Chapter 2
The Organizational Context of
the New Millennium
Diversity, Quality,
Technology, International
Learning Goals
• Understand why the U.S. Workforce will
increase in diversity well into the next
century
• Describe the direction in which many
organizations are headed in managing for
quality
Learning Goals (Cont.)
• Explain how technological changes will
affect modern organizations and their
management
• Discuss some issues and implications of
managing organizations in an increasingly
global environment
Chapter Overview
• Workforce Diversity
• Quality Management
• Technology, Organizations, and
Management
• The Global Environment of Organizations
Introduction
Workforce
diversity
Quality
Management
Emerging
issues
Global
environment
Technology,
Organizations,
and Management
Workforce Diversity
• Differences in workforce composition based
on personal and background factors of
people
• Some dimensions of workforce diversity
–
–
–
–
Age
Race
Physical ability
Family status
See text book Figure 2.1 for a more complete listing
Workforce Diversity (Cont.)
• Projections show more women, more
minorities, and older workers in the work
force
• Expect strong regional differences
• For example, California's population in
2005 will have 50 percent white and 50
percent people of color, speaking 80
languages
Workforce Diversity (Cont.)
• Differences in people also present different
worldviews to an organization
• They see the world through different
perceptual lenses
• Issue: harnessing these differences as
opportunities to pursue the organization’s
mission
Workforce Diversity (Cont.)
• Challenges to personnel and work policies
– Working parents: work schedules and on-site
day care
– Single parent: time off to tend to sick child
– Native Americans: work schedules and their
culture’s celebration periods
– Disabled: special access to building and work
area design
– Part-time: job sharing
Workforce Diversity (Cont.)
Three views
Valuing
Managing
Workforce
diversity
Managing for
Workforce Diversity (Cont.)
• Valuing diversity
– Aggressively embrace diversity
– Goes beyond managing existing diversity
– Recognizes the essential character of a diverse
workforce
– Actively builds a diverse workforce
Workforce Diversity (Cont.)
• Managing diversity
– Harness the potential of all sources of
difference within an organization's workforce
– Tap diverse perspectives and rethink
approaches to tasks and markets
– Example: after hiring its first Hispanic female
attorney, a small northeastern law firm
discovered a new market: pursue English-only
employment policies in cases involving
immigrants. Previously all-white legal staff
never thought of that market
Workforce Diversity (Cont.)
• Managing diversity (cont.)
– Not affirmative action in disguise
– Get the greatest contributions from increasingly
diverse people
– A variety of views enriches organizational life
– Does not ask people to give up their
individuality
Workforce Diversity (Cont.)
• Managing diversity (cont.)
– Honors differences among people, but asks
everyone to accept the core values of the
organization
– Core values come from organization's mission:
"An unending pursuit of excellence in customer
service.”
– People reach the goal in many different ways
because of their diversity
Workforce Diversity (Cont.)
• Managing diversity (cont.)
– No choice about managing for diversity
• Note the labor force statistics discussed earlier
• Likely have a diverse labor force in the future,
especially as an organization pursues scarce skilled
labor
• Organizations that have followed affirmative action
and Equal Employment Opportunity (EEO)
guidelines now have diverse workforces
Workforce Diversity (Cont.)
• Managing diversity (cont.)
– Good business strategy
• Increasingly diverse customer base
• Think and compete globally to remain competitive
• A diverse workforce helps managers attract
customers from diverse backgrounds
• Example: Pizza Hut has found that the presence of
Muslim workers attracts more Muslim customers
Workforce Diversity (Cont.)
• Managing diversity (cont.)
– Global environment adds another layer of
complexity
– Many U.S. organizations sell in foreign
markets, operate in foreign countries, or have
joint ventures with foreign organizations
– Need to understand local customs to meet
customer expectations in foreign markets
– Diverse workforce helps U.S. organizations
meet these global challenges
Workforce Diversity (Cont.)
• Managing for diversity
– Aggressively recruit and hire people of diverse
backgrounds
– Challenges
•
•
•
•
•
Unleash the potential of a diverse workforce
Channel it toward organizational goals
Provide vision so everyone understands the goals
Preserve a diversity of viewpoints
Help employees get the satisfaction they want from
their work experiences
Workforce Diversity (Cont.)
• Managing for diversity (cont.)
– Policy changes
•
•
•
•
Work schedules
Personal leave
Language training in English or other languages
Other basic skills
– Fairness in policies: day-care policy applies to
all employees
Workforce Diversity (Cont.)
• Managing for diversity (cont.)
– Managers will need to learn new skills
• Accepting differences
• Appreciating language differences
• Learning new languages. Includes sign language to
communicate with hearing-impaired employees
Workforce Diversity (Cont.)
