CHAPTER 12
Human Resource
Management
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Learning Objectives (1 of 2)
1. Explain why strategic human resource
management can help an organization gain a
competitive advantage.
2. Describe the steps managers take to recruit
and select organizational members.
3. Discuss the training and development options
that ensure organization members can
effectively perform their jobs.
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Learning Objectives (2 of 2)
4. Explain why performance appraisal and
feedback are such crucial activities, and
list the choices managers must make in
designing effective performance
appraisal and feedback procedures.
5. Explain the issues managers face in
determining levels of pay and benefits.
6. Understand the role that labor relations
play in the effective management of
human resources.
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Strategic Human Resource
Management (1 of 2)
Human resource management (HRM)
• Activities that managers engage in to
attract and retain employees and to
ensure that they perform at a high level
and contribute to the accomplishment
of organizational goals
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Strategic Human Resource
Management (2 of 2)
Strategic human resource management
• The process by which managers design the
components of an HRM system to be
consistent with each other, with other
elements of organizational architecture, and
with the organization’s strategy and goals
• Jack Welch: Six Sigma saved GE, Whirlpool,
Motorola
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Figure 12.1 Components of a Human
Resource Management System
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The Legal Environment of HRM
Equal employment opportunity (EEO)
• The equal right of all citizens to the
opportunity to obtain employment regardless
of their gender, age, race, country of origin,
religion, or disabilities
Equal Employment Opportunity Commission
(EEOC)
• Enforces employment laws
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Major Equal Employment
Opportunity Laws Affecting HRM
Year
Law
Description
1963
Equal Pay Act
Requires that men and women be paid equally if they are performing
equal work
1964
Title VII of the Civil Rights Act
Prohibits employment discrimination on the basis of race, religion, sex,
color, or national origins--covers a wide range of employment
decisions, including hiring, firing, pay, probation, and working
conditions
1967
Age Discrimination in
Employment Act
Prohibits discrimination against workers over the age of 40 and
restricts mandatory retirement
1978
Pregnancy Discrimination Act
Prohibits employment discrimination against women on the basis of
pregnancy, childbirth, and related medical decisions
1990
Americans with Disabilities Act
Prohibits employment discrimination against individuals with
disabilities and requires that employers make accommodations for
such workers to enable them to perform their jobs
1991
Civil Rights Act
Prohibits discrimination (as does Title VII) and allows the awarding of
punitive and compensatory damages, in addition to back pay, in cases
of intentional discrimination
1993
Family and Medical Leave Act
Requires that employers provide 12 weeks of unpaid leave for medical
and family reasons, including paternity and illness of a family member
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Contemporary Challenges for
Managers
Eliminating sexual harassment
Making accommodations for employees
with disabilities
Dealing with employees who have
substance abuse problems
Managing HIV-positive employees and
employees with AIDs
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Recruitment and Selection
Recruitment
• Activities that managers engage in to develop
a pool of candidates for open positions
Selection
• The process that managers use to determine
the relative qualifications of job applicants and
their potential for performing well in a
particular job
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Figure 12.2 The Recruitment and
Selection System
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Human Resource Planning (1 of 3)
Human resource planning (HRP)
• Activities that managers engage in to forecast
their current and future needs for human
resources
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Human Resource Planning (2 of 3)
Demand forecasts
• Estimates the qualifications and numbers of
employees the firm will need given its goals
and strategies
Supply forecasts
• Estimates the availability and qualifications of
current employees now and in the future, as
well as the supply of qualified workers in the
external labor market
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Human Resource Planning (3 of 3)
Outsourcing
• Using outside suppliers and manufacturers to
produce goods and services
• Using contract workers rather than hiring
them
• More flexible for the firm
• Provides human capital at a lower cost
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Job Analysis (1 of 2)
Job analysis
• Job description Identifying the tasks, duties
and responsibilities that make up a job
• Job specifications Knowledge, skills, and
abilities needed to perform the job
• Should be done for each job in the
organization
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Job Analysis (2 of 2)
Job analysis methods
• Observing what current workers do
• Having workers and manages fill out
questionnaires
• PAQ: Position Analysis Questionnaire
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Recruitment (1 of 5)
External recruiting
• Looking outside the organization for people
who have not worked at the firm previously
• Job postings on career websites, job fairs and
recruitment meetings with groups in the local
community, career fairs at colleges, open
houses, advertising in local newspapers
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Recruitment (2 of 5)
Advantages of external recruiting
• Having access to a potentially large applicant
pool
• Being able to attract people who have the
skills, knowledge, and abilities an organization
needs
• Bringing in newcomers who may have a fresh
approach to problems and be up to date on
the latest technology
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Recruitment (3 of 5)
Disadvantages of external recruiting
• High cost
• Additional training
• Will they be good performers?
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Recruitment (4 of 5)
Internal recruiting
• Managers turn to existing employees to fill
open positions.
Benefits of internal recruiting
• Internal applicants are already familiar with
the organization.
• Managers already know candidates.
• It can help boost levels of employee
motivation and morale.
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Recruitment (5 of 5)
Disadvantages of Internal recruiting
• Limited pool of candidates
• Candidates “set” in organization’s ways
• External recruiting: new ideas and
approaches
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Honesty in Recruiting
Realistic job preview
• An honest assessment of the advantage and
disadvantages of a job and organization
• Can reduce the number of new hires who quit
when jobs and organizations fail to meet their
unrealistic expectations
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The Selection Process
Selection process
• Managers finding out whether each applicant
is qualified for the position and likely to be a
good performer
• Background, interviews, tests, references
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Figure 12.3 Selection Tools
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Reliability and Validity
Reliability
• The degree to which the tool or test measures
the same thing each time it is used
Validity
• The degree to which a tool or test measures
what it purports to measure
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Training and Development (1 of 3)
Training
• Teaching organizational members how to
perform current jobs and helping them to
acquire the knowledge and skills they need to
be effective performers
• Home Depot’s “Pocket Guide”
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Training and Development (2 of 3)
Development
• Building the knowledge and skills of
organizational members so they are prepared
to take on new responsibilities and challenges
Needs assessment
• An assessment of which employees need
training or development and what type of
skills or knowledge they need to acquire
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Training and Development (3 of 3)
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Performance Appraisal and
Feedback (1 of 2)
Performance appraisal
• The evaluation of employees’ job performance
and contributions to their organization
• Focuses on the evaluation of traits, behaviors,
results
• Objective or subjective assessment
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Subjective Measures
of Performance (1 of 2)
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Subjective Measures
of Performance (2 of 2)
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Figure 12.6 Who Appraises
Performance?
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Performance Appraisal and
Feedback (2 of 2)
Performance feedback
• The process through which managers share
performance appraisal information with
subordinates, give subordinates an
opportunity to reflect on their own
performance, and develop—with
subordinates—plans for the future
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Effective Performance Feedback
Formal appraisals
• An appraisal conducted at a set time during
the year and based on performance
dimensions that were specified in advance
Informal appraisals
• An unscheduled appraisal of ongoing
progress and areas for improvement
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Effective Feedback Tips (1 of 2)
• Be specific and focus on behaviors or outcomes
that are correctable and within a worker’s
ability to improve.
• Approach performance appraisal as an exercise
in problem solving and solution finding, not
criticizing.
• Express confidence in a subordinate’s ability to
improve.
• Provide performance feedback both formally
and informally.
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Effective Feedback Tips (2 of 2)
• Praise instances of high performance and
areas of a job in which a worker excels.
• Avoid personal criticisms and treat
subordinates with respect.
• Agree to a timetable for performance
improvements.
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Pay and Benefits (1 of 3)
Pay
• Includes employees’ base salaries, pay
raises, and bonuses
• Determined by characteristics of the
organization and the job and levels of
performance
• Benefits based on membership in an
organization
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Pay and Benefits (2 of 3)
Pay level
• The relative position of an organization’s
incentives in comparison with those of other
firms in the same industry employing similar
kinds of workers
• Four Seasons Hotels and Resorts: “100 Best
Companies to Work For” (Fortune)
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Pay Structure
Pay structure
• The arrangement of
jobs into categories
based on their relative
importance to the
organization and its
goals, level of skills,
and other
characteristics
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CEO
VP
VP
Director Director Director
Dept Mgr
Dept Mgr
Pay and Benefits (3 of 3)
Benefits
• Legally required: Social Security, workers’
compensation, unemployment insurance,
health insurance for employers with 50 or
more employees
• Voluntary: Retirement, day care, flexible
working hours
• Cafeteria-style benefits plans. Employees
choose the best mix of benefits for them, but
can be hard to manage
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Labor Relations
Labor relations
• The activities managers engage in to ensure
they have effective working relationships with
the labor unions that represent their
employees interests
• Governmental efforts
• 1938: Fair Labor Standards Act
• 1963: Equal Pay Act
• 1970: Occupational Safety and Health Act
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Unions
Unions
• Represent workers’ interests to management
in organizations
• United group inevitably wields more power
than individual, and this type of power
especially helpful to employees in some
organizations
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Collective Bargaining
Collective bargaining
• Negotiation between labor and management
to resolve conflicts and disputes about issues
such as working hours, wages, benefits,
working conditions, and job security
• Grievance procedure
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Example - Wonderlic
Wonderlic provides many tools for prescreening employees.
