Review for Examination Three
Chapters 12-14 and 16-18
Human Resource Management
Chapter 12
Human Resources’ objective is to build a
system of rewards and punishments that
will enable management to enhance
organizational unity, efficiency,
effectiveness, quality, innovation and
responsiveness to customers – all of
which builds competitive advantage.
HRM Elements
Find the best (search), hire them (recruit),
keep them (retain), train them for their
current job, develop them for their next
job, monitor their performance, provide
feedback, pay them well (a performance
incentive) and give them benefits (a
membership reward).
HRM Tools and Techniques
• HR planning (Enough available to meet our needs?)
• Job analysis (What skills, knowledge and abilities does this job
require?)
• Benefits and drawbacks of inside versus outside recruiting
• Selection process (background check, references, interviews, tests)
• Types of appraisals and how to do them (formal, informal, behavior,
results, objective, subjective, self, peer, 360-degree); praise
publicly/critique privately, be specific and as positive as possible,
express confidence in their capability, agree on timetable for
improvement, always show respect
• Training (classroom and OJT)
• Incentivizing through pay (base, merit, bonus, stock options, etc.)
• In-kind rewards and other perks
Motivation and Performance
Chapter 13
Motivation: the psychological forces
that determine how hard and
persistently someone will work
• Intrinsically motivated: driven by need for
achievement at work (urgent)
• Extrinsically motivated: driven by potential
consequences (reward or punishment)
Expectancy theory
• Workers will be highly motivated if they
believe high effort will yield high
performance will yield desired rewards.
You must link these three elements.
• Customize if possible: find out what each
wants and give it to them to motivate good
performance
• You get the behavior you reward!
Needs Theories
• Maslow’s hierarchy of needs: selfactualization at the top (Theory Y)
• Alderfer’s ERG theory (Existence lowest,
Relatedness in the middle, Growth at the
top)
• McClelland’s needs for achievement,
affiliation and power
• All say the same thing in slightly different
ways; Maslow states it best.
Equity Theory
• If employees perceive they are not being
treated in an even-handed manner, they
will get angry, won’t work as hard, may
sue you and the company or leave.
• So treat them fairly and hope their faulty
perceptions don’t get in the way!
Goal-setting Theory
• Focus on goals important to the firm
• Provide specific direction
• Make the goals difficult, but not impossible
(i.e., “stretch” goals)
• Achieve agreement (worker buy-in)
• Include a feedback feature (KPIs and
performance appraisal); PDCA at work
Operant Conditioning
• Positive reinforcement: praise, pay, perks,
promotion
• Negative reinforcement: reprimand, demote, cut
pay, terminate
• Negative reinforcement works, but can be
perceived as brutal and unethical; it also is
uncomfortable to administer and can generate
lawsuits.
• Use much more positive reinforcement
(standard practice) than negative (last resort).
Pay for Performance
• It’s called a merit increase for good
reason; make the linkage between pay
and performance obvious.
• Complementary forms of remuneration –
bonus, commission, stock options – can
further underline the link between high
performance and reward.
• Examples: Toyota’s double-bonus
approach; Welch’s 10-70-20 rule
Leadership
Chapter 14
• Leadership is using position, power, personality
and persuasion to influence, inspire, motivate
and direct others to achieve goals. Generally,
whatever makes people do what you want.
• All leaders have a personal style: for example,
some delegate, empower and support; others
command and demand (pushing versus pulling)
• A leader’s manner and methods can vary with
circumstances and culture (both national and
corporate). The situation can define the style
most likely to succeed.
What is Leadership?
“Getting the other fellow to do what you
want him to do when you want him to do
it.”
President Dwight Eisenhower
Leadership Traits
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Credits success to team not self
Has strong conceptual skills; able to link cause and effect
Visionary; able to see what can be and inspire people to create it
Flexible, adjusting to circumstances and people
Good listener; able to accept suggestions and criticism
Persuasive communicator; dynamic, enthusiastic, energetic; able to pump
others up
Organized, focused, competent and knowledgeable; able to set an expert
example (able to do the right thing the right way)
Good at judging others’ capabilities and fitting the right person to the task
Curious; thirsty for information and knowledge
Courageous; willing to take risk and accept responsibility
Decisive, determined; persistent; has stamina – can work hard and long
Able to respond rather than react; calm while others are not
Ethical, honest and trustworthy
Leadership
Leaders have five types of power:
1. Legitimate power comes from his or her
position in the organization. The power of
position
2. Reward power is based on a manager’s ability
to give or withhold tangible (pay raises) or
intangible (praise) rewards. The power of
recognition
3. Coercive is the power of punishment (verbal
reprimand, pay cut, dismissal).
