CHAPTER 1
Management: Skills for Success
CHAPTER SUMMARY
Management may be defined in different ways, but essentially it involves the process of reaching
organizational goals by working with and through people and other organizational resources.
The management process is composed of the four integrally-related management functions:
(1) planning, (2) organizing, (3) influencing, and (4) controlling. These functions are performed
in all types of organizations.
These functions are interrelated because the performance of one depends upon the performance
of the others as organizational goals are pursued. In pursuing those goals, management uses four
basic types of organizational resources: (1) human, (2) monetary, (3) raw materials, and
(4) capital. Managerial efficiency and effectiveness are important in the utilization of these
resources.
Career planning is an important element of good management. Management careers are
characterized by a series of evolutionary stages: (1) exploration, (2) establishment,
(3) maintenance, and (4) decline. To enhance movement through these stages, an individual
must be proactive instead of reactive.
Important issues that should be addressed when making the decision to choose management as a
career include women’s role in management, the problems for dual-career couples, and the
relationship between the digital dimension and the traditional management functions.
CHAPTER 2
Managing: History and Current Thinking
CHAPTER SUMMARY
This chapter discusses six approaches to management situations and to solving organizational
problems.
The first one discussed is the Classical approach to management. This approach deals with
lower-level management analysis, such as was done by Frederick W. Taylor, Frank and Lillian
Gilbreth, and Henry L. Gantt. It also is concerned with a comprehensive analysis of
management as a whole, as exemplified by Henri Fayol.
Because the human factor was not adequately emphasized in the classical approach, the
Behavioral approach to management was developed. This approach began with the experiments
at the Hawthorne Works of Western Electric. This method emphasizes people.
The third approach is the Management Science approach to management, which involves using
the scientific method and mathematics to solve operational problems. This method began in
World War II. The approach is widely used today, especially by very large, complex
organizations.
The Contingency approach to management emphasizes that what managers do in practice is
dependent on a given set of circumstances. The approach is based on the premise that there is
probably no one best way to solve a management problem in all organizations, but there is
probably one best way to solve any given managerial problem in a specific organization.
The fifth approach to management is the Systems approach. This approach is based on the theory
that to understand fully the operation of an entity, the entity must be viewed as a system. There
are two basic systems in management: closed systems and open systems. The effect of
environmental factors on the management system cannot be over-emphasized. Managers can use
triangular management to get the information they need about their environments.
The sixth approach to management is the Learning Organization approach. A learning
organization is an organization that does well in creating, acquiring, and transferring knowledge,
and in modifying behavior to reflect new knowledge.
CHAPTER 3
Corporate Social Responsibility and Business Ethics
CHAPTER SUMMARY
Corporate social responsibility is the managerial obligation to take action that protects and
improves the welfare of society as a whole as well as organizational interests. Keith Davis
developed five propositions for socially responsible managers: (1) Social responsibility arises
from social power; (2) Business shall operate as a two-way open system, with open receipt of
input from society and open disclosure of its operation to the public; (3) The social costs and
benefits of an activity, product, or service shall be thoroughly calculated and considered in
deciding whether to proceed with it; (4) Social costs related to each activity, product, or service
shall be passed on to the consumer, and; (5) Business institutions, as citizens, have the
responsibility to become involved in certain social problems that are outside their normal areas
of operation.
There are arguments for and against social responsibility. Proponents argue that all members of
society must maintain society. Opponents, such as Milton Friedman, argue that business exists
mainly to make profits. While certain social responsibility is legislated, managers assume most
of the responsibility for determining how much corporate social responsibility is enough. Social
responsiveness is the degree of effectiveness and efficiency in pursuing social responsibility.
Socially responsive organizations must decide which responsibilities to pursue and how best to
pursue them. Three approaches are described: (1) the social obligation approach; (2) the social
responsibility approach; and (3) the social responsiveness approach. Socially responsible
activities can and should be integrated into an organization’s overall marketing plan, as well as
its organizing, influencing, and controlling functions. One method for controlling socially
responsible activities is the social audit. Society can help business meet its social obligations by:
(1) setting clear and consistent rules; (2) keeping the rules technically feasible; (3) making sure
that the rules are economically feasible; (4) making the rules prospective, not retroactive; and (5)
making the rules goal-oriented, not prescriptive. The catalyst which causes managers to take
socially responsible action is ethics. In business, ethics can be defined as the capacity to reflect
on values in the corporate decision-making process, to determine how these values and
decisions affect the various stakeholders, and to establish how managers can use these
observations in day-to-day company management.
The employment of ethical business practices enhances overall corporate health in three ways:
(1) increasing productivity, (2) positively affecting outside stakeholders, such as suppliers and
customers, and (3) minimizing regulation from government agencies. Various tests can be
applied to determine if potential actions will be considered ethical by the general public.
CHAPTER 4
Management and Diversity
CHAPTER SUMMARY
Diversity refers to characteristics of individuals that shape their identities and the experiences
they have in society. Diversity includes understanding relationships between majority and
minority group members. Just as we learned that work groups enhance decision-making, work
groups also gain large amounts of information and different approaches to problem solving from
a multicultural workforce. Markets are becoming increasingly diverse. In order to keep pace
with such diversity, organizations need to include diversity among their key decision-makers.
All organizations suffer from the high cost of maintaining a competent workforce. Studies show
that these costs can be reduced by instituting diversity practices aimed at retaining the nontraditional manager. Workers that feel valued and relaxed in a diverse work setting will, quite
naturally, be more productive. When fair and equitable promotions are handed out to the
deserving in an organization, the non-traditional manager in this diverse workforce contributes
and commits to organizational goals and objectives because he/she sees the fairness in the
competition.