One example is the Wonderlic Personnel
Test.
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CHAPTER 10
Managing
Organizational
Structure and
Culture
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Learning Objectives
1.
Identify the factors that influence managers’ choice of an
organizational structure.
2.
Explain how managers group tasks into jobs that are motivating
and satisfying for employees.
3.
Describe the types of organizational structures managers can
design, and explain why they choose one structure over another.
4.
Explain why managers must coordinate jobs, functions, and
divisions using the hierarchy of authority and integrating
mechanisms
5.
List the four sources of organizational culture, and explain why and
how a company’s culture can lead to competitive advantage.
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Organizational Structure
Organizational architecture
• The organizational structure, control systems,
culture, and human resource management
systems that together determine how
efficiently and effectively organizational
resources are used
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Designing Organizational Structure
(1 of 4)
Organizing
• Process by which managers establish the
structure of working relationships among
employees to allow them to achieve an
organization’s goals efficiently and effectively
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Designing Organizational Structure
(2 of 4)
Organizational
structure
• Formal system of
task and reporting
relationships that
coordinates and
motivates
organizational
members so they
work together to
achieve
organizational goals
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Designing Organizational Structure
(3 of 4)
Organizational design
• The process by which managers create a
specific type of organizational structure and
culture so that a company can operate in the
most efficient and effective way
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Figure 10.1 Factors Affecting
Organizational Structure
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Designing Organizational Structure
(4 of 4)
The way an organization’s structure works
depends on the choices managers make
about:
1. How to group tasks into individual jobs.
2. How to group jobs into functions and
divisions.
3. How to allocate authority and coordinate
functions and divisions.
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Grouping Tasks into Jobs:
Job Design
Job design
• Job Design is the process by which managers
decide how to divide tasks into specific jobs
(division of labor).
• The appropriate division of labor results
in an effective and efficient workforce.
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Job Design
Job simplification
• The process of reducing the number of tasks
that each worker performs
Job enlargement
• Increasing the number of different tasks in a
given job by changing the division of labor
Job enrichment
• Increasing the degree of responsibility a
worker has over a job
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Job Enrichment
1. Empowering workers to experiment to
find new or better ways of doing the job
2. Encouraging workers to develop new
skills
3. Allowing workers to decide how to do the
work
4. Allowing workers to monitor and measure
their own performance
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The Job Characteristics Model (1 of 2)
Skill variety
• Employee uses a wide range of skills.
Task identity
• Worker is involved in all tasks of the job from
beginning to end of the production process.
Task significance
• Worker feels the task is meaningful to the
organization.
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The Job Characteristics Model (2 of 2)
Autonomy
• Employee has freedom to schedule tasks and
carry them out.
Feedback
• Worker gets direct information about how well
the job is done.
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Grouping Jobs into Functions
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Functional Structure (1 of 2)
Advantages
• Encourages learning from others doing similar
jobs
• Easy for managers to monitor and evaluate
workers
• Allows managers to create the set of functions
they need in order to scan and monitor the
competitive environment
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Functional Structure (2 of 2)
Disadvantages
• Difficult for departments to communicate with
others
• Preoccupation with own department and
losing sight of organizational goals
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Divisional Structures
Divisional structure
• An organizational structure composed of
separate business units within which are the
functions that work together to produce a
specific product for a specific customer
• Product, geographic, market
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Figure 10.3 Product, Geographic,
and Market Structures
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Types of Divisional Structures (1 of 3)
Product structure
• Managers place each distinct product line or
business in its own self-contained division.
• Divisional managers have the responsibility
for devising an appropriate business-level
strategy to allow the division to compete
effectively in its industry or market.
• GlaxoSmithKline groups research into 8
product divisions to focus on particular
clusters of diseases
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Product Structure
• Allows functional managers to specialize
in one product area
• Allows division managers to become
experts in their area
• Removes need for direct supervision of
division by corporate managers
• Allows divisional management to improve
the use of resources
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Types of Divisional Structures (2 of 3)
Geographic structure
• Divisions are broken down by geographic
location.
Global geographic structure
• Managers locate different divisions in each of
the world regions where the organization
operates.
• This generally occurs when managers are
pursuing a multi-domestic strategy.
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Figure 10.4 Global Geographic and
Global Product Structures
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Types of Divisional Structures (3 of 3)
Market structure
• Groups divisions according to the particular
kinds of customers they serve
• Allows managers to be responsive to the
needs of their customers and act flexibly in
making decisions in response to customers’
changing needs
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Matrix Design Structure
Matrix structure
• A matrix structure is an organizational
structure that simultaneously groups people
and resources by function and product.
• The structure is very flexible.
• Each employee has two bosses.
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Matrix Structure
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Product Team Structure (1 of 2)
Product team structure
• Structure in which employees are
permanently assigned to a cross-functional
team and report only to the product team
manager or to one of the manager’s direct
subordinates
• Does away with dual reporting relationships
and two-boss managers
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Product Team Structure (2 of 2)
Cross-functional team
• A group of managers brought together from
different departments to perform
organizational tasks
• Example: Sealy’s cross-functional team
designs a new mattress outside hierarchy
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Figure 10.5 Product Team Structure
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Allocating Authority (1 of 3)
Authority
• Power to hold people accountable for their
actions and to make decisions concerning the
use of organizational resources
Hierarchy of authority
• An organization’s chain of command,
specifying the relative authority of each
manager
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Allocating Authority (2 of 3)
Span of control
• The number of subordinates who report
directly to a manager
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Allocating Authority (3 of 3)
Line manager
• Someone in the direct line or chain of
command who has formal authority over
people and resources at lower levels
Staff manager
• Someone responsible for managing a
specialist function, such as finance or
marketing
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Tall and Flat Organizations (1 of 2)
Tall structures have many levels of
authority and narrow spans of control.
• As hierarchy levels increase, communication
gets difficult, creating delays in the time being
taken to implement decisions.
• Communications can also become distorted
as they are repeated through the firm.
• Tall structures can become expensive.
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Tall Organizations
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Tall and Flat Organizations (2 of 2)
Flat structures have fewer levels and wide
spans of control.
• Results in quick communications but can
lead to overworked managers
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Centralization and
Decentralization of Authority
Decentralizing authority
• Giving lower-level managers and nonmanagerial employees the right to make
important decisions about how to use
organizational resources
• Flexible and responsive
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Integrating Mechanisms
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Organizational Culture (1 of 3)
Organizational culture
• The shared set of beliefs, expectations,
values, and norms that influence how
members of an organization relate to one
another and cooperate to achieve
organizational goals
• Organizational values: the shared standards
that its members use to evaluate whether they
have helped the company achieve its vision
and goals
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Organizational Culture (2 of 3)
Organizational culture
• Organizational norms: specify or prescribe
the kinds of shared beliefs, attitudes, and
behaviors that its members should observe
and follow
• Informal, but powerful, rules about how
employees should behave or conduct
themselves
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Figure 10.9 Sources of an
Organization’s Culture
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Organizational Culture (3 of 3)
Organizational ethics
• The moral values, beliefs, and rules that
establish the appropriate way for an
organization and its members to deal with
each other and with people outside the
organization
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Employment Relationship
Human resource policies
• Can influence how hard employees will work
to achieve the organization’s goals
• How attached they will be to the organization
• Whether or not they will buy into its values
and norms
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Strong, Adaptive Cultures Versus
Weak, Inert Cultures
Adaptive cultures
• Values and norms help an organization to
build momentum and to grow and change as
needed to achieve its goals and be effective.
Inert cultures
• Those that lead to values and norms that fail
to motivate or inspire employees
• Lead to stagnation and often failure over time
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Video: The Container Store
The Container Store provides significantly more
training for its employees than the industry norm.
How does this training impact job enrichment at
The Container Store?
Employees at The Container Store have a 5minute "huddle" every morning. What is the
purpose of this meeting, and how does it reinforce
the culture of the organization?
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CHAPTER 14
Leadership
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Learning Objectives (1 of 2)
1. Explain what leadership is, when leaders are
effective and ineffective, and the sources of
power that enable managers to be effective
leaders.
2. Identify the traits that show the strongest
relationship to leadership, the behaviors
leaders engage in, and the limitations of the
trait and behavioral models of leadership.
3. Explain how contingency models of leadership
enhance our understanding of effective
leadership and management in organizations.
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Learning Objectives (2 of 2)
4. Describe what transformational leadership
is, and explain how managers can engage
in it.
5. Characterize the relationship between
gender and leadership, and explain how
emotional intelligence may contribute to
leadership effectiveness.
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The Nature of Leadership (1 of 2)
Leadership
• The process by which a person exerts
influence over others and inspires,
motivates and directs their activities to
achieve group or organizational goals
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The Nature of Leadership (2 of 2)
Leader
• An individual who is able to exert influence
over other people to help achieve group or
organizational goals
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Personal Leadership Style
and Managerial Tasks (1 of 2)
Personal leadership style
• Specific ways in which a manager chooses to
influence others
• Michael Kraus, dry cleaners owner: Hands-on approach
• Laurie Glimcher, Dana-Farber CEO: Empowerment and
collaboration
• Shapes the way the manager approaches the
other principal tasks of management
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Personal Leadership Style
and Managerial Tasks (2 of 2)
Servant leader
• A leader who has a strong desire work for the
benefit of others
• Example: Robert Greenleaf at AT&T
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Leadership across Cultures
European managers tend to be more
people-oriented than American or
Japanese managers.
