuals Providing a diversity of rewards to match the varied needs of employees Being flexible in accommodating the cultural differences within a diverse workforce when attempting to motivate workers. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Motivation and Compensation
Pay-for-performance programs Compensation plans such as piece-rate plans, profit sharing, and the like that pay employees on the basis of performance measures not directly related to time spent on the job. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Compensation Alternatives
Competency-based compensation A program that pays and rewards employees on the basis of skills, knowledge, or behaviors they possess Broad-banding Pre-set pay level, based on the degree to which competencies exist and allow an employee to contribute to the organization. Stock options A program that allows employees to purchase company stock at a fixed price and profit when company performance increases its stock value. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Work-Life Balance: Alternative Work Schedules
Flextime A scheduling option that allows employees select what their work hours will be within some specified parameters. Job sharing A type part-time work that allows two or more workers to split a traditional 40-hour-a-week job Telecommuting A system of working at home on a computer that is linked to the office Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Employee empowerment: How Entrepreneurs Motivate Employees
Giving employees power by: Allowing them to complete the whole job. Having employees work together across departments and functions in the organization. Using participative decision making in which employees provide input into decisions. Delegating decisions and duties, turning over the responsibility for carrying them out to employees. Redesigning their jobs so they have discretion over the way they do their work. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Define leader and explain the difference between managers and leaders. Summarize the conclusions of trait theories of leadership. Describe the Fiedler contingency model. Summarize the path goal model of leadership. Explain situational leadership. Identify the qualities that characterize charismatic leaders. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Describe the skills that visionary leaders exhibit. Explain the four specific roles of effective team leaders. Identify the five dimensions of trust. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Managers Versus Leaders
“Not all leaders are managers, nor are all managers leaders.” Managers Persons whose influence on others is limited to the appointed managerial authority of their positions to reward and punish. Leaders Persons with managerial and personal power who can influence others to perform actions beyond those that could be dictated by those persons’ formal (position) authority alone. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Trait Theories Of Leadership
Theories that attempt to isolate characteristics that differentiate leaders from nonleaders Attempts to identify traits that always differentiate leaders from followers and effective leaders from ineffective leaders have failed. Attempts to identify traits consistently associated with leadership have been more successful. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Six Traits That Differentiate Leaders from Nonleaders
Drive Desire to lead Honesty and integrity Self-confidence Intelligence Job-relevant knowledge Source: Reprinted from “Leadership: Do Traits Really Matter?” by S. A. Kirkpatrick and E. A. Locke by permission of Academy of Management Executive, May 1991, pp.48–60. © 1991 by Academy of Management Executive. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 11.1

Behavioral Theories Of Leadership
Theories that attempt to isolate behaviors that differentiate effective leaders from ineffective leaders Behavioral studies focus on identifying critical behavioral determinants of leadership that, in turn, could be used to train people to become leaders. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Leadership Behaviors or Styles
Autocratic style of leadership A leader who centralizes authority, dictates work methods, makes unilateral decisions, and limits employee participation. Democratic style of leadership A leader who involves employees in decision making, delegates authority, encourages participation in deciding work methods and goals, and uses feedback to coach employees. A democratic-consultative leader seeks input and hears the concerns and issues of employees but makes the final decision him or herself. A democratic-participative leader often allows employees to have a say in what’s decided. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Leadership Behaviors or Styles (cont’d)
Laissez-faire style of leadership A leader who gives employees complete freedom to make decisions and to decide on work methods Conclusions about leadership styles The laissez-faire leadership style is ineffective. Quantity of work is equal under authoritarian and democratic leadership styles Quality of work and satisfaction is higher under democratic leadership. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Ohio State Studies Studies that sought to identify independent dimensions of leader behavior Initiating structure The extent to which a leader defines and structures his or her role and the roles of employees to attain goals Consideration The extent to which a leader has job relationships characterized by mutual trust, respect for employees’ ideas, and regard for their feelings Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The University Of Michigan Studies
Studies that sought to identify the behavioral characteristics of leaders related to performance effectiveness Employee oriented A leader who emphasizes interpersonal relations, takes a personal interest in the needs of employees, and accepts individual differences. Production oriented A leader who emphasizes technical or task aspects of a job, is concerned mainly with accomplishing tasks, and regards group members as a means to accomplishing goals. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Managerial Grid A two-dimensional view of leadership style that is based on concern for people versus concern for production Source: Adapted and reprinted by permission of the Harvard Business Review. An Exhibition from “Breakthrough in Organization Development” by R. R. Blake, J. A. Mouton, L. B. Barnes,and L. E. Greiner November-December 1964, p.136. Copyright © 1964 by the President and Fellows of Harvard College; all rights reserved. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 11.3

