Text for the course Management
KISS
Management
CHAMPLAIN REGIONAL COLLEGE – LENNOXVILLE CAMPUS
KISS Management
 2003 Dany Bernier, Stephanie Blanche, Michael Boersen, Martine Chrétien, Justin Dohler,
Richard Dupuy, Marie-Josée Fortin, Dan Fournier, Cynthia Godue, Nathalie Gratton-Martin,
Jo-Ani Mercier, Vedrana Milic, Pandora Pietraszkiewicz, Marie-Ève Racine, Melanie Roarke,
Pierre Rompré, Sophorn Sin, Kim Spader, and Guillaume Taillon
Lennoxville Campus
Lennoxville, Québec
J1M 2A1
Contributing Editors
MANAGEMENT CONCEPTS
1. Introduction to Management, its Functions, and Organisations
Dan Fournier
2. Ethics and Social Responsibility
Dan Fournier
3. Managing in the International Context
Dany Bernier
PLANNING
4. Strategic Planning
Justin Dohler
5. Decision Making
Martine Chrétien
ORGANISING
6. Organisational Structure and Design
Kim Spader
7. Organisational Culture
Marie-Ève Racine
8. Workforce Diversity
Pandora Pietraszkiewicz
9. Staffing and Human Resource Management
Melanie Roarke
10. Labour-Management Relations
Vedrana Milic
11. Managing Change and Development
Sophorn Sin
12. Management of Innovation
Dan Fournier
LEADING
13. Groups, Teams, and Teamwork
Michael Boersen
14. Communication and Interpersonal Skills
Jo-Ani Mercier
15. Motivation, Rewarding, and Empowering Employees
Guillaume Taillon
16. Managing Conflict and Stress
Stephanie Blanche
17. Leadership
Richard Dupuy
CONTROLLING
18. Control
Nathalie Gratton-Martin
19. Operations Management
Marie-Josée Fortin
20. Power and Political Behaviour
Cynthia Godue
21. Managing for Quality
Pierre Rompré
Contents
Preface
2
A collaboration............................................................................................................................. 2
MANAGEMENT CONCEPTS
3
1. Introduction to Management, its Functions, and Organisations....................................... 3
2. Ethics and Social Responsibility .......................................................................................... 13
3. Managing in the International Context ............................................................................... 18
PLANNING
22
4. Strategic Planning .................................................................................................................. 22
5. Decision Making .................................................................................................................... 26
ORGANISING
31
6. Organisational Structure and Design .................................................................................. 31
7. Organisational Culture .......................................................................................................... 37
8. Workforce Diversity .............................................................................................................. 42
9. Staffing and Human Resource Management ..................................................................... 47
10. Labour-Management Relations.......................................................................................... 54
11. Managing Change and Development................................................................................ 60
12. Management of Innovation................................................................................................ 65
LEADING
74
13. Groups, Teams, and Teamwork ........................................................................................ 74
14. Communication and Interpersonal Skills ......................................................................... 78
15. Motivation, Rewarding, and Empowering Employees ................................................... 84
16. Managing Conflict and Stress ............................................................................................ 90
17. Leadership ............................................................................................................................ 96
CONTROLLING
101
18. Control ................................................................................................................................ 101
19. Operations Management .................................................................................................. 108
20. Power and Political Behaviour ......................................................................................... 113
21. Managing for Quality ........................................................................................................ 117
List of Figures
Figure 1 - Selected Management Theories ......................................................................................................... 4
Figure 2 - Efficiency and Effectiveness .............................................................................................................. 8
Figure 3 - Management Hierarchy ....................................................................................................................... 9
Figure 4 - Management Roles ............................................................................................................................ 10
Figure 5 - Management Skills ............................................................................................................................. 11
Figure 6 - Areas of Social Responsibility .......................................................................................................... 14
Figure 7 - 2002 Corruption Perceptions Index (CPI)..................................................................................... 16
Figure 8 - Strategic Planning Process ................................................................................................................ 23
Figure 9 - The three levels of strategy............................................................................................................... 24
Figure 10 - Decision making in the five management functions .................................................................. 26
Figure 11 - Factors shaping culture ................................................................................................................... 38
Figure 12 - Dimensions of organizational culture........................................................................................... 38
Figure 13 - Negative Dynamics Confronting Women and Minorities in Organizations .......................... 43
Figure 14 - Advantages of a Diverse Workforce............................................................................................. 44
Figure 15 - Subjective performance appraisal system ..................................................................................... 50
Figure 16 - Objective performance appraisal system...................................................................................... 50
Figure 17 - Prohibited Grounds of Discrimination in Employment ........................................................... 52
Figure 15 - Grievance Procedure....................................................................................................................... 57
Figure 16 - Maslow’s Hierarchy of Needs ........................................................................................................ 85
Figure 17 - Simplified Expectancy Theory....................................................................................................... 86
Figure 18 - Equity Theory .................................................................................................................................. 86
Figure 22 - Major Stressors................................................................................................................................. 93
Figure 23 - Symptoms of Stress ......................................................................................................................... 94
Figure 19 - Leadership Skills and Traits ........................................................................................................... 96
Figure 20 - Management versus Leadership .................................................................................................... 98
Figure 21 - Control techniques for common functional areas of a business ............................................ 104
Figure 27 - Flow of Operations ....................................................................................................................... 108
Figure 28 - Three types of inventory .............................................................................................................. 111
Figure 29 - The Seven steps TQM model ...................................................................................................... 120
Figure 30 - Factors that facilitate continuous incremental improvements ................................................ 121
Preface
A collaboration
H
ow many times have you read a textbook and asked yourself: “This chapter is really
long… get to the point already!”? Students often complain that class texts are long and
boring.
And most often they are right.
know…“Keep It Simple Stupid”.
What ever happened to the KISS rule?
You
It seems that many authors today shy away from that
principle. In today’s complex and busy world we are all pressed with time – especially
students. Since time is now a scarce resource we all like to spend it wisely. None of us wants
to waste hours upon hours of our precious time reading through irrelevant “bla bla”. So what
are the alternatives? How about using no textbook at all? “Yeah…eh wait a minute…we gotta
have a textbook man!” Okay then.
So, in the winter semester of 2003 it was decided that third-year business students would
write their own textbook for their Management course. The fruits of their labour will now
benefit you. As a result, it is a book written by students for students. Thanks to all students
who have contributed to the making of KISS Management. We hope you enjoy it.
This book is dedicated to all graduate 2003 Business students at Champlain Regional College for
all their hard work and commitment.
- Dan Fournier, Business Teacher
2
PART
I
MANAGEMENT CONCEPTS
1. Introduction to Management, its Functions, and Organisations
History of Management
"People who ignore the past are destined to relive it."
A person unaware of mistakes made by others is likely to repeat them.
Each generation of managers needs to understand the lessons learned by its predecessors and build on them.
I
n order to gain a better understanding about management let’s take a ride through time and explore how concepts have
evolved to shape what we know today about this fascinating subject. It is important to learn about who helped shape
concepts and ideas that we use in business practices today.
Ancient History
Early civilisations - Management began when the earliest humans banded together in tribes. Their survival depended on the
individual and collective efforts to hunt, organise, and utilise scarce resources such as food, clothing and shelter.
One of the earliest feats of management involves the construction of the Egyptian pyramids. Just think. The construction of a
single pyramid occupied over 100,000 people for many decades. The largest of the pyramids
contained more than 2 million blocks, each weighing several tons. The quarries the blocks
came from were many miles from the construction site. Someone had to design the structure,
find a stone quarry, and arrange for the stones to be cut and moved - possibly over land and
by water - to the construction site, and mounted on top of the others. Who planned for,
designed, organised, and lead the efforts to construct such wonders? How did they manage to
do it? The answer to such a question is management.
Modern History
Two other events of importance occurred in the past few
economic doctrine - The Wealth of Nations. He argued the
from the division of labour. Simply put, Smith
productivity by taking advantage of each worker's area of
centuries. In 1776, Adam Smith published a classical
economic advantages that organisations would gain
concluded that the division of labour increased
specialisation.
Possibly the most significant pre-twentieth century influence on management was the Industrial
Revolution which started in Great Britain in the eighteenth century. This revolution eventually made
its way across the Atlantic to North America and machine power began to take the place of human and
animal power (as previously seen in the Agricultural Revolution). This, in turn, made it more
economical and effective to manufacture goods in factories. The advent of such factories spun the
requirement for managerial skills. Managers were needed to:




Forecast demand
Ensure that the necessary material resources were available and on hand for producing goods in question
Assign tasks to people
Ensure that machines were kept in good working condition
3


Find markets for the finished products
etc.
Management Theories and Schools of Thought
MANAGEMENT THEORIES
Classical (1780 - )
Scientific
Administrative
Era:
1890 – 1940 –
Ideas: - Classic Scientific
School
- Classic
Administrative
School
Key Frederick Taylor
People:
Henry Gantt
1920 – 1950 –
-Administrative
Management
-Bureaucracy
Behavioural
Quantitative
System
Quality
1920 – 1980 –
1940 – 1990 –
1950 – 1990 –
1980 –
- Human
Relations
- Human
Resources
- Management
Science
- Operations
Management
- Management
Information
systems (MIS)
Henri Fayol
Abraham
Maslow
Mary Parker Follett
Chester Barnard
Max Weber
- Kaizen
Approach
- Reengineering
W. Edwards
Deming
Figure 1 - Selected Management Theories
Theory attempts to explain the relationships between and among its underlying principles. Theory gives people a reason for
doing things.
CLASSICAL MANAGEMENT THEORY
Classical Management Theory originated during the Industrial Revolution. It has two
branches – Classic Scientific and Classic Administrative.
Classic Scientific School
 Arose as a result of a need to increase productivity
 The emphasis was to try to find the “one best way” of getting work done by
examining the way work was accomplished
 Focused on worker-machine relationships for increasing production
Classic Administrative School
 Grew out of a need for guidelines to manage the complex organisations that
emerged from the Industrial Revolution
 The emphasis was on the development of managerial principles rather than work
methods
 Advocated a belief in studying the flow of information
 Theorists aimed at understanding how an organisation operated
4
BEHAVIOURAL MANAGEMENT THEORY




Dealt with the human aspects of organisations
Focused on employees as individuals, resources, assets, and as part of work groups
Motivation and Leadership became topics of great interest
Resulted in the creation of positions for professionals as a Human Resources
Manager
QUANTITATIVE MANAGEMENT THEORY



Was born in World War II era
Used mathematical and statistical approaches, as well as computational models
and simulations for management problems
Used quantitative tools to help plan and control nearly every aspect in the
organisation
SYSTEMS MANAGEMENT THEORY
An organisation is viewed as a system, with inputs being processed, through operations,
into outputs. So a system is a set of interrelated parts that work together to achieve
stated goals.
Systems School
 The systems school holds that an organisation comprises various parts (subsystems)
that must perform tasks necessary for the survival and proper functioning of the
system as a whole
 The Functional Areas of business – Marketing, Finance, Human Resource
Management, etc. – are subsystems
 Interrelatedness emphasises that a manager can’t change one subsystem without
affecting the rest
Cumulative Energy of Synergy
 The whole is greater than the sum of its parts
 Synergy is the increased effectiveness that results from combined action or cooperation
 It is sometimes described as 2 + 2 = 5 since the result of a synergistic partnership is
more than the sum production of each partner alone
 Synergy can lead to negative effects (clash of cultures, loss of jobs (mergers &
downsizing), antitrust and ethical issues, etc.)
5
QUALITY MANAGEMENT THEORY



Quality Management emphasises achieving customer satisfaction by providing high
quality goods and services
What is done must be measured and evaluated quantitatively and qualitatively
Quality School is the most current and it is embraced worldwide
Kaizen
 Japanese in origin (means continuous improvement for people, products, and
processes)
 No matter how well things are going, the individual or organisation can do it better
Reengineering
 Change is constant; It will always occur
 Is the fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements
Key People:
Frederick W. Taylor (1856-1915)





Called the Father of Scientific Management
Scientifically studied work to identify the “one best way” to get a job done (standardising tasks)
Scientifically selected, hired, and trained workers
Motivated workers with financial rewards (prorata)
Introduced work breaks
Henry Gantt (1861-1919)



Developed the Gantt chart used for scheduling multiple overlapping tasks over a time period (still widely used in
organisations today for scheduling work)
Focused on motivational schemes, emphasising the greater effectiveness of rewards for good work
Developed a pay incentive system with a guaranteed minimum wage and bonus systems for people on fixed wages
Henri Fayol (1841-1925)




Believed that management required specific skills that could be learned and taught
Designated management as a universal set of functions that included planning, organising,
commanding, co-ordinating, and controlling
Described the practice of management as something distinct from accounting, finance, production,
and the other business functions
Developed several principles of management
6
Mary Parker Follett (1868 - 1933)



Focused on how organisations cope with conflict
Emphasised the human element in organisations and the need to discover and enlist individual
and group motivation
Introduced three important concepts: The Universal Goal, The Universal Principle, and the
Law of the Situation:
1.
2.
3.
The Universal Goal of organisations is an integration of individual effort into a synergistic whole
(goal sharing)
The Universal Principle is a circular or reciprocal response emphasising feedback to the sender
(the concept of two-way communication)
Law of the Situation emphasises that there is no one best way to do anything, but that it all
depends on the situation
Max Weber (1864-1920)



Known as the Father of Modern Sociology
Analysed bureaucracy as the most logical and rational structure for large organisations
A bureaucracy was a system characterised by division of labour, a clearly defined hierarchy, detailed
rules and regulations, and impersonal relationships
Chester Barnard (1886-1961)





Saw organisations as social systems requiring human co-operation
Argued that success depended on maintaining good relations with external groups and
institutions
Developed the concepts of Strategic Planning and Acceptance Theory of Authority
Argued that managers must gain acceptance for their authority
Believed that three top functions of the executive were to:
1. establish and maintain effective communication system,
2. hire and retain effective personnel, and
3. motivate those personnel
Abraham Maslow (1908- 1970)


Developed a needs-based theory of motivation (Hierarchy of Needs)
The theory is now considered central to understanding human motivation an behaviour
W. Edwards Deming (1900- 1994)



Father of Total Quality Management
Regarded by the Japanese as the key influence in their postwar economic turnaround
Created constancy of purpose for continual improvement of products and services
7
What is Management?
Management is the process of getting things done, effectively and efficiently, through and with other people 1. Let's take a look
at several components of this definition:
Process:
Represents the functions or primary activities managers perform (discussed below).
Efficiency:
Efficiency is a vital part of management. It means doing the task correctly and refers to the relationship
between inputs and outputs. For instance, if you get more output for a given input, you have increased efficiency. You also
increase efficiency when you get the same output with fewer resources. Since managers deal with input resources that are scarce
- money, people, and equipment - they are concerned with the efficient use of those resources.
Effectiveness:
Is getting activities completed. When managers achieve their organisation's goals, we say they are effective.
There exists a fundamental difference between efficiency and effectiveness. Efficiency is how you go about accomplishing
something (means) while effectiveness is the attainment or completion of a goal (ends).
For example, if you kill a fly with a hammer you may be effective (ends - killing the fly). But you would be much more efficient
by using a fly swatter (means – waste less energy, swat faster).
Figure 2 - Efficiency and Effectiveness
Management Functions
Management Functions are activities that comprise the Management Process. The four basic Management activities are
planning, organising, leading, and controlling.
Planning
The planning function involves defining an organisation's goals, establishing an overall strategy for achieving these goals, and
developing a set of plans to integrate and co-ordinate activities. Setting goals keeps the work to be done in proper focus and
helps organisation members keep their attention on what is important.
Organising
Managers are also responsible for designing an organisation's structure. Organising involves determining what jobs or tasks are to
be done, hiring and choosing who is going to do them, and deciding how they will be done.
Leading
Simply put, leading is influencing other people to get the job done. Leaders direct the activities of others, motivate employees,
maintain morale, mold company culture, and manage conflict and communication.
1
Robbins, DeCenzo, Stuart-Kotze, Fundamentals of Management (Prentice Hall, 2002), p. 5.
8
Controlling
Controlling is the last function a manager performs. Controlling is making sure that an organisation's performance is up to par
with the goals previously set. A manager must continuously monitor and compare actual performance with set standards and
take corrective action when necessary.
What do Managers do?
A manager is someone who plans, organises, leads, and controls people and the work of an organisation with the aim of
ensuring that the organisation achieves its goals.2
Types of Manager
Most organisations have several types of managers. There are several ways to classify managers. The three most common
classifications are by Organisational Level, by Managerial Function, and by Region or Divison.
1) Classifying Managers by Organisation Level:
Top
Managers
Middle
Managers
First-Line
Managers
Non-Managerial
Employees
Figure 3 - Management Hierarchy
Top managers are usually referred to as executives. They are responsible for making decisions that affect the organisation as a
whole. In addition, top managers define policies and establish long-term strategies that provide direction and vision to the
organisation. Top management also creates and co-ordinates alliances and partnerships with outsiders.
Middle managers usually report to top managers. Middle management translates Top management's long-term goals into
shorter-term objectives and set some of their own goals. They oversee the work of other Middle managers and those of the
First-Line (or Operational) level. Middle managers are typically assigned by function (e.g.: Marketing Manager) or region (e.g.:
East Coast Sales Manager).
First-Line managers are usually called supervisors. But more recently, many of them have been attributed the title "team
leader" or "team facilitator". These managers convert middle managers' goals and objectives in their own set of objectives. Of
all the levels, the first-line is most concerned with the day-to-day execution of ongoing operations.
2) Classifying Managers by Function:
A Functional manager is one whose expertise lies primarily, but not exclusively, in one specialty area. The most common
functional areas are:




2
Finance
Operations
Sales
Marketing
Dessler, Tarke, Cyr, Management – Leading People and Organisations in the 21st Century (Prentice Hall, 2001), p.3
9


Human Resources
Research and Development
3) Classifying Managers by Region or Division:
A Regional manager is or Division manager is one who is in charge of handling the management functions or duties for a
particular area.
Managers at different levels perform the four management functions, as well as other tasks, in varying degrees. Some managers
spend more time on planning and organising while others spend more time on leading and controlling. All depends on the
nature of the business, the goals to be achieved, and the resources available to the organisation.
Management Roles
Managers assume many important
roles. Here is a description of
some:
ROLE
DESCRIPTION
Interpersonal
Figurehead
Leader
Liaison
Performs symbolic or ceremonial duties
Motivated, hires, trains, empowers, and provides growth
opportunities for employees
Facilitates communication between members of different
departments with the organisation
Informational
Monitor
Disseminator
Spokesperson
Seeks and receives important internal and external information
Transmits information received to members of the organisation
Transmits information to outsiders on the organisation’s plans,
policies, actions, results, etc.
Decisional
Entrepreneur
Disturbance
Handler
Searches the internal and external environments for
opportunities and initiates projects to bring about
improvements and change
Responsible for corrective action when organisation faces
important disturbance
Figure 4 - Management Roles
10
Management Skills
Skills allow individuals to perform activities and functions in society. Managerial skills identify those abilities or behaviours that
are crucial to success in a managerial position. Such skills can be grouped in the following areas:
Conceptual
Technical
Political
Communication
Effectivenes
s
Interpersonal
Figure 5 - Management Skills
Managing Today
Managers need to constantly monitor and anticipate changes occurring in today’s volatile business environment. Organisations
are facing many new challenges and forces in today’s more competitive global marketplace. Some of the most significant
challenges and trends include:






Technological Innovations
Globalisation
A more Diverse Workforce
Changing Political Systems
Formation of new Trade Agreements/Areas
Synergy
Today’s manager needs to please customers, provide leadership, act ethically, value diversity in their employees, and cope with
global challenges.
KEY TERMS
Controlling
Division Manager
Effectiveness
Efficiency
Gantt chart
Functional Manager
Kaizen
Leading
Management
Manager
Organising
Middle Manager
11
Planning
Reengineering
Regional Manager
Synergy
Top Manager
WEB LINKS
History of Management
http://www.mgmtguru.com/mgt301/301_Lecture1.htm
Management History
http://ollie.dcccd.edu/mgmt1374/book_contents/1overview/management_history/mgmt_history.htm
Introduction to the theoretical and philosophical basis
of modern management
http://www.city.ac.uk/artspol/theorymgt.html
NOVA Online – Pyramids
http://www.pbs.org/wgbh/nova/pyramid/textindex.html
Introduction to Management
http://www.mapnp.org/library/mng_thry/mng_thry.htm
American Management Association
http://www.amanet.org/
The W. Edwards Deming Institute
http://www.deming.org/
Kaizen Institute
http://www.kaizen-institute.com/
Managerial Work and Organisational Structuring (work of Henry Mintzberg)
http://sol.brunel.ac.uk/~jarvis/bola/mintzberg/index.html
Faith Popcorn (Management Trends)
http://www.faithpopcorn.com/trends/trends.htm
Business.com - Management - Resources and information for management professionals
http://www.business.com/directory/management/index.asp
12
2. Ethics and Social Responsibility
What are ethics?
T
he word "ethics" is derived from the Greek word ethos (character) and from the Latin word mores (customs). Together,
they combine to define how individuals choose to interact with one another. Ethics are beliefs about what is right and
wrong or good or bad. Specifically, ethics is concerned with what constitutes right and wrong human conduct, including
actions and values, in light of a specific set of circumstances. Moreover, an individual's personal values and morals and the social
context in which they occur determine whether a particular behaviour is perceived as ethical or unethical. In other words,
ethical behaviour is behaviour that conforms to individual beliefs and social norms about what is right and good. Conversely,
unethical behaviour is behaviour that individual beliefs and social norms define as wrong and bad.
What are Business Ethics?
Business ethics is a term often used to refer to ethical or unethical behaviours by a manager or employee of an organisation.
From a practical point of view or perspective, business ethics is a form of applied ethics. It aims at inculcating a sense within a
company's employee population of how to conduct business responsibly.
Managing Ethically
Managers must balance diverse and sometimes contradictory demands of multiple constituencies—employees, customers,
shareholders, suppliers, and the community—while allocating and managing limited resources. In the internal environment,
managers must monitor not only their own behaviour but also the behaviour of their employees. Human behaviour derives
from discernible causes or motives that can be identified, acknowledged, and modified. Thus, managers must consciously
recognise the influence of underlying motivation in themselves and others. Some basic motives for stepping over the line
between ethical and unethical can include fear of losing one's job, pressures from time and superiors to produce results, aspiring
to advance one's career, revenge, a tendency to ignore the consequences of one's actions, etc. Therefore, managers have an
obligation to provide ethical training and education for all employees. It goes without saying that they should also practice what
they preach.
Corporate Responsibility
Corporate Responsibility refers to fulfilling the responsibilities or obligations that a company has towards it stakeholders.
When examining a particular corporate practice, like profit versus environmental protection, corporate responsibility can help
distinguish between a stakeholder expectation and a corporate obligation (i.e.: is the company obligated to provide absolute
environmental protection at all cost or is it obligated to maximise profits for its investors at the cost of damaging the
environment?).
Social Responsibility
The underlying premise of Social Responsibility is the belief that businesses should have a positive impact on society. Social
Responsibility refers to obligations a company has to the community, particularly with respect to charitable activities and
environmental stewardship. Environmental Stewardship is a position taken by an organisation to protect or enhance the
natural environment as it conducts its business activities 3. Corporate and social responsibility is sometimes described as being a
3
Solomon, Stuart, Carson, Smith, Marketing – Real People, Real Decisions (Prentice Hall, 2003), p. 62.
13
tacit contract between business and a community, whereby the community permits the business to operate within its jurisdiction
to obtain jobs for residents and revenue through taxation. Additionally, the community expects the business to preserve the
environment and to make the community a better place to live and to work through charitable activities.
Employees
Owners/Investors
Stakeholders
Customers
Suppliers
Communities/Society
Environment
Figure 6 - Areas of Social Responsibility
Figure 6 illustrates a company's responsibilities towards its stakeholders. Stakeholders in most businesses include their owners
and stockholders, employees, customers, and suppliers. But since stakeholders are those who have an interest or who are
affected by how a business conducts its operations, communities and society as a whole can also be viewed as a stakeholder. It
goes without saying that businesses also have a responsibility toward the natural environment. Let's take a look at each area of
responsibility in more detail.
Responsibility towards Environment
How does the business relate to its physical environment? Pollution (air, water, and land) has been and continues to be a
significant managerial challenge. A manager must not only be aware of local, national, and international environmental laws, but
also ensure that adequate measures are taken to preserve the natural environment. Many businesses produce products and
package those products using various materials. Hence, managers need to consider how they can promote recycling either in
producing or in disposing of their products.
Responsibility towards Customers
Social Responsibility towards customers generally falls into one of two categories: providing quality products (or services) and
pricing those products fairly. As with the environment, firms differ in their level of concern about responsibility to customers.
Customers have the right to receive quality products. After all, they pay for them using their hard-earned cash! Customers have
the right to safe products, have products that do what they are supposed to do, and be able to return them without hassles if they
do not work. Customers also have the right to a fair price. Many other consumer issues exist and have spun a social movement
called consumerism. Consumerism is a form of social activism dedicated to protecting the rights of consumers in their dealings
with businesses.4
Managers need to be aware of issues and concerns that their customers have with their products as well as how they are treated
by employees of the firm. In addition, managers should keep abreast of consumer issues happening in their industry.
Finally, managers need to be conscious and sensitive to issues regarding ethics in marketing and advertising products and
services.
Responsibility towards Employees
Organisations need to employ fair and equitable practices to all their employees. Activities such as recruiting, training,
promoting, and compensating are all basis for social responsibility towards employees. A company that provides its employees
with equal opportunities for rewards and advancement without regard to race, sex, or other irrelevant factors is meeting its social
responsibilities.
4
Griffin, Starke, Business Essentials (Prentice Hall, 2003), p. 59
14
In addition, to their responsibility to employees as resources of the company, firms have a social responsibility to their employees
as people. Firms that accept this responsibility make sure that the workplace is safe, both physically and emotionally. They
would no more tolerate an abusive manager or one who sexually harasses employees than they would a gas leak.
Business firms also have a responsibility to respect the privacy of their employees. While nearly everyone agrees companies
have the right to exercise some level of control over their employees, there is great controversy about exactly how much is
acceptable in areas like drug testing and computer monitoring.
Responsibility towards Investors
In the past few years we have seen managers, executives in particular, act illegally and socially irresponsible in several ways.
When managers of a firm abuse its financial resources, the ultimate losers are the owners, since they do not receive the earnings,
dividends, or capital appreciation due to them. However, laws are becoming less forgiving for such abusive managers. In light
of recent accounting scandals in large American corporations, we have seen many management executives convicted and sent to
jail. Hence, managers need to be more aware and vigilant about the inner workings of their financial management in order to
ensure that there are absolutely no misrepresentation of finances.
Another area of illegal and socially irresponsible behaviour by firms towards investors is the practice of insider trading. Insider
trading occurs when someone uses confidential information to gain from the purchase or sale of stocks.
Respecting employees as people also means respecting their behaviour as ethically responsible individuals. Employees who
discover that their company has been engaging in practices that are illegal, unethical, and/or socially irresponsible should be able
to report the problem to higher-level management and be confident that managers will stop the questionable practices. If no one
in the organisation will take action, the employee might decide to inform a regulatory agency or perhaps the media. At this point
the person becomes what is popularly know as a whistle-blower— an employee who discovers and tries to put an end to a
company's unethical, illegal, and/or socially irresponsible actions by publicising them.
Organisational Influences and Controls on Ethical Conduct
Organisations need to have a positive influence on individuals’ ability to act ethically. To do so, they need to emphasise the
importance of organisational controls. Most firms have corporate cultures that promote values and beliefs that govern the ways
in which people interact with others. But that might not be sufficient. In order to ensure that ethics are put into practice,
businesses can promote ethical conduct in three ways: have the Commitment of Top Management, develop Ethical Guidelines,
and establish Compliance Programs.
Commitment of Top Management
It is Top Management’s job to ensure that its organisation’s culture supports ethical conduct and social responsibility. To do
this, top management must make organisational integrity a core value. They must lead by example; they are the one’s who set the
tone. Top management must make it clear that it is serious about enforcing ethical codes of conduct. They must also ensure
that customers, suppliers, and employees are all aware of the firm’s stress on ethics.
Development of Ethical Guidelines (Policies, Procedures, and Code of Ethics)
A company’s policies are clearly defined statement or rules of what is expected. Procedures are actions on how to implement
the rules. A Code of Ethics is somewhat a mixture of the two. A Code of Ethics is a formal document that states an
organisation’s primary values and the etchical rules it expects employees or other stakeholders to follow.5 Let’s look at parts of
this definition. The “..ethical rules” are the specific policies regarding ethics while “…to follow” are employees expected
behaviours or conduct in applying those rules. A code of ethics must be specific enough to provide concrete guidance.
Compliance Programs
Compliance Programs are simply the establishment of a compliance mechanism. In other words, we want some means to
communicate and enforce code of ethics and conduct; otherwise they will be just words on paper. Two distinct ways in which
compliance programs can be implemented are through Compliance Training and Cognitive Thinking Exercises.
5
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000), p. 119.
15
Compliance Training involves communicating to people the policies, regulations, and laws that establish acceptable behaviour
within a company.
Thinking Exercises can be used to develop skills to allow people to think through various “moral mazes” with which they may
be confronted in the workplace.
Organisations can use other means to establish compliance such as having:




ethics committees
ethics officers
games/simulations
a weekly or monthly column or newsletter on ethics
Ethical Dilemmas
Ethics is not entirely prescriptive. No given set of rules can tell us how to behave morally or ethically in all situations. Codes of
conduct are written in a manner of company policies – as brief, general guidelines. Interpretation can vary from one individual
to the next. Like policies, codes are meant to give freedom of action within certain boundaries and require interpretation. In
reality, people are facing many grey areas. People sometimes find themselves in a difficult or perplexing situation. This situation
is called a dilemma. A dilemma is a situation requiring a choice between equally undesirable alternatives (damned if you do, damned
if you don’t type situation). An ethical dilemma is a situation that arises when all courses of action open to a decision maker are
judged to be unethical6. Even thought it can seem hopeless, there exists many guidelines or options for acting ethically when
faced with ethical dilemmas. Managers should provide employees with the necessary guidance that will help them make ethical
decisions.
Ethics in the International Context
Are ethical standards universal across the globe? Certainly not! Social and cultural differences between countries are important
factors that determine ethical and unethical behaviour.
Canadian firms have operations or deal with firms in other countries. Many find it difficult to uphold their Canadian-based
codes of conduct and ethical standards. The main reason is corruption – especially bribery. Canadian executives who would not
even think of bribing a Canadian official may discover that it is standard business practice in other countries. Canadian
companies are seen by the international community to be relatively corrupt-free. Which countries are considered the most
corrupt? The organisation called Transparency International has created a Corruption Perceptions Index (CPI) that is published
annually. Here are some highlights for 2002:
Transparency International’s Corruption Perceptions Index 2002
Top 10 least corrupt nations:
1. Finland
2. Denmark
3. New Zealand
4. Iceland
5. Singapore
6. Sweden
7. Canada
8. Luxembourg
9. Netherlands
10. United Kingdom
(The United States is ranked 16th)
Top 10 most corrupt nations
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Bangladesh
Nigeria
Paraguay
Madagascar
Angola
Kenya
Indonesia
Azerbaijan
Uganda
Moldova
Figure 7 - 2002 Corruption Perceptions Index (CPI)
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
729
6
16
KEY TERMS
Business Ethics
Code of Ethics
Consumerism
Corporate Responsibility
Environmental Stewardship
Ethical behaviour
Ethical Dilemma
Ethics
Insider Trading
Social Responsibility
Unethical behaviour
Whistle-blower
WEB LINKS
International Business Ethics Institute
http://www.business-ethics.org/
BusinessEthics.ca
http://www.businessethics.ca/
Business Ethics Resources on WWW
http://www.ethics.ubc.ca/resources/business/codes.html
Creating a Code of Ethics for Your Organization
http://www.ethicsweb.ca/codes/
Institute of Business Ethics: Code of Ethics (Developing Code of Ethics)
http://www.ibe.org.uk/code.htm
Transparency International (Global coalition against corruption)
http://www.transparency.org/
Levi Strauss & Co. - Social Responsibility
http://www.levistrauss.com/responsibility/
Yahoo – Ethics
http://dir.yahoo.com/Arts/Humanities/Philosophy/Ethics/
Yahoo – Business Ethics
http://dir.yahoo.com/Arts/Humanities/Philosophy/Ethics/Business/
Business.com - Management – Business Ethics
http://www.business.com/directory/management/business_ethics/
17
3. Managing in the International Context
What is International Management?
I
nternational Management: is the process of managing resources (people, information, funds, inventories, and technologies)
across national boundaries and adapting management principles and functions to the demand of foreign competition and
environments7.
Today, in order to compete in a global market, a company needs flexibility in order to get the needed resources. An organization
must also find resources of the highest quality, the greatest dependability, and at the lowest cost possible. For these reasons,
companies must go look to other countries in order to best fulfill their needs. Because the world is changing more rapidly every
day, the international manager must acquire a certain level of knowledge and expertise in the matter.
International managers often work in companies called multinationals. We can call a company a multinational when it is
established in more than one country. Usually, multinationals are divided in two major categories. There are those who
standardize and those who customize their products. A standardized product is one who is the same for every customer like:
cigarettes, chemicals, and liquors; while customized products are goods that are adapted to each different customer like
computer software which is designed to work in different foreign languages.
There are two basic sets of reasons why companies want to go international:
Proactive motives:






