SOLUTIONS MANUAL
SOLUTIONS MANUAL
EXPLORING MANAGEMENT 7TH EDITION BY JOHN R. SCHERMERHORN JR, DANIEL G. BACHRACH ( CHAPTER 1_18 ) SOLUTIONS MANUAL Chapter 1-18
Chapter 1 Managers and the Management Process Everyone Becomes a Manager Someday Chapter 1 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter one provides a thorough review of what it means to be a manager in today‘s knowledgebased workplace, where intellectual capital has become the ultimate foundation. Managers are indispensable to organizations and they bring together many resources to best meet the goals of the organization. The chapter begins with a discussion of the different job titles and levels of managers -- those who support and facilitate the work efforts of others in organizations. Accountability as a cornerstone of managerial performance, along with how effective managers help others achieve high performance and satisfaction is discussed. The various ways managers meet multiple and changing expectations in a changing workplace environment is reviewed. Next is an overview of what managers do, and the various skills they must possess to do an effective job. Often intense and demanding, the role of a manager includes the following four functions: planning (setting performance objectives), organizing (assigning tasks and allocating resources), leading (inspiring others to achieve goals), and controlling (measuring work performance and taking corrective action, if necessary). In addition, the way managers use a variety of technical, human, and conceptual skills is discussed. Lastly, the chapter covers important changes in today‘s workplace – those creating both tremendous opportunity and uncertainty. Changes are due to the impact of important trends regarding worker talent, technology, globalization, ethical standards, workforce diversity, and careers. Continuing diversity as a social priority is discussed, along with the importance of intellectual capital, self-management skills and personal career readiness for managers.
Chapter 1 Learning Objectives: 1-1
Learning Objective 1.1 Explain what it means to be a manager. Learning Objective 1.2 Describe what managers do and the skills they use.
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Learning Objective 1.3 Discuss the implications of important career trends and issues.
Chapter 1 Lecture Outline:
Learning Objective 1.1: Explain What It Mean to Be a Manager. o Organizations have different types and levels of managers o Accountability is a foundation of managerial performance o Effective managers help others achieve high performance and satisfaction o Managers are coaches, coordinators, and supporters
Learning Objective 1.2: Describe What Managers Do and the Skills They Use. o Managers plan, organize, lead and control o Managers perform informational, interpersonal, and decisional roles o Managers use networking and social capital to pursue action agendas o Managers use technical, human, and conceptual skills o Managers thrive on lifelong learning and learning agility
Learning Objective 1.3: Discuss the Implications of Important Career Trends and Issues. o Globalization has changed societies and the world of work o Failures of ethics and corporate governance are troublesome o Respecting diversity and eliminating discrimination are top social priorities o Talent is a ―must have‖ in a free-agent, gig, and on-demand economy o Self-management skills are essential for career success in changing times o Personal career readiness must be developed and continuously maintained
Chapter 1 Supporting Materials: Figures Figure 1.1: How to Make Critical Thinking About Career Readiness Work for You Figure 1.2: What Are the Typical Job Titles and Levels of Management in Organization? Figure 1.3: The Manager‘s Challenge – Fulfilling Performance Accountability while Dependent on Others to do the Work Figure 1.4: How Do Mindsets Change when the Organization is Viewed as an UpsideDown Pyramid? Figure 1.5: What Four Functions Make Up the Management Process? Figure 1.6: Three Types of Roles Filled by Managers in Their Everyday Work Figure 1.7: What Are Three Essential Managerial Skills, And How Does Their Importance Vary Across Levels? Figure 1.8: Using a Personal SWOT Analysis for Strategic Career Planning Feature Boxes and More Career Readiness: Career Planning for the COVID-19 ―New Normal‖ Issues: For Women, the First Step into Management Is the Hardest
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Choices: Want vacation? Take as much as you need. Quick Case: Team Leader Faces Disruptive Team Member Ethics: Social Media Cues May Cause Discrimination in Hiring Analytics: Facing the World That AI Will Create Insight: Self-awareness and the Johari Window Table 1.1: Seven ―Must-Have‖ Managerial Skills
Applications
TestPrep 1 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment: Career Readiness ―Big 20.‖ o Class Exercise: My Best Manager o Team Project: The Multigenerational Workforce Case Snapshot: Trader Joe‘s: Managing Less to Gain More
Chapter Outline Learning Objective 1.1 Explain What it Means to Be a Manager. Career and life success today require lots of initiative and self-awareness, as well as continuous learning.
Personal career readiness—always having skills and competencies that will move you forward with success, even in a rapidly changing environment.
Figure 1.1 shows how six critical thinking features in each chapter: Analytics—Interpreting data, Choices—Thoughtful decisions, Ethics—Moral judgements, Issues—Socially informed, Cases—Handling situations, and Insight—Self-awareness. These features introduce the context in which students will have to perform. Managers are required to meet multiple and changing workplace expectations and directly supervise, support and help the work efforts of others to achieve performance. Managers also support and facilitate the work efforts of others so that they can achieve high levels of job satisfaction and performance within an organization. There are various types and levels of managers. It is important to understand the concept of accountability as a foundation of management. These concepts allow the student to understand the nature of the work of a manager within an organization.
Organizations have different types and levels of managers
Managers are persons who directly supervise, support, and help activate work efforts to achieve the performance goals of individuals, teams, or even an organization as a whole.
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Figure 1.2 depicts an organization as a series of ―layers,‖ each of which represents different levels of work and managerial responsibilities. The top manager, typically a CEO or president, or executive director, reports to a board of directors in a business or to a board of trustees in a nonprofit organization. Middle managers report to top managers, and first-line managers or team leaders report to middle managers. Team leaders are first-line managers and supervisors in charge of small work groups Common titles are department head, team leader, unit manager Middle Managers are persons in charge of relatively large departments or divisions consisting of several smaller work units or teams. Usually supervise several first-line managers Examples are clinic directors in hospitals, plant managers, and regional sales managers in businesses Common titles include division manager, plant manager, deans in universities. Top managers are responsible for the performance of the organization as a whole. Examples of top manager titles are Chief Executive Officer (CEO), Chief Operating Officer (COO), chief financial officer (CFO), president and vice president. Expected to be alert to trends in the external environment, recognize problems and opportunities, and to lead the organization to long-term success The most effective top managers are strategic thinkers, can communicate well, and keep organization members focused on important objectives Boards of Directors Responsible for governance and the active oversight of the affairs of the organization and the performance of its top management The CEO or President typically reports to the Board of Directors, responsible for the hiring, firing and compensation of senior executives. In non-profit organizations, this may be called the Board of Trustees. Members of a board of directors are elected by stockholders to represent their ownership interests. Governance Oversight of top management by a board of directors or board of trustees. DISCUSSION TOPIC To illustrate the differences among different levels management, ask students to identify people they know who have been or are now managers. Have these students describe the nature of the work done by the managers they know. Then have the students analyze these descriptions and classify them according to top managers, middle managers, and team leaders and supervisors.
Accountability is a foundation of managerial performance Describes the requirement of one person to answer to a higher authority for performance achieved in his or her area of work responsibility Accountability flows upward in organizations Managers are also dependent on others to do the required work.
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Figure 1.3 shows that the same time that any manager or team leader is held accountable by a higher level, they are dependent on others to do the required work.
Effective managers help others achieve high performance and satisfaction Effective manager is someone who successfully helps others achieve both high performance and satisfaction in their work Quality of work life (QWL), integral to managers being a success, is the overall quality of human experiences in the workplace. QWL includes respected and valued employees, fair pay, safe working conditions, learning and growth opportunities, and pride in the workplace.
Managers are coaches, coordinators, and supporters Managers today are often referred to as ―coaches‖ or ―coordinators‖ See Figure 1.4–an upside-down pyramid depicting a new mindset for managers acting as coaches; the organization exists to serve its customers. This view puts customers at the top, being served by non-managerial workers, who are supported by team leaders and higher-level managers. 1.1 Questions for discussion suggested answers 1) Other than at work, in what situations do you expect to be a manager during your lifetime? Each of us will be ―managers‖ in several ways beyond work lives: managing our job or career; volunteer organizations; households and families; sports teams; daily priorities; finances and personal goals. 2) Why should a manager be concerned about the quality of work life in an organization? Quality of work life connects directly to employee satisfaction and productivity and customer satisfaction. If employee morale is poor and/or if employees are not viewed as individuals with unique goals and concerns, this will impact current sales and profitability; it will also impact retention and morale, and the costs associated with replacing experienced employees are quite high. 3) In what ways does the upside-down pyramid view of organizations offer advantages over the traditional view of the top-down pyramid? The upside-down view emphasizes the importance of customers and employees who serve or interact directly with those customers. That pyramid view of an organization mirrors reality better than the notion of the traditional view of a top-down pyramid which suggests that CEOs singlehandedly drive success. 1.1 Career Situations: What Would You Do? When people are promoted to managerial positions, they often end up supervising friends and colleagues. Put yourself in this situation. As a new manager of a team full of friends, what can and should you do to quickly earn the respect of others and build a smoothly functioning work team?
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Many students either face similar situations or will face soon. This is a wonderful discussion point to start them to think about separating their personal lives from professional responsibilities.
Learning Objective 1.2 Describe What Managers Do and the Skills They Use.
Managers plan, organize, lead and control. Four functions in the management process are shown in Figure 1.5 The management process consists of four functions: planning, organizing, leading, and controlling. Planning sets the direction as performance objectives. Organizing arranges people and tasks to do the work. Leading inspires others to work hard. Controlling measures performance to make sure that plans and objectives are accomplished.
The Management Process - planning, organizing, leading and controlling. All managers in any organization are responsible for doing each of these functions well Planning is the process of setting performance objectives and determining what actions should be taken to accomplish them Organizing is the process of assigning tasks, allocating resources, and coordinating work activities (or the activities of individuals and groups). Leading is the process of arousing people‘s enthusiasm to work hard and inspiring their efforts to fulfill plans and accomplish objectives. Controlling is the process of measuring work performance, comparing results to objectives, and taking corrective action as needed. DISCUSSION TOPIC
Divide students into discussion groups of five to six members. Have each group select a different campus organization to analyze. Each group should explore how the chosen campus organization exhibits planning, organizing, leading, and controlling.
Managers perform informational, interpersonal, and decisional roles. The four management functions are not performed one at a time or step-by-step. Mintzberg identified three sets of roles that he believed all good managers enact successfully Through these roles, the manager fulfills the four management functions Figure 1.6 shows three types of roles filled by managers in their everyday work. Informational roles (Monitor, Disseminator, and Spokesperson) focus on the giving, receiving, and analyzing of information. Interpersonal roles (Figurehead, Leader, and Liaison) reflect interaction with people inside and outside the work unit. Decisional roles (Entrepreneur, Disturbance handler, Resource allocator, and Negotiator) involve using information to make decisions to solve problems or address opportunities. DISCUSSION TOPIC
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Have students draw on their work, educational, athletic team, or other extracurricular experiences to identify examples of how people in managerial and leadership positions enact the various interpersonal, informational, and decisional roles.
Managers use networking and social capital to pursue action agendas Agenda setting is used by managers to develop and identify clear action priorities; in the beginning, these agendas may be incomplete and loosely connected but over time, they become more specific Networking is the building and maintenance of positive relationships with other people, ideally those who may be useful someday Networks create the opportunity through which many agenda items can be fulfilled Most managers maintain extensive networks not only with their own organization, but also with customers, suppliers, and community representatives. Social Capital is the capacity to attract support and help from others to get things done
Managers use technical, human, and conceptual skills. See Figure 1.7, which shows the relative importance of each skill by level of managerial responsibility. All managers need essential technical, human, and conceptual skills. At lower levels of management, the technical skills are more important than conceptual skills, but at higher levels of management, the conceptual skills become more important than technical skills. Because managerial work is so heavily interpersonal, human skills are equally important across all management levels. A Technical skill is the ability to use a special proficiency or expertise to perform particular tasks Examples are accountants, engineers, and systems analysts Technical skills are very important at career entry levels A Human skill is the ability to work well with others High self awareness, capacity for empathy, trusting, and enthusiasm with others Emotional Intelligence (EI) (described by Daniel Goleman) is the ability to manage ourselves and our relationships effectively. Five Foundations of Emotional Intelligence Self-Awareness Self-Regulation Motivation Empathy Social Skills A manager with good human skills is also likely to be high in emotional intelligence A Conceptual skill is the ability to think critically and analytically; the capacity to break down problems into smaller parts, see the relations between the parts and recognize the implications of any one problem for others
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Conceptual skills actually grow in importance as one moves up to higher management responsibilities DISCUSSION TOPIC Have students discuss the roles that technical skills, human skills, and conceptual skills play in their professors‘ performance of their jobs. Then have the students think of their own educational pursuits as a job. What roles do technical skills, human skills, and conceptual skills play in the students‘ performance of their jobs?
Managers should learn from experience. Lifelong learning - the process of continuously learning from our daily experiences and opportunities Self-awareness—having a real, unbiased understanding of your strengths and weaknesses Learning Agility- is the willingness to grow, to learn, to have insatiable curiosity. Table 1.1 presents Seven "Must-Have" Managerial skills. Teamwork Self-Management Leadership Critical Thinking Professionalism Communication Learning Agility
1.2 Questions for discussion suggested answers 1) Is Mintzberg‘s view of the intense and demanding nature of work realistic, and if so, why would you want to do it? The world is becoming more complex and more globally connected through technology. In order to compete, organizations and individuals can no longer partition their lives into 40 hour work weeks from ―8-5.‖ The paradox of improving the speed of communications is that it makes our lives less separable from our ―jobs.‖ Having a smartphone and laptop means 24/7/365 availability. Students may consider the types of communication they used 5 to 10 years ago (land lines, cell-phones, instant messaging) and the ones they use now (texting, Facebook, Twitter) and the increased amount of time spent communicating. Are they ready for their personal and professional lives to merge as the communication needs of both increase? Even though such a world may entail more stress and long hours, it also provides more flexibility, freedom, and mobility. Moreover, in order to compete, one must accept such consequences or another person somewhere in the world that is more willing to do so, may take your position.
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2) If Katz‘s model of how different levels of management use essential skills is accurate, what are its career implications for you? The Katz model indicates that in order to obtain a good entry-level position, it is imperative that my interpersonal skills and technical skills be outstanding. Human or interpersonal skills will remain high throughout my career, but it is important to acquire a strategic or ―big picture‖ view of the organization, competitors, and customers early to distinguish myself and ascend to the ―top.‖ 3) Why is emotional intelligence an important component of one‘s human skills? We all know someone who has or had ―great potential‖ but who has somehow not been able to translate that potential into actuality because of personal issues, including poor discipline, bad time management, losing one’s temper, and many other reasons. Developing emotional intelligence and self-awareness enables us to eliminate obstacles and create opportunities. 1.2 Career Situations: What Would You Do? It‘s time now to take a first interview for your ―dream‖ job. The interviewer is sitting across the table from you. She smiles, looks you in the eye, and says: ―You have a very nice academic record, and we‘re impressed with your extracurricular activities. Now tell me, exactly what can you do for us that will add value to the organization right from day one?‖ How do you respond in a way that clearly shows you are ―job ready‖ with strong technical, human, and conceptual skills? Student responses will vary. However, they should be encouraged to think through and outlines their knowledge, skills, and abilities with specific examples under each of the three categories. Interviewers do not care about generalities in such direct questions. They are looking for specifics and concrete examples.
Learning Objective 1.3 Discuss the Implications of Important Career Trends and Issues?
Globalization has changed societies and the world of work. Globalization is the worldwide interdependence of resource flows, product markets, and business competition Trend for companies to operate and have employees in multiple countries Global sourcing involves contracting for work to be performed in other countries Global outsourcing can create savings and efficiency gains through manufacturing or providing service with lower labor costs in some countries Job Migration occurs when global outsourcing shifts jobs from one country to another. The U.S. is a net loser at present Countries such as China, India and the Philippines are net gainers Not limited to unskilled labor; engineers, accountants, health professionals and scientists are a fraction of the cost of an equivalent U.S. worker Reshoring moves jobs back from foreign to domestic locations.
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Politicians and policymakers debate solutions to the high costs of job migrationprotection or patience and time for eventual strengthening of the national economy
Failures of ethics and corporate governance are troublesome. Recent sensational ethical failures Bernard Madoff convicted of a multibillion-dollar fraudulent Ponzi scheme Wide and huge impact on personal savings, investments How would you recover from a major loss? Ethics Ethics is a Code of moral principles that sets standards of conduct for what is ―good‖ and ―right‖ as opposed to ―bad‖ and ―wrong‖ Despite workplace scandals, the world of work still includes a lot of good o High value on personal integrity and ethical leadership o Concerns for natural environment, safety, protection of human rights Corporate Governance Corporate Governance is the active oversight of management decisions, corporate strategy, and financial reporting by a company‘s board of directors. Typical board of directors are responsible for hiring, firing and compensation of senior executives
Respecting diversity and eliminating discrimination are top social priorities. Workplace diversity describes the composition of a workforce in terms of differences among the members, such as gender, age, race ethnicity, religion, sexual orientation, and able-bodiedness. Diversity trends of changing demographics are well recognized The U.S. Census Bureau predicts that by 2060 no one racial or ethnic group will be in the majority. Hispanics, the fastest growing community, will represent almost one-third of the population. The U.S. population is also aging. By 2030, more than 20% of the U.S. population will be over 65 or older. U.S. laws prohibit the use of demographic characteristics when employers make decisions on hiring, promotion, and firing. Laws are one thing, actions another. The glass ceiling effect occurs when an invisible barrier or ―ceiling‖ prevents members of diverse populations from advancing to high levels of responsibility in organizations The leaky pipeline problem occurs when otherwise well-qualified and highperforming workers drop out of upward career paths after facing diversity obstacles and hitting glass ceilings Diversity bias still exists Prejudice is the holding of negative, irrational attitudes toward those who are different from us – take as an example, lingering prejudice against working mothers.
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Discrimination is when prejudice becomes active; when organizations treat minority members unfairly and deny them full membership benefits Implicit bias, also called unconscious bias, is an embedded prejudice that is largely unconscious and that results in the discriminatory treatment of others
Talent is a must-have in a free-agent, gig, and on-demand economy In a free-agent and on-demand economy, people change jobs more often and take ―gigs‖ as independent contractors with a shifting mix of employers. Shamrock Organization is an analogy used by British scholar and consultant Charles to describe three types of workers, each depicted by a leaf of a shamrock: Core - group of permanent, full-time employees with critical skills and standard career paths Freelance and Independent Contractors - workers with short- and long term-contracts; specialized skills and talents supporting the core workers Part-time temporary - workers hired as the needs of the business grows and let go when business fails Intellectual capital is the collective brainpower or shared workforce of an organization‘s workforce. Can be viewed as formula with two components: Intellectual Capital = Competency x Commitment DISCUSSION TOPIC
Conduct a brainstorming session with students to identify recent examples of each of the preceding characteristics of 21st century work environments (i.e., talent, technology, globalization, ethics, diversity, and careers). After generating a sufficient number of examples, focus class discussion on the implications of these examples for managerial activities.
Technology and Analytics Are Driving a Smart Workforce We are in the fourth industrial revolution, one where the cloud, mobile Internet, automation and robotics, and artificial intelligence are driving forces of change Knowledge workers use their minds, especially creativity and insight, as critical assets in their jobs. Members of a smart workforce have strong technical and human skills, work well together in teams, and are good with technology. Tech IQ is the ability to use technology at work and to stay updated and highly skilled as technology evolves with time. Analytical competency is the ability to evaluate, analyze, and interpret information in order to make good decisions and solve problems.
Self-Management Skills Are Essential for Career Success in Changing Times
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Self Management is the ability to understand oneself, exercise initiative, accept responsibility, and learn from experience. Career success requires continuous learning and capacity for self-management. Personal ―brand‖ - your reputation seen through the eyes of others. It is based on how they view your talents and the package of skills you can offer a potential employer. Management consultant Tom Peters advises your brand should be ―remarkable, measurable, distinguished and distinctive‖ relative to the competition. How does the brand called ―you‖ stack up?
Personal Career Readiness Must Be Developed and Maintained Figure 1.8 adapts a strategic management tool called SWOT analysis to help establish and maintain personal career readiness. Spend some time with Figure 1.8, and think seriously about your own personal strengths. Although it can be difficult to think about our own personal weaknesses, all great leaders have a well-developed sense of their personal weak points. Opportunities might include, for example, internships that coincide with experiences that you‘ve had, a job opening that focuses on the emphasis of your academic studies, an offer of a scholarship for graduate school, or a personal connection that links you to a business opportunity. Threats might include, for example, economic adjustments in society due to the COVID-19 crisis and/or another student with the same qualifications applying for the same internship and jobs.
1.3 Questions for discussion suggested answers 1) How are current concerns about ethics in business, globalization, and changing careers addressed in your courses and curriculum? Most textbooks and courses in Introduction to Business, Management, and Accounting include a separate chapter on Ethics, and the instructors spend considerable time on this topic. Additionally, Ethics may be an entire required course in the graduation track curriculum to obtain a business degree. Globalization is covered in most texts and courses as examples that apply to the chapter concepts. Changing careers may be the least effectively covered of the three concerns. Is that true in your curriculum? How do students feel about their preparation to meet challenges of the future? 2) Is it possible for members of minority groups to avoid being hurt by prejudice, discrimination, and the glass ceiling effect in their careers? Avoiding the ―hurt‖ may involve two aspects: 1) the personal feelings that are normal from a reaction to the glass ceiling effect; and 2) protecting oneself against being discriminated against in a culture that allows ―glass ceilings.‖As the name implies, it is never easy-if at all possible – to discern if a glass ceiling exists in a particular culture. The best evidence, though, is to objectively examine and investigate how many minorities are in senior management. If an organization is quite large and is devoid of minority senior executives, that organization’s culture deserves further scrutiny before you accept
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a position. It is also a reasonable area to explore during the interview process. If one is a victim of glass ceiling discrimination, the matter should be brought to the attention of appropriate agencies and within the company itself. But if the discrimination is subtle and hard to ―pin down‖ it is better to recognize that and not to invest valuable years in such an organization. 3) In what ways can the capacity for self-management help you to prosper in a free-agent economy? Self management is perhaps the most valuable area/trait for personal growth for one’s career. Change is occurring at an increasing rate and the ―life‖ of many companies and organizations may be shorter due to fierce competition. Each individual can build their resume through ―Chapters‖ or chunks of skills with what is likely to be many employers for most people today. Self-discipline and self-awareness are essential in such a climate. Globalization and technology advances mean that each person may be more of a ―free agent‖ than was the case in prior generations. 1.3 Career Situations: What Would You Do? One result of globalization is that many people now work domestically for foreign employers that have set up businesses in their local communities. How about you? Does it make any difference if you receive a job offer from a foreign employer such as Haier—a Chinese firm that makes popular home appliances—or a domestic employer? What are the ―pluses and minuses‖ of working at home for a foreign employer? Could the pluses outweigh the minuses for you? Student responses will vary.
Teaching Notes: In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management 6e for your students, especially the special features of the text.
Career Readiness: Career Planning for the COVID-19 ―New Normal‖ Life changing—paradigm shifting. It was like being caught in the center of a health and economic tsunami. The toll on us, our families, our communities, our economy, and our society is still being tallied. But we benefitted greatly from human resilience, ingenuity, and social cohesion, as well as science and technology. But surviving this crisis is one thing. Learning from it, and taking steps to move forward from it much stronger and better prepared to deal with an uncertain future, is another thing entirely. What did the COVID-19 pandemic teach you about work, and life, in changing times? What have you learned that can help you meet the challenges of the post-COVID-19 ―new normal,‖ and what life changes have you made? Learning Activity: Ask students to discuss ways in which they have adjusted their career planning to the new normal and shifted their thinking about their next steps. What lessons can be learned from different student experiences?
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Issues: For Women, the First Step into Management Is the Hardest Women are getting left behind at the very first step up the management ladder. You can talk about ―glass ceilings‖ and ―leaking pipelines‖ and even outright discrimination. But, in order for things to change, the ―change‖ must happen at the first step of the process. A study by LinkedIn and McKinsey & Co. shows that equal numbers of men and women now enter the workforce. But at the first management level, the first rung in the management ladder, the survey also found that men outnumber women two to one. Ask students have any of them been through such a situation firsthand or know someone in such situation. Why is it that the bottom rung on the management ladder seems to be the hardest for women to reach? If gender imbalance at all levels of management begins at this first level, what can and should be done to change things? Can you see yourself taking charge that way? And when it comes to you, what is your role in this process? Answers will vary in terms of strategies to address the first-level gender imbalance, however, it needs to start at the corporate culture with the top management fully on board and supporting all types of diversity including gender.
Choices: Want Vacation? Take as Much as You Need How about a job with ―unlimited‖ vacation? Sounds unreal, doesn‘t it? But don‘t be too fast to dismiss the idea. Some fashion-forward employers are already doing it. Netflix is one. What‘s Your Take? Is this approach to vacation time something that more employers should be planning? Is it the next hot thing sought by new college graduates? What are the risks and limits for employers, if any? How about the ―motivation‖ issues? Would this be a turn-on for you, something that would keep you productive and loyal? If unlimited vacation time is such a good idea, why aren‘t more employers doing it? Answers will vary in terms of motivation issues and whether college graduates are attracted to the perk. The unlimited vacation policy trend continues to grow. However, data shows that not all employees are taking advantage of the perk. Unlimited vacation is actually a cost-cutting measure for a company who no longer has to pay out unused vacation when someone leaves the company. The employers who are not introducing unlimited vacation may consider a few of the risks which include how to treat the vacation days that employees have already earned, parameters to minimize potential abuse, favoritism and limitations on certain periods that are particularly busy (seasonal).
Quick Case: Team Leader Faces Disruptive Team Member How do you handle Charles? How do you handle the team dynamics? What do you make sure that everyone, Charles included, achieves high performance and experiences high QWL? Which management functions are being tested here? What essential managerial skills will you need to
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succeed in this and similar situations? Student responses will vary. However, the need to address this critical issue should be reinforced to students and the importance of utilizing the human skills with emotional intelligence in interactions with Charles. The concept of progressive discipline can/should also be brought in. The main focus is that one good individual cannot be allowed to neutralize the team.
Ethics: Social Media Cues May Cause Discrimination in Hiring Research suggests that a job candidate‘s social media postings can contribute to discrimination in hiring. Professor Alessandro Acquisti and colleagues at Carnegie Mellon University distributed 4,000 résumés to job posting sites and associated them with Facebook profiles giving subtle cues—such as background photos and quotes, about the candidates‘ religion and sexuality. Religious cues were significant but sexuality cues made no difference in call-back rates. Discrimination based on social media investigations can be unconscious rather than intentional, with the employer showing the bias without realizing it. In addition to religion and sexuality, other social media cues that increase the risk of discriminatory behavior are photos of women showing pregnancies or children, and applicants with names often associated with ethnic, racial, or religious communities. Your decision? Is it ethical for employers to use social media to ―peek‖ at the personal lives of prospective candidates? Should there be laws preventing them from doing so? What about individual responsibility? The public visibility of social media postings is well publicized. Isn‘t it the job seeker‘s responsibility to avoid and screen out potentially discriminatory information? Student responses will vary. This should be a good discussion topic and real life lesson for most if not all students with regards to their social media pages.
Analytics: Facing the World That AI Will Create The facts are clear. Artificial intelligence is going to keep changing our lives—and it‘s going to continue to dramatically change the world of work. The implications are debatable, but there are both negatives and positives on the table that are important to consider. Researchers agree that as many as 50% of existing jobs are at risk of being replaced by AI in the near future. Your Interpretation? Have you considered the risk AI poses to your career aspirations? Are your current educational choices well aligned with the future of work that AI is already creating? And what about those who will lose jobs to AI? Can they be trained to fit into jobs that AI creates? And what are some of the social costs when they can’t?
Student responses will vary.
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Insight Learn About Yourself Self-Awareness and the Johari Window: When it comes to doing well as a student and in a career, a lot rests on how well you know yourself and what you do with this knowledge. Self-awareness helps us to build on strengths, overcome weaknesses, and avoid viewing ourselves more favorably than is justified. Exploring your Johari Window is one way to gain more self-awareness. It‘s a way of comparing what we know about ourselves with what others know about us. The ―open‖ areas known to ourselves and others are often small. The ―blind spot,‖ ―the unknown,‖ and the ―hidden‖ areas can be quite large. They challenge our capacities for self-discovery. Get to Know Yourself Better - Use the figure to map your Johari Window (page 21) and start to build better self-awareness. Make notes on your ―Open Area‖ and ―Hidden Self.‖ Speculate about your ―Unknown.‖ Ask friends, family, and coworkers for their thoughts on your ―Blind Spot.‖ Write a summary of what you learn about possible career strengths and weaknesses.
Skill Building Portfolio: Terms to Define: Accountability Agenda Setting Analytical competency Board of directors Conceptual Skill Controlling Corporate governance Discrimination Effective Manager Emotional Intelligence Ethics Free-agent economy Glass ceiling effect Global sourcing Globalization Governance Human Skill Implicit Bias Intellectual capital Intellectual capital equation Job migration Knowledge workers Leading Leaky pipeline problem Learning Agility
Lifelong Learning Management Process Manager Middle Managers Networking On-demand economy Organizing Personal Brand Personal Career Readiness Planning Prejudice Quality of Work life Reshoring Self-awareness Self-management Shamrock organization Smart workforce Social Capital SWOT Analysis Team leaders Tech IQ Technical Skill Top Managers Unconscious bias Upside-down Pyramid
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Workforce diversity
TestPrep 1: Multiple-Choice Questions Multiple Choice 1. If a sales department supervisor is held accountable by a middle manager for the department‘s performance, on who is the department supervisor dependent in making this performance possible? (a) Board of directors (b) Top management (c) Customers or clients (d) Department sales persons 2. The management function of is being activated when a bookstore manager measures daily sales in the magazine section and compares them with daily sales targets. (a) planning (b) agenda setting (c) controlling (d) delegating
3. The process of building and maintaining good working relationships with others who may someday help a manager implement his or her work agendas is called _. (a) governance (b) networking (c) emotional intelligence (d) entrepreneurship 4. According to Robert Katz, skills are more likely to be emphasized by top managers than by first-line managers. (a) human (b) conceptual (c) informational (d) technical 5. An effective manager is someone who helps others to achieve high levels of
both _ _ and (a) pay; satisfaction (b) performance; satisfaction (c) performance; pay (d) pay; quality work life
.
6.
is the active oversight by boards of directors of top management decisions in such areas as corporate strategy and financial reporting. (a) Value chain analysis (b) Productivity (c) Outsourcing (d) Corporate governance
7. When a manager denies promotion to a qualified worker simply because of personally disliking her because she is Hispanic, this is an example of . (a) discrimination (b) accountability (c) self-management (d) a free-agent economy 8. A company buys cloth in one country, has designs made in another country, has the garments sewn in another country, and sells the finished product in yet other countries. This firm is actively engaging in the practice of . (a) job migration (b) performance effectiveness (c) value creation (d) global sourcing 9. The intellectual capital equation states: Intellectual Capital = x Commitment.
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(a) Diversity (b) Confidence (c) Competency (d) Communication 10. If the direction in managerial work today is away from command and control, what is it toward? (a) Coaching and facilitating (b) Telling and selling (c) Pushing and pulling (d) Carrot and stick 11. The manager‘s role in the ―upside-down pyramid‖ view of organizations is best described as providing _ so that operating workers can directly serve . (a) direction; top management (b) leadership; organizational goals (c) support; customers (d) agendas; networking 12. When a team leader clarifies desired work targets and deadlines for a work team, he or she is fulfilling the management function of . (a) planning (b) delegating (c) controlling (d) supervising 13. The research of Mintzberg and others
concludes that most managers . (a) work at a leisurely pace (b) have blocks of private time for planning (c) always live with the pressures of performance responsibility (d) have the advantages of short workweeks 14. Emotional intelligence helps us to manage ourselves and our relationships effectively. Someone that is high in emotional intelligence will have the capacity to _ , an ability to think before acting and to control potentially disruptive emotions and actions. (a) set agendas (b) show motivation (c) self-regulate (d) act as a leader 15. Which of the following is a responsibility that is most associated with the work of a CEO, or chief executive officer, of a large company? (a)aligning the company with changes in the external environment (b)reviewing annual pay raises for all employees (c) monitoring short-term performance of lower level task forces and committees (d)conducting hiring interviews for new college graduates
Short Response 16. What is the difference between prejudice and workplace discrimination? Prejudice involves holding a negative stereotype or irrational attitude toward a person who is different from one’s self. Discrimination occurs when such prejudice leads to decisions that adversely affect the other person in his or her job, in advancement opportunities at work, or in his or her personal life. 17. How is the emergence of a free-agent economy changing career and work opportunities?
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The ―free agent economy‖ is one in which there is a lot of job-hopping and people work for several different employers over a career, rather than just one. This relates not only to the preferences of the individuals but also to the nature of organizational employment practices. As more organizations reduce the hiring of full-time workers in favor of more part-timers and independent contractors, this creates fewer long-term job opportunities for potential employees. Thus they become ―free agents‖ who sell their services to different employers on a part-time and contract basis. 18. In what ways will the job of a top manager typically differ from that of a first-line manager? You will typically find that top managers are more oriented toward the external environment than the first-level or lower-level managers. This means that top managers must be alert to trends, problems, and opportunities that can affect the performance of the organization as a whole. The first-line or lower manager is most concerned with the performance of his or her immediate work unit and managing the people and resources of the unit on an operational day-to-day basis. Top management is likely to be more strategic and long term in orientation. 19. How does planning differ from controlling in the management process? Planning sets the objectives or targets, that one hopes to accomplish. Controlling measures actual results against the planning objectives or targets, and makes any corrections necessary to better accomplish them. Thus, planning and controlling work together in the management process, with planning setting the stage for controlling. Integration and Application Questions: 20. Suppose you have been hired as the new supervisor of an audit team for a national accounting firm. With four years of auditing experience, you feel technically well prepared. However, it is your first formal appointment as a manager. The team has 12 members of diverse demographic and cultural backgrounds, and varying work experience. The workload is intense, and there is a lot of performance pressure. Questions: To be considered effective as a manager, what goals will you set for yourself in the new job? What skills will be important to you, and why, as you seek success as the audit team supervisor? I consider myself ―effective‖ as a manager if I can help my work unit achieve high performance and the persons in it to achieve job satisfaction. In terms of skills and personal development, the framework of essential management skills offered by Katz is a useful starting point. At the first level of management, technical skills are important, and I would feel capable in this respect. However, I would expect to learn and refine these skills even more through my work experiences. Human skills, the ability to work well with other people, will also be very important. Given the diversity anticipated for this team, I will need good human skills, and I will have to keep improving my capabilities in this area. One area of consideration here is emotional intelligence, or my ability to understand how my emotions
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and those of others influence work relationships. I will also have a leadership responsibility to help others on the team develop and utilize these skills so that the team itself can function effectively. Finally, I would expect opportunities to develop my conceptual or analytical skills in anticipation of higher-level appointments. In terms of personal development, I should recognize that the conceptual skills will increase in importance relative to the technical skills as I move upward in management responsibility, while the human skills are consistently important.