Contingency Theories Of Leadership
Fiedler contingency leadership model The theory that effective group performance depends on the proper match between the leader’s style of interacting with employees and the degree to which the situation gives control and influence to the leader Uses Least-preferred co-worker (LPC) questionnaire, to measure the leader’s task or relationship orientation. Identified three situational criteria—leader member relations, task structure, and position power—that could be manipulated match an inflexible leadership style. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Findings of the Fiedler Model

Path-Goal Theory Path-goal theory
The theory that it is a leader’s job to assist followers in attaining their goals and to provide the necessary direction and support A leader’s motivational behavior: Makes employee need satisfaction contingent on effective performance. Provides the coaching, guidance, support, and rewards that are necessary for effective performance. Assumes that the leader’s style is flexible and can be changed to adapt to the situation at hand. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Path-Goal Leadership Behaviors
Directive leader Lets employees know what is expected of them, schedules work to be done, and gives specific guidance as to how to accomplish tasks. Supportive leader Is friendly and shows concern for the needs of employees. Participative leader Consults with employees and uses their suggestions before making a decision. Achievement-oriented leader Sets challenging goals and expects employees to perform at their highest levels. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Path-Goal Theory EXHIBIT 11.5

Situational Leadership
Situational leadership theory (SLT) Leaders should adjust their leadership styles—telling, selling, participating, and delegating—in accordance with the readiness of their followers. Acceptance: Leader effectiveness reflects the reality that it is the followers who accept or reject the leader. Readiness: a follower’s ability and willingness to perform. At higher levels of readiness, leaders respond by reducing control over and involvement with employees. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Emerging Approaches To Leadership
Charismatic leadership theory Followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors People working for charismatic leaders are motivated to exert extra work effort and, because they like and respect their leaders, express greater satisfaction. Charisma leadership appears to be most appropriate when the followers’ task has a ideological component or when the environment involves a high degree of stress and uncertainty. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Charismatic Leadership
A charismatic leader influences followers by: Stating a vision that provides a sense of community by linking the present with a better future. Communicating high expectations and expressing confidence that followers can attain them. Conveying, through words and actions, a new set of values, and by his or her behavior setting an example for followers to imitate. Making self-sacrifices and engaging in unconventional behavior to demonstrate courage and convictions about the vision. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Key Characteristics of Charismatic Leaders
Self-confidence Vision Ability to articulate the vision Strong convictions Behavior that is out of the ordinary Appearance Environmental sensitivity Source: Based on J. A. Conger and R. N. Kanungo, “Behavioral Dimensions of Charismatic Leadership,” in J. A Conger and R. N. Kanungo, Charismatic Leadership (San Francisco; Jossey-bass, 1988), p.91. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 11.8

Visionary Leadership “A vision should create enthusiasm, bringing energy and commitment to the organization.” The key properties of a vision are inspirational possibilities that are value centered, realizable, and have superior imagery and articulation. Visionary leadership The ability to create and articulate a realistic, credible, attractive vision of the future that grows out of and improves upon the present Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Skills of Visionary Leaders
The ability to explain the vision to others. Make the vision clear in terms of required actions and aims through clear oral and written communication. The ability to express the vision not just verbally but through the leader’s behavior. Behaving in ways that continually convey and reinforce the vision. The ability to extend the vision to different leadership contexts. Sequencing activities so the vision can be applied in a variety of situations Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Transactional Leaders versus Transformational Leaders
Leaders who guide or motivate their followers toward established goals by clarifying role and task requirements. Transformational leaders Leaders who inspire followers to transcend their own self-interests for the good of the organization and are capable of having a profound and extraordinary effect on followers. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Challenge of Team Leadership
Becoming an effective team leader requires: Learning to share information. Developing the ability to trust others. Learning to give up authority. Knowing when to leave their teams alone and when to intercede. New roles that team leaders take on Managing the team’s external boundary Facilitating the team process Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Five Dimensions of Trust
Integrity Honesty and truthfulness Competence Technical and interpersonal knowledge and skills Consistency Reliability, predictability, and good judgment Loyalty Willingness to protect and save face for a person Openness Willingness to share ideas and information freely Source: Adapted and reproduced with permission of publisher from: J. K. Butler Jr., and R. S. Cantrell, “A Behavioral Decision Theory Approach to Modeling Dyadic Trust in Superiors and Subordinates.” Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 11.10