Japanese managers are group-oriented,
while U.S managers focuses more on
profitability.
Time horizons also are affected by cultures.
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Figure 14.1 Sources of Managerial
Power
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Power: The Key to Leadership (1 of 4)
Legitimate power
• The authority that a manager has by virtue of
his or her position in an organization’s
hierarchy
Reward power
• The ability of a manager to give or withhold
tangible and intangible rewards
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Power: The Key to Leadership (2 of 4)
Coercive power
• Coercive power is the ability of a manager to
punish others.
• Overuse of coercive power can even result in
dangerous working conditions.
• Examples include verbal reprimand, pay cuts,
and dismissal.
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Power: The Key to Leadership (3 of 4)
Expert power
• Power that is based on special knowledge,
skills, and expertise that the leader possesses
• Tends to be used in a guiding or coaching
manner
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Power: The Key to Leadership (4 of 4)
Referent power
• Power that comes from subordinates’ and
coworkers’ respect , admiration, and loyalty
• Possessed by managers who are likable and
whom subordinates wish to use as a role
model
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Empowerment: An Ingredient in
Modern Management
Empowerment
• The process of giving employees at all
levels the authority to make decisions, be
responsible for their outcomes, improve
quality, and cut costs
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Trait and Behavior Models of
Leadership (1 of 2)
Trait model
• Focused on identifying personal
characteristics that produce effective
leadership
• Some personal characteristics not personality
traits per se but, rather, concerned with a
leader’s skills, abilities, knowledge, and
expertise
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Traits and Personal Characteristics
Related to Effective Leadership
Trait
Description
Intelligence
Helps managers understand complex issues and solve problems
Knowledge and
expertise
Help managers make good decisions and discover ways to increase
efficiency and effectiveness
Dominance
Helps managers influence their subordinates to achieve organizational goals
Self-confidence
Contributes to managers effectively influencing subordinates and persisting
when faced with obstacles or difficulties
High energy
Helps managers deal with the many demands they face
Tolerance for stress
Helps managers deal with uncertainty and make difficult decisions
Integrity and
honesty
Help managers behave ethically and earn their subordinates’ trust and
confidence
Maturity
Helps managers to avoid acting selfishly, control their feelings, and admit
when they have made a mistake.
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Trait and Behavior Models of
Leadership (2 of 2)
Behavioral model
• Identifies the two basic types of behavior that
many leaders engaged in to influence their
subordinates
• Consideration and initiating structure
• Costco’s consideration: “Take Care of Our
Employees”
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The Behavior Model
Consideration
• Behavior indicating that a manager trusts,
respects, and cares about subordinates
Initiating structure
• Behavior that managers engage in to ensure
that work gets done, subordinates perform
their jobs acceptably, and the organization is
efficient and effective
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Contingency Models of Leadership
(1 of 3)
Contingency models
• Whether or not a manager is an effective
leader is the result of the interplay between
what the manager is like, what he does, and
the situation in which leadership takes place.
CONTEXT
©McGraw-Hill Education.
Contingency Models of Leadership
(2 of 3)
Fiedler’s model
• Effective leadership is contingent on both the
characteristics of the leader and the situation.
• Leader style is a manager’s characteristic
approach to leadership.
©McGraw-Hill Education.
Fiedler’s Contingency Model
Relationship-oriented style
• Leaders concerned with developing good
relations with their subordinates and being
liked by them
Task-oriented style
• Leaders whose primary concern is to ensure
that subordinates perform at a high level so
the job gets done
©McGraw-Hill Education.
Fiedler’s Model
Situation Characteristics (1 of 2)
Leader-member relations
• Extent to which followers like, trust, and are
loyal to their leader
Task structure
• Extent to which the work to be performed is
clear-cut so that a leader’s subordinates know
what needs to be accomplished and how to
accomplish it
©McGraw-Hill Education.
Fiedler’s Model
Situation Characteristics (2 of 2)
Position power
• Amount of legitimate, reward, and coercive
power that a leader has by virtue of his or her
position in an organization
• Determinant of how favorable a situation is for
leading
©McGraw-Hill Education.
Figure 14.2 Fiedler’s Contingency
Theory of Leadership
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images.
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House’s Path-Goal Theory
A contingency model of leadership
proposing that effective leaders can
motivate subordinates to achieve goals by:
1. Clearly identifying the outcomes that
subordinates are trying to obtain from their jobs
2. Rewarding subordinates with these outcomes
for high-performance and attainment of work
goals
3. Clarifying the paths leading to the attainment of
work goals
©McGraw-Hill Education.
Path-Goal Leadership Behaviors (1 of 2)
Directive behaviors
• Setting goals, assigning tasks, showing
subordinates how to complete tasks, and
taking concrete steps to improve performance
Supportive behavior
• Expressing concern for subordinates and
looking out for their best interests
©McGraw-Hill Education.
Path-Goal Leadership Behaviors (2 of 2)
Participative behavior
• Give subordinates a say in matters and
decisions that affect them
Achievement-oriented behavior
• Setting challenging goals, expecting that they
be met, and believing in subordinates’
capabilities
©McGraw-Hill Education.
The Leader Substitutes Model (1 of 2)
Leadership
substitute
• It is characteristic
of a subordinate or
of a situation or
context that acts in
place of the
influence of a
leader and makes
leadership
unnecessary.
©McGraw-Hill Education.
Members of an
organization can
sometimes perform
well without a
manager exerting
influence over them.
The Leader Substitutes Model (2 of 2)
Possible substitutes can be found in:
Characteristics of the subordinates: their
skills, experience, motivation
Characteristics of context: the extent to
which work is interesting and fun
©McGraw-Hill Education.
Contingency Models of Leadership
(3 of 3)
Model
Focus
Key Contingencies
Fiedler’s
contingency model
Describes two
leader styles,
relationshiporiented and taskoriented, and the
kinds of situations in
which each kind of
leader will be most
effective
Whether a relationship-oriented or a task-oriented
leader is effective is contingent on the situation.
House’s path-goal
theory
Describes how
effective leaders
motivate their
followers
The behaviors that managers should engage in to be
effective leaders are contingent on the nature of the
subordinates and the work they do.
Leader substitutes
model
Describes when
leadership is
unnecessary
Whether leadership is necessary for subordinates to
perform highly is contingent on characteristics of the
subordinates and the situation.
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Transformational Leadership (1 of 2)
1. Makes subordinates aware of how
important their jobs are for the
organization and how necessary it is for
them to perform those jobs as best they
can so that the organization can attain its
goals
©McGraw-Hill Education.
Transformational Leadership (2 of 2)
2. Makes subordinates aware of their own
needs for personal growth, development,
and accomplishment
3. Motivates workers to work for the good
of the organization, not just for their
own personal gain or benefit
©McGraw-Hill Education.
Being a Charismatic Leader
Charismatic leader
• An enthusiastic, self-confident
transformational leader able to clearly
communicate his vision of how good things
could be
• Being excited and clearly communicating
excitement to subordinates
• Openly sharing information with employees so
that everyone is aware of problems and the
need for change
©McGraw-Hill Education.
Stimulating Subordinates
Intellectually
Intellectual stimulation
• Behavior a leader engages in to make
followers aware of problems and make them
view these problems in new ways, consistent
with the leader’s vision
©McGraw-Hill Education.
Developmental Consideration
Developmental consideration
• Manager supports and encourages
subordinates, giving them opportunities to
enhance their skills and capabilities and
to grow and excel on the job.
©McGraw-Hill Education.
Transactional Leadership
Transactional leaders
• Leadership that motivates subordinates by
rewarding them for high performance and
reprimanding them for low performance
• Transformational leaders⎯transactional
leadership as a tool
©McGraw-Hill Education.
Gender and Leadership
Although there are more women in
management positions today than there
were 10 years ago, there are still relatively
few women in top management and, in
some organizations, even in middle
management.
Stereotypes suggest women are supportive
and concerned with interpersonal relations.
Similarly, men are seen as task-focused.
©McGraw-Hill Education.
Emotional Intelligence and
Leadership (1 of 2)
The moods of leaders:
Groups whose leaders experienced positive
moods had better coordination.
Groups whose leaders experienced
negative moods exerted more effort.
©McGraw-Hill Education.
Emotional Intelligence and
Leadership (2 of 2)
Emotional intelligence
• Helps leaders develop a vision for their firm
• Helps motivate subordinates to commit to the
vision
• Energizes subordinates to work to achieve the
vision
©McGraw-Hill Education.
Example – Coach Roy Williams
Roy Williams is the men’s basketball coach at the
University of North Carolina – Chapel Hill. He has
three guiding principles of leadership:
1. Everyone on the team must focus on the same
goal. “It's my job to effectively communicate
those goals to the team.”
2. Emphasize those goals every day.
3. Understand that although everyone has a
common goal, individuals also have goals,
needs, and dreams that must be cared for.
©McGraw-Hill Education.
Video: Zappos
What leadership style does Tony Hsieh
utilize at Zappos?
