Chapter 13: Groups and Teams Increasing Cooperation, Reducing Conflict 1. Groups vs Teams Group: management-directed, formal, do productive work; Team: self-directed, informal, for friendship Groups and Teams: How Do They Differ? o What A Group Is: A collection of people performing as individuals: (# a crowd) Two or more freely interacting individuals Share norms Share goals Have a common identity o What A Team Is: A collection of people with common commitment: a small group of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable “The essence of a team is common commitment” Formal vs Informal Groups o Formal Group: assigned by organizations or its managers to accomplish specific goals o Informal Group: formed by people whose overriding purpose is getting together for friendship or a common interest Types of Teams Teams are differentiated according to their: purpose, duration, level of member commitment o Work Teams: clear purpose with shared members, permanent and have complete commitment. Ex: A company’s audit team, professional sports team o Project Teams: solve particular problem or a specific task, meet just once/work together for many years, meet virtually/face to face. o Cross-functional Teams: include members from different areas (finance, operations, sales, etc.) within an organization; can be work team/project team, long-term/shortterm o Self-managed Teams: groups of workers who are given administrative oversight for their task domains; most common type of team o Virtual Teams: work together over time and distance via electronic media to combine effort and achieve common goals 2. Stages of Group and Team Development Tuckman’s Five-Stage Model o Stage 1: Forming – “Why are we here?”: the process of getting oriented and getting acquainted o Stage 2: Storming – “Why are we fighting over who’s in change and who does what?”: the emergence of individual personalities and roles and conflicts within the group o Stage 3: Norming – “Can we agree on roles and work as a team?”: Conflicts are resolved, close relationships develop, and unity and harmony emerge. Members believe they found their roles feeling of team spirit Principal by-product: group cohesiveness, a “we feeling” binding group members together o Stage 4: Performing – “Can we do the job properly?”: members concentrate on solving problems and completing the assigned task o Stage 5: Adjourning – “Can we help members transition out?”: members prepare for disbandment Is Tuckman’s Model Accurate? Groups have a life o cycle; successfully high-performing teams display productive energy toward getting things done. Punctuated o Equilibrium: Periods of stable functioning until an event causes a dramatic change in norms, roles and/or objectives. The group then establishes and maintains new norms of functioning, returning to equilibrium 3. Building Effective Teams To build a group into a high-performance team, managers must consider matters of: Collaboration – the Foundation of Teamwork: act of sharing information and coordinating efforts to achieve a collective outcome Trust: “We Need to Have Reciprocal Faith in Each Other”: reciprocal faith in others’ intentions and behaviors; based on credibility, past acts of integrity, follow-through on promises Performance Goals and Feedback Motivation through Mutual Accountability and Interdependence: o Mutual Accountability: members share accountability for the work, authority over how goals are met, discretion over resource use, and ownership of information and knowledge related to the work. o Team Member Interdependence: which team members rely on common taskrelated team inputs, such as resources, information, goals and rewards, and the amount of interpersonal interactions needed to complete the work. Team Composition: collection of jobs, personalities, values, knowledge, experience and skills of team members. Roles: How team members are expected to behave: o are socially determined expectations of how individuals should behave in a specific position o 02 types of team roles: task and maintenance Task Roles (or task-oriented role): Getting the work done: concentrates on getting the team’s tasks done Maintenance Roles (or relationship-oriented role): Keeping the Team Together: fosters constructive relationships among team members Norms: Unwritten rules for team members: general guidelines or rules of behavior that most group or team members follow o Why Norms Are Enforced: (04 reasons) To help the group survive – “Don’t do anything that will hurt us” To clarify role expectations – “You have to go along to get along” To help individuals avoid embarrassing situations – “Don’t call attention to yourself” To emphasize the group’s important values and identity – “We’re known for being special” Effective Team Processes: o Team processes are ‘members’ interdependent acts that convert inputs to outcomes through cognitive, verbal, and behavioral activities directed toward organizing taskwork to achieve collective goals”.’ o 03 additional activities to improve team processes: Create a team charter. Team charter outlines how a team will manage teamwork activities Engage a team reflexivity. Team reflexivity a process in which team members collectively reflect on the team’s objectives, strategies, and processes and adapt accordingly Give team members a voice. Team voice reflects: team members feel free to “engage in the expression of constructive opinions, concerns or ideas about work-related issues” 4. Managing Conflict Conflict: a process in which a party perceives that its interests are being opposed or negatively affected by another party The Nature of Conflict: Disagreement Is Normal o Dysfunctional Conflict – BAD for organization: conflict that hinders the organization’s performance or threatens its interests. o Functional Conflict – GOOD for organization: which benefits the main purposes of the organization and serves its interests Can Too Little or Too Much Conflict Affect Performance? Neither scenario is good o Too little conflict – Inactively o Too much conflict - Warfare Three Kinds of Conflict: o Personality Conflicts: Clashes because of personal dislikes/disagreements: interpersonal opposition based on personal dislike or disagreement Ex: workplace incivility, lack of regard between employees diminish job satisfaction, health, levels of customer service, etc. o Intergroup Conflicts: Clashes among work groups, teams and departments: Inconsistent goals or reward systems – when people pursue different objectives Ambiguous jurisdictions – when job boundaries are unclear Status differences – when there are inconsistencies in power and influence o Multicultural Conflicts: Clashes between Cultures How to Stimulate Constructive Conflict o Spur Competition among Employees o Change the Organization’s Culture and Procedures o Bring in Outsiders for New Perspectives o Use Programmed Conflict: Devil’s Advocacy and the Dialectic Method: Programmed Conflict: to elicit different opinions without inciting people’s personal feelings Devil’s Advocacy: the process of assigning someone to play the role of critic Dialectic Method: the process of having two people or groups play opposing roles in a debate in order to better understand a proposal 05 Basic Behaviors to Help You Better Handle Conflict: work on disagreement and keep them from flaring into out-of-control personality conflicts. o Openness o Equality o Empathy o Supportiveness o Positiveness Dealing with Disagreements Five Conflict-handling Styles: o Avoiding: ignoring or suppressing a conflict o Obliging: allows the desires of the other party to prevail o Dominating: relies on own formal authority and power to resolve a conflict o Compromising: give up something to gain something o Integrating: strive to confront the issue and cooperatively identify the problem Chapter 14: Power, Influence and Leadership From Becoming a Manager to Becoming a Leader 1. The Nature of Leadership: The Role of Power and Influence - Leadership: the ability to influence employees to voluntarily pursue organizational goals - Leadership Coaching: “about enhancing a person’s abilities and skills to lead and to help the organization meet its operational objectives.” What Is the Difference Between Leading and Managing? o Leaders: inspire and influencing others, provide emotional support; key role in creating a vision and strategic plan o Managers: form functions associated with planning, investigating, organizing and control; implementing vision and plan o Key characteristics of Managers and Leaders: Managerial Leadership: Can You be Both a Manager and a Leader?: the process of influencing others to understand and agree about what needs to be done and the process of facilitating individual and collective efforts to accomplish shared objectives Coping with Complexity vs Coping with Change: The Thoughts of John Kotter o Being a Manager: Coping with Complexity o Being a Leader: Coping with Change Five Sources of Power: Power is the ability to marshal human, informational and other resources to get something done: + Personalized Power: directed at helping oneself – as a way of enhancing their own selfish ends may give the word power a bad name + Socialized Power: directed at helping others – “My goal is to have a powerful impact on my community” o Legitimate Power: Influencing behavior because of one’s formal position: power that results from managers’ formal positions within the organization o Reward Power: Influencing behavior by promising or giving rewards: results from managers’ authority to reward subordinates o Coercive Power: Influencing behavior by threatening or giving punishment: results from managers’ authority to punish their subordinates o Expert Power: Influencing behavior because of one’s expertise: results from one’s specialized information or expertise o Referent Power: Influencing behavior because of one’s personal attraction: deriving from one’s personal attraction Common Influence Tactics: Influence Tactics: conscious efforts to affect and change behaviors in others. Generic Influence Tactics: characterize social influence as we use it in all directions o Hard vs Soft Tactics “Soft” Tactics: friendlier, not as coercive as hard tactics (rational persuasion, inspirational appeals, consultation, ingratiation, personal appeals) “Hard” Tactics: exert more overt pressure (exchange, coalition, pressure and legitimating tactics) Which Influence Tactics Do You Prefer? Match Tactics to Influence Outcomes o Rely on the core. Core influence tactics – rational persuasion, consultation, collaboration and inspirational appeals most effective at building commitment o Be authentic: Don’t try to be someone else; be authentic to your values and beliefs o Consult rather than legitimate o “Ingratiation” is not a good long-term strategy o Be subtle o Learn to influence An Integrated Model of Leadership 2. Trait