Search for new customers and new markets
Increase market share
Increase return on investment
Obtain easier access to raw material and other resources
Lower manufacturing costs
Obtain economies of scale
Reactive motives:




Escape from trade barriers
Escape from government regulations on production
Better service to a customer group
Remain competitive
Regional Trade Alliances
A simple concept explains why today’s businesses try to go international and it is the one of free trade. Free trade occurs when
two or more countries sign an agreement to allow the free flow of goods and services, unimpeded by trade barriers such as
tariffs, quotas, and embargoes8.
Some free trade agreements:
-European Union, or UN.
-Associations of Southeast Asian Nations, or ASEAN.
-North American Free Trade Agreement or NAFTA.
-Southern Cone Common Market or Mercosur.
-Free Trade Area of Americas, or FTAA
-World Trade Organization or WTO
7Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.647
8Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21 st Century (Prentice Hall, 2001), p.41
18
International Business Strategies
In order to go international a company must adopt a plan of attack or follow certain guidelines called strategies. Furthermore, a
company must determine how big its involvement will be in the other country; a big or a small commitment. Overall, the
company must decide the size of its control over international commerce.
Here are common strategies:
Exporting: Exporting usually: increases the sales volume, reduces the unit cost of production, allows greater use of plant capacity,
decreases dependence on a single domestic market, and gives the opportunity to gain a bigger share of a global market all
because of mass production. Exporting presents both advantages and disadvantages; on one hand it is an inexpensive way to go
international, but on the other hand transportation, tariffs, other regulations can be disadvantageous to a company. There is also
a lower level of control over the resources.
Licensing: Licensing agreements are often used when a company does not want to build a plan or elaborate a whole new
marketing strategy in another country. Because the licensee produces the product in its own country, often organizations can
escape some barriers that it would have otherwise encountered. However, the licenser loses all of the control on how the product
is being produced and sold to the market.
Franchising: Franchising is similar to licensing but with a more strict set of rules or guidelines to follow. Franchising is most often
used in the service sector like restaurants, hotels, and rental services. Franchising is a quick and inexpensive way for a firm to go
international. Furthermore, franchising also offers an established and reputable company.
Joint Venture: Joint venture is the participation of two or more companies jointly in an enterprise in which each party contributes
assets, owns the entity to some degree, and shares risks 9. A Joint venture gives the opportunity to one firm not to be alone in a
very uncertain business world that we are facing today. Overall, joint ventures give better knowledge to both companies but also
split the control in two halves as well.
Direct Investment: Direct investment is when a single investor opens up a new company in a foreign country. The entire control is
held by the new company’s owners. Therefore, in this case there are increased risks.
The International Environment
Political Environment: The international manager cannot only be concerned with governmental influence on trade (quotas and
tariffs) but they must take into consideration the political risks as well. The stability of a government can make the difference in
international commerce.
Legal Environment: Each country has its own unique set of laws that has influence on international commerce. Some rules are
designed for protecting individuals’ rights while others are for the labour union’s protection. International managers must know
all of the laws in which they operate. Some governments impose barriers to trade in order to protect their domestic industries
like:



Tariffs: A tax placed on imported goods to make them more expensive and thus less competitive with domestic
product10.
Quotas: A government regulation that limits the import of a product to a specified amount per year10.
Embargo: A government regulation enacted to keep a product out of a country for a time or entirely 10.
Economic Environment: International managers must be familiar with the economic system, the level of economic development, and
the currency exchange rate in the country in which they operate. Usually, there are two major principles on which of economic
system is based; one on free enterprise theory and the other on government regulations.
Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001), p.48
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.651
9Dessler,
10
19
Three different kinds of economic systems are:



Market Economy: The quantity produced and the price is determined by the law of supply and demand (e.g. UnitedStates).
Planned Economy: The central planning agency makes all the possible decisions (e.g. North Korea).
Mixed Economy: It is a mix of the previous two economic systems (e.g. Canada).
International managers must also deal with the currency exchange rate. A rise or a decrease in the country of production’s
exchange rate can make the difference whether a company produces to the maximum or not.
Sociocultural Environment: For the international manager this environment involves: people’s tradition, languages, customs, values,
religion, and level of education. In order to achieve their goals to be efficient in their positions, international managers must
work on a daily basis on their understanding of the country’s people and their values.
There are five Cultural Dimensions that international managers face:





Material Culture: Evaluation of the level of technology present.
Social Institution: Level of education composed of: religion, individual’s work ethic, and attitudes.
Human and the Universe: The beliefs of people.
Aesthetic: Dimension composed of art, folklore, myths, music, drama, native traditions in a culture. This is important
in communication such as gestures and visual representation because a bad interpretation can create problems.
Language: The most difficult dimension. Words have often more than one meaning and it is important for a manager
to understand and interpret some nuances creates by those words.
Individualism vs. Collectivism: Individualism is when people believe that that freedom comes with independence through individual
accomplishment. Collectivism is more group oriented; people think that success comes with the collective efforts of members
of a society.
Formality: Formality is a dimension that deals with traditions. Style is also part of this dimension; for example in America they
use a very direct style where no time is being waste opposed to a country like Japan where the meetings are very casual.
Materialism: Materialism is the way to think that status goes with certain objects like a car for example.
Time Orientation: In America time is often seen as a precious and scare resource while in other Arabian countries time is infinite.
This dimension often makes the difference in a deadline date.
The Global Manager
Specific Skills: International managers must operate with a global vision and strategy. They must view the world as one market.
Also, it is very important for them to develop and maintain an in-depth understanding of the environments of every country in
which it has operations, affiliates, suppliers, and customers 11. Communication skills are probably the most important for
international managers because often they have to communicate in a different language than their mother tongue. Effectiveness
and interpersonal skills can also improve a managers’ job performance.
Use of Technology: The global manager must deal with the technological environment which involves the kind of technologies
available for the manufacturing company that are already implemented or that can easily be added. Communication must be
effective even if the manufacturer is located overseas. Email or IM (Instant Messaging) are two fast ways of communication
which the international manager can use. Internet is now a key tool for all multinationals because it helps to increase the
efficiency of work mostly through better and faster communication.
Trends: Today many alliances are formed between countries in order to remain competitive within the global market. Regardless
of the kind of business international managers operate in, they must find partners which will provide them with the kind of
technology they are lacking in order to keep pace with the competitors.
According to Stephen Almassy, national director of Ernst & Young’s Electronic Industry Service Division: “The goal [of a
company] is to deliver –not necessarily build- the highest-quality products and bring them to market in the shortest possible
11Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.649
20
time”. This can only be done with the help of technology and it will help the firm increase its production as well as to decrease its
manufacturing cost.
KEY TERMS
Collectivism
Free Trade
Formality
Individualism
International Management
Materialism
Time Orientation
WEB LINKS
International Business Resources on the WWW
http://globaledge.msu.edu/ibrd/ibrd.asp
- Culture, Travel, and Language
http://globaledge.msu.edu/ibrd/busresmain.asp?ResourceCategoryID=17
ExecutivePlanet.com
http://www.executiveplanet.com/community/default.asp
CIA Fact Book
http://www.odci.gov/cia/publications/factbook/index.html
WTO (World Trade Organization -Member Countries)
http://www.wto.org/
The NAFTA Home Page
http://www.mac.doc.gov/nafta/
FTAA Official Site
http://www.ftaa-alca.org/
European Union
www.eurounion.org
ASEAN
www.asean.com
21
PART
II
PLANNING
4. Strategic Planning
What is Strategic Planning?
S
trategic planning is the process of creating or rewriting an organization’s mission, identifying and evaluating the long-term
goals and strategies to reach those goals, and determining the required resources 12. For a business to become successful and
be able to compete in the markets, keep costs reduced, and increase its customer base, it has to ask itself questions like
“what to we want to sell?”, “to whom do we want to sell it to?”, and “what must we do to stay ahead of the competition?” It is
designed to help answer important questions that the business might face.
Elements of Strategic Planning
Strategic planning is composed of four elements: scope, resource deployment, competitive advantage(s), and synergy. When
these four elements have been addressed, then the company will be in a good position to reach its strategic goals and objectives.
The scope of a strategy specifies what position, size, etc. the company wants to attain. For example, company ABC has been
around for a few years and has been averaging one million in profits. Their scope of a strategy is to attain 2 million in profits, or
become the number one producer of the item they produce. A scope strategy can also be to divest (e.g.: for obsolete products).
Radio Shack decided to narrow their scope by not producing computers.
Resource deployment is how the company intends to distribute its human, material, and financial resources to attain its
strategic goals. An example of this is when the company decides to use its financial resources to acquire new companies.
Instead of creating parts for their product, the company could outsource a contract to another company and have them build the
parts needed at a much lower price.
A competitive advantage(s) is when you have a distinctive or relative superiority advantage over your competitor. A company
has a competitive advantage if it can produce a part cheaper, quicker, or of superior quality than if the other company produces
the same part. It can also occur when a company has a better inventory control system. This would reduce costs because
whenever the company is low on materials, the system would automatically order them, which then would prevent slow downs
or work stoppages. It would also eliminate the need from keeping large amounts of inventory on hand.
Synergy is the increased effectiveness that results from when you combine the efforts, cooperation and actions from within the
company. It is sometimes described as the 2 + 2 = 5 effect because the result of a synergistic partnership actually exceeds the
sum of the production each partner can achieve when acting alone13. This is important because with synergy, companies can
attain special advantages in market share, technology application, cost reduction, or management skill. Through vertical
integration the company increases resources, quality, freedom and specialization. This enables the company to increase its
customer base and gives them a marketing advantage, makes them more competitive and provides protection from other
competing industries.
12
13
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations (South-Western, 2002), p.161
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations (South-Western, 2002), p.164
22
What is Strategic Management?
Strategic planning is an element of strategic management. The organization’s mission, goals, and strategies have to be considered
by management, for the company to succeed. Strategic management is top management’s responsibility; it defines the firm’s
position, formulates strategies, and guides the execution of long-term organizational functions and processes 14. To accomplish
this, the organization must use its internal resources and use them to accomplish the external demands of its environment. The
strategic planning process consists of five steps.
Step 1
Define the
business and
develop a mission
statement.
Step 3
Step 4
Formulate a
strategy to
achieve strategic
goals.
Implement
the strategy.
Step 2
Set strategic
goals.
Step 5
Evaluate and
correct as
needed.
Figure 8 - Strategic Planning Process
Step 1: Define the Business and Develop a Mission Statement
The business has to decide what it wants to develop or make. For example, an organization can decide to specialize in Porsches,
which is a high performance, hand made, high performance car, or a Toyota, which produces a large variety of cars, makes its
own parts, and is cost-efficient in production. Then a mission statement has to be developed. A mission statement broadly
outlines the organization’s future course and serves to communicate who the organization is, what it does, and where it is
headed15.
Step 2: Set Strategic Goals
This is when top management’s vision and mission is translated into strategic goals. A few examples of strategic goals could be
making the company bigger through acquisitions, cutting labour costs, and increasing market share.
Step 3: Formulate a Strategy to Achieve the Strategic Goals
A strategy is a course of action that explains how the enterprise will move from the business it is in now to the business it wants
to be in (as stated in its mission), given its opportunities and threats and its internal strengths and weaknesses 16. Through
analyzing the internal and external environments using SWOT analysis (strengths, weaknesses, opportunities and threats) the
company can formulate a strategy to make changes and achieve their strategic goals. Another commonly used analysis is PEST
(political factors, economic factors, social factors, and technology factors). Some political factors that are considered are legal
aspects such as patents, copyrights and, political climate. Economic factors include whether there is a recession, the stock
market rising or falling, etc. Social factors are social trends, fads, ageing population etc. Technology factors include everything
that affects your product and its market. These include Internet, wireless communications, electronic devices and anything else
technological that is affecting your product or service.
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations (South-Western, 2002), p.161
Dessler, Starke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001), p.163
16 Dessler, Starke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001), p.163
14
15
23
An example of a strategy taken is when Wal-Mart decided to become the national leader in low price merchandising in Canada
and the U.S. from its original small southern U.S. based chain of retail discount stores. To accomplish this, they had to reduce
inventory, delivery times, and distribution costs and create a satellite-based distribution system. They had to use SWOT analysis
and PEST analysis to create a strategy to achieve their goals.
When it comes to strategic planning, there are three types of strategy. First there is corporate level strategy. The purpose of
corporate level strategy is to answer the questions “what business are we in?” and what business should we be in?” When
these questions can be answered, it will help chart a long-term course for the whole organization.
The next level of strategy is the business level strategy. The question that is most asked is “how do we compete?” The business
level strategy focuses on how each product line within an organization competes for customers. Once decisions have been
made, a certain amount of money has to be put towards advertising, product research and development, equipment needed, and
whether to expand or contract existing product lines. For organizations in multiple businesses, each division will have its strategy
that defines the products or services it will offer and the customers it wants to reach 17.
The final level of strategy is the functional level strategy. Functional level strategy focuses on the major company activities
like finance, human resources management, marketing, production, research and development. It seeks to determine how to
support the business level strategy.
Corporate Level
Strategy
“What
business
are we in?”
“What business
should we be in?”
Business Level
Strategy
“How do we compete?”
Functional Level
Strategy
“How do we support business level strategy?”
R&D
Finance
Marketing
Human Resources
Production
Figure 9 - The three levels of strategy
Step 4: Implement the Strategy
When the strategy is implemented, you’re turning the strategy into actions and results. This requires that the management
process of planning, organizing, leading and controlling be taken into action.
Step 5: Evaluate Performance and Correct as Needed
Once strategy has been implemented, there has to be constant assessing of progress made, to make sure that the strategic goals
are being met. If this is not the case, then the company has to take corrective action. Management should also ensure that all
personnel in the company are contributing in a helpful and useful way to ensure that the strategy that has been implemented is
being followed.
17
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000), p. 179
24
KEY TERMS
Mission Statement
Strategic management
Strategic planning
WEB LINKS
What should our mission statement say?
http://www.nonprofits.org/npofaq/03/21.html
Strategic Planning: Business Strategy, Strategic Planners, Strategic Plans, etc.
http://www.planware.org/strategy.htm
Business.com - Strategic Planning
http://www.business.com/directory/management/strategic_planning/
HowBIZworks – Building Your Marketing Plan (see PEST)
http://biz.howstuffworks.com/marketing-plan.htm
25
5. Decision Making
What is Decision Making?
D
ecision making is the process of identifying problems and opportunities, developing alternative solutions, choosing an
alternative, and implementing it. In making the decision, a manager is reaching a conclusion - based on considering a
number of options or alternatives.18 In management, the terms decision making and problem solving are the same because
managers, very often, have to make decisions to solve problems.
All managers’ job has to deal with the process of decision making. A manager has to make decisions in relation to the five
management functions which are planning, organizing, staffing, leading and controlling. Therefore, the process of decision
making is considered as a common core for the other functions which are illustrated below.
Planning
Organizing
What is the mission of the organization? What should it be?
What are the needs of the customers?
What are the organization’s strengths, weaknesses, threats, and opportunities?
What are the strategic, tactical, and operational goals?
What strategies will achieve the goals?
What organizational option will best achieve the objectives?
What type of departmental structure will result in teamwork?
How many employees should report to a manager?
When should a manager delegate authority? How much?
Staffing
How many employees will we need this year?
What knowledge, skills, and abilities are necessary to do this job?
What type of training will best prepare the employee?
How can we improve the quality of the performance appraisal system?
Leading
What can we do to have motivated employees?
What style of leadership is the most effective with an individual?
What strategies are available to manage conflict?
How can we build teams?
Controlling
What tasks in the organization need to be controlled?
Which control technique is the most effective for monitoring finances?
What is the effect of controls on employee behaviour?
How do we establish acceptable standards of performance?
Figure 10 - Decision making in the five management functions 19
18
19
Plunkett, Attner, Allen, Management - Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.192
Plunkett, Attner, Allen, Management - Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.194
26
The Decision Making Process
The decision making process is composed of eight steps that one has to follow and which are all essential in order to process
effectively. In doing so, the decisions to be taken become easier, structured and logical.
Step 1 - is to define the problem or opportunity.
First of all, a problem has to exist in order to solve it. The identification of the problem has to be subjective but it remains a
simple not to say insignificant step of decision making.
Step 2 - is to identify the decision criteria.
When a problem has been identified, it needs attention and the decision criteria to solve it also has to be identified. Criteria
such as price, product model, product warranties, product options, and service support will help the manager to take the proper
decision.
Step 3 - is to allocate weight to the criteria.
The previous criteria have to be put in weighted order. Of course, it is wise to give first the most important criteria and to give it
all the power it needs to influence the decision. Your personal judgement will give the criteria the right priority.
Step 4 - is to develop alternatives.
All decisions that have to be taken always need alternatives. It is not necessary to evaluate those alternatives; all they need is
to be listed.
Step 5 - is to analyze alternatives.
It is the decision maker who analyses each alternative according to the weights and priorities of each. They have to be
compared and evaluated to the criteria in order to take the most advantageous decision for both the buyer and the user.
Step 6 - is to select the best alternative.
This step is the most important one. All the factors have been evaluated and now a decision has to be taken. It not always
easy since two or more alternatives can be equally viable. The right solution that comes out is the one that will be applied in
order to solve the problem.
Step 7 - is to implement the decision.
Even if you think that the solution is right, it still may fail if it is not implemented properly. Implementation includes conveying the
decision to those affected and getting their commitment to it. 20
Step 8 - is to establish a certain control and evaluation system.
The last step is to analyze if the decision taken has been working effectively. Is the situation has been improved? Is the user
satisfied and more productive?
Environmental Influences
When a decision has to be made, environmental factors will need to be considered along with the level of certainty.
Degree of Certainty
It is under the conditions of certainty, risk, or uncertainty that decisions are made. In some situations, the manager knows the
consequences of the decision about to be made.
Uncertainty is very difficult for anyone who has to make a decision. When the manager cannot evaluate precisely the
consequences of alternatives, the decision is then risky. For example, an important shipment of bananas is supposed to be
delivered to a well-patronized grocery store because the next day a big sale was announced. The bananas have not arrived but
the manager in charge of the shipment knows that the shipment truck was effectively sent to deliver those bananas. The
consumer is very impatient and nervous and he puts a lot of pressure on the manager to get his or her bananas. What should the
manager do? Send a new shipment which will involve a lot of money because of the waste of a full truck of bananas or wait one
20
Robbins, Coulter, Stuart-Kotze, Management - (Canadian Sixth Edition, 2000), p.135
27
more day hoping that the first shipment will reach its destination? Whatever he will decide, he knows that the consumer will be
angry. Are there any other alternatives? Uncertainty is the most difficult factor for a manager because the decision is taken on
risk.
Internal Environment
Decisions cannot solve problems or seize opportunities unless they receive acceptance and support. A manager’s decisionmaking environment is influenced by support (or lack of support) from superiors, subordinates, and organizational systems.21
A very important factor in a manager’s decision comes from their superiors’ influence. They want to be fully informed on
progress and they will then support the decision if they have confidence in the manager.
Employees will also influence the manager’s decision. The way they work, the time spent on work, and the people they work with
will affect directly his decision. The degree of involvement the manager has from subordinates will also determine the success of
the decision.
The last element which affects decision making is the organizational system. Because of its different rules, programs, procedures
and policies, it may automatically put a barrier to the manager’s decision. In this kind of situation, it is better to take the right
decision and then try to change or modify the system.
External Environment
The external environment like customers, competitors, government agencies and society in general influences strongly a
manager’s decision. It seems that customers are the most powerful factor in a decision. As for competitors, they force a
company to adjust their criteria in order to attract customers to them.
Decision Making in Groups
In organizations, it is possible to make decisions by one person or a group of people. Generally speaking, an important decision
will be taken by a team. It is proved that a manager spends hours in meetings in order to consult and have others’ opinion. The
advantages of taking a group decision are as follows:




The information is more complete;
It generates more choices;
It increases the chances for a decision to be accepted;
The legal aspect of a decision is more respected.
It may also include some disadvantages:
 It takes more time to decide as a group;
 The negative way of thinking (i.e.: pessimism);
 Too many people might share the final responsibility.
Techniques for improving group decision making:
Brainstorming - is a technique to put down all the ideas and alternatives of the participants in relation to the main problem
without any criticism. The pressures for conformity are overcomed. For example, when it is the time for a student to write an
essay, a brainstorming is an efficient step to organize the ideas and to produce good results.
Nominal group technique (NGT) – is a technique where ideas are expressed silently. Each idea is presented one after another
in order to be all heard by the team. There won’t be any discussion until everyone has delivered their idea.
Delphi technique – is similar to NGT except that it does not allow group members to meet face to face and therefore does not
require the physical presence of the group members. In the Delphi technique, the problem is identified and members are asked
to provide possible solutions through a series of carefully designed questionnaires.22
21
Plunkett, Attner, Allen, Management - Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.205
22
Robbins, Coulter, Stuart-Kotze, Management - (Canadian Sixth Edition, 2000), p.150
28
Quantitative techniques – are tools regarding the application of a decision. Such tools include decision trees, payback analysis
and simulations.
Decision Trees: is a graphic illustrating the steps that should be taken by a manager and the relation of those steps with
other events.
Payback Analysis: is a table showing how long will take each alternative to pay back its initial cost. Of course, the shorter
time it takes to pay back the costs, the better the alternative.
Simulations: is a model of a real activity or process. When a process is simulated, a model is created and will behave like
that process. Models may be physical or abstract. 23
Making Effective Managerial Decisions
To create a more effective decision making environment, a manager has to use some tricks and tips to overcome stress, and
organizational challenges and complexity. Such tricks help to surround a well-balanced decision making process.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Time is needed; not to push others.
Self-confidence; this quality is essential for a manager to make risky decisions.
Encouragement; subordinates have to be encouraged to act.
Experience; the use of others’ experiences is a gain that should not be neglected.
Discernment; it is necessary to evaluate the risk or priority and also the source of information.
Firm decision; once a decision has been made, stick to it and be prepared for positive and negative questioning.
Time to hold off; when we realize that a decision is not required at this point in time.
Be willing; be ready to take action.
Ask for help; be wise and ask for assistance if needed.
Some other techniques can help one to avoid potential problems. By increasing your knowledge, by using your intuition, by not
overstressing the finality of your decision, by making sure that the timing is right and last but not the less, and by being creative
you can improve your decision making. Being creative involves the development of original and novel responses to a problem.
23
Plunkett, Attner, Allen, Management - Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.217-218
29
KEY TERMS
Brainstorming
Decision Making
Delphi Technique
Nominal Group Technique
Quantitative Techniques
WEB LINKS
Decision Tools
http://idecide.decisivetools.com/www2/default.asp?Page=/idecide2000/default.htm
Ubmail – Applied Management Science
http://www.ubmail.ubalt.edu/~harsham/opre640/opre640.htm#rormaDecscience
Enquire Within – Management Decision Making
http://www.enquirewithin.co.nz/decision.htm
Mind Tools – Decision Tree Analysis
http://www.mindtools.com/dectree.html
Harcourt College – Managerial Decision Making
http://www.harcourtcollege.com/management/students/decision.htm#Brainstorming
Institute for Strategic Clarity – Decision Making Process Map
http://www.instituteforstrategicclarity.org/dmp.htm
30
PART
III
ORGANISING
6. Organisational Structure and Design
What is Organisational Structure and Design?
O



rganisational structure and design is a function of organising that involves structuring the resources of an
organisation to achieve objectives. Organising, along with planning, leadership, and control, is regarded as a primary
management function. In organisational structure and design, organising includes the following:
dividing tasks into jobs;
assigning jobs, clustering jobs into units, departments, etc., to form the shape of the organisation;
delegating authority and establishing a chain of command.
Organisational Structure defined
An organisation's structure involves the development of jobs and departments that direct the behaviour of employees to work
towards achieving the goals of the organisation. Managers perform the function of planning to determine what is to be done and
when; organising the structure of an organisation enables us to specify who will accomplish this and how. An organisational
structure is a structure by which job tasks are divided, grouped, coordinated.
Organisational Design defined
Which design is finally agreed upon depends on a number of decisions. Organisational design is a process that involves seven
key elements of structure: work specialisation, departmentalisation, chain of command, span of control, authority and
responsibility, centralisation and decentralisation, and formalisation. The objectives of organisational design for any manager are
to:




Respond to change - for the company to stay competitive, they must respond to changes in the environment as well as
changes that emerge from new developments.
Integrate new elements - new positions and new departments must be integrated into the design of the organisation as they
grow, evolve, and respond.
Coordinate the components - all departments need to be tied together to ensure coordination and collaboration across
departments.
Encourage flexibility - managers and employees need to have the ability to respond to change.
Specialisation
Work specialisation was first introduced back in the 1700's when economist Adam Smith published the Wealth of Nations. He
advocated that jobs should be divided into smaller parts and that is just what work specialisation (or division of labour) is. The
job is broken down into a counted number of steps, divided into separate jobs, and completed by a separate individual. In
essence, the entire job is done by a number of individuals with each individual specialising in doing a part of the job.
Dividing tasks into narrow specialities can give benefit from the division of labour by making efficient use of the diversity of
skills that workers hold. Some tasks may require highly developed skills while others may only require lower skill levels.
However, this division of labour can also generate problems such as boredom, fatigue, and stress in employees which can lead to
low productivity, poor work quality, increased absenteeism, and high staff turnover. Current approaches have evolved to
overcome these problems in the workplace and they include multiskilling, job rotation, working in teams, etc.
31
Departmentalisation
Once jobs have been divided up through work specialisation, they then have to be grouped back together so that common tasks
can be coordinated. Departmentalisation is the basis on which jobs are grouped in order to accomplish the organisation's
goals. This coordination is facilitated by putting specialists together in departments under the direction of a manager.
Every organisation will have its own specific way of classifying and grouping work activities. Several approaches to
departmentalisation are functional (process, knowledge), product, customer, and geographic. The last three types are market
related where there is a trade-off between customer focus and specialist knowledge. There is often an aggregation of
departments into divisions or firms in very large organisations. These divisions often function as semi-independent organisations
or business units.
Chain of Command
Chain of command is the linking together of employees in an unbroken line of authority that extends from the upper levels of
an organisation down to the lowest levels and clarifies who reports to whom. This establishes a reporting relationship and is
guided on the principle that no person should report to more than one boss. It helps determine who employees should go to if
they have a problem and also to whom they are responsible. There are three concepts to the chain of command of which are:



Authority - refers to the rights inherent in a managerial position which expects orders to be obeyed
Responsibility - the obligation or expectation to perform.
Unity of command - the management principle that no person should report to more than one boss. A subordinate
should have one and only one superior to whom he or she is directly responsible.
Span of control
The span of control is concerned with how many subordinates a manager can effectively and efficiently supervise or direct. The
most effective and efficient span of control is determined by looking at several contingency variables. For example, the more
training and experience subordinates have, the less direct supervisors they will need. Therefore, managers who have well-trained
and experienced employees can function quite well with a wider span. Other contingency variables that can determine the
appropriate span include similarity of subordinate tasks, the complexity of those tasks, the physical proximity of the
organisation's Management Information Systems, the strengths of the organisation's culture, and the preferred style of the
manager.
Authority and Responsibility
Authority refers to the rights inherent in a managerial position to give orders and to expect the orders to be followed. Each
manager is granted a certain degree of authority to meet his or her responsibilities. Authority is in relation to one's position
within an organisation and ignores the personal characteristics of the individual manager.
There are two forms of authority described as follows:


