Chapter Three
The Changing Environment
of Management
Chapter Objectives
• Summarize the demographics of the new
American workforce.
• Explain how the social contract between employer
and employee has change over the years.
• Define the term managing diversity, and explain
why it is particularly important today.
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Chapter Three | 2
Chapter Objectives (cont’d)
• Discuss how the changing political-legal
environment is affecting the practice of
management.
• Discuss why business cycles and the global
economy are vital economic considerations for
modern managers.
• Describe the three-step innovation process, and
define the term intrapreneur.
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Chapter Three | 3
The Twenty-First-Century Workplace:
Seven Major Changes
1.
2.
3.
4.
The Virtual Organization
The Just-in-Time Workforce
The Ascendancy of Knowledge Workers
Computerized Coaching and Electronic
Monitoring
5. The Growth of Worker Diversity
6. The Aging Workforce
7. The Birth of the Dynamic Workforce
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The Social Environment
• Dimensions of the Social Environment
– Demographics
• Changes in the statistical profiles of population characteristics
– The new social contract
• Changes in the employer-employee relationship
– Inequalities
• Persistent barriers encountered by women, minorities, and
others in the workplace
– Managing diversity
• Creating organizational cultures that enable all employees to
realize their potential
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Demographics of the New Workforce
• It is getting larger, increasingly female, more
racially and ethnically diverse, and older.
– Need for Remedial Education
• Labor force quality: The U.S. labor force is deficient in reading,
writing, science, and basic math skills.
– Diversity
• The workforce will have more Hispanics and older persons in
the future.
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Demographics of the New Workforce
(cont’d)
• Myths About Older Workers
–
–
–
–
–
–
They are less productive.
They incur higher benefits costs.
They have higher absenteeism.
They have more accidents at work.
They are less willing to learn.
They are inflexible about the hours they are willing to
work.
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Figure 3.1: The Changing U.S.
Workforce, 2002-2012
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Figure 3.1: The Changing U.S.
Workforce, 2002-2012 (cont’d)
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Figure 3.1: The Changing U.S.
Workforce, 2002-2012 (cont’d)
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Figure 3.1: The Changing U.S.
Workforce, 2002-2012 (cont’d)
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A New Social Contract Between
Employer and Employee
• New Social Contract
– The assumption that the employer-employee
relationship will be a shorter-term one based on
convenience and mutual benefit, rather than for life
• Employees are expected to manage their own careers to
increase their long-term value.
• Employers are expected to provide the means necessary for
continual workforce development.
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Nagging Inequalities in the
Workplace
• Under the Glass Ceiling
– Women continue to experience a significant genderwage gap and strong barriers to advancement.
– Women are demanding more equitable compensation
and workplace opportunities.
• Continuing Pressure for Equal Opportunity
– Women, minorities, and the physically challenged are
all expected to press harder for more employment
opportunities.
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Nagging Inequalities in the
Workplace (cont’d)
• Part-Timer Promises and Problems
– Contingent workers will comprise an increasing
percentage of the workforce.
– The advantages of lower wage and benefits costs and
the flexibility of a contingent workforce are offset by
their negative work attitudes and increased likelihood of
quitting.
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Managing Diversity
• Managing Diversity
– The process of creating an organizational culture that
provides all employees, including women and
minorities, with assistance and opportunities to help
them realize their full potential
• More Than EEO
– The moral necessity and commitment in going beyond
EEO and affirmative action to create flexible
organizations that encompass and value diversity
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The Political-Legal Environment
• The Politicization of Management
– Issues management
• Ongoing process of identifying, evaluating, and responding to
important social and political issues
• Purpose: Minimize “surprises” and make more systematic and
effective responses to issues
– General political responses
• Defending the status quo against all comers
• Adopting a “wait and see” approach
• Proactively trying to identify and respond to issues
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Figure 3.2: Management’s Political
Response Continuum
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The Political-Legal Environment
(cont’d)
• Specific Political Strategies
– Campaign financing
• Political action committees (PACs)
– Lobbying
• Garnering political support
– Coalition building
• Common rallying points
– Indirect lobbying
• Advocacy advertising
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Increased Personal Legal
Accountability
• Increases in Demands for Accountability
– Sarbanes-Oxley Act (2002)
• “Cooking the books,” price fixing, and bid rigging are serious
white-collar crimes likely to draw stiff penalties and jail
sentences.