Approaches: Do Leaders Have Distinctive Traits and Personal Characteristics? Trait Approaches to Leadership: attempt to identify distinctive characteristics that account for the effectiveness of leaders Positive Task-Oriented Traits and Positive/Negative Interpersonal Attributes o Positive Attributes (Chapter 11) o Negative Attributes: Narcissism: a self-centered perspective, feelings of superiority and a drive for personal power and glory Machiavellianism: displays a cynical view of human nature and condones opportunistic and unethical ways of manipulating people, putting results over principles Psychopathy: lack of concern for others, impulsive behavior, and a death of remorse when the psychopath’s actions harm others What Do We Know about Gender and Leadership? o Fact vs Fiction: Women make up more than half the workforce and more than half of all college students in the United States. o Do Men and Women Vary in Terms of Leadership Style of Effectiveness? YES o Are There Social Forces Working Against Women Leaders? YES Are Knowledge and Skills Important? Extremely important; 04 basic skills for leaders: 04 Conclusions about Leadership Traits o We cannot ignore the implications of leadership traits o The positive and “dark triad” traits suggest the qualities you should cultivate and avoid if you want to assume a leadership role in the future o Organizations may want to include personality and trait assessments in selection and evaluation processes o Cross-cultural competency is an increasingly value task-oriented trait. A global mindset is your belief in your ability to influence dissimilar others in a global context 3. Behavioral Approaches: Do Leaders Show Distinctive Patterns of Behavior? Behavioral Leadership Approaches: to determine the key behaviors displayed by effective leaders Task-oriented Leader Behaviors: Initiating-structure leadership and Transactional leadership Task-oriented Leadership Behaviors: ensure that people equipment and other resources are used in an efficient way to accomplish the mission of a group or organization; 02 kinds of task-oriented: o Initiating-Structure Leadership: “Here’s What We Do to Get the Job Done”: leader behavior that organizes and defines – that is, “initiates the structure for” – what employees should be doing to maximize output. o Transactional Leadership: “Here’s What We Do to Get the Job Done and Here Are the Rewards”: focusing on clarifying employees’ roles and task requirements and providing rewards and punishment contingent on performance Relationship-Oriented Leadership Behavior: Relationship-Oriented Leadership: concern with the leader’s interactions with his or her people; 04 kinds of relationship-oriented behaviors: o Consideration: “The concerns and needs of my employees are highly important”: concern with group members’ needs and desires that is directed at creating mutual respect or trust o Empowering Leadership: “I want my employees to feel they have control over their work”: which a leader creates perceptions of psychological empowerment in others Psychological empowerment: employees’ belief that they have control over their work. 04 kinds of behaviors to increase psychological empowerment: Leading for Meaningfulness: inspiring and modeling desirable behaviors Leading for Self-determination: delegating meaningful tasks Leading for Competence: supporting and coaching employees Leading for Progress: monitoring and rewarding employees o Ethical Leadership: “I am ready to do the right thing”: represents normatively appropriate behavior that focuses on being a moral role model (such as communicating ethical values to others, rewarding ethical behavior or treating followers with care and concern) o Servant-Leadership: “I want to serve others and the organization, not myself”: focuses on providing increased service to others – meeting the goals of both followers and the organization – rather than to yourself 10 characteristics of the servant-leader Passive Leadership: The lack of leadership skills o Passive Leadership: leadership form that behavior characterized by a lack of leadership skills o Another passive type: Laissez-Faire Leadership: leadership form characterized by a general failure to take responsibility for leading Two Key Conclusions for the behavioral approaches: o A leader’s behavior is more important than his or her traits o There is no type of leader behavior that is best suited for all situations 4. Situational Approaches: Does Leadership Vary With the Situation? Situational approach (or contingency approach): people who believe that effective leadership behavior depends on the situation at hand Contingency Leadership Model: Fiedler’s Approach: determines if a leader’s style is taskoriented or relationship-oriented and if that style is effective for the situation at hand o Two Leadership Orientations: Tasks vs Relationships: To find out, you or your employees would fill out a questionnaire (known as the least preferred co-worker, or LPC, scale), in which you think of the co-worker you least enjoyed working with and rate him or her according to an eight-point scale of 16 pairs of opposite characteristics (such as friendly/unfriendly, tense/relaxed, efficient/inefficient). The higher the score, the more the relationship-oriented the respondent; the lower the score, the more task-oriented. o 03 Dimensions of Situational Control: Leader-Member relations – “Do my subordinates accept me as