Self-Assessment 1: Personal Career Readiness The assessment suggested is Personal Career Readiness in the Skill-Building Portfolio. Students may be required to complete it prior to class so their results can be discussed as an introduction to chapter 1, or as a short break in your class presentation. Interpretation is in the Skill-Building Portfolio. Instructions Use this scale to rate yourself on the following list of personal characteristics. S Strong, I am very confident with this one. G Good, but I still have room to grow. W Weak, I really need work on this one. U Unsure, I just don‘t know. 1. Resistance to stress: The ability to get work done even under stressful conditions 2. Tolerance for uncertainty: The ability to get work done even under ambiguous and uncertain conditions 3. Social objectivity: The ability to act free of racial, ethnic, gender, and other prejudices or biases 4. Inner work standards: The ability to personally set and work to high performance standards 5. Stamina: The ability to sustain long work hours 6. Adaptability: The ability to be flexible and adapt to changes 7. Self-confidence: The ability to be consistently decisive and display one‘s personal presence 8. Self-objectivity: The ability to evaluate personal strengths and weaknesses and to understand one‘s motives and skills relative to a job 9. Introspection: The ability to learn from experience, awareness, and self-study 10. Entrepreneurism: The ability to address problems and take advantage of opportunities for constructive change Scoring Give yourself 1 point for each S and 1/2 point for each G. Do not give yourself points for W or U responses. Total your points and enter the result here: . Interpretation This assessment offers a self-described profile of your management foundations. Are you a
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perfect 10 or something less? There shouldn‘t be too many 10s around. Also ask someone else to assess you on this instrument. You may be surprised at the results, but the insights are well worth thinking about. The items on the list are skills and personal characteristics that should be nurtured now and throughout your career. If students are realistic and honest with themselves and/or obtain feedback from another person‘s assessment of their career readiness, this exercise can be used to motivate students to apply the theory and concepts learned from this course directly to their personal growth, which will increase their managerial competence.
Career Readiness ―Big 20‖ Rate your personal characteristics . . . start making a solid career development plan. Personal characteristics may refer to interests, aptitudes, skills, personality type and values related to work. Personal characteristics play a key role when developing a career plan. Personal characteristics will influence career choices along with preferred work culture and environment. When choosing a career, reflect on your ―Big 20‖ personal characteristics.
Class Exercise 1: My Best Manager Preparation Working alone, make a list of the behavioral attributes that describe the ―best‖ manager you have ever had. This could be someone you worked for in a full-time or part-time job, summer job, volunteer job, student organization, or elsewhere. If you have trouble identifying an actual manager, make a list of behavioral attributes of the manager you would most like to work for in your next job. Instructions Form into teams as assigned by your instructor, or work with a nearby classmate. Share your list of attributes and listen to the lists of others. Be sure to ask questions and make comments on items of special interest. Work together in your team to create a master list that combines the unique attributes of the ―best‖ managers experienced by members of your group. Have a spokesperson share that list with the rest of the class for further discussion.
Team Project 1: The Multigenerational Workforce What should Generation Xers, Millennials, and Generation Fs know about one another? Instructions • Gather insights regarding the work and career preferences, values, and expectations of members of different generational subcultures—specifically, Generation Xers, Millennials, and Generation Fs. • Analyze the points of potential difference between Generation Xers and Millennials. What
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advice can you give to a Generation X team leader on how to best deal with a Millennial team member? What advice can you give the Millennial on how to best deal with a Generation Xer boss? • Analyze the points of potential difference between Millennials and Generation Fs. What advice can you give to a Millennial team leader on how to best deal with a Generation F team member or intern? What advice can you give the Generation F worker on how to best deal with a Millennial boss?
Snapshot: Trader Joe’s: Managing Less to Gain More Trader Joe‘s is a model of a how a company effectively performs the management functions of planning, organizing, leader, and controlling. How did this retail grocer grow to $8.5 + billion in sales and attract an obsessive and diverse cult following of foodies? Much has to do with its unique corporate culture, which affects everything from how the company meticulously plans its store locations, to how it manages its employees and purchasing and branding strategies. Encourage students to check out the Trader Joe‘s website at www.traderjoes.com. 1. DISCUSSION Review the seven ―must have‖ managerial skills in Table 1.1. How does each become important to the management and culture of Trader Joe‘s? Are any of these more critical than others to implementing an ―upside-down pyramid‖ management approach? Teamwork: The culture at Trader Joe’s encourages teamwork and building consensus. Employees are cheerful and enthusiastic, and the culture is one of customer focus. Self-Management: At the top of its pyramid, behind customers, are nonmanagerial (crew members) who interact with customers to provide a unique experience. Trader Joe’s aggressively courts friendly, customer-oriented employees by writing job descriptions highlighting desired soft skills (―ambitious and adventurous, enjoy smiling and have a strong sense of values‖), as much as actual retail experience. Crew members are given the go-ahead to open up a bag of goodies for customer sampling and taste tests. Leadership: Mates and captains are able to influence crew members and support them to perform tasks to meet goals. Mentoring is a crucial part of Trader Joe’s environment (captains and mates coach supervisors). Rather than given orders, crew members (nonmanagerial employees) are coached. Store managers (mates and captains), hired only from within the company, are highly compensated, partly because they know the Trader Joe’s culture and system inside and out. Leadership at Trader Joe’s is focused on customer involvement among store employees. Team members are treated with respect and dignity. Managers and supervisors are promoted from within. Future leaders enroll in training programs such as Trader Joe’s University. This fosters loyalty necessary to run stores. Critical Thinking: The management approach at Trader Joe’s is premised upon making decisions to please customers. The company is customer-focused, yet laid back. Because profit margins for each product are not shared with team members, product decisions are based solely upon the wants and needs of customers. With fewer products, the company’s focus is on quality (i.e. ―Less is More‖). Customers trade value for selection. Managers gather and analyze information for problem solving to decide which products to carry and which not to carry. A
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promote from within policy insures that managers have been immersed in the company’s culture, which allows for predicting and meeting ever changing customer needs. Professionalism: Trader Joe’s employees are empowered and trained to make a strong positive impression upon customers. Management instills confidence by providing strong product knowledge. A strong connection to its customer base through product knowledge and customer involvement is key to training crew members. Communication: Trader Joe’s University (its formal training program), focuses on management, leadership, and communication skills. In place of a public address system, Trader Joe’s managers use a bell system to communicate various messages. The shopping experience is entertaining and customer feedback and communication helps determine product choices. Employees go out of their way to engage customers, and in an unassuming way, tout the store’s unique products. Learning Agility: The culture at Trader Joe’s encourages inquisitiveness, learning and engagement. Employees and managers thrive on communication, learning from each other and doing what it takes to take care of the customers. All are critical, though some may argue that because of Trader Joe’s team-based formula for success, that teamwork and leadership may deserve just a bit more attention. 2. PROBLEM SOLVING First-level ―mates‖ and middle-level ―captains‖ are the managers at a Trader Joe‘s. Suppose you were being hired in as a ―mate‖ right from college. How could you make your eff orts with planning, organizing, leading, and controlling fit well with the Trader Joe‘s culture? How would you deal with issues such as fatigue as employees exert high levels of energy to maintain the right atmosphere in the store? How mates and captains rely on the four functions of management: Planning: Planning is the process of setting performance objectives and actions taken to accomplish them. There are numerous references to their commitment to customer satisfaction, unique, quality products, cost savings and ―relentless pursuit of value‖ (―Every penny we save is a penny you save‖). Their simple four-part philosophy and approach to stocking guides purchasing plans. Organizing: Organizing involves arranging resources to efficiently accomplish organizational goals. Compensation at Trader Joe’s is high for the industry. This usually allows employers to hire better qualified employees even in a tight labor market, reducing training and turnover expenses. Their training programs (Trader Joe’s University) help develop employee potential to support their promote-from-within policy. Leading: Leading inspires people to achieve established performance levels. One responsibility of leadership that Trader Joe’s takes seriously is establishing a strong culture. Employees and customers alike are drawn to the chain’s ―charming blend of low prices, tasty treats and laidback but enthusiastic customer service‖. Not only is the attitude casual, employee dress and store décor are a nautical and tropical theme. The company hires employees to fit the culture with desired soft skills such as ―ambitious, adventurous, enjoy smiling and have a strong sense of values‖.
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Controlling: Controlling measures performance to ensure the desired results. Control, hand in hand with planning, measures the success of the plan by measuring results. Store size, inventory control, product choices, and aggressive cost cutting are meticulously measured and adjusted. How would you deal with issues such as fatigue as employees exert high levels of energy to maintain the right atmosphere in the store? A supervisor may want to re-design jobs to include both mental and physical tasks to prevent certain types of fatigue, introduce job rotation to spread out among a team the more physically and mentally intense tasks, use machinery and equipment such as lifting equipment to eliminate or reduce any excessive physical demands of the job or task, provide ergonomic materials to reduce fatigue from repetitive tasks such as ergonomic furniture and anti-fatigue mats, allow for additional rest breaks from physically and mentally strenuous activities, added recovery time can help sustain quality productivity levels. 3. FURTHER RESEARCH Study recent news reports to find additional information on Trader Joe‘s management and organization practices. Look for comparisons with its competitors and try to identify whether Trader Joe‘s has the right management approach and business model for continued success. Are there any internal weaknesses or external competitors, or industry forces that might create future challenges? Comparisons with competitors: Customer loyalty Unique products Low prices for high quality products Friendly employees and consummate customer service Strong presence in the United States Over 80% of products bear the company’s house brand (private label) Smaller stores – fewer square feet Laser-like customer focus to predict changing customer needs Organic food products Internal weaknesses: Lack of variety – not a ―one-stop‖ shopping destination Not all products are competitively priced External competitors or industry forces that might create future challenges: Whole Foods’ low prices and 365 Private label brand Competitive organic product industry Saturated grocery industry Product recalls (chicken salad and onion and chicken with basmati rice) Trader Joe’s must compete with specialty grocers and large supermarkets
Additional Exercises for Chapter 1: 1-25
Emotional Intelligence Exercise Chapter 1 includes an inset listing five foundations of Emotional Intelligence. Break the class into teams of three or four and ask each group to collectively discuss these five facets. Ask them to list well known managers or celebrities who seem to possess some or all of the facets, and provide examples to share with the class. Also ask them to provide examples of the failure of well known managers or celebrities who lack one or more of the five facets. Upon completion by all teams, have each team (a volunteer from the team) discuss their examples. This will allow the class to learn collaboratively and recognize the values of EI. Conceptual Skill Exercise Chapter 1 includes a review of conceptual skills. This exercise is designed to have teams use conceptual skills to create ideas for a new business in the community Organize the class into teams of three or four students each. Ask each team to ―create‖ a concept for a new business in the local community that serves a need or want they have observed (they should be prepared to support/explain this perceived need or want). They should be told that they can assume that they have the needed financing for a local business. It is useful to share with them an example such as the Geek Squad or a Starbucks, both of which first started as local companies in one community. Allow teams about 45 minutes for this exercise. The teams should report to the class their ―concept‖ as well as a ―name‖ for the business that is communicative and ―catchy‖ (again, Geek Squad is an example, or perhaps Stub Hub, the on-line ticket broker.) The Instructor should summarize the concepts and names. Then the Instructor may want to pick ―winners‖ of the ―best concept‖ and ―best name‖ based on his or her discretion and share the reasons with the class. Students enjoy this exercise and it allows them to see how valuable conceptual skills are. It adds interest and excitement to assign ―bonus points‖ to teams that win, either as extra credit toward their grade or added points (example 3-5 points) on their upcoming test/exam.
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Chapter 2 Management Learning Great Things Grow from Strong Foundations Chapter 2 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter two outlines the contributions of management theorists or ―thought leaders‖ of their time, who made great contributions to the evolution of management. Great contributions were made to the development of classical management approaches, behavioral management approaches and modern management thinking. Some of the theories and ideas are discussed in greater detail throughout the chapter. Despite many organizational changes over the decades, many of the lessons provide great value for managers today. The lessons of classical management include Frederick Taylor‘s scientific management approaches, Weber‘s bureaucratic organization, and Fayol‘s administrative principles. The scientific management approach sought to improve productivity by identifying a job‘s basic steps and motions. During the late 19th century, Weber‘s insights provided for an ―ideal bureaucracy‖ or bureaucratic model for organizations to solve what he viewed as poor performance. Fayol hoped to understand successful managers by identifying their roles and duties. Next, behavioral management approaches are described. During the 1920s, the contributions of behavioral management approaches focused attention on the human side of organizations as communities of cooperative action and ―employee ownership.‖ Spaulding and Follett emphasized notion of organizations as communities and Maslow described a hierarchy of human needs relevant within the organization. McGregor‘s Theory X and Theory Y created managerial assumptions about workers and their level of motivation. Agryris‘ ideas simply suggested that workers treated like adults will be happy and more productive. Last, modern management approaches are described. They include human approaches and advanced quantitative techniques and analysis (mathematic techniques) as tools to solve complex problems. Another key ingredient to modern management thinking is the concept that organizations are complex networks of open systems (which explains an organization‘s customer focus), interacting with their environment. Contingency thinking is an adaptive approach, based upon the situation, to solving problems in place of a ―one size fits all‖ approach. Quality management is focused on the continuous improvement of quality in both production and service
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industries. Evidence-based management, as its name suggests, is most effective when managers can separate fads from fact and conjecture from informed insight.
Chapter 2 Learning Objectives:
Learning Objective 2.1 - Understand lessons from classical management approaches. Learning Objective 2.2 - Identify insights from behavioral management approaches. Learning Objective 2.3 - Recognize foundations of modern management approaches.
Chapter 2 Lecture Outline: Learning Objective 2.1: Explain the Lessons of the Classical Management Approaches. o Taylor‘s scientific management sought efficiency in job performance. o Weber‘s bureaucratic organization is supposed to be efficient and fair. o Fayol‘s administrative principles describe managerial duties and practices. Learning Objective 2.2: Describe the Contributions of the Behavioral Management Approaches o Spaulding emphasized respect for people and belief in community. o Follett viewed organizations as communities of cooperative action. o The Hawthorne studies focused attention on the human side of organizations. o Maslow described a hierarchy of human needs with self-actualization at the top o McGregor believed managerial assumptions create self-fulfilling prophecies. o Agyris suggests that workers treated as adults will be more productive. Learning Objective 2.3: Identify the Foundations of Modern Management Thinking o Managers use quantitative analysis and tools to solve complex problems. o Organizations are open systems that interact with their environments. o Contingency thinking holds that there is no one best way to manage. o Quality management focuses attention on continuous improvement. o Evidence-based management seeks hard facts about what really works.
CHAPTER 2 Supporting Materials Figures Figure 2.1: Foundations of the Classical Approaches to Management Thinking Figure 2.2: Who Are the Major Contributors to the Behavioral or Human Resource Approaches to Management Thinking? Figure 2.3: How Does Maslow‘s Hierarchy of Human Needs Operate? Figure 2.4: How Do Organizations as Open Systems Interact with Their External Environments? Figure 2.5: How Do Organizations Operate as Complex Networks of Subsystems?
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Feature Boxes and More Career Readiness: The Past Can Be a Gateway to the Future Choices: App-Enabled Workers Are Not Robots Ethics: Fast Fashion Puts Stress on Environment Analytics: Generations Differ When Rating their Bosses Issues: Five-Hour Workday Put to the Test Insight: Make Learning Style Work for You Quick Case: Management Style Under Scrutiny Table 2.1 Characteristics of an Ideal Bureaucracy Applications TestPrep 2 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 2: Managerial Assumptions. Assumptions influence behavior . . . discover your Theory X/Y tendencies. o Class Exercise 2: Evidence-Based Management Quiz. It‘s easy to bet on hearsay . . . what the evidence says may surprise you. It‘s risky to make decisions on past experience . . . practice getting a sense of the future. o Team Project 2: Management in Popular Culture. Management learning is everywhere. We just have to look for it. o Evaluate Career Situations: What Would You Do? Case Snapshot: Zara – Fashion at the Speed of Light
Chapter Outline: Learning Objective 2.1 Explain the lessons of the classical management approach. Figure 2.1, prominent representatives of this school and their major contributions to management thinking include Frederick W. Taylor—scientific management, Henri Fayol— administrative principles, and Max Weber—bureaucratic organization. Taylor’s scientific management sought efficiency in job performance 1911 book by Frederick Taylor The Principles of Scientific Management Identify basic steps and motions of jobs and determine the most efficient ways of doing them Four principles of scientific management: o Develop a science for each job o Hire workers with the right abilities o Train and motivate workers
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o Support workers by planning and assisting their work according to science Still in use today (example is UPS calibrated productivity standards).
Weber’s bureaucratic organization is supposed to be efficient and fair Late-19th century German intellectual insights have made a significant impact on management and sociology of organizations Bureaucracy type of organization could be highly efficient and very fair Relies on logic, order, and legitimate authority Government agencies or large colleges may be examples Table 2.1 lists characteristics of an ideal bureaucracy Clear Division of Labor Jobs are well defined, and workers become highly skilled at performing them. Clear Hierarchy of Authority and responsibility are well defined, and each position reports to a higher-level one. Formal Rules and Procedures Written guidelines describe expected behavior and decisions in jobs; written files are kept for the historical record. Impersonality Rules and procedures are impartially and uniformly applied; no one gets preferential treatment. Careers Based on Merit Workers are selected and promoted on ability and performance; managers are career employees of the organization.
DISCUSSION TOPIC Modern management theory does not consider bureaucracy to be appropriate or inappropriate for all situations; instead, the bureaucratic structure is recommended for simple and stable environments, while more flexible structures are suggested for dynamic and complex environments. Ask students to explain why a bureaucratic organization would be an inappropriate structure for organizations operating in very dynamic and complex environments.
Fayol’s Administrative principles describe managerial duties and practices Henri Fayol published Administration Industrielle et Générale, outlining his views on proper management of organizations. Fayol‘s five ―rules‖ or ―duties‖ closely resemble the four functions used in management today: Foresight, Organization, Command, Coordination and Control. Scalar chain principle: there should be a clear and unbroken line of communication from the top to the bottom in the organization. Unity of command principle: workers should only have one boss.
DISCUSSION TOPIC One way to introduce this chapter is to ask students, ―Why do we bother to study management history?‖ Students are quick to point out that we can learn from the experiences of others, and
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can capitalize on their successes and avoid their mistakes. After all, those who are ―ignorant of history are doomed to repeat it.‖ 2.1 Questions for discussion suggested answers 1) How did Taylor and Weber differ in the approaches they took to improving the performance of organizations? Taylor focused on individual tasks and efficiency, assigning very narrow and repetitive jobs for speed. Weber, meanwhile, focused more on the overall organizational approach, rewards and rules. 2) Should Weber‘s concept of the bureaucratic organization be scrapped, or does it still have potential value today? Weber’s concepts still have value but perhaps not in isolation as a sole management philosophy. Every one of his tenets is used today by most companies, with the exception of such a clear division of labor-as companies have learned that flexibility and job enrichment are more satisfying and can improve performance. 3) What are the risks of accepting the ―lessons of experience‖ offered by successful executives such as Fayol? The risk is that executives may have a narrow or short-sighted view that is out of touch with employee’s behaviors and motivations. 2.1 Career Situation: What Would You Do? It‘s summer job time, and you‘ve found something that just might work—handling customer service inquiries for a local Internet provider. The regular full-time employees are paid by the hour. Summer hires like you fill in when they go on vacation. You will be paid by the call, $0.75 for each customer that you handle. How will this pay plan affect your behavior as a customer service representative? Is this a good way for the Internet provider to pay summer hires? How will things go when you are working side by side with full- timers? Some students might be motivated to handle calls quickly so that they can be paid more -- and that may result in less efficiency. This may result in speed compromising quality. Working sideby-side next to seasoned full-timers who are compensated differently may result in conflict regarding problem solving and work ethic. DISCUSSION TOPIC
Modern management theory does not consider bureaucracy to be appropriate or inappropriate for all situations; instead, the bureaucratic structure is recommended for simple and stable environments, while more flexible structures are suggested for dynamic and complex environments. Ask students to explain why a bureaucratic organization would be an inappropriate structure for organizations operating in very dynamic and complex environments.
Learning Objective 2.2 Describe the Contributions of the behavioral management approaches
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During the 1920s, the contributions of behavioral management approaches focused attention on the human side of organizations as communities of cooperative action and ―employee ownership.‖ As shown in Figure 2.2, this new school of thought included Spaulding‘s and Follett‘s notion of organizations as communities, the well-known Hawthorne studies, Maslow‘s theory of human needs, and theories generated from the work of Douglas McGregor and Chris Argyris.
See Figure 2.2: Who Are the Major Contributors to the Behavioral or Human Resource Approaches to Management Thinking?
Spaulding Espoused Respect for People and Belief in Community Charles Clinton Spaulding is referred to as the ―Father of African American Management.‖ His ideas include what he called the ―eight necessities‖ of management: 1. Cooperation and teamwork 2. Authority and responsibility 3. Division of labor 4. Adequate manpower 5. Adequate capital 6. Feasibility analysis 7. Advertising budget 8. Conflict resolution
Follett viewed organizations as communities of cooperative action Mary Parker Follett believed that a group or a sense of community were important aspects of organizations. The job of managers was to help workers cooperate with one another and to integrate their goals and interests Follett suggested that employee ownership would create feelings of collective responsibility Emphasis was placed on making profits while considering the public good, a predecessor of corporate social responsibility.
The Hawthorne studies focused attention on the human side of organizations Elton Mayo of Harvard University commenced a study in 1924 at the Western Electric Company to determine how economic incentives and physical conditions of the workplace affected the output of workers No direct relationship was found Instead, workers responded to increased attention by their managers Hawthorne effect – the tendency to live up to expectations; a person‘s performance will be affected by the way they are treated by their managers Groups can have a strong negative, as well as positive, influence on the behavior of their members DISCUSSION TOPIC
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To the Hawthorne researchers‘ surprise, the workers in the Bank Wiring Room established an informal group norm regarding the quantity of output that was below the standard set by management. Output was restricted despite a group incentive plan that rewarded each worker on the basis of the total output of the group. Group members enforced this output restriction norm by using disciplinary devices such as sarcasm, ridicule, ostracizing co-workers, and ―binging.‖ For fun, ask the students if they know what ―binging‖ means; chances are they won‘t. Then find a volunteer for a demonstration. Pretend that you are going to ―Bing‖ the student by punching him or her in the arm but stop short before making contact. This amuses the class while demonstrating the lengths that groups will go to in enforcing norms. Wrap up the demonstration by noting the contribution of the Hawthorne Studies in revealing these subtle group processes.
Maslow described a hierarchy of human needs with self-actualization at the top Human need is a physiological or psychological deficiency that a person feels compelled to satisfy Maslow described five levels of human needs that affect behavior (see Figure 2.3) Lower-level needs: physiological, safety, and social Higher order needs: esteem and self-actualization
Progression principle - a need at any level becomes activated only after the next-lowerlevel need is satisfied Deficit principle – a satisfied need doesn‘t motivate behavior; people act to satisfy needs for which a satisfaction ―deficit‖ exists Only at the highest level, self actualization, do both the deficit and progression principles cease to exist
Mc Gregor believed managerial assumptions create self-fulfilling prophesies Douglas McGregor wrote the classic book The Human Side of Enterprise Theory X – set of negative assumptions about workers; they dislike work, lack ambition, act irresponsibly, resist change, and prefer to follow rather than lead Theory Y – set of positive assumptions about workers; they are willing to work, are capable of self direction and control, responsible and creative Theory X managers likely to be ―command and control‖ managers Theory Y managers likely to be ―participative‖ managers Self fulfilling prophecy –workers respond to the way they are treated
DISCUSSION TOPIC Once you have presented the assumptions held by Theory X and Theory Y managers, ask students to think about supervisors they worked for and to indicate if the supervisors seemed to make Theory X or Theory Y assumptions about their subordinates. Then ask: ―How did these supervisors treat their employees?‖ ―Do you consider them to be good or bad managers?‖ Argyris suggests that workers treated as adults will be more productive Chris Argyris wrote the book Personality and Organization
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Many organizations treat workers like children, which is counterproductive. The result, he suggests, is a group of stifled and unhappy workers who perform below their potential. 2.2 Questions for discussion suggested answers 1. How did insights from the Hawthorne studies redirect thinking from the classical management approaches and toward something quite different? Hawthorne’s work shifted the focus from a scientific perspective to a more humanistic view. Employees were no longer viewed simply as ―machines‖ or a part of the assembly line, but as humans affected by motivation, reward systems, and attention. 2. If Maslow‘s hierarchy of needs theory is correct, how can a manager use it to become more effective? An effective manager needs to understand that each employee has unique needs and that one blanket approach will not suffice for all employees. Knowing each employee’s needs enables managers to tailor their development, rewards, and management to each person for higher performance. 3. Where and how do McGregor‘s notions of Theory X and Theory Y overlap with Argyris‘s ideas regarding adult personalities? Fundamentally, Argyris’ theory says to treat people like adults-with respect, trust and genuine caring. This is also what Theory Y in McGregor’s theory effectively would suggest. 2.2 Career Situation: What Would You Do? As a manager in a small local firm, you‘ve been told that because of an uncertain economy, workers can‘t be given any pay raises this year. You have some really hardworking and highperforming people on your team, and you were counting on giving them solid raises. What can you do? Can insights from Maslow‘s hierarchy of needs help you solve this dilemma? Is it possible to find ways other than pay to reward team members for high performance and keep them motivated? Certainly. During the recession many companies came up with creative ways to keep employees motivated. Benefits, pension and a safe work environment/fair practices provide security needs. Belongingness needs include social acceptance like friendship and respect on the job. Esteem needs are created through a positive self-image and respect and recognition from others. Nice workspaces and job titles along with prestigious job assignments may also contribute to esteem needs. Self-actualization includes achievement at work, challenging work, and possibly becoming a subject-matter expert.
Learning Objective 2.3: Identify the Foundations of Modern Management Thinking.
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Managers use quantitative analysis and tools to solve complex problems Management science and operations research are used interchangeably to describe mathematical techniques used for management problem solving. Operations management focuses on how organizations produce goods and services efficiently and effectively. Data analytics is the systematic analysis of large databases to solve problems and make informed decisions.
Organizations are open systems that interact with their environments Open systems obtain resources from the external environment; perform work activities to transform resources into goods or services for the external environment (Figure 2.4). Subsystems or smaller components include activities that individually and collectively support the work of the larger system. Figure 2.5 illustrates the relationship.
Figure 2.4 How Do Organizations as Open Systems Interact with Their External Environments? As open systems, organizations continually interact with their external environments to obtain resource inputs, transform those inputs through work activities into goods and services, and deliver finished products to their customers. Feedback from customers indicates how well they are doing.
Contingency thinking holds that there is no one best way to manage Contingency thinking - belief that the way one manages depends on organizational complexities and demands of situations Quality management focuses attention on continuous improvement W. Edwards Deming assisted Japanese industry in the 1950s with quality control techniques that included: tally defects, analyze and trace them to the source, make corrections and keep a record of what happened afterward, using statistics. Total Quality Management or TQM grew out of Deming‘s work. TQM links strategic objectives and applies them to all aspects of an organization‘s activities. Continuous Improvement is the goal of always looking for new ways to improve performance.
Evidence-based management seeks hard facts about what really works Evidence-based management is the process of making management decisions on ―hard facts‖—that is, about what really works— rather than on ―dangerous half-truths‖—things that sound good but lack empirical substantiation. Decision makers are encouraged to challenge conventional wisdom regarding ―what works‖ (example: merit pay encourages better performance) and encourage others to do the same. Decisions should be made with clear evidence that the solution or practice will achieve the desired result.
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Any research following the scientific method will display the following characteristics: o A research question or problem is identified. o Hypotheses, or possible explanations, are stated. o A research design is created to systematically test the hypotheses. o Data gathered in the research are analyzed and interpreted. o Hypotheses are accepted or rejected based on the evidence. 2.3 Questions for discussion suggested answers 1. Can you use the concepts of open system and subsystem to describe the operations of an organization in your community? Municipal governments and colleges are often organized and also function as Open Systems and Subsystems. For example, the zoning department and tax assessment departments are separate departments (or divisions in larger cities) yet both are somewhat related to property matters as the larger ―system‖ and both are subsystems of the entire city structure. Colleges, similarly, have departments such as Financial Aid, Cashier’s Office, and Registrar, all which have some role in handling Finances in most colleges. In that case, each is a ―subsystem‖ while Finance would be a ―system.‖ The Department of Business or English would be another example of separate ―subsystems‖ within the educational/teaching ―system‖ of the college or university. 2. In addition to the choice of organization structures, in what other areas of management decision making do you think contingency thinking plays a role? An effective manager should have a contingency plan for such areas as weather-related or crisis-related matters such as plant closings to ensure timely resumption (and security and access for such areas as Information Systems) continuity of operations with minor or no interruptions of customer service. Tornado drills and/or fire drills are routine drills performed in ―normal‖ times but are also examples of necessary and important employee safety contingency plans. Finally, having a sound risk management and insurance program is an integral part of any company’s management today. 3. Does evidence-based management allow for managers to learn from their own experiences as well as the experiences of others? Managers who use their own experience need to make sure their perspective on the previous experience is accurate before using it to make decisions regarding future events. For example, "fundamental attribution error" is the tendency to over emphasize internal controllable factors and under emphasize external and uncontrollable factors when reviewing the mistakes of others, yet doing just the opposite when reviewing our own mistakes. Good two-way communication with colleagues and others would help make sure the perspective is accurate. 2.3 Career Situation: What Would You Do? You‘ve just come up with a great idea for improving productivity and morale in a shop that silkscreens T-shirts for college bookstores. Your idea is to allow 401 employees to work four 10-
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hour days if they want instead of the normal 5-day/40-hour week. With the added time off, you reason, they‘ll be happier and more productive while working. But your boss isn‘t so sure. ―Show me some evidence,‖ she says. Can you design a research study that can be done in the shop to show whether your proposal is a good one? Evidence may include surveying or interviewing employees about the impact of less commuting, less wear and tear on an automobile, having one more full day off during each workweek while still preserving full-time income. Challenges may include the rigor and demand of four long workdays and increased work-family conflict for time pressures during that time.
Teaching Notes: In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management 6e for your students, especially the special features of the text.
Career Readiness: The Past Can Be a Gateway to the Future Ancestry.com is a hugely popular website. It helps people learn more about their roots—and, by extension, themselves. The history of management thought offers similar insights. To manage successfully in today‘s challenging times, it is critical to understand the insights and lessons of the past. Knowing where you‘re going requires knowledge of where you‘ve been and what happened along the way. Ask Students if they believe, history offers important insights. Why or why not? How can the lessons from history be used to gain advantage in the present and future?
Ethics: Fast Fashion Puts Stress on Environment History teaches us that consumers love the latest styles and colors in their clothing choices. History also teaches us that unless we‘re careful, damage done to the earth today is going to irreparably harm future generations. Is there a lesson here? Some things to discuss in class: What responsibility do the clothing makers have for cutting back on the waste their business models and products create? How about consumers? Should they pay a bit more to ensure that what‘s ―fast‖ in fashion today doesn‘t slow down progress on preserving the planet for future generations? Are fast fashion manufacturers and retailers doing enough to support closed loop recycling and ensure that ―recyclability‖ becomes a ―go/no-go‖ criterion in customers‘ purchase decisions? And speaking about business models, do the fast fashion firms face disruptive competition from an old economy standby—the consignment store? Many of our students are more environmentally conscious and this topic should generate a lively discussion in class.
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Issues: Five-Hour Workday Put to the Test For who knows how long, we have labored with the expectation that a normal workday is 8 hours and the standard workweek consists of 40 hours. But times are changing. Not only are more of us working remotely, but a few forward-thinking employers also are looking at nontraditional alternatives to the 5/40 standard. And they‘re thinking that a break with historical tradition just might result in higher productivity. How About It? Can this really work in anything other than a small operation or start-up venture? What are the potential drawbacks? How can this notion be modified to fit other work environments? Would this be a fit for you? How about alternatives—say a 40-hour week packed into four 10-hour days? Could a longer workday and shorter week offer similar advantages to the ―5 and 25‖ model in this example?
Quick Case: Management Style Under Scrutiny This describes a shift in a management style from one of trust built with employees and team members over the years to one of micromanaging under the stress of producing big results. Is a hands-on Theory X approach the best way to get things done when Theory Y has worked best in the past? Despite the importance of this project, what are the consequences of a shift in management styles?
Facts to Consider: Generations Differ When Rating Their Bosses Statistics on how Baby Boomers, GenX and Millenials rate their managers seem to indicate the older generations don't rate the performance of their managers as highly as younger workers. Thought questions probe possible reasons that younger workers seem to view their managers more positively. This makes a good illustration for understanding contingency management concepts in the chapter.
Choices: App-Enabled Workers Are Not Robots Here‘s the sharing economy business model. Set up a smart device app that matches people needing rides with freelance drivers willing to provide them—think Uber or Lyft. Take a fee for the matchup, monitor and post driver quality and customer satisfaction scores, and keep the technology up to date. Nice! Ride-sharing is just one of many examples of on-demand work now popular on the employment scene. But what‘s it like to be an app-enabled worker? The opportunity for income with job flexibility is attractive—work when you want, as long as you want, as often as you want. Yet, what rights do ―on-demand workers‖ have? If a ride-sharing company sets pay schedules, requires certain attire and behaviors, and can fire at will, are the drivers true ―employees‖? What‘s Your Take?
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Are you comfortable with Uber‘s business model? What are the social responsibilities of organizations that hire on-demand workers? Is it enough to offer income opportunity with work flexibility, or should more be on the table as part of the employer-employee contract? Are the sharing economy and the app-enabled workforce good for human sustainability? Many students today are familiar with the ride sharing or other app-enabled jobs/professions. One way to approach this topic is to divide the class in two teams: one taking the employer perspective while the other looking at the issues from the employees‘ perspective. Uber is quickly becoming a poster child for these cases. If court cases were to go against such companies, it has a heavy financial ramification on the insurance, workman‘s comp, taxes, and fringe benefits provided by the company. Where are your students on this issue?