Types Of Trust Deterrence-based trust Knowledge-based trust
Trust based on fear of reprisal if the trust is violated Knowledge-based trust Trust based on the behavioral predictability that comes from a history of interaction Identification-based trust Trust based on an emotional connection between the parties Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Define communication and explain why it is important to managers. Describe the communication process. List techniques for overcoming communication barriers. Describe the wired and wireless technologies affecting organizational communications. Identify behaviors related to effective active listening. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain what behaviors are necessary for providing effective feedback. Identify behaviors related to effective delegating. Describe the steps in analyzing and resolving conflict. Explain why a manager might stimulate conflict. Contrast distributive and integrative bargaining. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Communication Process Terms
Encoding The conversion of a message into some symbolic form Message A purpose to be conveyed Channel The medium by which a message travels Decoding A receiver’s translation of a sender’s message Feedback The degree to which carrying out the work activities require by a job results in the individual’s obtaining direct and clear information about the effectiveness of his her performance Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Written Versus Verbal Communications
Tangible Verifiable More permanent More precise More care is taken with the written word Verbal Less secure Known receipt Quicker response Consumes less time Quicker feedback Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Grapevine “The grapevine motto: Good information passes among people fairly rapidly—bad information, even faster!” Grapevine An unofficial channel of communication that is neither authorized nor supported by the organization. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Nonverbal Communications
Body language Nonverbal communication cues such as facial expressions, gestures, and other body movements Verbal intonation An emphasis given to word or phrases that conveys meaning Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Barriers to Effective Communication
Overcoming Barriers to Effective Communication Filtering Selective Perception Information Overload Emotions Language Gender National Culture Use Feedback Simplify Language Listen actively Constrain Emotions Watch Nonverbal Cues Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 12.2 EXHIBIT 12.3

Communication Barriers
Filtering The deliberate manipulation of information to make it appear more favorable to the receiver Selective perception Selective hearing communications based on one’s needs, motivations, experience, or other personal characteristics Information overload The result of information exceeding processing capacity Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Communication Barriers (cont’d)
Jargon Technical language that is not understood by outsiders Gender Men communicate to emphasize status and independence; whereas women talk to create connections and intimacy. National culture Communication differences that arise from the different languages and national cultures Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Developing Interpersonal Skills
Listening requires: Paying attention Interpreting Remembering sound stimuli Active listening requires: Listening attentively (intensely) to the speaker. Developing empathy for what the speaker is saying. Accepting by listening without judging content. Taking responsibility for completeness in getting the full meaning from the speaker’s communication. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Characteristics of Feedback
Positive feedback Is more readily and accurately perceived than negative feedback. Is almost always accepted, whereas negative feedback often meets resistance. Negative feedback Is most likely to be accepted when it comes from a credible source or if it is objective. Carries weight only when it comes from a person with high status and credibility. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Suggestions for Effective Feedback
Focus on specific behavior Keep feedback impersonal Keep feedback goal oriented Make feedback well-timed Ensure understanding Direct negative feedback towards behavior that the receiver can control Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 12.5

Empowerment Skills Delegation
The assignment of authority to another person to carry out specific activities while retaining the ultimate responsibility for the activities. Proper delegation is not abdication and requires: Clarifying the exact job to be done Setting the range of the employee’s discretion Defining the expected level of performance Setting the time frame for the task to be completed Allowing employees to participate Establishing feedback controls Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Contingency Factors in Delegation
The Size of the Organization The Importance of the Duty or Decision Organizational Culture Task Complexity Qualities of Employees Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 12.7