Now that we know the reasons that compel organizations to encourage a diverse workforce, let’s
look at some of the issues facing managers within the diverse workforce. The Hudson Institute’s
report on changing demographics lists the following five facts to be most important in relation to
workers and jobs in the 21st century: (1) there will be slowest population growth since 1930; (2)
the average age of the workforce will rise while the young workers entering the workforce will
fall; (3) there will be more women entering the workforce; (4) of the new entrants in the
workforce, minorities will make up a large share; (5) immigrants will represent the largest
increase entering the workforce.
Ethnocentrism—or the judging of other groups as being less favorable because their culture or
customs begin different from the norm, prejudices, stereotypes and discrimination—are all issues
that a manager will have to contend with in the diverse workforce. Mostly, the groups affected
by the aforementioned issues are women, minorities, older workers, and people with disabilities.
A major pattern of discrimination affecting women is the “glass ceiling,” which refers to an
invisible limit to advancement up the corporate ladder. Sexual harassment is another form of
discrimination affecting women.
Minorities face a socialization problem when they serve two cultural groups, the dominant one in
the workforce and their own. Older workers have their own particular problems with being
typecast as senile, incompetent, or “deadwood.” Finally, the disabled, although helped with the
passage of more recent legislation, are also subjected to many of the same problems and
prejudices affecting the other groups.
What can be done to promote diversity within the organization? The Hudson Institute report
offers six strategies: (1) stimulate balanced world growth; (2) accelerate productivity increases in
the service sector; (3) maintain a dynamic, aging workforce; (4) reconcile the conflicting needs
of women, work, and family; (5) integrate black and Hispanic workers into the economy;
(6) improve education and skills of all workers. If diversity is to be implemented and part of the
organizational strategy, “top management” must support and commit its resources to just such an
effort. Pluralism, an environment in which differences are acknowledged and seen to contribute
to an organization’s effectiveness, suggests five approaches to achieving workforce diversity:
(1) the “golden rule” approach—relies on the saying “do unto others as you would have them do
unto you” as the basis for diversity; (2) assimilation—belief that organizational members should
fit into the existing organizational culture; (3) right the wrongs—addresses the past injustices
suffered by a particular group and attempts to design compensation for damages; (4) culturespecific approach—teaches the employee norms and practices of another culture so that they
will be prepared to interact effectively; (5) multicultural approach—focuses on how
interpersonal skills and attitudinal changes relate to organizational performance. Managers play a
big part in bringing out the best in their associates. They do this through the four functions of
management: planning, organizing, influencing, and controlling. In order for managers to
successfully promote diversity organizations they need to implement diversity training for their
managers. This training needs to focus on five areas: (1) behavioral awareness, (2)
acknowledgement of biases and stereotypes, (3) job performance, (4) avoidance of assumptions,
and (5) modification of policies and procedures.
CHAPTER 5
Managing in the Global Arena
CHAPTER SUMMARY
International management is simply the performance of management activities across national
borders. Business with foreign countries is growing. Evidence of this growth comes from the
growing number of multinational corporations (MNCs). In general, the larger the organization,
the greater the probability that it participates in international operations of some sort.
International management is more complex than domestic management. The likelihood of
achieving desirable outcomes from involvement in international management varies from
country to country.
To succeed, multinational corporations must have an international strategy. International
strategies usually involve imports and exports, license agreements, direct investing, and joint
ventures. Five factors usually determine the organizational structure of multinational
corporations: (1) function, (2) product, (3) territory, (4) customer, and (5) manufacturing process.
For multinational organizations to thrive, they must have competent managers. Managerial
attitudes toward the operations of an MNC can range from ethnocentric to polycentric to
geocentric. Culture—the language, attitudes, and personal needs of a society—makes influencing
more difficult within multinational corporations. Controlling in multinational corporations is
complicated by different currencies and by geographical separation.
Some of the special issues in international management include maintaining ethics and preparing
expatriates for foreign assignments. Ethics is a challenge, because what is viewed as ethical in
one country may be viewed as unethical in another. It may help to respect core human rights,
respect local traditions, and determine right and wrong by examining the context. Preparing
expatriates may require training which covers culture profiles, cultural adaptation, logistical
information, and application of the manager’s role to the organization.
CHAPTER 6
Management and Entrepreneurship
CHAPTER SUMMARY
Entrepreneurship involves more than just starting a new business. It entails identifying,
evaluating, and exploiting opportunities. Entrepreneurial opportunities exist where persons are
able to sell new products or services at a profit producing price. To illustrate the importance of
entrepreneurship, 460,000 people start new businesses in the U.S. each month, on average, yet
research indicates that 34% of all new businesses fail within the first two years.
Entrepreneurship truly plays a vital role in our society.
Entrepreneurs are individuals who are able to identify, evaluate and exploit these opportunities.
There are five types of opportunities; creation of new products or services, discovery of new
geographical markets, creation of new raw materials or alternative uses for existing ones,
discovery of new methods of production, and the discovery of new methods of organizing.
Entrepreneurs must be able to identify these opportunities. There are four factors which
influence the ability of entrepreneurs to identify opportunities: entrepreneurial alertness,
information asymmetry, social networks and the ability to establish means-ends relationships.
The three stages of the entrepreneurship process include: opportunity identification, opportunity
evaluation, and opportunity exploitation of opportunities. (See Figure 6.1) When an
entrepreneur analyzes whether an idea is viable, he or she engages in a feasibility analysis. One
key issue to be examined in the evaluation stage is the entrepreneurial risk. It’s important when
entrepreneurs are evaluating risk, that they don’t fall victim to the downside loss, law of small
numbers or illusion of control.
It is common that when most entrepreneurs discover an opportunity they want to exploit, they
lack the capital necessary. Some fund their operation with their own money or with credit
cards, but most require at least some outside source of money. Three common sources of
external capital for entrepreneurs include: angel investors, venture capitalists or bank
financing.