Insight: Make Learning Style Work for You Learning style goes beyond how we prefer to learn, receive, process and recall new information, although students will explore their personal preferences as they complete the Managerial Assumptions in the Skill-Building Portfolio as suggested in the Explore Yourself feature. As students determine and reveal their preferences, an interesting class discussion on how this influences the results of their management style, contingency management and which of the management philosophies in chapter two they most closely resemble. The assessment tool is intended to help students reflect on their own management style or current orientation. Ask students to maintain their scores and reflections throughout the course and write a summary of the areas they want to strengthen, or change, as they develop as managers or employees. This may be a comprehensive special project near the end of the quarter/semester.
Skill Building Portfolio: Terms to Define: Bureaucracy Contingency thinking Continuous improvement Data analytics Deficit principle Evidence-based management Hawthorne effect Management science Motion study Need Open system
Operations management Operations research Progression principle Scalar chain principle Scientific management Self-fulfilling prophecies Subsystem Theory X Theory Y Total quality management Unity of command principle
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TestPrep 2 Multiple-Choice Questions 1. A management consultant who advises managers to carefully study jobs, train workers to do them with efficient motions, and tie pay to job performance is using ideas from ____________________________ . (a) scientific management (b) contingency thinking (c)Henri Fayol (d) Theory Y 2. The Hawthorne studies were important in management history because they raised awareness about the influence of _ on productivity. (a) organization structures (b) human factors (c) physical work conditions (d) pay and rewards 3. If Douglas McGregor heard an instructor complaining that her students were lazy and irresponsible, he would say these assumptions . (a) violated scientific management ideas (b)focused too much on needs (c) would create a negative self-fulfilling prophecy (d) showed contingency thinking 4. If your local bank or credit union is a complex system, then the loan-processing department of the bank would be considered a . (a) subsystem (b) closed system (c) learning organization (d) bureaucracy 5. When a manager puts Dante´ in a customer relations job because he has strong social needs and gives Sherrill lots of daily praise because she has strong ego needs, he is displaying . (a) systems thinking (b)Theory X (c) contingency thinking (d) administrative principles 6. Which of the following is one of the characteristics of Weber‘s ideal bureaucracy? (a) few rules and procedures (b) impersonality (c)promotion by privilege not by merit (d)ambiguous hierarchy of authority 7. Which principle states that a person should only receive orders from one boss in an organization? (a) scalar (b) contingency (c) Hawthorne (d) unity of command
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8. One of the conclusions from the Hawthorne studies was that (a) motion studies could improve performance (b) groups can sometimes restrict the productivity of their members (c) people respond well to monetary incentives (d) supervisors should avoid close relations with their subordinates
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9. If an organization was performing poorly, what would Henri Fayol most likely advise as a way to improve things? (a) teach managers to better plan, organize, lead, and control (b) give workers better technology (c) promote only the best workers to management (d)find ways to improve total quality management 10. When a worker is a responsible parent, makes car payments, and is active in local organizations, how might Argyris explain her poor work performance? (a) She isn’t treated as an adult at work. (b) Managers are using Theory Y assumptions. (c) Organizational subsystems are inefficient. (d) She doesn‘t have the right work skills. 11.
management assumes people are complex, with widely varying needs. (a) Classical (b) Neoclassical (c) Behavioral (d) Modern
12. The big interest today in refers to the management practice of using mathematics and computing power to examine ―big data‖ for insights on business. (a) continuous improvement (b)Theory X (c) analytics (d) total quality management 13. The highest level in Maslow‘s hierarchy is (a) safety (b) esteem (c) self-actualization (d) physiological
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14. If an organization is considered an open system, work activities that turn resources into outputs are part of the _ process. (a) input (b) transformation (c) output (d) feedback 15. When managers make decisions based on solid facts and information, this is known as . (a) continuous improvement (b) evidence-based management (c) Theory Y
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(d) Theory X Short-Response Questions: 16. Give an example of how principles of scientific management can apply in organizations today. You can see scientific management principles operating everywhere, from UPS delivery, to fast-food restaurants, to order-fulfillment centers. In each case the workers are trained to perform highly specified job tasks that are carefully engineered to be the most efficient. Their supervisors try to keep the process and workers well supported. In some cases, the workers may be paid on the basis of how much work they accomplish in a time period, such as a day or week. The basic principles are to study the job, identify the most efficient job tasks and train the workers, and then support and reward the workers for doing them well. 17. How do the deficit and progression principles operate in Maslow‘s hierarchy? According to the deficit principle, a satisfied need is not a motivator of behavior. The social need, for example, will motivate only if it is deprived or in deficit. According to the progression principle, people move step by step up Maslow’s hierarchy as they strive to satisfy their needs. For example, esteem need becomes activated only after the social need is satisfied. Maslow also suggests, however, that the progression principle stops operating at the level of self-actualization; the more this need is satisfied, the stronger it gets. 18. Compare the Hawthorne effect with McGregor‘s notion of self-fulfilling prophecies. The Hawthorne effect occurs when people singled out for special attention tend to perform as expected. An example would be giving a student a lot of personal attention in class with the result that he or she ends up studying harder and performing better. This is really the same thing as McGregor’s notion of the self-fulfilling prophesy with the exception that he identified how it works to both the positive and the negative. When managers, for example, have positive assumptions about people, they tend to treat them well and the people respond in ways that reinforce the original positive thinking. This is a form of the Hawthorne effect. McGregor also pointed out that negative self-fulfilling prophesies result when managers hold negative assumptions about people and behave accordingly. 19. Explain by example several ways a manager might use contingency thinking in the management process. Contingency thinking takes an ―if–then‖ approach to situations. It seeks to modify or adapt management approaches to fit the needs of each situation. An example would be to give more customer contact responsibility to workers who want to satisfy social needs at work, while giving more supervisory responsibilities to those who want to satisfy their esteem or ego needs. Integration and Application Question 20. Enrique Temoltzin is the new manager of a college bookstore. He wants to do a good job and decides to operate the store on Weber‘s concept of bureaucracy.
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Question: Is bureaucracy the best approach here? What are its potential advantages and disadvantages? How could Enrique use contingency thinking in this situation? A bureaucracy operates with a strict hierarchy of authority, promotion based on competency and performance, formal rules and procedures, and written documentation. Enrique can do all of these things in his store. However, he must be careful to meet the needs of the workers and not to make the mistake identified by Argyris—failing to treat them as mature adults. While remaining well organized, the store manager has room to help workers meet higher order esteem and self-fulfillment needs, as well as to exercise autonomy under Theory Y assumptions. Enrique must also be alert to the dysfunctions of bureaucracy that appear when changes are needed or when unique problems are posed or when customers want to be treated personally. The demands of these situations are difficult for traditional bureaucracies to handle, due to the fact that they are set up to handle routine work efficiently and impersonally, with an emphasis on rules, procedures, and authority.
Self-Assessment 2: Managerial Assumptions The assessment suggested is Managerial Assumptions in the Skill-Building Portfolio. Students may be required to complete it prior to class so their results can be discussed as an introduction to chapter 2, or as a short break in your class presentation. Interpretation is in the Skill-Building Portfolio. Instructions Use the space in the left margin to write ―Yes‖ if you agree with the statement or ―No‖ if you disagree with it. Force yourself to take a ―yes‖ or ―no‖ position for every statement. 1. Are good pay and a secure job enough to satisfy most workers? 2. Should a manager help and coach subordinates in their work? 3. Do most people like real responsibility in their jobs? 4. Are most people afraid to learn new things in their jobs? 5. Should managers let subordinates control the quality of their work? 6. Do most people dislike work? 7. Are most people creative? 8. Should a manager closely supervise and direct the work of subordinates? 9. Do most people tend to resist change? 10. Do most people work only as hard as they have to? 11. Should workers be allowed to set their own job goals? 12. Are most people happiest off the job? 13. Do most workers really care about the organization they work for? 14. Should a manager help subordinates advance and grow in their jobs? Scoring
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Count the number of ―yes‖ responses to items 1, 4, 6, 8, 9, 10, 12; write that number here as [X = ]. Count the number of ―yes‖ responses to items 2, 3, 5, 7, 11, 13, 14; write that score here as [Y = ]. Interpretation This assessment examines your orientation toward Douglas McGregor‘s Theory X (your ―X‖ score) and Theory Y (your ―Y‖ score) assumptions. Consider how your X/Y assumptions might influence how you behave toward other people at work. What self-fulfilling prophecies are you likely to create?
Class Exercise 2: Evidence-Based Management Quiz Instructions 1. For each of the following questions, answer T (true) if you believe the statement is backed by solid research evidence or F (false) if you do not believe it is an evidence-based statement. 1. Intelligence is a better predictor of job performance than having a conscientious personality. 2. Screening job candidates for values results in higher job performance than screening for intelligence. 3. A highly intelligent person will have a hard time performing well in a low-skill job. 4. ―Integrity tests‖ are good predictors of whether employees will steal, be absent, or take advantage of their employers in other ways. 5. Goal setting is more likely to result in improved performance than is participation in decision making. 6. Errors in performance appraisals can be reduced through proper training. 7. People behave in ways that show pay is more important to them than what they indicate on surveys. o Share your answers with others in your assigned group. Discuss the reasons members chose the answers they did; arrive at a final answer to each question for the group as a whole. o Compare your results with these answers ―from the evidence.‖ o Engage in a class discussion of how ―commonsense‖ answers can sometimes differ from answers provided by ―evidence.‖ Ask: What are the implications of this discussion for management practice?
Team Project 2: Management in Popular Culture You‘ll notice that the chapter openers in this book bring in movies and television shows from popular culture. Lots of them have situations and themes that deal with things like leadership, team dynamics, attitudes, personalities—all the major topics of this textbook. The point is:
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Management learning is everywhere; we just have to look for it. Question What management insights are available in various elements of our popular culture and reflected in our everyday living? Instructions Listen to music. Pick out themes that reflect important management concepts and theories. Put them together in a multimedia report that presents your music choices and describes their messages about management and working today. Watch television. Look again for the management themes. In a report, describe what popular television programs have to say about management and working. Also consider TV advertisements. How do they use and present workplace themes to help communicate their messages? Read the comics looking for management themes. Compare and contrast management and working in two or three popular comic strips. Read a best-selling novel. Find examples of management and work themes in the novel. Report on what the author‘s characters and their experiences say about people at work. Create your own alternative to the above suggestions Share results with your class and instructor
Case Snapshot: Zara– Fashion at the Speed of Light The case profiles Zara – a story of great supply chain prowess. In this world of ―hot today, gauche tomorrow,‖ no company does fast fashion better than Zara. Shoppers in 79 countries, and counting, are fans of Zara‘s knack for bringing the latest styles from sketchbook to clothing rack at lightning speed and reasonable prices. Low prices and a rapid response to fashion trends give Zara a top ranking among global clothing vendors. Now that Zara has shown the world how to do ―fast fashion‖ so well, won‘t others find it easy to copy their success story? Case discussion questions and suggested answers: 1. DISCUSSION In what ways are elements of the behavioral or human resource approaches to management evident at Zara International? How can systems concepts and contingency thinking explain the success of some of Zara’s distinctive practices? Classical management finds the best way to produce a product or service so both workers and employers benefit from increased efficiencies. Zara seems to have embraced the efficiencies found in Weber's bureaucratic form of organizations. The rapid response to fashion trends require efficient design, production, distribution and inventory management. All departments must clearly know their purpose with a clear division of labor, levels of authority are clearly defined, rules and procedures facilitate
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the fast turnaround necessary to get fresh fashions in the store within days of design. Fayol's administrative principles are in evidence in Zara's clear foresight or plan of action, organization allows fast mobilization of resources, command is evident in the vision and leadership of its founder and Chairman, Amancio Ortega Gaona. Across its 80,000 workers, coordination requires close communication and efficient operations, and control is seen in their ambitious goals for growth. Systems concepts and contingency thinking explain the success of some of Zara’s distinctive practices. For example, clothing lines are replaced weekly so that customers will purchase products when they're made available. Customers know that if they wait, the line may be gone within a short period of time. Additionally, high end fashion is made available to all shoppers at an affordable price. Markdowns are less common at Zara because of its tight inventory control and a keen eye on no overstocks. 2. DISCUSSION Zara’s logistics system and management practices can handle the current pace of growth, but they will eventually need to be updated. How could quantitative management approaches and data analytics help Zara executives plan for the next generation of its logistics and management approaches? One of Zara‘s major competencies is producing goods and services efficiently and effectively. In what ways does this competency require great strength with the quantitative management approaches, including operations management? Operations management involves production of goods and services and how they can be improved. Zara seems to have perfected the process of spotting fashion trends and bringing them to their retail stores in record time. They accomplish this by utilizing just-in-time inventory management and production practices along with distribution centers that processes orders within 24 hours. 3. PROBLEM SOLVING As a consultant chosen by Zara to assist with the expansion of its U.S. stores, you have been asked to propose how evidence-based management might help the firm smooth its way to success with an American workforce. What areas will you suggest be looked at for evidencebased decision making, and why? Evidence-based management is the process of using data from a large numbers of organizations to determine facts about effective management practices that can be validated by research. Decision makers are encouraged to challenge conventional wisdom regarding ―what works‖ and encourage others to do the same. Decisions should be made with clear evidence that the solution or practice will achieve the desired result. Zara would need to do extensive research about manufacturing and production with an American workforce – along with data which substantiates further expansion into the United States. Additionally, a study of the following areas for evidence-based management might help: Copyright © 2021 John Wiley & Sons, Inc.
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Purchasing trends in the U.S. (online and offline) Social Media trends and impact on fashion and purchasing Wages and hiring trends Apparel industry trends
4. FURTHER RESEARCH Gather the latest information on competitive trends in the apparel industry, and on Zara‘s latest actions and innovations. Is the firm continuing to do well? Are other retailers getting just as proficient with the fast-fashion model? Is Zara adapting and innovating to stay abreast of both its major competition and the pressures of a changing global economy? Is this firm still providing worthy management benchmarks for other firms to follow? Competitive trends in the apparel industry:
The internet will continue to take market share from brick and mortar, and more chains will be forced to shutter less productive doors.
Department stores may be more vulnerable as they face increased competition from offpriced retailers along with online behemoth Amazon.
With department stores experiencing declining sales, new retail concepts such as Bonobos are emerging. The showroom strategy (products are offered to customers for viewing only), offers no stock and requires customers to complete their purchase online.
Pop up shops and other flexible physical locations and channels will continue to become more popular as brands experiment without signing long-term and expensive retail mall leases.
With social media profiles and digital footprints, customers now have information available for savvy retailers adept in machine learning and deep analytics (along with Artificial Intelligence). A more targeted and personalized shopping experience for customers will continue to be a focus of smart retailers. Online and offline retailers will focus on data mining and personalization services to better serve customers who shop primarily on their mobile devices.
Athleisure continues to grow with brands like Zara and Kate Spade launching activewear and athleisure lines. Celebrity collaborations will continue (Adidas/Kanye West, for example). There will be an increased drive toward ―casualization‖ across many segments.
Are other retailers proficient with the fast-fashion model? There are a number of retailers who have embraced the fast fashion model. They include: Forever 21, H&M, Peacocks, Xcel Brands and Topshop.
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Is Zara adapting and innovating to stay abreast of both its major competition and the other pressures of a changing global economy? Yes, Zara is adapting and innovating. However, the competition continues to increase. Here is how Zara innovates: Chases trends and reacts to increased demand by moving an item from factory floor to store shelves in a few weeks. Cutting edge fashion at affordable prices. Produces small batches in facilities close to distribution headquarters in Spain. Fast response global supply, production and retail network. Rarely markdowns or discounts (small batches are produced rather than large volume which can stay on store shelves). Unique product design systems, order administration, production, distribution and retailing. Demand for a product dictates production and delivery. In just 15 days after a product is designed, it is delivered to stores worldwide. Moves an item from factory floor to store shelves in a few weeks Is the firm still providing worthy management benchmarks for other firms to follow? It is, however, fast fashion leaders Zara and H&M have both recently experienced shrinking profitability. Additionally, with the influence of mobile and social media addiction, styles are being pushed in and out at breakneck speed and some retailers are unable to keep pace. In fact, in a recent year, Zara’s profits hit an eight-year low. The fashion industry in general suffers from consumers spending on leisure activities and shifting purchases to online suppliers. This is putting price pressure on retailers like Zara – and consequently, taking a squeeze on profitability. Currency swings haven’t helped matters either.
CHAPTER 3 Ethics and Social Responsibility Character doesn’t stay at home when we go to work Chapter Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion.
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Chapter three provides a thorough review of ethics and corporate social responsibility. The chapter begins with a discussion of ethical behavior. Various approaches to what is considered ethical are explored. How ethical dilemmas occur at work and how people tend to rationalize unethical behavior is discussed. As personal influencers of ethical decision making, Lawrence Kohlberg‘s levels of moral development are reviewed. Emphasis is placed upon the role of a manager to inspire high standards of ethical conduct by setting a precedent as a role model. Discussed are various approaches to maintaining high ethical conduct within an organization, which include: ethics training, protecting whistleblowers, and company codes of ethical conduct. Another main chapter topic reviews the importance of the ways an organization can serve society, also known as corporate social responsibility or CSR. Classical and socioeconomic, the two views for and against CSR, are compared and contrasted. Triple bottom line, which measures a company in ways beyond just its financial results, is described. And finally, the importance of sustainability, sustainable development and the movement of social entrepreneurs, those who take business risk for a social mission and not just financial gain is discussed. Sustainable business and sustainable development are described as ways organizations preserve and protect the environment for future generations.
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Learning Objectives
Learning Objective3.1: Discuss ethical dilemmas and common ethics issues in the workplace. Learning Objective3.2: Describe ways to maintain high standards of ethical conduct. Learning Objective3.3: Identify when organizations are and are not acting in socially responsible ways.
Chapter Outline
Learning Objective 3.1: Discuss ethical dilemmas and common ethics issues in the workplace. o Ethical Behavior is values driven. o Views differ on what constitutes moral behavior. o What is considered ethical can vary across cultures. o Ethical dilemmas arise as tests of personal ethics and values. o People have tendencies to rationalize unethical behaviors.
Learning Objective 3.2: Describe ways to maintain high standards of ethical conduct. o Personal character and moral development influence ethical decision making. o Managers as positive role models can inspire ethical conduct. o Training in ethical decision making can improve ethical conduct. o Protection of whistleblowers can encourage ethical conduct. o Formal codes of ethics set standards for ethical conduct.
Learning Objective 3.3: Identify when organizations are and are not acting in socially responsible ways. o Social responsibility is an organization‘s obligation to best serve society. o Perspectives differ on the importance of corporate social responsibility. o Shared value integrates corporate social responsibility into mission and strategy. o Social businesses and social entrepreneurs are driven by social responsibility. o Social responsibility audits measure the social performance of organizations. o Sustainability is an important social responsibility goal.
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Supporting Materials Figures Figure 3.1: How Do Alternative Moral Reasoning Approaches View Ethical Behavior? Figure 3.2: How Do Cultural Relativism and Moral Absolutism Influence International Business Ethics? Figure 3.3: What Are the Stages in Kohlberg‘s Three Levels of Moral Development? Figure 3.4: Who Are the Stakeholders of Organizations? Figure 3.5: Four Criteria for Auditing the Social Performance of an Organization. Figure 3.6: How to Recognize ―Toxic‖ Versus ―Great‖ Employers. What’s Inside? Career Readiness: Curbing Work Hours to Improve Performance Choices: When #MeToo Becomes Catch 22 Ethics: Can Sustainability Survive the Novel Coronavirus Pandemic? Analytics: Behavior of Managers Key to an Ethical Workplace Issues: Child Labor Controversies Are a Global Business Reality Insight: Individual character is a confidence builder Quick Case: Teacher Calls About Daughter Cheating on Test Applications Test Prep 3 Skill Building Portfolio o Self-Assessment 3: Terminal Values Survey o Class Exercise 3: Confronting Ethical Dilemmas o Team Project 3: Organizational Commitment to Sustainability Case Snapshot: Warby-Parker—Disruption with a Conscience Insight: Individual Character Is a Confidence Builder
DISCUSSION TOPIC You can start the discussion of this chapter by asking students to identify examples of ethical and unethical business practices that they have read about, heard about, personally witnessed or experienced. Ask the students how these practices seem to have been viewed by the public at large. Also, have the students discuss how these practices seem to have affected the organization and relevant stakeholders in both the short term and the long term. To bring ethical and unethical behavior closer to home, discuss students‘ behavior within the college/university context. Topics may include cheating, adherence to campus regulations,
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plagiarism, maintenance of the physical environment, or unauthorized use of materials or equipment.
Lecture Outline Learning Objective3.1
Pick up any business newspaper and the headlines profile business scandals, financial failures, criminal charges, exploitation and greed. It can seem pervasive. This leaves us just a tad bit jaded about executive leadership in our society. This is why it is more important than ever to understand the moral and social implications of behavior in and by organizations. We begin with a discussion of ethics and ethical behavior.
Ethical behavior is values driven. Ethics is a code of moral principles that sets standards of good or bad, or right or wrong, in our conduct. Ethical Behavior is ―right‖ or ―good‖ in the context of a governing moral code Values are the underlying beliefs and judgments regarding what is right or wrong. Psychologist Milton Rokeach distinguishes between terminal and instrumental values: Terminal values are preferences about desired end states Instrumental values concern the means for accomplishing desired ends These values tend to be enduring for an individual but may vary considerably from one person to the next, which explains why different people respond quite differently to the same situation.
Views differ on what constitutes moral behavior Figure 3.1 summarizes the four philosophical views of ethical behavior Utilitarian view considers ethical behavior to be that which delivers the greatest good to the greatest number of people An example in the recent pandemic would be the companies that cut jobs and closed divisions in order to help the organization survive for the remaining employees and their communities (rather than lose all jobs to business failure). Individualism view focuses on the long-term advancement of self-interests Unethical behavior may pay off in the short-term, but in the long-term it catches up and the consequences can be devastating. Cheating on a test can lead to a short term gain, but if caught, you run the risk of the long term loss of being expelled. Justice view considers a behavior to be ethical when people are treated impartially and fairly, according to legal rules and standards
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Procedural justice involves the fair administration of policies and rules ● Distributive justice involves the allocation of outcomes without regard to individual characteristics such as gender, race, ethnicity or age ● Interactional justice focuses on the treatment of everyone with dignity and respect ● Commutative justice focuses on the fairness of exchanges or transactions and involves all parties to a transaction entering it freely with all relevant and available information. Moral-rights view considers behavior to be ethical when it respects and protects the fundamental rights of people. Excerpts from the Universal Declaration of Human Rights of the United Nations: o Article 1 All human beings are born free and equal in dignity and right. o Article 18 Everyone has the right to freedom of thought, conscience, and religion. o Article 19 Everyone has the right to freedom of opinion and expression. o Article 23 Everyone has the right to work, to free choice of employment, to just and favorable conditions of work. o Article 26 Everyone has the right to education. Students may have examples of people who are deprived of basic human rights such as child labor, repression of free speech or practice of religion. ●
DISCUSSION TOPIC Ask students for examples of each of the above views of ethical behavior. These can be either hypothetical examples, from current events or situations they have encountered in their own lives. Ask them to indicate which view they think is the most useful in business, and why. Also ask them to indicate which view they think is the most useful in their personal lives, and why. Compare and contrast the two sets of answers, exploring the nature and reasons for any differences in the two sets.
What is considered ethical can vary across cultures. Cultural relativism suggests that there is no one right way to behave and that ethical behavior is determined by its cultural context. The classic rule of ―when in Rome, do as the Romans do‖ reflects this position -- the values and practices of the local setting determine what is right or wrong. Moral absolutism is the belief that ethical standards apply universally among all cultures and that universal values transcend cultures in determining what is right or wrong.
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Ethical imperialism is imposing one‘s own ethical standards on others Figure 3.2 contrasts the influence on international business ethics of two diametrically opposed extremes of cultural relativism and moral absolutism.
Ethical dilemmas are tests of personal ethics and values. An Ethical dilemma is a situation requiring a decision about a course of action that, although offering potential benefits, may be considered unethical. Ethical dilemmas arise as tests of personal ethics and values. May be no clear consensus on what is ―right‖ or ―wrong‖ See Table 3.1 inset of common examples of unethical behavior at work, which include: o Discrimination: Denying people a promotion due to reasons not relevant to job performance (i.e., race, religion, gender, age). o Sexual Harassment: Making a co-worker feel uncomfortable through comments, actions or requesting sexual favors o Conflict of interest: Taking bribes, kickbacks or gifts in return for making favorable decisions o Customer privacy: Giving someone privileged information regarding the activities of a customer o Using organizational resources for one‘s personal benefit Managers report that many of their dilemmas arise out of conflicts with superiors, customers, and subordinates. The most frequent involve dishonesty in advertising and in communications with top management, clients, and government agencies. Holding people accountable for unrealistically high performance goals are high on the list of bad boss behaviors which creates undue pressure. When people feel extreme performance pressures, they can act incorrectly and engage in questionable practices to meet these expectations
DISCUSSION TOPIC A good way to get students thinking about ethical dilemmas and to generate a lively discussion is to ask students how they would respond to the following three dilemmas. The range of student responses is likely to be quite broad. Next, you can present the results of the Harvard Business Review survey from which they were taken. Case 1: foreign payment. A governmental official of a foreign nation asks you to pay a $300,000 consulting fee. In return for the money, the official promises special assistance in obtaining a $100 million contract that would produce at least a $5 million profit for your company. The contract will probably go to a foreign competitor if not won by you. Survey
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results: 43% of the responding managers would refuse to pay; 33% would pay, but consider it unethical; 36% would pay and consider it ethical in a foreign context. Case 2: competitor’s employee. You learn that a competitor has made an important scientific discovery. It will substantially reduce, but not eliminate, your profit for about a year. There is a possibility of hiring one of the competitor‘s employees who knows the details of the discovery. Survey results: 50% would probably hire the person; 50% would not. Case 3: expense account. You learn that a manager in your company who earns $50,000 a year has been padding his expense account by about $1,500 a year. Survey results: 89% feel padding is okay if superiors know about it; 9% feel it is unacceptable regardless of the circumstances. (Source: Brenner, S.N., and Mollander, E.A. ―Is the Ethics of Business Changing?‖ Harvard Business Review, January-February 1977, Volume 55, p. 60.)
People have tendencies to rationalize unethical behaviors. Even though most of us consider ourselves as ―good‖ people, when we do something that might be ―wrong,‖ or unethical, the common response is to rationalize the questionable behavior. Common ways to rationalize unethical behavior: It’s not really illegal It’s in everyone’s best interests No one will ever know about it The organization will stand behind them
STUDY GUIDE / Learning Objective3.1 Questions for Discussion 1) For a manager, is any one of the moral reasoning approaches better than the others? Students may debate the merits of all approaches. Ask them to give examples of where each may be appropriate such as ―the justice view is the view that seems most fitting for a CEO with a diverse workforce.‖ The instructor may also consider assigning different approaches to small groups of students and ask them to come up with an example that would advocate one approach as the best for the situation. 2) Will a belief in cultural relativism create inevitable ethics problems for international business executives? Cultural relativism in all likelihood will cause problems, since, as the name implies, there is no ―clear‖ boundary of what is right and wrong. Given a profit motivation, the
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temptation would be great to make decisions that could possibly result in unethical behavior. 3) Are ethical dilemmas always problems, or can they be opportunities? Ethical dilemmas can be opportunities. This is particularly true if it is a learning opportunity for the organization. An example might be when one company learns of proprietary information about a competitor through a supplier. By choosing not to exploit such a secret and use it, the manager or decision maker is sending a very strong message and setting a tone for the entire organization. Career Situation Today‘s classroom could be a mirror image of tomorrow‘s work place. You have just seen one of your classmates snap a cell phone photo of the essay question on an exam. The instructor has missed this, and you‘re not sure if anyone else observed what just happened. You know that the instructor is giving the exam to another section of the course starting next class period. Do you let this pass, perhaps telling yourself that it isn‘t all that important? If you can‘t let it pass, what action would you take? Students’ answers will vary based upon their personal views and individual experiences.
Learning Objective3.2 Describe Ways to Maintain High Standards of Ethical Conduct. Although there is a tendency to read about and focus on the bad behavior within organizations, we shouldn‘t forget that good does exist in a good many of them. There are organizations whose managers set the bar very high when it comes to ethics and codes of conduct expected for all employees. And there are a variety of methods used to encourage consistent ethical behavior.
Personal character and moral development influence ethical decision making. Ethical frameworks are well-thought-out personal rules and strategies for ethical decision-making Organization and action contexts influence workplace ethics Conditions in the external environment also influence organizations and their members (includes laws and regulations, and social norms and values) Lawrence Kohlberg describes three levels of moral development through which individuals progress (see Figure 3.3). Preconventional or Self-Centered Behavior - the individual focuses on selfinterests, avoiding harm and making deals for personal gain.
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Conventional or Social-Centered Behavior - attention becomes more socialcentered and the decisions are likely to be based on following social norms, meeting the expectations of others, and living up to agreed-on obligations.. Postconventional or Principle-Centered Behavior - principle-centered behavior results in the individual living up to societal expectations and personal principles.
DISCUSSION TOPIC Ask small groups of students to identify an ethical dilemma that commonly occurs for students as they pursue their educations. Each group should focus on a different dilemma. Then have each group discuss how their dilemma should be handled, given the checklist for making ethical decisions.
Managers as positive role models can inspire ethical conduct. The way top managers approach ethics issues can have a powerful effect on what happens in their organizations Policies that set high ethics standards Set a personal example of the behavior you expect, ―Walk the talk‖. Margin graphic illustrates three ways managers may choose to behave: Immoral managers choose to behave ethically Amoral managers disregard the ethics of an act or decision, but do so unintentionally by failing to consider the ethical consequences of his or her actions Moral managers make ethical behavior a personal goal Training in ethical decision making can improve ethical conduct. o Ethics training helps employees understand and best deal with ethical aspects of decision making. More and more college students majoring in business are required to take ethics courses as a required part of their curriculum. o Remember to never underestimate the risk of internet exposure. Hardly a day goes by without reading about a public official humiliated and damaged by photos or something posted online. o Table 3.2: Checklist for Dealing with Ethical Dilemmas •Step 1. Recognize the ethical dilemma. •Step 2. Get the facts. •Step 3. Identify your options. •Step 4. Test each option by asking: Is it legal? Is it right? Is it beneficial? •Step 5. Decide which option to follow. •Step 6. Double-check your decision by asking three spotlight questions. Spotlight Questions:
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How would I feel if my family found out about my decision? How would I feel if my decision was reported in the local newspaper or posted on the internet? What would a person I know who has the strongest character and best ethical judgment say about my decision? • Step 7. Take action.
Protection of whistleblowers can encourage ethical conduct. Whistleblowers are people who expose organizational misdeeds in order to preserve ethical standards and protect against wasteful, harmful, or illegal acts The very nature of organizations as power structures creates potential barriers to whistleblowing Strict chain of command can make it hard to bypass the boss if he or she is doing something wrong Strong work group identities can discourage whistle-blowing and encourage loyalty and self-censorship Conditions of ambiguous priorities can make it difficult to distinguish right from wrong DISCUSSION TOPIC
Ask students to describe what they would do if they happened to be in a situation where they could become whistleblowers. Then share the following practical tips for whistleblowers: 1. Do make sure you really understand what is happening and that your allegation is absolutely correct. 2. Do not assume the law automatically protects you. 3. Do talk to an attorney to ensure that your rights will be protected and proper procedures are followed. 4. Do not talk first to the media. 5. Do keep accurate records to document your case; keep copies outside of your office. 6. Do not act in anticipation of a big financial windfall if you end up being fired.
Formal codes of ethics set standards for ethical conduct. Codes of ethics formally state the values and ethical principles that members are expected to display Some require employees to read and agree as a condition of employment Can be very specific guidelines on how to behave in situations Increasingly common
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STUDY GUIDE / Learning Objective3.2 Questions for Discussion 1) Is it right for organizations to require ethics training of employees? It is not only right for a company to require ethics training; it is the responsible action that every company should take. It also reduces a company’s exposure even if an employee does commit an ethics violation. For instance, it increases the defense that the company does not have a climate for acceptance of sexual harassment if training can be demonstrated to have occurred. Most importantly, it explicitly sets out the ethics rules, and lets employees know that they are important enough to pay workers to attend. 2) Should whistleblowers have complete protection under the law? Whistleblowers are entitled to complete protection and are protected by law and policies. They are taking a high risk for actions that may jeopardize their careers or may even threaten their personal safety. The benefits to society for avoidance of situations such as Enron far outweigh any undesired or unintended costs of added federal or state protective laws and regulations. 3) Should all managers be evaluated on how well they serve as ethical role models? Yes - there is perhaps no better way to reinforce the importance of ethics than rewarding (or penalizing) managers for their ethical conduct. As a manager, modeling ethical behavior will replicate the behavior so crucial within an organization. Career Situation One of your first assignments as a summer intern for a corporate employer is to design an ethics training program for the firm‘s new hires. Your boss says that the program should familiarize newcomers with the corporate code of ethics. But, it should go beyond this to provide them with a foundation for handling ethical dilemmas in a confident and moral way. What will your lesson plan for the training program look like? Students’ answers will vary based upon their personal views and individual experiences. Code of ethics corporate training should aim to educate employees on how to adhere to an organization’s ethical guidelines for all interactions and transactions. Failure to do so could lead to conflicts of interest, non-compliance, confidentiality issues and a wide range of other issues. An employee-focused course that emphasizes mitigating legal and financial risks through real-life examples and scenarios may make sense.
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Learning Objective3.3 Explain What We Know About the Social Responsibilities of Organizations. Organizations are becoming increasingly aware that they do not exist separate from society. Corporate social responsibility and triple bottom line are concepts which many students already have become familiar with through daily interactions as consumers making purchases at both large and small companies.
Stakeholders, all of whom have varying interests, are people and institutions most directly affected in some way by how an organization performs and conducts business. Stakeholders, the individuals, groups and other organizations, have a direct ―stake‖ or interest in an organization and its performance.