Managing Conflict Conflict defined Functional conflict
Perceived differences resulting in interference or opposition Functional conflict Conflict that supports and organization’s goals Dysfunctional conflict Conflict that prevents and organization from achieving its goals Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Three Views of Conflict
Traditional view Assumed that conflict was bad and would always have a negative impact on an organization. Human relations view Argued that conflict was a natural and inevitable occurrence in all organizations; rationalized the existence of conflict and advocated its acceptance. Interactionist view Encourages mangers to maintain ongoing minimum level of conflict sufficient to keep organizational units viable, self-critical, and creative. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 12.8

Sources of Conflict Communication differences Structural differences
Arising from semantic difficulties, misunderstandings, and noise in the communication channels. Structural differences Horizontal and vertical differentiation creates problems of integration leading to disagreements over goals, decision alternatives, performance criteria, and resource allocations in organizations. Personal differences Individual idiosyncrasies and personal value systems create conflicts. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Dimensions of Conflict (Thomas)
Cooperativeness The degree to which an individual will attempt to rectify a conflict by satisfying the other person’s concerns. Assertiveness The degree to which an individual will attempt to rectify the conflict to satisfy his or her own concerns. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Dimensions of Conflict (cont’d)
Conflict-handling techniques derived from Thomas’ cooperative and assertiveness dimensions: Competing (assertive but uncooperative) Collaborating (assertive and cooperative) Avoiding (unassertive and uncooperative) Accommodating (unassertive but cooperative) Compromising (midrange on assertiveness and cooperativeness Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Conflict Management What Works Best and When
Strategy Best Used When Avoidance Conflict is trivial, when emotions are running high and time is needed to cool them down, or when the potential disruption from an assertive action outweighs the benefits of resolution Accommodation The issue under dispute isn’t that important to you or when you want to build up credits for later issues Forcing You need a quick resolution on important issues that require unpopular actions to be taken and when commitment by others to your solution is not critical Compromise Conflicting parties are about equal in power, when it is desirable to achieve a temporary solution to a complex issue, or when time pressures demand an expedient solution Collaboration Time pressures are minimal, when all parties seriously want a win-win solution, and when the issue is too important to be compromised EXHIBIT 12.10 Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Stimulating Conflict Convey to employees the message that conflict has its legitimate place. Use hot-button communications while maintaining plausible deniability. Issue ambiguous or threatening messages. Centralize decisions, realign work groups, increase formalization and interdependencies between units. Appoint a devil’s advocate to purposely present arguments that run counter to those proposed by the majority or against current practices. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Negotiation Negotiation defined Distributive bargaining
A process in which two or more parties who have different preference must make a joint decision and come to an agreement Distributive bargaining Negotiation under zero-sum conditions, in which the gains by one party involve losses by the other party Integrative bargaining Negotiation in which there is at least one settlement that involves no loss to either party Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Developing Effective Negotiation Skills
Research the individual with whom you’ll be negotiating. Begin with a positive overture. Address problems, not personalities. Pay little attention to initial offers. Emphasize win-win solutions. Create an open and trusting climate. If needed, be open to accepting third-party assistance. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Define control. Describe three approaches to control. Explain why control is important. Describe the control process. Distinguish among the three types of control. Describe the qualities of an effective control system. Identify the contingency factors in the control process. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Explain how controls can become dysfunctional. Describe how national differences influence the control process. Identify the ethical dilemmas in employee monitoring. Describe how an entrepreneur controls for growth. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

What Is Control? Control
The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations An effective control system ensures that activities are completed in ways that lead to the attainment of the organization’s goals. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Characteristics of Three Approaches to Control Systems
Market Uses external market mechanisms, such as price competition and relative market share, to establish standards used in system to gain competitive advantage. Bureaucratic Emphasizes organizational authority of administrative and hierarchical mechanisms to ensure appropriate employee behaviors and to meet performance standards. Clan Regulates employee behavior by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization’s culture. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 13.1