Finally, there is both corporate or commercial entrepreneurship and social entrepreneurship. The
two differ in three respects: mission, resources and performance measurements. Performance
measures are based upon the networks of relationships, their capital bases, and the public’s
acceptance of the new venture.
CHAPTER 6
Principles of Planning
CHAPTER SUMMARY
Planning is the process of determining how the organization can get where it wants to go. The
fundamental purpose of planning is to help the organization reach its objectives. Advantages of
planning include: (1) an emphasis on the future, (2) coordination of decisions, and (3) a clear
focus on the objectives. If done incorrectly or excessively, planning can be disadvantageous, but
its benefits outweigh its disadvantages. The six steps of the planning process are: (1) stating
objectives, (2) listing alternatives, (3) developing premises, (4) choosing alternatives,
(5) developing plans to pursue the chosen objective, and (6) putting the plan into action.
Implementation of the planning process is the key to success. One way of approaching this
implementation is to view planning activities as organizational subsystems. Chief executives
have the final responsibility for organizational planning. Many chief executives, especially of
larger firms, seek planning assistance from organizational planners. These planners should be
able to: (1) use their organizational experience, (2) see the organization as a whole, (3) detect and
react to trends, and (4) get along with others. Organizational planners have three general duties
to perform. These are: (1) overseeing the planning process, (2) evaluating developed plans, and
(3) solving planning problems. The evaluation of planners would be based on both objective and
subjective appraisals of their performances. Success in implementing a planning subsystem is not
easily attainable. Several safeguards can be employed to ensure the success of the planning
process. These include: (1) top management support, (2) an effective and efficient planning
organization, (3) an implementation focused planning orientation, and (4) inclusion of the right
people.
CHAPTER 7
Making Decisions
CHAPTER SUMMARY
A decision is a choice made between two or more available alternatives. There are two basic
types of decisions which are at the opposite ends of a continuum: (1) programmed decisions are
routine and repetitive, and (2) nonprogrammed decisions are one-shot occurrences and are
usually less structured than programmed ones. The scope of the decision is the proportion of the
total management system that a particular decision will affect. The broader the scope of a
decision, the higher the level of the manager responsible for making that decision. With
decisions through consensus, everyone agrees.
Environmental factors influence decision makers as they go through the decision-making
process. In order of occurrence, the model of the decision-making process has five steps:
(1) identifying the existing problem, (2) listing possible alternatives to solve the problem, (3)
selecting the most beneficial of those alternatives, (4) putting the selected alternatives into
action, and (5) gathering feedback to find out if the implemented alternative is solving the
identified problem.
There are three basic conditions under which decisions are made: (1) The complete certainty
condition is the decision-making situation in which the decision maker knows exactly what the
result of an implemented opportunity will be; (2) The complete uncertainty condition is the
decision-making situation in which the decision maker has absolutely no idea what the results of
an implemented alternative will be; (3) The risk condition is the decision-making situation in
which the decision-maker has only enough information to estimate how probable the outcome of
implemented alternatives will be. Probability theory is a decision-making tool used in risk
situations. Probability refers to the likelihood that an event or outcome will occur and allows
decision makers to calculate an expected value for each alternative. Another decision-making
tool used in risk conditions is a decision tree. A decision tree is typically used to evaluate
decisions containing a series of steps.
CHAPTER 8
Strategic Planning
CHAPTER SUMMARY
Strategic planning is long-term planning that focuses on the organization as a whole. To
determine how far into the future they should plan, managers should use the commitment
principle. Strategy is the end result of strategic planning. Strategic management is the process of
ensuring that an organization possesses and benefits from the use of an appropriate
organizational strategy. It consists of five sequential and continuing steps: (1) environmental
analysis, (2) the establishment of organizational direction, (3) strategy formulation, (4) strategy
implementation, and (5) strategic control.
In order to perform an environmental analysis, a manager must understand how the general,
operating, and internal environments affect organizational performance. The components of the
general environment are: economic, social, political, legal, and technological. The operating
environment is the level of the organization's external environment that contains components that
normally have relatively specific and immediate implications for managing the organization.
The internal environment from a management viewpoint includes planning, organizing,
influencing, and controlling within the organization.
Two important stages during the establishment of organizational direction are the development
of (1) the organizational mission and (2) the organizational objectives. Once these are
established, strategy formulation occurs. The tools for developing strategies include: (1) critical
question analysis, (2) SWOT analysis, (3) the Boston Consulting Group Growth-Share Matrix,
(4) the GE Multifactor Portfolio Matrix, and (5) Porter's model for industry analysis. The fourth
step of the strategy management process is the implementation of the strategy.
The successful implementation of strategy requires four skills: (1) interacting skills, (2)
allocating skills, (3) monitoring skills, and (4) organizing skills. The last step, strategic control,
focuses on ensuring that all steps of the strategic management process are appropriate,
compatible, and functioning properly. Tactical planning should reflect strategic planning.
Tactical planning focuses on what to do in the short-term to help the organization achieve the
long-term objectives determined by strategic planning. As managers move from lower to upper
management, they spend more time on strategic planning and less time on tactical planning.
CHAPTER 9
Plans and Planning Tools
CHAPTER SUMMARY
A plan is a specific action proposed to help the organization achieve its objectives. A plan has
four dimensions: (1) repetitiveness, (2) time, (3) scope, and (4) level. Using the repetitiveness
dimension as a guide, organizational plans are usually either standing plans or single-use plans.
Three specific types of standing plans are policies, procedures, and rules. Single-use plans, on
the other hand, are exemplified by programs designed to carry out a special project and budgets.
Managers should know what causes plans to fail and should take appropriate steps to prevent
plan failure. A comprehensive organizational plan includes plant facilities planning and human
resource planning. Both are types of input planning.