Figure 3.4 lists stakeholders as:
Customers Suppliers Competitors Regulators Investors/Owners Employees Future Generations Labor Unions
Stockholders Federal, State, local governments Educational Institutions Public-Interest Groups Financial Institutions Legal Institutions
Social responsibility is an organization’s obligation to best serve society. Corporate Social Responsibility (CSR) advocates organizational behavior that serves its own mission and interests by acting in a way that serves the best interests of all stakeholders, including society as a whole. Triple bottom line is a concept that evaluates organizational performance on financial, social and environmental criteria rather than just financial. Three Ps of Organizational Performance are: Profit People Planet Perspectives differ on the importance of corporate social responsibility
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In academic and public policy circles, there is much debate over corporate social responsibility or CSR. The classical view takes a stand against making CSR a business priority, whereas the socioeconomic view advocates for it. One of the problems with the pro and con CSR debate is that it pits the interests of shareholders and owners against other stakeholders in a win-lose fashion. Classical view of CSR – ―The business of business is business‖ meaning that the goal of business is to produce profits for the owners or stockholders and that management‘s only responsibility in running a business is to maximize profits and shareholder value. Milton Friedman advocated, along with many others, that society‘s best interests are served by managers who strive for profits without expanding the business mission to include social causes. Socioeconomic view of CSR – Business must focus on all stakeholders including society at large and that management of any organization should be concerned for the broader social welfare, not just corporate profits. This may lead to improved financial performance as a positive perception of the business leads to a ―virtuous circle‖. A virtuous circle is a best-case scenario where corporate social responsibility leads to improved financial performance that leads to greater social responsibility.
Shared value integrates corporate social responsibility into business strategy Shared value view of CSR approaches business decisions with understanding that economic gains and social progress are interconnected. This approach integrates corporate social responsibility into business strategy. Advocated by Michael Porter and Mark Kramer, they believe that executives can and should make business decisions with full understanding that economic gains and social progress are interconnected. The benefit corporation, or B Corp, is legally committed to both creating profits for shareholders and creating value for employees, communities, and the environment as stakeholders.
Social businesses and social entrepreneurship point the way in social responsibility. Social business has as its foundation the goal of addressing a social problem, yet may still return a profit. Social entrepreneurs are people who take business risk with the goal of finding novel ways to solve pressing social problems at home and abroad.
Social responsibility audits measure the social performance of organizations. A social responsibility audit measures and reports on an organization‘s performance in various areas of corporate social responsibility. Criteria for evaluating socially responsible practices include, but are not limited to (Figure 3.5):
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Economic Legal Ethical Discretionary
Sustainability is an important social responsibility goal. Sustainability is a goal that addresses the rights of present and future generations as co-stakeholders of present-day natural resources. Sustainable business is where firms operate in ways that both meet the needs of customers and protect or advance the well-being of our natural environment. Sustainable development describes the practices that make use of environmental resources to support societal needs today while also preserving and protecting the environment for future use for future generations. Environmental Capital or Natural Capital, an increasingly popular and useful term in conversations about sustainable development, is the available natural resources Atmosphere, land, water, air, minerals ISO 14001 is a global quality standard for organizations that have objectives for sustainable business practices. Stewardship means taking personal responsibility to always respect and protect the interests of organizational stakeholders. Human Sustainability socially responsible organizations must consider the effect of management practices on employees. Figure 3.6 shows how to recognize ―Toxic‖ versus ―Great‖ employers.
DISCUSSION TOPIC Discuss ways in which businesses can protect the environment and save money at the same time, such as grocery stores selling low-priced canvas bags to replace paper or plastic ones; coffee shops encouraging patrons to bring in their own cups; and fast food restaurants providing recycling bins so customers can sort their trash. Ask students for other examples. STUDY GUIDE / Learning Objective3.3 Questions for Discussion 1. Choose an organization in your community. What questions would you ask to complete an audit of its social responsibility practices? The social audit would include criteria to assess the organization’s performance in terms of the impact a wide range of stakeholder groups. Criteria would include Economic Responsibility, Legal Responsibility, Ethical Responsibility and Discretionary
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Responsibility. This would be an interesting small group activity, requiring all groups to audit different organizations. Other criteria might include: Environment: byproducts used, emissions to air and water through manufacturing, waste produced, energy consumed, protecting and restoring the environment. Community: charitable corporate investment and giving, community investments, employee activities and volunteer hours, customer diversity and inclusion, Workplace: employee health and safety, low turnover, employee satisfaction, employee diversity, employee training and learning, providing customers value, providing sound quality goods and services Marketplace: reach in disadvantaged areas, supply chain efficiency, customer satisfaction surveys Respecting and promoting ethics, transparency, human rights, and accountability. 2. Is the logic of the virtuous circle a convincing argument in favor of corporate social responsibility? Responses will differ along the same arguments as the classical view of CSR and socioeconomic view of CSR. Students may have read research that supports the view that socially responsible companies are more profitable over time than those that hold a more classical view. Others may have research that supports the classical view. Ask them to compare with examples. 3. Should government play a stronger role in making sure organizations commit to sustainable development? Recent corporate governance failures of AIG and other financial institutions may tip student opinion to favor more government involvement. The reporting requirements and regulations added by the Sarbanes – Oxley Act do not appear to have prevented behavior students perceive to be unethical. The question needs to be asked: ―can any amount of regulation prevent unethical behavior of amoral or immoral behavior of managers such as Bernard Madoff?‖ Career Situation It‘s debate time, and you‘ve been given the task of defending corporate social responsibility. Make a list of all possible arguments for making CSR an important goal for any organization. For each item on the list, find a good current example that confirms its importance based on real events. In what order of priority will you present your arguments in the debate? Next, what arguments ―against‖ CSR will you be prepared to defend against? Students’ answers will vary based upon their personal views and individual experiences.
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Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management 6e for your students, especially the special features of the text.
Career Readiness: Curbing Work Hours to Improve Performance Does it surprise you that software coders produce higher quality work in 40-hour versus 60-hour weeks? Working long hours gives the impression of being ―dependable‖ and ―committed.‖ But at what price? An occupational psychologist says: "We need to see duty of care as part of the role of manager…sensible hours needs to be championed by middle managers as well as senior leaders." Not taking care of your health, missing children's life and school events, and inattention to spouse or partner are warning signs. Living with always-on technology doesn‘t help. In response, Volkswagen suspends email from 30 minutes after shifts end until the next day. Daimler allows employees to have vacation and holiday emails deleted from the server. What social responsibility do employers have to make sure that employees don't work so many hours that they lose productivity and damage their health and personal lives? A good starting discussion in class about work-life balance issues and its impact on the productivity/performance of employees. Do organizations truly care about the well-being of their employees? Should additional hours be offset with perks offered by companies like Google? Where is the line for push for productivity versus wellbeing of employees?
Analytics: Behavior of Managers is Key to an Ethical Workplace A survey conducted for Deloitte & Touche USA includes the following findings: Forty-two percent of workers say the behavior of their managers is a major influence The most common unethical acts by managers include verbal, sexual, and racial harassment, misuse of company property, and giving preferential treatment. Ninety-one percent of workers are more likely to behave ethically when they have work-life balance. Top reasons for unethical behavior are lack of personal integrity and lack of job satisfaction. Ask students if there are surprises in these data and whether they agree that this emphasis on manager behavior is justified as they key to ethical behavior in the workplace. What do students think is acceptable and unacceptable workplace behaviors?
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Quick Case: Teacher Calls about Daughter Cheating on Test ―Hello, this is Ann‘s fourth-grade teacher. I‘d like to set up a conference. She‘s been caught cheating on a test.‖ This isn‘t the telephone message you‘d been expecting when answering voice mail from your daughter‘s school. Just the other day Ann had been telling you how much she enjoyed the class and working in a small groups on projects. ―It‘s so much fun working with others,‖ she said. After calling the teacher back you‘ve learned that one of the students from that team asked for and received from Ann an answer during a standardized test. The teacher hasn‘t said anything to the students yet, but wants to talk to the parents. You also wonder about all the emphasis on teamwork, sharing, and collaboration that is part of the typical school day. How do those things reconcile with a classmate‘s request for help on a test? The teacher conference is scheduled for tomorrow. Ann will be waiting when you get home from work. Can Ann‘s behavior be justified on ethics grounds? What do you say, ask, and do with her? How can you turn this situation into a learning experience that will help her know right from wrong? How do you handle her emotions… and likely questions? What is the line here between ethical and unethical behavior in a culture of teamwork? What do you say, ask, and do with the teacher? This should be an interesting debate amongst students – you can create two teams and have each team take one side and defend. Students’ answers will vary based upon their personal views and individual experiences.
Issues: Child Labor Controversies Are a Global Business Reality The International Labour Organization (ILO) estimates there are 152 million child laborers worldwide. Half of them are 5–11 years old. About 73 million children work in hazardous conditions. It was once commonplace for children to work in factories in the United States. Some would say this contributed to the country‘s economic development. President Franklin D. Roosevelt signed the Fair Labor Standards Act of 1938, banning child labor in ―oppressive‖ conditions. Today, a host of U.S. laws strictly govern the employment of children. Yet child labor is part of the economies of many countries, and millions of families depend on the income children provide. Global businesses face differing laws and customs as they travel the world looking for resources, markets, and labor. Mining, food sourcing, and garment manufacturing are common targets of news exposés on child labor scandals. Are you a ―relativist‖ or an ―absolutist‖ when it comes to child labor? Can you accept child labor in under certain conditions and in certain locations? Can you provide an example of when it is or could be acceptable? What is your take on the issue of economic development? If child labor did contribute to the economic development of America in the past, how do you answer those who
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argue that the practice should be allowed in countries struggling to achieve economic success today? This is a good class discussion issue and students should be able to relate to this as they all can relate to this situation from one or the other side. This can be set up as a debate in class by dividing the class in two groups and each group taking one side.
Choices: When #MeToo Becomes Catch 22 Consider data on sexual harassment claims filed with the Equal Employment Opportunity Commission. A study of four years‘ worth of claims found that two-thirds of filers experienced retaliation—being transferred to different jobs or shifts, or being fired. Just 23% of complaints resulted in monetary awards, with the median compensation about $10,000. One analyst says: ―It‘s not surprising that so few people file formal complaints given the high cost of complaining.‖ Ask students what would they do? How can this problem be resolved, and progress made in such situations? Where in the #MeToo statistics are they, or will they be? Students will vary in their response to this complex situation.
Ethics: Can Sustainability Survive the Novel Coronavirus Pandemic? Sustainability may be a luxury commodity or, if you prefer, a luxury goal for people and organizations. Is it something to be pursued when times are good, but put on the shelf when things get bad? And things do get bad; the COVID-19 pandemic is a potent reminder of that fact. When personal and organizational livelihoods are at risk, survival trumps all other priorities. So, what are the implications for sustainability goals and the progress we‘ve made toward them? Is it justifiable to push sustainability and CSR practices aside when the survivability of a business or a community or a family is at risk? Can we say that the first ethical responsibility of management in times of extreme crisis is to preserve the business or service organization for its employees and customers? Is it acceptable to argue that by saving a business today can help build a stronger business for tomorrow, perhaps one that will be more committed than ever before to sustainability and CSR? How about you and your family? What decisions did you make in attempting to survive the COVID-19 crisis? Where did sustainability and CSR goals fit in your personal consumption behaviors? This is a good class discussion issue and students should be able to relate to this as they all/most have or will go through sustainability examples. This could also be given as an out-of-class
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assignment where students can be asked to prepare a position statement to these questions and come prepare to discuss in class.
TestPrep 3 MULTIPLE CHOICE 1. A business owner makes a decision to reduce a plant‘s workforce by 10% in order to cut costs and be able to save jobs for the other 90% of employees. This decision could be justified as ethical using the approach to moral reasoning. (a) utilitarian (b) individualism (c) justice (d) moral rights 2. If a manager fails to enforce a late-to-work policy for all workers—that is, by allowing some favored employees to arrive late without penalties—this would be considered a violation of . (a) human rights (b) personal values (c) distributive justice (d) cultural relativism 3. According to research on ethics in the workplace, is/are often a major and frequent source of pressures that create ethical dilemmas for people in their jobs. (a) declining morals in society (b) long work hours (c) low pay (d) requests or demands from bosses
4. Someone who exposes the ethical misdeeds of others in an organization is usually called a/an . (a) whistleblower (b) ethics advocate (c) ombudsman (d) stakeholder 5. Two employees are talking about ethics in their workplaces. Jay says that ethics training and codes of ethical conduct are worthless; Maura says they are the only ways to ensure ethical behavior by all employees. Who is right and why? (a) Jay—no one really cares about ethics at work. (b) Maura—only the organization can influence ethical behavior. (c) Neither Jay nor Maura—training and codes can encourage but never guarantee ethical behavior. (d) Neither Jay nor Maura—only the threat of legal punishment will make people act ethically. 6. Which ethical position has been criticized as a source of ―ethical imperialism‖? (a) individualism (b) absolutism (c) utilitarianism (d) relativism 7. If a manager takes a lot of time explaining to a subordinate why he did not get a promotion and sincerely listens to his concerns, this is an example of an attempt to act ethically according to justice. (a) utilitarian (c) interactional
(b) commutative (d) universal
8. At what Kohlberg calls the level of moral development, an individual can be expected to act consistent with peers, meet obligations, and follow rules of social conduct. (a) postconventional (b) conventional (c) preconventional (d) nonconventional 9. In respect to the link between bad management
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and ethical behavior, research shows that . (a) managers who set unrealistic goals can cause unethical behavior (b) most whistleblowers just want more pay (c) only top managers really serve as ethics role models (d) a good code of ethics makes up for any management deficiencies 10. A person‘s desires for a comfortable life and family security represent values, while his or her desires to be honest and hardworking represent values. (a) terminal; instrumental (b) instrumental; terminal (c) universal; individual (d) individual; universal 11. A proponent of the classical view of corporate social responsibility would most likely agree with which of these statements? (a) Social responsibility improves the public image of business. (b) The primary responsibility of business is to maximize profits. (c) By acting responsibly, businesses avoid government regulation. (d) Businesses should do good while they are doing business.
13. The triple bottom line of organizational performance would include measures of financial, social, and performance. (a) philanthropic (b) environmental (c) legal (d) economic 13. An amoral manager . (a) always acts in consideration of ethical issues (b) chooses to behave unethically (c) makes ethics a personal goal (d) acts unethically but does so unintentionally 14. In a social responsibility audit of a business firm, positive behaviors meeting which of the following criteria would measure the highest level of commitment to socially responsible practices? (a) legal—obeying the law (b) economic—earning a profit (c) discretionary—contributing to community (d) ethical—doing what is right 15. What organizational stakeholder would get priority attention if a corporate board is having a serious discussion regarding how the firm could fulfill its obligations in respect to sustainable development? (a) owners or investors (b) customers (c) suppliers (d) future generations
SHORT-RESPONSE QUESTIONS 16. How does distributive justice differ from procedural justice? Distributive justice means that everyone is treated the same, that there is no discrimination based on things like age, gender, or sexual orientation. An example would be a man and a woman who both apply for the same job. A manager violates distribute justice if he interviews only the man and not the woman as well, or vice versa. Procedural justice means that rules and procedures are fairly followed. For example, a manager violates distributive justice if he or she punishes one person for coming to work late while ignoring late behavior by another person with whom he or she regularly plays golf. 17. What are the three Spotlight Questions that people can use for double-checking the ethics of a decision? The ―spotlight questions‖ for double-checking the ethics of a decision are: ―How would I feel if my family finds out?‖ ―How would I feel if this were published in a local newspaper or on the internet?‖ ―What would the person you know or know of who has the strongest character and best ethical judgment do in this situation?‖ 18. If someone commits an unethical act, how can he or she rationalize it to make it seem right? The rationalizations include believing that (1) the behavior is not really illegal, (3) the behavior is really in everyone’s best interests, (3) no one will find out, and (4) the organization will protect you. 19. What is the virtuous circle of corporate social responsibility? The ―virtuous circle‖ concept of social responsibility holds that social responsibility practices do not hurt the bottom line and often help it; when socially responsible actions result in improved financial performance, this encourages more of the same actions in the future – a virtuous circle being created.
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INTEGRATION AND APPLICATION QUESTIONS: 20. A small outdoor clothing company in the U.S. has just received an attractive proposal from a business in Tanzania to manufacture the work gloves that it sells. Accepting the offer from the Tanzanian firm would allow for substantial cost savings compared to the current supplier. However, the American firm‘s manager has recently read reports that some businesses in Tanzania are forcing people to work in unsafe conditions in order to keep their costs down. The manager is now seeking your help in clarifying the ethical aspects of this opportunity. Questions: How would you describe to this manager his or her alternatives in terms of cultural relativism and moral absolutism? What would you identify as the major issues and concerns in terms of the cultural relativism position versus the absolutist position? Finally, what action would you recommend in this situation, and why? Answer: If the manager adopts a position of cultural relativism, there will be no perceived problem in working with the Tanzanian firm. The justification would be that as long as it is operating legally in Tanzania that makes everything okay. The absolutist position would hold that the contract should not be taken because the factory conditions are unacceptable at home and therefore are unacceptable anywhere. The cultural relativism position can be criticized because it makes it easy to do business in places where people are not treated well; the absolutist position can be criticized as trying to impose one’s values on people in a different cultural context.
Skill Building Portfolio Self-Assessment: Terminal Values Survey 1. Read the following list of things people value. Think about each value in terms of its importance as a guiding principle in your life. A comfortable life An exciting life A sense of accomplishment A world at peace A world of beauty Equality
Family security Freedom Happiness Inner harmony Mature love National security
Pleasure Salvation Self-respect Social recognition True friendship Wisdom
2. Circle six of these 18 values to indicate that they are most important to you. If you can, rankorder these most important values by writing a number above them—with ―1‖ the most important value in my life, and so on through ―6.‖ 3. Underline the six of these 18 values that are least important to you.
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Interpretation Terminal values reflect a person‘s preferences concerning the ends to be achieved. They are the goals individuals would like to achieve in their lifetimes. As you look at the items you have selected as most and least important, what major differences exist among the items in the two sets? Think about this and then answer the following questions. A) What does your selection of most and least important values say about you as a person? B) What does your selection of most and least important values suggest about the type of work and career that might be best for you? C) Which values among your most and least important selections might cause problems for you in the future—at work and/or in your personal life? What problems might they cause, and why? How might you prepare now to best deal with these problems in the future? D) How might your choices of most and least important values turn out to be major strengths or assets for you—at work and/or in your personal life, and why? Teaching Notes: This feature offers students a chance to determine their personal values system by taking the Terminal Values Assessment (goals individuals would like to achieve in their lifetimes) in the Skill-Building Portfolio. The assessment tool is intended to help students reflect on their values. Examples include: family security, freedom, mature love, pleasure, happiness, self-respect, wisdom, an exciting life, a world at lease, and so on. Ask students to maintain their scores and reflections throughout the course and write a summary of the areas they want to strengthen, or change, as they develop as managers or employees. This may be a comprehensive special project near the end of the quarter/semester.
Class Exercise: Confronting Ethical Dilemmas Preparation Read and indicate your response to each of the following situations. 1. Ron Jones, vice president of a large construction firm, receives in the mail a large envelope marked ―personal.‖ It contains a competitor‘s cost data for a project that both firms will be bidding on shortly. The data are accompanied by a note from one of Ron‘s subordinates saying: ―This is the real thing!‖ Ron knows that the data could be a major advantage to his firm in preparing a bid that can win the contract. What should he do? 2. Kay Smith is one of your top-performing team members. She has shared with you her desire to apply for promotion to a new position just announced in a different division of the company. This will be tough on you because recent budget cuts mean you will be unable to replace anyone who leaves, at least for quite some time. Kay knows this and, in all fairness, has asked your
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permission before she submits an application. It is rumored that the son of a good friend of your boss is going to apply for the job. Although his credentials are less impressive than Kay‘s, the likelihood is that he will get the job if she doesn‘t apply. What will you do? 3. Marty José got caught in a bind. She was pleased to represent her firm as head of the local community development committee. In fact, her supervisor‘s boss once held this position and told her in a hallway conversation, ―Do your best and give them every support possible.‖ Going along with this, Marty agreed to pick up the bill (several hundred dollars) for a dinner meeting with local civic and business leaders. Shortly thereafter, her supervisor informed everyone that the entertainment budget was being eliminated in a cost-saving effort. Marty, not wanting to renege on supporting the community development committee, was able to charge the dinner bill to an advertising budget. Eventually, an internal auditor discovered the charge and reported it to you, the personnel director. Marty is scheduled to meet with you in a few minutes. What will you do? Instructions Working alone, make the requested decisions in each of these incidents. Think carefully about your justification for the decision. Meet in a group assigned by your instructor. Share your decisions and justifications in each case with other group members. Listen to theirs. Try to reach a group consensus on what to do in each situation and why. Be prepared to share the group decisions, and any dissenting views, in general class discussion. Teaching Note This is an extremely useful exercise for exposing students to the kinds of ethical dilemmas that they can expect to experience in their careers. As such, it provides them with an opportunity to consider how they will respond to such dilemmas. During in-class discussions of these dilemmas, allow all students to discuss their anticipated responses. There will likely be considerable variability in their answers, with some students selecting much more ―ethical‖ responses than others. During your discussion, emphasize the long-term advantages of selecting highly ethical responses (e.g., maintaining one‘s integrity, demonstrating to others that you can be trusted, and having a clear conscience), since these advantages may not be immediately apparent to all members of the class. Finally, instruct students to use the following checklist for making ethical decisions to evaluate their initial responses to each of these dilemmas. Doing so should prove to be beneficial in separating unethical from ethical responses to these dilemmas. A Quick Check for Dealing with Ethical Dilemmas Step 1. Recognize the ethical dilemma. Step 2. Get the facts and identify your options. Step 3. Test each option: Is it legal? Is it right? Whom does it affect? Who benefits? Who gets hurt? Step 4. Decide which option to follow.
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Step 5. Double-check with the spotlight questions: ―How will I feel if my family finds out about my decision?‖ ―How will I feel if my decision is reported in the local newspaper or posted on the Internet? Step 6. Take action.
Team Project: Organizational Commitment to Sustainability Instructions In your assigned work teams do the following: 1. Agree on a definition of ―sustainability‖ that should fit the operations of any organization. 2. Brainstorm audit criteria that can be used to create a Commitment to Sustainability Scorecard (CSS) that can be used to assess the sustainability practices of an organization. 3. Formalize your list of criteria, and then create a formal CSS worksheet that can be used to conduct an actual audit. Be sure that an organization being audited would not only receive scores on individual dimensions or categories of sustainability performance but also receive a total overall ―Sustainability Score‖ that can be compared with results for other organizations. 4. Present and defend your CSS to the class at large. 5. Use feedback received from the class presentation to revise your CSS to be used in an actual organizational sustainability audit. 6. Use your CSS to conduct a sustainability audit for a local organization. Instructor’s Note: When asked to perform original research with an actual organization, students sometimes struggle with gaining access. Remind them that their workplaces, internship sites, friends and relatives can often facilitate making contact at prospective sites which illustrates the value of having and using effective networks. Step #3 is an excellent opportunity for helping students to understand how to set measurable criteria for evaluation. These are an important part of the critical thinking process.
Case Study: Warby-Parker—Disruption with a Conscience The case for this chapter is Warby-Parker—Disruption with a Conscience. Instructors may consider suggesting students visit Warby-Parker‘s website at https://www.warbyparker.com/ for further preparation as they prepare case answers. Case Analysis Questions
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1. Discussion In what ways can a newer, smaller competitor ―punch above its weight‖ by taking advantage of the Internet? How can the Internet be applied as a tool to help businesses avoid some of the costs associated with doing business following more conventional or ―old school‖ approaches? How do you see the balance of power in industries like the eyewear industry shifting as customers become more comfortable buying eyewear online? Student answers may vary. It can ―punch above its weight‖ by reaching a huge audience without needing the capital to open lots of stores. Businesses can also use the Internet to connect to suppliers directly and cut out the middlemen that add costs. After early adopters (consumers who are willing to try something new first) pave the way, other consumers then become willing to shift from the monopolistic companies to smaller companies. 2. Discussion What impact does Warby Parker‘s decision to donate a pair of eyeglasses for every pair purchased from them have on customers‘ perceptions of the company? How does Warby Parker‘s focus on being a great place to work influence how the company is seen in the market? Student answers may vary. Both questions hit on the same issue in that customers are likely to perceive that Warby Parker cares about people both customers and employees. As noted, multiple times in the case, Warby Parker is a ―company that cares‖. The company maintains that both internally (taking care of employees by being a great place to work) and externally (donating glasses to people in need). 3. Problem Solving As an operations management consultant, you‘ve been contracted to help a large, traditionally configured clothing company—Marquee Clothes—to become more Internet enabled and competitive in light of customers‘ shopping habits, attitudes, and expectations. The company has a well-established supply chain infrastructure, currently has more than 50 retail locations, and has been in business for more than 20 years. Over the last several years, with increasing numbers of mall closings, the business has had to shut several of its stores and is seeing much of the foot traffic that traditionally was its bread and butter start to decline as well. Sales have been off the last three quarters, and the 56-year-old owner of the privately held company is concerned that she‘ll have to close more stores if things don‘t turn around. She‘s been convinced by her college-aged daughter that in order to continue to compete, the company is going to have to undergo a makeover and become a twenty-first-century player, with a fully fleshed-out online approach and strategy. What should she do? What are some of the first things that you‘d advise? What steps need to be taken to help take Marquee Clothes fully into the twenty-first century Student answers may vary. Marquee Clothes needs an online presence. First, the company needs to allow customers to purchase clothes online. The company may need to offer customizable clothes or let customers ―try on‖ clothes virtually.
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3. Further Research What‘s happening now with Warby Parker? What kinds of things is the billion-dollar company doing to stay ahead of other competitors and make headway in the eyewear market? What kinds of steps has Luxottica taken to defend itself against Warby Parker‘s disruptive tactics?
Student answers may vary particularly given the time-frame of the search (with something like ―Warby Parker vs Luxottica‖ in the search box) since almost all markets change over time. Digital footprint especially during COVID time has been a success stream for many companies. The company is primarily an online retailer of prescription glasses and sunglasses. The company also has 120 bricks and mortar stores (as of September 2020). The company closed all 120 stores on March 13, 2020 as a safety precaution and has since re-opened the stores. However, the digital sales have significantly improved due to more work from home scenarios. Given that e-commerce penetration has increased from 16% to 27% in just 8 weeks of quarantine, companies like Warby parker has benefited with the shop online trend. The company has built apps such as virtual try-ons using Apple iPhone as well as well as an app for prescription check. The company is reportedly valued at about $1.75 billion.
Insight for Personal Development: Individual Character Is a Confidence Builder There is no doubt that individual character is evident in all we do. Persons with high character act consistently and confidently due to the self-respect it provides, even in difficult situations. Those with less character are more insecure. They act inconsistently and suffer in self-esteem and in the esteem of others. Ethics and social responsibility issues facing organizations today can put individual character to a very stiff test. We need to know ourselves well enough to make principled decisions that we can be proud of and that others will respect. After all, it‘s the character of the people making key decisions that deter-mines whether our organizations act in socially responsible or irresponsible ways. Personal integrity is a foundation for individual character. It provides an ethical anchor shaping how we behave at work and in life. Think of it as demonstrated honesty, civility, caring, and sense of fair play. Your integrity and character should be more than occasional concerns. They deserve constant attention. Ethical dilemmas can arise unexpectedly. Expediency pressures— meeting deadlines, for example, can cause action without having thought through the consequences. To deal with these situations, we have to know ourselves well enough to make principled decisions we can be proud of and that others will respect. One trait that can undermine individual character is hyper competitiveness. You see it in people who think that winning—or getting ahead—is the only thing that matters. They hate to lose.
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These types of people judge themselves more on their achievements than on the methods they used to get there. Moreover, they may be quick to put aside virtues to succeed in competitive situations, including those in the workplace. Get To Know Yourself Better Do a personal integrity and individual character self-check. Make notes on two situations that presented you with an ethical dilemma. From the perspectives of a parent, loved one, or good friend, write a critique of how you handled each incident and what this shows about your individual character. Did you act with high integrity? Watch yourself for signs of hyper competitiveness in school and work situations. Ask: What are the ethical implications of my behavior? Self-Check for Signs of Hyper-Competitiveness Y or N Winning makes me feel powerful Y or N Winning increases my sense of self-worth Y or N I hate to lose an argument Y or N I turn everything into a contest Y or N I am not satisfied unless I win a competition Y or N If it helps me win, I am willing to obstruct my opponent. Follow Up: Get to know yourself better by taking the Terminal Values self-assessment and completing other activities in the Exploring Management Skill-Building Portfolio.
Additional Exercises for Chapter 3: Ethics Exercise Break the class into teams of three or four and ask each group to take a survey within their group, summarize their findings and discuss the implications. Note: The questions listed below should be phrased if they know ―anyone‖ who has ever done the behavior described, and not to disclose whether they themselves have. This will allow for more open discussion while providing personal privacy. Here are ten questions (you may write these on the board, post on a message board, or use handout surveys) to discuss and summarize results (ask them to provide a specific tally count for each question) within each group: ―Have you ever known anyone (this may include yourself) who …
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Worked in a restaurant or bar and did not report all tips earned to the IRS? Paid money to a babysitter for child care but did not report it to the IRS? Painted, built decks, or did other types of contracting work, and did not report all income to the IRS? Cheated on an exam? Took supplies such as copy paper, pens, etc. from work? Using work time, surfed the World Wide Web for personal use or to pass time? Called in sick when not sick for a ―free‖ day off? Lied on an expense report (exaggerated actual meal cost etc.)? Stole from a warehouse or retail store that they worked in? Has witnessed an ethical issue by another at work or school and did not report it to the teacher, authorities or the manager etc.?
Students then should discuss these questions and discuss how ―serious ―each is perceived to be. Are some very accepted in our society? If so, why is that? Is it a big ―leap‖ from these behaviors to CEO ―scandals ―such as the Enron fraud case? As individuals get promoted, does ethical behavior improve, stay the same, or worsen? Allow teams about 30-30 minutes for this exercise. The teams will then report to the class the summaries of their conclusions. Take the students tally and summarize the total tally by questions. The results will provoke further questions and discussion.
CHAPTER 4 Managers as Decision Makers There Is No Substitute for a Good Decision Chapter 4 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. The role of a manager and the way decisions are made and problems solved has changed dramatically with available technology, information, and analytics. As new technologies continue to enter the workplace, innovations in learning, problem solving, and decision making
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are being realized. The chapter begins with a discussion of three different types of competencies for successful problem solving. How managers approach and deal with problems is discussed next. Some managers avoid problems, while others solve them, and some managers, to be proactive, seek out problems. Next, two types of decisions are addressed followed by systematic and intuitive thinking is discussed, along with cognitive styles of decision making. Making decisions under varying conditions of certainty, risk and uncertainty is explained. Next section describes covers a detailed discussion of the five steps in the decision-making process.
The chapter concludes with a description of current issues in managerial decision making. They include how creativity, when unlocked, can encourage better decision making. The advantages and disadvantages of group decision making is discussed along with judgmental heuristics and other biases and decision making traps that can cause errors in decision making. Next, managers must be prepared to make decisions during a crisis. Finally, analytics and big data are presented as tools for decision making in organizations.
Chapter 4 Learning Objectives
Learning Objective 4.1 Explain How Managers Use Information to Solve Problems. Learning Objective 4.2 Identify Five Steps in the Decision-Making Process. Learning Objective 4.3 Discuss Current Issues in Managerial Decision Making.
Chapter 4 Lecture Outline
Learning Objective 4.1: How do Managers Use Information to Solve Problems? o Managers use technological, information, and analytical competencies to solve problems. o Managers deal with problems posing threats and offering opportunities. o Managers can be problem avoiders, problem solvers, or problem seekers. o Managers make programmed and nonprogrammed decisions o Managers use both systematic and intuitive thinking. o Managers use different cognitive styles to process information for decision making. o Managers make decisions under conditions of certainty, risk and uncertainty.
Learning Objective 4.2: What Are Five Steps in the Decision-Making Process? o Decision-making Step 1 is to identify and define the problem. o Decision-making Step 2 is to generate and evaluate alternative courses of action. o Decision-making Step 3 is to decide on a preferred course of action. o Decision-making Step 4 is to implement the decision. o Decision-making Step 5 is to evaluate results.
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o Ethical reasoning is important at all steps in decision making.
Learning Objective 4.3: What Are Some Current Issues in Managerial Decision Making? o Creativity can be unlocked and encouraged for better decision making. o Group decision making has both advantages and disadvantages. o Judgmental heuristics and other biases and traps may cause decision-making errors. o Managers must be prepared for crisis decision making.
Chapter 4 Supporting Materials Figures Figure 4.1: In What Ways Do Managers Serve as Information Nerve Centers in Organizations? Figure 4.2: Four Cognitive Styles and their Different Approaches to Decision Making Figure 4.3: What Are the Differences Between Certain, Risk, and Uncertain DecisionMaking Environments? Figure 4.4: What Are Five Steps in the Decision-Making Process? Figure 4.5: How Does the Classical Model of Managerial Decision Making Differ from the Behavioral Model? What’s Inside Career Readiness: Making the ―Right‖ Job Choices Choices: Gender Quotas Add More Women to Corporate Boards Ethics: Left to Die on Mt. Everest Analytics: The ―Ask Gap‖ – What it Takes for Women to get Raises Issues: AI Offers Instant Insights on Employee Morale Insight: Self-confidence builds better decisions Quick Case: Time for a Pay Boost Applications TestPrep 4 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 4: Maximizer or Satisficer Quick Check o Class Exercise 4: Lost at Sea o Team Project 4: Crisis Management Realities Case Snapshot: Target—Hitting (or Missing) the Bull‘s-Eye?
Chapter Outline Learning Objective 4.1 Explain How Managers Use Information to Solve Problems.
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Managers use technological, informational, and analytical competencies to solve problems Problem-solving - the process of identifying a discrepancy between an actual and desired situation and then taking action to resolve it Knowledge workers - definition of "persons whose value to organizations rests with their intellectual and analytical talents, not physical, capabilities" is very appropriate for managers Information competency - the ability to locate, retrieve, organize, and display information of potential value to decision making and problem solving Technological competency – the ability to understand new technologies and use them to their best advantage. Analytical competency – the ability to evaluate and interpret information to find meaningful patterns, make decisions, and solve real problems Figure 4.1: In What Ways Do Managers Serve as Information Nerve Centers in Organizations? Managers sit at the center of complex networks of information flows; they serve as information-processing hubs or nerve centers. Each of the management functions – planning, organizing, leading, and controlling – requires the gathering use, and transfer of information in these networks. Managers must have the information competencies needed to perform well in these roles. Managers deal with problems posing threats and offering opportunities Performance threat - an actual or potential performance deficiency -- the most obvious problem-solving situation for managers Performance opportunity - a situation that offers the possibility of a better future if the right steps are taken now. Problem solving often involves, or should involve, chances to deal with a performance opportunity.