Is this style always effective? Why or why
not?
©McGraw-Hill Education.
CHAPTER 13
Motivation and
Performance
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Learning Objectives (1 of 2)
1. Explain what motivation is and why managers
need to be concerned about it.
2. Describe from the perspectives of expectancy
theory and equity theory what managers should
do to have a highly motivated workforce.
3. Explain how goals and needs motivate people
and what kinds of goals are especially likely to
result in high performance.
©McGraw-Hill Education.
Learning Objectives (2 of 2)
4. Identify the motivation lessons that
managers can learn from operant
conditioning theory and social learning
theory.
5. Explain why and how managers can use
pay as a major motivation tool.
©McGraw-Hill Education.
The Nature of Motivation (1 of 3)
Motivation
• The psychological forces that determine the
direction of a person’s behavior in an
organization, a person’s level of effort, and a
person’s level of persistence
• Explains why people behave the way they do
in organizations
©McGraw-Hill Education.
The Nature of Motivation (2 of 3)
Direction
• Possible behaviors a person could engage in
Effort
• How hard people work
Persistence
• Refers to whether, when faced with
roadblocks and obstacles, people keep trying
or give up
©McGraw-Hill Education.
The Nature of Motivation (3 of 3)
Intrinsically motivated behavior
• Behavior performed for its own sake
Extrinsically motivated behavior
• Behavior performed to acquire material or
social rewards or to avoid punishment
Prosocially motivated behavior
• Behavior performed to benefit or help others
©McGraw-Hill Education.
Outcomes and Inputs
Outcome
• Anything a person gets from a job or an
organization
• Pay, job security, benefits, vacation time
Input
• Anything a person contributes to his or her job
or organization
• Time, effort, skills, knowledge, work behaviors
©McGraw-Hill Education.
Figure 13.1 The Motivation Equation
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Expectancy Theory (1 of 3)
Expectancy theory
• The theory that motivation will be high when
workers believe that high levels of effort lead to
high performance and that high performance leads
to the attainment of desired outcomes
• 1960s, Victor H. Vroom
©McGraw-Hill Education.
Expectancy Theory (2 of 3)
Expectancy
• A person’s perception about the extent to which effort
(an input) results in a certain level of performance
Instrumentality
• A person’s perception about the extent to which
performance at a certain level results in the
attainment of outcomes
Valence
• How desirable each of the available outcomes from
the job is to a person
©McGraw-Hill Education.
Figure 13.2 Expectancy,
Instrumentality, and Valence
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Expectancy Theory (3 of 3)
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Need Theories
Need theories
• Theories of motivation that focus on what
needs people are trying to satisfy at work and
what outcomes will satisfy those needs
Need
• A requirement or necessity for survival and
well-being
©McGraw-Hill Education.
Maslow’s Hierarchy of Needs (1 of 2)
Maslow’s hierarchy of needs
• The hierarchy of needs is an arrangement of
five basic needs that motivate behavior
• Maslow proposed that the lowest level of
unmet needs is the prime motivator and that
only one level of needs is motivational at a
time.
©McGraw-Hill Education.
Table 13.1 Maslow’s Hierarchy of
Needs (2 of 2)
Levels
Needs
Description
Examples of How Managers Can Help People
Satisfy These Needs at Work
Highest-Level
Needs
Self-actualization Needs
The needs to realize one’s full
potential as a human being.
Giving people the opportunity to use their
skills and abilities to the fullest extent
possible.
Below HighestLevel Needs
Esteem Needs
The needs to feel good about
oneself and one’s capabilities,
to be respected by others, and
to receive recognition and
appreciation.
Granting promotions and recognizing
accomplishments.
Medium-Level
Needs
Belongingness Needs
Needs for social interaction,
friendship, affection, and love.
Promoting good interpersonal relations and
organizing social functions such as company
picnics and holiday parties.
Above LowestLevel Needs
Safety Needs
Needs for security, stability,
and a safe environment.
Providing job security, adequate health care
benefits, and safe working conditions.
Lowest-Level
Needs
Physiological Needs
Basic needs for things such as
food, water, and shelter that
must be met in order for a
person to survive.
Providing a level of pay that enables a person
to buy food and clothing and have adequate
housing.
The lowest level of unsatisfied needs motivates behavior; once this level of needs is satisfied, a
person tries to satisfy the needs at the next level.
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Alderfer’s ERG Theory (1 of 2)
Alderfer’s ERG theory
• The theory that three universal needs—for
existence, relatedness, and growth—
constitute a hierarchy of needs and motivate
behavior
• Proposed that needs at more than one level
can be motivational at the same time
©McGraw-Hill Education.
Alderfer’s ERG Theory (2 of 2)
Levels
Needs
Description
Examples of How
Managers Can Help People
Satisfy These Needs at
Work
Highest-Level Needs
Growth needs
The needs for selfdevelopment and creative
and productive work
Allowing people to
continually improve their
skills and abilities and
engage in meaningful work
Medium-Level Needs
Relatedness needs
The needs to have good
interpersonal relations, to
share thoughts and
feelings, and to have open
two-way communication
Promoting good
interpersonal relations and
providing accurate
feedback
Lowest-Level Needs
Existence needs
Basic needs for food, water,
clothing, shelter, and a
secure and safe
environment
Providing enough pay for
the basic necessities of life
and safe working
conditions
As lower-level needs are satisfied, a person is motivated to satisfy higher-level needs. When a person
is unable to satisfy higher-level needs (or is frustrated), motivation to satisfy lower-level needs
increases.
©McGraw-Hill Education.
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Herzberg’s Motivation-Hygiene
Theory (1 of 2)
Herzberg’s motivator-hygiene theory
• This need theory distinguishes between
motivator needs and hygiene needs and
proposes that motivator needs must be met
for motivation and job satisfaction to be high.
• Interesting work, autonomy, responsibility, the
ability to grow and develop on the job, sense
of accomplishment and achievement help to
satisfy motivator needs.
©McGraw-Hill Education.
Herzberg’s Motivation-Hygiene
Theory (2 of 2)
Motivator needs relate to the nature of the
work itself: autonomy, responsibility,
interesting work.
Hygiene needs are related to the physical
and psychological context of the work:
comfortable work environment, pay, job
security.
©McGraw-Hill Education.
McClelland’s Needs for Achievement,
Affiliation, and Power (1 of 2)
Need for achievement
• The extent to which an individual has a strong
desire to perform challenging tasks well and
to meet personal standards for excellence
©McGraw-Hill Education.
McClelland’s Needs for Achievement,
Affiliation, and Power (2 of 2)
Need for affiliation
• Concerned about establishing and
maintaining good interpersonal relations,
being liked, and having the people around him
or her get along with each other
Need for power
• A desire to control or influence others
©McGraw-Hill Education.
Equity Theory (1 of 2)
Equity theory
• A theory of motivation that focuses on
people’s perceptions of the fairness of their
work outcomes relative to their work inputs
©McGraw-Hill Education.
Equity Theory (2 of 2)
Condition
Person
Equals, less
than, or
greater
than
Referent
Example
Equity
Outcomes
Inputs
=
Outcomes
Inputs
An engineer perceives that he contributes
more inputs (time and effort) and receives
proportionally more outcomes (a higher salary
and choice job assignments) than his referent.
Underpayment
inequity
Outcomes
Inputs
<
(less than)
Outcomes
Inputs
An engineer perceives that he contributes
more inputs but receives the same outcomes
as his referent.
Overpayment
inequity
Outcomes
Inputs
>
(greater
than)
Outcomes
Inputs
An engineer perceives that the contributes the
same inputs but receives more outcomes than
his referent.
©McGraw-Hill Education.
Copyright © McGraw-Hill Education. Permission required for reproduction or display.
Inequity
Underpayment inequity
• The inequity that exists when a person
perceives that his or her own outcome–input
ratio is less than the ratio of a referent
Overpayment inequity
• The inequity that exists when a person
perceives that his or her own outcome–input
ratio is greater than the ratio of a referent
©McGraw-Hill Education.
Equity and Justice in Organizations
(1 of 2)
Distributive justice
• A person’s perception of the fairness of the
distribution of outcomes in an organization
Procedural justice
• A person’s perception of the fairness of the
procedures that are used to determine how to
distribute outcomes in an organization
©McGraw-Hill Education.
Equity and Justice in Organizations
(2 of 2)
Interpersonal justice
• A person’s perception of the fairness of the
interpersonal treatment he or she receives from
whoever distributes outcomes to him or her
Informational justice
• A person’s perception of the extent to which his
or her manager provides explanations for
decisions and the procedures used to arrive at
them
©McGraw-Hill Education.
Goal-Setting Theory
Goal-setting theory
• A theory that focuses on identifying the types
of goals that are most effective in producing
high levels of motivation and performance and
explaining why goals have these effects
• Must be specific and difficult
©McGraw-Hill Education.
Learning Theories
Learning theories
• Theories that focus on increasing employee
motivation and performance by linking the
outcomes that employees receive to the
performance of desired behaviors and the
attainment of goals
©McGraw-Hill Education.
Operant Conditioning Theory
Operant conditioning
• People learn to perform behaviors that lead to
desired consequences and learn not to
perform behaviors that lead to undesired
consequences.