Planning tools are techniques that managers can use to help develop plans. Forecasting involves
predicting the future organizational environment. Sales forecasting is the most important form of
organizational forecasting. Methods of sales forecasting include: (1) the jury of executive
opinion method, (2) the sales force estimation method, and (3) the time series analysis method.
Scheduling is another commonly used planning tool. It involves the listing of activities for
reaching an objective. Two frequently used scheduling methods are Gantt charts and the
program evaluation review technique (PERT).
CHAPTER 10
Fundamentals of Organizing
CHAPTER SUMMARY
Organizing is the process of establishing orderly uses for all resources in the organization. The
organizing function is the mechanism used to activate plans. The main steps of the
organizing process are: (1) reflecting on plans and objectives, (2) establishing major tasks,
(3) dividing major tasks into subtasks, (4) allocating resources and directives for subtasks, and
(5) evaluating the results of implemented organizing strategy. Classical organizing theory is the
cumulative insights of early management theorists on how organizational resources can best be
used to enhance goal attainment. Max Weber used the term bureaucracy to describe a
management system with detailed procedures and rules, a clearly outlined organizational
hierarchy, and mainly impersonal relationships among organizational members. In any
organizing effort, managers must choose an appropriate structure. Organization structure is
graphically represented by the organization chart. There are two basic types of structure within
any organization: (1) formal and (2) informal. While informal structure is a system or network
of interpersonal relationships that exist within an organization, the most common method for
instituting formal relationships among resources is by establishing departments. Work bases for
establishing departments within the formal organization include: (1) work functions, (2) product,
(3) territory, and (4) customers.
Four primary factors influence the evolution of the formal structure of an organization are:
(1) forces in the manager, (2) forces in the task, (3) forces in the environment, and (4) forces in
the subordinates. Another consideration is division of labor. While division of labor may be
efficient and have economic benefits, overspecialization is boring and can depress production
rates. In an organization that uses division of labor, effective coordination is crucial for
success. Groups cannot maintain their productivity without coordination. The third
consideration of any organizing effort is span of management. According to Harold Koontz,
the appropriate size of an individual’s span of management is affected by: (1) similarity of
functions, (2) geographic contiguity, (3) complexity of functions, (4) coordination, and (5)
planning. A broad span of management indicates a flat organization; a narrow span indicates
a tall organization chart. The fourth consideration of any organizing effort is scalar
relationships or the chain of command. The lower an individual’s position on the
organization chart, the less authority possessed. Henri Fayol suggested that strict adherence
to the chain of command is inappropriate in all situations. Fayol advocated the use of a
gangplank or bridge in some situations.
CHAPTER 11
Responsibility, Authority, and Delegation
CHAPTER SUMMARY
The most fundamental method of channeling the activities of individuals within an organization
is responsibility. The source of the responsibility lies within the individual and is summarized
in the job description. Dividing job activities, clarifying the job activities of managers, and being
responsible are all related to responsibility. Authority must reflect responsibility.
Once individuals are given the responsibility for an assignment, they must be given the authority
to perform it. Three main types of authority exist within an organization: (1) line authority,
(2) staff authority, and (3) functional authority. Conflict may arise between line and staff
personnel. Overcoming these conflicts requires a serious and continuous effort. Accountability
is the management philosophy whereby individuals are held liable for how well they use their
authority and live up to their responsibility.
Delegation is the actual process of assigning job activities. It involves three steps: (1) assigning
duties, (2) granting authority, and (3) creating an obligation. Three kinds or types of obstacles to
delegation may occur within the organization: (1) obstacles related to the supervisor,
(2) obstacles related to subordinates, and (3) obstacles related to organizations. These barriers
can be overcome to some extent by the supervisor. Notable differences exist in the relative
number of job activities and the relative amount of authority delegated to subordinates,
depending upon the degree of decentralization that exists within the organization. The amount of
decentralization is determined by: (1) the size of the organization, (2) the locations of customers,
(3) the homogeneity of the product line, (4) the locations of suppliers, (5) the need for quick
decisions, and (6) the desire for creativity.
CHAPTER 12
Managing Human Resources
CHAPTER SUMMARY
To provide appropriate human resources to fill either managerial or nonmanagerial openings,
managers follow four sequential steps: (1) recruitment, (2) selection, (3) training, and (4)
performance appraisal.
Recruitment activities begin with a thorough understanding of the position to be filled. This is
accomplished through the development of job analyses, job descriptions, and job specifications.
Because the labor supply is in constant flux, recruiters must be able to pinpoint sources of human
resources. Sources from within the organization are found by using: (1) human resource
inventories, (2) management inventory cards, (3) position replacement forms, and (4)
management manpower replacement cards. Sources outside the organization include: (1)
competitors, (2) employment agencies, (3) readers of certain publications, and (4) educational
institutions. Laws regulate recruiting practices.
The selection process is typically represented as a series of stages through which prospective
employees must pass to be hired. Each stage reduces the number of prospective employees until
one is hired. Tests are used to measure: (1) potential, (2) skill level, (3) vocational interests, and
(4) personality. Assessment centers are another employee selection tool.
Training is essentially a four-stage process involving: (1) determining training needs, (2)
designing the training program, (3) administering the training program, and (4) evaluating the
training program. Training needs can be determined through evaluation of the production
process, requests for employee feedback, and looking into the future. Training programs can
consist of lectures, programmed learning, on-the-job training, and classroom training.
Successful training programs show a reasonable return.
The main purpose of performance appraisals is to furnish feedback to organization members
about how they can become more productive. Forms of performance appraisals include (1) a
rating scale, (2) employee comparisons, (3) the free-form essay, and (4) the critical-form essay.
