1-1 McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh ** Management, Leadership, and Empowerment 7 CHAPTER * **

New Management Roles Skilled communicator Team player and a planner Coordinator Organizer Supervisor

Managing for the Future 1.Prepare for the unexpected 2.Faster reaction times 3.Flatter structure 4.Build teams 5.Grow globally 6.Develop cultural sensitivity 7.Invest in technology 8.Develop a family work atmosphere 9.Create vision 10.Enhance competencies

Management Functions Planning Organizing Leading Controlling

Planning: Create Vision Set Vision, Goals, Objectives Vision and Mission – Why Organization Exists, Purpose of Organization Goals – Broad, Long- Term Objectives – Specific, Short-Term Continuous Process (SWOT)

Questions of Planning 1.What is the situation now? Where do we want to go? 2.How can we get there from here? Strategic Planning Tactical Planning Operational Planning Contingency Planning

SWOT Analysis Potential Internal STRENGTHS Potential Internal WEAKNESSES Potential External OPPORTUNITIES Potential External THREATS

Planning Functions

Decision Making: Steps Decision Making 1. Define2. Describe 3. Develop Alternatives 4. Develop Agreements 5. Decide6. Do 7. Determine

Organizing Skills/Tasks Stakeholders Staffing

Management Pyramid President, Vice Pres. Division Heads, Plant Mgrs. Top Management Middle Management Supervisory (First-Line) Non-supervisory Foreman, Dept Heads Employees

Required Management Skills Technical Skills Human Relations Skills Conceptual Skills

Successful Leadership Communicate a Vision Establish Corporate Values Promote Corporate Ethics Embrace Change

Leadership Styles Autocratic Participative (Democratic) Free-rein

Four Leadership Types Rationalists Politicists Humanists Culturists Source: CIO Nov 2003

Autocratic Leadership Making managerial decisions without consulting others

Participative Leadership Democratic Managers and employees working together to make decisions

Free-rein Leadership Managers set objectives Employees are relatively free to do whatever it takes to accomplish those objectives

Empowering Employees Empowerment: Giving employees the authority and responsibility to make decisions. Enabling: Giving workers the education tools needed to make decisions.

Manager’s Empowerment Checklist TARGET TOOLS TRAINING TIME TRUTH TRACKING TOUCH TRUST Source: Empowerment Checklist, Cathcart Institute, 2004,

Knowledge Management Do you want to know more about your customers? What about competition? What information would make the company more effective in the marketplace? What do I still not know? Whom should I be asking?

Controlling 1.Establish clear standards 2. Monitor and record performance 3. Compare results against standards 4. Communicate results 5. If needed, take corrective action Are standards realistic? Feedback

Are You a Micromanager? Do you have strategic initiatives that you have not addressed? Do you often check on your employees for quality control? Do you often check on your subordinates throughout the day? Do you seldom take a vacation? Is there a lot of turnover? Did you answer YES to any question? Source: CFO May 2005

Most Critical Trends, Management Concerns Globalization Improving Knowledge Management Cost and Cycle Time Reduction Improving Global Supply Chains Manufacturing at Multiple Locations and in Many Countries Managing More Part-time, Temporary and Contract Workers Source: Quality Digest 2004

1-25 McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh ** Adapting Organizations to Today’s Markets 8 CHAPTER * **

Structuring an Organization Comprises: Accountability Allocating Resources Establishing Procedures Division of Labor Team Tasks Assigning Responsibility/ Authority

Fayol’s Principles of Organization Unity of Command Hierarchy of Authority Division of Labor Subordination of Individual Interest to the General Interest Authority Degree of Centralization Clear Communication Channels Order Equity Esprit de Corps

Weber’s Organizational Principles Job Descriptions Written Rules Procedures, Regulations, Policies Staffing/Promotions Based on Qualifications

Centralization (No Delegation) Advantages Greater Top- Management Control More Efficiency Simpler Distribution System Stronger Brand/Corporate Image Disadvantages –Less Responsiveness to Customers –Less Empowerment –Interorganizational Conflict –Lower Morale Away from Headquarters