Managers can be problem avoiders, problem solvers, or problem seekers Problem avoiders - managers who ignore information that would signal the presence of a performance threat or opportunity Problem solvers - managers who make decisions and try to solve problems when required; reactive Problem seekers - managers who look for problems to solve or opportunities to explore; information gatherers; proactive
DISCUSSION TOPIC Ask students to explore 3-5 decisions they have made since morning. How would they classify them? Most of them should be routine programmed decisions such as what to eat for breakfast, what to wear for the class, and books/assignments to take with them, etc. Ask them to differentiate these decisions with some major ones such which college to attend. This discussion can set the stage for starting the topic on programmed vs non-programmed decisions.
Managers make programmed and non-programmed decisions when solving problems Decision - a choice among possible alternative course of action
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Programmed decisions - can use preplanned solutions based on past experience; best for structured problems Non-programmed decisions - for new or unusual problems full of ambiguities and information deficiencies; novel solutions crafted to meet the unique demands
DISCUSSION TOPIC Ask students to explore whether Capt. Sullenberger's emergency landing in the Hudson River provides an example of a programmed or non-programmed decision and why?
Managers can use both systematic and intuitive thinking Systematic thinking - a person who approaches problems in a rational, step-by-step, and analytical fashion Intuitive thinking - a person who is more flexible and spontaneous than the systematic thinker; the person may also be quite creative
Managers use different cognitive styles to process information for decision making Cognitive styles - the way individuals deal with information while making decisions Sensation Thinkers (STs) - impersonal and realistic in problem solving, prefer facts, certainty and control Intuitive Thinkers (ITs) - idealistic and intellectual, comfortable with abstract and unstructured situations, impersonal manner and low attention to details Intuitive Feelers (IFs)- take a broad and global view of issues, insightful, short on details, flexible with a high priority on relationships Sensation Feelers (SFs) - analytical but place relationships as a high priority, realistic and factual, open communicators and sensitive to feelings and values of others
DISCUSSION TOPIC Ask students to identify examples of manager or professor with whom they have worked into one of the categories: sensation thinker, intuitive thinker, intuitive feelers, and sensation feelers. Students may discuss their reasoning in small or large groups.
Managers make decisions under conditions of certainty, risk, and uncertainty Certain environment - an ideal situation where factual information exists on alternative courses of action and their consequences (a student loan cost is an example; you know the interest rate, the time periods etc.) Risk environment - information and facts are incomplete, and the future is hard to predict Alternative courses of action can be assigned probabilities (chances of occurring) Uncertain environment - the most difficult condition; facts are few and information is poor DISCUSSION TOPIC
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Ask students to identify examples of making decisions in each of the three environments. See Figure 4.3 What Are the Differences Between Certain, Risk, and Uncertain Decision Making Environments? Managers rarely face a problem where they can know all the facts, identify all alternatives and their consequences, and chart a clear course of action. Such certainty is more often than not replaced by problem environments involving risk and uncertainty. Risk is where alternatives are known but their consequences can be described in terms of probabilities. Uncertainty is where all alternatives are not known and their consequences are highly speculative.
4.1 Questions for discussion suggested answers Can a manager be justified for acting as a problem avoider in certain situations? A manager needs to be able to prioritize, including whether a problem is worth involvement or attention. For example, an employee who is having personal issues that may be affecting work may not merit attention unless such behavior continues for some time and is affecting performance. Would an organization be better off with mostly systematic or mostly intuitive thinkers? Neither is innately ―better‖ than the other; both systematic and intuitive workers have important roles in organizations. It is important, however, to match employee thinking patterns with job requirements. Intuitive workers may not perform well in such welldefined and structured jobs as, say, tax accounting. Systematic workers may perform poorly in jobs that require creativity. Customer Service positions would probably be best handled by a Sensation Feeler decision making style.
Is it possible to develop programmed decisions for use in conditions of risk and uncertainty? Yes, pilots in high-risk or critical situations such as Capt. Sullenberger have extensive training that allows them to face unique situations with a background of similar procedures for programmed situations. Fire, tornado and earthquake drills for schools are examples.
4.1 Career Situation: What Would You Do? Even though some problems in organizations seem to ―pop up‖ unexpectedly, many of them can be anticipated. Examples are an employee who calls in sick at the last minute, a customer who is unhappy with a product or service and wants a refund, and even a boss who ask you to do something that isn‘t job relevant. How might you anticipate handling such situations as a decision maker? Students’ answers will vary based upon their personal views and individual experiences. One perspective to impress upon students is that as long as the situation or what is asked of you does not compromise your principles or personal safety, one should attempt to go out of their way to work at such unexpected situations. How you respond and rise to unexpected situations is going to determine how far you go in career and life.
Learning Objective 4.2
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Identify Five Steps in the Decision-Making Process.
Figure 4.4 What Are Five Steps in the Decision-Making Process? Decision making can be viewed as a series of steps—(1) find and define the problem, (2) generate and evaluate solutions, (3) choose a preferred alternative, (4) implement the decision, and (5) evaluate the results. It is important to conduct ethical analysis at all steps in the decision-making process—from initial problem identification all the way to the evaluation of results. When the ethics of a decision are questioned, it‘s time to stop and rethink the entire process. This helps the decision maker to be confident that all underlying moral problems have been identified and dealt with in the best possible ways.
Step 1 — Identify and define the problem Stage of information gathering, information processing, and deliberation Stage where goals are clarified to specify exactly what a decision should accomplish Common mistakes in identifying problems Defining the problem too broadly or too narrowly Focusing on symptoms instead of causes Dealing with the wrong problem
Step 2 — Generate and evaluate alternative courses of action o Criteria for evaluating alternatives Cost benefit analysis - compares what an alternative will cost with its expected Timeliness - how long until we see results? Acceptability - will stakeholders accept the alternative? Ethical soundness - does it fit our ethical requirements
Step 3 — Decide on a preferred course of action Classical decision model - views the manager as acting rationally and in a fully informed manner; he or she makes an optimizing decision (that gives the absolute best solution to the problem) Behavioral decision model - assumes that people act only in terms of their perceptions, which are frequently imperfect; he or she makes a satisficing decision by choosing the first solution that appears satisfactory to them
Figure 4.5 How Does the Classical Model of Managerial Decision Making Differ from the Behavioral Model? The classical model views decision makers as having complete information and making optimum decisions that are the absolute best choices to resolve problems. The behavioral model views decision makers as having limited informationprocessing capabilities. They act with incomplete information and make satisficing decisions, choosing the first satisfactory alternative that comes to their attention.
Step 4 — Take Action to Implement the decision Lack of participation error-when managers don‘t include in the decision-making process those persons whose support is necessary for implementation
Step 5 — Evaluate results
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This is a form of control Gathering data to measure performance results against initial goals; examining both positive and negative outcomes; may involve redoing steps in the decision-making process
Ethical reasoning is important at all steps in decision making Conduct an "ethics double check" Ethical criteria utility - does the decision satisfy all stakeholders? rights - does the decision respect rights and duties of all? justice - does the decision administer justice? caring - is the decision consistent with responsibility to care? Spotlight questions How would I feel if my family found out about this decision? How would I feel if this decision was published in the local newspaper or posted on the Internet? What would the person I know who has the strongest character and best ethical judgment say about my decision?
4.2 Questions for discussion suggested answers 1) Do the steps in the decision-making process have to be followed in order? Yes, the steps are intended to be sequential, but if evaluation of results (step 5) is unsatisfactory, the process begins again with re-defining the problem (step 1). 2) Do you see any problems or pitfalls for managers using the behavioral decision model? Absolutely. Perceptions are frequently imperfect. Mangers may be certain that they understand the problem or stakeholders, but not have correct information. Some managers may ―shoot from the hip‖ and make decisions too fast based on poor information or ―instinct.‖ The consequences may be costly. Involving additional stakeholder groups may prevent a "lack of participation error" that would correct the faulty perception. 3) Is use of the spotlight questions sufficient to ensure an ethical decision? The ethics double-check depend upon the decision maker to have several basic concepts. A clear understanding of all relevant stakeholders, applicable rights and duties, justice and the ability to care are all necessary for the decision maker to make correct answers to the four ethical questions. The spotlight questions require the decision maker to feel a responsibility to a family or community that would make value judgments on the morality of the decision and its consequences. If a decision maker lacked the ability to understand these criteria or lacked a value system that would cause guilt or embarrassment, he or she could answer the questions incorrectly and make an unethical decision. This might particularly be true if the decision maker were in an unfamiliar country or culture and did not adequately understand the relevant rights or duties or did not have any expectation that family or a home
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community would find out about or understand the decision. The spotlight questions might also present a problem if the organization was large enough that the decision maker was confident that the decision would be attributed to the organization and no one would find out who was responsible. 4.2 Career Situation: What Would You Do? You are under a lot of pressure because the problem situation involves social loafing and poor performance by one of your team members. You have come up with a reason to remove her from the team. But you feel very uneasy knowing that your intention fails all three of the recommended spotlight questions. What do you do now? Students’ answers will vary based upon their personal views and individual experiences. Students should always be encouraged to explore what is the ―right‖ thing to do – it may be difficult but in the long-run it works out for the best.
Learning Objective 4.3 What Are Current Issues in Managerial Decision Making?
Creativity can be unlocked and encouraged from better decision making Creativity -generation of a novel idea or unique approach that solves performance problems or exploits performance opportunities Big-C creativity – when extraordinary things are done by exceptional people (Steve Jobs/Mark Zuckerberg) Little-C creativity – when average people come up with unique ways to deal with daily events and situations. Personal Creativity Drivers build creativity in the workplace task expertise - creativity is an expansion of an existing skill task motivation - drive to work hard to resolve a problem creativity skills - "right brain" thinking such as imagination, intuition, holistic processing and the ability to make random associations. DISCUSSION TOPIC Students may do extended research by taking one of many online quizzes that assess tendencies to right or left brain thinking. Author Daniel Pink explores the impact of right brain thinking and careers in the future in the book "A Whole New Mind". Students may read the book and report on Pink's findings or present one of the many online videos of Daniel Pink discussing the subject.
Group decision-making has both advantages and disadvantages Advantages more information, knowledge, and expertise more alternatives increased understanding
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increased likelihood of decision acceptance and implementation Disadvantages conformity with social pressures domination by a few members difficult and time consuming Judgmental heuristics and other biases may cause decision-making errors Availability heuristic - using readily available information from memory as a basis for assessing a current event or situation. Representativeness heuristic - assessing the likelihood of something happening based on its similarity to a stereotyped set of past occurrences. Anchoring and adjustment heuristic - making decisions based on adjustments to a previously existing value or starting point. Framing error - when mangers evaluate and resolve a problem in the context in which they perceive it Confirmation error - decision maker only notices or accepts information that confirms the decision recently made Escalating commitment - tendency to increase effort and perhaps apply more resources to pursue a course of action that is not working; an inability to call it quits how to avoid wasting resources on an escalating commitment to a bad decision: Set advance limits on your involvement in and commitment to a particular course of action; stick with these limits. Make your own decisions; don‘t follow the lead of others because they are also prone to escalation. Carefully determine just why you are continuing a course of action; if there are insufficient reasons to continue, don‘t. Remind yourself of the costs of a course of action; consider saving these costs as a reason to discontinue.
Managers must be prepared for crisis decision-making Crisis - an unexpected problem that can lead to disaster if not resolved quickly and appropriately Manager mistakes - a common error in a crisis is for managers to become isolated and limit the sources of information when in fact they should do exactly the opposite. This is a time when heuristics are attractive and can lead to poor judgment. Seek many sources of information before taking action. Crisis Management Programs train managers in how to handle crisis situations Six rules for managing a crisis: o Figure out what is going on o Remember that speed matters o Remember that slow counts, too o Respect the danger of the unfamiliar o Value the skeptic o Be ready to ―fight fire with fire‖
Analytics and Big Data Are Important Tools for Decision Making in Organizations
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Analytics - the process of systematically interpreting data to support decision making. Big data - exists in huge quantities and is difficult to process without using sophisticated mathematical and computing techniques. Business intelligence - the process of tapping or mining information to extract useful data. o Intelligent data provides competitive information. o Intelligent data provides big picture information. o intelligent data provide function-specific information. Data visualization – The use of executive dashboards come into play. They present intelligence information in the form of easy-to-understand graphs, charts, and scorecards that can include real-time streaming of key performance indicators.
4.3 Questions for discussion answers 1) How can you avoid being hurt by the anchoring and adjustment heuristic in your annual pay raises? If the company for which you work uses an ―anchor and adjustment‖ system, there are a couple ways to mitigate the possible negative consequences: Perform at a high level and the ―adjustment‖ portion should, in most organizations, grow at a very steep rate. Over time, you may outperform the market. Gather convincing evidence that the compensation which you receive is below that which you could earn at comparable positions in other companies. This method requires god interpersonal skills, but managers do not want to lose great employees. If your performance is at a high level, you will have a concerned listener in your manager. Arm him or her with ―ammunition‖ regarding competitive compensation. 2) What are some real-world examples of how escalating commitment is affecting decision making in business, government, or people‘s personal affairs? Here are several real-world examples of escalating commitment: You win several hundred dollars gambling in Las Vegas, a total of $800 ―net.‖ Then you begin to lose and eventually are down by $200 below the initial sum you brought with you, say $500. Rather than walk out the door with the $300 you have left, you continue to play to ―get back to‖ the initial $500. One world leader presents objective evidence that indicates that a war is not being waged successfully. In discussing this, the other party notes that ―we have already invested many lives and millions of dollars already‖ and we cannot exit because of those factors. You invest $1000 in the stock market by buying one company’s shares. After the stock price increases in value several months in a row, it drops substantially and the news is bad (liability issues, ethics, losses etc.) You decide to ―sell‖ but want to wait until you get back to what you initially invested, $1000 rather than ―cut your losses.‖ 3) Is it really possible to turn a crisis into an opportunity, and, if so, how? A crisis can be turned into an opportunity in a number of ways.
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The way a manager handles a crisis can be an opportunity to demonstrate the integrity of the company. For example, Johnson & Johnson handled a crisis extremely well when they were a victim of product tampering in 1984. Extra Strength Tylenol was contaminated with cyanide, killing seven people in the Chicago area. Johnson & Johnson acted swiftly to remove the product from the market and took effective steps to warn consumers about the danger. Their swift response was seen as responsible and ethical. Within a year, Tylenol had regained much of its pre-crisis market share and Johnson & Johnson was seen as an example of corporate responsibility. US Airways saw a similar effect following the 2009 ditching of a disabled aircraft in the Hudson River. The actions of Captain Sullenberger and his crew were seen as heroic, and US Airways received praise. Another way a crisis can be turned into an opportunity is to evaluate all actions after the crisis has passed to turn it into a learning experience for future experience. US Airways and other airlines have used the lessons learned from the experience to determine ways to reduce the bird strikes that were responsible for damaging the aircraft and make water landings safer and survivable.
4.3 Career Situation: What Would You Do? You have finally caught the attention of senior management. Top executives asked you to chair a task force to develop a creative new product that can breathe new life into an existing product line. First, you need to select the members of the task force. What criteria will you use to choose members who are most likely to bring high levels of creativity to this team? Students’ answers will vary based upon their personal views and individual experiences. Students should at least bring in the discussion of personal creativity drivers: task expertise, task motivation, and creativity skills of individuals being selected for the team.
Teaching Notes: In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Making the ―Right‖ Job Choices
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Whether talking about your first job or a later step in career progression, this is one of the most important decisions you‘ll ever make. Too bad, it‘s often wrong. A survey by Development Dimensions found only 51% of new hires confirming they made the right decisions. Many said they missed important information during the recruitment process – things like travel requirements, actual hours of work, work team dynamics, organizational finances, and job turnover rates. Unmet and unrealistic expectations lead to later job disengagement, causing many new hires to later want out. Recruiters should provide full information to job candidates, including the potential downsides of a job and employer. But many still go for the traditional ―tell and sell‖ approach. How can you get realistic perspective of a job and use this information to make an informed career choice? Students’ answers will vary, however, there is no substitute for solid research. Reading about the company, asking current employees, and also looking at the track record of the organization in the areas important to you.
Quick Case: Time for a Pay Boost As a class discussion, ask students to describe what they will say and do to get their boss to agree that they deserve a raise. Ask students to prepare a narrative that presents the exact words, justifications, and dollar target they would use to ask for a raise in their future job. Alternatively, ask them to assume they have been working in their chosen career field for five years, have developed lots of expertise and earned high performance reports, and now want a raise.
Issues: AI offers instant insights on employee morale Human resource management used to be a face-to-face process. That‘s still there, but artificial intelligence is starting to put the machine in many places where HR people used to be. A Deloitte survey found that 40% of employers now use artificial intelligence in HRM, and one of those areas is tracking employee morale. Ask students their position on AI? How comfortable are they working for an employer that uses AI for hiring, firing, career development, and other HR decisions? Should AI be regulated? Students’ answers will vary, however, this could be set up as a good debate issue with half the class researching and taking a pro position whereas the other half taking a con position for AI and more and more organization’s move to adopt AI.
Ethics: Left to Die on Mt. Everest This true story of life and death on Mt. Everest poses some interesting ethical questions. The questions in the " Your Decision?" section probe student thoughts about their views of ethics that may not be of life-or-death proportions, but still define their character.
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In our personal affairs, daily lives, and careers, we are all, in our own ways, climbing Mt. Everest. What are the ethics of our climbs? How often do we notice others in trouble, struggling along the way? And, like the mountain climbers heading to the summit of Everest, how often do we pass them by to continue our own journeys? Can you identify examples—from business, school, career, sports, and so on—that pose similar ethical dilemmas?
Analytics: The ―Ask Gap‖ – What it Takes for Women to get Raises Facts show that women ask for raises less frequently than men.
44% of women in a Condé Nast Glamour survey believed they would be getting higher pay if they were a man. 39% of women and 54% of men in the survey said they asked for more pay when negotiating for a new job. Of the women who asked for more pay, 75% got it. 27% of women in a Citi/Linked In survey said they asked for more pay last year. Of them, 84% said they were successful.
Why don‘t more women ask for raises and promotions? What are the implications for women and men when top executives, managers, and team leaders say ―just trust the system and everything will work out for you?‖ Ask students if they have ever asked for more pay and career advancement and to share their experiences in a class discussion.
Choices: Gender Quotas Add More Women to Corporate Boards o It‘s old news that women are underrepresented on corporate boards. Even though the situation is improving, there is still a lot of progress yet to be made. Consulting firm PwC reports that women now hold board seats at the majority of S&P 500 firms, but fill more than two seats at just 25% of them. Global data show women holding 15% of board seats. The number doubles to 34% for countries that set specific gender quotas and levy noncompliance penalties.
Ask students to describe their views of quotas and penalties as a means of increasing female representation on corporate boards. Are quotas the best way to advance women into these roles? Can quotas work if they are not backed up by fines and penalties? What about the ―trickle-down effect‖? Can the imposition of quotas at the board level make a difference on diversity at all levels in the future?
Student answers will vary. One point to consider: why has it not happened yet? There are many other issues such as diversity with ethnicity, gender pay gaps, balancing work-life issues, etc. Recently, many firms are taking the pledge to engage an African American talent on the boards. There are no penalties for this initiative yet, however, it is an uphill battle.
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Insight for Personal Development: Self-Confidence Builds Better Decisions Does confidence put a spring into your step and a smile on your face? It‘s a powerful force, something to be nurtured and protected. Managers need the self-confidence not only to make decisions but also to take the actions required to implement them. Once decisions are made, managers are expected to rally people to use resources and take effective action. This is how problems actually get solved and opportunities get explored. But lacking in confidence, procrastination becomes easy. Too many of us have difficulty deciding, and we have difficulty acting. Students will make a decision over the following case: Situation: A massive hurricane has damaged a railroad bridge over a large lake. The bridge is critical for relief eff orts to aid a devastated city. You are leading a repair team of 100. Two alternatives are on the table: Rebuild using new tracks, or rebuild with old track salvaged from the lake. Question: How do you proceed?
Skill Building Portfolio Terms to Define Analytics Analytic competency Anchoring and adjustment heuristic Availability heuristic Behavioral decision model Big-C creativity Big data Business intelligence Certain environment Classical decision model Cognitive styles Confirmation error Cost-benefit analysis Creativity Crisis Data visualization
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Decision Decision-making process Escalating commitment Framing error Information competency Intuitive thinking Knowledge workers Lack-of-participation error Little-C creativity Nonprogrammed decision Optimizing decision Performance opportunity Performance threat Problem solving Programmed decision Representativeness heuristic
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Risk environment Satisficing decision Spotlight questions Systematic thinking Technological competency Uncertain environment
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TestPrep 4: Multiple-Choice Questions Multiple-Choice Questions 1. A manager who is reactive and works hard to address problems after they occur is described as a . (a) problem seeker (b) problem solver (c) rational thinker (d) strategic opportunist
2. A problem is a discrepancy between a/an situation.
situation and a desired
(a) unexpected (b) risk (c) actual (d) uncertain
3. If a manager approaches problems in a rational and analytical way, trying to solve them in step-by-step fashion. He or she is well described as a/an . (a) systematic thinker (b) intuitive thinker (c) problem seeker (d) behavioral decision maker
4. The first step in the decision-making process is to
.
(a) generate a list of alternatives (b) assess the costs and benefits of each alternative (c) identify and define the problem (d) perform the ethics double-check
5. When the members of a special task force are asked to develop a proposal for increasing the international sales of a new product, this problem most likely requires decisions. (a) routine (c) crisis
(b) programmed (d) nonprogrammed
6. Costs, benefits, timeliness, and are among the recommended criteria for evaluating alternative courses of action in the decision-making process. (a) ethical soundness (b) past history (c) availability (d) simplicity
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7. The _____________ decision model views managers as making optimizing decisions, whereas the decision model views them as making satisficing decisions. (a) behavioral; judgmental heuristics (b) classical; behavioral (c) judgmental heuristics; ethical (d) crisis; routine
8. One of the reasons why certainty is the most favorable environment for problem solving is that it can be addressed through ______________ decisions. (a) satisficing (b) optimizing (c) programmed (d) intuitive
9. A common mistake by managers facing crisis situations is
.
(a) trying to get too much information before responding (b) relying too much on group decision making (c) isolating themselves to make the decision alone (d) forgetting to use their crisis management plan
10. In which decision environment does a manager deal with probabilities regarding possible courses of action and their consequences? (a) risk (b) certainty (c) uncertainty (d) optimal
11. You go to your boss and ask for a pay raise. She says: ―Well, let‘s take a look first at what you are making now.‖ The risk you face in this situation is that your boss‘s decision will be biased because of . (a) a framing error (b) escalating commitment (c) anchoring and adjustment (d) strategic opportunism
12. Which decision-making error is most associated with the old adage: ―If you don‘t succeed, try and try again‖? (a) satisficing (b) escalating commitment (c) confirmation
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(d) too late to fail
13. When a manager makes a decision about someone‘s annual pay raise only after looking at the person‘s current salary, the risk is that the decision will be biased because of _. (a) a framing error (b) escalating commitment (c) anchoring and adjustment (d) strategic opportunism
14. Personal creativity drivers include creativity skills, task expertise, and
.
(a) strategic opportunism (b) management support (c) organizational culture (d) task motivation
15. The last step in the decision-making process is to
.
(a) choose a preferred alternative (b) evaluate results (c) find and define the problem (d) generate alternatives
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Short-Response Questions 16. How does an optimizing decision differ from a satisficing decision? An optimizing decision represents the absolute ―best‖ choice of alternatives. It is selected from a set of all known alternatives. A satisficing decision selects the first alternative that offers a ―satisfactory‖ choice, not necessarily the absolute best choice. It is selected from a limited or incomplete set of alternatives. 17. What is the difference between a risk environment and an uncertain environment in decision making? A risk environment is one in which things are not known for sure—all of the possible decision alternatives, all of the possible consequences for each alternative—but they can be estimated as probabilities. For example, if I take a new job with a new employer, I can’t know for certain that it will turn out as I expect, but I could be 80% sure that I’d like the new responsibilities, or only 60% sure that I might get promoted within a year. In an uncertain environment, things are so speculative that it is hard to even assign such probabilities. 18. How can you tell from people‘s behavior if they tend to be systematic or intuitive in problem solving? A manager using systematic thinking is going to approach problem solving in a logical and rational fashion. The tendency will be to proceed in a linear step-by-step manner, handling one issue at a time. A manager using intuitive thinking will be more spontaneous and open in problem solving. He or she may jump from one stage in the process to the other and deal with many different things at once. 19. What is escalating commitment and how can it be avoided? Escalating commitment is the tendency of people to keep investing in a previously chosen course of action, continuing to pursue it, even though it is not working. This is a human tendency to try and make things work by trying harder, investing more time, effort, resources, etc. In other words, I have decided in the past to pursue this major in college; I can’t be wrong, can I? The feedback from my grades and course satisfaction suggests it isn’t working, but I’m doing it now so I just need to make it work, right? I’ll just stick with it and see if things eventually turn out okay. In this example, I am making a decision to continue with the major that is most likely an example of escalating commitment.
Integration and Application Questions: 20. With the goals of both expanding your resumé and gaining valuable experience, you have joined a new mentoring program between your university and a local high school. One of the first activities is for you and your teammates to offer ―learning modules‖ to a class of sophomores. You have volunteered to give a presentation and engage them in some learning activities on the topic: ―Individual versus group decision making: Is one better than the other?‖
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Question: What will you say and do, and why? This is what I would say. On the question of whether a group decision is best or an individual decision is best, the appropriate answer is probably: It all depends on the situation. Sometimes one is preferable to the other; each has its potential advantages and disadvantages. If you are in a situation where the problem being addressed is unclear, the information needed to solve it is uncertain, and you don’t have a lot of personal expertise, the group approach to decision making is probably best. Group decisions offer advantages like bringing more information and ideas to bear on a problem; they often allow for more creativity; and they tend to build commitments among participants to work hard to implement any decisions reached. On the other hand, groups can be dominated by one or more members, and they can take a lot of time making decisions. Thus, when time is short, the individual decision is sometimes a better choice. However, it is important that you, as this individual, are confident that you have the information needed to solve the problem or can get it before making your decision.
Self-Assessment 4: Maximizer or Satisficer Quick Check Instructions Answer the following questions in the way that most often describes your behavior. Yes Yes Yes Yes Yes Yes Yes Yes
No No No No No No No No
1. I am a frequent channel surfer when watching TV. 2. I try on a lot of outfits before purchasing clothes. 3. It‘s hard for me to choose movies for pleasure viewing. 4. I‘m careful about relationships, trying to find the perfect fi t. 5. Second best at anything isn‘t good enough for me 6. I dream a lot about living a different lifestyle. 7. I write several drafts before being satisfied with a term paper. 8. I often think about changing jobs.
Scoring and Interpretation The more ―Yes‖ answers, the more you tend toward a ―maximizer‖ decision making approach that tries to find the optimum or absolute best course of action. The more ―No‖ answers, the more you tend toward a ―satisficer‖ approach that seeks a satisfactory course of action that is ―good enough‖ even if not perfect. Researchers link maximizing tendencies with perfectionism and regret, while satisficing is correlated with higher life satisfaction. Psychology Professor Barry Swartz of Swarthmore College says: ―Maximizers make good decisions and end up feeling bad about them. Satisficers make good decisions and end up feeling good about them.‖
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Class Exercise 4: Lost at Sea Consider This Situation You are adrift on a private yacht in the South Pacific when a fire of unknown origin destroys the yacht and most of its contents. You and a small group of survivors are now in a large raft with oars. Your location is unclear, but you estimate that you are about 1,000 miles south-southwest of the nearest land. One person has just found in her pockets five $1 bills and a packet of matches. Everyone else‘s pockets are empty. The items below are available to you on the raft. Individual ranking Team ranking Expert ranking Sextant Shaving mirror 5 gallons water Mosquito netting 1 survival meal Maps of Pacific Ocean Floatable seat cushion 2 gallons oil-gas mix Small transistor radio Shark repellent 20 square feet black plastic 1 quart 20-proof rum 15 feet nylon rope 24 chocolate bars Fishing kit Instructions 1. Working alone, rank the 15 items in order of their importance to your survival (1 is most important and 15 is least important). 2. Working in an assigned group, arrive at a ―team‖ ranking of the 15 items. Appoint one person as team spokesperson to report your team ranking to the class. 3. Do not write in column 3 until your instructor provides the ―expert‖ ranking. Copyright © 2021 John Wiley & Sons, Inc.
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Team Project 4: Crisis Management Realities Question What types of crises do business leaders face and how do they deal with them? Instructions • Identify three crisis events from the recent local, national, and international business news. • Read at least three different news reports on each crisis, trying to learn as much as possible about its specifics, how it was dealt with, what the results were, and the aftermath of the crisis. • For each crisis, use a balance sheet approach to list sources or causes of the conflict and management responses to it. Analyze the lists to see if there are any differences based on the nature of the crisis faced in each situation. Also look for any patterns in the responses to them by the business executives. • Score each crisis (from 1 = low to 5 = high) in terms of how successfully it was handled. Be sure to identify the criteria that you use to describe ―success‖ in handling a crisis situation. Make a master list of ―Done Rights‖ and ―Done Wrongs‖ in crisis management. • Summarize the results of your study into a report on ―Realities of Crisis Management.‖
Case Snapshot: Target—Hitting (or Missing) the Bull’s-Eye? The case for this chapter is ―Target—Hitting (or Missing) the Bull‘s-Eye?‖ Target is now the eighth largest retailer in the world. It operates 1,850 stores, located in 1,249 cities, across all 50 states in the United States, with more than 300,000 Target employees, and annual sales in excess of $75 billion dollars. This massive retailing infrastructure is supported by a large network of 37 regional distribution centers, located throughout the United States, that independently employ more than 16,000 team members to service the ongoing inventory requirements of all of the stores in the chain. Target‘s direct distribution networks work full-time to keep the retail outlets stocked with more than 80,000 unique SKUs (stock keeping unit). Students have probably visited Target as a customer. Encourage them to visit the company website from the perspective of evaluating the decision-making process of the company. Case discussion questions and suggested answers: 1. DISCUSSION In what ways does Target‘s massive infrastructure relate to the complexities of making coherent, competitive decisions? Can a large corporation like Target cope—and thrive— in the information intense environment that it has created? What kinds of solutions might help Target avoid some of the pitfalls that it has experienced most recently? Regarding the first question, Target probably has 11 members on the executive board and 40+ other executives because of its size. Getting that many people to agree on something is going to be difficult. Even getting information to that many people is difficult. It will be nearly impossible to get all of those people together in one place to discuss an issue. Given the problems with the company, it is unlikely that the CEO can make a decision that everyone has to follow without everyone having some say into that decision. There are also many
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moving parts which makes it hard to keep track of everything and to not ruin one part of the business in order to improve another part. Any organization can cope and thrive in information intense environments if that organization uses data appropriately and makes good business decisions. This is the point of MIS, data mining, analytics, and business intelligence explained in the chapter. These tools help organizations make better decisions. It is hard to stop data breaches since criminals are so determined. Yet, organizations can ensure every employee is on the lookout for criminals trying to infiltrate: they should have updated security system, security training for employees, etc. The Target Canada failure occurred because Target did not use technology properly. Just like the data breach, all employees were not ―on board‖ with how the organization needed to move forward with the implementation. The transgender restroom policy and advertising campaigns may have been the result of not knowing the target market (or perhaps only wanting to cater to certain parts of the market). In short, all employees need to be on board with the company’s goals and Target executives should understand what society wants. 2. Discussion Target functions using a traditional, top-down structure with a group of C-suite executives led by a CEO. How can an organization with this kind of traditional structure expect to keep all of the moving parts in the company moving in a coordinated way? What kinds of decision-making tools might increase Target‘s ability to cope with changing market demands? The traditional structure is precisely what provides the coordination. Decentralized decisionmaking with make the organization less coordinated. The organization needs to use data mining, Big Data, analytics, and data visualization to cope with changing market demands. There is too much data and information available, so Target needs to use information systems/technology to manage everything. 3. PROBLEM SOLVING Target has faced a number of very costly issues relating to decision making—how to control and safeguard its customers‘ private data, whether and in what ways to expand internationally, what kinds of in-store, customer facing policies make the most sense, defining an ethical and defensible labeling policy, among others. What is clear is that there are issues relating to how information is used and decision making at Target Corporation that could benefit from some reevaluation and restructuring. What kinds of advice might you give to executives at Target for improving decision making at the company? Adopt the role of a business process consultant. How might you help Target to help itself to avoid some of the more controversial decisions that it has made over the last five or six years? Can you think of any data analytics approaches that could be useful? What about decision-making architecture more broadly—how are different kinds of information used in decision making? Who has access to tactical and strategic information? How might Target modify the policies and procedures it has in place for taking raw data, turning it into actionable corporate intelligence, and then effectively leveraging it to execute a tactical initiative?
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Student answers will vary. Regarding the data breach, Target is the first major retailer to get hit with this magnitude of a data breach. While they were security-minded, they had no idea the extent to which hackers would go to get into the system. Frankly, Target is the forerunner on what happens to a company after a data breach in the current market. For expanding internationally, the company did not understand the market prior to entry, so more research is needed for those kinds of initiatives. Regarding ethical issues, companies have not historically taken a stand on sensitive issues like this because companies know they will alienate some of the customer base. Whether Target’s stand on transgender bathrooms is a matter of opinion. Regarding false advertising, that is something that has to be ―punished‖ by executives if the company does not want that behavior to continue. Regarding useful data analytics approaches, students should discuss Figure 7.1: • Intelligence-information: gathered from stakeholders and external environment • Internal information: flows up, down, around, and across organizations • Public information: disseminated to stakeholders and external environment They should also discuss data visualization and executive dashboards in the form of graphs, charts, and scorecards to see data in real-time but in a way that is easy to understand. Regarding different kinds of information, students could possibly discuss structured and unstructured problems where the more troublesome issues come from unstructured problems since they happen rarely and do not have a clear right/wrong answer. Regarding who has access to tactical and strategic information, middle managers typically have access to tactical information and executives typically have access to strategic information. Regarding policies and procedures, every employee would need to have the authority to enter data into a system where that data can be analyzed to make higher-level decisions. 4. FURTHER RESEARCH What is happening at Target Corporation now? What steps has Target taken to avoid the kind of massive data breach that sent its stock price tumbling by almost 50%? How has the company recovered from its massive Canadian expansion failure? What about its transgender restroom policy? What has Target done to improve its image following its ―Made-in-the USA‖ scandal? How is Target coping with the trade war with China? Student answers may vary particularly given the time-frame of the search since ―now‖ is flexible, companies have to constantly update their security to stay ahead of hackers, recovery from failures and scandals is constant, the transgender issue continues to evolve in society as a whole, and the trade war is in flux.