CHAPTER 13
Organizational Change and Stress
CHAPTER SUMMARY
The purpose of organizational change is to increase organizational effectiveness. Organizations
must change continually. Employees can provide ideas for change. In addition to change, some
degree of stability is a prerequisite for long-term organizational success. Factors to consider
when changing an organization include: (1) the change agent, (2) determining what should be
changed, (3) the type of change to make, (4) individuals affected by the change, and (5)
evaluation of change.
The change agent is probably the most important factor. While managers can choose to change
an organization in many different ways, most changes can be categorized as either (1) a
technological change, (2) a structural change, or (3) a people change. Technological changes
emphasize the modification of the level of technology within a management system. Structural
changes increase organizational effectiveness by changing controls that influence organizational
members during the performance of their jobs. The matrix organization is a good illustration of
a structural change. The focus of people change is on such factors as employees’ attitudes and
leadership skills. The process of people change can be referred to as organization development
(OD), and one commonly used OD technique is called grid OD.
Resistance to change within an organization is as common as the need for change. Resistance to
change can be reduced if managers: (1) avoid surprises, (2) promote understanding,
(3) present a positive attitude toward change, and (4) implement change on a tentative basis.
According to Kurt Lewin, behavioral change is caused by three distinct but related conditions
experienced by an individual: (1) unfreezing, (2) changing, and (3) refreezing. An evaluation of
the change may increase how much the organization benefits from the change. Another
important consideration when implementing change is concern for how much stress is being
created as a result of the change. Stress should be studied because it can harm employees, cause
absenteeism and turnover, and affect safety. It also represents a significant cost to organizations.
Stress can be either too high or too low. High stress causes more organizational problems than
low stress. To help employees manage stress, managers can prevent the development of
stressors by providing a supportive organizational climate, by making jobs interesting, and by
designing and developing career counseling programs.
Virtual organizations with virtual offices and offices are a change, which involves using
technology to reduce the need to have people at a fixed place of employment and at a fixed time
to the same degree as has long been the case, thus opening whole new challenges in managing
employees who are linked electronically to the employer but do not have face-to-face contact and
the same type of interaction as was once common.
CHAPTER 14
Influencing and Communication
CHAPTER SUMMARY
Influencing is the process of guiding the activities of organizational members through the
performance of four primary management activities: (1) leading, (2) motivating, (3) considering
groups, and (4) communicating. Emotional intelligence deals with specific skills that enable
managers have more of an influence on others.
Communication is the process of sharing information with others. The communication activities
of a manager involve interpersonal communication which includes three elements: (1) the
source/encoder, (2) the signal, and (3) the decoder/destination. To increase the probability that
communication will be successful a manager should understand the barriers that inhibit
communication. To minimize communication microbarriers, managers can: (1) limit the amount
of communication transmitted to subordinates; (2) make messages to subordinates as simple as
possible; and (3) encourage subordinates to learn and understand foreign languages and cultures.
To minimize communication microbarriers, managers can: (1) be aware of their attitudes toward
destination; (2) try to monopolize their subordinates’ attention; (3) be aware of their attitudes
toward the source; (4) make messages specific; and (5) define their words in messages. Feedback
is the decoder/destination's reaction to a message. Feedback can be either verbal or nonverbal.
The communication effectiveness index can be used to evaluate personal communication
effectiveness. Nonverbal communication may influence the impact of a message more than
verbal communication. Managers must avoid contradictory verbal and nonverbal messages.
Organizational communication is interpersonal communication within organizations.
In general, there are three types of formal organizational communication: (1) upward, (2)
downward, and (3) lateral. By nature, organizational communication creates patterns of
communication among organizational members. One common pattern is serial transmission.
Informal organizational communication ignores the organization chart. The grapevine is the
network of informal organizational communication. The grapevine usually follows one of four
patterns: (1) the single-strand, (2) the gossip grapevine, (3) the probability grapevine, and (4) the
cluster grapevine. How managers deal with grapevines depends upon the specific organizational
situation in which managers find themselves. Strategies for encouraging formal organizational
communication include listening, sending clear messages, providing access to channels, and
using staff personnel.
CHAPTER 15
Leadership
CHAPTER SUMMARY
The central theme of leadership is getting things done through people. Leadership is a subset of
management. Early leadership research tried to develop a complete profile of the traits of the
successful leader. The findings of the trait approach to leadership are inconsistent.
The situational approach to leadership is based on the assumption that the instances of successful
leadership are somewhat different and require a unique combination of leaders, followers, and
leadership situations. The Tannenbaum-Schmidt Leadership Continuum is a situational
approach that shows how leadership decision-making behavior can range from autocratic to
democratic. According to these researchers, three primary forces influence a manager’s
determination of which leadership behavior to use to make decisions. They are: (1) forces in the
manager,
(2) forces in subordinates, and (3) forces in the situation. An update of this study shows that both
societal and organizational environments are a force to be continued with in the decision
environment. A decision-focused theory of leadership is the Vroom-Yetton-Jago Model, which
focuses on how much participation to allow subordinates in the decision-making process. The
OSU studies are a series of leadership investigations that concluded that leaders exhibit two main
types of behavior: (1) structure behavior and (2) consideration behavior. The OSU studies
resulted in a model that depicts four fundamental leadership styles, which are behavior patterns a
leader establishes while guiding organizations in appropriate directions. The Michigan Studies
were conducted at about the same time the OSU studies were being done. The Michigan Studies
pinpointed two basic types of leader behavior: (1) job-centered behavior and (2) employeecentered behavior. The results of the OSU Studies and the Michigan Studies are very similar.