The Control Process EXHIBIT 13.2

Steps in the Control Process
Measuring actual performance Personal observation, statistical reports, oral reports, and written reports Management by walking around (MBWA) A phrase used to describe when a manager is out in the work area interacting with employees Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Steps in the Control Process (cont’d)
Comparing actual performance against a standard Comparison to objective measures: budgets, standards, goals Range of variation The acceptable parameters of variance between actual performance and the standard Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Steps in the Control Process (cont’d)
Taking managerial action to correct deviations or inadequate standards Immediate corrective action Correcting a problem at once to get performance back on track Basic corrective action Determining how and why performance has deviated and then correcting the source of deviation Revising the standard Adjusting the performance standard to reflect current and predicted future performance capabilities Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Mid-Western Distributors’ Sales Performance for July (hundreds of cases)
BRAND STANDARD ACTUAL OVER (UNDER) Heineken 1, (162) Molson Beck’s Moosehead Labatt’s Corona (20) Amstel Light (5) Dos Equis (15) Tecate Total cases 4,300 4, Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 13.4

Types Of Control Feedforward control Concurrent control
Control that prevents anticipated problems Concurrent control Control that takes place while an activity is in progress Feedback control Control that takes place after an action Provides evidence of planning effectiveness Provides motivational information to employees Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Types of Control EXHIBIT 13.5

The Qualities Of An Effective Control System
Accuracy Timeliness Economy Flexibility Understandability Reasonable criteria Strategic placement Emphasis on the exception Multiple criteria Corrective action Copyright © 2004 Prentice Hall, Inc. All rights reserved.

What Contingency Factors Affect the Design of A Control System?
Size of the organization The job/function’s position in the organization’s hierarchy Degree of organizational decentralization Type of organizational culture Importance of the activity to the organization’s success Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Controls And Cultural Differences
Methods of controlling employee behavior and operations can be quite different in different countries. Distance creates a tendency for formalized controls in the form of extensive, formal reports. In less technologically advanced countries, direct supervision and highly centralized decision making are the basic means of control. Local laws constraint the corrective actions that managers can take foreign countries. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Dysfunctional Side Of Control
Problems with unfocused controls Failure to achieve desired or intended results occur when control measures lack specificity Problems with incomplete control measures Individuals or organizational units attempt to look good exclusively on control measures. Problems with inflexible or unreasonable control standards Controls and organizational goals will be ignored or manipulated. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Contemporary Issues In Control
The right to personal privacy in the workplace versus: Employer’s monitoring of employee activities in the workplace Employer’s liability for employees creating a hostile environment Employer’s need to protect intellectual property Remember: The computer on your desk belongs to the company Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Workplace Violence Witnessed yelling or other verbal abuse 42%
Yelled at co-workers themselves 29% Cried over work-related issues 23% Seen someone purposely damage machines or furniture 14% Seen physical violence in the workplace 10% Struck a co-worker 2% Source: Integra Realty Resources. October–November Survey of Adults 18 and Over, in “Desk Rage.” Business Week, November 20, 2000, p.12. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 13.7

How An Entrepreneur Can Control For Growth
Planning for growth By addressing growth strategies as part of business planning but not being overly rigid in planning. Organizing for growth The key challenges include finding capital, finding people, and strengthening the organizational culture. Controlling for growth. Maintaining good financial records and financial controls over cash flow, inventory, customer data, sales orders, receivables, payables, and costs. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Suggestions for Achieving a Supportive Growth-Oriented Culture
Keep the lines of communication open—inform employees about major issues. Establish trust by being honest, open, and forthright about the challenges and rewards of being a growing organization. Be a good listener—find out what employees are thinking and facing. Be willing to delegate duties. Be flexible—be willing to change your plans if necessary. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 13.8a

Continually train employees to enhance their capabilities and skills.
Suggestions for Achieving a Supportive Growth-Oriented Culture (cont’d) Provide consistent and regular feedback by letting employees know the outcomes—good and bad. Reinforce the contributions of each person by recognizing employees’ efforts. Continually train employees to enhance their capabilities and skills. Maintain the focus on the venture’s mission even as it grows. Establish and reinforce a “we” spirit since a successful growing venture takes the coordinated efforts of all the employees. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 13.8b