Additional Exercises for Chapter 4 Assign teams to develop a decision-making process for buying a used car for, say, $7,000. This should include a consensus ranking of the top 5 criteria they would use and evaluate in their selection. Where would they look for the cars? How many cars or models would they examine
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before they would feel comfortable making their decision? What are the benefits of looking at more cars? What are the disadvantages, if any? Were they able to optimize or satisfice? CHAPTER 5 Plans and Planning Techniques Get There Faster with Objectives
Chapter 5 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter five provides a review of the guidelines and importance of planning, types of plans, and planning techniques and tools. Through planning, the focus of this chapter, managers can make decisions that will facilitate goal accomplishment. Planning sets the stage for the subsequent management functions of organizing, leading, and controlling. The Chapter begins with a definition of planning and a review of its benefits and the various types of plans used by most organizations. The distinction between policies and procedures is explained. A variety of specific types of planning support tools or specific types of planning are reviewed. They include: forecasting, contingency, budgets, project and scenario planning. Next, the chapter discusses the types of plans that managers use; these include short-range and long-range plans; followed by strategic and operational plans. In addition, the chapter describes the importance of providing members with day-to-day guidance on policies and procedures, also plans. Additional planning tools and techniques are discussed. They include budgets, which are plans that commit resources to activities. The chapter then shifts to a discussion of useful planning tools and techniques, including forecasting, contingency planning, scenario planning, and benchmarking. Goal setting helps align plans by identifying clear and quantifiable goals within an organization. The five criteria for great goals are: specific, timely, measurable, challenging, and attainable. The chapter ends with a discussion of how participatory planning includes those people whose ideas and inputs can benefit the plans and whose support is needed for implementation.
Chapter 5 Learning Objectives: Learning Objective 5.1 How and Why do Managers Use the Planning Process? Learning Objective 5.2 What Types of Plans do Managers Use? Learning Objective 5.3 What are some Useful Planning Tools and Techniques?
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Chapter 5 Lecture Outline:
Learning Objective 5.1 Explain How and Why Managers Use the Planning Process. o Planning is one of the four functions of management o Planning sets objectives and identifies how to achieve them o Planning improves focus and flexibility o Planning improves action orientation o Planning improves coordination and control o Planning improves time management
Learning Objective 5.2 What Types of Plans do Managers Use? o Managers use short-range and long-range plans o Managers use strategic and operational plans o Organizational policies and procedures are plans o Budgets are plans that commit resources to activities
Learning Objective 5.3 What are Some Useful Planning Tools and Techniques? o Forecasting tries to predict the future o Contingency planning creates backup plans for when things go wrong o Scenario planning crafts plans for alternative future conditions o Benchmarking identifies best practices used by others o Goal setting aligns plans and activities o Goals can have downsides and must be well managed o Participatory planning builds implementation capacities
Chapter 5 Supporting Materials: Figures Figure 5.1: Why Does Planning Play a Central Role in the Management Process? Figure 5.2: How Might a Hierarchy of Objectives Guide a Quality Management Program in a Manufacturing Firm? Figure 5.3: Jaques‘s findings on short-term vs. long-term planning horizons. Figure 5.4: Five Characteristics of Stretch Goals. Figure 5.5: How do Participation and Involvement Help Build Commitment to Plans? What’s Inside Career Readiness: Picking a Major Based on Projected Future Salaries Choices: Keep Your Career Plan Tight and Focused, or Loosen Up? Choices: Employers Offer Help in Paying Back Student Loans Analytics: Policies on Office Romances Vary Widely Analytics: Planning Scenarios for Surviving Coronavirus Pandemic Misery Quick Case: New Dads Say It’s Time for Paternity Leave Insight: Time Management Unlocks Performance Potential
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Applications
TestPrep 5 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 5: Time Management Profile o Class Exercise 5: The Future Workplace o Team Project 5: Personal Career Planning Case Snapshot: Uber—Riding the Gig Economy
Chapter Outline Learning Objective 5.1 How and Why Do Managers Use the Planning Process? Planning is one of the four functions of management Planning – is a process of setting goals and objectives, and determining how to best accomplish them Planning comes first among the four functions; it sets the stage for every other function (Figure 5.1 illustrates the four functions).
Planning sets objectives and identifies how to achieve them See Table 5.1 which explains the 5 steps in the planning process Step 1 - Define your objectives - the specific results or desired goals one hopes to achieve Step 2 - Determine where you stand vis-à-vis objectives - where are you now, and how far do you need to go to accomplish the objectives Step 3 - Develop premises regarding future conditions - what could possibly happen? Step 4 - Make a plan. o Plan - a list of actions that must be taken in order to pursue the alternative and accomplish the objectives Step 5 - Implement the plan and evaluate results - take action and decide if it was the correct one to take. Planning improves focus and flexibility Good planning helps us to stay: Action oriented Priority oriented Advantage oriented Change oriented Control oriented
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Planning improves action orientation Planning helps avoid the complacency trap of becoming inactive or stuck due to current successes or failures.
Planning improves coordination and control Planning provides a link with control, setting a goal with which to measure success. Hierarchy of objectives - lower level objectives help to accomplish higher ones Figure 5.2 illustrates the hierarchy with an example of a quality management program in a manufacturing firm. Mission and Purpose Top Management Objective Senior Management Objective Middle Management Objective Team Leader Objective
o Planning improves time management Helps make choices that allocate time among competing demands The planning fallacy is underestimating the time required to complete a task.
DISCUSSION TOPIC Many students often juggle classes, study time, part-time work, and extracurricular activities, along with other commitments. Doing this requires the use of time management skills. To generate discussion, ask students how they manage their time so as to deal with their various commitments. DISCUSSION TOPIC Challenge students to describe the planning steps as they would follow them to achieve a personal goal such as earning an ―A‖ on the next management exam, graduating on time or getting a job. 5.1 Questions for discussion suggested answers 1) Should all employees plan, or just managers? All employees need to plan effectively. This skill will enable higher job performance and illustrates to supervisors that an employee is ready for promotion to positions where planning will become increasingly important. 2) Which step in the planning process do you think is the hardest to accomplish? Deciding where to go (or objectives) is the most difficult. Once those are determined, the other steps are much easier to perform. Deciding on objectives is perhaps the most unstructured area in planning.
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3) How could better planning help in your personal career development? Individuals should prepare a strategic plan for themselves and their career. What objectives do I want to accomplish? When do I want to achieve each objective? What resources will I need? What tactics such as training or degrees will I need? Which types of experiences will I need to gain to advance and how will I gain that experience? 5.1 Career Situation: What Would You Do? Someone you really care about wants you to take a step forward in time management. She asks you to make a list of all the things you plan to do tomorrow and identify which ones are (A) most important—top priority, (B) important—not top priority, and (C) least important—low priority. Next, she says to double-check your Bs—asking if any really should be As or Cs and your As – to see if any should be Bs or Cs? Do it, and see how things turn out. Can an exercise like this help you take charge of your time and get the really important things done first? Student answers will vary but most should come to the realization that even though such an exercise may take some time but in the long run it should be very productive and a good time management tool.
Learning Objective 5.2 What types of plans do managers use?
Managers use short-range and long-range plans Short-range plans - usually cover a year or less Long-range plans - look ahead three or more years into the future Elliot Jacques, researcher, found that very few people have the capacity to think long-term; most of us work comfortably with only three-month time spans (See Figure 5.3)
DISCUSSION TOPIC To generate discussion, ask students to identify their short-, intermediate-, and long-range career plans. Many students will be able to quickly identify and distinguish between these types of plans. For example, some students may express a long-term career objective of owning their own business. Their intermediate-range plans for achieving this goal may include obtaining a college degree and then working in a large corporation for a number of years to ―learn the ropes‖ of a particular industry. Their short-range plans will most likely include detailed plans for completing this course as well as other relevant courses.
Managers use strategic and operational plans Strategic plans - set broad, comprehensive, and longer-term directions Vision - organization's purpose and hopes for the future Tactical or Operational plans - They are shorter-term and step-by-step means for putting the strategies into action.. Tactical plans often take the form of functional plans - how different parts of the enterprise contribute to the overall strategy. Examples of functional plans include:
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Production plans - methods and technology needed by people in their work Financial plans - deal with money required to support various operations Facilities plans - deal with facilities and work layouts Marketing plans - deal with the requirements of selling and distributing goods or services Human resource plans - deal with the recruitment, selection, and placement of people into various jobs
Organizational policies and procedures are plans A policy communicates broad guidelines for taking action and making decisions in specific circumstances Procedures or rules describe exactly what actions to take in specific situations
Budgets are plans that commit resources to activities A budget is a plan that commits resources to activities, programs, or projects A fixed budget allocates a set amount of resources for a specific purpose A flexible budget allocates resources that vary in proportion with various levels of activity A zero-based budget allocates resources as if each budget was brand new
5.2 Questions for Discussion Suggested Answers 1) Is there any need for long-range plans in today‘s fast-moving environment? Yes, long-range planning is very important, especially in complex industries, such as the automotive, defense, aerospace, and pharmaceutical industries, where product development cycles are lengthy. 2) What types of policies do you believe are essential for any organization? Companies need to have policies for human resources, safety and health, environmental compliance, ethics, and perhaps company intellectual property. 3) Are there any possible disadvantages to zero-based budgeting? Yes, zero-based budgeting has the disadvantage of requiring more time in preparation and justification of expenses and programs. Using existing budgets as a ―base-line‖ allows for easier incremental changes. 5.2 Career Situation: What Would You Do? One of the persons under your supervision has contacted you about a ―possible‖ sexual harassment complaint against a co-worker. But, she says the organization‘s procedures are not clear. You decide they‘re not clear and take the matter to your boss. He tells you to draft a set of procedures that can be taken to top management for approval. What procedures will you recommend so that future sexual harassment complaints can be dealt with in a fair manner?
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Student answers will vary – this activity can be divided up as a mini team research project. Students can be encouraged to research and benchmark the set of procedures against the best practices and present their drafts to the class.
Learning Objective 5.3 What are some useful planning tools and techniques?
Forecasting tries to predict the future Forecasting is the process of predicting what will happen in the future Qualitative forecasting relies on expert opinions Quantitative forecasting relies on mathematical models and/or statistical analysis
Contingency planning creates back-up plans for when things go wrong Contingency planning identifies alternative courses of action to take when things go wrong. The recession, tsunami in Japan and resulting Fukshima nuclear plant disaster, BP Deepwater Horizon oil spill, Joplin Missouri tornado and recent devastating floods have caused many organizations to realize the importance of contingency plans.
Scenario planning crafts plans for alternative future conditions Scenario planning identifies alternative future scenarios and makes plans to deal with each. The global COVID-19 pandemic is a glaring reminder of the importance of scenario planning. Scenario planning can and should be used to tackle major global issues such as pandemics, climate change, resource scarcities, and sustainable development. Most typically, it involves descriptions of ―worst cases‖ and ―best cases.‖
DISCUSSION TOPIC To reinforce the ideas of contingency planning and scenario planning, ask the students to consider what might happen in their own lives during the next five years. Have them develop the parameters of different personal scenarios and describe how they would deal with these different scenarios. This could be used as an out-of-class written assignment.
Benchmarking identifies best practices used by others Benchmarking uses external comparisons to gain insights for planning Best practices are methods that lead to superior performance
Goal setting aligns plans and activities Stretch goals -- performance targets that we have to work extra hard and really stretch to reach Figure 5.4 shows five characteristics of stretch goals. Specific Timely Measurable
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Relevant Attainable Goal alignment makes sure that goals everywhere in the organization are linked together to support its mission. Hierarchy of goals or hierarchy of objectives - It links lower-level goals and objectives in clear means–end fashion with the desired accomplishment of higherlevel ones.
Goals can have downsides and must be well managed Learning goals set targets to create the knowledge and skills required for performance. Outcome goals set targets for actual performance results.
Participatory planning builds implementation capacities Participatory planning includes all planning steps, the people who will be affected by the plans, and those who are asked to help implement them Figure 5.5 depicts how participation helps build commitment to plans Any plan needs the efforts and support of many people to make it work. It is easier and more likely to get this commitment when the people responsible for implementation have had the opportunity to participate in developing the plans. Participation increases the creativity and information available for planning. It also increases the understanding and acceptance of plans, as well as commitment to their success.
5.3 Questions for Discussion Suggested Answers 1) If forecasting is going to be imperfect, why bother with it? Forecasting, even if imperfect, still provides directional guidance in most cases. It is better than ―randomness‖ or the lack of total direction. 2) Shouldn‘t all planning provide for contingency plans? Some plans involve decisions that are so inconsequential or low in cost or importance that a contingency plan is not worth the effort in time it would require. For instance, it would not make sense to have a contingency plan for grocery shopping if your favorite tissue brand is out-of-stock. 3) Are stretch goals a good fit for today‘s generation of college students when they enter the workplace? Stretch goals are performance targets that require extra hard work and stretch to reach. Given the uncertain state of the economy and job market, stretch goals might be not only a good fit but mandatory for career success. Stretch goals also seem to fit well with the characteristics of millenials. 5.3 Career Situation: What Would You Do?
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As CEO you‘ve decided to hire a consulting firm to help write a strategic plan for your organization. The plan is important, but you are worried about getting ―buy-in‖ from all members, not just those at the top. What guidelines will you give the consultants so that they come up with a solid strategic plan that has strong commitments to its implementation by all members of your organization? Students should be able to identify the critical nature of participation from all levels of organization to generate a solid buy-in.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Picking a Major Based on Projected Future Salaries The choice of major, or majors, is one of the most important plans a college student ever makes. It may not be the absolute key to career and life success, but it‘s certainly sets the stage for a college experience that overall should build talents for long term career accomplishments. Lots of students take out large loans to pay for their studies, but data show that different majors command different starting salaries. How many students plan well to turn their choice of major into real career opportunities, including having enough earning power to quickly pay off their loans? Ask students to discuss if their major and career choices will allow them to meet family obligations? Will the ratio of your earnings to debt be something they can manage? Will their major selection make them competitive in their career?
Choices: Keep Your Career Plan Tight and Focused, or Loosen Up? This feature begs the question of whether too much (or too little) career planning is okay. Two different executives give career advice. After students read each executive‘s planning advice (one a tight career planner and the other far looser), they will be able to discuss whether they relate to ―tight career planning‖ or loose career planning. Those in favor of tight career planning may say that it gives them a sense of direction and that it is highly motivating. Opponents argue that if you are too tightly focused, you will miss unique opportunities.
Choices: Employers Offer Help in Paying Back Student Loans Student loan debt already tops $1.5 trillion and it affects up to two-thirds of college graduates. Some refer to this as a social crisis, a disaster waiting to happen as loans go into default or repayments strangle loan holders as they try to establish themselves financially in new careers and start families. This isn‘t passing without notice by great employers. If you look carefully, you‘ll find that some are making an effort to turn this problem into an opportunity, and it‘s one you might take advantage of—if you plan right. Why not work for an Copyright © 2021 John Wiley & Sons, Inc.
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organization that offers help in paying back your student loans? Some employers offer to make periodic cash payments, for example, by allowing employees to cash in certain benefits—say part of vacation time or some personal days—to make loan payments. Others offer direct subsidies or refinancing help. Ask students if they believe this is a benefit they would consider in screening where to work. How would they like to see this benefit apply – simply pay the student loans for employees? How to make this fair for both parties?
Quick Case: New Dads Say It’s Time for Paternity Leave This case asks students to act as the Human Resource Director for a medium-sized business who has been asked by the CEO to draft a paternity leave policy. New dads would like official time off but worry about negative consequences for their careers and job security. At present they are informally allowed to take up to a week off but now it is their task to not only develop the new policy on paternity leave, but also make sure it is accepted by all stakeholders. Ask students to formulate a plan about how they will go about getting good information to make this paternity leave policy, who they should include in the process, how they will make sure the new policy is a good for both the organization and its employees, and what they will do to make sure new dads take advantage of the new policy and aren't afraid to use it because of job and career concerns.
Analytics: Policies on Office Romances Vary Widely The Facts to Consider feature provides information on romance between co-workers as a concern of business. Statistics on the types of policies that organizations have about office romance are included. These questions may be used in class or online for discussion in addition to the questions listed in the "What‘s Your Take" section: Do you know anyone who has been involved in an office relationship? What are your thoughts? Is this an area that employers should be regulating, or should office romance be left to the best judgments of those involved? Additional Questions: What would be the benefit of developing a policy on employees becoming romantically involved? Could there be any disadvantages of having such a policy? Should the policy apply at all levels of the organization? Why or why not?
Analytics: Planning Scenarios for Surviving Coronavirus Pandemic Misery In respect to COVID-19, Harvard-based epidemiologist Mark Lipsitch said: ―. . . when you are trying to understand how infectious disease is going to unfold, you should rely on history as well as models.‖ He and a team of colleagues from around the world studied historical data and new understandings to offer Copyright © 2021 John Wiley & Sons, Inc.
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three scenarios for the future. • Scenario 1: After the first wave in spring 2020, subsequent smaller waves of the virus occur for up to two years. • Scenario 2: A larger wave occurs in the fall and winter and requires reinstitution of behavioral restrictions. Smaller waves follow for up to two years. • Scenario 3: Disease transmission continues in a ―slow burn‖ that can be handled without restrictive measures. Ask students as they been through it, they know which of these scenarios proved to be most accurate. What is their interpretation of how our attempts to make informed data-driven decisions in a complex social and economic context affected real outcomes? How did we do? What did we learn? What are the implications for the future as we deal with inevitable virus pandemics? What are the implications for any planning that has to be done in the face of crisis conditions, great uncertainty, or both? Surely there are personal implications here as well—health considerations aside. What alternative scenarios are they working with in respect to career plans and prospects? Students answers will vary.
Insight for Personal Development: Time Management Unlocks Performance Potential When it comes to planning, one of the first things that often pops into mind is time. It is one of our most precious resources, and time management is an essential career skill. Some 77% of managers in one survey said that the digital age has increased the number of decisions they have to make. Forty-three per-cent said there was less time available to make these decisions. Who hasn‘t complained or heard others complain, ―There are just not enough hours in the day to get everything done‖? Time management is a form of planning that is consistently rated as one of the top ―must have‖ skills for new graduates entering fast-paced and complicated careers in business and management. Many of us, perhaps most of us, keep ―to do‖ lists. But it‘s the rare person who is consistently successful in living up to his or her list. Planning can easily suffer the same fate as the ―to do‖ lists—although we start with the best of intentions, we may end up with little or nothing to show in the way of results. Have students review the ―Time Management Checkup List,‖ along with keeping a daily time log for two days.
Skill Building Portfolio: Terms to Define:
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Benchmarking Best practices Budget Complacency trap Contingency planning Forecasting Functional plan Hierarchy of objectives Long-range plan Objectives Operational (tactical) plan Participatory planning Plan
Planning Policy Procedure Scenario planning Short-range plan Strategic plan Stretch goals Vision Zero-based budget
Test Prep 5 Multiple Choice Questions: Multiple-Choice Questions 1. Planning is best described as the process of and _. (a) developing premises about the future; evaluating them (b) measuring results; taking corrective action (c) measuring past performance; targeting future performance (d) setting objectives; deciding how to accomplish them
2. The benefits of planning often include . (a) improved focus (b) less need for controlling (c) more accurate forecasts (d) increased business profits
3. The first step in the planning process is to . (a) decide how to get where you want to go (b) define your objectives (c) identify possible future conditions or scenarios (d) act quickly to take advantage of opportunities
4. As a first step to help implement her firm‘s strategic plans, the CEO of a business firm would most likely want marketing, manufacturing, and finance executives to develop clear and Copyright © 2021 John Wiley & Sons, Inc.
appropriate
.
(a) means–ends chains (b) operational plans (c) flexible budgets (d) project management 4. planning identifies alternative
courses of action that can be taken if problems occur with the original plan. (a) Benchmark (b) Participatory (c) Staff (d) Contingency
6. Having a clear sexual harassment policy won‘t help an organization much unless it is accompanied by clear that let all members know for sure how it will be implemented. (a) contingencies (b) benchmarks (c) procedures (d) budgets
7. When a manager is asked to justify a new budget proposal on the basis of projected activities rather than as an incremental adjustment to the prior year‘s budget, this is an example of . (a) zero-based budgeting (b) strategic planning (c) operational planning 5-112
would most likely deal with
(d) contingency planning
8. One of the expected benefits of participatory planning is
.
(a) faster planning (b) less need for forecasting (c) greater attention to contingencies (d) more commitment to implementation
9. When managers use benchmarking in the planning process, they usually try to . (a) set up flexible budgets (b) identify best practices used by others (c) find the most accurate forecasts that are available (d) use expert staff planners to set objectives
10. In a hierarchy of objectives, plans at lower levels are supposed to act as for accomplishing higherlevel plans. (a) means (b) ends (c) scenarios (d) benchmarks
.
(a) production methods and technologies (b) money and capital investments (c) facilities and workforce recruiting (d) sales and product distribution
14. The best goals or objectives for planning purposes would have which of the following characteristics? (a) Easy enough so that no one fails to reach them (b) Realistic and possible to achieve, while still challenging (c) Open ended, with no clear end point identified (d) No set timetable or due dates
14. The planning process isn‘t complete until . (a) future conditions have been identified (b) stretch goals have been set (c) plans are implemented and results evaluated (d) budgets commit resources to plans
11. If a team leader wants to tap the advantages of participatory planning, what type of decision-making method should he or she use? (a) Authority (b) Quantitative (c) Group (d) Zero-based
12. From a time management perspective, which manager is likely to be in best control of his or her time? One who . (a) tries to never say ―no‖ to requests from others (b) works on the most important things first (c) immediately responds to instant messages (d) always has ―an open office door‖
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Short-Response Questions 16. List the five steps in the planning process, and give examples of each. The five steps in the formal planning process are (1) define your objectives, (2) determine where you stand relative to objectives, (3) develop premises about future conditions, (4) identify and choose among action alternatives to accomplish objectives, and (5) implement action plans and evaluate results. 17. How does planning facilitate controlling? Planning facilitates controlling because the planning process sets the objectives and standards that become the basis for the control process. If you don‘t have objectives and standards, you have nothing to compare actual performance with; consequently, control lacks purpose and specificity. 18. What is the difference between contingency planning and scenario planning? Contingency planning essentially makes available optional plans that can be quickly implemented if things go wrong with the original plan. Scenario planning is a longer-term form of contingency planning that tries to project several future scenarios that might develop over time and to associate each scenario with plans for best dealing with it. 19. Why is participation good for the planning process? Participation is good for the planning process, in part because it brings to the process a lot more information, diverse viewpoints, and potential alternatives than would otherwise be available if just one person or a select group of top managers are doing the planning. Furthermore, and very importantly, through participation in the planning process, people develop an understanding of the final plans and the logic used to arrive at them, and they develop personal commitments to trying to follow through and work hard to make implementation of the plans successful. Integration and Application Question 20. My friends Curt and Rich own a local bookstore. They are very interested in making plans for improving the store and better dealing with competition from the other bookstores that serve college students in our town. I once heard Curt saying to Rich: ―We should be benchmarking what some of the successful coffee shops, restaurants, and novelty stores are doing.‖ Rich replied: ―I don‘t see why; we should only be interested in bookstores. Why don‘t we study the local competition and even look at what the best bookstores are doing in the big cities?‖ Questions: Who is right, Curt or Rich? If you were hired as a planning consultant to them, what would you suggest as the best way to utilize benchmarking as a planning technique to improve their bookstore? And, how would you use the planning process to help Curt and Rich come to a point of agreement on the best way forward for their bookstore? Benchmarking is the use of external standards to help evaluate one‘s own situation and develop ideas and directions for improvement. Curt and Rich are both right to a certain extent about its potential value for them. Rich is right in suggesting that there is much to learn by Copyright © 2021 John Wiley & Sons, Inc.
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looking at what other bookstores are doing really well. The bookstore owner/manager might visit other bookstores in other towns that are known for their success. By observing and studying the operations of those stores and then comparing his store to them, the owner/manager can develop plans for future action. Curt is also right in suggesting that there is much to be learned potentially from looking outside the bookstore business. They should look at things like inventory management, customer service, and facilities in other settings— not just bookstores; they should also look outside their town as well as within it.
Self-Assessment 5: Time Management Profile Instructions Indicate Y (yes) or N (no) for each item. Be frank; let your responses describe an accurate picture of how you tend to respond to these kinds of situations. 1. When confronted with several items of similar urgency and importance, I tend to do the easiest one first. 2. I do the most important things during that part of the day when I know I perform best. 3. Most of the time I don‘t do things someone else can do; I delegate this type of work to others. 4. Even though meetings without a clear and useful purpose upset me, I put up with them. 5. I skim documents before reading them and don‘t complete any that offer a low return on my time investment. 6. I don‘t worry much if I don‘t accomplish at least one significant task each day. 7. I save the most trivial tasks for that time of day when my creative energy is lowest. 8. My workspace is neat and organized. 9. My office door is always ―open‖; I never work in complete privacy. 10. I schedule my time completely from start to finish every workday. 11. I don‘t like ―to-do‖ lists, preferring to respond to daily events as they occur. 12. I ―block‖ a certain amount of time each day or week to be dedicated to high-priority activities. Scoring Count the number of ―Y‖ responses to items 2, 3, 4, 7, 8, and 12. [Enter that score here Count the number of ―N‖ responses to items 1, 4, 6, 9, 10, and 11. [Enter that score here Add the two scores together.
]. ].
Interpretation The higher the total score, the closer your behavior matches recommended time management guidelines. Reread those items where your response did not match the desired one. Why don‘t they match? Do you have reasons why your behavior in this instance should be different from the recommended time management guideline? Think about what you can do (and how easily it can be done) to adjust your behavior to be more consistent with these guidelines. For further Copyright © 2021 John Wiley & Sons, Inc.
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reading Alan Lakein, How to Control Your Time and Your Life (New York: David McKay, no date), and William Oncken, Managing Management Time (Englewood Cliffs, N.J.: PrenticeHall, 1984). Instructor’s Note Consider using this assessment in conjunction with Exercise 9Beating the Time Wasters. They both deal with time management skills and complement one another. If you decide to use this assessment, but not the exercise, you may still want to present some or all of the suggestions for ―beating the time wasters‖ which are provided as part of the instructor‘s note for the exercise. (Source: Suggested by a discussion in Quinn, R.E., Faerman, S.R., Thompson, M.P., and McGrath, M.R. Becoming a Master Manager: A Contemporary Framework. New York: John Wiley & Sons, 1990, pp. 74-76.)
Class Exercise 5: The Future Workplace Instructions Form groups as assigned by the instructor. Brainstorm to develop a master list of the major characteristics you expect to find in the workplace in the year 2020. Use this list as background for completing the following tasks: 1. Write a one-paragraph description of what the typical ―Workplace 2020‖ manager‘s workday will be like. 2. Draw a ―picture‖ representing what the ―Workplace 2020‖ organization will look like. 3. Summarize in list form what you consider to be the major planning implications of your future workplace scenario for management students today. That is, explain what this means in terms of using academic and extracurricular activities to best prepare for success in this future scenario. 4. Choose a spokesperson to share your results with the class as a whole and explain their implications for the class members. Instructor’s Note This exercise can be extremely useful for stimulating students to seriously consider what their future jobs and workplaces may be like. While student ―pictures‖ can and should vary depending upon their perspectives and their expectations for the future, their ―pictures‖ of the manager may reflect some of the following desirable characteristics of the 21st-century manager: 1. Global strategist understands interconnections among nations, cultures, and economies; plans and acts with due consideration of them. 2. Master of technology comfortable with information technology; understands technological trends and their implications, able to technology to best advantage. 3. Effective politician understands growing complexity of government regulations and the legal environment; able to relate them to the interests of the organization. Copyright © 2021 John Wiley & Sons, Inc.
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4. Inspiring leader attracts highly motivated and inspires them with a highperformance culture where individuals and teams can do their best work. Moreover, future managers will require the personal competencies for managerial success that are summarized in Manager’s Notepad 1.3 from the textbook and which are presented below. 1. Communication –– demonstrates the ability to share ideas and findings clearly in written and oral expression. 2. Teamwork –– demonstrates the ability to work effectively as a team member and team leader. 3. Self-management –– demonstrates the ability to evaluate oneself, modify behavior, and meet performance obligations. 4. Leadership –– demonstrates the ability to influence and support others to perform complex and sometimes ambiguous tasks. 5. Critical thinking –– demonstrates the ability to gather and analyze information for creative problem solving. 6. Professionalism –– demonstrates the ability to sustain a positive impression, instill confidence, and maintain career advancement. The ―picture‖ of the organization, may reflect the following trends in workforce demographics: The size of the workforce is growing more slowly. 1. The available pool of younger workers is shrinking. 2. The average age of workers is rising. 3. More women are entering the workforce. 4. The proportion of ethnic minorities in the workforce is increasing. 5. The proportion of immigrants in the workforce is increasing. Finally, the ―picture‖ of the organization may reflect the following characteristics of vanguard organizations: Vanguard organizations are people-oriented. 1. Vanguard organizations have visible leadership. 2. Vanguard organizations seek employment stability. 3. Vanguard organizations have a consumer orientation. 4. Vanguard organizations are future-oriented.
Team Project 5: Personal Career Planning Instructions 1. Complete the following activities and bring the results to class. Your work should be in a written form suitable for grading. Copyright © 2021 John Wiley & Sons, Inc.
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Activity 1: Strengths and Weaknesses Inventory Different occupations require special talents, abilities, and skills. Each of us, you included, has a repertoire of existing strengths and weaknesses that are ―raw materials‖ we presently offer a potential employer. Actions can (and should!) be taken over time to further develop current strengths and to turn weaknesses into strengths. Make a list identifying your most important strengths and weaknesses in relation to the career direction you are likely to pursue upon graduation. Place a * next to each item you consider most important to focus on for continued personal development. Activity 2: Five-Year Career Objectives Make a list of three career objectives that you hope to accomplish within five years of graduation. Be sure they are appropriate given your list of personal strengths and weaknesses. Activity 3: Five-Year Career Action Plans Write a specific action plan for accomplishing each of the five objectives. State exactly what you will do, and by when, in order to meet each objective. If you will need special support or assistance, identify what it is and state how you will obtain it. An outside observer should be able to read your action plan for each objective and end up feeling confident that he or she knows exactly what you are going to do and why. 2. In class, form into groups as assigned by the instructor. Share your career-planning analysis with the group and listen to those of others. Participate in a discussion that examines any common patterns and major differences among group members. Take advantage of any opportunities to gather feedback and advice from others. Have one group member be prepared to summarize the group discussion for the class as a whole. Instructions Form into groups as assigned by the instructor. Share your career planning analysis with the group; listen to those of others. Participate in a discussion that examines any common patterns and major differences among group members. Take advantage of any opportunities to gather feedback and advice from others. Have one group member prepared to summarize the group discussion for the class as a whole. Await further class discussion led by the instructor. Instructor’s Note This exercise can be done with a minimum of at-home preparation time and in a normal class period. It forces students to be somewhat precise in looking five years ahead into their futures, and trying to anticipate not only their preferred work positions but also their strengths and weaknesses in being able to succeed in those positions. The exercise can be done as an individual written assignment to be turned in as a concluding requirement for the course. It is also very easy to turn the exercise into a short classroom activity. Students can convene in small groups to share career goals and discuss some of the problems and opportunities that are expected along the way. Brief classroom presentations by each group help bring a sense of closure to the course, and also help students explore some of the differences between their viewpoints, opinions and aspirations and those of their colleagues. Most students find career planning activities to be valuable and interesting. For most of them (even part-time MBAs), this will be the first real attempt to set a specific career objective and develop a plan for reaching the objective. The exercise will have quite a different flavor, depending upon whether it is done with younger undergraduates or older participants already Copyright © 2021 John Wiley & Sons, Inc.
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embarked on a career. Younger students need more help with the self-exploration aspects of the exercise. Older students may find it a little more difficult to be open about their weaknesses, depending on what the norms about openness are at your school. If you are teaching an undergraduate course, you may do well to use this exercise toward the end of the course. You could assign it early in the year and point out that some students may want to use the library, visit the placement center, and perhaps interview people in the occupation they are considering. You can exercise some control over this by requiring that they write a ―Career Plan‖ paper covering all aspects of their planning.
Case Snapshot:: Uber – Riding the Gig Economy The case for this chapter is Uber, part of the gig economy which has revolutionized how people consumer products and services. Companies such as Airbnb, for example, provide an online marketplace that connects would-be renters with people seeking accommodations and eliminates the ―middleman‖ in 192 countries worldwide. Companies following a ―gig‖ approach are growing in number and popularity, with more appearing every day. The list is huge and includes—just to name a few—Lyft , which connects drivers with passengers; Turo, which connects rental cars with customers in need of a car; and Open Airplane, RVshare, Sailo, Boatbound, Parking Panda, Closet Collective, and Grubhub. We are seeing a revolution in the way the ―market‖ functions . . . or are we?
Case discussion questions and suggested answers: 1. DISCUSSION Although many argue that the gig economy has opened up opportunities for individuals to be self-employed in ways that complement their lifestyle, the investments that gig giant Uber is making suggest a different kind of future for the uber-successful taxi substitute. What do think Uber has in mind? Student answers will vary. With autonomous vehicles, it remains to be seen just how much opportunity for self-employment there will be. Recently California has taken up the issue whether Ride Sharing companies must count drivers as employees. This has tremendous ramifications for both parties: the companies and the drivers. 2. DISCUSSION What are some of the potential applications for fleets of self-driving vehicles? What role might this kind of infrastructure play in towns and cities in the future? How might Uber leverage these kinds of assets to generate a profit? Do you see a way for Uber to be successful while still employing human drivers? How? Potential applications include deliveries of all kinds – groceries, food, beverage, medication, and so on. However, it will clearly impact the transportation/trucking industry. To enter the trucking industry, Uber
recently purchased Otto, a self-driving truck startup. The role this kind of infrastructure might play in town and cities in the future will vary, including but not limited to reduced mobility and infrastructure costs, increased safety, increased mobility, increased customer satisfaction and maybe even a reduction in crime and traffic collisions and injuries. There may also be less of a need for insurance. Traffic flow will also be enhanced via expanded roadway capacity and reduced congestion. There will be business models for mobility as a service in the sharing economy. Computerized systems will divert vehicles onto surface Copyright © 2021 John Wiley & Sons, Inc.