Line authority - permits a manager to direct or supervise the work of an employee. As a link in the chain of command, a
manager with line authority has the right to direct the work of employees and to make certain decisions without
consulting anyone. Of course, in the chain of command, every manager is also subject to the direction of his or her
supervisor.
Staff authority - these positions have some authority but are mainly created to support, assist, advise, and generally reduce
some of the organisation's financial burdens.
When managers delegate authority, they must also allocate responsibility. Therefore, when employees are given the right to do
something they also assume a corresponding obligation to perform their assigned activity which is known as responsibility.
Centralisation and Decentralisation
Centralisation is the degree to which decision making is concentrated in the upper or central level of the organisation whereas
decentralisation is the handing down of decision making authority to lower levels in an organisation. Centralisation and
decentralisation is not an either-or-concept. Instead it's rated on a degree factor which means that no organisation is completely
centralised or decentralised. Few organisations could function effectively if all of the decisions were made only by top
32
management. On the other side, no organisation could function effectively if all decisions were delegated to the lowest employee
levels.
Formalisation
Formalisation is the extent to which rules of the organisation dominate activities. It refers to the degree to which jobs within
the organisation are standardized and the extent to which employee behaviour is guided by rules and procedures. In a highly
formalised setting, the person doing a job has a minimum amount of discretion over what is to be done, when it's to be done,
and how it should be done. With high formalisation comes explicit job descriptions, a lot of organisational rules, and clearly
defined procedures covering work processes. Where there is low formalisation, job behaviours are relatively non-structured and
employees have a great deal of freedom in how they do their work.
Design Applications
Simple Structure
A simple structure is an organisational design that is low in complexity, has little formalisation, but is high in centralisation;
decision making is usually done by a single person, the owner. This structure consists of the business' owner(s) and its
employees and is defined more by what it is not than what it is; the fact is that the simple structure is not an elaborate one. If
you notice an organisation that appears to have almost no structure, it is probably of the simple variety which means that the
work specialisation is low, few rules govern the operations, and authority is centralised.
The simple structure is a flat organisation because it normally has only two or three vertical levels, an informal arrangement of
employees, and centralised decision making authority. This type of structure is more widely used in smaller businesses in which
the manager and owner are often the same person.
The obvious strengths of the simple structure are that it is fast, flexible, inexpensive to maintain, and accountability is clear.
However, its one major weakness is that it is effective only in small organisations. It becomes more and more inadequate as an
organisation grows because high centralisation and low formalisation creates information overload at the top meaning that there
is too much information for top management to handle. As the size of the organisation grows, decision making will usually
become slower and may eventually come to a standstill as the single executive tries to continue making all the decisions; the
structure would have to be changed and made more elaborate so that the organisation can prosper.
Bureaucracy
Many organisations cannot remain simple structures whether it is by choice or because of structural contingency factors. As a
company boosts its sales and production volume, it will generally reach a point at which more employees are needed to help cope
with the additional duties and requirements of operating at increased volume. And as the number of employees rises, the
organisation tends to be more formalised. The organisation becomes increasingly bureaucratic when rules and regulations are
introduced, jobs become specialised, departments are created and levels of management are added.
A bureaucracy is formed when an organisational arrangement is based on order, logic, and the legitimate use of authority. The
functional and divisional structures are the two most popular bureaucratic design options that grew out of the function and product
departmentalisations.
Functional Structure
The functional structure's primary focus is on achieving the efficiencies of the division of labour by grouping similar specialists
or related occupational specialties together in a functional grouping. This structure expands the concept of functional
departmentalisation to make it the dominant form for the entire organisation; the strength of the functional structure lies in the
cost-saving advantages that accrue from work specialisation which results in economies of scale, minimized duplication of
personnel and equipment. It also makes employees more comfortable because they are with others who 'talk the same language'.
The biggest, and most obvious, weakness to this structure is that the organisation can lose sight of its overall interests in the
pursuit of functional goals. Another disadvantage is that the employees may have little understanding of and concern for the
specialty areas outside their own functional area which can lead to barriers in communication, cooperation, and coordination.
33
Divisional structure
Divisional structure groups departments based on organisational outputs which creates self-contained, autonomous (within
given parameters) units or divisions with a division manager responsible for performance and conducting complete strategic and
operational decision making authority over his or her unit. A central headquarters provides support services, such as financial
and legal services, to the divisions as well as acting as an external overseer to coordinate and control the various divisions.
The main advantage of the divisional structure is that it focuses on results. The division executives have full responsibility over
what happens to their products or services and the divisional structure also frees the headquarters staff from having to be
concerned with day-to-day operating details so that they can pay attention to long-term and strategic planning.
The major disadvantage of this approach is the duplication of activities and resources, such as marketing, research and
development, and production, which increases the organisation's costs and reduces efficiency.
In response to marketplace demands for being lean, flexible, and innovative, many managers today are finding creative ways to
structure and organise their own and to make their organisations more responsive to the needs of customers, employees, and
other organisational constituents.
Matrix Structure
The matrix structure was developed by companies in the US aerospace industry to help them cope with the demands of
efficiently and effectively managing a number of concurrent projects. The matrix structure is an organisational design that
combines and utilises functional and divisional chains of command simultaneously in the same part of the organisation. It is a
structural design that assigns specialists from different functional departments to work on one or more projects led by a project
manager. To achieve this combination, this structure employs lines of authority.
The term matrix comes from the addition of a vertical dimension to the traditional horizontal functional departments which, in
effect, wove together elements of functional and product departmentalisation.
A unique aspect of the matrix structure is that it creates a dual chain of command. Employees have at least two bosses; their
functional departmental manager and their project manager. Authority is shared by the two managers, except that the project
manager is given authority over project employees relative to the project's goals and the functional manager has responsibilities
to make decisions about matters such as promotions, salary recommendations and annual reviews. To effectively work together,
the project and functional managers must have regular communication as well as coordinate the expectations from their
common employees.
Some advantages of the matrix structure are that:



it increases the motivation of individual employees;
the achievement of goals brings a sense of commitment and satisfaction;
it also provides training in functional and general management skills.
The matrix structure has also proven to be flexible because teams can be created, changed, and dissolved without a major
problem; this demonstrates increased communication and coordination.
A disadvantage to the matrix structure is that potential conflict, confusion, and frustration can be created by the dual chain of
command (i.e. employees have two bosses).
Team-Based Structure
The team-based structure may be the most potentially powerful approach to organisational structure because it organises
separate functions or processes into a group based on one overall objective. It takes direct aim at the different design
applications whether it be functional, divisional, or matrix and flattens it.
Companies who adopt the team-based structure push authority down to lower levels through supporting employee
empowerment and holding the team responsible for all work activity and performance results in their respective areas. In
implementing team structures, team departments are created where the team members represent different functions or processes
of the organisation and are grouped together. They are then accountable for their performance. In so doing, the company
becomes decentralised.
34
Advantages of the team structure include:
 breaks down barriers of communication and invites compromise between the different departments;
 speeds up decision making and response time;
 employees are strongly motivated;
 results in enthusiasm and commitment in taking on a responsibility for a project and not just a simple task;
 lower administration costs because of the elimination of levels of managers;
 and finally, it is an improvement over the matrix structure because it does not involve the problem of dual reporting.
If there has to be a disadvantage to the team-based structure, it would have to be that if the company does not provide training,
then performance can suffer. The team-based structure depends on employees who learn and train for success.
Autonomous Business Units
Autonomous business units are decentralised business units that each have their own products, clients, competitors, and profit
goals. These numerous business units or divisions are owned by large organisations that have adopted the structure of
autonomous business units. Top-level managers evaluate these units as if they were free-standing companies (i.e. independent).
Autonomous business units may sound very similar to the divisional structure under the bureaucracy organisational design,
however, the key difference is that these business units are autonomous; there is neither the centralised control nor the resource
allocation that one would find in the divisional structure arrangement.
Boundaryless Organisations
The boundaryless organisation is an organisational design application that is not defined or limited by boundaries imposed
from a predefined structure. Boundaryless organisations are flatter organisations and they also attempt to eliminate vertical,
horizontal, and inter-organisational barriers. This type of horizontal organisation requires multidisciplinary work teams that have
the authority to make the necessary decisions and be held accountable for measurable outcomes. The factors that have
contributed to the rise of boundaryless organisations are the globalisation of markets and competitors. The need best served by
boundaryless organisations is the ability to respond and adopt to the complex and dynamic environment.
35
KEY TERMS
Authority
Autonomous Business Units
Boundaryless Organisation
Chain Of Command
Decentralisation
Departmentalisation
Divisional Structure
Formalisation
Functional Structure
Matrix Structure
Organisational Design
Organisational Structure
WEB LINKS
Organizational Design & Structure
http://www.liebowitzassoc.com/articles/organizrestructuring.shtml
Organizational Structure & Design (PDF file)
http://faculty.mstm.okstate.edu/~eastman/mgmt5113/orgstr.pdf
36
Simple Structure
Span Of Control
Team-Based Structure
7. Organisational Culture
What is Organizational Culture?
O
rganizational Culture is a dynamic system of shared values, beliefs, philosophies, experiences, habits, expectations,
norms, and behaviours that give an organization its distinctive character24. This system defines what is important to the
organization, the way decisions are made, the methods of communication, the degree of structure, the freedom to
function independently, how people should behave, how they should interact with each other, and for what they should be
striving. Furthermore, each organization has a unique culture because each has its own beliefs, values, and norms.
There are three factors that shape organizational culture: cultural artifacts, patterns of behaviour, and values and beliefs.
Cultural artifacts are the obvious signs and symbols of corporate culture, such as written rules, office layouts, and
organizational structure25. Patterns of behaviour include ceremonial events, written and spoken comments, and the actual
behaviours in which the firm’s managers and other employees engage 26. Values and beliefs are guiding standards that lay out
“what ought to be” as distinct from “what is” 27.
Factors Shaping Culture
Even if each company has its unique culture, there are seven culture-shaping factors found in many organizations:







Key organizational processes, which are the processes people follow to gather information, communicate, make decisions,
manage work flow, and produce goods or services.
Dominant coalition, include the objectives, strategies, personal characteristics, and interrelationships of the organizations’
managers.
Employees and other tangible assets are the resources (employee population, plant, offices, equipment, tools, land, inventory, and
money) that the organization uses in order to carry out its activities.
Formal organizational arrangements involve the formal structure of the organization and its rules and procedures that organize
tasks and individuals.
Social system, which is the set of employee relationships that relate to power, affiliation, and trust.
Technology includes the major technological processes and equipment that employees use and how they use them.
External environment is how suppliers, markets, competitors, the economy, regulators, and other factors outside an
organization affect its goals, resources, and processes.
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.294
25 Dessler, Starke, Cyr, Management – Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.78
26 Dessler, Starke, Cyr, Management – Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.79
27 Dessler, Starke, Cyr, Management – Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.79
24
37
Employees
and Other
Tangible
Assets
External Environment
Dominant
Coalition
Formal
Organizational
Arrangements
Organizational
Culture
Technology
Social System
Key
Organizational
Processes
Figure 11 - Factors shaping culture
Dimensions of Organizational Culture
The organization and the way organizational members do their work are often shaped by a cultural dimension that rises above
the others in many organizations that have strong cultures. Strong cultures are organizations in which the key values are
intensely held and widely shared28. Organizational personalities include strong risk-taking personalities, strong attention-to-detail
personalities, strong outcome-orientation personalities, strong people-orientation personalities, strong team-orientation
personalities, strong aggressiveness personalities, and strong non-stability personalities.
Innovation and
Risk Taking
Attention to
Detail
Stability
Outcome
Orientation
Organizational
Culture
People
Orientation
Aggressiveness
Team Orientation
Figure 12 - Dimensions of organizational culture
28
Robbins, Coulter, Stuart-Kotze, Management, (Pentice Hall, 1999), p.55
38
Strong Risk-Taking Personalities are seen in organizations that encourage employees to take risks.
Strong Attention-to-Detail Personalities are seen in organizations that focus only on the details of the business
Strong Outcome-Orientation Personalities are seen in organizations that focus on results or outcomes such as customer
service. An example of this personality is Ben & Jerry’s homemade ice cream. This company focuses on maintaining high
ethical standards and behaving in a socially responsible fashion.
Strong People-Orientation Personalities are seen in organizations that have made their employees a central part of their
cultures. An example of this personality is present at Hewlett Packard. This company was committed to recognize and respect
the personal worth of employees and allow them to share in the success of the company.
Strong Team-Orientation Personalities are seen in organizations that focus on team concept. An example of this personality
includes Colgate-Palmolive’s Cambridge. All the employees at this company are members of self-managed or cross-functional
teams.
Strong Aggressiveness Personalities are seen in organizations where aggressiveness dominates. An example of this
personality is found at Microsoft. This company is regularly characterized as epitomizing the best and worst characteristics of
the entrepreneurial spirit.
Strong Non-Stability Personalities are seen in organizations that define their cultures by their overwhelming emphasis on
growth. An example of this personality includes Samsung Group. This company is already South Korea’s largest business group,
with operations in electronics, chemicals, finance, and heavy machinery.
How does Organizational Culture Manifest Itself?
An organization’s culture manifests itself in various ways. The evidence of culture include statements of principle, expectations
of employees, signs, symbols, slogans, ceremonies, stories, working climate, and the physical environment.
Statement of Principle: Many years ago Forrest Mars established fundamental beliefs for the company. Mars’s principles are:





Quality - which is everywhere and everyone’s responsibility;
Responsibility - where all employees are responsible for results, exercising initiative, and
making decisions;
Mutuality - where employees are to act so that everyone can win;
Efficiency - which means using fewer resources than the competitors to create the same level of output;
Freedom - where the company allows employees to remain free.
Expectations of Employees: Employees are expected to embrace a company’s culture. They should also help redefine and
shape culture as it evolves over time.
Signs, Symbols, and Slogans: Signs and symbols are the activities in an organization such as profit sharing or managers’ actions
that symbolize what is valued29. They are used in strong-culture firms to create and sustain the company’s culture. A slogan is a
phrase or saying that clearly expresses a key organizational value 30. However, a slogan is not a company’s advertising campaign.
The slogan is genuinely backed by the actions of the company and becomes a company value.
Ceremonies: Managers hold ceremonies to exemplify and reinforce company values. Many companies use ceremonies to mark
special events and they increase the employees’ identification with the organization’s values.
Stories: They illustrate important company values and are used to reinforce the firm’s culture.
Dessler, Starke, Cyr, Management – Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.79
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.299
29
30
39
The Working Climate: Is the quality of the work environment experienced by employees. Climate is also a function of how
workers feel about the organization.
The Physical Environment: Includes the setting or geographic location in which an organization chooses to operate in. For
example, a company may include a park with pic-nic tables for employees or a playground and day-care center for employees that
have children.
Creating Culture
Culture is created by managers and employees. Each has a contributing role.
Role of Managers
Managers set the tone, control the resources, and have the means to influence results. Management helps to create culture in the
following ways:






Clearly defining the company’s mission and goals;
Identifying the core values;
Determining the amount of individual autonomy and the degree to which people work
separately or in groups;
Structuring the work in accordance with the corporation’s values to achieve its goals;
Developing reward systems that reinforce the values and goals;
Creating methods of socialization that will bring new workers inside the culture and
reinforce the culture for existing workers.
If applied correctly, the organization will have a healthy, dynamic culture.
Role of Employees
Employees contribute to organizational culture to the extent that they accept and adopt the culture or by helping to shape the
values it embodies. Also, workers play a role in influencing organizational culture by forming subcultures. A subculture is a unit
within an organization that is based on the shared values, norms, and beliefs of its members 31.
Practical Ways to Build a Culture
Here are some ways that will help build culture:









Create orientation and ongoing training programs that have ideological as well as practical
content, teaching such things as values, norms, and traditions;
Promote on-the-job socialization by peers and immediate supervisors;
Initiate rigorous up-through-the-ranks policies such as hiring young, promoting from within, and
shaping employees mind-set from early on;
Ensure exposure to pervasive methodology of “heroic deeds” and corporate exemplars;
Create unique language and terminology that reinforce a frame of reference and sense of
belonging to an elite group;
Develop corporate songs, cheers, affirmations, or pledges that reinforce psychological
commitment;
Initiate tight screening processes, either during hiring or within the first few years of
employment;
Provide incentive and advancement criteria explicitly linked to fit with the corporate ideology;
Provide awards, contests, and public recognition that reward those who display great effort
consistent with the ideology;
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002),
p.305
31
40




Have tolerance for honest mistakes that do not breach the company’s ideology
Create buy-in mechanisms;
Design plant and office layouts that reinforce norms and values;
Place constant verbal and written emphasis on corporate value, heritage, and the sense of
belonging to something special.
KEY TERMS
Cultural Artifacts
Organizational Culture
WEB LINKS
Individual Personality And Organizational Culture Or "Let's Change This Place So I Feel More
Comfortable"
http://pamij.com/barkdoll.html
Organizational Culture
http://mapnp.org/library/org_thry/culture/culture.htm
Total Quality Communication - "Customer" Decision Making
http://129.113.160.149/comm2002/Textbook/Chapter04.html
Toolpack Consulting – Organizational Culture
http://toolpack.com/culture.html
41
8. Workforce Diversity
E
mployees in an organization are heterogeneous. They possess different characteristics that make them unique such as, but
not limited to gender, age, cultural and national origin, sexual orientation, mental and physical capability, or ethnicity.
Different Bases for Diversity
It is important for managers to understand diversity in the workforce since demographics are changing and minority groups will
be much more predominant in organizations. Managers must understand the population so that they can be better prepared to
manage a diverse workforce.



The Canadian population is made up of different ethnic groups; people with a British origin make up 40%, French origin
27%, other European backgrounds 20%, Amerindian 1.5%, and other, mostly Asian, 11.5%.
Statistics Canada forecast that Canada’s fastest growing mother language will be Chinese, along with Spanish, Arabic,
Punjabi, and Polish.
It has also been estimated that people with an aboriginal ancestry will be 4.5% of the Canadian population by 2016.32
Racial or ethnic groups: Asians, aboriginals, or other ethnic groups now comprise a significant minority of the Canadian population.
By 2005, Women will represent about 48% of the Canadian workforce.33
People with disabilities: People who suffer from mental or physical disabilities are protected from discrimination by the
Employment Equity Act of 1986. This act makes it illegal to discriminate against people who are disabled but otherwise able to
do their job. However, in Canada, 50 percent of those with physical disabilities are unemployed.
Sexual Orientation 34: It has been estimated that 10% of the population is homosexual.
Age 35: In 2016 there will be an estimated 6.3 million senior citizens and 9 to 11 million in 2041. By 2030 Canada may record
more deaths than births.
Recognising and Valuing Diversity
Managers should understand and recognise diversity since people are unique and will not be assimilated to match the views or
norms of the organization they are part of. People will not “set aside their cultural views and preferences when they come to
work. The challenge for management is, therefore, to make their organization more accommodating to diverse groups of people
by addressing different lifestyles, family needs and work styles.” 36
Managers must make their employees feel valued and appreciated for their differences, uniqueness and individuality. Each group
brings differences to the workplace. Managers must be sensitive to this and be sure that they are in a position to recognize the
different needs, values and expectations of employees without being racist, sexist or offensive.
Statistics Canada
Ebert, Griffin, Starke, Business Essentials, (Prentice Hall, 2003), p 62.
34 Ebert, Griffin, Starke, Business Essentials, (Prentice Hall, 2003), p 63.
35 Statistics Canada
36 Coulter, Robbins, Stuart-Kotze, Management, (Prentice Hall, 1999), p. 39
32
33
42
Barriers with Diversity
There are many challenges and barriers involved with managing diversity. Diversity can often lead to conflict and it is difficult to
take full advantage of the diverse workforce because of:
Ethnocentrism: “The tendency to view members of one’s own group as the center of the universe and to view other social groups
less favourable than one’s own.” 37 This is demonstrated by people who believe that their group or culture is better than others.
Stereotyping and Prejudice: A stereotype can be defined as a person who is believed to conform to a specific group or standard based
on behavioural traits or their apparent belonging or membership to a specific group. Prejudice is a judgement that is formed
based on an opinion, preference, or assumption that is formed without adequate knowledge or examination of the facts.
Prejudice generates hostility and hatred towards particular groups, races, or religions. There are often stereotypes formed
regarding older workers. They are often seen to be senile, incompetent and useless in the workforce, even though many older
workers are hard working, and high performers.
Discrimination: “Whereas prejudice means bias towards prejudging someone on stereotypical traits, discrimination refers to taking
specific actions towards a person based on the person’s group.” 38
Tokenism: This is when a superficial effort is made to accomplish a goal, such as racial integration. It could occur when a
company promotes members of a minority group to high-profile positions rather than hiring more members of the group in
question.
Gender-Role Stereotyping: Gender-Role Stereotyping associates women and men with specific jobs based on what society believes is
appropriate (e.g. secretarial rather than managerial jobs for women). This also deals with perceptions of people’s behaviours and
what our society believes to be appropriate for each.
WOMEN
Gender-Role Stereotypes
-expectations and prejudices
Limits to organizational
advancements
High Expectations from
and scrutiny by other
women
CHALLENGES IN COMMON
Discrimination in hiring, pay, and
Promotions
Pressure to conform to the majority
culture at the expense of one’s own
culture
Hostile or stressful work and
environment:
-too low visibility (e.g.,
tracked into jobs with low
responsibility, status, or opportunity
for advancement)
MINORITIES
Racial stereotypes,
ethnocentrism, and
prejudices
Bicultural stress
High expectations and
scrutiny by other members
of one’s group
Dynamics of tokenism
Seen as representative spokesperson
for all members of one’s group
Isolation or lower degree of social
acceptance
Lack of opportunities for mentoring
Figure 13 - Negative Dynamics Confronting Women and Minorities in Organizations
37
38
Certo, Owens, Sales, Modern Management in Canada (Prentice Hall, 1998), p.585
Certo, Owens, Sales, Modern Management in Canada (Prentice Hall, 1998), p.585
43
Advantages of Diversity
Diversity has many positive aspects. Members of various cultures bring different viewpoints and talents from their cultures to an
organization. Group decisions are seen to improve the quality of decision making. With a wide range of cultural and world views,
different approaches will be taken to make decisions and solve problems. This, in turn, can help increase the level of creativity
and innovation in an organization. It also helps organizations to be more competitive in the Canadian market as well as in
International markets.
When an organization diversifies its workforce, it should ensure that its group of decision makers is diverse so that the different
cultural attitudes can work together to solve problems and establish marketing strategies that will attract various groups of
customers. There may be challenges involved with a heterogeneous group working together because it is harder to reach
agreements due to the fact that there are more perspectives involved. However, this problem usually fades with time and
decreases the chance that a weak alternative will be chosen.
ADVANTAGES OF DIVERSITY IN THE WORKPLACE










Improved ability to gain and keep market share
Cost savings
Increased productivity
A more innovative workforce
Minority and women employees who are more motivated
Better quality of managers
Employees who have internalized the message that “different” does not mean “less than”
Employees who are accustomed to make use of differing world views, learning styles, and approaches
in the decision making process and in the cultivation of new ideas
Employees who have developed multicultural competencies, such as learning to recognize, surface,
discuss, and work through work related issues pertaining to global, cultural, or intergroup differences
A workforce that is more resilient when faced with change
Figure 14 - Advantages of a Diverse Workforce39
Managing Diversity
It is socially responsible for an organization to recruit for a diverse workforce. Managers in the recruiting process should focus
on recruiting people in places where they have not recruited before. Organizations tend to hire people who share the same
characteristics of the company’s current employees. In order to increase diversity, employers are recruiting in places where they
did not recruit before, such as training centres for persons with disabilities, over-50 clubs, or through gay rights organizations.
Many older workers who have retired are now re-entering the job market because they haven’t saved enough money to retire. In
the selection process one of the most important concerns is to ensure that the selection is not discriminatory.
Orientation is often difficult for new employees. It is even harder if the transition is made by people who don’t share
the same ethnic background, religion, race, gender or sexual orientation. Organizations try to help people adapt to these
situations by providing training sessions, mentors, or special workshops that focus on diversity issues.
Diversity Laws
Canadians are protected by many laws governing employment. The Employment Equity Act, which is overseen by the Canadian
Human Rights Commission, encourages employers to hire women, people who are disabled, aboriginals, or people who are of a
visible minority so long as they are qualified. These laws guarantee everyone has access to organizations. The Canadian Human
Rights Act also protects the population from discrimination based on, “race, national or ethnic origin, colour, religion, age, sex,
sexual orientation, marital status, family status, disability, and conviction for which a pardon has been granted.” Employers and
managers must be aware of these guidelines and laws so that they can be sure to follow them.
Companies are always working towards ways in which they can promote diversity in the workplace. Each year, an award is given
by the federal government to companies who, “do business with the government and not only comply with but exceed its
requirements for employment equity programs.” Organisations should design policies and procedures so that discrimination will
not be included in the workplace. Employees need to be aware of these policies regarding the legal aspects of diversity so that
39
Certo, Owens, Sales, Modern Management in Canada (Prentice Hall, 1998), Table 23.1 p. 583
44
they can abide by the rules set out by the organization. Some organizations provide workshops on harassment and diversity in
the workplace so that the employees are informed about the organisations views, policies, and procedures.
Strategies to Promote Diversity
Pluralism is the belief that cultural, ethnic, group, or individual differences remain distinct from each other but coexist as one
within an organization where individual differences are recognized and accepted. Diversity is effective within an organization
when managers are able to achieve pluralism.
There are five strategies used to promote diversity.
The Golden Rule Approach
This strategy is based upon “Do unto others as you would have them do unto you.” It focuses on the morality involved with
diversity and promoting diversity. The problem with this is that people apply this strategy without thinking of the other culture’s
expectations or preferences of the other person.
The Assimilation Approach
This strategy takes the existing culture of the organization and shapes the organization members to fit that culture. A concern
with this method of promoting diversity would be that the organization pressures the employees who don’t not already share that
culture to change their views. Most people are resistant to change and will not change who they are or what they believe to fit in.
Righting-the-Wrongs Approach
This approach uses things that have gone wrong in the past and trying to make them right. For example, a minority group in the
past experienced injustices which may cause them to be at a disadvantage for success in the future; this approach uses an
affirmative action approach and tries to create a more equitable set of conditions for the future.
Culture-Specific Approach
This strategy teaches employees about other cultures and practices to prepare them to interact with people of other cultures. A
negative aspect of this approach is that the employee will not necessarily appreciate another culture or their practices the way
they would have if they had actually experienced it.
Multicultural Approach
This strategy allows people to learn to appreciate one another for who they are by developing an appreciation for the variations
in cultures as well as an acceptance of individual differences. This is said to be one of the most effective approaches to pluralism
because everyone in the organization is involved in the change to comfortably accommodate the diverse workforce.
45
KEY TERMS
Discrimination
Ethnocentrism
Gender-Role Stereotyping
Pluralism
Prejudice
Stereotype
Tokenism
Workforce Diversity
WEB LINKS
Equal Employment Opportunity Commission
http://www.eeo.gov/
Gateway to Diversity
http://www.equalopportunity.on.ca/eng_g/index.asp
46
9. Staffing and Human Resource Management
Planning for Human Resources
Human resource planning consists of three activities: forecasting personnel requirements, forecasting the supply of inside and
outside candidates as well as producing plans that describe how candidates will be hired, trained and prepared for the job that is
becoming available. Due to new technologies such as computers, human resource planning has become more sophisticated.
Most firms have computerized data banks that have information about employee traits like special skills, product knowledge,
work experience, training courses, relocations restrictions and career interests. The availability of employee data makes planning
and filling positions much easier in larger corporations. It has also helped to protect the privacy of the employee data in the
system. Demand for human resources is a result of the economy’s demand for the companies’ products and services.
Management can estimate the need for personnel based on past total revenue. If they want to increase revenues they can
establish the number and mix of human resources to reach the desired revenues. In some cases the opposite may occur as well.
An example of this might be a tax consulting firm. They may find the need to hire and lay off employees depending on the time
of year and the amount of work they have to do. They make these decisions based on their need for employees and the
qualifications needed to do the job. The first step in human resource planning is job analysis. The purpose of job analysis to
prepare up to date descriptions that list the duties and skills required of each jobholder 40. Following this step managers must
review the analyses to ensure that employees aren’t duplicating the efforts of others. Some companies employ job analysts to
perform job analysis. Job analysts observe the employee performing his or her duties, review questionnaires that have been
completed by the employee or his or her supervisor, conduct interviews with both parties and form a committee to analyze and
summarize the results.
A job description states the job title and the purpose of the job. It lists major work activities, the levels of authority above and
below the jobholder, the equipment and materials the jobholder must use, and any physical demands or hazardous conditions the
job may involve41.
A job specification lists the human dimensions that a position requires which include education, experience, skills, training and
knowledge. To avoid any kind of discrimination towards future jobholders, those who create job specifications must take care to
list only those factors linked directly to successful work performance 42.
Human Resource Inventory
Human resource inventory provides an organization with information about their present personnel. The inventory is a
catalogue of the skills, abilities, interests, training, experience and the qualifications of each employee in its current workforce.
This inventory lets management be aware of the qualifications, length of service, responsibilities, experiences and promotion
potential of each employee in the company. This information is updated frequently and the most recent appraisals are added as
they are given to employees.
Human resource forecasting
When forecasting an organizations’ personnel requirements, management needs to consider the strategic plans of the company.
These strategic plans determine the company’s direction and need for employees.
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.346
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.347
42 Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.347
40
41
47
Recruitment and Selection
Recruiting is attracting a pool of viable job applicants 43. If you only have two or three applicants for two open positions you
may not have a lot of choice in who you hire. On the other hand if you have 75 to 100 applicants you can choose the applicants
who are best qualified for the jobs available.
Internal Sources of Candidates
When the thought of recruiting comes to mind one often thinks of employment agencies or classified ads. This is no longer the
recruitment trend, although it is still practiced. More and more companies are looking within their own organizations to fill open
positions. This comes with more advantages for the company, the employee already is familiar with the product or service and
when others see that there are opportunities to move up or along in the company it gives them a new goal for themselves. In
some companies the move is upward whereas others is horizontal, this depends on the structure of the company. There is a
drawback to internal candidates though. Eventually when you keep moving employees around in the same company there
maybe no new ideas implemented. When you bring in new personnel they bring new life to the company and in these cases it is
more advantageous.
Advertising is a major source of attracting applicants either through newspapers, the Internet or on bulletin boards. The
medium chosen depends on the type of job an organization is advertising for. The local newspaper is best for blue collar help,
clerical employees and lower-level administrative employees44. Professional journals are a better way to attract employees for
specialized positions.
An employment agency is an intermediary whose business is to match applicants with employers’ open positions 45. Some
agencies charge a fee for their service of matching an employer with an applicant. These days it is more common for the
employer to pay the fee than the applicant as part of the hiring process.
Executive recruiters are agencies used by employers to find top management talent; these recruiters are also known as head
hunters. Their purpose is to aid firms looking for top management material for their firms. They have a large bank of candidates
and often go out seeking a manager who is currently in a position. They also save firms’ recruiters lots of valuable time in
screening applicants.
There is another form of recruiting known as walk-in applicants. In this case the applicants literally walk into the place of work
and leave their resumes and are sometimes seen at that time. Walk-in applicants are encouraged when you see a help wanted sign
in the window.
A job posting means publicizing an open job to employees and listing its attributes such as qualifications, supervisor, working
schedule and pay rate46.
The selection process involves testing and interviewing applicants to determine if they are qualified to perform the job
advertised. The tests used should be reliable and valid. Reliability addresses whether a selection device measures the same
characteristic consistently47. An example to see if a test is reliable means that and individual’s score should remain fairly stable
over time, assuming that the characteristics being measured are also stable. Any selection device that a manager uses like an
application form or interview must demonstrate validity. There must be a proven relationship between the selection device used
and some relevant measure48. An example of this would be an employer could refuse to hire a candidate if they are incapable of
performing the tasks required in the job. A man applying for a position in the fire department can be refused if he is confined to
a wheel chair but not if he is applying for a dispatching position. Some other tests include tests of aptitude, ability, interest and of
intelligence. Also there are performance simulation tests. These tests are made up of actual job behaviours, the applicant is put
in a simulation environment and are asked to perform the tasks while being monitored by the hiring committee. Besides theses
tests there is also the interview that is most commonly used to screen applicants before hiring candidates. An interview is very
Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001) p.270
Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001) p.271
45 Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001) p.271
46 Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001) p.271
47 Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000) p.151
48 Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000) p.151
43
44
48
useful in the selection process when it structured and well organised, otherwise the interview may become biased and may not as
well be performed. When interviewing candidates there are a few elements that should be avoided to restrain any types of bias:
1.
2.
3.
4.
If the interviewer has prior knowledge of the applicant
If the interviewer favours applicants with the same attitudes
The order in which the applicants are interviewed
Negative information is given high weight
Once a candidate has been selected the orientation process can take place. Orientation is used to reduce the initial anxiety all
new employees feel as they enter a new place of employment. This is when new candidates get to see the organization as a whole
as well as finding out their specific duties and responsibilities and how their performance will be measured. Work unit
orientation makes the employee familiar with the goals of the work unit, makes clear how their job contributes to the
organization and provides an introduction to their new co-workers. Organization orientation allows the new employee to
learn about the organization’s objectives, history, philosophy, rules and procedures. This information also includes policies
about work hours, pay procedures, overtime requirements and benefits.
Training an employee involves changing skills, knowledge, attitudes and behaviour. This process could mean changing what
employees know, how they perform a certain job and their attitudes towards their job and co-workers. The management of an
organization is responsible for deciding when employees are in need of training and how to go about getting them the training
they need to be more productive and efficient.
Performance Appraisals
In some organizations performance appraisals take place every day, informally. When it is done formally for a given period and
summarized and shared it becomes a performance appraisal. This is a structured system designed within legal limits to
measure the actual job performance of an employee by comparing it to designated standards49.
Purposes of Performance Appraisal:






To provide feedback about the success or failure of previous training and to discuss further training if needed;
To develop individuals’ plans for improving their performance and help them to make the plans;
To determine rewards like pay increases, promotions, transfers or commendations depending on the performance of
the employee;
To identify areas for additional growth and methods that can be used to achieve it;
To develop and enhance the relationship between the one being evaluated and the evaluator;
To give the employee a clear understanding of where they stand in relation to the supervisors’ expectations and how
they have reached specific goals.
Components of Appraisal Systems
There are three major components in the performance appraisal system: the criteria, the rating, and the method used to
determine the rating. The criteria may include quality of work, efforts at improvement, attitudes, and quantity of output. The
rating summarizes how well the employee is performing. The methods used to determine the ratings may involve specific people
and procedures. There are four commonly used methods, which are Management By Objectives (MBO), behaviourally anchored
rating scales, 360-degree feedback, and computer monitoring. Management By Objectives requires a manager and a
subordinate to meet every now and then to agree on specific performance goals for the subordinate over a fixed time period.
MBO is evaluated by the number of goals met and how effectively and efficiently they were achieved. Behaviourally anchored
rating scales, or BARS, identifies specific behaviours that correspond to different levels of performance. Each behaviour
matches a numeric rating and the employee’s overall rating sum of the points earned in each category gives their score. The 360degree feedback method allows managers and employees to meet often to discuss the goals to be met by employees. Computer
monitoring uses technology to determine how an employee achieves the goals set out by managers. Appraisal systems may be
categorized as subjective or objective. Subjective systems allow raters to operate from their own personal points of view 50.
49
50
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.360
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.362
49
Objective performance appraisals attempt to remove rater biases51. The criteria are clearly defined and shared with the
employee in advance of the actual rating.
Excellent
Time Management
Attitude
Knowledge of job
Communication
Good
Fair
Poor