©McGraw-Hill Education.
Operant Conditioning Tools (1 of 2)
Positive reinforcement
• Gives people outcomes they desire when they
perform organizationally functional behaviors
Negative reinforcement
• Eliminating or removing undesired outcomes
when people perform organizationally
functional behaviors
©McGraw-Hill Education.
Operant Conditioning Tools (2 of 2)
Extinction
• Curtailing the performance of a dysfunctional
behavior by eliminating whatever is
reinforcing it
Punishment
• Administering an undesired or negative
consequence when dysfunctional behavior
occurs
©McGraw-Hill Education.
Avoiding Side Effects of Punishment
Downplay the emotional element involved.
Try to punish dysfunctional behaviors as
soon as they occur.
Try to avoid punishing someone in front of
others.
©McGraw-Hill Education.
Organizational Behavior
Modification
Organizational behavior modification
• The systematic application of operant
conditioning techniques to promote the
performance of organizationally functional
behaviors and discourage the performance of
dysfunctional behaviors
©McGraw-Hill Education.
Figure 13.4 Five Steps in Organizational
Behavior Modification (OB MOD)
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Social Learning Theory (1 of 3)
Social learning theory
• A theory that takes into account how learning
and motivation are influenced by people’s
thoughts and beliefs and their observations of
other people’s behavior
©McGraw-Hill Education.
Social Learning Theory (2 of 3)
Vicarious learning
• Occurs when a person becomes motivated to
perform a behavior by watching another
person perform the behavior and be positively
reinforced for doing so
• Also called observational learning
©McGraw-Hill Education.
Social Learning Theory (3 of 3)
Self-reinforcer
• Any desired or attractive outcome or award
that a person gives himself or herself for good
performance
Self-efficacy
• A person’s belief about his or her ability to
perform a behavior successfully
©McGraw-Hill Education.
Pay and Motivation (1 of 2)
Pay as a motivator
• Expectancy theory
• Instrumentality, the association between performance and
outcomes, must be high for motivation to be high.
• Need theory
• Pay is used to satisfy many needs.
• Equity theory
• Pay is given in relation to inputs.
©McGraw-Hill Education.
Pay and Motivation (2 of 2)
Pay as a motivator
• Goal setting theory
• Pay is linked to attainment of goals.
• Learning theory
• Outcomes (pay) are distributed upon performance of
functional behaviors.
©McGraw-Hill Education.
Merit Pay and Performance
Merit pay plan
• A compensation plan that bases pay on
individual, group or organization performance
• Individual plan: when individual performance
(sales) can be accurately measured
©McGraw-Hill Education.
Salary Increase or Bonus?
Employee stock option
• A financial instrument that entitles the bearer
to buy shares of an organization’s stock at a
certain price, during a certain period of time,
or under certain conditions
©McGraw-Hill Education.
Video: New Belgium Brewery
How does the open-book management style
at New Belgium Brewery motivate the
employees?
©McGraw-Hill Education.
Example – Warren Buffet
Investor Warren Buffett is giving away a
large portion of his fortune to the Gates
Foundation.
He is doing it now because he believes in
the work the foundation is doing with world
health issues and improving U.S. libraries
and high schools.
©McGraw-Hill Education.
CHAPTER 11
Organizational
Control and Change
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Learning Objectives
1. Define organizational control, and explain how it increases
organizational effectiveness.
2. Describe the four steps in the control process and the way it
operates over time.
3. Identify the main output controls, and discuss their advantages and
disadvantages as means of coordinating and motivating
employees.
4. Identify the main behavior controls, and discuss their advantages
and disadvantages as means of coordinating and motivating
employees.
5. Discuss the relationship between organizational control and
change, and explain why managing change is a vital management
task.
©McGraw-Hill Education.
Organizational Control
Organizational control
• Managers monitor and regulate how efficiently
and effectively an organization and its
members are performing the activities
necessary to achieve organizational goals.
©McGraw-Hill Education.
Control Systems and IT (1 of 4)
Control systems
• Formal, target-setting, monitoring, evaluation,
and feedback systems that provide managers
with information about whether the
organization’s strategy and structure are
working efficiently and effectively
©McGraw-Hill Education.
Figure 11.1 Three Types of Control
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Control Systems and IT (2 of 4)
Feedforward control
• Control that allows managers to anticipate
problems before they arise
• Giving stringent product specifications to
suppliers in advance
©McGraw-Hill Education.
Example – University of Alabama
Gameday
The University of Alabama provides
information for fans to be ready for football
game day parking and events.
This is an example of feedforward control.
©McGraw-Hill Education.
Control Systems and IT (3 of 4)
Concurrent control
• Control that gives managers immediate
feedback on how efficiently inputs are being
transformed into outputs so managers can
correct problems as they arise
©McGraw-Hill Education.
Example – Achieving Competitive
Excellence (ACE)
United Technologies Corporation uses ACE
to get employees involved in identifying and
solving design and quality problems and
finding better ways to assemble its products
to increase quality and reduce costs.
Problems are correct on an ongoing basis.
This is an example of concurrent control.
©McGraw-Hill Education.
Control Systems and IT (4 of 4)
Feedback control
• Control that gives managers information
about customers’ reactions to goods and
services so corrective action can be taken if
necessary
©McGraw-Hill Education.
Control Process Steps
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The Control Process (1 of 4)
1. Establish standards of performance,
goals, or targets against which
performance is to be evaluated.
• Managers decide on the standards of
performance, goals, or targets that they will
use in the future to evaluate the performance
of the entire organization or part of it.
©McGraw-Hill Education.
The Control Process (2 of 4)
2. Measure actual performance.
• Managers measure outputs resulting from
worker behavior or measure the behavior
themselves.
• The more non-routine the task, the harder it is
to measure behavior or outputs.
©McGraw-Hill Education.
The Control Process (3 of 4)
3. Compare actual performance against
chosen standards of performance.
• Managers evaluate whether, and to what
extent, performance deviates from the
standards of performance chosen in step 1.
©McGraw-Hill Education.
The Control Process (4 of 4)
4. Evaluate the result and initiate
corrective action if the standard is not
being achieved.
• If managers decide that the level of
performance is unacceptable, they must try
to change the way work activities are
performed to solve the problem.
©McGraw-Hill Education.
Three Organizational Control
Systems
Type of Control
Output
control
Behavior
control
Clan
control
©McGraw-Hill Education.
Mechanisms of Control
Financial measures of
performance
Organizational goals
Operating budgets
Direct supervision
Management by objectives
Rules and standard operation
procedures
Values
Norms
Socialization
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Financial Measures of Performance
(1 of 4)
Profit ratios
• Measure how efficiently managers are using
the organization’s resources to generate
profits
Return on investment (ROI)
• Organization’s net income before taxes,
divided by its total assets
• Most commonly used financial performance
measure
©McGraw-Hill Education.
Financial Measures of Performance
(2 of 4)
Operating margin
• Calculated by dividing a company’s operating
profit by sales revenue
• Provides managers with information about
how efficiently an organization is utilizing its
resources
©McGraw-Hill Education.
Financial Measures of Performance
(3 of 4)
Liquidity ratios
• Measure how well managers have protected
organizational resources to be able to meet
short-term obligations
Leverage ratios
• Measure the degree to which managers use
debt or equity to finance ongoing operations
©McGraw-Hill Education.
Financial Measures of Performance
(4 of 4)
Activity ratios
• Show how well managers are creating value from
organizational assets
Inventory turnover
• Measures how efficiently managers are turning
inventory over so excess inventory is not carried
Days sales outstanding
• Reveals how efficiently managers are collecting
revenue from customers to pay expenses
©McGraw-Hill Education.
Organizationwide Goal Setting
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Operating Budgets
Operating budgets
• Blueprint that states how managers intend to
use organizational resources to achieve
organizational goals efficiently
©McGraw-Hill Education.
Effective Output Control
Objective financial measures
Challenging goals and performance standards
Appropriate operating budgets
©McGraw-Hill Education.
Problems with Output Control
Managers must create output standards
that motivate at all levels.
These should not cause managers to
behave in inappropriate ways to achieve
organizational goals.
©McGraw-Hill Education.
Behavior Control
Direct supervision
• Managers who actively monitor and observe
the behavior of their subordinates
• Teaches subordinates appropriate behaviors
• Intervenes to take corrective action
• Most immediate and potent form of behavioral
control
• Can be an effective way of motivating
employees
©McGraw-Hill Education.
Problems with Direct Supervision
Very expensive because a manager can
personally manage only a relatively small
number of subordinates effectively
Can demotivate subordinates if they feel
that they are under such close scrutiny that
they are not free to make their own
decisions
©McGraw-Hill Education.
Management by Objectives (1 of 2)
Management by objectives (MBO)
• A goal-setting process in which a manager
and each of his or her subordinates negotiate
specific goals and objectives for the
subordinate to achieve and then periodically
evaluate the extent to which the subordinate
is achieving those goals
©McGraw-Hill Education.
Management by Objectives (2 of 2)
1. Specific goals and objectives are
established at each level of the
organization.
2. Managers and their subordinates
together determine the subordinates’
goals.
3. Managers and their subordinates
periodically review the subordinates’
progress toward meeting goals.