a leader?” Task structure – “Do my subordinates perform unambiguous, easily understood tasks?” Position power – “Do I have power to reward and punish?” o The Most Effective Style: The Path-Goal Leadership Model: House’s Approach: holds that effective leader makes available to followers desirable rewards in the workplace and increases their motivation by clarifying the paths, or behavior, that will help them achieve those goals and providing them with support. o What Determines Leadership Effectiveness: Employee characteristics and environmental factors affect leader behavior: Employee characteristics Environmental factors Leader behaviors Several important implications for managers: o Use more than one leadership style o Help employees achieve their goals o Managers need to alter their leadership behavior for each situation o Provide what people and teams need to succeed 5. The Uses of Transformational Leadership Full-range Leadership: leadership behavior varies along a full range of leadership styles, from passive (such as laissez-faire) “leadership” at one extreme, through transactional leadership, to transformational leadership at the other extreme. Transformational Leaders: transforms employees to pursue organizational goals over self-interests; they are affected by 02 factors: o Individual characteristics o Organizational culture The Best Leaders are Both Transactional and Transformational 04 Key Behaviors of Transformational Leaders o Inspirational Motivation: “Let me share a vision that transcends us all” Charisma: a form of interpersonal attraction that inspires acceptance and support Charismatic leadership: which was assumed to be an individual inspirational and motivational characteristic of particular leaders o Idealized influence: “We are here to do the right thing” o Individualized consideration: “You have the opportunity here to grow and excel” o Intellectual Stimulation: “Let me describe the great challenges we can conquer together” 03 Practical Applications of Transformational Leadership o It can be used to train employees at any level o You can prepare and practice being transformational o It should be used for ethical reasons (Table 14.7) 6. Three Additional Perspectives Leader–member exchange (LMX) model of leadership emphasises that leaders have different sorts of relationships with different subordinates. o LMX focuses on relational quality in leader–follower dyads. o LMX assumes that leaders have distinctive relationships with each follower. o 02 types of LMX interactions: In-group exchange: trust and respect Out-group exchange: lack of trust and respect Servant leadership focuses on providing increased service to others - meeting the goals of both followers and the organisation - rather than the goals of oneself. Humble leaders tend to display five key qualities valued by employees: high self-awareness, openness to feedback, appreciation of others, low self-focus, and appreciation of the greater good. (Power of Humility) Empowering leadership represents the extent to which a leader creates perceptions of psychological empowerment in others. Ethical leadership represents normatively appropriate behaviour that focuses on being a moral role model. Leaders want followers who are productive, reliable, honest, cooperative, proactive, and flexible. Abusive supervision represents supervisors’ sustained verbal and non-verbal hostility toward subordinates. Chapter 15: Interpersonal and Organizational Communication Mastering the Exchange of the Information 1. The Communication Process: What It Is, How It Works Communication Defined: The Transfer of Information and Understanding o Communication: the transfer of the information and understanding from one person to another o Efficient Communicator: transmit your message accurately in the least time o Effective Communicator: intended message is accurately understood by the other person How the Communication Process Works Communication: a process consisting of “a sender transmitting a message through media to a receiver who responds” o o Sender, Message and Receiver Sender: the person wanting to share information (or Message) Receiver: the person for whom the message is intended Communication Process (Figure 15.1): Sender Message Receiver Encoding and Decoding Encoding: translating a message into understandable symbols or language o Decoding: interpreting and trying to make sense of the message Sender [Encoding] Message [Decoding] Receiver The Medium: the pathway by which a message travels: Sender [Encoding] Message [Medium] Message [Decoding] Receiver o Feedback: whereby the receiver expresses his or her reaction to the sender’s message; the process with feedback: o Communication accuracy Paraphrasing Noise: the disruption at several different points Noise: any disturbance that interferes with the transmission of a message Jargon: terminology specific to a particular profession of a group Selecting the Right Medium for Effective Communication: o Is a Medium Rich or Lean on Information? Media Richness: how well a particular medium conveys information and promotes learning o Types of media along a continuum ranging Matching the Appropriate Medium to the Appropriate Situation Rich Medium: Best for non-routine situations and to avoid oversimplification Lean Medium: Best for routine situations and to avoid overloading 2. How Managers Fit into the Communication Process Formal Communication Channels: Up, Down, Sideways, Outward o Vertical Communication: Up and Down the Chain of Command Downward communication – from top to bottom: flows from a higher level to a lower level Upward communication – from bottom to top: flows from a lower level to a higher level o Horizontal Communication: Within and between Work Units: flows within and between work units; its main purpose is coordination; 03 ways to have: By Specialization that makes people focus on only their jobs By Rivalry between workers and work units, which prevents sharing of information o By Lack of Encouragement from management External Communication: Outside the organization: flows between people inside and outside the organization Informal Communication Channels: develop outside the formal structure; not follow the chain of command; more spontaneous, can skip management levels, cut cross lines of authority; 02 types of Informal Channels: o The Grapevine: the unofficial communication system of the informal organization. Ex: a network of in-person or online gossip and rumour o Face-to-Face Communication: Here are some basic principles to making F2F: Make time for F2F Listen more, talk less Deliver goods news up front; lead in to bad Hold employee town hall meetings Use webcasts when you can’t be there 3. Barriers to Communication Physical Barriers: Sound, Time, Space Personal Barriers: Individual Attributes that Hinder Communication o Variable Skills in communicating effectively o Variations in the way we process and interpret information o Variations in Trustworthiness and Credibility o Oversized egos o Faulty Listening Skills: a state of reduced attention. It is expressed in behavior that is rigid or thoughtless o Tendency to Judge others’ messages o Generational Differences Cross-Cultural Barriers: more common in view of globalization; barriers cause by different in meaning of norms or ethnocentrism Non-Verbal Communication: How unwritten and unspoken messages may mislead: consists of messages send outside of the written or spoken word; non-verbal communication can be used through o Eye Contact o Facial Expressions o Body Movements and Gestures o Touch Gender Differences: Women and men process language in different parts of the brains different in ways of communicating o Linguistic style: a person’s characteristic speaking patterns – pacing, pausing, directness, word choice, use of questions, jokes, stories, apologies and similar devices o Differences in communication between men and women (Table 15.4) 4. Social Media and Management Social Media: web-based and mobile technologies to generate interactive dialogue with members of a network Social Media has Changed the Fabric of Our Lives Social Media and Managerial and Organizational Effectiveness o Employment Recruiting o Employment Productivity o Employer Productivity Social media benefits for employers: Essence of social media is connectivity: Connect with key stakeholders Connect with varied sources of expertise inside the organization Connect with varied sources of expertise outside the organization o Social Media and Innovation: Crowdsourcing: using the internet and social media to enlist a group outside the organization for help solving a problem o Social Media and Sales and Brand Recognition: “Effective” social media customers and brand recognition because: o Increase product/service awareness and generate customer inquiries Enhance relationships with customers Increase the ability to reach customers Foster co-promotion and image Foster consumers’ conservations about brands Social Media and Reputation Create and enforce a social media policy for employees Appoint experienced managers to monitor your social media presence and respond quickly and appropriately to negative posts Acknowledge there is a problem Downsides of Social Media o Cyberloafing: using the Internet at work for personal use o Phubbing and FOMO: Microaggressions (or acts of unconscious bias): include a number of seemingly tiny but repeated actions, like interrupting others, mispronouncing or mistaking someone’s name, and avoiding eye contact Phubbing: for phone snubbing or ignoring those present in order to pay attention to a mobile phone. FOMO: Fear of Missing-Out o Security: Guarding against Cyberthreats: a system of safeguards for protecting information technology against disasters, system failures, and unauthorized access that result in damage or loss o Privacy: Keeping Things to Yourself: The right of people not to reveal information about themselves Identity Theft: which thieves hijack your name and identity and use your good credit rating to get cash or buy things Managerial Implications of Texting o Tips for making the most of texting for work purposes: As with all social media tools, strictly limit your use for personal reasons during the work day Text only important messages Avoid texting during meetings Don’t use abbreviations or emojis As always, proofread Managerial Considerations in Creating Social Media Policies o Social Media Policy: describes the who, how, when and for what purposes of social media use, and the consequences for non-compliance. o Assessing an Organization’s Social Media Readiness: How supportive management is of creating communities How well the culture fosters collaboration and knowledge sharing How widely social media is used to collaborate 5. Improving Communication Effectiveness Non-Defensive Communication: o Defensive Communication: either