Define operations management and the transformation process. Describe three reasons operations management is important to all managers. Differentiate between a service and a manufacturing organization. Define value chain management. Explain the organizational and managerial requirements for value chain management. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Identify the benefits and obstacles to value change management. Discuss technology’s role in operations management. Explain what is meant by the term just-in-time management. Describe what is meant by the term quality control. Explain the concept of project management. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Importance Of Operations Management
Operations management defined The study and application of the transformation process OM is important because it: Encompasses processes in all organizations—services as well as manufacturing. Is important in effectively and efficiently managing productivity. Plays a strategic role in an organization’s competitive success. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Transformation and Organizations
Transformation process The process through which an organization creates value by turning inputs (people, capital, equipment, materials) into outputs (goods or services) Manufacturing organization Organizations that produce physical goods Service organization An organization that produces nonphysical outputs such as educational, medical or transportation services Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Transformation Process

Productivity Productivity defined Benefits of high productivity
The overall output of goods and services produced divided by the inputs needed to generate that output. Benefits of high productivity Fosters economic growth and development Increases individual wages without inflation Lowers costs and makes firms more competitive Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Value and the Value Chain
The performance characteristics, features and attributes, or any other aspects of goods and services for which customers are willing to give up resources. Value chain The entire series of organizational work activities that add value at each step beginning with the processing or raw materials and ending with a finished product in the hands of end users. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Value Chain Management versus Supply Chain Management
A method of improving the process of creating and transferring documents by automating the flow of information Supply chain management Management of the facilities, functions, and activities involved in producing and delivering a product or service, from suppliers to customers. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

The Goals Of Value Chain Management
Creating customer-defined value by: Providing a unique combination that truly meets customer needs and at a price that can’t be matched by competitors. Having a sequence of participants work together as a team, each adding a component of value to the overall process. It’s all about providing value, not bargains, to the customer Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Value Chain Management
Business model A strategic design for how a company intends to profit from its broad array of strategies, processes, and activities. Value chain management requirements Coordination and collaboration Technology investment Organizational processes Leadership Employees/human resources management Employees Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Six Requirements for Successful Value Chain Management

Effect of Value Chain Management on Organizational Processes
Better demand forecasting is necessary and possible because of closer ties with customers and suppliers. Selected functions may need to be done collaboratively with partners in the value chain. New measures are needed for evaluating the performance of activities along the value chain. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Implementing Value Chain Management
Benefits Improved customer service Cost savings Accelerated delivery times Improved quality Inventory reduction Improved logistics management Increased sales Increased market share Obstacles Organizational barriers Cultural attitudes Required capabilities People Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Obstacles to Successful Value Chain Management

Contemporary Operations Management Issues
Technology How an organization will transform its inputs into outputs. Just-in-time (JIT) inventory systems How to develop systems in which inventory items arrive when needed in the production process instead of being stored in stock. Continuous improvement and quality control How to ensure that what is currently produced meets preestablished standards. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Quality and Operations Management
Quality control Monitoring quality—weight, strength, consistency, color, taste, reliability, finish, or any one of myriad characteristics—to ensure that it meets some preestablished standard. Continuous improvement A comprehensive, customer-focused program to continuously improve the quality of the organization’s processes, products and services. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Managing Projects Project Project management
One-time-only set of activities with a definite beginning and ending point in time Project management Task of getting the activities done on time, within budget, and according to specifications Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Popular Scheduling Tools
Gantt chart A planning tool that shows in bar graph form when tasks are supposed to be done and compares that with the actual progress on each task. Load chart As modified version of a Gantt Chart, the load chart lists either whole departments or specific resources. This information allows managers to plan and control for capacity utilization in the scheduling of individual work stations. Copyright © 2004 Prentice Hall, Inc. All rights reserved.

A Sample Gantt Chart EXHIBIT 14.5

A Sample Load Chart EXHIBIT 14.6

PERT Program evaluation and review technique (PERT) network analysis
A flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity Copyright © 2004 Prentice Hall, Inc. All rights reserved.

PERT Components Events Activities Slack time Critical path
End points that represent the completion of major activities Activities Actions that take place Slack time The time difference between the critical path and all other paths Critical path The longest or most time-consuming sequence of events and activities required to complete a project in the shortest amount of time Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Developing PERT Charts
Identify every significant activity that must be achieved for a project to be completed. Ascertain the precedence order in which these events must be completed and create a diagram reflecting the ordering of activities. Compute a weighted average time estimate (expected time) for completing each activity. Insert start and finish times into the diagram and inspect to determine the critical path. Copyright © 2004 Prentice Hall, Inc. All rights reserved. EXHIBIT 14.7

Managers and Management

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