The Hersey-Blanchard Life Cycle Theory of Leadership is a rationale for linking leadership
styles with various situations so as to ensure effective leadership. The life cycle theory is based
primarily on the relationship of follower maturity, leader task behavior, and leader relationship
behavior. Situational theories of leadership are based on the concept of leader flexibility—that
successful leaders must change their leadership style as they encounter different situations. One
strategy proposed by Fred Fiedler was to change the situation to fit the leader’s style. According
to the contingency theory of leadership, leader-member relations, task structure, and the position
power of the leader are the three primary factors that should be used for moving leaders into
appropriate leadership situations. Another leadership theory is the path-goal theory of leadership,
which suggests that the primary activity of a leader should be to make desirable and achievable
rewards available to organization members as a result of attaining organizational goals and to
clarify the kinds of behavior that must be performed. According to this theory, leaders perform
four primary types of behavior: (1) directive, (2) supportive, (3) participative, and (4)
achievement.
Transformational leadership is receiving more attention recently because of the dramatic changes
that many organizations are going through. Coaching leadership instructs followers on how to
meet the special challenges they face. Superleadership helps followers to lead themselves.
Servant leadership views leaders’ primary role as helping followers in their quests to satisfy
personal needs, aspirations, and interests. Entrepreneurial leadership views the leader as selfemployed. Substitute leadership theory believes that in certain situations the leader has little or
no influence over the subordinates. For example, subordinates that have a very high level of
experience, skill, group cohesion, and experience require little or no leadership. In these
situations the work gets done regardless of the quality of leadership present. More attention to
women as leaders has developed and it has been found that women tend to lead in a
transformational manner as opposed to men who lead in a transactional manner.
CHAPTER 16
Motivation
CHAPTER SUMMARY
Motivation explains why people behave the way they do. Process theories of motivation are
explanations of how individuals are motivated. Content theories of motivation are explanations
of what motivates people. Four important process theories that describe how motivation occurs
are: (1) the needs-goal theory, (2) the Vroom expectancy theory, (3) the equity theory, and (4)
the Porter-Lawler theory. The needs-goal theory is a motivation model that hypothesizes that felt
needs cause human behavior. The Vroom expectancy theory is a motivation theory that
hypothesizes that felt needs cause human behavior and that motivation strength depends on an
individual's degree of desire to perform a behavior. The equity theory states that perceived
equities can lead to changes in behavior. The Porter-Lawler theory is a more complete theory
because it stresses: (1) intrinsic and extrinsic rewards, (2) task requirements and ability, and (3)
the perceived fairness of rewards.
Four important content theories of motivation are: (1) Maslow’s hierarchy of needs, (2)
Alderfer’s ERG theory, (3) Argyris’ maturity-immaturity continuum, and (4) McClelland’s
acquired-needs theory. Maslow’s hierarchy of needs reflects a sequence of satisfaction of needs:
physiological, security, social, esteem, and self-actualization. Alderfer’s ERG theory is similar
to Maslow’s theory except he identified three basic categories of needs: (1) existence needs, (2)
relatedness needs, and (3) growth needs. Satisfaction in sequence is not necessary according to
Alderfer. Argyris’ maturity-immaturity continuum shows how humans progress through a
natural maturation process. This continuum focuses on the personal and natural development of
people to explain how needs exist. McClelland’s acquired-needs theory focus on the need that
people develop through their life experiences. He focuses on three needs: (1) the need for
achievement, (2) the need for power, and (3) the need for affiliation. Motivation of
organizational members requires satisfying human needs through work.
Motivation increases appropriate behavior, thereby increasing productivity. To motivate
employees, managers can use (1) managerial communication, (2) Theory X - Theory Y, (3) job
design, (4) behavior modification, (5) Likert’s management system, (6) monetary incentives, and
(7) nonmonetary incentives. No single strategy will necessarily be more effective for a manager
than any other.
Motivation through communication is one of the simplest strategies. Theory X - Theory Y
involves managers’ assumptions about the nature of people. Job design strategies include work
simplification, job rotation, job enlargement, job enrichment, and flextime. Behavior
modification uses positive and negative reinforcement and punishment to motivate employees.
With Likert’s management style, productivity increases as the management style moves from
system 1 to system 4. Yet another motivation strategy is monetary incentives such as bonuses
and ESOPs. Nonmonetary incentives include an emphasis on quality.
CHAPTER 17
Groups, Teams, and Corporate Culture
CHAPTER SUMMARY
Groups that exist in organizations are typically divided into two basic types: formal and
informal. Formal groups are commonly divided into command groups and task groups.
Command groups do routine activities and task groups handle non-routine activities. Committees
and work teams are two formal groups that can be established in organizations. Committees tend
to increase the quality of decision-making, encourage honest opinions, enhance decision support,
provide need satisfaction, and ensure group representation. Committees will be successful if: (1)
their goals are clearly defined; (2) the committee’s authority is specified; (3) the optimum size of
the committee is determined; (4) the chairperson is selected on the basis of ability; (5) a
permanent secretary is appointed; (6) the agenda is distributed before the meeting; and (7) the
meeting starts on time and ends at a predetermined time. Managers should also help the
committee avoid the phenomenon of groupthink. Work teams are another example of task
groups.
There are four stages in the development of a group. Stage 1 is called the acceptance stage.
Stage 2 is the communication and decision-making stage. At stage 3, group solidarity occurs. At
stage 4, there is group control. In general terms, as a group passes through each of these four
stages it tends to become more mature and more effective. Mature groups are more productive.
Informal groups develop naturally as people interact. There are two kinds of informal groups.
Interest groups share issues of common concern. Friendship groups are basically social
relationships. The benefits that group members receive from informal group membership
include: (1) the perpetuation of social and cultural values that the group members consider
important, (2) status and social satisfaction that may not be enjoyed without group membership,
(3) increased ease of communication among group members, and (4) increased desirability of the
overall work environment.