©McGraw-Hill Education.
Bureaucratic Control
Bureaucratic control
• Control by means of a comprehensive system
of rules and standard operating procedures
(SOPs) that shapes and regulates the
behavior of divisions, functions, and
individuals
©McGraw-Hill Education.
Problems with Bureaucratic Control
Rules are easier to make than discard,
leading to bureaucratic “red tape” and
slowing organizational reaction times to
problems.
People might become so used to
automatically following rules that they stop
thinking for themselves.
©McGraw-Hill Education.
Clan Control
Clan control
• The control exerted on individuals and groups
in an organization by shared values, norms,
standards of behavior, and expectations
©McGraw-Hill Education.
Organizational Change
Organizational change
• Movement of an organization away from its
present state and toward some desired future
state to increase its efficiency and
effectiveness
©McGraw-Hill Education.
Figure 11. 5 Organizational Control
and Change
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Figure 11. 6 Lewin’s Force-Field
Theory of Change
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Evolutionary and Revolutionary
Change (1 of 2)
Evolutionary change
• Gradual, incremental, and narrowly focused
• Constant attempt to improve, adapt, and
adjust strategy and structure incrementally to
accommodate changes in the environment
©McGraw-Hill Education.
Evolutionary and Revolutionary
Change (2 of 2)
Revolutionary change
• Rapid, dramatic, and broadly focused
• Involves a bold attempt to quickly find ways to
be effective
• Likely to result in a radical shift in ways of
doing things, new goals, and a new structure
for the organization
©McGraw-Hill Education.
Figure 11.7 Four Steps in the
Organizational Change Process
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Implementing the Change (1 of 2)
Top-down change
• A fast, revolutionary approach to change in
which top managers identify what needs to be
changed and then move quickly to implement
the changes throughout the organization
©McGraw-Hill Education.
Implementing the Change (2 of 2)
Bottom-up change
• A gradual or evolutionary approach to change
in which managers at all levels work together
to develop a detailed plan for change
©McGraw-Hill Education.
Evaluating the Change
Benchmarking
• The process of comparing one company’s
performance on specific dimensions with the
performance of other, high-performing
organizations
• Example: Xerox benchmarking against
L.L.Bean, John Deere, and Proctor &
Gamble
©McGraw-Hill Education.
Video: Starbucks
How important is quality control to
Starbucks’s success?
What quality control steps does Starbucks
take?
©McGraw-Hill Education.
CHAPTER 9
VALUE CHAIN
MANAGEMENT:
FUNCTIONAL
STRATEGIES FOR
COMPETITIVE
ADVANTAGE
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Learning Objectives (1 of 2)
1. Explain the role of functional strategy and value chain
management in achieving superior quality, efficiency,
innovation, and responsiveness to customers.
2. Describe what customers want, and explain why it is so
important for managers to be responsive to their needs.
3. Explain why achieving superior quality is so important,
and understand the challenges facing managers and
organizations that seek to implement total quality
management.
©McGraw-Hill Education.
Learning Objectives (2 of 2)
4. Explain why achieving superior efficiency
is so important, and understand the
different kinds of techniques that need to
be employed to increase efficiency.
5. Differentiate between two forms of
innovation, and explain why innovation
and product development are crucial
components of the search for competitive
advantage.
©McGraw-Hill Education.
Figure 9.1 Four Ways to Create a
Competitive Advantage
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Functional Strategies and
Value Chain Management (1 of 8)
Functional-level strategy
• Plan of action to improve the ability of each of
an organization’s departments to performs its
task-specific activities in ways that add value
to an organization’s goods and services
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (2 of 8)
Value chain
• The coordinated series or sequence of
functional activities necessary to transform
inputs such as new product concepts, raw
materials, component parts, or professional
skills into the finished goods or services
customers value and want to buy
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (3 of 8)
Value chain management
• Development of a set of functional-level
strategies that support a company’s businesslevel strategy and strengthen its competitive
advantage
©McGraw-Hill Education.
Figure 9.2 Functional Activities and
the Value Chain
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Functional Strategies and
Value Chain Management (4 of 8)
Product development
• Engineering and scientific research activities
involved in innovating new or improved
products that add value to a product
Marketing function
• Once a new product is developed,
marketing’s task is to persuade customers
that a product meets their needs and to
convince them to buy it.
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (5 of 8)
Materials management function
• Controls the movement of physical materials
from the procurement of inputs through
production and into distribution and delivery to
the customer
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (6 of 8)
Production function
• Production function is responsible for the
creation, assembly or provision of a good or
service—for transforming inputs into outputs.
• Production for physical products generally
means manufacturing or assembly.
• Production for services takes place when the
service is provided or delivered to the
customer.
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (7 of 8)
Sales function
• Plays a crucial role in locating customers and
then informing and persuading them to buy
the company’s products
• Personal, face-to-face communication, selling
to existing and potential customers
©McGraw-Hill Education.
Functional Strategies and
Value Chain Management (8 of 8)
Customer service function
• Provides after-sales service and support
• Can create a perception of superior value by
solving customer problems and supporting
customers
©McGraw-Hill Education.
What Do Customers Want?
1. A lower price
2. High-quality products
3. Quick service and good after-sales
service
4. Products with many useful or valuable
features
5. Products that are tailored to their
unique needs
©McGraw-Hill Education.
Customer Relationship Management
Customer relationship management
• Technique that uses IT to develop an ongoing
relationship with customers to maximize the
value an organization can deliver to them over
time
©McGraw-Hill Education.
Figure 9.3 Impact of Increased Quality on
Organizational Performance
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Total Quality Management
Total quality management (TQM)
• Focuses on improving the quality of an
organization’s products and stresses that all
of an organization’s value chain activities
should be directed toward this goal
©McGraw-Hill Education.
Steps to Successful TQM
Implementation (1 of 2)
1. Build organizational commitment to
quality.
2. Focus on the customer.
3. Find ways to measure quality.
4. Set goals and create incentives.
5. Solicit input from employees.
©McGraw-Hill Education.
Steps to Successful TQM
Implementation (2 of 2)
6. Identify defects and trace them to their
source.
7. Introduce just-in-time inventory systems.
8. Work closely with suppliers.
9. Design for ease of production.
10. Break down barriers between functions.
©McGraw-Hill Education.
Six Sigma
Six Sigma
• A technique used to improve quality by
systematically improving how value chain
activities are performed and then using
statistical methods to measure the
improvement
• Founded by Motorola
©McGraw-Hill Education.
Six sigma
DMAIC process
Define
Measure
Analyze
Improve
Control
©McGraw-Hill Education.
Example – Meyers Brothers Kalicka
MBK values continuous learning, which laid the
foundation for involvement with Six Sigma.
Some senior managers attended a presentation
on Six Sigma, and Melyssa Brown, senior
manager in the auditing department, underwent
the first level of training, earning a “green belt”
certification.
Her improvements in the data sharing process
improved interaction with clients, reduced the
unproductive client hours, and increased
delivery of services. She is now looking at
streamlining billing and administrative work.
©McGraw-Hill Education.
Facilities Layout, Flexible
Manufacturing, and Efficiency (1 of 2)
Facilities layout
• Strategy of designing the machine-worker
interface to increase operating system
efficiency
• Product
• Process
• Fixed Position
• Office
• Warehouse
©McGraw-Hill Education.
Facilities Layout, Flexible
Manufacturing, and Efficiency (2 of 2)
Flexible manufacturing
• The set of techniques that attempt to reduce
the costs associated with the product
assembly process or the way services are
delivered to customers
• Able to produce many more varieties of a
product than before, in the same amount of
time
• Example: How patients are routed through a
hospital
©McGraw-Hill Education.
Figure 9.4 Three Facilities Layouts
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Facilities Layout (1 of 3)
Product layout
• Machines organized so that each operation is
performed at work stations arranged in a fixed
sequence
• Mass production
• Car assembly lines
©McGraw-Hill Education.
Facilities Layout (2 of 3)
Process layout
• Self-contained work stations not organized in
a fixed sequence
• Product goes to whichever workstation
needed to perform next operation
• More flexible, less efficient
• Custom furniture manufacturer
©McGraw-Hill Education.
Facilities Layout (3 of 3)
Fixed-position layout
• Product stays in fixed position and
components produced at remote stations
brought to the product for final assembly
• Airplane manufacturing
©McGraw-Hill Education.
Just-in-Time Inventory and
Efficiency
Just-in-time (JIT) inventory system gets
components to the assembly line just as
they are needed to drive down costs.
Major cost savings can result from
increasing inventory turnover and reducing
inventory holding costs.
©McGraw-Hill Education.
Self-Managed Work Teams
and Efficiency
Self-managed work teams produce an
entire product instead of just parts of it.
Team members learn all tasks and move
from job to job.
Teams can increase productivity and
efficiency.
©McGraw-Hill Education.
Process Reengineering
and Efficiency
Process reengineering
• The fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvement in critical measures of
performance such as cost, quality, service,
and speed
©McGraw-Hill Education.
Two Kinds of Innovation (1 of 2)
Quantum product innovation
• The development of new, often radically
different, kinds of goods and services
because of fundamental shifts in technology
brought about by pioneering discoveries
©McGraw-Hill Education.