Decentralization (Delegate Authority) Advantages –Better Adaptation to Customer Wants –More Empowerment of Workers –Faster Decision Making –Higher Morale Disadvantages Less Efficiency Complex Distribution System Less Top-Management Control Weakened Corporate Image

Organizational Structures Tall Organizations Many Layers of Management High Cost of Management Narrow Span of Control Flat Organizations Current Trend Creation of Teams Broad Span of Control

Span of Control - Narrow Advantages More Control by Top Management More Chances for Advancement Greater Specialization Closer Supervision Disadvantages Less Empowerment Higher Costs Delayed Decision Making Less Responsiveness to Customers

Span of Control - Broad Advantages Reduced Costs More Responsiveness to Customers Faster Decision Making More Empowerment Disadvantages Fewer Chances for Advancement Overworked Managers Loss of Control Less Management Expertise

Advantages Skill Development Economies of Scale Good Coordination Departmentalization by Function Disadvantages –Lack of Communication –Employees Identify with Department –Slow Response to External Demands –Narrow Specialists –Groupthink

Departmentalization By Product By Function By Customer Group By Geographic Location By Process

Line Organizations Advantages –Clear Authority & Responsibility –Easy to Understand –One Supervisor Per Employee Disadvantages –Inflexible –Few Specialists for Advice –Long Line of Communication –Difficult to Handle Complex Decisions

Line/Staff Organizations Line Personnel –Formal Authority –Make Policy Decisions Staff Personnel –Advise Line Personnel –Assist Line Personnel

Matrix Organizations Advantages –Flexibility –Cooperation & Teamwork –Creativity –More Efficient Use of Resources Disadvantages –Costly/Complex –Confusion in Loyalty –Requires Good Interpersonal Skills & Cooperation –Not Permanent

Important Conditions for Small Teams 1.Clear Purpose 2.Clear Goals 3.Correct Skills 4.Mutual Accountability 5.Shift Roles When Appropriate Source: CIO Dec 2003

Networking –Real Time –Transparency –Virtual Corporations

A Virtual Corporation CoreFirm Accounting Firm Production Firm Distribution Firm Advertising Agency Design Firm Legal Firm

Adapting to Change Restructuring for Empowerment Focusing on the Customer Creating a Change-Oriented Organizational Culture The Informal Organization

Layers of Authority- Traditional Top Managers- Decision Makers Middle Managers- Develops Rules & Procedures Middle Managers- Develops Rules & Procedures Workers and Supervisors Workers and Supervisors

Inverted Organization Structure Empowered front- line workers Support Personnel Top Mgmt.

1-45 McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh ** Producing World-Class Goods and Services 9 CHAPTER * **

How Manufacturers Have Become More Effective Focus on customers Maintain close relationships Continuous improvement Focus on quality Save costs Rely on the Internet New production techniques

From Production to Operations Management Production Production Management Operations Management (OM)

Production Processes Form Utility Process Manufacturing Assembly Process Continuous Process Intermittent Process

Three Requirements For Production 1.Build and deliver products in response to the demands of the customer at a scheduled delivery time 2.Provide an acceptable quality level 3.Provide everything at the lowest possible cost

What Is Increasing Productivity? Source: 2005 National Innovation Survey, Council on Competitiveness

Production Techniques Flexible Manufacturing Lean Manufacturing Mass Customization

Operations Management Planning Facility Location Facility Layout Materials Requirement Planning Purchasing J-I-T Inventory Control Quality Control

Six Sigma Quality Statistical Quality Control (SQC) Statistical Process Control (SPC) The Baldrige Award ISO 9000 ISO 14000

Baldrige Award Recipients Sunny Fresh Foods, Inc., Monticello, MN (Manufacturing) DynMcDermott Petroleum Operations, New Orleans, LA (Service) Park Place Lexus, Plano, TX (Small Business) Richland College, Dallas, TX (Education) Jenks Public Schools, Jenks, OK (Education) Bronson Methodist Hospital, Kalamazoo, MI, (Health care) Source: NIST News Release, November 22, 2005