• Managing for diversity (cont.)
– Other changes touch the heart of an
organization's culture
– Values suitable to a homogeneous white-male
culture need to yield to the heterogeneous
values of diverse groups
– Social activities
• Rituals in male cultures will need to change to allow
ready access by females
• Rotate activities to meet the desires of both groups
• Example: if social gatherings include only maleoriented sports, add other activities
Quality Management
• Managing all parts of an organization to
ensure quality products or services
• Can trace its roots to the 1920s
• Ignored by American managers until forced
to focus on it by competitive forces
• Many names: Total Quality Control,
Leadership through Quality, Total Quality
Management, Robust Design, six-sigma
quality
• Quality Management (QM) covers them all
Quality Management (Cont.)
• Quality Management
– A philosophy and system of management
– Philosophy: values of quality, continuous
improvement, and “getting it right the first
time”
– System of management: tools and techniques
that help manage for quality and continuous
improvement
– Has its roots in manufacturing but applies to all
organizations
Quality Management (Cont.)
• History
– An American invention, not Japanese
– Some significant contributors: W. Edwards
Deming, Walter A. Shewhart, Armand V.
Feigenbaum, Joseph M. Juran, and Philip B.
Crosby
– Taught to the Japanese after WW II. They
understood what it meant from the beginning
Quality Management (Cont.)
• Requires a total system's view of the
organization. Reaches beyond its
boundaries
• Interdependence of outside people, outside
organizations, and groups within the
organization to manage for quality
– Employees
– Suppliers
– Clients, customers
Quality Management (Cont.)
• Interdependence (cont.)
–
–
–
–
Community
Coalitions to which the organization belongs
Professional or trade associations
Competitors
Quality Management (Cont.)
• View organizations as a system of
processes, not as a vertical chain-ofcommand view
– Emphasizes processes, customers,
interdependence with suppliers, and the role of
feedback in continuous quality improvement
– Ask customers and suppliers: discover shifts in
expectations and quality requirements
Quality Management (Cont.)
• Supporting tools and techniques
– Let people watch work processes to ensure a
quality product or service
– Train employees in the use of the tools
– Most QM tools and techniques let organizations
analyze processes
Quality Management (Cont.)
• Supporting tools and techniques (cont.)
– Typically done by teams of people drawn from
all parts of the organization affected by the
process
– Deliberately diverse teams bring different
views to the analysis and improvement of a
work process
– Example: analysis team examining an
organization's hiring process includes members
from the Human Resources Department, hiring
departments, newly hired employees, labor
union representatives
Quality Management (Cont.)
• Benefits
– Increased employee commitment to continuous
quality improvement
– Cost of providing a service or manufacturing a
product drops
– More dependable service processes. More
reliable products
Quality Management (Cont.)
• QM differs from other ways of managing
– Emphasizes a long-term commitment to
continuous quality improvement
– Quality is everyone's job, not the job of a
quality-control department
– Intensely customer focused: demands that all
organization members share that focus
– Emphasizes high involvement in the work
process
Quality Management (Cont.)
• QM differs from other ways of managing
(cont.)
– Communication in all directions--top-down,
bottom-up, laterally
– A long-term orientation: commitment to the
future
– Decisions made with a view of the future
– Continuous improvement lets people do more
with the same resources
Quality Management (Cont.)
• QM differs from other ways of managing
(cont.)
– Involving everyone in continuous improvement
can add challenge to employees' jobs
– Long-run result: a committed corps of people
with an impassioned focus on mission,
customers, and continuous quality improvement
Quality Management (Cont.)
• Moving toward QM presents massive
change to an organization
• Requires people to reframe the way they
think about their organization
• Difficult transformations might account for
some QM failures
Quality Management (Cont.)
• Results
– Continuous improvement increases process
efficiency and reduces costs
– Quality can attract new customers and increase
the retention of old ones. Costs five times more
to get new customers than to keep present ones
– High quality can make a product or service so
attractive that an organization can charge higher
prices than competitors
Quality Management (Cont.)
• Results (cont.)
– QM efforts produced poor results when
managers did not target improvements to areas
that had the greatest long-term positive effect
on profits
– Some significant positive financial effects
– Some major failures: The Wallace Co. and
Florida Power and Light
Technology, Organizations,
and Management
• Computing power and computer features
– Desktop computers with CD-Rom drives, highspeed processors, and large memory capacity:
create business presentations using threedimensional animated technology
– Laptop and palmtop computers: Internet
connections using ports in airport telephones,
aircraft telephones, or cybercafés
– Tracking appointments and staying connected
will continue to get easier in the future
Technology, Organizations,
and Management (Cont.)