Two Kinds of Innovation (2 of 2)
Incremental product innovation
• The gradual improvement and refinement of
existing products that occur over time as
existing technologies are perfected
©McGraw-Hill Education.
Strategies to Promote Innovation
and Speed Product Development (1 of 3)
Product development
• Management of the value-chain activities
involved in bringing new or improved goods
and services to the market
• Example: Monte Peterson, former CEO of
Thermos, and the new barbecue grill.
©McGraw-Hill Education.
Strategies to Promote Innovation and
Speed Product Development (2 of 3)
Establish cross-functional teams
Involve both customers and suppliers
Establish a stage-gate development funnel
©McGraw-Hill Education.
Strategies to Promote Innovation
and Speed Product Development (3 of 3)
Stage-gate development funnel
• A planning model that forces managers to
choose among competing projects so
organizational resources are not spread thinly
over too many projects
• Example: 3M’s 15% rule
©McGraw-Hill Education.
Figure 9.5 A Stage-Gate
Development Funnel
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A Stage-Gate Development Funnel
(1 of 2)
Product development plan
• A plan that specifies all of the relevant
information that managers need in order to
decide whether to proceed with a full-blown
product development effort
©McGraw-Hill Education.
A Stage-Gate Development Funnel
(2 of 2)
Contract book
• A written agreement that details product
development factors such as responsibilities,
resource commitments, budgets, timelines,
and development milestones
• Example: 3M team members and top
management negotiate contract at launch
©McGraw-Hill Education.
Establish Cross-Functional Teams
Core members
• Members of a team who bear primary
responsibility for the success of a project and
who stay with a project from inception to
completion
©McGraw-Hill Education.
Figure 9.6 Members of a CrossFunctional Product Development Team
©McGraw-Hill Education.
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Video: Goodwill
What role does the customer service
function play at Goodwill?
Describe the value chain for Goodwill.
©McGraw-Hill Education.
CHAPTER 16
Promoting Effective
Communication
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Learning Objectives (1 of 2)
1. Explain why effective communication
helps an organization gain a competitive
advantage.
2. Describe the communication process,
and explain the role of perception in
communication.
3. Define information richness, and
describe the information richness of
communication media available to
managers.
©McGraw-Hill Education.
Learning Objectives (2 of 2)
4. Describe the communication networks
that exist in groups and teams.
5. Explain how advances in technology
have given managers new options for
managing communications.
6. Describe important communication skills
that managers need as senders and as
receivers of messages and why it is
important to understand differences in
linguistic styles.
©McGraw-Hill Education.
Communication and Management
Communication
• The sharing of
information
between two or
more individuals
or groups to
reach a common
understanding
©McGraw-Hill Education.
©Gary Burchell/Getty Images
The Importance of Good
Communication
Increased efficiency in new technologies
and skills
Improved quality of products and services
Increased responsiveness to customers
More innovation through communication
©McGraw-Hill Education.
The Communication Process (1 of 4)
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The Communication Process (2 of 4)
Sender – person wishing to share
information with some other person
Message – the information to communicate
Encoding – sender translates the message
into symbols or language
Noise – refers to anything that hampers any
stage of the communication process
©McGraw-Hill Education.
The Communication Process (3 of 4)
Receiver – person or group for which the
message is intended
Medium – pathway through which an
encoded message is transmitted to a
receiver
Decoding – critical point where the receiver
interprets and tries to make sense of the
message
©McGraw-Hill Education.
The Communication Process (4 of 4)
Verbal communication
• The encoding of messages into words, either
written or spoken
Nonverbal communication
• The encoding of messages by means of facial
expressions, body language, and styles of
dress
©McGraw-Hill Education.
The Role of Perception in
Communication (1 of 3)
Perception
• Process through which people select,
organize, and interpret sensory input to give
meaning and order to the world around them
• Influenced by people’s personalities, values,
attitudes and moods as well as their
experience and knowledge
©McGraw-Hill Education.
The Role of Perception in
Communication (2 of 3)
Biases
• Systematic tendencies to use
information about others in ways that
can result in inaccurate perceptions
• For example, stereotypes
©McGraw-Hill Education.
The Role of Perception in
Communication (3 of 3)
Stereotypes
• Simplified and often inaccurate beliefs about
the characteristics of particular groups of
people
• Can interfere with the encoding and decoding
of messages
©McGraw-Hill Education.
Information Richness and
Communication Media
Managers and their subordinates can
become effective communicators by:
Selecting an appropriate medium for each
message—there is no one “best” medium
Considering information richness
• A medium with high richness can carry much
more information to aid understandings.
©McGraw-Hill Education.
Information Richness
Information richness
• The amount of information that a
communication medium can carry
• The extent to which the medium enables the
sender and receiver to reach a common
understanding
©McGraw-Hill Education.
Information Richness of
Communication Media
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Face-to-Face Communication (1 of 2)
Face-to-face
• Has highest information richness
• Can take advantage of verbal and nonverbal
signals
• Example: ProQuest, although mainly
electronic communication, every four
months, face-to-face.
©McGraw-Hill Education.
Face-to-Face Communication (2 of 2)
Management by wandering around
• Face-to-face communication technique in
which a manager walks around a work area
and talks informally with employees about
issues and concerns
©McGraw-Hill Education.
Spoken Communication
Electronically Transmitted
Spoken communication electronically
transmitted
• Has the second highest information richness
• Telephone conversations are information rich
with tone of voice, sender’s emphasis, and
quick feedback, but provide no visual
nonverbal cues
©McGraw-Hill Education.
Personally Addressed Written
Communication
Personally addressed written
communication
• Has a lower richness than the verbal forms of
communication, but still is directed at a given
person
• Personal addressing helps ensure receiver
actually reads the message
• Personal letters and e-mail common forms
©McGraw-Hill Education.
Impersonal Written Communication
(1 of 4)
Impersonal written communication
• Has the lowest information richness
• Good for messages to many receivers where little or
feedback is expected (e.g., newsletters, reports)
©McGraw-Hill Education.
Impersonal Written Communication
(2 of 4)
Information overload
• The potential for important information to be
ignored or overlooked while tangential
information receives attention
©McGraw-Hill Education.
Impersonal Written Communication
(3 of 4)
Blog
• A website on which an individual, a group, or
an organization posts information,
commentary, and opinions and to which
readers can often respond with their own
commentary and opinions
©McGraw-Hill Education.
Impersonal Written Communication
(4 of 4)
Social networking site
• A website that enables people to
communicate with others with whom they
have some common interest or connection
©McGraw-Hill Education.
Communication Networks (1 of 2)
Communication networks
• The pathways along which information flows
in groups and teams and throughout the
organization
©McGraw-Hill Education.
Communication Networks (2 of 2)
Type of communication network depends
on:
• The nature of the group’s tasks
• The extent to which group members need to
communicate with each other to achieve
group goals
©McGraw-Hill Education.
Communication Networks in
Groups and Teams
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Organizational Communication
Networks (1 of 2)
Organization chart
• The chart summarizes the formal reporting
channels in an organization.
• Communication in organization flows through
formal and informal pathways.
• Vertical communications flow up and down
corporate hierarchy.
©McGraw-Hill Education.
Organization Communication
Networks (2 of 2)
Organization chart
• Horizontal communications flow between
employees of the same level.
• Informal communications can span levels and
departments.
• Grapevine
• An informal network carrying unofficial information throughout
the firm
©McGraw-Hill Education.
Formal and Informal Communication
Networks in an Organization
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Information Technology and
Communication
Intranets
• A company-wide system of computer
networks
Advantages of intranets
• Versatility as a communication medium
• Can be used for several different purposes by
people who may have little expertise in
computer software and programming
©McGraw-Hill Education.
Groupware and Collaboration
Software
Groupware
• Computer software that enables members of
groups and teams to share information with
each other to improve their communication
and performance
©McGraw-Hill Education.
How to Be Successful Using
Groupware
1. Work is team-based and members are
rewarded for group performance.
2. Groupware has full support of top
management.
3. Culture of the organization stresses flexibility.
4. Groupware is being used for a specific
purpose.
5. Employees receive adequate training.
©McGraw-Hill Education.
Groupware (1 of 2)
Employees are likely to resist using
groupware when:
• People are working primarily on their own.
• People are rewarded for their own individual
performances.
• People are reluctant to share information.
©McGraw-Hill Education.
Groupware (2 of 2)
Collaboration software
• Groupware that promotes and facilitates
collaborative, highly interdependent
interactions, and provides an electronic
meeting site for communication among team
members
©McGraw-Hill Education.
Barriers to Effective Communication
Messages that are unclear, incomplete,
difficult to understand
Messages sent over the inappropriate
medium
Messages with no provision for feedback
Messages that are received but ignored
©McGraw-Hill Education.
Communication Skills for Managers
as Senders (1 of 3)
Table 16.2
Seven Communication Skills for Managers as Senders of
Messages
Send messages that are clear and complete.
Encode messages in symbols that the receive understands.
Select a medium that is appropriate for the message.
Select a medium that the receiver monitors.
Avoid filtering and information distortion.
Ensure that a feedback mechanism is built into messages.
Provide accurate information to ensure that misleading rumors
are not spread.
©McGraw-Hill Education.