Figure 15 - Subjective performance appraisal system
Performance
Aspect
Self Improvement:
Consider the desire
to expand present
capabilities in both
depth and breadth
Attendance:
Consider the
regularity with which
the employee reports
to work
Punctuality:
Consider number of
occasions late
Work Planning:
Consider how the
work load is planned
and organized for
maximum efficiency
Rating
1
Has no
interest in
learning
additional
duties
2
Has limited
interest in
expanding job
assignments
3
Has
demonstrated
interest in
additional
assignments
4
Has shown
extra effort to
learn
additional
duties
5
Is very
inquisitive
concerning all
phases of job
related
assignments
Excessively
absent
Frequently
absent
Occasionally
absent
Rarely absent
Almost never
absent
Excessively
tardy
Frequently
tardy
Occasionally
tardy
Rarely tardy
Almost never
tardy
Unsystematic,
unable to
organize
work load
Fair on routine
but unable to
organize
variations
effectively
Efficient
under normal
conditions.
Gives priority
to important
jobs
Skilful in
organizing and
planning work.
Meets
emergencies
promptly
Exceptional
efficiency,
keeps priority
items
improper
perspective
Figure 16 - Objective performance appraisal system
Implementation of Employment Decisions
Employment decisions include promotion, transfers, demotions and separation. Promotions are job changes that lead to higher
pay and greater authority and that reward devoted, outstanding effort 52. These serve as incentives, offering promises of greater
personal growth and challenges to those who want them. Promotions are usually granted to those who show superior
performance and go beyond what is expected. In some cases past performance isn’t the only factor that is taken into
consideration when promoting an employee. Affirmative action requires that underrepresented groups such as women and
minorities be better represented at all levels within an organization 53. A transfer is the movement of an employee to a job with
similar levels of responsibility, compensation and status. This allows the employee to acquire more training and development in
the company by moving laterally in it. A demotion is a reassignment to a lower rank on the organization’s chain of command.
A demotion isn’t usually used as punishment, many employees would rather take a job of lower status and lower pay than to be
laid off. Others choose demotions to decrease stress levels and like having more freedom to pursue outside interests or to meet
challenges of caring for children or taking care of an elderly parent. A separation is the departure of an employee or it may be
voluntary or involuntary. Voluntary separations include resignations and retirements. Involuntary separations include
layoffs and firings because of declining business, personal performance or company bankruptcies.
51
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.362
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.365
53 Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.365
52
50
Compensation
Compensation includes salaries, wages, benefits, bonuses, gain sharing, profit sharing, and awards for good service.
Compensation is a way for the company to show the employees that they have proven to be valuable. There are three purposes
for compensation: to attract, retain talented performers, and to help develop employees. Companies use compensation to keep
existing employees from looking for other employment opportunities and to give them incentive to continually improve
performance. Employees who feel adequately compensated think that their time and energy being put into the company is
acknowledged.
The wages and salaries of employees are usually derived by a pay scale set up by human resource managers. They classify jobs
by the type of work involved and put a dollar amount with them depending on the skills needed, the level of education, the level
of responsibility required and the amount of training to get the job done properly. All of these elements are evaluated and a
final pay scale is implemented for the company that is competitive with other companies in the same industry. Pay scales can
vary depending on whether the firm is unionized or not. Along with the wages or salary that an employee receives from their
employer there are quite a number of benefits that may come along also. There are two groups of benefits; legally required and
voluntary. The ones legally required are social security, unemployment compensation and worker’s compensation insurance.
The ones that are voluntary include variable work schedules, life and health insurance, pension and savings plans, payment for
sick days, leaves of absence, profit sharing, and employee assistance programs. An employee assistance program may be a health
and wellness program that deals with the prevention of health-related problems. They often offer clinics to keep the staff that
they have healthy and productive. Some of the clinics may be to stop smoking, lose weight, reduce stress and financial and
psychological counselling. Most organizational benefits help to attract, develop and retain talented and committed employees.
There is another class of benefits knows as perks commonly used to attract executive position employees. Some of these perks
are shares of the company, bonuses based on overall company performance, use of the company’s airplane and residential suites,
generous travel, pay for housing, no interest loans and memberships in various clubs and associations. All of these perks have a
dollar value attached to them making them interesting for incoming executives in the company.
51
Legal issues
The following table gives an overview of the different provinces and territories’ stated restrictions on discriminating factors.
Prohibited
Grounds
Race
Religion
Age
Sex
Marital status
Physical/Mental
disabilities
Sexual orientation
National origin
Family status
Dependence on
alcohol or drugs
Ancestry
Political belief
Pardoned conviction
Source of income
Place of residence
Social condition
Language
Fed.
B.C
Alta
Sask
Man
Ont
Que
N.B
P.E.I
N.S
Nfld
N.W.T
Y.T









1

















2












3










1











1





1








4





6

1


3
1

5




1,7
1



7
1

1



1



7

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5
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Figure 17 - Prohibited Grounds of Discrimination in Employment
Any limitation, exclusion, denial, or preference may be permitted if a bona fide occupational requirement can be demonstrated.
1Complaints accepted based on policy
2Includes gender-determined characteristics
3Quebec uses term “civil status”
4Pursuant to a 1992 Ontario Court of Appeal decision, the Canadian Human Rights Commission now accepts complaints on the
grounds of sexual orientation
5Defined as nationality
6Ontario’s Code includes only “citizenship”
7Previous dependence only
8Defined as “receipt of public assistance”
52
KEY TERMS
360 degree Feed Back
Behaviourally Anchored Rating System
Benefits
Compensation
Demotion
Human Resource Inventory
Human Resource Planning
Involuntary Separation
Job Analysis
Job Description
Job Specification
Management By Objectives (MBO)
Performance Appraisal
Perks
WEB LINKS
HRM Guide USA
http://www.hrmguide.com/
HR Internet Guide
http://www.hr-guide.com/
Monster.com - The World's Leading Career Network
http://www.monster.com/
CareerBuilder.com
http://www.careerbuilder.com/
53
Promotions
Recruiting
Separation
Training
Transfer
Voluntary Separation
10. Labour-Management Relations
Working Conditions
Trouble usually begins when somebody doesn’t do something right…
Occupational health and safety accidents are both numerous and costly for employers. For example, in 1997, PCL Constructors
Canada was fined $150 000 for failing to ensure that workers were trained in the proper use of propane cylinders: an explosion at
a construction site had resulted in the death of a PCL company foreman. To prevent this kind of accident, employers are
required by law to provide working conditions that do not impair the safety or health of their employees.
The employers must ensure a work environment that protects employees from physical hazards, unhealthy conditions, and
unsafe acts of other personnel. Through effective safety and health practices, the physical and emotional well-being of employees
may be preserved and even enhanced.
Three following points are a description of what supervisors or managers can do to create a safe and healthy work environment:
1.
Become familiar with the occupational health and safety legislation governing their operations;
2.
Enforce health and safety standards throughout the organization;
3.
Protect employers from physical hazards, unhealthy conditions, and unsafe acts of other personnel.
We have seen that employers are required by law to provide healthy and safe working conditions for their employees. To achieve
these objectives, certain measures should be taken to control and eliminate health and safety hazards, namely:
-Take every reasonable precaution to ensure employee safety. The majority of employers have a formal safety program.
The success of a safety program depends largely on managers and supervisors of the operating department.
-Inform and train employees about safety and health requirements in the organization. Most organizations have a safety
awareness program that entails the use of several different media such as safety lectures, commercially produced films, specially
developed videocassettes, pamphlets and many others. Also, specifics expectations and standards concerning safety are
communicated through supervisors, bulletin-boards notices and employee handbook.
-Keep records and investigate any accidents. Every accident, even those considered minor, should be investigated by
supervisor and a member of the safety committee. This can determine the factors contributing to the accident and may reveal
what corrections are needed to prevent it from happening again.
Among the more serious issues facing employers today are dealing with ethical concerns such as:
o
o
o
Discrimination;
Sexual harassment;
Pay equity.
Discrimination means giving preference to members of certain groups such as race, religion, gender, age, national or ethnic
origin, physical handicap, or marital status.
Sexual harassment means unwelcome advances, requires for sexual favours, and other verbal or physic conduct of a sexual
nature in the working environment. For example, it is not acceptable to have a calendar on desk displaying a nude female.
Pay equity means the practice of equal pay for work of equal value. For example, if woman and man are doing substantially the
same work for the same organization or company, they must receive the same wage unless the difference in pay is due to
seniority or merit.
54
Labour Unions
Labour unions are groups of workers who have joined together to negotiate with employers about wages and working
conditions. Because a union speaks for many employees, it can get a better deal for its members that individuals could
themselves.
The reasons why employees join unions are:
1.
2.
3.
Dissatisfaction with pay and benefits;
Dissatisfaction with managerial practices;
Desire for recognition and status.
Before a union can become the legal bargaining agent for a group of workers, it must be certified by the appropriate Labour
Relations Board. For certification to occur, a majority of the workers must indicate their desire to belong to that particular
union. Once certified, the union can begin negotiations with management on issues affecting the workers, such as wages,
working conditions, work hours, job security, promotions, etc.
Unions in Canada
Unions were first organized in Canada in early decades of the 19 th century, though various economic downturns meant that most
were relatively short-lived. Today, labour unions in Canada are legally sanctioned and that membership in a union cannot be
denied by an employer or used as cause for dismissal. There are hundreds of labour unions in Canada that have an industrial
category and/or provincial/territorial basis as well as a number of national labour organizations.
Unions in Other Countries
Labour relation systems vary from country to country because unions means different thing in different countries. For example
in the United Stated labour relation involves collective bargains and labour contracts, but in Sweden and Denmark it involves
national wage setting, in Germany it involves union representation in the company’ board of directors.
Legal consideration
“Being ignorant of the law is not a valid excuse…”
Labour Laws
Laws have been written to protect both the employer and employees; these laws reflect the values of society and in some
situations have come into place because of poor management practices.
Canada has two distinct sets of legislation: federal and provincial employment laws. In addition, each province and territory has
its own legislation that covers employment standards. In the federal sector, the Canada Labour Code covers basic employment
conditions, labour relations, and health and safety. Each province and territory has relatively similar legislation that provides
certain rights and guarantees regarding employment. For example, each province has maximum limits regarding hours per day or
hour per week that a person can work before the company is obligated to pay overtime wages.
Labour Rights
Right is the ability to engage in conduct that is protected by law or social sanction, free from interference by another party. For
example, employees have the legal right to form a union.
Statutory rights are employee’s rights that are protected by specific laws enacted by government. Employee’s key statutory right
is protection from discrimination based ion race, sex, religion, national origin, age, handicap, etc.
55
Another important employee statutory right is protection from unsafe or unhealthy working conditions. In Quebec, the
Commission de la santé et de la sécurité du travail (CSST) requires employees to provide safe working conditions for workers.
Contractual rights are based on the law of contract. A contract is a legally binding promise between two or more competent
parties. Both employers and employees have right and obligations to each other when entering into a new contract agreement.
Employees often expect certain other rights in addition to statutory and contract rights. These include:
o
A right to ethical treatment (employees expect to be treated fairly and ethically in return for providing their employer
with fair and reasonable amount of work)
o
Limited rights to free speech and privacy (the right to privacy protects people from unreasonable and unwarranted
intrusion in their personal affairs.
Collective Bargaining
What is Collective Bargaining?
Collective bargaining is process of negotiating a collective agreement, including the use of economic pressures by both parties.
Four of the most important issues related to collective bargaining are:
1. barging behaviour;
2. bargaining power;
3. bargaining topics;
4. impasses in bargaining.
In each of the following areas, managers must monitor their behaviour carefully:
Barging behaviour means treating the other party reasonably even when disagreement arises. Management should develop
different proposals and suggestions for negotiating with the union instead of simply rejecting all union proposals.
Bargaining power means that both parties are likely to take opening positions that favour their goals but leave them some room
to negotiate.
Bargaining topics are classified into three categories: mandatory, permissive, and illegal.
Mandatory topics include wages, hours and employment conditions. These are the topics that both parties consider fundamental to
the organization’s labour relations.
Permissive barging topics are particular may be discussed during collective bargaining when both parties agree to do so.
Illegal bargaining topics may not be discussed in collective bargains. Examples of illegal topics are closed shop agreements,
featherbedding and discriminatory employment practices.
In reality, negotiating a collective agreement entails long hours of extensive predations combine with diplomatic manoeuvring
and the development of bargaining strategies. Collective bargaining may also include the use of economic pressures in the form
of strikes and boycotts by a union. Lockouts, plant closures, and the replacement of strikers are similar pressures used by an
employer.
56
Labour-Management Negotiations
During negotiations, it is necessary for each party to retreat sufficiently from its original position to permit an agreement to be
achieved. If this does not occur union and an employer utilize forms of bargaining power in order to enforce their bargaining
demands. Such powers include:
1.
The union’s power in collective bargains comes from its ability to strike, or boycott.
Strike is a situation in which unionized workers refuse to perform their work.
Boycott is union tactic to encourage its members to stop engaging in certain work-related activities.
2.
The employer’s power during negotiations comes from its ability to lock out employees or to operate during a strike by
using managerial or replacement employees.
Lockout is strategy by which the employer denies employees the opportunity to work by closing its
operations.
When a strike or a lockout occurs, both parties are soon affected by it. The employer will suffer a loss of profit and customer.
The union members suffer a loss of income of income that is likely to be only partially offset by strike benefits or outside
income. As the losses to each side mount, the disputing parties usually feel more pressure to achieve a successful negotiation.
Preparing for negotiations includes planning the strategy and assembling data to support bargaining proposals. This will permit
collective bargaining to be conducted in an orderly, factual and positive basis. Negotiators for both parties should develop a
written plan covering their bargaining strategy. At minimum, bargaining strategy must address the followings:
 Each side will prepare a list of goals it wishes to achieve while additionally trying to anticipate the goals desired
by the other side;
 Both employer and union negotiators will be sensitive to current bargaining patterns within the industry,
general cost-of-living trends, and geographic wage differentials;
 The collective-bargaining process includes not only the actual negotiations but also the power tactics used to
support negotiating demands.
Grievance Procedure
Grievance Procedure is a disagreement an employee has concerning a specific issue.
It typically provides for the union to represent the interest of its members in processing a complaint that something in the
collective agreement has been violated.
GRIEVANCE PROCEDURE
STEP 1
STEP 2
STEP 3
STEP 4
(ARBITRATION)
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Informal meeting to discuss grievance
Between employee and supervisor
Hard to distinguish between complaint and grievance
Verbal discussion
Written Complaint
Between supervisor & union official
Written Document
Between manager and union agent
Juridical function
Formal and legalistic
Decisions are binding and enforceable through the courts
Frequently handled by lawyers
Figure 18 - Grievance Procedure
57
STEP 1 → In order for an employee’s grievance to be considered formally, it must be expressed orally, ideally to the employee’s
immediate supervisor. If the employee feels unable to communicate effectively with the supervisor, the grievance may be taken
to the union steward, who will discuss it with the supervisor.
STEP 2 → Most collective agreements require that grievances carried beyond the initial step be stated in writing. Requiring a
written statement reduces the chance that various versions of the grievance will appear because of lapses in memory.
STEP 3 → If a grievance is to be resolved successfully, representatives of both management and the union must be able to
discuss the problem in a rational and objective manner. A grievance should not be viewed as something to be won or lost.
Rather, both sides must view the situation as attempts to solve a problem.
STEP 4 (ARBITRATION) → Arbitration is to provide the solution to a grievance that a union and an employer have been
unable to resolve by themselves. It is used only as last resort when the previous steps have failed to remedy the grievance. It is
performed by a neutral third party. An arbitrator must be acceptable to both disputing parties. Typically arbitrators are
professionals such as professors, lawyers or retired government labour arbitrators. Because of their professional background,
they tend to be identified with neither labour nor management and therefore are able to occupy a position of neutrality.
Benefits of Grievance
Union grievance procedures provide benefits to both management and employees. Specially:
o
The grievance procedure protects union employees from arbitrary management decisions.
o
The grievance procedure helps management quickly and efficiently settle conflicts that could otherwise end up in the
courts or result in work stoppages.
o
Management can use the grievance procedure as an upward communications channel to monitor and correct the
sources of employee dissatisfaction with jobs or company policies.
58
KEY TERMS
Bargaining behaviour
Bargaining power
Bargaining power
Bargaining topics
Boycott
Collective Bargaining
Contractual rights
Discrimination
Grievance procedure
Illegal topics
Labour unions
Mandatory topics
WEB LINKS
59
Pay equity
Right
Sexual harassment
Statutory rights
Strike
11. Managing Change and Development
What is Change?
C
hange is any alteration in the current work environment, such as changes in people, structure, and/or technology 54. The
manager’s job would be less complicated if it were not for changes. There would be no need for planning because everyday
would be the same. Decision making would be easy because the outcome of each alternative could be predicted with the same
result. Managers’ work would be simplified if there was no introduction of new products and services by competitors, there was
no demand for new and improved products by customers, the government did not modify the regulations, or if employees’ needs
did not change. Change is an organizational reality and handling change is an integral part of every manager’s job 55. For
example, changes in the computer industry mean that they must constantly accommodate for technological innovation. Another
example deals with companies reducing its prices. By lowering its prices, the company usually sees an increase in sales. They
would then need more employees and/or equipment to be more productive and make more efficient use of technology to meet
the needs of the company.
Sources of Changes
Change can occur in both external and internal environments. Changes in external forces result from various sources such as:

Government laws and regulations: when the government issues new legislation, organizations must adapt to it. For example,
some companies may need to provide easy access for persons with disabilities.

Technology: There are constant changes happening in technology today. Companies may need to purchase new
equipment for an assembly line or purchase new equipment to replace human workers which would lead to a change in
the labour market.

Economic changes: A recessionary pressure would force the organization to become more cost efficient.
Internal forces would include the operation of the organization itself as a result of the impact from external changes. For
example, when a manager redefines or modifies his or her strategy, it becomes a change to the organization. Forces of change in
the workforce include age, education, gender, and ethnic background. Introducing new equipment could also bring about the
need for change; employees may have to change jobs or receive training. As a result of change employees’ attitudes may include
dissatisfaction, which could lead to absenteeism and even strikes.
The Manager as Change Agent
Changes within an organization need a catalyst. People who act as catalysts and assume the responsibility for managing the
change process are called change agents56. Any manager in the organization can be a change agent. Change agents ought to
be thoughtful because they are the ones that live with the consequences of their actions. There could be other agents apart from
managers such as the internal staff or outside consultants who are experts in change implementation. The advantage of hiring
outside consultants is that they could offer ideas and perspectives that insiders usually could not see. The disadvantage is that
they would have an inadequate understanding of the organizations’ history, culture, operating procedures, and people.
Resistance to Change
There are changes occurring in everyday life and people often are resistant to these changes. The main reasons why individuals
are resistant to changes are:

Uncertainty: Uncertainty, includes the fear of the unknown. For example, when employees go into training to learn how
to use a new machine, they may be uncertain that they will be able to operate it.
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations (South-Western, 2002), p.307
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada), p.286
56 Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada), p.287
54
55
60

Fear of loss: Being afraid of losing status, money, authority, friendships, personal convenience, or other benefits they
value from the organization.

Person’s belief: Employees may believe that changes are incompatible with the goals and better good of the organization.
For example, if the change was done by the employees and not the change agent, these changes would be more
acceptable to the organization.

Loss of security: The lost of confidence when changing to new technology, new system, new procedures and new
managers.

Fear of economic loss: Afraid of layoffs or reduced wages.

Loss of power and control: The changes of the organization will cut-off top managers and for these managers they are likely
to preserve their status quo.

Reluctance to change old habits: When an employee performs the same job they may develop a habit in the way they
perform their job, and the learning of a new process requires rethinking which may prove to be hard for them.
Techniques for Overcoming Resistance

Education and communication: It is important to communicate with employees to help them see the reasons and benefits
of change. In the case of misunderstanding of information or poor communication, employees can receive the full
facts. It can be done through one-on-one discussions, memos, group meetings or reports.

Facilitation and support: This means involving employees in decision making so that they can make a meaningful
contribution. Facilitation and support to see that change can be successful and can increase the quality of the
organization.

Negotiation: To have the change agent to exchange something that is a value for a reduction of the resistance. For
example, if the change is only going to occur to the few managers they could award them with a new package that can
be negotiated to meet their need. The disadvantage is to only negotiate with one manager, the other manager can black
mail the agent.

Manipulation and co-optation: The organization gets the employees to go to a meeting, but not to give opinions only to
persuade them into accepting the changes. It is deceitful but if employees know they are being tricked it will become
worse.

Coercion: Using direct threats or force on the resistors to accept the changes.

Sensitivity: When implementing changes, managers must work with those affected to learn each employee’s concerns and
respond to them.

Security: Is to get the manager to reassure the employees that changes will not affect income and job security.
Implementing Changes
1) Changing Organizational Cultures: Organizational culture is made up of relatively stable and permanent characteristics. It tends
to make that culture very resistant to change. It can take time to form an organization culture and once it has been formed it
becomes somewhat fixed. If cultures become inappropriate to an organization, there is not much that can be done 57.
Understanding Situational Factors
Cultural changes occur when:
 A dramatic crisis occurs: The shock that undermines the status quo and calls into question the relevance of the
current cultures. An example would be the loss of a major customer or a surprising financial set back.
 Leadership changes: New top leadership can provide an alternative set of key values which may be perceived as being
more or less capable of responding to crisis. Top leadership includes the organization’s chief executives, but might
need to include all senior management.
 The organization is young and small: It is easier for management to communicate its new values when the organization
is small. When an organization is small or new, it has a culture that is more adaptable.
57
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada), p.294
61
 The culture is weak: It is easier to change weak cultures because they are more receptive to change than strong
cultures. The stronger the culture is, the higher the agreement among members on its overall value will be.
How can cultural change be accomplished:






Conduct a cultural analysis to identify cultural elements needing change;
Make it clear to employees that the organization’s survival is legitimately threatened if change is not forthcoming;
Appoint new leadership with a new vision;
Initiate a re-organization;
Introduce new stories and rituals to convey the new vision;
Change the selection and socialization processes and the evaluation and reward systems to support the new values.
2) Implementing TQM (Total Quality Management): TQM is essentially a continuous, incremental change program. TQM was
developed to find problems within an organization and to find solutions to change the problems to improve in the organization.
TQM basically focuses on customers’ needs, emphasizes participation and team work and seeks to create a culture where all
employees strive to continuously improve the organization. TQM has three main areas in which management can direct its
change efforts. These are structure, technology and people58.
Focusing the Change Effort

Structure: The organization will be decentralized in order to reduce vertical differentiation. The organization will have a
wider span of control and reduced division of labour and will support cross-functional teams. The structural change
gives employees the authority and the means to implement process improvement.

Technology: TQM is directed at developing flexible processes to support continuous improvement. The employees look
for changes to be fixed and the organization is to offer education and training to the workers. The organization
provides training skills such as problem solving, decision-making, negotiation, statistical analysis, and team building.

People: TQM requires the employees to be committed to the organization’s objectives of quality and continual
improvement. It is necessary for proper education and training for employees. People also demand supportive
performance evaluations and reward systems.
Role of the Change Agent
The role of the change agent is to study the success of TQM programs. Most studies demonstrate that the programs require
active and strong leadership from the CEO. Change agents set the vision of the organization and continually convey the
message to employees of all those involved59.
Structure
Technology
People
Decentralization
Flexible Processes
Education and Training
Reduced Vertical
Differentiation
Education and
Training of Workers
Supportive Performance
Evaluation and Reward
System
Reduced Division
of Labour
Wider Span of
Control
Cross-Functional
Teams
58
59
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada Inc), p.296
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada), p.298
62
Change Agent
Active Leadership form the
Top
3)
Re-engineering: Re-engineering is the redesign of part or all of the organization working processes. Managers reinvent
structure, technology, and people by starting from the beginning.
Organizational Development
Organizational development involves making a rough analysis of the problem and then creating and implementing long-term
solutions to solve the problems.
Purpose Organizational Development:
The purpose of organizational development is to find new systems for the organization that can effectively cope with
environmental changes and to maximize organizational effectiveness and individual work satisfaction60.
Strategies of Organizational Development:
There are many organizational development tools and strategies to choose from. The final decision depends on circumstances
such as limits on time and/or money and lack of skill at implementing a strategy.
Diagnostic Strategies:
 Consultants: To have an outsider analyse and conduct audits of existing policies, procedures, and problems.
 Surveys: Interviews or questionnaires used to assess the attitudes, complaints, problems, and needs of employees.
 Group discussions: Periodic meetings where managers look to uncover problems and sources of subordinates’
discomforts and dissatisfactions with their employees.
Change Strategies:
 Training programs: Organizations offer their employees training programs to improve or increase skill levels, change or
instil attitudes, or increase their knowledge to perform present jobs more effectively and efficiently.
 Meeting and seminars: Meetings to help define the problems and solutions in an organization.
 Grid OD: Is a leadership grid that is based on a six-phase program. The grid is designed for management and
organizational development.
7
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations (South-Western, 2002), p.324
63
KEY TERMS
Change
Change Agent
Organizational Development
Resistance to change
WEB LINKS
What is Planning? Introduction
http://www.rtpi.org.uk/planning-advice/
Thirteen Tips for Managing Change
http://www.ncrel.org/sdrs/areas/issues/educatrs/leadrshp/le5spark.htm
Organization Development - The management of change
http://www.business.com/directory/management/organization_development/
64
12. Management of Innovation
What is Innovation?
I
nnovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation
(process).61 You may have the most brilliant idea in the world but unless you turn it into something useful it will be
irrelevant.
Types of Innovation
There are three main types of innovations:
1.
Incremental Innovations - Involves small changes to existing products, services, or processes. They can simply
be enhancements. This category accounts for the most —roughly 90%—of innovations
created by businesses and individuals.
Examples include: Any of the 10,000 new products that are introduced each year in supermarkets or grocery stores.
Kraft's EasyMac microwaveable macaroni and cheese dinner would be one such incremental innovation.
2.
Radical Innovations - Are completely new creations; they didn't exist before. They have a significant impact on
consumers and people. They completely change the way people do things.
Examples include: The telephone, television, contact lenses, the microwave oven, ATM machine, Microsoft Windows
operating systems software (i.e.: Graphical User Interface as opposed to Black & White text-only monochrome
computer screens).
3.
System Innovations - Involves a complex set of changes. They are characterised by many resources and inputs.
Examples include: Hospitals (when first introduced), communication satellite networks, the space shuttle, the
international space station.
Why are Innovations important?
Innovations are important for several reasons. Let's begin by looking at whom innovation benefits:
1.
Benefits to individuals - All people, on a conscious or subconscious level, like to create. It is an instinct that we are born
with. Also, people like to be recognised for their accomplishments. When someone invents or creates something that
solves a problem or addresses a particular need, that person feels good about himself or herself.
2.
Benefits to organisations - Innovation is important for firms because the benefits are many. Innovative
firms such as 3M benefit in many ways:
- Increased Profits or Market Share
- Beating the competition
- Staying competitive
- Becoming more efficient and effective
- Improving processes to become more efficient
- It becomes easier to attract and keep qualified employees
- Gaining a positive image
61
Robbins, DeCenzo, Stuart-Kotze, Fundamentals of Management, Prentice Hall (2002), p.197
65
3.
Benefits to an industry - Collectively, many innovative firms in a given industry may spark benefits such as:
- Breathing new life in dying products or entire industries
- Improving Social Responsiveness
- Decreasing Pollution
- Spurring growth for an industry
4.
Benefits to the economy - Benefits to the economy include:
- Increased efficiency in the use of resources
- Increased economic activity
- Job Creation
- Strengthening the Labour Pool
- Provide more Diversity
5.
Benefits to the society - Innovation benefits society in many ways:
- It increases the Standard of Living
- Improves Health Care
- Improves Working Conditions
- Improves Quality of Life
- Increases the ability to expand capacity of the human mind
- Gives hope for the future
Creativity
“Creativity is only limited by the power of your imagination.”
In short, creativity is the foundation of innovation. In general usage, creativity means to combine ideas in a unique way or to
make unusual associations among ideas. 62 Creativity involves developing novel approaches to doing things or providing unique
solutions to problems. You need not be born a creative person; creativity is a simple skill that can be taught and learned by
anyone.
Barriers to Creativity
Several barriers to creativity exist; they mostly include:







Time constraints
Distractions
Concentration
Health
Direction
Voice of Judgement
Motivation/Laziness
There are ways to overcome such barriers. Heuristics to the rescue! Heuristics can be a good thinking tool to help overcome
barriers. Heuristics involves encouraging a person to learn, discover, understand, or solve problems on his or her own, as by
experimenting, evaluating possible answers or solutions, or by trial and error.
62
Robbins, DeCenzo, Stuart-Kotze, Fundamentals of Management, Prentice Hall (2002), p.197.
66
Let's take a look at a few simple heuristics that we can use to help us become more creative:
HEURISTIC # 1 (Voice of Judgement) — DESTROY JUDGEMENT, CREATE CURIOSITY
Voice of judgement, also known as VOJ, is that little voice inside your head that tells you: "be normal!" You know
it's like the Angel vs. Devil in your conscience. In most contemporary societies we are raised to, somewhat,
adhere to social norms. Moreover, if we deviate from such norms we are deemed to be judged as nonconformists! All of this contributes to a strong layer of inhibition. And the result is a beating on our creative
mental processes as a result of fear of judgement. VOJ is very destructive to creativity. The trick learn how to
silence it. By silencing the VOJ you will become familiar with just how powerful your mind really is. You must
first become familiar with how your mind works (i.e.: what are your mental thought processes?; How do you think
about things?). Each mind is unique. Your mind and your mind alone decide how it views reality and how you
decide to behave. Once you know more about this, you will become more comfortable using it in a creative and
curious way. You set the boundaries in which you think. You will increase your creativity twofold simply by
suppressing the VOJ.
HEURISTIC # 2 — PAY ATTENTION
"The mere act of observing something changes the nature of the thing observed."
Werner K. Heisenberg
(Heisenberg Uncertainty Principle)
I asked a very successful friend at our twenty-fifth alumni reunion of the Harvard Business School for his measure of success.
He said, "I learned to smell the roses."
Robert Medearis
Chairman
Silicon Valley Bank
Are you listening? Pay attention to what? How focused are you to what is happening in and around your world?
It is important for you to pay attention to what you are feeling, what you are sensing, what you are thinking, and
to the sights and sounds around you. Are you using all your senses? If you pay attention at every moment, you
form a new relationship to time. Your own absorption slows you down internally. That slowing down feeds your
sense of deep appreciation and at the same time produces more energy. In some magical way, by slowing down
you become more efficient, productive, and energetic, focusing without distraction directly on the task in front of
you. Not only do you become immersed in that moment; you become that moment.
Most people ignore or filter-out what is going on around them (also known as selectual perception). You must
learn to take it all in in order to improve your observation skills.
HEURISTIC # 3 — ASK DUMB QUESTIONS
"The only stupid question is the one you don't ask."
Have you ever noticed how kids ask dumb questions? As we grow older beyond childhood, we become afraid to
ask dumb questions because of the VOJ (Voice of Judgement). Arghhh that villain! We are afraid at what others
might think of us; we are afraid that we might appear stupid. This is the result of a fundamental lack of
confidence present in most human beings.
Implicitly or explicitly, creativity always begins with a question. And in both your business and personal lives, the
quality of your creativity is determined by the quality of your questions — by the way you frame your approaches
to circumstances, problems, needs, and opportunities. A creative approach makes life a questioning process.
In the same way, when you bring creative questioning to your life, you don't care what you find. You do it for the
adventure itself, without defining expectations.
67
HEURISTIC # 4 — IF AT FIRST YOU DON'T SUCCEED, SURRENDER
What does surrender mean? It doesn't mean to quit or give up, but rather to let go of any emotional attachment
to the final outcome. You see, when emotions take over logic and reasoning gets lost! The feeling that comes
from the act of surrendering is one of relief. The objective is to get out the inhibitor and free your mind. What
you need to do is surrender to the situation, concentrate on what is going on, and be creative and analytical.
Once you are relaxed you will gain a different view of things around you; you will see things for as a whole or
from a broader perspective.
So how do you do this? Here are a few tips and tricks:
Breathe!
 Don’t stress about the outcome
 Use Relaxation Techniques
 Be less concerned about ego and image
 Apply yourself to the task
 Maintain a spirit of inquiry
 Sleep/Exercise/Meditate/Read/Visualise…
 Allow creativity to surface
The four heuristics main purpose is to release your creative abilities. Although it will not be discussed, another
way to foster creativity is to increase your perceptual abilities.
68
Barriers to Innovation
There are essentially three types of barriers to Innovation - Personal, Structural, and Environmental:
Barrier
Personal
Lack of Knowledge,
Skills, & Abilities (KSA's)
Resistance to Change
Resources
Voice of Judgement
(VOJ)
Power
Structural
Reward System
Skill Base (missing or
disappointing)
Structure
Communication System
Philosophy concerning
R.O.I (Short-run
profitability)
Resources (shortages of)
Education
Ecology
Environmental
Government
Competition
Media
Culture
Global Influences
Society
Ways to overcome the barrier
Education, Training & Development, Practice, Simulations
Modify Attitudes and Values, Decrease Fears, Improve
Motivation, Modify Reward Systems
Improve Management Information System, Use
Technological Aids, Introduce Time Management
Techniques
Build self-confidence for Individuals, Improve Thinking Skills,
Adjust Culture (encourage openness, allow suggestions)
Empower Employees (decentralise), Change Reward
Systems, Improve access to Information
Be tolerant of failure; failure can be used as a tool (ask why
failed? - good for learning), Use Merit as opposed to
Seniority, Use Positive Reward
Improve Recruitment & Selection, Training & Development,
Introduce Job Rotations, Use Job Redesign
Decentralise (to a certain extent), Decrease formalised
Rules & Regulations that may inhibit employees
Make sure communication is free flowing in all directions,
Make communication system more efficient, Use
Technology to improve
Don't sacrifice the long-term good for short-term profitability,
Get out of short-run mentality, Set and Respect long-term
goals and objectives
Avoid organisational politics, Distribute resources wisely
Education should be Life-Long (continuous), Implement
regular Seminars & Workshops, Assure and Encourage
Professional Development
Ensure Social Responsibility, Get Community Involved with
some of your decisions
Find out about Subsidies, Grants, and Aids for your
Industry/Company Development, Anticipate Regulations,
Get involved in Government Regulatory Environment
(through Trade Associations and Lobbying Efforts), Increase
Cooperation with Government
Joint-Ventures/Strategic Alliances, Take-overs, Partner with
Competition, Erect barriers to keep competitors afar
(Patents, etc.), Develop Strong Brand Equity,
Use the Media to your Advantage, Maintain good relations
with the Media (through good Public/Press Relations),
Handle Press Releases, Inform the Media, Show how
involved you are in Social Responsibility and Giving back to
the Community
Be a Trend Setter, Use the Public, Help redefine people's
and society's cultures
Tap into the potential of Global Partners and Global
Diversity
Keep abreast of Trends (Social, Demographic, &
Consumer), Be Socially Responsible and give back to
Society
69
Managing the Innovation Process
The Innovation Process doesn't happen overnight in an organisation. It requires much planning and collaboration not just from
top management but from all employees of the organisation. When planning for innovation a firm must begin by identifying
problems or opportunities. Let's take a look at problems first and later we will discuss opportunities. The first idea relates to
Strategic Planning. A company must ask itself: "What line of business are we in?" and "What line of business should we be in?".
Here is a first place in which a problem may occur. If a company is not heading in the right direction, to begin with then it will
be difficult to be successful. Once an organisation is certain in which line of business it is in and wants to be in it should
continuously examine the following potential problem areas:
Product Line