• Political and Legal Implications for Management
– Increased use of legal audits
• A review of all operations to pinpoint possible legal liabilities or
problems
– Use of alternative dispute resolution (ADR)
• Settling disputes with less costly methods, including arbitration
and mediation
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The Economic Environment
• The Job Outlook in Today’s Service Economy,
Where Education Counts
– The job category for “general managers and operations
managers” is rapidly growing and one of the most
resistant to “offshoring.”
– Service sector jobs in high-paying occupations that
require at least a bachelor’s degree are growing twice
as fast as that of all other occupations.
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The Economic Environment
• Coping with Business Cycles
– Business cycles
• Alternating periods of economic expansion and
recession
• The up-and-down movement of an economy’s ability
to generate wealth
• Worldwide convergence
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The Economic Environment
• Cycle-Sensitive Decisions
– Timing decisions about appropriate responses
to changes in the business cycle is necessary
to
• Reduce the chances that a firm’s assets and
resources will be underutilized or wasted in
economic downturns
• Take advantage of opportunities that will arise during
periods of rapid economic expansion
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Figure 3.3: Business Cycles Affect
Managerial Decisions
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The Challenge of a
Global Economy
• A Single Global Marketplace
– Global trade is causing a shift to a single economy.
– The commercial world is no longer East-West, NorthSouth; it is now one economy, one marketplace.
• Globalization Is Personal
– A growing trend: Working for a foreign-owned company
– Meeting world standards for quality and costs (through
lower wages) is necessary to be globally competitive.
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The Technological Environment
• Technology
– Technology includes all the tools and ideas available for
extending the natural and mental reach of humankind.
– Technology is facilitating the evolution of the
information age.
– Information has become a valuable strategic resource
for gaining competitive advantage.
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Table 3.1: Science Fiction Is
Becoming Reality with These Seven
New Technologies
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The Technological Environment
(cont’d)
• The Innovation Process
– The systematic and practical application of a new idea
• Steps in the Innovation Process
– Conceptualization: When a new idea occurs to
someone
– Product technology: Creation of a working prototype
– Production technology: Development of a profitable
production process
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Figure 3.4: The Three-Step
Innovation Process
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The Technological Environment
(cont’d)
• Innovation Lag
– The time it takes for a new product to be translated into
satisfied demand
• Shortening Innovation Lag
– Goal setting: Creating a sense of urgency and purpose
– Empowerment: Pushing decision-making authority
down to the level of the decision
– Concurrent engineering: Using a team approach to
product design involving specialists from all functional
areas including research, production, and marketing
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Promoting Innovation Through
Intrapreneurship
• Intrapreneur
– An employee who takes personal responsibility for
pushing an innovative idea through a large organization
• Fostering Intrapreneurship
–
–
–
–
Focus on results and teamwork.
Reward innovation and risk taking.
Tolerate and learn from mistakes.
Remain flexible and change-oriented.
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Summary
• The U.S. workforce will continue to become
larger, older, more diverse, and more female.
• The traditional social contract has been replaced
by a shorter-term relationship of convenience
between employee and employer.
• Persistent opportunity and income equalities are
powerful stimuli for workplace changes that will
tap every employee’s full potential.
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Summary (cont’d)
• Managers are becoming increasingly politicized
and more likely to be held personally responsible
for their decisions and actions.
• Business cycles and the emerging global
economy affect the decisions managers make.
• Intrapreneurship can flourish in an organizational
climate that values individuals who champion
ideas and innovations.
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Chapter Three | 32
Terms to Understand
•
•
•
•
•
•
•
•
•
Demographics
New social contract
Glass ceiling
Contingent workers
Managing diversity
Issues management
Advocacy advertising
Legal audit
Alternative dispute
resolution
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•
•
•
•
•
•
•
Business cycle
Technology
Innovation process
Product technology
Production technology
Innovation
Concurrent
engineering
• Intrapreneur
Chapter Three | 33
Skills and Tools
• How Business Leaders Can Help
Women Break the Glass Ceiling
–
–
–
–
–
–
–
–
–
–
Provide feedback on job performance
Accept women
Ensure equal opportunities
Provide career counseling
Identify potential
Encourage assertiveness
Accelerate development
Offer mentoring opportunities
Encourage networking
Increase women’s participation
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Chapter Three | 34