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streets and this may possibly result in the adjustment of routing patterns for trucks and other heavy vehicles to avoid vulnerable infrastructure. The result? Cost cutting and preservation of the lifespan of roadways and bridges. It remains uncertain as to whether Uber can still be successful while still employing human drivers. Some passengers may take some time to feel comfortable in an autonomous vehicles. 3. PROBLEM SOLVING You‘ve been hired on by Uber‘s CEO Dara Khosrowshahi as the Chief Financial Officer and asked to address the issue of huge quarterly losses, despite massive sales revenues. The Uber fleet is not likely to be ―self-driving‖ for at least another 5 years, and it isn‘t clear whether the current model will be sustainable until then, particularly given increasing competitive pressures to raise drivers‘ rates from companies such as Lyft. What steps could you take to address these competing pressures—market pressures to raise rates and the need to generate profits? Student answers will vary. However, the mindset in Silicon Valley is that losing billions each year isn‘t always frowned upon. In fact, if Uber is said to have lots of sale growth potential and it is concurrently reducing losses, the trend can be favorable. If revenues are kept up and losses continue to decline, investors may very well continue investing. Some even use 10-15 years a benchmark to begin producing profits. Steps to address competing pressures to raise rates and generate profits? This will depend entirely on the competitive landscape and whether investors (VC firms) continue investing. 4. FURTHER RESEARCH Look into some of the more well-known gig companies currently making headlines in the financial press. Are any of these companies generating a profit? What factors are at work here? How have these profitable companies organized to become profitable? Are any of these companies moving toward models that remove the ―human factor‖—that mechanize in the way that it looks like Uber could be seeking to mechanize? How are the financial values of some of these gig companies being determined? In light of the huge losses experienced by some gig economies, what factors are likely playing a role in these financial evaluations? Are people speculating on an unknown future? Well known gig companies making headlines: Uber, Lyft, Turo, OpenAirplane, Postmates, TaskRabbit, Dolly, HelloTech, OneFineStay, SpareHire, Etsy. Are they generating a profit? Some are, many are not. How are these companies organized to become more profitable? Gig economy companies or on demand companies are highly productive, low-employment technology companies with fewer full-time employees – mainly because shareholders and venture capital firms place a higher value on lean companies and profits for shareholders. We have what some refer to as ―employee-less‖ companies that are leveraging technology to become highly profitable. Are these companies moving toward models that remove the human factor? Copyright © 2021 John Wiley & Sons, Inc.
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Yes, some companies are removing the human factor. In some industries (automobile manufacturing, for example), robots have become common. In trucking, there is experimentation with driverless trucks. Drones are being used for deliveries of valuable drugs and medical devices in remote locations of the world. How are the financial values of these gig companies determined? In light of the huge losses experienced by some gig economies, what factors are likely playing a role in these financial evaluations? Are people speculating on an unknown future? Yes, people are speculating on an unknown future along with assumptions of hyper growth and rapid changes in technology – which changes the competitive landscape. When valuing gig economy companies, some start by looking at the future growth potential, including market size. This can be defined as operating performance, customer penetration rates, and average revenue per customer, margins, and return on invested capital.
Suggested Team Exercise for Chapter 5 Assign teams to develop a strategic plan and an operational plan for a residential interior painting service that they are planning to launch in the local market, or an improved food service for your college. When their plans are complete, they may be required to contact local painting contractors or food service distributors and determine how feasible their plans really are.
CHAPTER 6 Controls and Control Systems What gets measured happens Chapter 6 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter six provides a comprehensive discussion of controls and control systems, including how and why managers use the control process, the types of controls used and some useful tools and techniques. The chapter begins with a definition of control, one of the four management functions, as measuring performance and taking action to ensure desired results. The four steps of the control process are described as: 1) establish performance objectives and standards, 2) measuring actual Copyright © 2021 John Wiley & Sons, Inc.
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performance, 3) comparing actual performance with objectives and standards, and 4) taking corrective action, as needed. In other words, the controlling process sees that the right things happen, in the right way, and at the right time. Managers use a variety of controls, including feedforward, concurrent, and feedback controls. In addition, internal and external controls are used. Last, management by objectives is a way to integrate planning and control. Feedforward (preliminary) controls are put in place before work begins, while concurrent controls focus on what is happening during the work process, and feedback controls (post-action), take place after a job or project is complete. Internal and external controls are used for self-control and to structure situations so that things happen as planned. A way to integrate planning and controlling is by managing by objectives, also called MBO. MBO is a structured process between a supervisor and subordinate to jointly set, and subsequently review, agreed upon performance objectives. Finally, system-wide organizational controls and project management are reviewed. They include quality control, purchasing and inventory control, breakeven analysis (financial control), financial ratios, and the balanced scorecard. Making quality an everyday performance objective in any industry, whether it is manufacturing, production, or service-related, is crucial. Maybe you know someone who is a project manager – or as a student, you‘re a project manager of sorts. Project management, is the overall planning, supervising and control of projects. Controlling inventory, which can be costly, can reduce costs, and keeping a close eye on revenues and costs (and where they meet), is what breakeven analysis is all about. Ratios measure key financial performance, and you‘ll find them in any company annual report. Similar to an academic report card, a balanced scorecard for any organization is useful for measuring an organization‘s health across numerous areas – financial performance, customer satisfaction, and internal processes, to name a few.
Chapter 6 Learning Objectives
Learning Objective 6.1 Understand How and Why do Managers Use the Control Process. Learning Objective 6.2 Identify Types of Controls are Used by Managers. Learning Objective 6.3 Describe Some Useful Control Tools and Techniques.
Chapter 6 Lecture Outline
Learning Objective 6.1 Identify How and Why Managers Use the Control Process. o Controlling is one of the four functions of management o Step 1 -- Control begins with objectives and standards o Step 2 -- Control measures actual performance o Step 3 -- Control compares results with objectives and standards o Step 4 -- Control takes corrective action as needed
Learning Objective 6.2 Explain the Types of Controls Used by Managers. o Managers use feedforward, concurrent and feedback controls
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o Managers use both internal and external controls o Management by objectives helps to integrate planning and controlling
Learning Objective 6.3 What Are Some Useful Control Tools and Techniques? o Quality control is a foundation of modern management o Gantt charts and CPM/PERT improve project management and control o Inventory controls help save costs o Breakeven analysis shows where revenues will equal costs o Financial ratios measure key areas of financial performance o Balanced scorecards keep the focus on strategic control
Chapter 6 Supporting Materials Figures Figure 6.1: Why is Controlling so Important in the Management Process? Figure 6.2: What Are the Four Steps in the Control Process? Figure 6.3: What Are the Differences Between Feedforward, Concurrent, and Feedback Controls? Figure 6.4: How Does Managing by Objectives Help to Integrate Planning and Controlling? Figure 6.5: Sample Control Chart Used in a Manufacturing Process Figure 6.6: Gantt chart showing tasks to be scheduled for a building project Figure 6.7: CPM/PERT Network Chart Showing Critical Path for Project Planning. Figure 6.8: Reorder Points in the Economic Order Quantity Form of Inventory Control Figure 6.9: How Do Managers Use Breakeven Analysis to Make Informed What-If Decisions? Figure 6.10: Information for Financial Control Shown on Balance Sheets and Income Statements What’s Inside Career Readiness: Mastering Self Control a Step Forward in Life Success Analytics: Everyday Distractions can be Goal Killers Choices: Should Parents Pay for Children’s Grades? Ethics: Boss Wants Staff to Lose a Few Pounds Insight: Resiliency Offers Strength from Within Issues: The Boss May Use Data Mining to Spy on You Quick Case: Flexible Work Hour Policy Starting to be Abused Applications TestPrep 6 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 6: Internal/External Control Copyright © 2021 John Wiley & Sons, Inc.
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o Class Exercise 6: Stakeholder Maps o Team Project 6: After Meeting/Project Review Case Snapshot: Electronic Arts—Inside Fantasy Sports
Chapter Outline Learning Objective 6.1 Identify How and Why Managers Use the Control Process.
Controlling is one of the four functions of management Controlling is the process of measuring performance and taking action to ensure desired results How does control fit in with the other management functions? Planning sets the directions Organizing arranges the people and resources Leading inspires people toward their best efforts Controlling sees to it that the right things happen After-action review, a program pioneered by the United States army, is a structured review of lessons learned and results accomplished through a completed project, task force assignment, or special operation Figure 6.1 lists why controlling is so important in the management process Controlling measures performance How well are you doing? What actions will ensure desired results? Do results meet expectations? Controlling sets a strong foundation for performance
Step 1 -- Control begins with objectives and standards Metrics - numbers that identify key outcomes used to assess and track performance over time An output standard measures performance results (outcomes or work) in terms of quantity, quality, cost, or time An input standard measures work efforts that go into a performance task
DISCUSSION Ask the students to provide examples of when they have exercised self-control. Seek to determine the extent to which the students‘ self-management was preceded and facilitated by some form of objective setting. Figure 6.2 The Steps in the Control Process Set performance objectives and standards Measure actual performance Compare actual performance with objectives and standards Copyright © 2021 John Wiley & Sons, Inc.
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Take corrective action as needed These steps apply equally as well to personal careers
Step 2 -- Control measures actual performance Accurate and timely measurement is essential to spot differences between what is really taking place and what was originally planned.
DISCUSSION To help students understand the role of control as measurement, ask them to identify how they use control in their personal lives by setting objectives and measuring performance. Examples may include using a scale to calculate weight loss, keeping track of their grades to keep a certain grade point, keeping to a personal budget or looking for a car with a minimum gas mileage rating.
Step 3 -- Control compares results with objectives and standards Control equation: Need for action = Desired performance - Actual performance Engineering comparisons - carefully calculated and predetermined standards Historical comparisons - past experiences as a basis to measure Relative comparisons - they benchmark actual performance against that being achieved by other people, work teams, or organizations
o Step 4 -- Control takes corrective action as needed Management by exception - the practice of giving attention to high-priority situations that show the greatest need for action
DISCUSSION TOPIC Before you formally present the steps in the control process, you may want to solicit student input by asking them to identify some examples of controls that are used in organizations. You can simply record these controls on the chalkboard or overhead projector as they are offered. Students typically provide many examples ranging from a minimum GPA requirement to liquor laws to shoplifting guards. You can then use one or more of the examples provided to illustrate the control process presented below. For instance, using the example of the minimum GPA requirement, you could point out that this requirement is a standard against which actual student performance is compared. When students‘ GPAs fall below this standard, they are placed on academic probation and counseled to improve their performance. If they remain below the standard, they are suspended from the program. Through this process, the quality of students who graduate from a program is maintained. Students who do exceptionally well are also singled out for special attention in the form of awards and honors. An example such as this can make the control process more tangible to students. Encourage students to take the self-assessment on Internal/External Control and other activities in the Skill Building Portfolio. 6.1 Questions for Discussion with Suggested Answers 1. What performance standards should guide a hospital emergency room or fire department?
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Standards for an emergency room might include: time from admission to procedure; mortality rates; patients successfully treated per evening; litigation expense; national or community ratings. Standards for a fire department might include response time to leave station from dispatch call; saved buildings; lives lost; fireman injuries and/or deaths. 2. Can one control performance equally well with input standards and output standards? Yes, and example would be conformance standards-does the item meet customer requirements. This would be true for both incoming raw materials and outgoing finished goods. 3. What are the possible downsides to management by exception? Management by exception presumes that the ―norm‖ or the ―baseline‖ is satisfactory, and therefore may lessen opportunities for all units or departments to continuously improve. Managers must also be observant of problem situations on items of any level of priority so they may be corrected, and opportunity situations on any level should provide lessons to improve future performance.
6.1 Career Situation: What Would You Do? A work colleague comes to you and confides that she feels ―adrift in her career‖ and ―just can‘t get enthused about what she‘s doing anymore.‖ Your take is that this might be a case of selfmanagement and personal control. How will you explain to her that using the steps in the management control process might help her in better understanding and correcting her situation? Student responses will vary. However, the steps in the control process,) setting performance objectives and standards, 2) measuring actual performance, 3) comparing actual performance with objectives and standards, and 4) taking corrective action as needed helps establish the objectives/targets to achieve and keep the focus on the goals in career progression with measurements and corrective actions to stay on target.
Learning Objective 6.2 Explain the Types of Controls Used by Managers.
Managers use feedforward, concurrent and feedback controls Organizations are open systems that interact with their environment with a cycle of input, throughput and output that is controlled by management. o Figure 6.3 depicts three types of managerial controls Feedforward controls - (preliminary controls) take place before work begins/prevent problems before they occur; proactive Concurrent controls - (steering controls) focus on what happens during the work process Feedback controls - (post action controls) take place after completing an action
DISCUSSION Students may be asked to consider the areas they identified earlier for control in their personal lives and determine how they use feedforward, concurrent and feedback controls to accomplish their objectives.
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Managers use both internal and external controls Internal control (self-control) - managers encourage workers to use self discipline to keep focused in achieving goals at work. External control – occurs through direct supervision or administrative systems. Bureaucratic control – influences behavior through authority, policies, procedures, job descriptions, budgets and supervision Clan control - influences employee behavior through social norms and peer expectations Market control - the influence of market competition forces on the behavior of organizations and their members. Organizations adjust products, pricing and other practices to maintain a competitive advantage
Management by objectives helps integrate planning and controlling Management by objectives (MBO) is a process of joint objective setting between a superior and a subordinate Important to state as specifically and quantitatively as possible Measurable end product Verifiable work activities Figure 6.4 depicts the MBO process Improvement objectives - specific performance improvement is stated so it can be measured Personal development objectives are for employee development or personal growth Learning Activity - After reviewing "Tips to Remember - How to write a good performance objective", directs students to write a Personal Development Objective. This may be implemented as a group activity in face to face or online classes as students get into small groups and share goals and do peer review to determine if they fulfill the steps in ―Tips to Remember.‖
Tips on Setting Performance Objective: o Clarify the target o Make it measurable o Define the timetable o Avoid the impossible (be realistic) o Add challenge o Don‘t overcomplicate
6.2 Questions for Discussion with Suggested Answers How does bureaucratic control differ from clan control? Bureaucratic control is a formal system of policies, procedures and supervision established by management to directly control employees. Clan control is an informal control of employee behavior that is reinforced by employees to maintain organizational culture. New employees are taught the culture or "the way we do things around here" and reinforce appropriate behavior and discourage inappropriate behavior.
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What is Douglas McGregor‘s main point regarding internal control? McGregor's Theory Y type manager would feel that people are willing to use internal controls or self discipline in their work, but they are more likely to do this when they have some participation in setting performance objectives. Can MBO work when there are problems in the relationship between a team leader and a team member?
MBO probably would fail if there is a relationship problem between a team leader and a team member. Mutual support and trust is a key aspect of success in a team as well as for MBO to work well. If MBO is administered well, it may improve team leader and team member relations. 6.2 Career Situation: What Would You Do? You have a highly talented work team whose past performance has been outstanding. Recently, though, team members are starting to act like the workday is mainly a social occasion. Getting the work done seems less important than having a good time; performance is on the decline. How can you use external controls in a positive way to restore team performance to high levels? Student answers will vary. However, they should bring in the aspects of 1) bureaucratic control policies, procedures, job descriptions, budgets and supervision all keep behavior in line with organizational objectives; 2) clan control - organizational culture influences employee behavior; and 3) market control - market competition forces organizations to adjust products, pricing and other practices to maintain a competitive advantage – as the three external controls. Of these, clan control with bringing focus back on the organizational culture on accomplishments and results can serve as the positive way to restore team performance. Clan control is an informal control of employee behavior that is reinforced by employees to maintain organizational culture. New employees are taught the culture or "the way we do things around here" and reinforce appropriate behavior and discourage inappropriate behavior. Also, if external competitive forces can be brought in to focus, market control can enhance the team performance significantly.
Learning Objective 6.3 Identify Useful Control Tools and Techniques.
Quality control is a foundation of modern management Total quality management (TQM) - efforts to make quality an everyday performance objective and doing things right the first time. Continuous improvement - constantly looking for new ways to improve performance Control charts - graphical representation of performance that indicate trends. These trends can be used to identify whether performance is "in control". Students who have taken statistics courses will recognize the control limits in control charts (see Figure 6.5). Six Sigma - quality standard that tolerates no more than 3.4 defects per million units produced.
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DISCUSSION Students may apply the concepts of total quality management, continuous improvement and control charts to academic performance in a management class. How are academic performance indicators and student effort similar to quality control in industry?
Gantt charts and CPM/PERT improve project management and control. Projects are one-time activities with many component tasks that must be completed in proper order and according to budget. Project management - area of management that is responsible for planning, supervision, and control of projects. Project managers are responsible for completing an activity on time and on budget. Gantt chart - graphic depiction of the scheduling necessary to complete tasks on time for project completion (see Figure 6.6). CPM/PERT - is a combination of the critical path method and the program evaluation and review technique. The critical path is the pathway from project start to conclusion that involves the longest completion times (see Figure 6.7).
Inventory controls help save costs Inventory control ensures inventory is only big enough to meet immediate needs Economic order quantity - automatic order of a pre-determined amount of inventory when inventory falls to a certain level (see Figure 6.8). Examples include college bookstores and supermarkets. Just-in-time scheduling (JIT) - routes materials to workstations just in time for use
Breakeven analysis shows where revenues will equal costs Breakeven point - revenue equals costs. When revenue exceeds this point a product or service will earn a profit. Breakeven Point = Fixed Costs ÷ (Price - Variable Costs) Figure 6.9 illustrates the concept graphically Breakeven analysis – performs what-if calculations under different revenue and cost conditions.
Financial ratios measure key areas of financial performance The balance sheet shows assets and liabilities at a point in time. It will be displayed in an Assets = Liabilities format. The income statement shows profits or losses at a point in time. It will be displayed in a Sales – Expenses = Net Income format. Financial ratios - calculations that track financial success of the organization. Liquidity - ability to meet short term financial obligations Leverage - measures use of debt Asset management - measures asset and inventory efficiency Profitability - measures profit generation Balanced scorecard Keep the Focus on Strategic Control A balanced scorecard measures performance on financial, customer service, internal process, and innovation and learning goals.
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Financial Performance - ―How well do our actions directly contribute to financial performance?‖ Customer Satisfaction - ―How well do we serve our customers and clients?‖ Internal Process Improvement - ―How well do our activities and processes directly increase value for our customers and clients?‖ Innovation and Learning - ―How well are we learning, changing, and improving things over time?‖ 6.3 Questions for Discussion with Suggested Answers 1. Can a firm such as Wal-Mart ever go too far in controlling its inventory costs? If control results in shortages of inventory, demand might drop as customers determine that the organization rarely has the items that are advertised or are in high demand. Good inventory management manages inventory costs so they are held to a minimum but do not result in shortages. 2. Is the concept of total quality management out of date? Students will likely agree that it is not out of date, particularly if they have used a defective product or had a vehicle recalled. This would be an opportunity to ask them why total quality management is still so important. Why after 50 years of understanding the importance of quality production do we still have defective products? 3. Does the ―balanced scorecard‖ as described in this chapter measure the right things? Balanced scorecards build on financial analysis to measure organizational performance in other financial measures, customer satisfaction, internal process improvement and innovation and learning. 6.3 Career Situation: What Would You Do? You‘ve had three years of solid work experience after earning your undergraduate degree. A lot of your friends are talking about going to graduate school and they‘re pushing you to take time out to earn an MBA degree. There are potential costs and benefits if you go for the MBA. How can breakeven analysis help you make the decision to: (1) go or not go, (2) go full time or part time, and (3) even where to go? Student answers will vary. Managers rely on breakeven analysis to perform what-if calculations under different projected cost and revenue conditions. You can do similar what-if scenarios depending on places and what costs versus projected salaries would be with MBA.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Mastering Self-Control for Life Success
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The lesson begins with the marshmallow test. Picture this. Several young, 4-6 year old children are at a table with two marshmallows in front of them. A researcher tells them they can eat one now or get both if they hold off eating for five minutes. What would you do? About one-third of the kids delayed gratification long enough to get two marshmallows instead of one. Forty years later these ―high self-control‖ students were found to have entered college with higher SATs, graduated with higher averages, and earned more money than their ―quick gratification‖ counterparts. How would you do on the marshmallow test? To what extent is self-control a personal strength… or a weakness? What can you do to make it a real personal asset going forward in a life? Student answers will vary. However, this should be used as a self-reflection and development exercise – no judgements.
Analytics: Everyday Distractions Can Be Goal Killers How prone are you to allowing distractions eat away at your precious time? Distractions cause wasted time and unmet goals. eBay‘s director of learning at organizational development calls the situation an ―epidemic.‖ Some of the facts to consider include:
Office workers get distracted as often as once every 3 minutes and it takes several minutes to refocus after a major interruption. Handling electronic messages can kill up to one-half a workday. Facilitators of disruptions include open-plan office spaces use of multiple electronic devices, and constant checking of social media and message windows.
YOUR THOUGHTS: How prone are you to letting distractions consume your time? Does this problem apply to your personal affairs and relationship, not just work? It‘s interesting that some employers are trying to step in and set policies that might minimize the negative impact of distractions, particularly electronic ones. Where‘s the self-control? Aren‘t there things we can all do to protect our time and keep our work and goals on track? Student answers will vary.
Quick Case: Flexible Work Hour Policy Starting to be Abused Your employer started a flexible working hour‘s program which allows workers to vary starting and ending times on a daily basis depending upon their personal circumstances and preferences. Staff members have started to abuse the policy. Discuss how you should go about resolving the problem. Student answers will vary. This can be used as a two team discussion in the classroom.
Ethics: Boss Wants Staff to Lose a Few Pounds Copyright © 2021 John Wiley & Sons, Inc.
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The CEO, a fitness addict, has decided that it‘s her responsibility to help everyone on staff to adopt a healthier lifestyle. She just sent an email to all with the following statements: ―I have just subscribed to a health and wellness service for the entire company. Progress in meeting these targets will be assessed at three month intervals. Individuals meeting or exceeding their targets each period will earn one additional personal leave day. Individuals who do not meet targets AND who have poor attendance records at the available activities will lose one personal leave day. Is this CEO onto something that others should follow – making organization supported wellness activities available and mandatory during work hours? Or, is the CEO going a step too far? Is wellness a personal issue that should not be part of workplace expectations? Can an employer‘s attempts to control staff wellness be justified ethically? Is this CEO operating within acceptable boundaries of management control? Student answers will vary and can be used as a debate issue. However, from the organizational viewpoint, it should be noted that healthy employees influence the productivity, morale, and healthcare costs for the company – so the CEO may be on to something using both the carrot and stick approach.
Issues: The Boss May Use Data Mining to Spy on You Worrying about who might be reading your email is the tip of the iceberg in today‘s techenriched workplaces. Now your boss has all sorts of new ways to spy on you. A report in The Wall Street Journal says that ―employers are mining the data their workers generate to figure out what they‘re up to, and with whom.‖ Think ―workplace analytics‖ and then ask: ―What does the growing presence of analytics in organizations mean for me?‖ Ask Students: Are you ready for this new workplace reality? How do you interpret the data on employee monitoring? What are the issues here in terms of individual privacy and employer rights? In what directions can you see all this going in the future? U.S. employers have lots of room to maneuver right now in this area. But is there a line to be drawn between what is legal and what is right to do? How will you feel someday after finding out that your employer is doing some of the things mentioned here? Is workplace analytics a production booster or a trust killer? Student answers will vary.
Choices: Should Parents pay for Children’s grades? This feature explores the topic of paying for grades. Is paying for grades the correct things to do? Does it improve parental control over children‘s study habits? Those who support paying for grades say it improves performance and ―gets the kids‘ attention.‖ Is performance for pay okay at such a young age? Opponents are concerned that the motivation comes from financial gain rather than love of learning. Ask students what their thoughts are when it comes to making money for
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good grades. Discuss the subject of extrinsic and intrinsic rewards. Is parenting similar to managing people in the workplace? Student answers will vary.
Insight for Personal Development: Resiliency Offers Strength from Within Managerial control is all about increasing the probability that things will go right for organizations even as they deal with an increasing number of operational complexities. It‘s the same for us—every day—in our work and personal lives. We need to spot and understand whether things are going according to plan or off course. We need to have the courage and confidence to change approaches that aren‘t working well. Our success, simply put, depends a lot on resiliency—the ability to call on inner strength and keep moving forward even when things are tough. Take the Resiliency Quick Test. A score of 35 or better suggests you are highly resilient; with any lower score, you should question how well you hold up under pressure. Double-check the test results by looking at your behavior. Write notes on how you handle situations such as a poor grade at school, a put-down from a friend, a denial letter from a job application, or criticism from a supervisor or coworker. Summarize what you‘ve learned in a memo to yourself about how you might benefit from showing more resiliency in difficult situations. Follow Up Get to know yourself better by taking the Internal/External Control self-assessment and completing other activities in the Exploring Management Skill-Building Portfolio.
Skill Building Portfolio Terms to Define: After-action review Balance sheet Balanced scorecard Breakeven analysis Breakeven point Bureaucratic control Clan control Copyright © 2021 John Wiley & Sons, Inc.
Concurrent control Continuous improvement Control chart Control equation Controlling CPM/PERT Critical path 6-133
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Economic order quantity External control Feedback control Feedforward control Gantt chart Improvement objectives Income statement Input standards Internal control (self-control) Inventory control Just-in-time scheduling (JIT) Management by exception Managing by objectives Market control Metrics Output standards Personal development objectives Project Project management Six Sigma Total quality management (TQM)
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TestPrep 6: Multiple-Choice Questions 1. After objectives and standards are set, what step comes next in the control process? (a) Measure results. (b) Take corrective action. (c) Compare results with objectives. (d) Modify standards to fit circumstances. 2. When a soccer coach tells her players at the end of a losing game, ―You did good in staying with the game plan,‖ she is _ as a measure using a/an of performance. (a) input standard (b) output standard (c) historical comparison (d) relative comparison 3. When an automobile manufacturer is careful to purchase only the highestquality components for use in production, this is an example of an attempt to ensure high performance through control. (a) concurrent (b) statistical (c) inventory (d) feedforward 4. Management by exception means . (a) managing only when necessary (b) focusing attention where the need for action is greatest (c) the same thing as concurrent control (d) the same thing as just-in-time delivery 5. A total quality management program is most likely to be associated with . (a) EOQ (b) continuous improvement Copyright © 2021 John Wiley & Sons, Inc.
(c) return on equity (d) breakeven analysis 5. The chart graphically displays the scheduling of tasks required to complete the project. (a) exception (b) Taylor (c) Gantt (d) after-action 7. When MBO is done right, who does the review of a team member‘s performance accomplishments? (a) the team member (b) the team leader (c) both the team member and team leader (d) the team leader, the team member, and a lawyer 8. A good performance objective is written in such a way that it . (a) has a flexible timetable (b) is general and not too specific (c) is impossible to accomplish (d) can be easily measured 9. A team leader is not living up to the concept of MBO if he or she . (a) sets performance objectives for subordinates (b) stays in touch and tries to support subordinates in their work (c) jointly reviews performance results with subordinates (d) keeps a written record of subordinates‘ performance objectives 10. If an organization‘s top management establishes a target of increasing new hires of minority and female candidates by 15% in the next six months, this is an example of a/an standard for control purposes. 6-135
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15. Among the financial ratios often used for control purposes, Current Assets/Current Liabilities is known as the . (a) debt ratio (b) net margin (c) current ratio (d) inventory turnover ratio
12. When one team member advises another team member that ―your behavior is crossing the line in terms of our expectations for workplace civility,‖ she is exercising a form of _ control over the other‘s inappropriate behaviors (a) clan (b) market (c) internal (d) preliminary 13. In CPM/PERT, ―CPM‖ stands for . (a) critical path method (b) control planning management (c) control plan map (d) current planning matrix 14. In a CPM/PERT analysis, the focus is on and the event that link them together with the finished project. (a) costs; budgets (b) activities; sequences (c) timetables; budgets (d) goals; costs
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Short-Response Questions 16. What type of control is being exercised in the U.S. Army‘s after-action review? The Army’s ―after-action review‖ takes place after an action or activity has been completed. This makes it a form of ―feedback‖ control. The primary purpose is to critique the action/activity and try to learn from it so that similar things in the future can be done better and so that the people involved can be best trained. 17. How could clan control be used in a TQM program? One way to use clan control in a TQM context would be to set up small teams or task forces called ―Quality Circles‖ that bring together persons from various parts of the work place with a common commitment to quality improvements. You can ask these teams or QCs to meet regularly to discuss quality results and options, and to try and maintain a continuous improvement momentum in their work areas. The members should ideally get special quality training. They should also be expected to actively serve as quality champions in their own work areas to implement continuous quality improvements and come up with ideas for new ones. 18. How can a just-in-time system reduce inventory costs? The just-in-time inventory approach reduces the carrying costs of inventories. It does this by trying to have materials arrive at a work station just in time to be used. When this concept works perfectly, there are no inventory carrying costs. However, even if it is imperfect and some inventory ends up being stockpiled, it should still be less than that which would otherwise be the case. But as the recent tsunami and nuclear disaster in Japan showed, firms that are too reliant on JIT in their supply chains must prepare for the risk of disruptions when crises and natural disasters occur. 19. What four questions could be used to set up a balanced scorecard for a small business? The four questions to ask when developing a balanced scorecard are: (1) Financial Performance—To improve financially, how should we appear to our shareholders? (2) Customer Satisfaction—To achieve our vision, how should we appear to our customers? (3) Internal Process Improvement—To satisfy our customers and shareholders, at what internal business processes should we excel? (4) Innovation and Learning—To achieve our vision, how will we sustain our ability to change and improve?
Integration and Application Question Integration and Application Question 20. Put yourself in the position of a management consultant who specializes in MBO. The local Small Business Enterprise Association has asked you to be the speaker for its luncheon next week. The president of the association says that the group would like to learn more about the topic: ―How to Use Management by Objectives for Better Planning and Control.‖ Questions: Your speech will last 15 to 20 minutes. What is the outline for your speech? Copyright © 2021 John Wiley & Sons, Inc.
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How will you explain the potential benefits of MBO to this group of small business owners? I would begin the speech by describing MBO as an integrated planning and control approach. I would also clarify that the key elements in MBO are objectives and participation. Any objectives should be clear, measurable, and time defined. In addition, these objectives should be set with the full involvement and participation of the employees; they should not be set by the manager and then told to the employees. Given this, I would describe how each business manager should jointly set objectives with each of his or her employees and jointly review progress toward their accomplishment. I would suggest that the employees should work on the required activities while staying in communication with their managers. The managers, in turn, should provide any needed support or assistance to their employees. This whole process could be formally recycled at least twice per year.
Self-Assessment 6: Internal/External Control Instructions Circle either a or b to indicate the item you most agree with in each pair of the following statements. 1. (a) Promotions are earned through hard work and persistence. (b) Making a lot of money is largely a matter of breaks. 2. (a) Many times the reactions of teachers seem haphazard to me. (b) In my experience I have noticed that there is usually a direct connection between how hard I study and the grades I get. 3. (a) The number of divorces indicates that more and more people are not trying to make their marriages work. (b) Marriage is largely a gamble. 4. (a) It is silly to think that one can really change another person’s basic attitudes. (b) When I am right, I can convince others. 5. (a) Getting promoted is really a matter of being a little luckier than the next guy. (b) In our society, an individual‘s future earning power is dependent on his or her ability. 6. (a) If one knows how to deal with people, they are really quite easily led. (b) I have little influence over the way other people behave. 7. (a) In my case, the grades I make are the results of my own efforts; luck has little or nothing to do with it. (b) Sometimes I feel that I have little to do with the grades I get. 8. (a) People such as I can change the course of world affairs if we make ourselves heard. (b) It is only wishful thinking to believe that one can really influence what happens in society at large. 9. (a) Much of what happens to me is probably a matter of chance. (b) I am the master of my fate. 10. (a) Getting along with people is a skill that must be practiced. (b) It is almost impossible to figure out how to please some people. Scoring Give yourself 1 point for 1b, 2a, 3a, 4b, 5b, 5a, 7a, 8a, 9b, 10a. Total scores of: 8–10 = high Copyright © 2021 John Wiley & Sons, Inc.
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internal locus of control, 5–7 = moderate internal locus of control, 5 = mixed locus of control, 3–4 = moderate external locus of control, 0–2 = high external locus of control. Interpretation This instrument offers an impression of your tendency toward an internal locus of control or external locus of control. Persons with a high internal locus of control tend to believe they have control over their own destinies. They may be most responsive to opportunities for greater selfcontrol in the workplace. Persons with a high external locus of control tend to believe that what happens to them is largely in the hands of external people or forces. They may be less comfortable with self-control and more responsive to external controls in the workplace.
Class Exercise 6: Stakeholder Maps Preparation Review the discussion of organizational stakeholders in the textbook. (1) Make a list of the stakeholders that would apply to all organizations—for example, local communities, employees, and customers. What others would you add to this starter listing? (2) Choose one organization that you are familiar with from each list below. (3) Draw a map of key stakeholders for each organization. (4) For each stakeholder indicate its major interest in the organization. (5) For each organization make a list of possible conflicts among stakeholders that the top manager should recognize. Nonprofit Elementary school Community hospital Church University United Way
Government Local mayor‘s office State police U.S. Senator Internal Revenue Service Homeland Security agency
Business Convenience store Movie theater National retailer Local pizza shop Urgent care medical clinic
Instructions In groups assigned by your instructor, choose one organization from each list. Create ―master‖ stakeholder maps for each organization, along with statements of stakeholder interests and lists of potential stakeholder conflicts. Assume the position of top manager for each organization. Prepare a ―stakeholder management plan‖ that represents the high-priority issues the manager should be addressing with respect to the stakeholders. Make a presentation to the class for each of your organizations and engage in discussion about the importance and complexity of stakeholder analysis.
Team Project 6: After Meeting Project Review Copyright © 2021 John Wiley & Sons, Inc.