Are sales on the decline?
Where is the product situated in the Product Life Cycle (PLC)? Is it in the decline stage?
What is our competitive position?
Is competition becoming fiercer?
What is happening in the regulatory environment (Government & Regulatory Agencies)?
How satisfied are our customers?
Transformation Process
 How old is our technology?
 Are we using our resources in the most efficient and productive manner?
 How flexible is our manufacturing process?
Administration






What are our internal problems?
Are all units of the organisation adding value?
How high are our overhead costs?
How streamlined is our sourcing/outsourcing?
Are we efficient in handling administrative functions (such as Payroll, Accounting, etc.)?
Are focussing on what we do best?
Culture




What defines our organisation culture?
Is our culture or lack thereof, stimulating or hindering innovation?
What is our attitude towards change? Are we resistant to change?
How do we handle/implement change?
After looking at the aforementioned problem areas, almost all firms will recognise the need to innovate. It is important to
reiterate that the organisation, its managers, and its employees must continuously scan for problems and seek ways to fix or
improve those problems.
Another useful tool a manager can use is an Innovation Audit. An Innovation Audit seeks to identify capabilities in the
organisation (maximise) and barriers to innovation (minimise). An innovation audit includes taking inventory for:
1. History of Innovation within the Organisation
 What role does our Organisational Structure have? (formal vs. informal, centralised vs. decentralised, horizontal vs. vertical,
regulations & procedures)
 What are our Reward Systems? (Intrinsic Rewards, Recognition, Motivation, Based on Performance, Fairness)
 What is our Culture? (Risk Tolerance, Resistance to Change, Power & Political Behaviour)
 What is our Communication System like? (Formal vs. Informal, Fear, Openness, Suggestion Boxes, Secrets, Authority)
 What about the Union? (are there imposed limits in Job Positions?, does it hinder creativity and innovation?)
70
2. Personnel







What Knowledge, Skills, & Abilities (KSA's) do we have?
How creative are we?
What is past performance in the area of innovation?
How open-minded are we?
How diverse is our workforce?
Are we tapping into everyone's full potential?
Do we have a database of our employees KSA's?
3. Resources





How much money do we have?
How much are we willing to spend and risk on Innovation Projects?
What is our R & D budget?
How well do we manage time (a most scarce resource)?
How up-to-date is our equipment and technology?
By attempting to answer these questions from our Innovation Audit, we put ourselves in a much better position to pave the way
for innovation in the organisation.
The next step in the Innovation Process is to seek opportunities. An opportunity is something you do yet know you want to do
but you can do it. There are many opportunities out there; most people do not look for them. Unfortunately, we are raised as
problem-solvers and we are not brought up to seek opportunities. Entrepreneurs are different; they are always looking for
opportunities. Major sources of opportunities include, but are not limited to:
1. Demographics








Age (e.g.: ageing of the population, percentage of population in given age groups, etc.)
Gender (balance between males and females)
Ethnicity
Immigration
Language
Culture
Health
Death
2. New Knowledge
 Research & Development (Pure/Basic/Applied research, Secondary research, Scientists)
 Science & Technology
 In the Social Sciences, Humanities, Business
3. Shifts in Culture







Trends
Family
Health
Sports
Leisure Activities
Sexual Attitudes
Violence
71
4. Changes in Industry Structure





Automobile
Air
Computer
Energy
Retailing
5. Process Needs




Sources of Power (Hydro-Electricity, Hydrogen, Nuclear, New/Undiscovered Sources)
Manufacturing Process (Robotics)
Recycling
Processing Waste
6. Unexpected Events






Natural Disasters (Floods, Earthquakes, Fires, Hurricanes, Tornadoes, Tsunamis, etc.)
Weather Patterns
Terrorism
Wars
Sudden Governmental moves
Political Events
Fostering Innovation
Without going into too much detail, the remaining steps in the innovation process include redefining the Organisation’s Culture
to promote innovation, and ensuring that adequate Organisational Structure and Reward Systems are put into place.
An organisation's culture has a profound effect on its ability to be innovative. Innovative organisations tend to share similar
cultures. They encourage experimentation, reward both successes and failures, and promote risk-taking behaviour. An
innovative culture is likely to have the following seven characteristics 63:
1.
2.
3.
4.
5.
6.
7.
Acceptance of ambiguity;
Tolerance of the impractical;
Low external controls;
Tolerance or risk;
Tolerance of conflict;
Focus on ends rather than on means;
Open systems focus.
Finally, from a people perspective, research indicates that innovators have common personality characteristics:
extremely high in self-confidence, persistent, energetic, and have a tendency to take risks.
63
Robbins, DeCenzo, Stuart-Kotze, Fundamentals of Management, Prentice Hall (2002), p.199.
72
they are
KEY TERMS
Creativity
Innovation
Innovation Audit
Opportunity
WEB LINKS
Inc.com - The Innovation Factor: What's Your Innovation Quotient?
http://www.inc.com/magazine/20020901/24545-print.html
Innovation Management Association Canada (IMAC)
http://www.imac-acgi.ca/
Canadian Innovation Centre
http://www.innovationcentre.ca/
HighWired Internet Innovations
http://www.hwired.com/
Innovation and Science (Alberta)
http://www.innovation.gov.ab.ca/
Centre for Innovation Law and Policy
http://www.innovationlaw.org/
Inventors.About.com
http://inventors.about.com/
Inventers and Inventions
http://home.san.rr.com/cfamily/swres/Science/Invent.html
Discover Magazine Innovation Awards
http://www.discover.com/awards/
How Stuff Works
http://www.howstuffworks.com
Wacky Patent of the Month
http://colitz.com/site/wacky.htm
CIPO (Canadian Intellectual Property Office) - Canadian Patent Database
http://patents1.ic.gc.ca/intro-e.html
United States Patent and Trademark Office
http://patents.uspto.gov/patft/index.html
73
PART
IV
LEADING
13. Groups, Teams, and Teamwork
What is a Group?
A group is two or more interacting and interdependent individuals who come together to achieve particular goals64. Groups can
either be formal or informal. Formal groups are workgroups that are formed to perform specific tasks and assignments. In
formal groups, appropriate behaviours are established by and directed toward organizational goals.
Informal groups on the other hand, are more of the social type. These groups are not work oriented but more for social
interaction around the workplace. Informal groups tend to form around friendships and common interests.
Basic Group Concepts
Within groups there are undoubtedly many concepts which affect group behaviour and effectiveness. These include roles,
norms, conformity, status systems, group size, group cohesiveness, and conflict management.
A role refers to a set of expected behaviour patterns attributed to someone who occupies a given position in a social unit.
Whether it is oriented toward task accomplishment or maintaining group member satisfaction, each individual within a group is
expected to perform certain roles because of their position in the group.
In some cases individuals will play multiple roles. They will adjust their roles to the group to which they belong at the time,
therefore causing problems in trying to understand role behaviour. When individuals such as these are confronted by different
role expectations he or she experiences role conflict. A good example of role conflict is as follows: A young university
instructors’ colleagues want him to give very few high grades in order to maintain the department’s reputation for having tough
standards, but the students want him to give out high grades to enhance their grade point averages. To the degree that the
instructor wants to satisfy the expectations of both his colleagues and his students, he faces role conflict.
A norm is an acceptable standard or expectation that is shared by a group’s members. Norms dictate factors such as work
output levels, absenteeism, promptness, and the amount of socializing allowed on the job. Even though each group will have its
own unique set of norms, there are common types of norms in most organizations. These norms focus on effort and
performance, dress, and loyalty. Because humans are such social creatures, we want to be accepted by groups to which we
belong and therefore are susceptible to conformity pressures. Norms are what pushes individuals to conform to group
standards.
Status is the prestige grading, position, or rank within a group. Status is a significant motivator and has behavioural
consequences when individuals see a disparity between what they perceive their status to be and what others perceive it to be.
Characteristics such as education, age, skill, or experience may informally confer status in a group. In fact, anything can have
status value if others in the group evaluate it that way. However, even though status is informal this does not mean that it is
unimportant or that it is hard to determine who has it or who does not. On the contrary, group members have no problem
placing people into status categories, and usually agree about who has high, middle, or low status. Status can also be formally
conferred. This occurs through the organizational structure of a business, in other words, the positions or jobs held by each
employee.
Group size is another important concept. Studies show that smaller groups tend to be faster at completing asks then are larger
ones. On the other hand, if the group is engaged in problem solving activities the larger group consistently hailed better results.
One of the disadvantages of having a large group is that as the groups get incrementally larger, the contribution of the individual
members often tends to decrease. The dispersion of responsibility within a group may encourage individuals to slack off. This
phenomenon is often referred to as the free rider tendency.
64
Robbins, Coulter, Stuart-Kotze, Management [ Prentice Hall, 2000] p.336
74
Obviously it makes sense that groups that have a lot of internal disagreement and lack of cooperation are less effective in
completing their tasks than are groups in which members generally agree, cooperate, and like each other. Group Cohesiveness
is the degree to which members are attracted to a group and share the group’s goals. The more cohesive a group is, the more its
members will follow its goals.
Conflict management is another concept that groups must deal with when performing tasks. The word conflict is perceived to
be incompatible differences resulting in some form of interference or opposition. When we talk about group conflicts there are
different views towards conflicts. Some conflicts can be seen as functional conflicts and others as dysfunctional conflicts.
Functional conflicts are seen as conflicts that support the goals of the workgroup and improved its performance. Dysfunctional
conflicts are destructive and prevent a group from achieving its goals. To differentiate between these two conflicts you have to
take a look at the type of conflict. There are three different types of conflicts: task conflict, relationship conflict, and process
conflict. Task conflict relates to the content and goals of the work. Relationship conflict focuses on interpersonal relationships
and process conflict refers to how the work gets done. It seems however, that relationship conflicts are almost always
dysfunctional. This is due to the fact that friction and interpersonal hostilities inherent in relationship conflicts increases
personality clashes and decreases mutual understanding, and this in turn hinders the completion of organizational tasks.
What is a Team?
A team is defined as a group of two or more people who interact regularly and coordinate their work to accomplish a common
objective65. At least two people must be involved; the members must interact regularly and coordinate their work, and members
must share a common objective.
Types of Teams
All the types of different teams there are can be grouped into two different groups: vertical teams, and horizontal teams. A
vertical team, sometimes called the command team or a functional team, is composed of a manager and his or her subordinates
in the formal chain of command, hence the vertical aspect. These teams are usually composed of employees from the same
department following the chain of command. A horizontal team is made up of different employees from different departments,
hence the horizontal factor. There are five common kinds of horizontal teams: task forces, cross-functional teams, self-managed
teams, virtual teams, and committees. However, some of these teams may fit into both the vertical and horizontal category even
though they are listed as horizontal.
A Task force is a team designed to accomplish a limited number of objectives or tasks. These teams are generally short-term
teams and are only in existence until they meet their objectives.
A Cross-functional team is a team that uses the knowledge of its members from various functional areas to solve problems.
Just as task forces, cross-functional teams also focus on objectives; however, they have a continuous life.
A Self-managed team is a team without a manager. This group of employees is responsible for a complete work process. This
group plans, schedules, assigns, and controls the work that is to be done and at what pace it will be done. They also make
operating decisions and take actions when problems occur.
A Committee can either be ad hoc (set up to do a job and then disbanded) or can be standing (permanent). Standing
committees work is ongoing where as ad hoc committees work is limited.
Last but not least, a Virtual team is really the team of the future. These teams use computer technology to link physically
dispersed members in order to achieve a common goal. In a highly powered technological society we are becoming more and
more dependent on computers and the Internet. More and more businesses are realizing how inexpensive and easy it is to
communicate over the Internet. This is why many turn to the Internet and create teams such as these.
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, [ South Western/ Thompson Learning, 2002] p.
487
65
75
Advantages of Using Teams:





More ideas;
Better and more diversified ideas (two heads are better than one);
Different and diversified skills;
More work done and much more effectively;
Goals met faster and easier (through division of labour).
Characteristics of Effective Teams
It is important for teams to have very clear goals and for each member to understand them and believe that the attainment of the
goals is very important. By having a clear understanding of the importance and the objectives of the goals, employees are often
more encouraged to put personal concern into achieving the goals.
It is also very important for team members to have relevant skills. Not only must they have technical skills but also interpersonal
skills so that they can work well as a team member. This point is often overlooked.
Another important point is that teams must have mutual trust within. Every member must trust the ability, character, and
integrity of each member. But, as we all know trust is a volatile thing. It takes a long time to gather or build, but it can be
broken or lost in a fraction of a second.
Unified commitment is another important characteristic of the successful team. Unified commitment is really loyalty and
dedication to the team. This means that every member of the team will do anything in their power to help their team succeed.
Of course in all successful teams there must be good communication. Members must be able to clearly pass on messages to
other members. However, good communication does not just stop with the conveying of messages. There must be good
feedback within the system. Feedback helps the team members to correct misunderstandings.
Good negotiating skills are also very important when working in teams. As we all know, when we are part of a team, roles tend
to change fairly often and quickly. This is why negotiating skills are very important. Problems in relationships regularly occur
and team members need to be able to confront and reconcile differences.
Also, as with any other team, there has to be an appropriate leader or appropriate leadership. A good leader helps to clarify goals
and to give members confidence. They encourage and give advice. It is important to note that the best leaders do not
necessarily direct or control but play more of a coach or facilitator role.
The last characteristic of an effective team is good internal and external support. By internal support we mean proper training, a
clear and reasonable measurement system that team members can use to evaluate their overall performance, an incentive
program that recognizes and rewards team activities, and a supportive human resource system. External support refers to the
supply of resources needed to fulfill goals and complete tasks.
Benefits of Teams
There are many benefits when using teams. These include synergy, increased skills and knowledge, flexibility, and commitment.
Synergy, as we all know, uses the 2+2=5 idea. In terms of teams, this means that two heads put together are better than two
heads working apart. Also, workers tend to pick up new skills and knowledge while being exposed to jobs other than their own.
Employees also get extra training when part of a team. The benefit of flexibility is one that is not only applicable to the workers
but also to the company. Workers become flexible as their aptitudes and attitudes develop. As this occurs the company
becomes more flexible as well; the broader knowledge base of team members allows them to adjust to changes in work
commands and workflow and to respond positively to emergencies. Increased commitment is also a benefit of teamwork. More
and more companies are using self-managed teams, giving each employee more power and freedom when it comes to their work.
This in turn increases satisfaction and commitment from employees.
76
Costs of Teams
Everyone knows that nothing has only an up-side and teams are no exception. When a business opts for team-work they incur
many costs which could be the whole reason why this idea does not work. Included in the costs of opting for teams are powerrealignment costs, training expenses, lost productivity, free-riding costs, and loss of productive workers. In power-realignment
we see the power from the lower and middle management levels shift from them to the team and team workers. Some of these
managers have a hard time accepting this and resist; this can inflate cost in time and in money.
Another thing is when a business opts for the team approach. More often than not employees will need retraining so that they
can learn to function in and as a team.
The loss of productivity is also a big factor because when developing teams it takes large amounts of time, and when this time is
spent in team development it is not being used in production. Besides, many employees need time to adjust to their new roles,
team and job before actually becoming productive.
Free-riding costs are also a factor to consider. When teams are formed some people tend to believe that since there are many
people pulling the same weight or doing the same tasks that they don’t have to be as productive. This leads many to slack off
and get a free ride, hence free-riders.
Finally, some companies incur the loss of productive workers. Not everyone can and will work in a team environment, therefore
many of these employees are either forced out or resign voluntarily and hence companies lose skilled employees.
KEY TERMS
Group
Group Cohesiveness
Norm
Role
Status
Team
WEB LINKS
Self-Directed Work Teams
http://users.ids.net/~brim/sdwtt.html
Team Management Systems
http://www.tms.com.au/welcome.html
77
14. Communication and Interpersonal Skills
The Communication Process
C
ommunication is the transmission of information from one person or group to another. Communicating is an important
part in management since the greatest portion of managerial activity depends on verbal communication and competent use
of language (spelling, grammar and punctuation) and should be certain that the receiver understands the message.
Communication is a process through which a sender (the initiator of communication) transmits information (message) to a
receiver that gets the information. The sender chooses a mean to transmit the message through a medium and finally, the
receiver shows how he or she perceived the sender’s message (feedback).
WRITTEN VS. VERBAL COMMUNICATION
Written communications include memos, letters, e-mail, Instant-Messaging (IM), organizational periodicals, bulletin boards or
any other device that transmits written words or symbols. There are some advantages of using written communication:



Tangible, verifiable, and more permanent than verbal communication;
Physically available for later reference;
Well-organized, logical and clear.
Disadvantages of using written communications are:


Consumes a lot of time;
Lack of oral communication or feedback.
Verbal messages can be delivered face-to-face or by electronic means such as telephone, voice mail, and voice messaging. Verbal
communication should be used when it requires immediate two way feedback and a personal touch. If the message is
complicated and requires a fast response, communication should be written.
NON-VERBAL COMMUNICATION
In large part, communication is made through non-verbal means. Visual transmitters are extremely powerful and persuasive
tools that enable the sender to transmit information that is not possible with words. Psychologists claim that the impact you
make on others depends on what you say (7%), how you say it (38%), and by your body language (55%). Since how you sound
also conveys a message, 93% of emotion is communicated without actual words. 66 A good example that proves that nonverbal
communication can be more reliable than verbal one is suppose you are going to an interview and the interviewer isn’t looking at
you and seems not interested by seeing you and tells you with a cold voice “It’s great to see you, have a seat.” When this
happens, your first reaction is to think that this guy doesn’t like you. Even if he welcomes you with nice words, his attitude tells
much more than what he said. Here are the major non-verbal means of communication:
Body Language:


Entrance and Carriage: The first impression is very important. You can communicate confidence with a strong
stride, good posture, and a friendly smile.
Shaking Hands: It is an important symbol of respect, and in most business settings it is the proper greeting. It can
communicate warmth or aloofness, genuine concern for the prospect or indifference, and an image of strength or
weakness. The message we communicate can be determined by five factors: Eye contact during handshake, degree of
firmness, depth of interlock, duration of grip, and the degree of dryness of hands.
66Body Language in Business:How to Sell Using Your Body http://www.brennerbooks.com/bodylang.html
78

Facial Expressions: The face is a great communicator and can communicate any emotion in a second. The best habit
to take in the business world as well as in real life is to offer a sincere smile to anyone you meet because people tend to
trust a smiling face.
Appearance:




Simplicity: The color and design of your clothes communicate a message.
Appropriateness: Select appropriate clothes with appropriate work.
Quality: The quality of our clothes influence the image we project to customers.
Visual Integrity: Visual presence must have a certain amount of integrity and consistency. People are often extra alert
when meeting someone new, and this consciousness makes every detail count.
Voice Quality:


Rapidity of Speech: Do not talk too fast or too slowly. Rapid speech often causes customers to become defensive.
Speech Pattern: Avoid a kind of voice that is dull and colourless. Your tone of voice mirrors your emotional state and
physical well being.
Manners:





Familiarity: Avoid the temptation to address a new contact by their first name.
Comments or Stories: Avoid offensive comments or stories.
Views and Religious issues: Do not express personal views on political or religious issues.
Lunch with a Customer: When you invite a customer to lunch, do not discuss business before the meal is ordered
unless the client initiates the subject.
Voice Mail: When you use voice mail, leave a clear, concise, and short message.
INTEPERSONAL COMMUNICATION
Involves real time face-to-face or voice-to-voice conversation that allows for instant feedback. Interpersonal communication is
appropriate for discussing matters that require give-and-take between participants. Meetings and conferences are useful forms
of interpersonal communication when the issues affect others or require input from more than one or two parties. Some uses of
interpersonal communication can be, for example, brainstorming sessions, quality circles, committee meetings, and contract
negotiations.
Team Communication
Teams are taking an increasingly large role in organizations. Managers find that by putting workers together, they can get better
work accomplished. Team members generally engage in four kinds of communication:




Exchange views: Each individual possesses unique traits.
Discuss work: Discussion of work to be done.
Deliberate on a problem or issue: It takes place when a group meets to explore an issue, determine how to
implement a procedure, or solve a technical problem. By hearing multiple perspectives it helps a person generate more
ideas than he or she could generate alone. Also, the interaction of people can create a powerful synergy and can
increase the commitment to the decision.
Transmit information: A team meeting is ideal to share new information and findings and is more efficient than
telling each one individually. Also, when information is transmitted to several people at once, the chance each team
member receiving the same information increases and it gives the opportunity for team members to discuss its
implication.
79
Barriers to Interpersonal Communication
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Diction and Semantics: Diction is the choice and use of words in speech and writing. Semantics is the study of the
meanings of words. Abstract words can create different images and can convey both negative and positive
connotations and may have a strong emotional impact for senders and receivers. Also, jargon, is specialized technical
language that is developed in certain groups; may pose its problem in different cultures of the business world. When
members of these subcultures attempt to communicate with those outside their group by using these expressions,
confusion can result. In order to counter these problems, make sure that the receiver understands what you are saying
and that it has the same meaning for both of you.
Expectations of Familiarity: It happens when, in a conversation, you know exactly what the speaker is going to say.
People do this because they are familiar with a speaker’s thoughts on particular topics. When it happens, listening
stops. For example, when your mother begins with: “When I was your age...”, you automatically fail to listen since the
expectation of familiarity is a factor that inhibits communication. A good way to increase the attention of your receiver,
is to know about his/her current knowledge of the topics and avoid saying familiar things.
Sources’ Lack of Credibility: If a sender has credibility in the receiver’s mind, the message will be received more
readily than if the sender lacks credibility. For example, if the Prime Minister comes in this class to talk about the
Quebec economy, people will listen much more than if it was a local Economics teacher.
Preconceived Notions: If a new and different viewpoint contradicts what a receiver knows to be true, he or she will
not accept it.
Differing Perceptions: People can have different perceptions due to different values, beliefs and language. Also,
stereotypes can cause positive or negative reactions.
Conflicting Nonverbal Communication: This refers to the conflict between the non-verbal and verbal. For
example, facial expressions can communicate the opposite of what a person is saying.
Emotions: Messages communicated with very strong emotions can be damaging to people and their relationships for
some time to come.
Noise: Noise in the environment can bring interference between the sender and the receiver.
ORGANIZATIONAL COMMUNICATION
Channels:
Formal communication channels result from a company’s organizational structure. The channels act as a connection between
members and outsiders as paths through which official communication flows.
Barriers to Organizational Communication:
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Overload: Involves too much information.
Filtering by Levels: Levels through witch information has to pass. The more it has been through, the more filtered
will information be.
Timing: Time to get information from a source to its receiver.
Lack of Trust and Openness: Trust that managers have towards employees.
Inappropriate Span of Control: Delegating authority and providing quick access to needed information.
Rank or Status in the Company: Can make others timid and hesitant to communicate.
Managers’ Interpretations: Managers can have different needs, perspective, and priorities from other employees.
Electronic Noise: Breakdowns, overloads.
IMPROVEMENT OF COMMUNICATION
Responsibilities of senders:
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Being Certain of Intent;
Knowing the Receiver and Constructing the Message Accordingly;
80
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Selecting the Proper Medium;
Timing the Transmission;
Seeding and Giving Feedback.
Responsibilities of Receivers:
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Listening Actively;
Being Sensitive to the Sender;
Indicating an Appropriate Medium;
Initiating Feedback.
GENDER ISSUES IN THE COMMUNICATION PROCESS
Research has shown that when men talk, they do so to emphasize status and independence, whereas women talk to create
connections and intimacy. There can be conflict between the two genders due to the fact that women want support and
connection from men rather than advice. Since men and women have to live and work together, effective communication is very
important in every organization. But how can we manage the various differences in communication styles?
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First, we need to accept the fact that men and women are different and that one style isn’t better than the other;
Second, we have to understand both communication styles in order to know how to react to conflict;
Third, we need to communicate adaptively and put some effort to build strong relationships.
TECHNOLOGY IN COMMUNICATION
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E-Mail is a computerized information system that lets group members electronically create, edit, and disseminate
messages to each other, using electronic “mailboxes.”
Instant Messaging allows two people to communicate in "real time" over the internet, superseding the pace of email.
It also gives you the convenience of sending files back and forth to one another. 67 Here are some examples: MSN
Messenger, ICQ, etc.
Videoconferencing is a telecommunications-based method that lets group members interact directly with or leave
messages for a number of other group members via television links. This kind of technology can greatly improve
communication and coordination among the group members even if they are far from each other. The main advantage
is that the non-verbal component of communication is added.
Groupware relies on computer networking to open communications channels among people and to share data. It
essentially combine the functionality of email, messaging and conferencing, and document management systems. Some
example of groupware include Lotus Notes and Groove.
Developing Interpersonal Skills
Listening Skills
Interpersonal skills are extremely important in management since managers have to get things done through others so they have
to be completely familiar with such skills in order to be effective in their jobs. The ability to listen to others is almost an art even
if it seems so simple to do. We generally take it for granted and most of the time we practice active hearing and forget about
active listening. We hear things, but two minutes later those things mean nothing to us anymore. In order to transform passive
hearing in active listening we should:
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67
Pay attention to what is being said;
Interpret the information carefully;
Remember sound stimuli.
http://netconference.about.com/library/aa042098.htm?terms=instant+messaging
81
In order to be a good active listener, it requires:
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Intensity: Listener has to concentrate intensively on what the speaker is saying;
Empathy: Listener should put him or herself in speaker’s shoes in order to focus on what he or she is saying and not
on what he or she wants to hear;
Acceptance: Listener should listen objectively without judging content in order to focus on what the speaker is saying
and not on what you want to reply;
Taking responsibility for completeness: Listener has to do the necessary to get the full intended meaning from the
speaker communication. Look for feeling and ask questions to ensure understanding.
Feedback
Feedback skills are an important part of the communication in an organization. They can be positive or negative but they both
share the same purpose: to communicate an opinion about certain past behaviour. Positive feedback is almost always accepted
with enthusiasm and negative feedback often meets resistance. The important thing is to be aware there may exist the potential
for resistance and how to learn to use negative feedback in situations in which it is most likely to be accepted. To increase the
chance of acceptance, the feedback should come from a credible source and should also be objective. Here are some tips to
make feedback effective:
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Focus on specific behaviours: It should be specific rather than general;
Keep feedback impersonal: It should be descriptive rather than judgmental or evaluative;
Keep feedback goal oriented: It should not be given primarily to dump or unload on another person;
Make feedback well timed: It should be given in a very short interval between employee behaviour and the receipt of
it;
Ensure understanding: It should be concise and complete enough to ensure that receiver clearly understands your
point.
Direct negative feedback toward behaviour that the receiver can control: Feedback should be directed toward
behaviour that the receiver can do something about.
82
KEY TERMS
E-mail
Groupware
Instant Messaging
Videoconferencing
WEB LINKS
Body Language in Business
http://www.brennerbooks.com/bodylang.html
The language everybody speaks
http://www.lichaamstaal.com/english/bodylanguage.html?communication.html
83
15. Motivation, Rewarding, and Empowering Employees
What is Motivation?
M
otivation is the willingness to exert high levels of effort to reach organizational goals, conditioned by the effort’s ability to
satisfy some individual need. 68
There are three important keys in motivation: effort, organizational goals, and need.
A goal is an outcome to be achieved or a destination to be reached over a period of time through the exercise of management
function and the expenditure of resources69.
For a manager there are many important challenges that are difficult to deal with. Motivating and Rewarding employees are two
of the most important activities that managers perform.
For an employee there is a process identifying how motivation progresses during a given period of time:
The Motivation Progress:
Unsatisfied Need  Tension  Drives  Search Behaviour  Satisfied Need  Reduction of tension
At work, people have different needs to satisfy or reach any types of goals. A need is an internal state that makes certain
outcomes appear attractive.3
Needs-based Approaches to motivating employees
Maslow’s Needs-hierarchy theory
It is a theory based on five important human needs: Physiological, Safety, Social, Esteem, Self-Actualization. Maslow
hypothesized that with in every human being is a hierarchy of five needs. As each need is substantially satisfied, the next need
becomes dominant. Maslow separated the five needs into two levels: high level and low level. Physiological and safety needs are
described as lower order needs while social, esteem and self-actualization are higher level needs. The difference between the two
levels is that higher-order needs are satisfied internally, whereas lower order needs are predominantly satisfied externally.
68 Robbins, Coulter Stuart-Kotze, Management, Prentice Hall (2000), p.366
69 Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western/Thompson Learning, 2002,
p.5
84
Figure 19 - Maslow’s Hierarchy of Needs
1. Physiological needs relate to the most important things a human needs to survive like: food, drink, shelter and sexual needs.
2. Safety needs are a person’s needs for security or protection from physical and emotional harm.
3. Social needs are person’s needs for affection, a sense of belonging, acceptance and friendship.
4. Esteem needs are internal factors such as self respect, autonomy and achievement. There are also external factors such as
stated recognition and attention.
5. A Self-Actualization is a person’s drive to become all what he or she is capable of becoming.
Herzberg’s two Factors theory:
This theory divides Maslow’s hierarchy into a low-level and a high-level set of needs, and it shows that the best way to motivate
someone is to offer to satisfy the person’s high level needs.
Herzberg believes in two major factors such as Hygiene and Motivators. Hygiene includes factors outside the job itself like
working conditions, salary and supervision. On the other hand, Motivators are factors that are essential to the work itself like
the opportunity for achievement, recognition, responsibility, and challenge.
Adding more of hygiene factors, like salary to the job, is a very bad way to try to motivate someone, because lower-level need
such as physiological and security needs are quickly satisfied.
Alderfer’s ERG theory:
ERG is a theory that compresses Maslow’s five needs level into three. Those are Existence, Relatedness and Growth.
Existence need relates to a person’s physical well-being. It refers to physiological and safety needs of Maslow’s theory.
Relatedness is a level that includes needs for satisfactory relationship with others. It refers to social need. Growth needs call for
the realization of potential and the achievement of competence. It is like esteem and self-actualization of the Maslow’s hierarchy.
Process Approaches to Motivating Employees
Expectancy Theory:
Expectancy theory is a theory that an individual tends to act in a certain way based on the expectation that the act will be
followed by a given outcome and on the attractiveness of that outcome to the individual. 70
70
Robbins, Coulter Stuart-Kotze, Management, Prentice Hall (2000), p.379
85
Individual
Effort
Individual
Performance
Expectancy
Organization
Rewards
Instrumentality
Individual
Goals
Valence
Figure 20 - Simplified Expectancy Theory
Between each case there is a belief taken by the employee and it increases in a positive way the further that the employee moves
forward in this schema. The first one is Expectancy which is the probability perceived by the individual that exerting a given
amount of effort will lead to a certain level of performance. The second one is the Instrumentality which is the degree to which
the individual believes that performing at a particular level is instrumental in leading to the attainment of a desired outcome.
Finally, the third one is Valence which refers to the importance that the individual places on the potential outcomes or rewards
that can be achieved on the job. Valence considers goals and needs of the individuals.
Reinforcement Theory:
Reinforcement theory is a motivation theory that states a supervisor’s reactions and past rewards and penalties affect
employees’ behaviour71. So the individual tends to act in a certain way based on the expectation that the act will be followed by a
given outcome and the attractiveness of that outcome to the individual. The key to reinforcement theory is that it ignores factors
such as goals, expectations and needs. Instead it focuses solely on what happens to a person when he or she takes some
action.
Managers can influence employees’ behaviour by reinforcing acts they deem favourable. However, because the emphasis is on
positive reinforcement, not punishment, managers should ignore, not punish, unfavourable behaviour. So, punishment is not a
good way of acting with employees because later it may have side effects like workplace conflict, absenteeism, and turnover.
Equity theory:
Equity theory propose that employees perceive what they get from a job situation (outcome) in relation to what they put into it
(input) and then compare their input-output ratio with the input-output ratio of a referent72. The term equity relates to the
concept of fairness and equal treatment compared to others, or a referent, who behaves in similar way.
Outcomes of employee A
-----------------------------------Inputs of employee A
<
Outcomes of a referent
---------------------------Inputs of a referent
Outcomes of employee A
-----------------------------------Inputs of employee A
=
Outcomes of a referent
---------------------------Inputs of a referent
Outcomes of employee A
-----------------------------------Inputs of employee A
>
Outcomes of a referent
---------------------------Inputs of a referent
= INEQUALITY
(under rewarded)
= EQUITY
= INEQUALITY
(over rewarded)
Figure 21 - Equity Theory
Employees are always trying to compare themselves with referent around them. A referent is a person against which someone
compares himself or herself to assess equity.
71
Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Western, 2002, p.429
72
Robbins, Coulter Stuart-Kotze, Management, Prentice Hall (2000), p.378
86
Goal-Setting theory:
Goal-Setting Theory is a motivation theory stating that behaviour is influenced by goals, which tell employees what they need
to do and how much effort they need to expend 73. Goal-setting theory is similar to the concepts associated with expectancy
theory in that it focuses on the conscious choice that a person makes.
According to the theory, there are two approaches to goal-setting:
1 — Managers may set goals for the employee
2 — Employees and managers develop employee’s goals together
By making those plans and discussions between managers and employees there is low risk of contradiction. Also, it increases
motivation from both sides because managers will know how to motivate the employees. From their side, employees will enjoy
goals set and they will be more motivated to achieve them.
Behaviour-Based Approaches to Motivating Employees
People’s behaviours change depending on various situations at work. To increase the motivation of employees there are specific
methods of reinforcement adopted by managers. Managers can choose from four main types of reinforcement: positive,
avoidance, extinction, and punishment.
Positive reinforcement increases the probability that an individual will repeat a desired behaviour. A manager will provide
positive reinforcement as soon as possible after the desired behaviour occurs. Positive reinforcement most often leads to a long
range growth in individuals by producing lasting and positive behaviour changes. Praise, pay, and promotions are examples of
positive reinforcement.
Avoidance attempts to increase the probability that a positive behaviour will be repeated by showing the consequences of
behaviour the manager does not desire. For example, a manager has a policy of penalizing all employees who do not turn in
reports on time.
Extinction consists of ignoring the behaviour of subordinates in order to weaken their behaviour. A manager can use this
approach when behaviour is temporary and not serious in its negative consequences.
Punishment is an attempt to decrease the recurrence of behaviour by applying negative consequences. However, this method is
the last one to be imposed by a manager because it creates negative relations between manager and employees. Types of
punishment could include loss of privileges, docked pay, or suspension.
Managing for Motivation
With a well-rounded, people–centered philosophy in place, a manager is ready to motivate by creating a positive supportive work
environment. A manager could use different techniques to motivate employees thus increasing their value in the company.
Pay for performance:
Pay for performance includes any compensation method that ties pay to the quantity or quality of work the person produces 74.
The most familiar way of paying by performance is with a piecework plan. A piecework pay plan involves earnings that are tied
directly to what the worker produces in the form of a piece rate for each unit he or she turns out. Also, when companies make
profits it is possible for employees to receive company shares.
Using recognition:
Most people like to feel appreciated. In a Company, words like “Good job” and “Thanks” are very well accepted by employees
even more when it is from supervisors, peers, and team members. When people believe that their work is appreciated by others it
Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.433
Starkle, Cyr, Manage Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western,
2002, p.351
73
74Dessler,
87
increases the motivation of continuing in the same way. Being recognized for a job well done makes a lot of sense in terms of
motivation theory. It is a powerful reinforcer and it can provide some immediate outcomes to counterbalance employees’ efforts.
Using Positive Reinforcement:
Positive reinforcement programs are widely used. They rely on operant conditioning principles to change behaviour. This
concept could be in function in a construction plant, for example, where there is a principle of wearing a helmet all the time at
work. The employee could have a desired behaviour in a way to wear the helmet or an undesired behaviour which means to not
wear a helmet.
There are two consequences of positive reinforcement which are Social and Tangible. Social reinforcement is reinforced by
peer encouragements, praise from boss, and a letter of thanks from the president. On the other hand, Tangible reinforcement
is more related to rewards and money. Tangible reinforcement includes bonuses, incentive pay, and merit raises.
______________________________________________________________________________________
Empowering Employees:
Leaders empower employees by sharing authority and information, providing needed training, listening to employees, developing
relationships based on mutual trust and respect, and acting on employee recommendations75.
Empowering occurs when individuals in an organization are given autonomy, authority, and trusted to break the rules when
necessary in order to get the job done. Empowered employees make decisions that formerly were made by the manager.
Empowerment results in greater responsibility and innovation and a willingness to take risks. Ownership and trust, along with
authority, become a motivational package.
Redesigning Jobs:
Job redesign is the application of motivational theories to the structure of work, to increase output and satisfaction 76. Jobs are
important motivational tools because what they contain may provide a means to meet an employee’s needs. Managers need to
know what elements of a job provide motivation and then apply the concepts of job redesign. Job redesign requires a knowledge
of and concern for the human qualities that people bring with them to the organization.
There are two approaches to job redesign: Job Scope and Job Depth.
Job Scope: An element of job redesign that refers to the variety of task incorporated into a job77.
Job Depth: An element of job redesign referring to the degree of discretion an employee has to alter the job78.
Three alternatives to job redesign are enlargement, rotation and enrichment. These strategies are planned to increase employee
satisfaction and productivity.
Enlargement: Increasing the variety on the number of tasks a job includes, not the quality of the challenge of those tasks. 79
Rotation: Temporarily assigning people to different jobs or tasks on a rotation basis 80. As an example on assembly line there are
many strategic places that a worker takes place to build a product. There, a worker can switch his or her position with another
worker in the assembly line to do a different job. This prevents boredom of always completing the same tasks.
Enrichment: Designing a job to provide more responsibility, control, feedback and authority for decision making 81. By this, the
workers do much planning and inspection that normally are done by the supervisor.
Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.438
Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.440
77 Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.441
78 Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.441
79 Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.441
80 Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.441
81 Plunkett, Attner, Allen, Management –Meeting and Exceeding Customer Expectations, South Western, 2002, p.441
75
76
88
KEY TERMS
Alderfer’s ERG Theory
Empowering
Equity
Expectancy
Herzgerg’s Theory
Maslow’s Need Hierarchy
Motivation
WEB LINKS
Employee Motivation Tips for your Success
http://www.motivation123.com/
Gleg Water Conditioning
http://www.slegg.com/
89
Job Redesigning
Referent
Reinforcement
16. Managing Conflict and Stress
What is Conflict?
C
onflict is a natural disagreement resulting from individuals or groups that differ in attitudes, beliefs, values, and needs. It
can also originate from past rivalries and personality differences. Other causes of conflict include trying to negotiate before
the timing is right or before needed information is available. 82 In simplest terms, conflict is no more than a by-product of
growth, change, or innovation. But it is also something that, when handled correctly, can actually promote better
communication, guarantee achieving desired results, and improve employee morale and productivity.83
Types of Conflict
There are three types of conflict that exist in organizations and they are individual, interpersonal, and intergroup organizational.
Individual Conflict is a conflict that occurs when a person is faced with conflicting orders, such that compliance with one
would make it difficult or impossible to comply with the other. An example of individual conflict is when a corporal receives
orders from a captain that would force her to disobey and order from her sergeant, or when obeying an order might force a
person to violate their values and sense of right and wrong. Role conflict or individual conflict is a serious problem in
organizations one that can be stressful to the people involved and can adversely affect morale and performance. Interpersonal
Conflict is conflict that occurs between individuals or between individuals and groups. These conflicts arise from differences in
goals or objectives between the parties involved. Personalities are a big part of conflicts. Intergroup Organizational Conflict
are conflicts such as those between line and staff units or between functional departments. Effectively managing intergroup
conflict is especially crucial today as firms increasingly try to manage change. 84
Views of Conflict
Three basic approaches that manager’s use to control conflict are based on what the manager views and beliefs are about
conflict.
Traditional view: The manager who views conflict as unnecessary and harmful to an organization fears conflict and eliminates
all evidence of it. Such a manager holds the traditional view of conflict. If conflict does occur, the manager perceives it as a
personal failure.
Behavioural View: The behaviourist recognizes that conflict frequently occurs because of human nature, the need to allocate
resources, and organizational life. A manager who holds behavioural views expect conflict. He or she believes that, on occasion,
conflict can produce positive results. In general, however, a manager with a behavioural view believes that conflict is usually
harmful. The manager’s reaction to conflict is to resolve conflict or eliminate it as soon as it occurs.
Interactionist View: A more current philosophy, the interactionist view, holds that conflicts are not only inevitable but also
necessary for organizational health. This view maintains the conflict can be good or bad, depending on how it is managed. A
manager with an interactionist view attempts to harness conflict to maximize its positive potential for organizational growth and
to minimize its negative effects.85
Positive and Negative Aspects of Conflict
Conflicts can be both positive and negative. Some conflicts support goals of the organization; these are functional conflicts of
a constructive form. Other conflicts prevent an organization from achieving its goals; these are dysfunctional conflicts of a
destructive form. Conflict can be healthy when effectively managed. Healthy conflict can lead to growth and innovation, new
ways of thinking, additional management options. However, conflict can also lead to destructive consequences and damages to
relationships if not dealt with or goes unchecked. In addition these may include time, productivity, morale, turnover,
absenteeism, lost of opportunity and development, sick days, low innovation, and low loyalty. The cycle of violence and
vengeance though strikes, lockouts and sabotage may ensue from the conflict, which is not dealt with in a way that produces
positive consequences and outcomes.86
Managing Conflict, A guide for watershed partnerships, available: http://www.ctic.purdue.edu/KYW/Brochures?ManageConflict.html [ January 31 2003]
Murphy, Managing Conflict at Work, (American Media Publishing, 1994), p.4
84 Dessler, Tarke, Cyr, Management – Leading People and Organizations in the 21st Century (Prentice Hall, 2001), p.459
85 Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations (South-Western, 2002), p.507-8
86 Aviary Group, managing conflict, valuing diversity and maintaining open communication, available: http://www.aviarygroup.ca/newsletter19.html [January 31 2003]
82
83
90
Sources of Conflict
Conflict can arise from each of the following:
Competition – Competition can take the form of two individuals trying to outperform each other. Conflict can arise from the
struggle over limited resources like money, equipment, personnel, materials, and physical facilities to accomplish his or her
objectives. Conflict can also arise from competition of rewards.
Differences in Objectives – Conflict can arise when employees’ objectives differ from those of the organization. For example,
one employee may believe quality is important while another may believe that the lowest possible cost is important.
.
Differences in Values, Attitudes, and Perceptions – Conflict can arise from differences in values, attitudes and perceptions.
For example, an employee believes family time is important while the managers would like employees to work long overtime
hours.
Disagreements About Role Requirements – When people work in teams their roles change and conflict can arise from this.
Disagreement About Work Activities – Conflict can arise from the quantity of work assigned and group work assigned. For
example, the employee needs the work from another employee to complete her work and she can’t do her work until the other is
done.
Disagreement About Individual Approaches - Conflict can arise from how people individually deal with others and with
situations. For example, some people may be reflective people while others are argumentative.
Breakdowns in Communication – Conflict can arise from miscommunication, misinterpretation, and misunderstanding. 87
Strategies for Managing Conflict
Conflict is a daily part of our lives. It can take many forms, from small encounters to full scale battles. No matter what form a
conflict takes, you can learn how to recognize and prevent it. The key to managing conflict is having the courage to take risks
and to regularly practice techniques that will give you more control over your environment. 88
Collaboration, Compromise, Competition, Accommodation and Avoidance are strategies for managing conflict.
Collaboration is a strategy that results from a high concern for the interests of other partners. The outcome is win/win. This
strategy is generally used when concerns for others are important. It is also generally the best strategy when society’s interests are
at stake. This approach helps build commitment and reduce bad feelings. The drawbacks are that it takes time and energy. In
addition, some partners may take advantage of the others trust and openness. Collaboration is the best approach for managing
conflict and reaching an agreement.
Compromise is a strategy that results from a high concern for your group’s own interests along with a moderate concern for the
interests of other partners. The outcome is win some/ lose some. This strategy is generally used to achieve temporary solutions, to
avoid destructive power struggles, or when time pressures exist. One drawback is that partners can lose sight of important values
and long term objectives. This approach can also distract the partners from the merits of an issue and create a cynical climate.
Competition is a strategy that results from a high concern for your group’s own interest with less concern for others. The
outcome is win/lose. This strategy includes most attempts at bargaining. It is generally used when basic rights are at stake or to
set an example.
Accommodation is a strategy that results from a low concern for the interests of other partners. The outcome in lose/win. This
strategy is generally used when the issue is more important to others than to you. It is a goodwill gesture. It is also appropriate
when you recognize that you are wrong. The drawbacks are that your own ideas and concerns don’t get attention. You may also
lose credibility and future influence.
87
88
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations (South-Western, 2002), p.507-8
Murphy, Managing Conflict at Work, (American Media Publishing, 1994), p.4
91
Avoidance is a strategy that results from low concern for your groups own interests coupled with a low concern for the interest
of others. The outcome in lose/lose. This strategy is generally used when the issue is trivial or other issues are more pressing. It
is also used when confrontation has a high potential for damage or more information is needed. The drawbacks are that
important decisions may be made by default. 89
Stress
What is Stress?
Stress is a condition in which an individual is confronted with an opportunity, constraint, or demand related to what he or she
desires and for which the outcome seems to be both important and uncertain. Stress is a complex issue- it can become apparent
in both a positive and negative way. Stress is said to be positive when the situation offers an opportunity for one to gain
something. It is said to be negative when constraints or demands are placed on us. Constraints are barriers that keep us from
doing what we desire. Purchasing a sport-utility vehicle may be your desire but if you cannot afford the price you are constrained
from purchasing it. Demands are circumstances that may cause us to give up something we desire. 90 If you wish to go away for
March break and do not wish to come back until late Sunday night but you have an Auditing midterm on Monday the Auditing
midterm may take precedence or priority, which cuts your vacation short.
Stress is rampant in today’s companies. In July 2000, a group of business leaders who formed the Business and Economic Roundtable
on Mental Health estimated that pressure at work were causing untold amounts of worker stress. The group estimated that worker
stress was costing the Canadian economy billions of dollars annually. They also estimated that at any given time stress was
causing serious depression in ten percent of the Canadian workforce. In Japan there is a concept called karoshi, which means
death from overworking – employees who die after working more than 3000 hours the previous year. More than 2300
individuals who die each year have karoshi listed as their cause of death. 91
Sources of Stress
Stress can arise from 4 basic sources:
Environment – weather, noise, traffic, pollution;
Social stressors – deadlines, financial problems, loss of a loved one, family conflict, relationship problem, role changes, job loss,
etc;
Physiological – new diagnosis of health problems, chronic illness, menopause, aging, lack of exercise, poor nutrition, etc;
Your thoughts – how we interpret an experience, our expectations of life, expectations that we have of other and ourselves; 92
Managing Conflict, A guide for watershed partnerships, available: http://www.ctic.purdue.edu/KYW/Brochures?ManageConflict.html [ January 31
2003]
90 Robbins, DeCenzo, Stuart-Kotze, Fundamentatls of Management (Prentice Hall, 2002), p.193
91 Robbins, DeCenzo, Stuart-Kotze, Fundamentatls of Management (Prentice Hall, 2002), p.193-4
92 Calgary Health Region Heart Health/ Learning and Development reviewed august 2002, available: http://www.crhahealth.ab.ca/hlthconn/items/StressMgmt.htm [January 31 2003]
89
92
Common Causes of Stress
Stress can be caused by a number of factors called stressors. Factors that create stress can be grouped into two major
categories: organizational and personal. Both directly affect employees and ultimately, their jobs.
Figure 22 - Major Stressors
Stress is organized into five categories: task, role, interpersonal demands, organization structure and organizational leadership. Task
demands are factors related to the employee's job. They include the design of the person’s job, working conditions and the
physical work layout. Role demands relate to pressures placed on employees as a function of the particular role he or she plays
in the organization. Role conflicts create expectations that may be hard to reconcile or satisfy. Role overload is experienced
when the employee is expected to do more than time permits. Role ambiguity is created when role expectations are not clearly
understood and the employee is not sure what he or she is to do. Interpersonal demands are pressures created by other
employees. Lack of social support from colleagues and poor interpersonal relationships can cause considerable stress, especially
among employees with a high social need. Organizational Structure can increase stress. Excessive rules and an employee’s
lack of opportunity to participate in decisions that affect him or her are examples of structural variables that might be potential
sources of stress. Organization leadership represents the supervisory style of the organizations’ company officials. Some
managers create a culture characterized by tension, fear, and anxiety. They establish unrealistic pressures, tight controls, and
routinely fire employees who don’t measure up.
Personal factors that can create stress include family issues, personal economic problems, and inherent personality characteristics.
Employees personalities have an effect on how susceptible they are to stress. The two types of personality traits are Type A
personality and Type B personality. Type A is a person who has a chronic sense of urgency and an excessive competitiveness
drive. Type B is a person who is relaxed and easygoing and accepts change easily.93
93
Robbins, DeCenzo, Stuart-Kotze, Fundamentatls of Management (Prentice Hall, 2002), p.194-5
93
Symptoms of Stress
People are often not aware of how stress affects their body. The first step in coping with stress is recognizing how your body
reacts to stressful situations. You can then take positive steps to relieve the build-up of stress. There are three groups of
symptoms: Physiological, Psychological and Behavioural.
Physiological
Psychological
SYMPTOMS OF
STRESS
Behavioural
Figure 23 - Symptoms of Stress
Physiological changes affect your metabolism, also increase your heart and breathing rates, raises blood pressure, produces
headaches, and has the potential of creating heart attacks. Psychological changes include dissatisfaction, tension, anxiety,
irritability, boredom, and procrastination. Behavioural changes in productivity, absenteeism, job turnover, changes in eating
habits, increased smoking or consumption of alcohol, rapid speech, fidgeting, sleep disorders. 94
Reducing and Managing Stress
Things that managers can do to reduce stress:
 Employee selection – make sure employees abilities match job requirements
 A realistic job – reducing job expectations
 Improve organizational communications
 Performance Planning Program – clarify job responsibilities, provide clear performance goals
 Job Redesign – when stress can be traced to boredom or to work overload
 Employee Counselling – talk to someone about problems
 Time Management Program – sort out priorities
 Wellness Programs – massages, help employees save time, day care centers, on-site banking, financial services, etc. All this
creates a highly motivated work force95
When you find yourself in a stressful situation you can take steps to manage it in a positive way. Here are some stress reduction
techniques:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
94
95
Education – educate yourself about what is causing you stress
Relaxation techniques – lowers your heart rate, blood pressure, breathing rate, and relaxes your tense muscles;
Meditation techniques – helps counter physiological effects of stress;
Prioritizing your responsibilities – decide what is important and use your energy and resources to do this first;
Humour – make time for fun, laughter is a natural way to release stress;
Take care of yourself – get enough rest and eat well;
Exercise – helps relax your body;
Communication – using good communication skills can often prevent or relieve stress;
Using self-talk – much of our stress is due to the conversations that we have with ourselves. Talk to yourself in a more
positive way;
Assertiveness training – how to express your thaughts and feelings in such a way that the rights of others are not violated;
Time management skills – learn to better manage your time;
Use of biofeedback- a special machine that detects stress in your body that you usually don’t notice;
Anger Management – take classes;
Leisure/Recreational activities – get away from daily concerns and do something for yourself;
Support Systems – share stress and receive support from those who care about you;
Spirituality – involve getting in touch with yourself to find the meaning in your life.
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000), p.296
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall, 2000), p.296-7
94
17. Seek professional help – if these techniques don’t work you may need professional help; 96
Taking care of your health is a lifelong process and will require changes in your lifestyle. Each person has choices. Managing
stress in a positive way starts with making the choice to change behaviour. Learn to identify the stress triggers in your life and
take steps to cope with stress in a positive way. Your ability to relax, learn how to handle stress, and to heal yourself is an
important part of a healthy lifestyle. All it takes is patience, practice, and time.
KEY TERMS
Conflict
Constraints
Dysfunctional Conflict
Functional Conflict
Karoshi
Role Ambiguity
Role Demand
Role Overload
Stress
Stressors
WEB LINKS
Managing Conflict, A Guide for Watershed Partnerships
http://www.ctic.purdue.edu/KYW/Brochures.ManageConflict.html
Ten tips for Managing Stress
http://www.fredsphoto.on.ca/stress.htm
Top ten strategies for wildly effective stress management
http://caps.unc.edu/Mstress.htm
How to Deal with Stress
http://www.iss.stthomas.edu/studyguides/stress.htm
Mind Tools: Stress Management Techniques
http://www.mindtools.com/pages/article/new/TCS_00.html
Your Health: Stress Management
http://www.crha-health.ab.ca/hlthconn/items/StressMgmt.htm
Conflict Management Test
http://www.psychtests.com/test/relationships/conflict_management_access.html
96
Calgary Health Region Heart Health/ Learning and Development reviewed august 2002, available: http://www.crhahealth.ab.ca/hlthconn/items/StressMgmt.htm [January 31 2003]
95
Type A Personality
Type B Personality
17. Leadership
What is Leadership?
L
eadership, in its management application is the process of influencing individuals and groups to set and achieve goals.
Influence is the power to sway other people to one’s will or views. Leaderships involve three variables:
1. The leader
2. Those being led
3. The circumstances and situation
The leader, just like those being led, is a human with various skills, traits, knowledge, personal philosophies, and ethical beliefs.
Leadership traits, skills and behaviours
Leadership traits
As you know leaders possessed certain traits that lay at the root of their ability to lead. Here is a list suggested by Gary Yukl:97
Traits
Skills
Adaptable
Alert to social environment
Ambitious and achievement-oriented
Assertive
Cooperative
Decisive
Dependable
Dominant (desires to influence others)
Energetic (high activity level)
Persistent
Self-confident
Tolerant of stress
Willing to assume responsibility
Conceptual ability
Creativity
Diplomacy
Fluency in speaking
Knowledge about the group task
Organizational (administrative) ability
Persuasiveness
Social ability
Figure 24 - Leadership Skills and Traits
No list of leadership traits and skills can be definitive; no leader is exactly the same. They all may possess different traits from
this list.
Leadership skills
A person’s skills are the competencies and capabilities he or she possesses. Just look at the list above. These skills include
diplomacy, fluency in speech (communication skills), persuasiveness, and social ability.
Leadership behaviours
Gary Yukl says also lists nineteen categories of “meaningful and measurable” leadership behaviours. Just look at the following
behaviours:98
1. Performance emphasis: This means that the leader emphasizes the importance of subordinate performance, tries to improve
productivity and efficiency, tries to keep subordinates working up their capacity, and checks on their performance.
2. Consideration: This means that the leader is friendly, supportive, and considerate toward subordinates and strives to be fair and
objective. For example: When a subordinate is upset about something, the supervisor is sympathetic and tries to console others.
97
98
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations (South-Western, 2002) p 453
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations( South-Western, 2002) p 455
96
3. Inspiration: Implies that the leader stimulates subordinates’ enthusiasm for the work of the group and says things to build
subordinates confidence in their ability to perform assignments successfully and attain group objectives.
4. Praise-recognition: Means that a leader rewards subordinates with effective performance, shows appreciation for their special
efforts and contributions, and makes sure they get credit for their helpful ideas and suggestions.
5. Structuring reward contingencies: Signifies that a leader rewards effective subordinate performance with tangible benefits. Such
benefits include pay increases, promotions, preferred assignments, a better work schedule, and time off.
6. Decision participation: Is the extent to which a leader consults with subordinates and otherwise allows them to influence
decisions.
7. Autonomy-delegation: Is the extent to which a leader delegates authority and responsibility to subordinates and allows them to
determine how to do their work.
8. Role clarification: is the extent to which a leader informs subordinates about their and responsibilities, specifies the work and
policies that must be observed, and lets subordinates know what is expected of them.
9. Goal setting: means that a leader emphasises the importance of setting specific performance goals for each important aspect of a
subordinate’s job, measures progress toward the goals, and provides concrete feedback.
10. Training-coaching: means that a leader determines training needs for subordinates and provides any necessary training and
coaching.
11. Information dissemination: means that a leader keeps subordinates informed about developments that affect their work, including
events in other work units or outside the organization; decision made by higher management; and progress with superiors or
outsiders.
12. Problem solving: means that a leader takes the initiative in proposing solutions to serious work-related problems and acts
decisively to deal with such problems when a prompt solution is needed.
13. Planning: occurs when a leader or manager decides how to organize and schedule work efficiently, plans how to attain workunit objectives, and makes contingency plans for potential problems.
14. Coordinating: means that a leader coordinates the work of subordinates, emphasizes the importance of coordination and
encourages subordinates to coordinate their activities.
15. Work facilitation: means that a leader obtains for subordinates any necessary supplies, equipment, support services or other
resources, eliminates problems in the work environment, and removes other obstacles that interfere with the work.
16. Representation: means that a leader establishes contacts with other groups and important people in the organization, persuades
them to appreciate and support the leader’s work unit, and influences superiors and outsiders to promote and defend the
interests of the work unit.
17. Interaction facilitation: means that a leader tries to get subordinates to be friendly with each other, cooperate, share information
and ideas, and help each other.
18. Conflict management: This means that a leader restrains subordinates from fighting and arguing, encourages them to resolve
conflicts in a constructive manner, and helps settle disagreements between subordinates.
19. Criticism-discipline: This means a leader criticizes or disciplines a subordinate who shows consistently poor performance,
violates a rule, or disobeys an order. Disciplinary actions include official warnings, reprimands, suspensions, and dismissals.
Management versus Leadership
Management and leadership are not synonyms. Managers plan, organize, staff, lead, and control. But ideally, leadership and
management skills combine to allow a manager to function as a leader. A manager who gives orders or explicit instructions is not
97
leading but impeding productivity. Leaders empower—they give people the things needed to grow, change, and be more
productive.
In other words, managers are appointed and have legitimate power that allows them to reward and punish, influence by
authority. On the other hand, leaders’ influence comes from performance beyond the action of formal authority.
Figure 25 - Management versus Leadership
Leaders’ vision becomes a role model for managers. Some leaders are called transformational leaders because they are able to
create fundamental changes in their organizations’ values.
Management
Planning and budgeting: Establishing detailed steps and timetables for achieved needed results and then allocating the resources
necessary to make them happen.
Organizing and staffing: Establishing a structure for accomplishing plan requirements, staffing that structure with individuals,
delegating responsibility and authority for carrying out plans, providing policies and procedures to help guide people, and
creating methods or systems to monitor implementation.
Controlling and problem-solving: Close monitoring of results in terms of the plan, identifying deviations and then planning and
organizing to solve these problems.
These management functions produce a degree of predictability and order and consistently achieve the key results expected by
various stakeholders (for customer, being on time; for stockholders, being on budget)
Leadership
Establishing direction: Developing a vision of the future, often the distant future, and strategies for producing the changes needed
to achieve that vision.
Aligning people: Communicating the direction by words and deeds to all those whose cooperation may be needed to influence the
creation of teams and coalitions that understand the vision and strategies and accept their validity.
Motivating and inspiring: Energizing people to overcome major political, bureaucratic, and resource barriers by satisfying basic, but
often unfulfilled, human needs.
The leadership functions produce change, often to a dramatic degree, that has the potential, of being extremely useful.
98
Power and leadership
Power gives the ability to exert influence over others, to get them to follow; it makes leadership possible. Leaders possess power
in five foundation stones of leadership:
1. Legitimate Power: Managers’ formal authority derives from their position in their organizations, which each position’s job
description usually specifies. A leader has the right to assign work and establish standards. Employees understand their duties.
2. Coercive Power: One result of the exercise of legitimate power is that a person has formal authority to punish a subordinate’s
unacceptable outcomes and performances. A coercive use of power includes oral and written warnings, suspension, and firing;
these are the result of inappropriate behaviour.
3. Reward Power: The opposite of coercive power is reward power this means the right to promise or grant rewards, such as raises,
praises, promotion, and so on; this is often the result of exercising legitimate power. This is to attract good manners and
motivation.
4. Expert Power: A person’s abilities, skills, knowledge, and experience can exert influence when others value them. An example of
expert power involves a trainer or a coach using it to impact his or her knowledge, skills, and attitudes to trainees.
5. Referent Power: Power that comes to people because of the kind of personality or personal attractiveness they have to others is
known as referent, or charismatic, power; it creates in people a desire to associate with or emulate the person who has it. Your
personality, sense of humour, openness, honesty, and other endearing traits can draw others to you.
Leadership styles
The perceived approaches and behaviours a manager uses to influence others constitute the manager’s leadership style.
Positive versus negative motivation
How leaders motivate others to achieve goals depends on the style they use. Positive style would include praise, recognition, or
monetary rewards or by adding employee responsibilities. A positive style encourages the development of employees and results
in a higher level of job satisfaction. Negative style would include sanctions, fines, suspension, and termination. This would result
in an environment of fear and would create a sense of dictatorship rather than leadership.
Leaders have three decision-making styles:
1. Autocratic style
2. Participative style
3. Free-rein style
Autocratic style is a leadership approach in which a manager does not share decision-making authority with subordinates.
Participative style is a leadership approach in which a manager shares decision-making authority with subordinates.
Free-rein style is a leadership approach in which a manager shares decision-making authority with subordinates, empowering
them to function without direct involvement from managers to whom they report. In other words, they are directly involved
with the managers to whom they report.
99
KEY TERMS
Leadership
Inspiration
Work Facilitation
Coordinating
Representation
WEB LINKS
Leadership journal
http://www.christianitytoday.com/leaders/
Dimensions of Sustaining Leadership
http://www.ed.gov/pubs/Leadership/ch2a.html
Organizational Leadership & Management is not easy
http://www.buycrki.com/LeadershipManagementTraining.htm?source=overture
Leadership Qualities
http://www.nsba.org/sbot/toolkit/LeadQual.html
The Best Leader I Ever Knew
http://management.about.com/library/weekly/aa111100.htm
100
PART
V
CONTROLLING
18. Control
What is Control?
C
ontrol is the process of monitoring activities to ensure that they are being accomplished as planned and correcting any
significant deviations.99 It is very difficult for managers to really know whether their units are performing properly, until
they have evaluated what activities have been done and have compared the actual performance with the desired standard.
Organizational goals are met once there is an effective control system that ensures activities are completed.
The Control Process
The control process consists of three separate and distinct steps:
1.
2.
3.
Measuring actual performance
Comparing actual performance against a standard
Taking managerial action to correct deviations or inadequate standards
1. Measuring actual performance
Measuring is used to determine actual performance; the manager needs to acquire information about it.
The four common sources of information mostly used to measure performance are:
Personal observations: provides information that is not filtered through others;
Statistical reports: are presented by graphs, bar charts, or numerical displays of any form that managers can use for assessing
performance;
Oral reports: through conferences, meetings, one-to-one conversations, or telephone calls;
Written reports: through memos, performance appraisals, etc.
2. Comparing actual performance against a standard
The comparing step determines the degree of discrepancy between actual performance and the standard.
Since there might be some variation in performance, it is important to determine the range of variation, that is the acceptable
parameters of variance between actual performance and the standard. 100
3. Taking managerial action to correct deviations or inadequate standards
Managers can choose among three courses of action:
 They can do nothing;
 They can correct the actual performance;
 They can revise the standard.
99
Robbins, coulter, Stuart-Kortzse, Management - (Canadian Sixth Edition, 2000), p.332
Robbins, coulter, Stuart-Kortzse, Management - (Canadian Sixth Edition, 2000), p.337
100
101
Immediate corrective action gets performance back on track and corrects problems at once. Basic corrective action
determines how and why performance has deviated and then corrects the source of deviation. 101
Effective managers analyze deviations and when the benefits justify it, take the time to permanently correct significant variances
between the standard and actual performance
Controlling Inputs, Processes and Outputs
Controls can be applied before the production process starts (input controls), during the production process (process controls),
or after the production process has been completed (output controls).
Control Inputs:
Managers use input controls as a means of prevention measure. Input controls (also called feed forward or prevention controls)
monitor the material, human and capital resources that come into the organization. 102 For example, Four Seasons Hotels places
strong emphasis on controlling inputs so that customers get the service they expect.
Controlling Processes:
Process controls focus on the activities that transform inputs into outputs. Process controls (also called steering or concurrent
controls) are applied while the product or service is produced.103 Interaction between bosses and subordinates provides control
by keeping up to date with the production of goods and services. The interaction processes helps the managers and the workers
become aware of problems as they develop and also suggests actions that might be necessary to get work back on track.
Controlling Outputs:
Managers use output controls to assess the results of the production process. Output controls (also called comparison or yes-no
controls) are used to determine whether deviations from standards have occurred in a product or service. 104 An example of
output controls includes a coach assessing a basketball player’s offensive and defensive statistics.
Type of Controls
Managers can implement controls before an activity starts, while the activity is going on, or after the activity has been completed.
Feedforward control is the most desirable type of control and prevents anticipative problems because it takes place in advance
of the actual activity. This control allows management to prevent problems rather than having to cure them later.
Concurrent control takes place while an activity is in progress. This control helps manager’s correct problems before they
become too costly.
Feedback control is the control that takes place after the action. The major drawback of this type of control is that by the time
the manager has the information the damage has already been done. Feedback provides managers with meaningful information
on how effective their planning effort was. Feedback that indicates little variance between standard and actual performance is
evidence that planning was generally on target.
A Control system is one in which feedforward, concurrent, and feedback controls operate in harmony to ensure that standards
are enforced, goals are reached, and resources are used effectively and efficiently. 105
Qualities of effective control systems
Effective control systems tend to have certain qualities in common. The importance of these qualities varies with the situation,
but we can generalize that the following characteristics should make a control system effective. Controls should be:
101
Robbins, coulter, Stuart-Kortzse, Management - (2000), p.338
Dessler, Starke, Cyr, Management- Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.482
103 Dessler, Starke, Cyr, Management- Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.485
104 Dessler, Starke, Cyr, Management- Leading People Organizations in the 21st Century, (Pentice Hall, 2001), p.485
105 Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.534
102
102
* Accurate: An accurate control system produces valid data and is reliable. A control system that generates inaccurate
information can result in management’s failing to take action when it should or responding to a problem that doesn’t work.
* Timely: It is important that an effective control system provide timely information. A control should call management’s
attention to variations in time to avoid limiting the unit’s performance.
* Economical: A control system must be economically reasonable. Any system of control that has to justify the benefits that it
gives in relation to the costs it incurs. To minimize costs, management should try to impose the least amount of control
necessary to produce desired results. 106
* Flexible: It is important for controls to be flexible enough to adjust to problems or to take advantage of new opportunities.
* Understandable: Controls that cannot be understood have no value. A control system that is hard to understand can cause
unnecessary mistakes, frustrate employees, and eventually be ignored.
* Reasonable: Control standards must be reasonable and attainable. Employees might resort to unethical or illegal shortcuts
because most employees don’t want to risk being labelled incompetent by accusing superiors of asking them too much. Control
should enforce standards that challenge and help people reach higher performance levels without demotivating them or
encouraging deception.
* Strategic: Managers need to place controls on factors that are strategic to attain organizational performance. Controls should
cover the critical activities, operations, and events within the organization.
* Acceptability: People must agree that controls are necessary, particular kinds of controls in use are appropriate and controls
will not have negative impacts on individuals or their efforts to achieve personal goals.
Control Techniques
Control techniques are devices designed to measure and monitor specific aspects about the performance of an organization, its
people and its processes.107
106
Robbins, coulter, Stuart-Kortzse, Management - (Canadian Sixth Edition, 2000), p.341
107Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.548
103
FINANCIAL CONTROL TECHNIQUES
________________________________________________________________________________________________
*Plans
*Financial responsibility
centers
*Ratio analysis
*Financial
statements
*Financial ratios
*Budgets
*Audits
MARKETING CONTROL TECHNIQUES
*Plans
*Test marketing
*Sales quotes
*Budgets
*Market
research
*Marketing ratios
*Stockage models
*Audits
OPERATIONS CONTROL TECHNIQUES
*Prototype
*Decision support
and pilot systems
testing
*Expert systems
*Budgets
*Security
systems
*Software programs
*Audits
*Networks
Figure 26 - Control techniques for common functional areas of a business
Financial Controls
Finance managers need to gather as well as generate information about all aspects of the organization’s operations in order to
determine its current and future ability to meet its financial obligations. With the of use of an organization’s strategic plans,
financial managers measure and monitor ongoing operations, and prepare estimates and forecasts for future success.
Financial Statements
Two primary financial statement are used by nearly all organizations, the balance sheet and the income statement.
The balance sheet identifies the assets of a business and the owners’ interests in them. The equation that describes the content
of a balance sheet is:
Assets = liabilities + shareholders’ equity.
The income statement presents the difference between an organization’s income and its expenses to determine whether the
business operated at a profit or a loss over a period of time. 108
The equation that describes an income statement is:
Income – Expenses = Profit or loss
108Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.551
104
Both are used to prepare budgets and other kinds of plans and controls as well as to monitor the organization’s financial
position.
Financial Ratio Analysis
A ratio is used to express the relationship between numbers. It can be expressed in words, as a percentage, or as a decimal.
A financial ratio involves selecting two critical figures from a financial statement and expressing their relationship as a ratio or a
percentage. Financial ratios help accountants and others measure a company’s progress toward goals and assess its financial
health.109
There are several types of ratios:
Liquidity Ratios: Managers use liquidity ratios to measure the ability of a firm to raise enough cash to meet short-term debts.
Profitability Ratios: Managers use profitability ratios to study a company’s profits from several perspectives. For example, they
can be used to calculate profits generated from sales or to calculate the profit generated from owner’s investment.
Debt Ratios: A debt ratio expresses an organization’s capacity to meet its debts.
Activity Ratios: Activity ratios are used as a key element in internal areas to reveal performance. An example of this is when
managers wish to assess inventory tools. Several different activity ratios are helpful inventory net working capital, current
liabilities to inventory, and average inventory levels to total sales.
Financial Audits
Financial information is only as good as the data and interpretation on which it is based. Audits are formal investigations
conducted to determine if financial data, records, reports, and statements are correct and consistent with the organization’s
policies, rules and procedures. Insiders or outsiders may conduct audits. 110
There are two types of audits:
 Internal audits
 External audits
Internal audits: It is important for most companies to maintain controls to determine if people are handling corporate financial
activities according to policy and procedural, legal and ethical guidelines. Most accounting systems incorporate controls to
guarantee adherence to procedures.
External audits: An independent public accounting firm usually conducts an external audit. Such firms have specific people
working for them such as certified public accountants who provide expert accounting and management services. Their duties
consider a thorough inspection and analysis of policies, procedures, and records as the auditors believe may be applicable to the
situation.
Budget Controls
The primary financial control used to manage operating organizations is a budget. A budget is a plan and control mechanism for
the receipt and spending of income over a fixed period.
Budgets serve managers in four important ways:
1.
2.
3.
4.
They expedite allocation and coordination of resources for programs and projects.
They operate as powerful monitoring system when supplemented with periodic budget updates.
They provide rigorous guidelines for managers by setting limits on expenditures.
They facilitate evaluation of individual and department performance.111
109Plunkett,
110Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.555
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.559
105
Marketing Controls
Marketing managers must work closely with others in finance and operations for designing, pricing, promotion and distributing
products and services. It is also important for them to determine product and service features and performance characteristics
that meet or exceed customer expectations. But they must build these at a price consumers are willing to pay and must also be in
line with allocated funds.
Marketing Research
Marketing research falls under the control technique of feedforward. It consists of gathering and analysing geographic,
demographic, and psychographic data. In order to meet specific needs, research analysis helps planners decide what potential and
current customers want and need so that the planners can design products and services.
Marketing research falls into different types of data:
1.
2.
3.
Demographic data, which refers to people’s income, age, gender, occupation, martial status or education.
Geographic data, which describes where people live by region, neighbourhood, or type of housing.
Psychographic data, which relates mostly to people’s attitudes, interests, and opinions.
Marketing Ratios
Marketing managers must track and control their costs in order to monitor ongoing operations and determine needs for
improvements by using various ratios. Frequently used measures include the ratio of profit to sales, costs of selling to gross
profit, sales calls to orders generated, and changes in sales volume to price change.
Sales Quotas
In many organizations each salesperson operates with a sales quota — a minimum dollar amount of sales within a specific time
period to justify his or her salary. Many salespeople work on a commission-only basis, earning money in direct proportion to and
as a fixed percentage of the value of the goods or services they sell.112
Salespeople can easily be stimulated with commissions and quotas, which help them to meet or exceed specific quantity goals,
but they can also lead to abuses.
Human Resource Controls
Human resource managers employ diverse control techniques. The most frequently used are statistical analysis, human asset
valuation, training and development, and performance appraisal. Each control helps to provide information about the
productivity of the workforce and the quality and quantity of individual and group performance.
Statistical Analysis
Companies need to gather and store data about the composition of their workforce, compliance with equal opportunity
guidelines, employee turnover and absenteeism, and effectiveness of recruiting and compensation efforts. 113 For companies to
forward their daily activities they need data about managerial and individual effectiveness, levels of job satisfaction and
motivation, and company safety and health.
Human Asset Valuation
Various monitoring devices help managers assess the value of each employee to a company. One approach focuses on
accounting and the other on promotability of each employee. Human asset accounting treats employees as assets not
expenses, by recording money spend on people as increases in the value of those assets. 114
111Plunkett,
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.560
Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.568
113Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.569
114 Plunkett, Attner, Allen, Management – Meeting and Exceeding Customer Expectations, (South Weatern/ Thomson Learning, 2002), p.571
112Plunkett,
106
Managers who use human asset accounting realize that each person represents a sizeable investment of company resources and
these managers focus on the commitment to retain good people.
Training and Development
Training and development consists of knowledge, skills and attitudes necessary for successful job performance.
Performance Appraisals
The most important control device for human resource managers is the use of a regularly scheduled legal, objective and equitable
appraisal system. The focus of such a system must be on comparing employee’s performance against standards established for
them and then sharing results.
KEY TERMS
Audit
Balance Sheet
Basic Corrective Action
Budget
Concurrent Control
Control
Control System
Control Techniques
Feedback Control
Feedforward Control
Human Asset Accounting
Immediate Corrective Action
WEB LINKS
What is Control?
http://www.insider.com/
The Control Process
http://www.controlprocess.com/
107
Income Statement
Input Controls
Output Control
Process Controls
Range of Variation
19. Operations Management
What is Operations Management?
O
perations Management refers to the design, operation, and control of the transformation process that convert resources
such as labour and raw materials into finished goods and services115. A manager needs to be familiar with the Operations
Management concept to be able to achieve goals and objectives more efficiently. Operations Management is present everywhere
not just in manufacturing but also in service organization such as educational institution and hospital for example.
The nature and importance of Operations Management
The principal objective in an organization is to have a high degree of success and to have more profit. The most important thing
that we must take in consideration to achieve these goals is the production of good and services to sell. Many managers have
discovered that the operation strategy and operation system are directly related to their success. Productivity and quality are the
improvement of Operations Management.
The transformation process
The majority of organisations produce goods or services through a transformation process. In a very simplified fashion, every
organization has an operations system that creates value by transforming inputs into outputs. The systems takes inputs- peoples,
capital, equipment, materials- and transform them into desired finished goods and services116.
OUTPUTS
INPUTS
-Raw materials
-Human Resources
-Capital
-Information
-Technology
-Goods
-Services
TRANSFORMATION
PROCESSES
Figure 27 - Flow of Operations
There are two kinds of transformation: the first one is like Nike who produces sport items or a car manufacturer such as Honda
who produces physical goods. The second one is the service organization that produces non-physical service such as medical,
educational, or transportation services that are intangible. These services cannot be stored in inventory. However, each
organization that produces goods and services has similar operational problems:



Each is concerned with converting resources into something saleable;
Each must acquire materials or supplies to achieve that conversion;
Each must schedule the processes and ensure quality.
Technology and Productivity
Technology is how an organization transforms its inputs into outputs 117. Also, technology includes the equipment and the
operating method used to increase productivity. In recent years, organisations have substituted human labour by robotics and
computers. The advantage of robotics provides greater precision than do humans. The disadvantage of robotics includes capital
expenditure, maintenance costs and malfunctions. For example, companies such as Bombardier or General Electric have been using
Robbin, Coulter, Stuart-Kotze, Management Prentice Hall, 2000), p. 450
Robbin, DeCenzo, Stuart-Kotze, Fundamental of management (Prentice Hall, 2002), p. 358
117 Robbin, DeCenzo, Stuart-Kotze, Fundamental of Management (Prentice Hall, 2002), p. 358
115
116
108
automated offices, robotics in manufacturing, computer-assisted design software, integrated circuits, microprocessors and
electronic meetings. These technological advances make organisations more productive and help them create and maintain a
competitive advantage.
Productivity is the result of many aspects such as employees, managers, and technology. Productivity can be expressed in the
following ratio:
Productivity = Output / (Labour + Capital + Material).
Increasing productivity is the key of success for international competitiveness. If an employee has good working condition,
he/she will be more motivated to work increasing productivity. Managers must implement better work environments to give the
opportunity to their employees to use their creativity and knowledge more efficiently. For example, CN has implemented a small
physical fitness centre in the building for their employees. Everyone knows that a person in good health will be more alert,
energetic, and productive.
Customer driven operations
It’s the customer who determines the success of a company and it’s the customer who determines the demand. The majority of
people prefer to be treated as a unique person because everyone has different needs. So, if the company gives better personalised
service and quality to their clients, they will be satisfied and will become loyal customer. Successful organisations need to take in
consideration four things:
1.
2.
3.
4.
Think constantly about who their customers are;
Maintain close and frequent contact with their customers;
Determine how to provide products in a way that competitors cannot imitate;
Determine how to satisfy customer’s current, anticipated, and even unanticipated needs.
Planning Operations
In the case of an organization’s operation, the planning stage involves product or service design planning, capacity planning,
facility planning, and process planning.
Product or Service design planning
Production planning analyses sales forecasts and orders and decides on the manufacturing resources (capacity, materials and labour)
required to meet current and anticipated demand
There are two kinds of design concept: 1- Design for manufacturability and Assembly, 2- design for disassembly.
Design for manufacturability and Assembly means considering, during the design stage, how products will be manufactured and
assembled118. For example, at Ford Motor, the Taurus’s design team includes process, product, and manufacturing engineers,
designers, marketers, financial experts, suppliers, and factory-floor workers. Five criterion are included in DFM/A product and
service design:
1.
2.
3.
4.
5.
Producibility: the degree to which the product or service can be manufactured for the customer within the
organization’s operational capacity.
Cost: includes the price of everything in the production such as labour, materials, design, overhead, and transportation.
Quality: the excellence of the product or service and is the serviceability and value gained by purchasing the product.
Reliability: the degree to which the customers can count on the product or service to fulfill its intended purpose.
Timeliness: There is an appropriate date and time for each product or service.
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectation, (South Western/Thomson Learning, 2002), p.
585
118
109
Design for Disassembly means considering, during the design stage, to conceive, develop, and build a product with a long-term
view of how its components can be refurbished, reused, or disposed of safely at the end of the product’s life cycle119. For
example, Interface has developed a new polymeric carpet material that can be remanufactured.
Capacity planning
Capacity planning is a part of Operations Management that determines the capability of an organization to produce goods and
service necessary for the demand. Many things can be implemented to increase the capacity such as building new facilities,
creating additional shifts and hiring new staff, paying present staff overtime, subcontracting work to outside firms, or refitting
existing plans. On the other side, if a company wants to reduce capacity, they can lay off workers, reduce the hours of operation,
and close facilities.
Facilities planning
The location of a company is important because to keep your price competitive, you might want to locate close to your
customer. The location of a company depends on which factors have the greatest impact on the production. Some of these
factors include: location of the market where the product will be sold, availability of skilled labour, labour costs, proximity to
suppliers, tax rates, construction expenses, utilities rates, and quality of life for employees.
Process planning
In process planning, management determine how a product or service will be produced120. When we change something in process
planning such as cost, quality or labour, there is the effect on the other element. Many questions are important in the process
planning:




Will the technology be routine or non-routine?
What degree of automaton will be used?
Should the system be developed to maximize efficiency or flexibility?
How should the product or service flow through the operation system?
Controlling Operations
Cost Control
Cost Control is initiated and controlled by the accounting staff. This department establishes a cost standard per unit and if there
is a deviation, it’s the manager who verifies the cause. Cost control needs to play a central part in the design of an operations
system, and it needs to be a continuing concern of every manager121. In an organization, there are two kind if costs: direct and
indirect. Direct costs are incurred in proportion to the output of a particular good or service. Indirect cost are largely unaffected
by changes in output. For example, rent and utilities are indirect costs.
Design control
Before a product is produced, the team who works on the design have the opportunity to insert their creativity, quality and
performance control. Design Control is a part of operation control that creates new product (new design) for reliability,
functionality and serviceability. The person who works at this stage integrates a connection between consumer needs and
production capabilities. Some companies such as Ford with Taurus work directly with consumers to establish quality and design.
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectation, (South Western/Thomson Learning, 2002), p.
587
120 Robbin, Coulter, Stuart-Kotze, Management Prentice Hall, 2000), p. 457
121 Robbin, Coulter, Stuart-Kotze, Management Prentice Hall, 2000), p. 461
119
110
Supply Chain Management
Supply Chain Management includes facilities, functions and all activities from product planning to delivery that are produced
from supplier to customer. Supply Chain Management focuses on “estimating the demand for a product or service, planning and
managing supply and demand; acquiring materials; producing and scheduling the product or service; warehousing, inventory
control, and distribution; and delivery customer service” to provide customer quality products at the lowest possible cost 122. To
promote the supply chain, one of the ways that organisations use is to vertically integrate their processes. For their finished
product, a business owns or significantly controls the supplier that provides vital materials. An organisation that reduces the
number of vendors to oversee its operation is called a variation of supply chain management.
Materials, Purchasing and Inventory Control
Purchasing is obtaining needed goods and services. The objective of purchasing control is to ensure that the quality of materials
is available and acceptable at an optimal cost from competent and reliable sources. Many reasons shows the importance of
purchasing: If we don’t have the material at an appropriate date, nothing can be produce and if the quality of material is inferior,
producing quality product is difficult or costly.
Inventory is the goods an organization keeps on hand 123. To sustain the proper flow of material while maintaining adequate
inventory levels and minimum cost is the goal of inventory control. There are three types of inventory control: raw material,
work-in-process and finished goods.
Inputs
Transformation
processes
Outputs
Raw Material
Inventory
Work-in-process
Inventory
Finished goods
Inventory
Figure 28 - Three types of inventory
Project Management
Project Management is the task of getting activities completed on due date, within an appropriate budget and with some
specifications. In the typical project, team members are to report to a Project Manager. They coordinate the project’s activities
with other department in an organization and report to a senior executive.
Scheduling Control / Tools
An important element of operation control is schedule control because the manager must detail what activities have to be done,
the order in which they are to be done, who is to do each, and when they are to be completed. Gantt chart and PERT are two
basic scheduling techniques.
A Gantt chart is a bar graph with time (in months) on horizontal axis and activities schedules on vertical axis. This graph shows
when activities are supposed to be done and it compares the assigned date with the actual progress on each.
PERT or Program Evaluation and Review Technique is a flowchart like diagram that depicts the sequence of activities needed to
complete a project and the time or cost associated with each activity 124. A manager who uses PERT does three things: determines
Robbin, DeCenzo, Stuart-Kotze, Fundamental of Management (Prentice Hall, 2002), p. 373
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectation, (South Western/Thomson Learning, 2002), p.
600
124 Robbin, DeCenzo, Stuart-Kotze, Fundamental of Management (Prentice Hall, 2002), p. 378
122
123
111
what has to be done, determines which events depend on one another and identifies potential trouble spots. Finally, many
reasons show why an organization could use PERT: for design and construct facilities, to prepare environmental studies, to
conduct research and development, to design software, and to plan large conference.
KEY TERMS
Customer-driven operations
Gantt Chart
Operations Management
Producibility
Reliability
Supply Chain Management
Timeliness
PERT
Project Management
WEB LINKS
Operation Management: An overview
http://www.arunk.com/iiit/fifth_semester/operations_mgt/operation_management.htm
What is Operations Management?
http://www.staffs.ac.uk/schools/business/operations/whatis.html
Operations Management
http://www.mapnp.org/library/ops_mgnt/ops_mgnt.htm
An introduction to Operations Management
http://members.lycos.co.uk/tomi/whatis.html
112
20. Power and Political Behaviour
Power
The interest in organizational power has been inspired by dissatisfaction with conventional approaches. The study of power
in organizations can prevent problems, as it is rather a slippery concept, difficult to pin down and define. Power is a major
concern of organizational theorists and it inevitably gets mixed up with the forms of power that occur in wider society. Within
organizations politics is often regarded with great distaste as the main barrier to getting on with the job.
Power is the ability to exert influence in the organization 125. In other words, power is the extent to which an individual is able
to influence others so that they respond to orders. The terms power and authority are frequently confused. Authority is
positional, whereas power is personal. Two managers can occupy the same positions in an organization (i.e.: with the same
authority) and still not be equally effective in the organization because one manager possesses more power than the other.
Authority is part of the larger concept of power. For example, corrective action must be implemented after a manager has
studied actual performance versus planned performance. Although the manager has a lot of authority, the orders may or may
not be followed, depending on how much power the manager has over his or her employees.
The total power a manager possesses is made up of two kinds of power:
1.
2.
Position power: is the power derived from the organizational position a manager holds. An upper-level manager
has more position power than a lower-level manager.126
Personal power: is the power derived from a manager’s relations with others. 127
Types of Power
French and Raven (1959) developed a scheme of five categories of power:
1.
2.
3.
4.
5.
Legitimate power and authority are synonyms. Legitimate power represents the power a person has as a result of
his or her position in the organizational hierarchy 128. Specifically, it implies that the members of an organization
accept the authority of a position. An employee’s instructor, manager, or team leader has the right to assign work,
establish standards for its execution, and apply those standards to both outcomes and behaviours of subordinates.
Coercive power is defined as being dependent on fear129. The employee will react to this power because of the
negative results that might happen if he or she does not comply. A few of the possible results from the exercise of
coercive power include oral and written warnings, suspension, and firing.
Reward power is the opposite of the coercive power. It is the right to promise or grant rewards such as raises,
praise, promotions, and so on. People are attracted by rewards. On the other hand, when rewards are promised
and are not granted in a timely manner, they will probably have a negative impact on the employee’s motivation.
Of course, the employee has to earn the reward before being granted or it diminishes its value and importance to
the individual.
Expert power is influence wielded as a result of expertise, special skill, or knowledge 130. With job specialization,
management has become more and more dependent on “staff experts” to achieve the organization’s goals. As an
employee increases his or her knowledge in a certain field, and that nobody else has the level of knowledge, this
employee gains expert power.
Referent power is the power that arises from identification with a person who has desirable resources or personal
traits131. An employee’s personality, sense of humour, openness, honesty, and other traits can draw other
employees to him or her. However, not everyone is attracted by the same personalities or traits therefore this kind
of power is possessed nearly by everyone to some degree.
125
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.243
Certo, Owens, Sales, Modern Management in Canada (Prentice Hall, 1998), p.479
127 Certo, Owens, Sales, Modern Management in Canada (Prentice Hall, 1998), p.479
128 Coulter, Robbins, Stuart-Kotze, Management, (Prentice Hall, 1999), p. 414
129Coulter, Robbins, Stuart-Kotze, Management, (Prentice Hall, 1999), p. 414
130 Coulter, Robbins, Stuart-Kotze, Management, (Prentice Hall, 1999), p. 415
131 Coulter, Robbins, Stuart-Kotze, Management, (Prentice Hall, 1999), p. 415
126
113
Managers can become leaders when they couple their legitimate power with one or more other types of power. Moreover, it is
possible to be a leader without being a manager and a manager without being a leader.
Sources of Power
In modern organisational life, various sources of power are used to get others to do something they otherwise would not do.
The principal sources of power are:
1. Expectations, values and language of today: It incorporates words and phrases that focus attention on matters
we regard as important today. If we lived in 1800, our expectations, values and language may result in different
interpretations about what we regard as good, immoral, or true. We see principles, needs, trends, opportunities
and threats differently than in the past.
2. Speaking fluently: if someone speaks fluently, he or she will be empowered and may also empower others to
create, direct, and dominate organisational relationships.
3. Property ownership and institutionalised law: “It’s my business, I own it, and I make the decisions”.
4. Personality and skill in building influence and reputation.
5. Family interest and traditions: can affect the family-owned business.
6. Company, charity, club, and trade union activities can be controlled by interest groups who manoeuvre for
position.
7. Democracies: the power to rule rests with its people.
8. Autocracy: an individual or a small group holds the power to govern, control and own resources through force
and ability to reward followers. They define the rights, privileges and rules of behaviour.
9. Bureaucracy: control is achieved via rationally defined, accepted procedures and regulations which guide activity
(“the rule of law”). Those who know and can use the rules can control decisions and action.
10. Technology driven organisation: experts and problem-solvers acquire influence according to the know-how they
contribute.
11. Co-determination: groups collaborate to manage shared interests jointly via a coalition.
Steps for Increasing Total Power
Managers can increase their level of power by enhancing either their personal power or their position power or both. Generally,
position power is enhanced by moving to a higher position. To increase personal power, a manager should attempt to develop
the following beliefs and attitudes in other organization members:
1.
2.
3.
4.
A sense of obligation toward the manager: If a manager is able to develop this sense of obligation, other members of the
organization will allow the manager to influence them also within certain limits. Doing personal favours for people
is the basic strategy suggested for creating this sense of obligation.
A belief that the manager possesses a high level of expertise within the organization: Most of the time, managers’ personal
power emerges when organization members realise that the manager’s level of expertise is increasing. Managers
must quietly make significant achievements visible to others and build up a professional reputation in order to raise
the perceptions of their expertise.
A sense of identification with the manager: The manager can attempt to develop this identification by behaving in certain
ways that employees respect and by achieving goals, values, and ideas commonly held by them.
The perception that they are dependent on the manager: Here, the main strategy is to convey clearly the amount of authority
(or legitimate power) the manager has over the resources – not only those necessary for employees to do their jobs
but also those employees personally receive in such forms as salaries and bonuses.
Power Strategies and Tactics
Morgan (1986) provides an extensive account of the range of tactics that people employ in pursuit of individual and sectional
interests:



Persuasion: is a form of influence in which people try to amplify their power by convincing others that they possess
power resources that they do not.
Controlling: this involves setting the terms of debate and preventing issues from getting into the bargaining area.
Coalitions and interest groups: they are sponsor-protégé relationships that are informal alliances between senior and
junior staff in which the protégé may assist the more senior person in some specialty area. In return the sponsor will
114

guide the career of the protégé. Coalitions are informal relationships between two or more interested groups for the
purpose of increasing their joint power in relation to some other group or groups. The interest group tactic represents
true political behaviour only when it is actively chosen or used as an occupational strategy.
Professionals: employed professionals have a degree of expert power and are differentiated from other organizational
members. They are quite likely to pursue their interests via their profession rather than the organization.
Understanding Power and Politics
In a perfect world, everybody would receive promotions, raises, and a fair share of desirable and undesirable assignments, based
on merit. Unfortunately, these kinds of decisions are decided by organizational politics. Organizational politics are the
unwritten rules of work life and informal methods of gaining power and advantage 132. The interaction between those in
positions of influence and those seeking influence results in the politics of an organization. These interactions are increased by
power being acquired, transferred, and exercised on others.
Since we know that politics are a way of life, employees and managers should identify the current power structure in an
organization in order to be in an advantageous position. Once we have identified the key people in the power structure, we must
acquire power.
Identifying the power structure is determining the following:




Who are the people to whom the leaders of the organisation rely?
What are the skills and knowledge provided by these people?
Are you able to supply the same knowledge and skills?
Could you learn from these people if they would be your sponsors or mentors?
Acquiring power is doing the following:




Developing expertise in areas critical to the company: Knowledge and reputation that you acquire in a specific area
can provide you the opportunity to participate in projects and lend advice. In today’s marketplace expertise is valued in
quality control, understanding consumer preferences, making teams successful, and working with organizations to solve
problems.
Developing a network of contacts: with a good network, you can acquire information, gather support for new ideas,
and provide expertise for solving problems.
Acquire line responsibility: we have seen before that the position a person holds automatically carries certain power.
Line managers have more power than staff managers because they work to the primary purpose of the organisation.
Solving others’ problems: A very good way to acquire support is to help others to solve problems, whether this
person is a colleague, someone in another department, or a superior. From that, you will get positive reviews and
endorsements.
Working with the Boss
One of the most important strategies in career management is to learn to work with the boss. If an employee does not learn this,
his or her career can be extinguished; an employee should develop a positive alliance with a superior.
Understanding the Boss: In order to work in a friendly atmosphere, you must spend time determining and understanding your
boss’ priorities, objectives, and negative “hot buttons”. The boss will appreciate a valued subordinate that relieves him or her
pressure.
Making the boss successful: More than understanding your boss, you must add to his or her success. After identifying his or
her objectives and priorities, you should develop a set of sub-objectives in order to support these objectives. This is not only
good for career advancement, it is also sound management.
132
Plunkett, Attner, Allen, Management- Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.703
115
Supporting versus bucking the boss: Of course, no boss-subordinate relationship is perfect. There cannot always be
agreement, operations will not always run smoothly, and there will be problems for sure. In these situations, the subordinate has
different alternatives:



Provide solutions rather than register complaints: A subordinate should not only identify problems but he or she should
also provide solutions to these problems.
Practice constructive disagreement rather than rebellion: Here we are talking about disagreement focused on a problem,
not on a person. The outcome of a disagreement is to identify weaknesses and solutions. Once the discussion is over,
the job gets done whether it is win or lose. On the other hand, rebellion means “my way only”. It also means that the
disagreement will continue even after the discussion and even with other people.
Support the decision: Once the boss made a decision, the subordinate should do everything to make it work. Ignoring
the decision will give a negative impression to the manager. However, in situations where decisions taken by a manager
are not satisfying the organisational goals, the subordinate should take the issue to someone other than the boss. In this
kind of situation, having a mentor can be appreciated.
KEY TERMS
Coercive Power
Expert Power
Legitimate Power
Organizational Politics
Personal Power
Position Power
Power
Referent Power
Reward Power
WEB LINKS
Multi-System Management Department
http://dju.prodj.com/courses/mobmanage/c15b.html
Historical Background of Organizational Behaviour
http://web.cba.neu.edu/~ewertheim/introd/history.html
Power and Symbolism
http://sol.brunel.ac.uk/~jarvis/bola/power/symbol.html
Power, Organisations and Management
http://sol.brunel.ac.uk/~jarvis/bola/power/power.html
116
21. Managing for Quality
What is Quality?
Q
uality is defined by both internal and external customer needs, but those needs and expectations are like moving targets—
continually and rapidly changing. Customers continue to want things faster, better, and cheaper. Between you and me,
who does not want that? Today’s customers can choose from the best producers anywhere in the world. This expectation
puts pressure on managers and their organizations. It is because the managers know that the survival and profitability of their
organization are directly linked to meeting or exceeding customers’ needs and expectations. They can satisfy customers by
guaranteeing that all individual efforts and their results possess Quality. Quality is the totality of features and characteristics of a
product or service that bear on its ability to satisfy stated or implied (requirements of those who use or consumer)” 133 in other
words, the consumer. Quality translates into the ability of some person’s, group’s, or organization’s output to meet or exceed, the
needs of another.
Concern for quality, that is, customer satisfaction, begins with the standards and methods used to recruit, hire, train, evaluate,
and reward employees. Concern for quality must exist within every person and process. It must be a core value within an
organization’s culture and within the cultures of its suppliers and partners. As a means to satisfy customers, they must determine
who their customers are and what they require. Finally, employees must make it both a personal commitment and a primary duty
to meet customer needs.
Audits
A Quality Audit determines if customer requirements are being met134. If requirements are not met, auditors attempt to
discover why not. A quality audit can focus on a particular product, process, or project. A team of insiders or outsiders—a
consultant or quality improvement team, for example—can perform the audit.
A Quality Control Audit is a check of quality control efforts that asks two questions: How are we doing? And what are the
problems?135. It focuses on “ the way… the factory builds quality into a given product, control of subcontracting, the manner in
which customer complaints are handled, and the methods of implementing quality assurance at each step of production, staring
from… new product development”.
Quality circle
A Quality circle is a temporary team of approximately 6 to 12 employees/workers who share a problem. It meets regularly
usually once a week until the problem is solved136. Members of a circle are usually volunteers who agree to use their knowledge
and experience to eliminate barriers to both quality and productivity. Such teams are first trained in problem analysis techniques.
Then the quality circle is ready to apply the problem analysis process. In practice, this process has five steps: problem
identification, problem selection, problem analysis, solution recommendations, and solution review by top management.
Quality Function Deployment and Benchmarks
Quality Function Deployment (QFD) is a disciplined approach to solving quality problems before the design phase of a
product137. The purpose of QFD is to assure that the customer obtains high value from a product. QFD uses a matrix that
relates customer requirements and features of competitors’ products to functional design characteristics and customer
satisfaction. For example, Toyota used QFD to design and build the Lexus LS 400. In the initial stages of product design, Toyota
purchased competing cars from Mercedes, Jaguar, and BMW. The process begins with surveys to identify what features and
133
134
85
135
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.7
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
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136
87
137
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
70
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performance characteristics customer value. If a competing product already exists, a sample is purchased and disassembled to
determine its particular characteristics. The best of the competing products becomes a benchmark—the product to meet or beat
in terms of design, manufacture, performance, and service138. Furthermore, the search for the best practices among competitors
or non-competitors that lead to their superior performance, could well be considered benchmarking. Benchmarking is an
improvement process in which a company measures its performance against that of best-in-class companies, determines how
those companies achieved their performance levels, and uses the information to improve its own performance. The subjects that
can be benchmarked include strategies, operations, processes, and procedures139. In 1979, Xerox undertook what is widely
regarded as the first benchmarking effort in North America. The company’s head manufacturing took a team to Japan to make a
detailed study of their competitor’s costs and processes because they couldn’t figure it out by themselves.
An increasing number of organisations are applying quality practices to build a competitive advantage. To the degree that an
organisation can satisfy a customer’s need for quality, it can differentiate itself from the competition and attract and retain a loyal
customer base. Moreover, constant improvements in the quality and reliability of an organisation’s products or services can result
in a competitive advantage others cannot steal.
What is the ISO 9000 Series?
ISO 9000 series are standards designed by the International Organisation for Standardization that reflect a process whereby
independent auditors attest that a company’s factory, laboratory, or office has met quality management requirements140. These
standards, once met, assure customers that a company uses specific steps to test the quality of the products it sells; continuously
trains its employees to ensure they have up-to-date skills, knowledge, and abilities; maintains satisfactory records of its
operations; and corrects problems when they occur. A company that obtains an ISO certification can boast that it has met
stringent international quality standards and is one of a select group of companies world-wide to achieve that designation.
Certification can be more than just a competitive advantage; it also permits entry into some markets not otherwise accessible.
Customer-focused programs continuously improve the quality of the organisation’s processes, products, and services. Whereas
continuous improvement programs emphasise actions to prevent mistakes, and quality control emphasises identifying mistakes
that may have already occurred.
What do we mean by quality control?
Quality control refers to monitoring quality—weight, strength, consistency, colour, taste, reliability, finish, or any one of myriad
characteristics—to ensure that it meets some pre-established standard141. Quality control will probably be needed at one or
more points, beginning with the reception of inputs. It will continue with work-in-process and all steps leading up to the final
product. Assessments at intermediate stages of the transformation process typically are part of quality control. Early detection of
a defective part or process can save the cost of further work on the item. Before implementing any quality control measures,
managers need to ask whether they expect to examine 100 percent of the items produced or only sample. The inspection of every
item makes sense if the cost of continuous evaluation is very low or if the consequences of a statistical error are very high (as in
the manufacturing of a drug used in open heart surgery). Statistical samples are usually less costly, and sometimes they’re the only
viable option. For example, if the quality test destroys the product, as it does when testing flash bulbs, fireworks, or home
pregnancy tests, then sampling has to be used. What you have to keep in mind is that quality control is the process of ensuring
that what is produced fully serves its purpose and meets some pre-established standard.
Quality-Productivity-Profitability Link
Productivity results when income received by a firm exceeds the cost of paying its bills. The profitability of a firm depends on its
ability to efficiently produce goods and services that please its customer. “No matter how high the quality, if the product is
overpriced it cannot gain customer satisfaction”.
138
70
139
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
70
140
141
Robbins, DeCenzo, Stuart-Kotze, Fundamental of Management, Prentice Hall (2002), p.70
Robbins, DeCenzo, Stuart-Kotze, Fundamental of Management, Prentice Hall (2002), p. 374
118
Total Quality Management (TQM)
What is TQM?
Total quality management (TQM) is a strategy for continuously improving performance at every level, and in all areas of
responsibility142. TQM is a philosophy of management that is driven by customer needs and expectations. A quality revolution
is taking place both in business and in the public sector. The generic term to describe this revolution is Total Quality
Management. It was inspired by small group of quality experts, the most prominent being an American named W. Edwards
Deming. Deming went to Japan and advised many top Japanese managers on how to improve their production effectiveness.
Central to his management methods was to use statistics to analyse variability in production processes. A well-managed
organisation, according to Deming, was one in which statistical controls reduced variability and resulted in uniform quality and
predictable quantity of output.
There are five major components of a TQM system:
1.
2.
3.
4.
5.
142
Intense focus on the customer. The customer includes not only outsiders who buy the organisation’s products or
services, but also internal customers (such as shipping or accounts payable personnel) who interact with and serve
others in the organisation.
Concern for continuous improvement. TQM is a commitment to never being satisfied. “Very good” is not good
enough. Quality can always be improved.
Improvement in the quality of everything the organisation does. TQM uses a very broad definition of quality. It
relates not only to the final product but also to how the organisation handles deliveries, how rapidly it responds to
complaints, how politely the phones are answered, and the like.
Accurate measurement. TQM uses statistical techniques to measure every critical variable in the organisation’s
operations. These are compared against standards or benchmarks to identify problems, trace them to their roots, and
eliminate their causes.
Empowerment of employees. TQM involves many different kinds of employees in the improvement process. Teams
are widely used in TQM programs as empowerment vehicles for finding and solving problems.
Plunkett, Attner, Allen, Management-Meeting and Exceeding Customer Expectations, (South Western/Thomson Learning, 2002), p.
73
119
Figure 29 - The Seven steps TQM model
Step 1
Establish the TQM management
and cultural environment
Vision
 Long-term commitment
 People involment
 Disciplined methodology
 Support systems
 Training
Step 2
Define mission of each component of the
organisation.
Step 3
Set performance improvement
opportunities, goals, and priorities.
Step 4
Establish improvement projects and plans
Step 7
for action.
Review and recycle
Step 5
Implement projects by using improvement
methodologies.
Step 6
Evaluate
Improved performance

Reduced cycle time
 Lower costs
 Innovation
120
TQM Principles
TQM is also known by and practised under several other labels like Continuous Quality Improvement (CQI), managing total
Quality, Leadership through quality, and Total Quality Control (TQC), etc. No matter what the name is, its concepts and
principles are usually the same:








Quality improvements create productivity gains;
Quality is defined as conformance to requirements that satisfy user needs;
Quality is measured by continual process and product improvement and user satisfaction;
Quality is determined by product design and achieved by effective process controls;
Process-control techniques are used to prevent defects;
Quality and part of every function in all phases of the product life cycle;
Management and all employees responsible for quality;
Relationships with suppliers are formed for the long term and are quality-oriented.
Implementing Total Quality Management
Total quality management is essentially a continuous, incremental change program. It’s compatible with the “calm waters”
metaphor, because TQM recognises that organisations must continuously find ways to “navigate” the problems that arise as it
strives to improve143. TQM focuses on customer needs, emphasises participation and teamwork, and seek to create a culture in
which all employees strive to continuously improve such activities and output as the quality of the organisation’s products or
services, customer response time, or work processes. It might be helpful to look at TQM in terms of three areas towards which
management can direct its change efforts: structure, technology, and people.
Structure
Technology
Decentralisation
Flexible Processes
Reduced vertical
differentiation
Education and Training
People
Education and
Training
Supportive
Performance
Evaluation and
Reward System
Change Agent
Active Leadership from the
Top
Reduced Division of
Labour
Wider Spans of
Control
Cross-Functional
Teams
Figure 30 - Factors that facilitate continuous incremental improvements
143
Robbins, Coulter, Stuart-Kotze, Management (Prentice Hall Canada Inc), p. 296
121
KEY TERMS
Benchmarking
ISO 9000 Series
Quality
Quality Audit
Quality Circle
Quality Control
Quality Control Audit
Quality Function Deployment
Quality-ProductivityProfitability Link
Total Quality Management
(TQM)
WEB LINKS
Planning
http://www.rtpi.org.uk/planning-advice/
ISO 9000 Series
http://www.iso.ch/iso/en/ISOOnline.frontpage
Quality and Performance Management
http://www.metricstream.com/
Total Quality Management (TQM)
http://www.manucfacturing.net/
http://sbinformation.about.com/
Quality Circle
http://biahawaii.inets.com/docs/webdocs/Flyer.pdf
122
Management Glossary
360 degree Feed Back – allows
managers and employees to
meet often to discuss the goals
to be met by employees.
A
Alderfer’s ERG Theory - is a
theory that compresses
Maslow’s five needs level into
three - Existence, Relatedness,
and Growth.
Audit – a formal investigation
conducted to determine if
financial data, records, reports,
and statements are correct and
consistent with the
organization’s policies, rules and
procedures. Insiders or outsiders
may conduct audits.
Authority - refers to the rights
inherent in a managerial position
to give orders and to expect the
orders to be followed.
Autonomous Business Units are separate decentralized
business units, each with its own
product, clients, competitors,
and profit goals.
B
Balance Sheet - identifies the
assets of a business and the
owners’ interests in them.
Basic Corrective Action determines how and why
performance has deviated and
then corrects the source of
deviation.
Behaviourally Anchored
Rating System – identifies
specific behaviours that
correspond to different levels of
performance.
Benchmarking - Which is the
product to meet or beat in terms
of design, manufacture,
performance, and service.
Benefits – are added incentives
for an employee to work in a
given firm such as variable work
schedules or payment for sick
days.
Boundaryless Organisation an organisation whose design is
not defined by, or limited to, the
boundaries imposed by a
predefined structure.
Brainstorming - is a technique
to put down all the ideas and
alternatives of the participants in
relation to the main problem
without any criticism.
Budget - a plan and control
mechanism for the receipt and
spending of income over a fixed
period.
Business Ethics - Refers to
ethical or unethical behaviours
by a manager or employee of an
organisation.
Business Level Strategy – A
Strategy focusing on how each
product line within an
organization competes for
customers.
C
Chain Of Command - is an
unbroken line of authority that
extends from the upper levels of
the organisation to the lowest
levels, and clarifies who reports
to whom.
Change - is any alteration in the
current work environment, such
as changes in people, structure,
and/or technology.
Change Agent - people who act
as catalysts and assume the
responsibility for managing the
change process are called
change agents.
Code of Ethics - is a formal
document that states an
organisation’s primary values
and the etchical rules it expects
employees or other stakeholders
to follow.
Coercive Power - defined as
being dependent on fear.
Collectivism – an ideal in which
success comes from the
collective efforts of members of
a society.
123
Compensation – includes
salaries, wages, benefits,
bonuses, gain sharing, profit
sharing and awards for good
service.
Concurrent Control - takes
place while an activity is in
progress and helps manager’s
correct problems before they
become too costly.
Conflict – Perceived
incompatible differences
resulting in interference or
opposition.
Constraints – Barriers that keep
us from doing what we desire.
Control - the process of
monitoring activities to ensure
that they are being
accomplished as planned and
correcting any significant
deviations.
Control System - a system
which feedforward, concurrent,
and feedback controls operate in
harmony to ensure that
standards are enforced, goals
are reached, and resources are
used effectively and efficiently.
Control Techniques -devices
designed to measure and
monitor specific aspects about
the performance of an
organization, its people and its
processes.
Controlling – is making sure
that an organisation's
performance is up to par with the
goals previously set.
Corporate Responsibility Refers to fulfilling the
responsibilities or obligations
that a company has towards it
stakeholders.
Consumerism - Is a form of
social activism dedicated to
protecting the rights of
consumers in their dealings with
businesses.
Coordinating - means that a
leader coordinates the work of
subordinates emphasizes the
importance of coordination and
encourages subordinates to
coordinate their activities.
Corporate Level Strategy – A
strategy whose purpose is to
answer the questions “what
business are we in?” and what
business should we be in?”
Creativity - to combine ideas in
a unique way or to make
unusual associations among
ideas.
Cultural Artifacts - are the
obvious signs and symbols of
corporate culture, such as
written rules, office layouts, and
organizational structure.
Customer-driven operations It’s the customer who
determines the success of a
company and it’s the customer
who determines the demand.
D
Decentralisation - is the
handing down of decision
making authority to lower levels,
departments or divisions in an
organisation.
Decision making - is the
process of identifying problems
and opportunities, developing
alternative solutions, choosing
an alternative, and implementing
it.
Delphi technique - is a
technique where ideas are
expressed but does not allow
group members to meet face to
face and therefore does not
require the physical presence of
the group members.
Demotion – is reassignment to
a lower rank on the
organization’s chain of
command.
Departmentalisation - is the
basis on which jobs are grouped
in order to accomplish
organisational goals.
Discrimination - refers to taking
specific actions towards a
person based on certain
characteristics of that person’s
group.
Division Manager – A manager
who is in charge of handling the
management functions or duties
for a particular area.
Divisional Structure - an
organisational structure made up
of autonomous self-contained
units.
Dysfunctional Conflict –
Conflict that prevents an
organization from achieving its
goals.
E
E-Mail - A computerized
information system that lets
group members electronically
create, edit, and disseminate
messages to each other, using
electronic “mailboxes.”
Effectiveness – Is the
attainment of a goal.
Efficiency – Doing a task
correctly.
Empowering - it is sharing
authority and information,
providing needed training,
listening to employees,
developing relationships based
on mutual trust and respect, and
acting on employees.
Environmental Stewardship Is a position taken by an
organisation to protect or
enhance the natural environment
as it conducts its business
activities.
Ethical behaviour - Is
behaviour that conforms to
individual beliefs and social
norms about what is right and
good.
Equity - concept of fairness and
equal treatment compared to
others, or a referent, who
behave in similar way.
Ethical dilemma - Is a situation
that arises when all courses of
action open to a decision maker
are judged to be unethical.
124
Ethics - Are beliefs about what
is right and wrong or good or
bad.
Ethnocentrism – the tendency
to view members of one’s own
group as the center of the
universe and to view other social
groups less favourable than
one’s own.
Expectancy - It is the probability
perceived by the individual that
exerting a given amount of effort
will lead to a certain level of
performance.
Expert Power - influence
wielded as a result results of
expertise, special skill, or
knowledge.
F
Feedback Control -the control
that takes place after the action
and the major drawback is that
by the time the manager has the
information the damage has
already been done.
Feedforward Control - the most
desirable type of control and
prevents anticipative problems
because it takes place in
advance of the actual activity.
First-Line Manager – Converts
middle managers' goals and
objectives into own set of
objectives and is concerned with
the day-to-day execution of
ongoing operations.
Formalisation - the degree to
which jobs within an organisation
are standardized and the extent
to which employee behaviour is
guided by rules and procedures.
Formality – is the degree to
which individuals formally or
informally interact with each
other according to traditions.
Free Trade - occurs when two or
more countries sign an
agreement to allow the free flow
of goods and services,
unimpeded by trade barriers
such as tariffs, quotas, and
embargoes.
Functional Conflict – Conflict
that supports an organizations
goals.
Functional Level Strategy – A
strategy that focuses on the
major company activities like
finance, human resources
management, marketing,
production, research and
development.
Functional Manager – a
manager whose expertise lies in
a functional area.
Functional Structure - an
organisational design that
groups similar or related
occupational specialties
together.
G
Gantt chart – A scheduling and
control tool that helps managers
plan and control a sequence of
overlapping tasks.
Gender-Role Stereotyping associates women and men with
specific jobs based on what
society believes is appropriate.
Goal Setting - means that a
leader emphasizes the
importance of setting specific
performance goals for each
important aspect of a
subordinate’s job, measures
progress toward the goals, and
provides concrete feedback.
Group - two or more people
interacting and interdependent
individuals who come together to
achieve particular goals.
Group Cohesiveness - the
degree to which members are
attracted to a group and share
the group’s goals.
Groupware - relies on computer
networking to open
communications channels
among people and to share
data. It essentially combines the
functionality of email, messaging
and conferencing, and document
management systems.
H
Herzgerg’s Theory - is a theory
that divides Maslow’s hierarchy
into a low-level and a high-level
set of needs, and it shows that
the best way to motivate
someone is to offer to satisfy the
person’s high level needs.
Human Asset Accounting treats employees as assets not
expenses, by recording money
spend on people as increases in
the value of those assets.
Human Resource Inventory –
provides an organization with
information about their present
personnel.
Human Resource Planning –
consists of forecasting
personnel, forecasting the
supple of inside and outside
candidates as well as producing
plans that describe how
candidates will be hired and
trained for the job.
Immediate Corrective Action gets performance back on track
and corrects problems at once.
Income Statement -presents
the difference between an
organization’s income and its
expenses to determine whether
the business operated at a profit
or a loss over a period of time.
Individualism – Is the belief that
freedom comes with
independence through individual
accomplishment.
Information Dissemination means that a leader keeps
subordinates informed about
developments that affect their
work, including events in other
work units or outside the
organization; decision made by
higher management; and
progress with superiors or
outsiders.
Innovation - is the process of
taking a creative idea and
turning it into a useful product,
service, or method of operation
(process).
Innovation Audit - seeks to
identify capabilities in the
organisation (maximise) and
barriers to innovation (minimise).
Input Controls - monitor the
material, human and capital
resources that come into the
organization.
125
Insider trading - occurs when
someone uses confidential
information to gain from the
purchase or sale of stocks.
Inspiration - implies that the
leader stimulates subordinates’
enthusiasm for the work of the
group and says things to build
subordinates confidence in their
ability to perform assignment
successfully and attain group
objectives.
Instant Messaging - Allows two
or more people to communicate
in "real time" over the Internet,
superseding the pace of email.
It also gives you the
convenience of sending files
back and forth to one another.
International Management - is
the process of managing
resources (people, information,
funds, inventories, and
technologies) across national
boundaries and adapting
management principles and
functions to the demand of
foreign competition and
environments.
Involuntary Separation – is a
lay off or being fired because of
declining business or personal
performance.
ISO 9000 Series - are
standards designed by the
International Organisation for
Standardization that reflect a
process whereby independent
auditors attest that a company’s
factory, laboratory, or office has
met quality management
requirements.
J
Job Analysis – to prepare up to
date descriptions that list the
duties and skills required for the
jobholder.
Job Description – states the job
title and purpose of the job.
Job Redesigning - is the
application of motivational
theories to the structure of work,
to increase output and
satisfaction.
Job Specification – lists the
human dimensions that a
position requires such as
education, experience, skills,
training and knowledge.
K
Kaizen – A Japanese term
meaning continuous
improvement.
Karoshi – a Japanese term,
involves death from overworking.
L
Leadership - in its management
application is the process of
influencing individuals and
groups to set and achieve goals.
Influence is the power to sway
other people to one’s will or
views.
Leading – Is influencing other
people to get the job done.
Legitimate Power - represents
the power a person has as a
result of his or her position in the
organizational hierarchy.
M
Management – Is the process of
getting things done, effectively
and efficiently, through and with
other people.
Management By Objectives
(MBO) – requires a manager
and a subordinate to meet every
now and then to agree on
specific performance goals for
the subordinate over a specific
time period.
Management Functions - Are
activities - planning, organising,
leading, and controlling - that
comprise the Management
Process
Manager – Is someone who
plans, organises, leads, and
controls people and the work of
an organisation with the aim of
ensuring that the organisation
achieves its goals.
Maslow’s Need Hierarchy - It is
a motivation theory based on
five important human needs:
Physiological, safety, social,
esteem, and self-actualization.
Materialism - The way to think
that status goes with certain
objects.
Matrix Structure - an
organisational structure that
assigns specialists from different
functional departments to work
on one or more projects being
led by a project manager.
Middle Manager - Translates
Top management's long-term
goals into shorter-term
objectives and set some of their
own goals.
Mission Statement - broadly
outlines the organization’s future
course and serves to
communicate who the
organization is, what it does, and
where it is headed.
Motivation - is the willingness to
exert high levels of effort to
reach organizational goals,
conditioned by the effort’s ability
to satisfy some individual need.
N
Need - is an internal state that
makes certain outcomes appear
attractive.
Nominal group technique - is a
technique where ideas are
expressed silently. Each idea is
presented one after another in
order to be all heard by the
team.
Norm - an acceptable standard
or expectation that is shared by
a group’s members.
O
Operations Management refers to the design, operation,
and control of the transformation
process that convert resources
such as labour and raw
materials into finished goods and
services.
Opportunity - is something you
do yet know you want to do but
you can do it.
Organisational Culture – is a
dynamic system of shared
values, beliefs, philosophies,
experiences, habits,
expectations, norms, and
behaviours that give an
126
organization its distinctive
character.
Organisational Design - is a
process that involves seven key
elements of structure: work
specialisation,
departmentalisation, chain of
command, span of control,
authority and responsibility,
centralisation and
decentralisation, and
formalisation.
Organizational Development involves making a rough
analysis of the problem and then
creating and implementing longterm solutions to solve the
problems.
Organizational Politics - the
unwritten rules of work life and
informal methods of gaining
power and advantage.
Organisational Structure - the
organisation's formal framework,
by which job tasks are divided,
grouped, and co-ordinated.
Organising –Involves
determining what jobs or tasks
are to be done, hiring and
choosing who is going to do
them, and deciding how they will
be done.
Output controls - are used to
determine whether deviations
from standards have occurred in
a product or service.
P
Performance Appraisal – a
structured system designed
within legal limits to measure the
actual job performance of an
employee by comparing it to
designated standards.
Perks – used to attract
executives to an organization.
Personal Power - is the power
derived from a manager’s
relations with others.
PERT - Program Evaluation and
Review Technique is a flowchart
like diagram that depicts the
sequence of activities needed to
complete a project and the time
or cost associated with each
activity.
Planning – Involves defining an
organisation's goals,
establishing an overall strategy
for achieving these goals, and
developing a set of plans to
integrate and co-ordinate
activities.
Pluralism - is the belief that
cultural, ethnic, group, or
individual differences remain
distinct from each other but
coexist as one within an
organization where individual
differences are recognized and
accepted.
Position Power - is the power
derived from the organizational
position a manager holds. An
upper-level manager has more
position power than a lower-level
manager.
Power - ability to exert influence
in the organization.
Prejudice - is a judgement that
is formed based on an opinion,
preference, or assumption that is
formed without adequate
knowledge or examination of the
facts.
Problem Solving - means that a
leader takes the initiative in
proposing solutions to serious
work-related problems and acts
decisively to deal with such
problems when a prompt
solution is needed.
Process Controls - are applied
while the product or service is
produced.
Producibility - the degree to
which the product or service can
be manufactured for the
customer within the
organization’s operational
capacity.
Project Management - is the
task of getting activities
completed on due date, within
an appropriate budget and with
some specifications.
Promotions – a job change that
leads to higher ay and greater
authority and that reward
devoted, outstanding effort.
Q
Quality - is defined by both
internal and external customer
needs, but those needs and
expectations are like moving
targets—continually and rapidly
changing.
Quality Audit - determines if
customer requirements are
being met.
Quality Circle - is a temporary
team of approximately 6 to 12
employees/workers who share a
problem. It meets regularly
usually once a week until the
problem is solved.
Quality Control - refers to
monitoring quality—weight,
strength, consistency, colour,
taste, reliability, finish, or any
one of myriad characteristics—to
ensure that it meets some preestablished standard.
Quality Control Audit - is a
check of quality control efforts
that asks two questions - How
are we doing? And what are the
problems?
Quality Function Deployment is a disciplined approach to
solving quality problems before
the design phase of a product.
Quality-ProductivityProfitability Link - Productivity
results when income received by
a firm exceeds the cost of paying
its bills. The profitability of a firm
depends on its ability to
efficiently produce goods and
services that please its
customer. “No matter how high
the quality, if the product is
overpriced it cannot gain
customer satisfaction”.
Quantitative techniques - are
tools regarding the application of
a decision. Such tools include
decision trees, payback analysis
and simulations.
R
Range of Variation - the
acceptable parameters of
variance between actual
performance and the standard.
127
Recruiting – is attracting a pool
of viable job applicants.
Reengineering – Is the
fundamental rethinking and
radical redesign of business
processes to achieve dramatic
improvements.
Referent - is a person against
whom someone compares
himself or herself to assess
equity.
Referent Power - power that
arises from identification with a
person who has desirable
resources or personal traits.
Regional Manager – A manager
who is in charge of handling the
management functions or duties
for a particular area.
Reinforcement - Motivation
theory that states a supervisor’s
reactions and past rewards and
penalties affect employees’
behaviours.
Reliability - the degree to which
customers can count on the
product or service to fulfill its
intended purpose.
Representation - means that a
leader establishes contacts with
other groups and important
people in the organization
persuades them to appreciate
and support the leader’s work
unit, and influences superiors
and outsiders to promote and
defend the interests of the work
unit.
Resistance to change - are
changes occurring in everyday
life and people often are
resistant to these changes.
Reward Power - It is the right to
promise or grant rewards such
as raises, praise, promotions,
and so on.
Role - refers to a set of expected
behaviour patterns attributed to
someone who occupies the
given position in a social unit.
Role Ambiguity -is created
when role expectations are not
clearly understood and the
employee is not sure what is
expected.
Role Demand - relate to
pressures placed on employees
as a function of the particular
role he or she plays in the
organization.
Role Overload - is experienced
when the employee is expected
to do more than time permits.
S
Separation – is the departure of
an employee.
Simple Structure - An
organisational design that is low
in complexity and formalisation
but high in centralisation.
Span Of Control - involves the
number of subordinates a
manager can supervise
effectively and efficiently.
Social Responsibility - Refers
to obligations a company has to
the community, particularly with
respect to charitable activities
and environmental stewardship.
Status - prestige grading,
position, or rank within a group.
Stereotype - be defined as a
person who is believed to
conform to a specific group or
standard based on behavioural
traits or their apparent belonging
or membership to a specific
group.
Strategic management defines the firm’s position,
formulates strategies, and
guides the execution of longterm organizational functions
and processes.
Strategic planning - is the
process of creating or rewriting
an organization’s mission,
identifying and evaluating the
long-term goals and strategies to
reach those goals, and
determining the required
resources.
Stress – The physiological and
psychological reaction of the
body as a result of demands
made on it.
Stressors - Factors that create
stress.
Supply Chain Management include facilities, functions and
all activities from product
planning to delivery that are
produced from supplier to
customer.
Synergy – Is the increased
effectiveness that results from
combined action or co-operation.
T
Team - a group of two or more
people who interact regularly
and coordinate their work to
accomplish a common objective.
Team-Based Structure - an
organisational structure made up
of work groups or teams that
perform that organisation's work.
Timeliness - it’s an appropriate
date and time for each product
or service.
Training – involves changing
skills, knowledge, attitudes and
behaviour.
Training-Coaching - means
that a leader determines training
needs for subordinates and
provides any necessary training
and coaching.
Transfer – is the movement of
an employee to a job with similar
levels of responsibility,
compensation and status.
Time Orientation – The degree
or attitude to which individuals
gives importance to time in a
business context.
Tokenism - occurs when a
superficial effort is made to
accomplish a goal, such as
racial integration.
Top Manager – A manager
responsible for making decisions
that affect the organisation as a
whole and establishing long-term
strategies that provide direction
and vision to the organisation.
Total Quality Management
(TQM) - is a strategy for
continuously improving
performance at every level, and
in all areas of responsibility.
Type A Personality - is a
person who has a chronic sense
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of urgency and an excessive
competitiveness drive.
Type B Personality - is a
person who is relaxed and
easygoing and accepts change
easily.
U
Unethical behaviour - Is
behaviour that individual beliefs
and social norms define as
wrong and bad.
V
Videoconferencing - A
telecommunications-based
method that lets group members
interact directly with one another
or leave messages for a number
of other group members via
television links. This kind of
technology can greatly improve
communication and coordination
among the group members even
if they are far from each other.
Voluntary Separation – include
resignations and retirements.
W
Whistle-blower - An employee
who discovers and tries to put an
end to a company's unethical,
illegal, and/or socially
irresponsible actions by
publicising them.
Work facilitation - means that a
leader obtains for subordinates
any necessary supplies,
equipment, support services or
other resources, eliminates
problems in the work
environment, and removes other
obstacles that interfere with the
work.
Work Facilitation - means that
a leader obtains for subordinates
any necessary supplies,
equipment, support services or
other resources, eliminates
problems in the work
environment, and removes other
obstacles that interfere with the
work.
Workforce Diversity – People
in an organisation possess
different characteristics that
make them unique such as, but
not limited to gender, age,
cultural and national origin,
sexual orientation, mental and
physical capability, or ethnicity.
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