• Communications technology
– Note: the first transatlantic telephone cable
carried only 89 simultaneous calls!
– Digital satellite systems: allows handheld
digital cellular communication anywhere in the
world
Technology, Organizations,
and Management (Cont.)
• Communications technology (cont.)
– Lucent Technology's Bell Labs' wave division
multiplexing
• Splits a single beam of light into multiple colors
• Each color is a separate communication channel
within an optical fiber
– Handheld communicators: send and receive
e-mail, talk to a person by telephone, and surf
the Web--from anywhere
Technology, Organizations,
and Management (Cont.)
• Other technologies
– Electronically based measurement systems:
monitor manufacturing processes and collect
sales data at store checkout stands
– Future computer technologies: digitize
information from voice interaction and
handwriting on a digital tablet
– Handheld computers: track inventories and
send orders electronically
Technology, Organizations,
and Management (Cont.)
• Other technologies (cont.)
– Navigation satellites: track truck and ship
fleets
– Communication satellites: managers can talk to
drivers and ship captains anywhere in the world
– E-mail, voice mail, videoconferencing,
teleconferencing
– Widely used now and will increase in use in the
future
Technology, Organizations,
and Management (Cont.)
• Other technologies (cont.)
– Videoconferencing adds a two-way video
connection to the now common teleconference
– Replace or supplement e-mail systems with
voice-mail systems. Oral messages, not written
ones, appear in a person's electronic mailbox
– Widespread use of intranets (internal networks)
and the Internet
Technology, Organizations,
and Management (Cont.)
• Materials technology and engineering
– Commonly used: carbon fiber composites and
optical fibers
– New: superpolymers, amorphous metal alloys,
and superconductors
– Innovations in product ideas and technological
solutions no longer will depend on naturally
existing materials
Technology, Organizations,
and Management (Cont.)
• Materials technology and engineering
(cont.)
– New materials: lighter cars and trucks that can
carry heavier loads
– New ceramics technology allows designing jet
engines with more thrust. Larger planes going
longer distances with more people and cargo
Technology, Organizations,
and Management (Cont.)
• Manufacturing
– Agile manufacturing processes with almost no
inventory. Direct computer links with
customers or end-users
– Cost-effective and competitive processes to
produce both custom-made items and large
production runs in the same plant
– Products moving through these processes can
differ from item to item
Technology, Organizations,
and Management (Cont.)
• Manufacturing (cont.)
–
–
–
–
Computer-assisted manufacturing (CAM)
Computer-integrated manufacturing (CIM)
Modern materials
Robotics
Technology, Organizations,
and Management (Cont.)
• Manufacturing (cont.)
– Laser cutting
– Bonding methods
– Internet technology: suppliers receive orders as
manufacturer updates its manufacturing
schedule in real time
Technology, Organizations,
and Management (Cont.)
• Managerial role changes
– People in scattered places
– Networks will act as coordinating mechanisms,
replacing face-to-face interaction
• Increase in telecommuting
Technology, Organizations,
and Management (Cont.)
• New strategies
– Flexibility: key feature that will permeate the
design and response of manufacturing and
service operations
– Includes thorough understanding of customer
needs and variations among markets
– Latter will be especially true for multinationals
Technology, Organizations,
and Management (Cont.)
• New strategies (cont.)
– Markets in different countries have high
diversity even between nearby countries
– Treat customers of different countries in the
way they expect. Example: insurance giant
AIG
• Local agents collect monthly premiums at each
insured's home in Taiwan
• Electronic bank transfers in Hong Kong
Technology, Organizations,
and Management (Cont.)
• Organizational design
– New strategies require decentralized
organizations
– Fast responses to meet shifting market and
customer needs
– Cross-functional teams to tightly integrate the
total business process
Technology, Organizations,
and Management (Cont.)
• Organizational design (cont.)
– Local teams with broad decision-making and
problem-solving authority will help large
organizations decentralize
– Modern information technologies will help
globally dispersed organizations decentralize
Technology, Organizations,
and Management (Cont.)
• Organizational design (cont.)
– Organization-wide self-managing teams
• Form teams around a specific customer base,
product, or service
• Makes all decisions in response to customer needs
• Conceives, designs, builds, markets
Technology, Organizations,
and Management (Cont.)
• Organizational design (cont.)
– Self-managing teams (cont.)
• Involved in all parts of the business process
affecting a customer
• Will do much of the selection and socialization of
new employees
– Virtual organizations: link to various partners
over the Internet
Technology, Organizations,
and Management (Cont.)
• Organizational design (cont.)