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Communication Skills for Managers
as Senders (2 of 3)
Jargon
• Specialized language that members of an
occupation, group, or organization develop to
facilitate communication among themselves
• Should never be used when communicating
with people outside the occupation, group, or
organization
©McGraw-Hill Education.
Example – Photography Jargon
Unless you’re a serious photographer you
may not understand the terms f-stop, bokeh,
white balance, backlight and full-frame.
©McGraw-Hill Education.
Communication Skills for Managers
as Senders (3 of 3)
Filtering
• Withholding part of a message because of the
mistaken belief that the receiver does not
need or will not want the information
Information distortion
• Changes in the meaning of a message as the
message passes through a series of senders
and receivers
©McGraw-Hill Education.
Communication Skills for
Managers as Receivers
Pay attention
Be empathetic
Be a good listener
©McGraw-Hill Education.
Video: Information Overload
How can managers use brevity to ensure
that employees can process and retain
information and direction?
©McGraw-Hill Education.
CHAPTER 17
Managing Conflict,
Politics,
and Negotiation
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Learning Objectives (1 of 2)
1. Explain why conflict arises and identify
the types and sources of conflict in
organizations.
2. Describe conflict management strategies
that managers can use to resolve conflict
effectively.
3. Understand the nature of negotiation and
why integrative bargaining is more
effective than distributive negotiation.
©McGraw-Hill Education.
Learning Objectives (2 of 2)
4. Describe ways in which managers can
promote integrative bargaining in
organizations.
5. Explain why managers need to be
attuned to organizational politics, and
describe the political strategies that
managers can use to become politically
skilled.
©McGraw-Hill Education.
Organizational Conflict
Organizational conflict
• The discord that arises when the goals,
interests, or values of different individuals or
groups are incompatible and those individuals
or groups block one another’s attempts to
achieve their objectives
• Conflict inevitable
• Can exist between departments and divisions
©McGraw-Hill Education.
Figure 17.1 The Effect of Conflict on
Organizational Performance
©McGraw-Hill Education.
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Types of Conflict (1 of 3)
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Types of Conflict (2 of 3)
Interpersonal conflict
• Conflict between individuals due to
differences in their goals or values
Intragroup conflict
• Conflict within a group, team or department
©McGraw-Hill Education.
Types of Conflict (3 of 3)
Intergroup conflict
• Conflict between two or more teams, groups
or departments
• Managers play key role in resolution
Interorganizational conflict
• Conflict that arises across organizations
©McGraw-Hill Education.
Sources of Conflict (1 of 5)
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Sources of Conflict (2 of 5)
Different goals and time horizons
• Different groups have differing goals and time
horizons.
Overlapping authority
• Two or more managers claim authority for the
same activities, which leads to conflict.
©McGraw-Hill Education.
Sources of Conflict (3 of 5)
Task interdependencies
• One member of a group or a group fails to
finish a task that another member or group
depends on, causing the waiting worker or
group to fall behind.
©McGraw-Hill Education.
Sources of Conflict (4 of 5)
Different evaluation or reward systems
• A group is rewarded for achieving a goal, but
another interdependent group is rewarded for
achieving a goal that conflicts with the first
group.
©McGraw-Hill Education.
Sources of Conflict (5 of 5)
Scarce resources
• Managers can come into conflict over the
allocation of scare resources.
Status inconsistencies
• Some individuals and groups have a higher
organizational status than others, leading to
conflict with lower-status groups.
©McGraw-Hill Education.
Conflict Management Strategies (1 of 7)
Functional conflict resolution
• Handling conflict by compromise or
collaboration between parties
©McGraw-Hill Education.
Conflict Management Strategies (2 of 7)
Compromise
• Each party is concerned about not only their
goal accomplishment but also the goal
accomplishment of the other party. Each is
willing to engage in a give-and-take exchange
to reach a reasonable solution.
• Meet each other halfway.
©McGraw-Hill Education.
Conflict Management Strategies (3 of 7)
Collaboration
• Both parties try to satisfy their goals by finding
an approach that leaves them both better off
and does not require concessions on issues
that are important to either party.
©McGraw-Hill Education.
Conflict Management Strategies (4 of 7)
Accommodation
• An ineffective conflict-handling approach in
which one party, typically with weaker power,
gives in to the demands of the other, typically
more powerful, party
• Okay, we’ll do it your way (although I don’t
want to)
©McGraw-Hill Education.
Conflict Management Strategies (5 of 7)
Avoidance
• An ineffective conflict-handling approach in
which the parties try to ignore the problem
and do nothing to resolve their differences
• If I ignore it, it will go away
©McGraw-Hill Education.
Conflict Management Strategies (6 of 7)
Competition
• An ineffective conflict-handling approach in
which each party tries to maximize its own
gain and has little interest in understanding
the other party’s position or arriving at a
solution that will allow both parties to achieve
their goals
©McGraw-Hill Education.
Conflict Management Strategies (7 of 7)
Problem-solving approach
• Focuses on objective outcomes—not
individual opinions or views—thus respecting
and preserving social relationships within a
group
• Helps reduce stress of interpersonal conflict
©McGraw-Hill Education.
Strategies Focused on Individuals
Practicing job rotation or temporary
assignments
Increasing awareness of sources of conflict
Increasing diversity awareness and skills
Using permanent transfers or dismissals when
necessary
©McGraw-Hill Education.
Strategies Focused on the
Whole Organization
• Changing an organization’s structure or
culture
• Altering the source of conflict
©McGraw-Hill Education.
Negotiation (1 of 2)
Negotiation
• Method of conflict resolution in which the
parties consider various alternative ways to
allocate resources to arrive at a solution
acceptable to all of them
• Third-party negotiator
• Mediators
• Arbitrators
©McGraw-Hill Education.
Negotiation (2 of 2)
Third-party negotiator
• An impartial individual with expertise in
handling conflicts and negotiations who helps
parties in conflict reach an acceptable solution
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Third-Party Negotiators
Mediator
• Facilitates negotiations but has no authority
to impose a solution
Arbitrator
• Can impose what he thinks is a fair solution
to a conflict that both parties are obligated to
pursue
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Distributive Negotiation (1 of 2)
Distributive negotiation
• Adversarial negotiation in which the parties in
conflict compete to win the most resources
while conceding as little as possible
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Distributive Negotiation (2 of 2)
Distributive negotiation
• Parties perceive that they have a “fixed pie” of
resources that they need to divide.
• They take a competitive adversarial stance.
• They see no need to interact in the future.
• They do not care if their interpersonal
relationship is damaged by their competitive
negotiation.
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Integrative Bargaining (1 of 2)
Integrative
bargaining
• Cooperative
negotiation in which
the parties in conflict
work together to
achieve a resolution
that is good for them
both
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Integrative Bargaining (2 of 2)
Integrative bargaining
• Parties perceive that they might be able to
increase the resource pie by trying to find a
creative solution to the conflict.
• Parties view the conflict as a win-win situation
in which both parties can gain.
• Bargaining is handled through collaboration or
compromise.
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Strategies to Encourage
Integrative Bargaining
Superordinate goals
• Goals that both parties agree to regardless of
the source of their conflict
• Example: Hofbeck and Steinberg’s German
restaurant
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Negotiation Strategies for
Integrative Bargaining
Table 17.1
Negotiation Strategies for Integrative Bargaining
Emphasize superordinate goals.
Focus on the problem, not the people.
Focus on interests, not demands.
Create new options for joint gain.
Focus on what is fair.
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Organizational Politics (1 of 2)
Organizational politics
• The activities managers engage in to increase
their power and to use power effectively to
achieve their goals or overcome resistance or
opposition
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Organizational Politics (2 of 2)
Political strategies
• Tactics that managers use to increase their
power and to use power effectively to
influence and gain the support of other
people, while overcoming resistance or
opposition
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The Importance of
Organizational Politics
Politics
• Can be viewed negatively when managers act
in self-interested ways for their own benefit
• Also a positive force that can bring about
needed change when political activity allows a
manager to gain support for needed changes
that will advance the organization
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Political Strategies for
Increasing Power
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Political Strategies for Gaining and
Maintaining Power
Strategies
Description
Controlling
uncertainty
Reduce uncertainty for others in the firm.
Making oneself
irreplaceable
Develop valuable special knowledge or expertise.
Being in a
central position
Have decision-making control over the firm’s crucial
activities and resources.
Generating
resources
Hire skilled people or find financing when it is needed.
Building
alliances
Develop mutually beneficial relations with others inside and
outside the organization.
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Political Strategies for
Exercising Power
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Strategies for Exercising Power
Strategies
Description
Relying on objective
information
Providing objective information to make
others feel the manager’s course of
action is correct
Bringing in an outside Using an expert’s opinion to lend
expert
credibility to the manager’s proposal
Controlling the
agenda
Making everyone a
winner
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Influencing which alternatives are
considered or whether a decision is
actually made
Making sure that everyone whose
support is needed benefits personally
from providing that support
Example – North Carolina
Association of Family Mediators
The North Carolina Association of
Professional Family Mediators is the
statewide professional organization for
family mediators.
Most members have private practices for
providing mediation services to the public.
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Video: CH2M Hill
How does CH2M Hill deal with cultural
conflict in the global marketplace?
What conflict strategy is most often used?
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