aggressive, attacking, angry communication or passive, withdrawing communication o Non-defensive Communication: communication that is assertive, direct and powerful Using Empathy o Empathy: ability to recognize and understand another person’s feelings and thoughts o 03 distinct types of empathy Cognitive empathy Emotional empathy Compassionate empathy Being an Effective Listener Active listening: process of actively decoding and interpreting verbal messages o Understand your listening style or styles: Active – I’m fully invested Involved – I’m partially invested Passive – It’s not my responsibility to listen o Detached – I’m uninterested Concentrate on the Content of the Message (Table 15.10) Being an Effective Writer o Start with Your Purpose o Write Simply, Concisely and Directly o Know Your Audience o Don’t Show Ignorance of the Basics Being an Effective Speaker o Tell them what you’re going to say o Say it o Tell them what you said Chapter 16: Control Systems and Quality Management Techniques for Enhancing Organizational Effectiveness 1. Control: When Managers Monitor Performance Controlling: monitoring performance, comparing it with goals, and taking corrective action as needed Why Is Control Needed? o To adapt to change and uncertainty o To discover irregularities and errors o To reduce costs, increase productivity, or add value o To detect opportunities and increase innovation o To provide performance feedback o To decentralize decision making and facilitate teamwork Steps in the Control Process: o Establish Standards: “What is the Outcome We Want?”: Control standard (or performance standard or simply standard): the desired performance level for a given goal o Use balanced scorecard to establish standards Measure Performance: “What is the Actual Outcome We Got?”: 05 sources of performance data: o Employee behavior and deliverables Peer input or observations Customer feedback Managerial evaluations Output from a production process Compare Performance to Standards: “How Do the Desired and Actual Outcomes Differ?”: To compare measured performance against the standards established Control charts: a visual statistical tool used for quality control purposes; is used to monitor the amount of variation in a work process Management by Exception: a control principle that managers should be informed of a situation only if data show a significant deviation from standards. o Take Corrective Action, if necessary: “What changes should we make to obtain desirable outcomes?” (Make no changes/Recognize and Reinforce positive performance/Take action to correct negative performance) Types of Control o Feedforward Control: focuses on preventing future problems o Concurrent Control: entails collecting performance information in real time o Feedback Control: amounts to collecting performance information after a task or project is done 2. Levels and Areas of Control Levels of Control: o Strategic Control by Top Managers: monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed o Tactical Control by Middle Managers: monitoring performance to ensure that tactical plans – those at the divisional or department level – are being implemented and taking corrective action as needed o Operational Control by First-line Mangers: monitoring performance to ensure that operational plans – day-to-day goals – are being implemented and taking corrective action as needed. 06 Areas of Control o Physical Area: includes buildings, equipment and tangible products; use equipment control, inventory-management control and quality control o Human Resource Area: uses personality tests, drug tests, performance tests, employee surveys, and the like as controls to monitor people o Informational Area: uses production schedules, sales forecasts, environmental impact statements and the like to monitor the organization’s various resources o Financial Area: uses financial control o Structural Area Bureaucratic Control: an approach to organizational control that is characterized by use of rules, regulations, and formal authority to guide performance Decentralized Control: an approach to organizational control that is characterized by informal and organic structural arrangements o Cultural Area: influences work process and levels of performance through the set of norms that develop as a result of the values and beliefs that constitute an organization’s culture Controlling the Supply Chain: the sequence of suppliers that contribute to creating and delivering a product, from raw materials to production to final buyers Control in Service Firms 3. The Balanced Scorecard and Strategy Maps The Balanced Scorecard: A Dashboard-like View of the Organization Balanced Scorecard: top managers a fast but comprehensive view of the organization via 04 indicators: customer satisfaction, internal processes, innovation and improvement activities, financial measures o The Balanced: Scorecard: 04 Perspectives Financial Perspective: “How do we look to shareholders?” Customer Perspective: “How do customers see us?” Internal Business Perspective: “At what must we excel?” Innovation and Learning Perspective: “Can we continue to improve and create value?” Strategy Mapping: Visual representation of the path to organizational effectiveness: “visual representation of a company’s critical objectives and the crucial relationships among them that drive organizational performance” 4. Some Financial Tools for Control Budgets: Formal Financial