To manage work groups, managers should determine group existence, understand the evolution
of informal groups, and maximize work group effectiveness. Sociometric analysis determines
what groups exist and the membership of those groups. The most widely accepted framework for
explaining the evolution of informal groups was developed by George Homans. According to
Homans, informal groups evolve from the sentiments, interactions, and activities of formal
groups.
Group effectiveness is influenced by size of work groups, their cohesiveness, the work groups’
norms, and the status of work groups’ members. Corporate culture is an important ingredient in
managing organizational members as a total group. Managers can use five primary mechanisms
to help develop and reinforce desired corporate culture. These mechanisms are: (1) what the
leaders pay attention to, measure, and control; (2) leaders' reactions to critical incidents and
organizational crises; (3) deliberate role modeling, teaching, and coaching, (4) criteria for
allocation of rewards and status; and (5) criteria for recruitment, selection, promotion, and
retirement of employees.
CHAPTER 18
Understanding People:
Attitudes, Perception, and Learning
CHAPTER SUMMARY
Attitudes are a predisposition to react to a situation, person, or concept with a particular
response. The response can be either positive or negative. There are generally three types of
attitudes: (1) Cognitive—beliefs about a person, (2) Affective—a positive or negative feeling
about a particular person, (3) Behavioral—an intent to behave a certain way toward a particular
person.
A person’s attitude is a result of values and beliefs held by that individual. Beliefs are accepted
facts based on experience. Values are levels of worth placed on environmental factors.
Attitude surveys are conducted during elections to predict results. Employee’s attitudes toward
their jobs are usually quite stable over time. Managers trying to change employee attitudes
should try first to understand the concept of reasoned action. When behavior is a matter of
choice, the best predictor of behavior is intention to perform. Intention is predictable by knowing
the following: (1) the person’s attitude toward performing the behavior; or (2) the person’s
subjective norm, or the expectation that the person will perform a certain behavior. Job factors
are also an important predictor of attitudes. Three theories are used to explain the primary
determinant of employee attitudes: (1) design of the job, (2) social influence, and (3)
dispositional approach.
Managers can best predict behavior and attitudes by knowing the following: (1) a person’s
beliefs, or (2) the social norms that influence a person’s intentions. Managers use compensation,
job design, and work hours to try and change employee attitudes. Another approach to job
satisfaction is the human resource approach, in which those activities that are highly valued by
employees are provided by the organization. Bad attitudes are generally not the problem but just
a matter of unacceptable behavior. Attitude, although an influence in behavior, is internal and
cannot be accurately measured. Since beliefs and values affecting attitudes can be complex,
managers should not focus too hard on this aspect. Human resource specialists have identified
four major causes of behavioral problems: (1) lack of skills—this can be remedied through
training, transfer, or termination; (2) lack of positive attitude—this can be resolved by finding
out what motivates the employee and offer it as a reward for good behavior; (3) rule breaking—
this is best handled with positive discipline; and (4) personal problems.
Perception and the perception process is a series of actions in which an individual selects stimuli,
organizes data, and interprets the resulting information. Perception links the person to his/her
environment. Managers try to interpret the behavior of others through a process known as
attribution. This process can be avoided by making the effort to see the situation as perceived by
the employee, by guarding against perceptual distortions, and finally, by paying attention to
individual differences.
Managers try to understand the causes, which can be internal or external, of employee behavior.
Researchers tend to focus on three factors of attribution: (1) consensus, (2) consistency, and
(3) distinctiveness. Managers tend to make judgments based on their perceptions but must avoid
the following distortions: (1) stereotyping, (2) halo effect, (3) projection, (4) self-serving bias
and attribution error, (5) selective perception, and (6) recency. Employees continually evaluate
the fairness of a system or process through a concept known as procedural justice. A critical
factor in this evaluation process is how managers resolve disputes. Mediation of disputes is
found to be the fairest of all techniques used. Learning can be a permanent change in behavior
through one of the following methods: (1) operant—behavior is a function of its consequences;
or (2) cognitive—employees choose behaviors that will enable them to achieve long-range goals.
Cognitive learning is based on goal setting. Some strategies for setting goals include: (1) directed
behavior, (2) challenges, (3) resource allocation, and (4) structure. Managers use goal setting to
correct problems and to achieve new objectives. The primary objective of any disciplinary action
is to warn that undesired behavior can, and will, invoke penalties, and secondly to motivate
employees to comply with rules and regulations.
CHAPTER 19
Encouraging Creativity and Innovation
CHAPTER SUMMARY
Creativity is the ability to generate original ideas or new perspectives on existing ideas. Through
the use of creativity organizations can explore problems from different angles and develop new
answers and solutions. Managers should conscientiously take specific action aimed at building
creativity in organizations.
Innovation is the process of applying a new idea to the improvement of organizational processes,
products, or services. Innovation is critical to the long run success of virtually any organization.
The ideas upon which innovation is based come from creativity in the organization. Both
innovation and creativity work together as an organization turn new ideas into tangible benefits.
Quality is defined as how well a product does what it is supposed to do—how closely and
reliably it satisfies the specifications to which it is built. Under the total quality management
(TQM) concept, all organizational members work both individually and collectively to maintain
product quality. In general, the more effective a TQM program is within an organization, the
higher quality of goods and services that an organization can offer to the marketplace. Typically,
high-quality goods and services benefit the organization in the following three ways: (1) a
positive company image, (2) lower costs and higher market share, and (3) decreased product
liability costs.
Two approaches may be taken to improve quality: (1) incremental improvement and (2) the
complete reengineering of a process. There has been increased emphasis on recognizing the
importance of product quality, and the Malcolm Baldridge National Quality Award is evidence
of this trend. Two experts on quality are W. Edwards Deming and Philip B. Crosby. They
provide creative ideas based on quality improvement.