– Virtual organizations (cont.)
• Example: Aditi Inc.
– Customer support to software users with a twist
– Seattle and Bangalore, India based
– After American workers go home, messages transfer over
the Internet to Bangalore
– Reverse happens at the end of the Indian work day
– Almost immediate customer response, no matter what
their time zone
More detail in Chapter 17: Organizational Design
Technology, Organizations,
and Management (Cont.)
• Internet commerce
– Forecast: $1.3 trillion in sales by 2002
– Biggest growth areas: computers, software,
books, music, videos
– Example: Amazon.com offers three million
book titles, outstripping Barnes & Noble's
175,000 titles
– Simple to set up commercial Web sites
– Observers predict a flood of upstarts: new
generation of competitors
The Global Environment
of Organizations
• Our increasingly interconnected world
requires managers to have a global
perspective
• Range of perspective
– Finding new markets outside the home country
– Multinational organization: operations in many
countries
– Transnational organization: sees no country
boundary limits
The Global Environment
of Organizations (Cont.)
• Modern managers must think of the entire
world as a source of labor, materials,
markets, and the like
• Highly interconnected economies around
the world
The Global Environment
of Organizations (Cont.)
• Technology effects
– International travel: common and fast with
modern aircraft
– Telecommunication-satellites: information in
all forms moves quickly from country to
country
– Includes international videoconferences
– Easy Internet communication
The Global Environment
of Organizations (Cont.)
• Free trade effects
– Regional trade agreements: opening vast new
markets; increasing a firm’s competition
– North American Free Trade Agreement opened
the borders of Mexico, Canada, and the United
States: easy movement of goods, capital, and
services
– Europe and the Euro: 11 European countries
moving to a single currency
– Many Latin American countries are moving
toward freer trade
The Global Environment
of Organizations (Cont.)
• Issues for managers
– Language differences among countries
– Form partnerships with local business people or
learning the language oneself can help solve the
language problem
– Cultural differences among countries
• Affects how a company enters markets, the way it
markets goods or services, how it deals with labor
laws, and how it builds a loyal customer base
• Orientations to space and time. See text book for
examples
The Global Environment
of Organizations (Cont.)
• Issues for managers (cont.)
– Values desired for globally dispersed operations
• Values of home country?
• Values of local culture?
– Values of home country: place people from the
home country in charge of units
The Global Environment
of Organizations (Cont.)
• Issues for managers (cont.)
– Organizations that hire local people for
management positions often first socialize them
to its major home country values
– Hewlett-Packard: managers know the "HP
Way" whatever their national origins or the
country in which they work
The Global Environment
of Organizations (Cont.)
• Country culture dimensions that imply
acceptable management behavior and
organizational forms
• Five dimensions
–
–
–
–
–
Power distance
Uncertainty avoidance
Individualism
Masculinity
Long-term orientation
The Global Environment
of Organizations (Cont.)
• Country culture dimensions (cont.)
– Power distance: degree of inequality among
people a culture considers normal
• Low: people treated as equals despite social status
• High: people accept authority relations
– Uncertainty avoidance: value placed on
predictability, structure, stability
• Low: prefer few formal rules
• High: want clear behavioral guides
The Global Environment
of Organizations (Cont.)
• Country culture dimensions (cont.)
– Individualism: value placed on acting alone
and not as part of a group
• Low: group behavior important
• High: individual behavior important
– Masculinity: value placed on decisiveness and
assertiveness
• Low: caring for others; warm interpersonal
relationships
• High: assertive, ambitious, tough
The Global Environment
of Organizations (Cont.)
• Country culture dimensions (cont.)
– Long-term orientation: value placed on
persistence, status, thrift
• Low: respect for tradition, personal stability,
focused on the past
• High: perseverance, thrift, focused on the future
The Global Environment
of Organizations (Cont.)
High
Use formal authority for
Prefer well-defined procoordination and simple
cedures; clear organizastructures that emphasize
tional structure; rules
senior management's role
and procedures
I
II
Rely less on formal rules
Rely on simple organizaand organizational form
tional forms and use of
and more on direct interdirect supervision
personal interactions to
III work activities
IV
coordinate
Low
Low
Power distance
High
Countries in middle of each dimension rely on middle management
The Global Environment
of Organizations (Cont.)
• Uncertainty avoidance and power distance:
Implications
– High-low countries: Austria, Germany, Israel
– High-high countries: Mexico, Panama,
Guatemala
– Low-low countries: Denmark, Sweden,
Republic of Ireland
– Low-high countries: China, Malaysia,
Singapore
– Middle of each dimension countries: United
States, Canada, The Netherlands