Projections Budget: a formal financial projection of planned activities for a given period of time o Incremental Budgeting: increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are viewed o Fixed vs Variable Budgets (02 incremental budgets) Fixed budgets – where resources are allocated on a single estimate of costs: resources on the basis of a single estimate of costs Variable budgets – where resources are varied in proportion with various levels of activity: allows the allocation of resources to vary in proportion with various levels of activity Financial Statements: Summarizing the Organization’s Financial Status: a summary of some aspect of an organization’s financial status o The Balance Sheet: Picture of Organization’s Financial Worth for a specific point in time: an organization’s overall financial worth (assets and liabilities) at a specific point of time o The Income Statement: Picture of Organization’s Financial Results for a Specified Period of Time: an organization’s overall financial results (revenues and expenses) over a specific period of time Audits: External vs Internal: formal verifications of an organization’s financial and operational systems o External Audits – Financial Appraisals by Outside Financial Experts (outside experts) o Internal Audits – Financial Appraisals by Inside Financial Experts (own professional staff) 5. Total Quality Management (TQM) Deming Management: The Contributions of W. Edward Deming to Improved Quality: proposed ideas for making organizations more responsive, more democratic, and less wasteful o Quality should be aimed at the needs of the consumer o Companies should aim at improving the system, not blaming workers o Improved quality leads to increased market share, increased company prospects, and increased employment o Quality can be improved on the basis of hard data, using the PDCA cycle (Plan-Do-Check-Art cycle: observed data for continuous improvement of operations) Core TQM Principles: Deliver Customer Value and Strive for Continuous Improvement: a comprehensive approach – led by top management and supported throughout the organization – dedicated to continuous quality improvement (such as Kaizen), training and customer satisfaction; 02 Core Principles of TQM: o o People Orientation – Focusing Everyone on Delivering Customer Value: Delivering customer value is most important People will focus on quality if given empowerment TQM requires training, teamwork and cross-functional efforts Improvement Orientation – Focusing everyone on continuously improving work processes Continuous improvement: ongoing, small, incremental improvements in all parts of an organization Improvement orientation makes these assumptions: It’s less expensive to do it right the first time It’s better to make small improvements all the time Accurate standards must be followed to eliminate small variations There must be strong commitment from top management Kaizen: Japanese philosophy of small continuous improvement to involve everyone at every level of the organization in the process of identifying opportunities and implementing and testing solutions Applying TQM to Services Some TQM Tools, Techniques and Standards o Outsourcing: Let outsiders handle it: the subcontracting of services and operations to an outside vendor o Reduced Cycle Time: Increasing the speed of work processes: reduction in steps in a work process o Statistical Process Control: Taking periodic random samples: a technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability o Six Sigma and Lean Sigma: Data-driven ways to eliminate defects Six Sigma: a rigorous statistical analysis process that reduces defects in manufacturing and service-related processes Lean Six Sigma: focuses on problem solving and performance improvement – speed with excellence – of a well-defined project o ISO 9000 and ISO 14000: Meeting Standards of Independent Auditors ISO 9000: a series consists of quality-control procedures companies must install – from purchasing to manufacturing to inventory to shipping – that can be audited by independent quality-control experts (or registrars) ISO 14000: a series extend the concept, identifying standards for environmental performance 6. Managing Control Effectively The Keys to Successful Control Systems: o They are Strategic and Results Oriented o They are Timely, Accurate and Objective Timely – when needed Accurate – correct Objective – impartial o o They are Realistic, Positive and Understandable and encourage Self-control Be realistic Be positive Be understandable Encourage self-control They are Flexible Barriers to Control Success o Too much control o Too little employee participation o Overemphasis on means instead of ends o Overemphasis on paperwork o Overemphasis on one instead of multiple approaches 7. Managing for Productivity What is Productivity? Why is Increasing Productivity Important? o Productivity track record o Role of Information Technology (IT): Much of productivity growth is thought to result from the implementation of information technology, including enterprise resource planning (ERP) systems, though wages in most industrialized countries have not kept up. Productivity depends on control. What Processes Can be Used to Increase Productivity? o Benchmarking o Best Practices: a set of guidelines, ethics or ideas that represent the most efficient or prudent course of action
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