Leadership
4. Expert power comes from the example you set
because you know more about the subject or
are able to do it better than anyone else. The
power of example
5. Referent power results from the admiration and
respect people feel for you. The most effective
form of leadership; usually gained by likeable,
admirable managers. The power of respect
and admiration
Leadership
• Strongest leaders are inspirational, charismatic
and transformational; able to lead in troubled
times when corporate change is required.
• I believe the most important leadership
characteristics are stamina, intelligence,
imagination (“what-if” skill), confidence,
practicality, ethicality, a voracious appetite for
information and persuasive communication
capability.
• It also helps to be able to laugh at yourself.
Gender, Nationality and Leadership
• Although gender may affect leadership style, I
believe there is no connection between gender
and leadership capability
• Although national culture may have some effect
on leadership style (people versus task
orientation, group versus individual orientation,
short versus long-term viewpoint, etc.), always
be cautious in assuming such a connection.
• Corporate culture can and should affect
leadership style.
Toyota Leadership
Find the path, Show the way
• Analyze, plan, inform, energize, organize, empower, check results,
improve the process, do it again (PDCA).
• Preserve/improve corporate culture -- the root of success.
• Be hands-on (genchi-genbutsu).
• Find the problem’s root cause (the five why’s); build the “burning
platform” for change; show the way and generate organizational
ownership (nemawashi); embed discipline and continuous
improvement (kaizen).
• Harvest cost-savings to re-invest in improvement so you can run
your competitors to death.
• Discipline, discipline, discipline!
• Run scared.
My Personal Leadership Style
• Look for trends – opportunities and threats; seize the
opportunity and (usually) attack the threat.
• Learn to write and speak persuasively.
• Give credit, take blame, demand results
• Listen to your people and they will make you smart; ask
them how, don’t tell them how.
• Always be ethical (the “red-face” test); no trust-no follow
• Try to correct your biggest fault, leave the others alone.
• Pay attention to both the envelope and the letter.
• Never confuse your ass with the chair it’s sitting in – the
job is important, you aren’t.
Communication
Chapter 16
• Communication: sharing information to
forge mutual understanding that enables
coordinated action
• The oil lubricating the cogs of commerce;
the foundation of creativity, innovation,
teamwork, problem-solving, decisionmaking and customer satisfaction
• In short, important!
The Communication Process
• A sender encodes a message, transmits it over a
medium to a receiver, who decodes it and
provides feedback to the sender. If this circular
process (the communication loop) is effective,
shared understanding will be achieved.
• The choice of medium (face-to-face, video
conference, e-mail, phone, fax, memo, letter,
etc.) is important because each medium has its
strengths and weaknesses and may be more or
less appropriate for any particular content.
Communication Media
• Face-to-face is the “richest” medium because it
includes body (posture and gestures), facial
(expressions) and verbal (tone of voice) content
as well as words.
• Video conference is the next richest.
• A general memorandum to many people is least
rich and least persuasive.
• Richer media can convey more content more
quickly, effectively and persuasively
• Select the medium with the appropriate
“richness” for your message.
The Role of Perception in
Communication
• Perception: the process by which people gather,
sort, organize and interpret sensory input to
distill meaning, form opinions, and make
decisions.
• Your experience creates internal “filters” that
affect how you perceive input, sometimes
skewing the message a sender intends.
• Become aware and wary of your filters and their
potential effects; try to set them aside when
making important decisions; be skeptical of
yourself during the decision process
Barriers to Effective
Communication
• Incomplete, difficult-to-understand messages
• Messages sent over an inappropriate medium
• No provision for feedback to confirm shared
understanding
• Messages sent over automated media that can
anger or frustrate receivers because they lack a
human element
• Messages not received or ignored
Communication Skills for Senders
• Send clear, complete, accurate messages; talk
in a circle – (1) headline what you intend to tell
them, (2) tell them, (3) summarize what you told
them.
• Encode the message in symbols the receiver will
understand (example, avoid American slang
when talking to foreigners).
• Select an appropriate medium monitored by the
intended receiver.
• Include a feedback mechanism to complete the
loop and confirm shared understanding.
Communication Skills for Receivers
• Be an active listener; your ears and eyes are far
more useful than your mouth.
• Understand different linguistic styles; this is
particularly important across national cultures.
• Pay attention to non-verbal (body language) as
well as verbal messages.
• Ask questions to clarify your interpretation.
• Provide final feedback to confirm that you
understand.