CHAPTER 20
Principles of Controlling
CHAPTER SUMMARY
As the scale and complexity of modern work organizations grow, the problem of control in
organizations gains in significance. Control is making things happen as planned. Controlling is
the process managers go through to control. The controlling process has three main steps: (1) to
evaluate performance, (2) to compare measured performance to standards, and (3) to take
corrective action. To evaluate performance, a unit of measure must be established, and
performance must be observed.
Standards used for comparison include profitability standards, market position standards,
productivity standards, product leadership standards, personnel development standards,
employee attitude standards, and standards reflecting relative balance between short- and longrange goals. Corrective action is action taken to bring performance up to standard. Corrective
action should focus on planning, organizing, and influencing. There are three types of control:
precontrol, concurrent control, and feedback control. The controller or comptroller is usually a
staff person who gathers information that helps managers control. The controller usually works
with information about: (1) profits, (2) revenues, (3) costs, (4) investment, and (5) discretionary
expenses. Managers should perform cost-benefit analyses to determine how much controlling
activity is justified. The human related aspect of controlling is power. Power is the ability to
influence others. The total power of a manager equals position power plus personal power.
Managers can increase personal power by: (1) making people feel obligated, (2) being seen as an
expert in an area, (3) having others identify with them, and/or (4) holding the purse strings.
Guidelines for controlling include: (1) Do not overemphasize the short term; (2) Do not frustrate
through controlling; (3) Do not disregard extenuating circumstances; (4) Keep control activities
in the proper perspective; and (5) Remember that controlling is a means, not an end. To make
the control process more effective, managers should: (1) verify that controlling suits the
situation; (2) use control to achieve many ends; (3) act on information quickly; and (4) make
controlling understood.
CHAPTER 21
Production Control
CHAPTER SUMMARY
Production control ensures that an organization produces goods and services as planned.
Production is the transformation of organizational resources into products, while productivity is
the ratio of outputs to inputs. Five traditional strategies can be used to increase productivity: (1)
train the work force, (2) use automation and robotics, (3) make products easier to assemble, (4)
upgrade equipment, and (5) hire more qualified employees. While increasing productivity,
managers should not ignore quality. Management has come to realize that quality is not an
afterthought, but rather it is a continuous process that when done properly, reduces rework,
production delays, and poor use of time and materials. Quality assurance starts with quality
standards and ends when a quality product is delivered to the customer. A “no rejects”
philosophy helps management control quality on the front end instead of at the end when it’s too
late. Quality circles—small groups of workers who meet to solve a particular quality problem—
are being used more and more as a way of involving the employee and gaining commitment.
Automation can be defined as electromechanical devices replacing human effort.
In addition to understanding production and productivity, managers need to be aware of
strategies, the plan of action, systems, organizational components (linked together to help
complete a process), and the flow of interrelated events toward a goal. Operations management
deals with such management activities as the selecting, designing, operating, controlling and
updating of production systems. Operations management transforms resources
into finished products through a number of key strategies: (1) capacity strategy, (2) location
strategy, (3) product strategy, (4) process strategy, (5) layout strategy, and (6) human resource
strategy. After the operational plan has been developed, the specific tasks needed to accomplish
the goals are considered. Operations control includes such activities as: (1) just-in-time
inventory control, (2) maintenance control, (3) cost control, (4) materials control, (5) advanced
manufacturing support, and (6) master scheduling, inventory control, aggregate planning, etc.
In addition to the production management tools listed, there are other selected operational control
tools to be considered: (1) management by exception, (2) management by objectives, (3)
breakeven analysis, (4) decision tree analysis, (5) work measurement, (6) payoff table, (7) value
analysis, and (8) computer-aided design and manufacturing. Management by exception ensures
that managers handle only exceptional issues.
Management by objectives uses employee-participation to improve productivity. Breakeven
analysis generates information about various levels of profit or loss associated with various
levels of production. Managers can use either graphic or algebraic breakeven models or a
combination. Materials requirement planning plots the flow of materials. Just-in-time (JIT)
inventory control is one form of materials requirement planning.
Two other control tools which do not deal directly with the production process are budgets and
ratio analysis. A budget is a planning and a control tool. In using budgets, managers should
emphasize significant expenses, justify expenses each year, and change budgets periodically.
Ratio analysis is a control tool that summarizes the financial position of an organization by
calculating ratios based on various financial measures. There are four types of ratios: (1)
liquidity, (2) leverage, (3) activity, (4) profitability.
CHAPTER 22
Information Technology
CHAPTER SUMMARY
Data are facts or statistics. Information is conclusion derived from data analysis. The value of
information is defined in terms of the benefit that can accrue to the organization through the use
of information. Four primary factors determine the value of information: (1) information
appropriateness, (2) information quality, (3) information timeliness, and (4) information quantity.
Appropriate information is information relevant to the decision. High-quality information
represents reality. Timely information is received in time to benefit the organization. Sufficient
information is needed to justify decisions.
Evaluating information involves determining whether the expected value of the information
exceeds the expected cost. An information system (IS) gets information to where it is needed.
The six-step process for operating an IS involves:
(1) determining what information is needed, (2) gathering data to fit information needs,
(2) summarizing the data, (4) analyzing the data; (5) transmitting the data; and (6) using the
information. IS information should be appropriate for the manager receiving it. The process of
establishing an IS involves four stages: (1) planning for the IS; (2) designing the IS;
(3) implementing the IS; and (4) improving the IS. Planning is probably the most important
stage. The design of an IS should emphasize decision-making. To improve an IS managers must
evaluate the symptoms of an inadequate IS to determine IS weaknesses. Closely related to IS is
the management decision support system (MDSS). MDSS is characterized by: (1) corporate
databases, (2) quantitative tools stored in model databases, and (3) dialogue capability.