ISO ISO was founded in 1947 At the end of 2004, the worldwide total of certificates: –ISO 9000 – 670,000 in 154 countries –ISO – 90,000 in 127 countries Source: Business Week Online, March 17, 2006

Control Procedures Program Evaluation & Review Techniques (PERT) Gantt Chart

PERT Steps 1.Analyzing and sequencing tasks that need to be done 2.Estimating the time needed to complete each task 3.Drawing a PERT network illustrating the information from steps 1 and 2 4.Identifying the critical path

Gantt Chart Named for its developer, Henry Gantt A bar graph that clearly shows what projects are being worked on and how much has been completed at any given time

Learning from Failure Formalize forums for analyzing failure Move the goalposts Share personal stories Bring in outsiders Prove yourself wrong, not right Celebrate smart failures Source: Business Week Online, July 10, 2006

1-60 McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh ** Human Resource Management: Management: Finding and Keeping the Best Employees Employees 11 CHAPTER * **

HR Challenges Shortages Unskilled Workers Undereducated Workers Shift in Workforce Composition Laws & Regulations Single-Parent & Two- Income Families Attitudes Toward Work Continued Downsizing Overseas Labor Pools Customized Benefits Employees With New Concerns Decreased Loyalty

Determining HR Needs 1.Prepare HR Inventory 2.Prepare Job Analysis Job Description Job Specification 3.Assess HR Demand 4.Assess HR Supply 5.Establish Strategic Plan

Hiring Process Recruit Select Application Form Interview Test Investigate Examine Probation Train/Develop Orientation OJT Apprenticeship Off-The-Job Training Online Training Vestibule Training Job Simulation

Applicants’ Mistakes Source: USA Today

Interviewing Mistakes Source: USA Today

Number Interviewed to Find Quality Hire Source: USA Today, January 24, 2005

Important Factors When Phrasing Interview Questions Language Relevance Information Level Complexity Information Accessibility Source: University of Central Arkansas

Training & Development Assess Needs Design Training Evaluate Effectiveness

Training Methods 1.Employee Orientation 2.On-The-Job 3.Apprenticeship 4.Off-The-Job 5.Online 6.Vestibule 7.Job Simulation

Management Development On-The-Job Coaching Understudy Job Rotation Off-The-Job Courses & Training

Performance Appraisal 1.Establish Standards 2.Communicate Standards 3.Evaluate Performance 4.Discuss Results 5.Take Corrective Action 6.Use Results to Make Decisions

Employee Retention Compensation Individual Team Fringe Benefits Job-Sharing Flextime Core Time Compressed Workweek Home-Based & Mobile Work

Compensation & Benefits Program Objectives Attract the right people Employee incentives Retain valued employees Maintain competitiveness Financial security for employees

Pay Systems Salary Hourly wage and daywork Piecework system Commission plans Bonus plans Profit-sharing plans Gain-sharing plans Stock options

Scheduling To Meet Employee Needs Flextime Plans Home-Based & Other Mobile Work Job-Sharing Plans

Benefits of Job-Sharing Opportunities for wanting to work only part- time High level of enthusiasm and productivity Reduced absenteeism and tardiness Ability to schedule in peak demand period Retention of experienced workers

How Employers Are Becoming Flexible Source: insala.com, April 2005

Benefits of Providing Flexibility Source: Insala.com, April 2005

Why is Retention Important? Employee turnover could cost up to 40% of a company’s annual profits The average company loses $1 million with the loss of every ten managerial employees Turnover costs are 50%-100% of the ex- employees’ annual salary Source: insala,com, April 2005

Top 10 Reasons Employees Stay On Their Job 1.Credit Union Membership 2.Health Benefits 3.Salary 4.Good Coworkers 5.Office Hours 6.Childcare 7.Vacation Time 8.Sick Leave 9.Distance from Home 10. Popular Company Source: Source: Creditunionrate.com, accessed July 13, 2006

Employee Movement Promotion/Reassignment Termination Retirement Resignation

Companies’ Aid to Disabled Employees Source: USA Today