Managing Conflict and Politics
Chapter 17
• Organizational conflict is discord arising
when different individuals or groups hold
different values, pursue conflicting goals,
or try to block one another’s progress.
• Inevitable and necessary in business,
useful if controlled; you will have to learn
to deal with it.
Sources of Conflict
• Conflicting goals and timetables
• Overlapping authority (two dogs/one
fireplug)
• Scarce resources (zero-sum mentality)
• Status inconsistencies that create
perceptions of unfairness, causing envy
Conflict Management Strategies
• Resolution through compromise (share the
pain) or collaboration (share the gain)
Compromise: Distributive bargaining
Collaboration: Integrative bargaining
• Accommodation (one party plays door mat)
• Avoidance (letting the problem fester – not good)
• Competition (survivor wins -- stupid)
Conflict Minimization Strategies
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Increase awareness of potential conflict sources
Increase tolerance (empathy, respect for others)
Practice job rotation (walk in each other’s shoes)
Transfer or dismiss (move or fire the problem)
Make unproductive conflict unacceptable in the
corporate culture.
Negotiation
Conflict resolution in which two parties of
equal power try to find an acceptable
solution by considering various ways to
allocate resources to each other
Third-Party Negotiators
• Mediator: a facilitator with no authority to
impose a solution
• Arbitrator: a facilitator with the power to
create and impose a fair solution
Organizational Politics
Activities managers pursue to increase
their power to overcome opposition
and achieve goals
• Negative when used to pursue selfinterest.
• Positive when used to achieve
organizational goals or improve
performance.
• Leaders learn to use politics effectively.
Some Political Strategies
• Become central to the organization’s
mission.
• Become irreplaceable.
• Build both internal and external alliances.
• Rely on objective, fact-based information.
• Control the agenda.
• Bring in an outside “expert” for support.
• Make everyone a winner.
Advanced Information Technology
Chapter 18
Scientia est Potestas
KNOWLEDGE IS POWER
(and the genie is out of the bottle)
How does Information differ from
Data?
• Data: raw, unsummarized, unanalyzed
information that is mostly useless
• Information: data analyzed to discover
patterns and correlation and organized to
make it useful for decision-making
Information Technology
A set of techniques for:
1. Acquiring
2. Organizing
3. Storing
4. Manipulating
5. And transmitting
INFORMATION
Information and Managerial Control
Managers exert control by:
1. Establishing measurable goals
2. Monitoring performance against the goals
3. Measuring the final results
4. Correcting the process
5. Doing it again
6. And rewarding effective performance
This is PDCA and cannot be accomplished without
timely, accurate, complete, relevant and reliable
information from both inside and outside the
company. Global sourcing and competition are
making it ever more complex and rapid.
IT’s Role
Efficient, cutting-edge IT facilitates management and can enhance
competitive advantage (example: Wal-Mart’s supply chain
management)
But beware of over-reliance on IT – particularly when dealing with
customers or making decisions that require a human “gut”
(computers are fast and persistent, but not intuitive).
And beware of the decentralization IT unleashes (Knowledge Is
Power). Establish information controls and strengthen training and
corporate culture as you decentralize; inform and empower
employees in order to assure unity of purpose, plan and execution
but assure that each employee knows how to properly use the
actionable knowledge you give them.
Implementing a new IT System
• Audit the current system to verify that information
collected is accurate, complete, reliable, relevant and
timely
• Benchmark leading companies
• Decide what needs to be improved
• List major goals and new types of information required
• Establish ways to measure implementation progress
• Make certain the new tool fits the business need
• Build employee buy-in and support
• Train, train, train!
• Implement
Make Certain IT is…
• Cost-effective
• Cutting-edge
• Coherent
IT and Product Development
• IT can greatly facilitate product
development, cutting cost and speeding
the product cycle.
Product Life Cycle
Four Stages
1. Embryonic: new with minimal demand
2. Growth: demand increases
3. Maturity: demand peaks and flattens
4. Decline: demand decreases
Products – like life -- follow a bell curve.
Factors Affecting Life Cycle
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Fad
Fashion
Competitors’ actions
Pace of technology change
Evolving needs and circumstances
Product-development Goals
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Accelerate development pace to reduce
cost and be first to market, capturing
longer life cycle and initial price premium.
Maximize manufacturability.
Maximize differentiation.
Maximize quality.
Minimize cost.
All of which will maximize customer
satisfaction
Product-development Techniques
• Cross-functional teams
• Concurrent – not sequential – engineering
- Reduces development time and cost
- Enhances manufacturability
- Enhances quality
• Customer involvement
• Supplier involvement