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Instructions 1. Complete the following assessment after participating in a meeting or a group project. 1. How satisfied are you with the outcome of the meeting project? Not at all satisfied 1 2 3 4 5 5 7 Totally satisfied 2. How do you think other members of the meeting/project group would rate you in terms of your influence on what took place? No influence 1 2 3 4 5 5 7 Very high influence 3. In your opinion, how ethical was any decision that was reached? Highly unethical 1 2 3 4 5 5 7 Highly ethical 4. To what extent did you feel ―pushed into‖ going along with the decision? Not pushed into it at all 1 2 3 4 5 5 7 Very pushed into it 5. How committed are you to the agreements reached? Not at all committed 1 2 3 4 5 5 7 Highly committed 5. Did you understand what was expected of you as a member of the meeting or project group? Not at all clear 1 2 3 4 5 5 7 Perfectly clear 7. Were participants in the meeting/project group discussion listening to each other? Never 1 2 3 4 5 5 7 Always 8. Were participants in the meeting/project group discussion honest and open in communicating with one another? Never 1 2 3 4 5 5 7 Always 9. Was the meeting/project completed efficiently? Not at all 1 2 3 4 5 5 7 Very much 10. Was the outcome of the meeting/project something that you felt proud to be a part of? Not at all 1 2 3 4 5 5 7 Very much 2. Make sure that everyone in your group completed this assessment for the same team project. 3. Each person in the group should then take the “mirror test.” They should ask: (a) What are my thoughts about my team and my contributions to the team, now that the project is finished? (b) What could I do in future situations to end up with a “perfect” score after a meeting or after a project review? 4. Share results of both the assessment and mirror test with one another. Discuss their implications: (a) for the future success of the group on another project and (b) for the members as they go forward to work with other groups on other projects in the future. 5. Be prepared to share your team project results with the class as a whole.
Case Snapshot: Electronic Arts—Inside Fantasy Sports Copyright © 2021 John Wiley & Sons, Inc.
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Electronic Arts is the third largest and one of the most profitable players in the video game industry. Exclusive contracts with professional sports teams have enabled it to dominate the sports gaming market. Can EA stay in the pole position as gaming shifts to mobile in a crowded and contentious market? Case discussion questions and suggested answers: 1. DISCUSSION How can feedforward, concurrent, and feedback controls help Electronic Arts meet its quality goals for video games? Feedforward, Concurrent and Feedback controls are three types of managerial controls that illustrate how organizations react with their environments as they control internal processes. For EA, these types of control would help achieve quality goals for video games by:
Feedforward or preliminary controls ensure that EA is producing the correct products to achieve their mission and excite their target market. To do this they must keep track of their own product sales, track the sales of competing products and keep on top of the popularity of the celebrity players depicted in the sports games they develop. Students may have many other suggestions such as new gaming technology or economic trends. It is also important to use the right resource inputs. This might include talented programmers, licensing of the NFL, rights to use player likeness. Concurrent Controls ensure that the right things are being done in the work-flow process to make sure that a quality product is being produced. For EA, this would include accurate development and programming of the game to prevent glitches. Feedback Controls ensure that the final results are up to desired standards. Product testing and customer feedback would be two ways to effectively test games. Students with a strong background in testing prototype games are very likely to have much greater insight into this process than all but the most game-savvy instructor or professor!
2. DISCUSSION Which of the control systems and techniques can be most useful to EA’s next round of business decisions, and why? Recent sales have been below expectations, in the case, the company has fallen from first to sixth place in the gaming industry behind Sony, Nintendo, Microsoft, Tencent, and Activision Blizzard. Competitors are changing the nature and delivery of the product. Clearly, Electronic Arts is aware of these factors and as a result is turning its attention to trying to regain market share. 3. Problem Solving Break the video game production process down into its various components, a start-to-finish workflow model. Identify for each phase in the process the control standards that could be set so that managers make the process work best overall. First, work inputs should involve market research on the latest trends in gaming technology and turnings attention to product development and/or strategic alliances. Here feed forward controls ensure that the organization is headed in the right direction and has people, Copyright © 2021 John Wiley & Sons, Inc.
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resources and technology needed to compete. Next, they need to implement concurrent controls by ensuring that gamest are manufactured according to high quality standards and pre-tested to correct any glitches before the products are released. Lastly, Electronic Arts needs to put in place a feedback control system that gathers data from retailers, consumers, social media sites, etc. to determine what needs to be changed going forward. The control process involves: 1.) establishing objectives and standards; 2.) measuring actual performance; 3.) comparing actual performance with objectives and standards; 4.) taking necessary action as needed. The gaming business operates in a rapidly changing environment. Today‘s best seller is on the mark-down rack tomorrow. However, difficult it is to plan methodically in this industry, it needs to be done. Electronic Arts appears to be more reactive to its external environment (new technologies, consumer demands, and increasing competition) than proactive. 4. FURTHER RESEARCH What is the latest in Electronic Arts‘ quest to regain its former glory as the top gaming publisher? How well is EA positioned for future competitive advantage? Overall, is EA‘s executive team still on ―top of its game‖? How well is EA positioned for future competitive advantage? Overall, is EA‘s executive team still on ―top of its game?‖ Students’ responses may be somewhat influenced by their personal experiences with Electronic Arts products. However, since this case was written, the company has slipped to 6th place (behind Sony, Nintendo, Microsoft, Tencent, and Activision Blizzard) in the video game industry. Students may also find blogs online that detail quality problems and complaints with Electronic Arts products. Currently, their best-selling games are sports games such as FIFA, NHL, and NBA Live as well as Plants vs. Zombies, Titanfall, Dead Space, and Command & Conquer. Electronic Arts needs to move forward fast enough into newer types of game delivery and taking advantage of emerging markets and changes in technology.
Suggested Team Exercise for Chapter 6 Break the class into pairs and be sure that at least one student has a calculator in each pair. Calculate the breakeven costs for this hamburger restaurant: The selling price for each hamburger is $ 2.00 each The average cost per burger is Meat Paper Condiments Bread Labor
.50 .10 .15 .20 .20
In addition, the cost per year for rent, insurance, property taxes, and utilities which are on all the time is $75,000. Copyright © 2021 John Wiley & Sons, Inc.
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A) How many hamburgers does the restaurant need to sell to break-even? B) How many do they need to sell to make a profit of $150,000 a year? Calculations: a) Unit costs are $1.25 per burger obtained by adding the costs above. Therefore, BEP = Fixed Costs/Price per Unit -Variable Cost per Unit = $75,000/ ($2.00-$1.25) = 100,000 burgers b) The goal is to make a profit of $150,000 after covering all costs. Since we already know the BEP is 100,000 burgers and we know that we make $.75 per burger, then the restaurant needs to ―cover‖ the goal of the $ 150,000 by selling an added 200,000 burgers. So, the total is the 200,000 needed to break-even PLUS the added 150,000 burgers needed to make a profit of $ 150,000 annually. OR 350,000 TOTAL burgers will generate a profit of $150,000. Proof: 200,000 burgers X a profit of $.75 each per burger = $150,000 annually
CHAPTER 7 Strategy and Strategic Management Insights and hard work deliver results Chapter 7 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter seven provides a definition of strategy and a review of strategic management and insights. The chapter explores various levels of strategies, including those for growth, in use at most organizations. Considerable attention is then devoted to both corporate-level and businesslevel strategy formulation. Divestiture and restructuring strategies, used primarily when an organization runs into difficulties, are reviewed. A brief discussion of firms pursuing global strategies, cooperative and partnership strategies, and e-business strategies follows. Copyright © 2021 John Wiley & Sons, Inc.
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This chapter focuses on strategic management and the role that strategy plays in achieving competitive advantage and maximum organizational performance. The chapter begins by defining the key terms and concepts in strategic management and describing the strategic management process. Emphasis is placed on strategy formulation and strategy implementation. The importance of strategic management for gaining a competitive advantage is also discussed. This is followed by a discussion of the different levels of strategies used by an organization. Considerable attention is then devoted to both corporate-level and business-level strategy formulation. The chapter‘s focus then shifts to defensive strategies followed by global strategies, alliances & partnerships, and E-business strategies. Next is a review of how managers formulate and implement strategies to accomplish long-term goals and competitive advantage. The steps of the strategic management process are defined, along with an explanation of strategy formulation as the basis of organization‘s mission and objectives. A SWOT analysis, tool to analyze company and industry strategy and competitiveness, details an organization‘s internal strengths and weaknesses and external opportunities and threats is explored further. Porter‘s competitive strategies model and tools to understand the competition position of a company and challenges within its industry are reviewed. Last is a discussion of strategic leadership to ensure strategy implementation and control.
Chapter 7 Learning Objectives
Learning Objective7.1 Explain the types of strategies used by organizations Learning Objective7.2 Describe how managers formulate and implement strategies
Chapter 7 Lecture Outline:
Learning Objective 7.1 Explain the Types of Strategies Used by Organizations. o Strategy is a comprehensive plan for achieving competitive advantage o Organizations use corporate, business, and functional strategies o Growth strategies focus on expansion o Restructuring and divestiture strategies focus on consolidation o Global strategies focus on international business opportunities o Cooperative strategies focus on alliances and partnerships o E-business strategies use the web and apps for business success
Learning Objective 7.2 Describe How Managers Formulate and Implement Strategies. o The strategic management process formulates and implements strategies o SWOT analysis identifies strengths, weaknesses, opportunities, and threats o Porter‘s five forces model examines industry attractiveness o Porter‘s competitive strategies model identifies business or product strategies
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o Portfolio planning examines strategies across multiple businesses or products o Strategic leadership ensures strategy implementation and control
Chapter 7 Supporting Materials Figures Figure 7.1: The Value Proposition Underlying Strategy in Organizations Figure 7.2: What Are the Steps in the Strategic Management Process? Figure 7.3: What is the Purpose of SWOT Analysis? Figure 7.4: What Is Porter‘s Five Forces Model of Industry Attractiveness? Figure 7.5: What are Strategic Options in Porter‘s Competitive Strategies Model? Figure 7.6: Why is the BCG Matrix Useful in Strategic Planning? What’s inside? Career Readiness: Diversity in leadership linked to financial performance Choices: Pandemic Lockdowns Hit Minority Businesses Hard Ethics: The Purpose of Companies in the Fourth Industrial Revolution Analytics: Disposable workers are indispensable to business profits Issues: Today’s Graduates Must ―Jump Right In‖ Insight: Get and stay ahead with critical thinking Quick Case: Kickstarting a friend’s business idea Applications TestPrep 7 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 7: Facts and Inferences o Class Exercise 7: Strategic Scenarios o Team Project 7: Contrasting Strategies Case Snapshot: Dunkin‘– Growth Feeds a Sweet Tooth
Chapter Outline: Learning Objective 7.1: Explain the Types of Strategies Used by Organizations?
Strategy is a comprehensive plan for achieving competitive advantage Strategic leadership identifies and communicates a strategic vision and inspires others to work hard to accomplish it. A strategy is a comprehensive action plan for allocating resources to accomplish long-term goals ―Best guess‖ about what to do to be successful in the face of rivalry and changing conditions Mission—a clear and ideally lofty sense of purpose or why you exist Strategic intent – a clear and lofty sense of where you are going in the future Competitive advantage is the ability to outperform rivals
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Sustainable Competitive Advantage is a way of operating that is difficult to imitate Figure 7.1 summarizes the value proposition underlying the role of strategy in organizations. Mission and Strategic Intent: Why you exist and where you are heading Strategy: How you are going to get there Competitive Advantage: What you can do better than rivals Organizations use corporate, business and functional strategies Corporate strategy provides direction and guides resource use for the organization as a whole Business strategy focuses on the strategic intent for a single business unit or product line Functional strategy guides activities to implement higher-level business and corporate strategies Such as Marketing, Finance, Manufacturing, Marketing, and Human Resources Growth strategies focus on expansion Growth strategies are those designed to increase the size of current operations Concentration strategies focus on expansion within an existing business area Diversification strategies focus on expansion by entering new business areas o Related – similar or complementary business areas o Unrelated – entirely new business areas o Vertical integration - acquire suppliers (backward) or distributors (forward)
Restructuring and divestiture strategies focus on consolidation A retrenchment strategy seeks to correct weaknesses by making radical changes to current ways of operating Liquidation – when a business closes and sells is assets to pay creditors A restructuring strategy reduces the scale or mix of operations Chapter 11 bankruptcy - protects an insolvent firm from creditors during a period of reorganization to restore profitability Downsizing seeks to decrease the size of operations Divestiture sells off parts of the organization to refocus attention on core business areas
Global strategies focus on international business opportunities Globalization strategy adopts standardized products and advertising for worldwide use Gillette razors Multidomestic strategy customizes products and advertising to meet local cultural needs Proctor & Gamble consumer products Transnational strategy integrates global operations without having a strong national identity Ford, Sony
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Cooperation Strategies focus on alliances and partnerships Strategic alliances - organizations join together in partnership to pursue an area of mutual interest Outsourcing alliances - contracting to purchase specialized services from another organization. Supplier alliances - suppliers have preferred relationships with others in the supply chain to facilitate smooth flow of supplies. Distribution alliances - firms cooperate for product/service sales and distribution. Coopetition - working with rivals on projects of mutual benefit Competitors Daimler and BMW work together to co-develop new motors and parts for hybrid cars E-business strategies use the web and apps for business success B2C – business to consumers; use the Web and apps to link businesses directly with consumers B2B – business to business; link businesses with members of their supply chains C2B – consumers to business; use the Web and apps to link consumers with businesses C2C – consumers to consumers; use the Web and apps to link consumers with each other P2P – peer to peer; use the apps to link persons in need of services with those willing to provide them Social media strategy -social media is used to engage customers and other external groups Crowdsourcing - social media strategy that uses the Web to allow customers to make suggestions and express opinions on products and their designs. Table 7.1 summarizes the types of web-based business models Advertising model Brokerage model Community model Freemium model Infomediary model Merchant model Referral model Subscription model
7.1 Questions for discussion with Suggested Answers 1) With things changing so fast today, is it really possible for a business to achieve ―sustainable‖ competitive advantage? It is much more difficult to sustain an advantage today, with the speed of change and technology. However, companies can create a sustainable culture than allows a sustainable advantage through ongoing commitments to innovation and continuous
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improvement. Examples are Apple, 3M, Proctor and Gamble, Toyota, and many other companies. 2) Why is growth such a popular business strategy? Growth is popular because so many owners and investors desire growth in their returns on capital. Additionally, American culture in particular is growth-oriented compared to other cultures. 3) Is it good news or bad news for investors when a business announces that it is restructuring? Usually restructuring plans are treated as ―good news‖ for investors. The reason for this is that such plans are usually developed when a company is experiencing financial difficulties or sales are slowing, etc. The restructuring plan sends a signal to the market and investors that management is addressing issues and has a plan in place for improving results. 7.1 Career Situation: What Would You Do? A neighborhood business association has members from the local coffee bistro, bookstore, drugstore, hardware store, and bicycle shop. The owners of these businesses are interested in how they might ―cooperate‖ for better success. Be a business consultant to the association. What would you propose as possible strategic alliances and cooperation strategies so these businesses can work together for mutual gain?
Student answers will vary. For example, the bookstore and coffee bistro can form an alliance and sell each other’s products and services; a coffee station can be set up at the bookstore and a book kiosk can be set up at the coffee shop. Similarly, other combinations for all of the business can be achieved – students should be encouraged to find possible synergies through alliances.
Learning Objective 7.2 Describe How Do Managers Formulate and Implement Strategies.
The strategic management process analyzes, formulates, and implements strategies Strategic management is the process of analyzing, formulating, and implementing strategies to accomplish long-term goals and sustain competitive advantage Strategic analysis assesses the organization, its environment, its competitive positioning, and its current strategy Strategy formulation uses the insights of strategic analysis to craft strategies to fit mission and strategic intent, objectives, and environmental conditions Strategy implementation is the process of putting strategies into action
See Figure 7.2 for a description of the steps in the management process Analyze current situation Analyze organization and external environment Develop new strategies Implement strategies
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Evaluate results
SWOT analysis identifies strengths, weaknesses, opportunities, and threats SWOT analysis involves a detailed examination of organizational strengths and weaknesses, as well as environmental opportunities and threats.
See Figure 7.3 for a depiction of SWOT analysis Internal Assessment of the Organization includes its strengths and weaknesses External assessment of the organization includes its opportunities and threats Core competency is a special strength that gives an organization a competitive advantage DISCUSSION TOPIC To prompt a lively discussion, engage the students in a SWOT analysis of your college or university. They will typically have a lot of opinions some quite insightful about the strengths and weakness of the institution. They are likely to be less well informed about the opportunities and threats that exist in your institution‘s external environment. This activity provides students with a real-life application of SWOT analysis that will help them to better understand how to use this analytical tool.
Tips to Remember: Key Operating Objectives of Organizations Profits Cost efficiency Market share Product quality Talented workforce Innovation Social responsibility Sustainability
Porter’s five forces model analyzes industry attractiveness Figure 7.4 illustrates the five forces model which include competitors, new entrants, suppliers, customers and substitutes Bargaining power of suppliers Bargaining power of customers Threat of new entrants to industry Threat of substitute products Rivalry among firms in industry Unattractive industry – intense rivalry, easy entry, substitute products, high suppliers and customers Attractive industry – low rivalry, barriers to entry, few or no substitute products, low supplier and customer power
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Porter’s competitive strategies model identifies business or product strategies A differentiation strategy seeks competitive advantage through uniqueness A cost leadership strategy seeks competitive advantage through operating with lower costs than competitors A focused differentiation strategy seeks competitive advantage through concentration on special market segment and offering a unique product to that segment‘s customers A focused cost leadership strategy seeks competitive advantage through concentration on a special market segment and being the low-cost provider to that market segment‘s customers See Figure 7.5 for a depiction of competitive strategies model in the soft drink industry What is the market scope – broad or narrow? What is the expected source of competitive advantage – lower price or product uniqueness? The four combinations of answers result in: Differentiation Cost leadership Focused differentiation Focused cost leadership
DISCUSSION TOPIC If you used the Discussion Topic regarding a SWOT analysis of your college or university, you can continue with that scenario in this Discussion Topic. Have the students discuss which of Porter‘s generic strategies that your college or university uses. Make sure that the students fully explain their reasoning.
Portfolio planning examines strategies across multiple businesses or products Useful for companies that operates a variety of businesses BCG matrix analyzes business and product strategies based on market growth rate and market share See Figure 7.6 for a depiction of the BCG matrix approach Stars - high market share in high growth markets Cash cows - high market share in low growth markets Question marks - low market share in high growth markets Dogs - low market share in low growth markets
Strategic leadership ensures strategy implementation and control Requires supporting structures, a good allocation of tasks and work flow designs, and the right people to staff all aspects of operations Strategic leadership identifies and communicates a strategic vision and inspires others to work hard to accomplish it A strategic leader has to: Be a guardian of trade-offs Create a sense of urgency Make sure that everyone undersands the strategy
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Be a teacher Be a champion of control Strategic control - responsibility of top managers to keep in touch with strategy, how well it is being implemented and poor strategies are tweaked or scrapped DISCUSSION TOPIC Ask students to pick an industry and find examples of companies that seem to be using strategic control as opposed to those who are not. Discuss these in light of the corporate bailouts being sought by corporations vs. those who are not. 7.2 Questions for discussion with Suggested Answers 1) Can an organization have a good strategy but a poor sense of mission? Yes, a strategy answers the question ―how‖ we will succeed; the mission says ―what‖ the purpose of the organization is. If a company has a poorly written mission statement that allows for a ―jack of all trades‖ business definition, the company may attempt to become a conglomerate and fail, or perform with mediocrity, even though the strategies in each separate business/ market may be sound. On the other hand, a company may see its mission as very narrowly defined and miss out on opportunities for growth or adaptation. 2) Would a monopoly receive a perfect score for industry attractiveness in Porter‘s five forces model? Monopolies would be very close and may receive a perfect score. The only area where this may be less than perfect is the power of suppliers. Even a monopoly must rely on suppliers. Unless the monopoly happens to also be the sole customer for the supplier’s products (unlikely for most resources), then that aspect would make the ―score‖ less than perfect. 3) Does the BCG Matrix oversimplify a complex strategic management problem? Yes, the BCG matrix oversimplifies strategic positions and strategic planning. It offers a ―formula‖ approach and may lead to abandoning a business that may yield very high returns if management attention is focused on the business in question. Very few companies use the BCG matrix; it was popular in the 1970’s when conglomerates were in vogue. 7.2 Career Situation: What Would You Do? For some years now, you‘ve owned a small specialty bookshop in a college town. You sell some textbooks but mainly cater to a broader customer base. Your store always stocks the latest fiction, nonfiction, and children‘s books. Recent numbers show a steep decline in sales, including of books that would normally be considered best sellers. You suspect this is because of the growing popularity of e-books and e-readers such as the Amazon Kindle and Barnes & Noble Nook. Some of your friends say it‘s time to close up because your market is dying. Is it hopeless, or is there a business strategy that might yet save the store?
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Student answers will vary. Students should be encouraged to perform a SWOT analysis. A possible focused differentiation strategy can be explored which focuses on giving customers a unique experience with hosting book club events and possible alliances with local coffee shop or even creating an in-house coffee/bookshop environment.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Diversity in Leadership Linked to Financial Performance A McKinsey study of 366 companies found that financial performance was higher as the percentage of women and minorities in top management teams increased. Gender diversity delivered a 15% performance benefit while the advantage for ethnic diversity was 35%. If the diversity advantage is real, why aren‘t more U.S. companies making it part of their performance strategies? If the diversity advantage applies in large organizations, will it hold true for smaller ones? How your teams – work and personal, are you getting the most out of the diversity advantage? Student answers will vary. However, it should be emphasized that the more diverse your personnel at different levels even in small organization, the greater the success possibilities.
Ethics: The Purpose of Companies in the Fourth Industrial Revolution In celebration of its 50th anniversary, the World Economic Forum (WEF) updated the Davos Manifesto, which for years has offered principles to guide company leaders. The new manifesto recognizes tremendous changes in society and the role companies do and should play in this context. ―Today‘s global companies,‖ the WEF states, ―are agents of unprecedented change, playing a greater role than ever before in shaping the political, social, and cultural forces that are transforming the world.‖ Should this manifesto guide any business of any size and type and anywhere in the world? Is this manifesto adequate as a guide for businesses to follow in order to act responsibility as local and global citizens while still producing goods and services for profit? What would you add or change to strengthen it further? Does the notion of ―shared value‖ offer real opportunities to rally the power of businesses to help solve the great problems of our day, including global pandemics, climate change, income inequality and poverty, health-care disparities, and more? Student answers will vary. This can be used as a good class discussion issue.
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Choices: Pandemic Lockdowns Hit Minority Businesses Hard The coronavirus pandemic hit hard, fast, and with a vengeance. The health crisis quickly became an economic one as well. Shelter-in-place orders resulted in skyrocketing unemployment, lost tax revenues for municipalities and states, and ―closed‖ or ―out of business‖ signs being all too common on storefronts. The Wall Street Journal called the Covid lockdown ―the equivalent, in only weeks, of four great depressions.‖ Some 3.3 million businesses shut down, a loss of 22% overall. While most everyone suffered, some suffered more than others. Small minority-owned businesses were especially hard hit. The National Bureau of Economic Research (NBER) reported that in just four months, the number of ―active black business owners‖ fell 41%. The loss of businesses owned by Latinos was 35%, and by women 25%. The researchers concluded that prolonged economic damage ―may be problematic for broader racial inequality because of the importance of minority businesses for local job creation.‖ How can small businesses handle a crisis like this and still survive? Can they plan ahead now to better deal with the next one? Is any strategy capable of withstanding such a blow? What is the role of government when something like this happens? Why did minority firms take a such a disproportionately large hit? What does their suffering mean for race equality and social justice long term? What can and should be done to help them to do well in the future and to keep creating jobs in their communities? Student answers will vary. One way to approach this issue is to divide the class in teams to research the different responses implemented by various businesses and cities/counties/states. The teams could be asked to prepare a best practices guideline and present to the class.
Issues: Today’s Graduates Must ―Jump Right In‖ When you hear the term sunrise industry, you think of a business that is upbeat, on the move, one to watch. When you hear the term sunset industry, you think of a business on the decline, past its prime, and of the need to watch out. Now, think strategically. Picture yourself as an industry. Are you ―sunrise‖ or ―sunset‖? What can you do now to make sure that you are on the right side when you answer this question? A Wall Street Journal survey of employers confirms that technical skills are changing fast. It‘s a bit like the popular TV show Project Runway: One day you‘re in and the next day you‘re out. The Survey report goes on to say that employers want ―fast learners who can quickly evolve and have exceptional soft skills—the ability to write, listen, and communicate effectively.‖ In other words, when the sun is setting, it‘s time to muster all of your learning capacities and face the sunrise ready to conquer a new day. What‘s Your Take? How would you turn the advice just given into a set of ―guidelines‖ for your behavior in a new job? What do you self-assess as personal strengths and weaknesses based on this list? Make a list of your ―hard skills‖—the technical ones. Then list your ―soft skills‖—the ones the WSJ survey Copyright © 2021 John Wiley & Sons, Inc.
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suggests are most likely to help you in the long term. What are the implications of these lists? Perhaps most important of all: Are you a ―fast learner‖ prepared to continuously update and improve yourself to stay a step ahead of the changes taking place in our fast-paced environment? Student responses will vary.
Quick Case: Kick Starting a Friend’s Business Idea This case asks students to act as a person with money and a nice stock portfolio who is often a target for handouts and loans. A friend is looking for advice and financing for a small shop called The Design Place where customers can go to choose fabrics, and then use a workspace to design their own fashions. Students should discuss various questions to ask and come up with strategic business advice to offer. Students should reflect on the successes of other do-it-yourself stores and discuss whether this business proposal has any real potential.
Choices: Can the Sharing Economy Create Good Jobs? The advice is increasingly frequent in everyday conversations. Need a ride? Call Uber instead of a taxi. Need a small job done in your home or small business? Go online with TaskRabbit and book a ―tasker‖ ready to jump on it. Need someone to watch your dog while you take a long weekend in the city? Let Dogvacay match you with a nearby dog sitter. There‘s more to come. What‘s Your Take? The sharing economy is here, but what are its implications for large and small employers, for career seekers, and for society at large? Is this a hot spot for innovation and eventual job creation, or is another sign that income inequalities are here to stay? How can the sharing economy be turned into a real strategic opportunity that benefits employers and workers alike? What are the career strategy implications of all this for you? Student responses will vary. Many of them may already be users of services such as Uber and Tasker, hence, should be able to contribute firsthand to the discussion as consumers and/or job seekers.
Analytics: Disposable Workers Are Becoming Indispensible to Business Profits It‘s the era of disposable. Businesses are enamored with the idea of hiring less full-timers and more part-time or temporary workers that can be added and let go according to demand. The ―Your Interpretation‖ section poses questions about whether the switch to more disposable workers is a good long-term business strategy and the downsides to remaining employees.
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Discuss with students how this trend may impact them and whether it is something they have factored into their career plan.
Insight: Get and Stay Ahead with Critical Thinking Managers face significant challenges as they try to move their organizations forward in the world‘s increasingly complex and ever-changing environments. When the environment is complicated and uncertain, critical thinking skills are especially important. They help us to gather, organize, analyze, and interpret information to make good decisions in situations that range from difficult to totally perplexing. The same critical thinking that is part of a rigorous class discussion or case study in your course is what helps managers to create strategies that result in competitive advantage. But managers rarely have the luxury of full information boxed up for analysis in a nice, neat case format. Many life and career events are similar to puzzles; everything looks pretty easy until you sit down and try to put all the pieces together. Are your critical thinking skills able to meet the challenges of a constantly changing competitive landscape? How good are you at making critical connections in unusual situations? For starters, take a stab at the two puzzles shown here.
Skill Building Portfolio Terms to Define:
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B2B business strategy B2C business strategy BCG Matrix Business strategy C2B business strategy C2C business strategy Chapter 11 bankruptcy Competitive advantage Concentration Coopetition Core competencies Corporate strategy Cost leadership strategy Crowdsourcing Differentiation strategy Diversification Divestiture Downsizing E-business strategy Focused cost leadership strategy Focused differentiation strategy Functional strategy Globalization strategy Growth strategy Liquidation Mission Multidomestic strategy P2P business strategy Restructuring Retrenchment strategy Social media strategy Strategic alliance Strategic analysis Strategic control Strategic intent Strategic leadership Strategic management Strategy Strategy formulation Strategy implementation Sustainable competitive advantage SWOT analysis Transnational strategy Vertical integration
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TestPrep 7: Multiple-Choice Questions 1. Which is the best question to ask when starting the strategic management process? (a) ―What is our mission?‖ (b) ―How well are we currently doing?‖ (c) ―How can we get where we want to be?‖ (d)―Why aren‘t we doing better?‖ 2. The ability of a firm to consistently outperform its rivals is called (a) vertical integration (b) competitive advantage (c) strategic intent (d)core competency 3. General Electric is a complex conglomerate that owns many firms operating in very different industries. The strategies pursued for each of these units within GE would best be called __________ level strategies. (a) corporate (b) business (c) functional (d)transnational 4. An organization that is downsizing by cutting staff to reduce costs can be described as pursuing a strategy. (a) liquidation (b)divestiture (c)retrenchment (d)stability 5. When you buy music downloads online, the firm selling them to you is engaging in which type of e-business strategy? (a) B2C (b) B2B (c) infomediary (d)crowdsourcing 6. The alliances that link together firms in supply chain management relationships are examples of how businesses try to use strategies. (a) B2C (b)growth (c) cooperation (d) concentration 7. Among the global strategies that international businesses might pursue, the strategy most directly tries to tailor products to fit local needs and cultures in Copyright © 2021 John Wiley & Sons, Inc.
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different countries. (a) concentration (b)globalization (c) transnational (d) multidomestic 8. If Google‘s top management were to announce that the firm was going to buy Federal Express, this would indicate a growth strategy of . (a) diversification (b) concentration (c) horizontal integration (d)vertical integration 9.
are an organization‘s special strengths that help it outperform competitors. (a) Core competencies (b) Strategies (c) Alliances (d)Operating objectives
10. A
in the BCG Matrix would have a high market share in a low-growth market.
(a) dog
(b) cash cow (c) question mark (d)star 11. In Porter‘s five forces model, which of the following conditions is most favorable from the standpoint of industry attractiveness? (a) many competitive rivals (b)many substitute products (c) low bargaining power of suppliers (d) few barriers to entry 12. The two questions asked by Porter to identify the correct competitive strategy for a business or product line are ―What is the market scope?‖ and ―What is the ?‖ (a) market share (b) source of competitive advantage (c) core competency (d)industry attractiveness 13. When snack food makers spend millions on ads trying to convince customers that their products are unique, they are pursuing a strategy. (a) transnational (b)concentration (c) diversification Copyright © 2021 John Wiley & Sons, Inc.
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(d) differentiation 14. A firm that wants to compete with rivals by selling a very-low priced product in a broad market would need to successfully implement a strategy. (a) retrenchment (b) differentiation (c) cost leadership (d) diversification 15. In addition to focusing on strategy implementation and strategic control, the responsibility for strategic leadership of an organization involves success with . (a)motivating a disposable workforce (b) the process of continuous change (c) Chapter 11 bankruptcy (d)growth by liquidation
Short-Response Questions: 16. What is the difference between corporate strategy and functional strategy? A corporate strategy sets long-term direction for an enterprise as a whole. Functional strategies set directions so that business functions such as marketing and manufacturing support the overall corporate strategy. A corporate strategy sets long-term direction for an enterprise as a whole. Functional strategies set directions so that business functions such as marketing and manufacturing support the overall corporate strategy. 17. Why is a cost leadership strategy so important when one wants to sell products at lower prices than competitors? If you want to sell at lower prices than competitors and still make a profit, you have to have lower operating costs (profit 3 revenues 5 costs). Also, you have to be able to operate at lower costs in ways that are hard for your competitors to copy. This is the point of a cost leadership strategy—always seeking ways to lower costs and operate with greater efficiency than anyone else. 18. What strategy should be pursued for a ―question mark‖ in the BCG Matrix, and why? A question mark in the BCG matrix has a low market share in a high growth industry. This means that there is a lot of upside potential, but for now it is uncertain whether or not you will be able to capitalize on it. Thus, hard thinking is required. If you are confident, the recommended strategy is growth; if you aren’t, it would be retrenchment, to allow resources to be deployed into more promising opportunities. 19. What is strategic leadership? Copyright © 2021 John Wiley & Sons, Inc.
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Strategic leadership is the ability to enthuse people to participate in continuous change, performance enhancement, and the implementation of organizational strategies. The special qualities of the successful strategic leader include the ability to make tradeoffs, create a sense of urgency, communicate the strategy, and engage others in continuous learning about the strategy and its performance responsibilities.
Integration and Application Questions: Integration and Application Question 20. Kim Harris owns and operates a small retail store, selling the outdoor clothing of an American manufacturer to a predominantly college-student market. Lately, a large department store outside of town has started selling similar but lower-priced clothing manufactured in China, Thailand, and Bangladesh. Kim is starting to lose business to this store. She has asked your instructor to have a student team analyze the situation and propose some strategic alternatives to best deal with this threat. You are on the team. Questions: Why would a SWOT analysis be helpful in addressing Kim‘s strategic management problem? How could Porter‘s competitive strategies model be helpful as well? A SWOT analysis is useful during strategic planning. It involves the analysis of organizational strengths and weaknesses, and of environmental opportunities and threats. Such a SWOT analysis in this case would help frame Kim’s thinking about the current and future positioning of her store, particularly in respect to possible core competencies and competitive opportunities and threats. Then she can use Porter’s competitive strategy model for further strategic refinements. This involves the possible use of three alternative strategies: differentiation, cost leadership, and focus. In this situation, the larger department store seems better positioned to follow the cost leadership strategy. This means that Kim may want to consider the other two alternatives. A differentiation strategy would involve trying to distinguish Kim’s products from those of the larger store. This might involve a ―made in America‖ theme or an emphasis on leather or canvas or some other type of clothing material. A focus strategy might specifically target college students and try to respond to their tastes and needs rather than those of the larger community population. This might involve special orders and other types of individualized service for the college student market.
Self-Assessment 7: Facts and Inferences Instructions 1. Read the following report. A well-liked college instructor had just completed making up the final examination and had turned off the lights in the office. Just then a tall, broad figure with dark glasses appeared and demanded the examination. The professor opened the drawer. Everything in the drawer was picked up, and the individual ran down the corridor. The president was notified immediately. Copyright © 2021 John Wiley & Sons, Inc.
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2. Indicate whether you think the following observations are true (T), false (F), or doubtful in that it may be either true or false (?). Judge each observation in order. Do not reread the observations after you have indicated your judgment, and do not change any of your answers. 1. The thief was tall, broad, and wore dark glasses. 2. The professor turned off the lights. 3. A tall figure demanded the examination. 4. The examination was picked up by someone. 5. The examination was picked up by the professor. 6. A tall, broad figure appeared after the professor turned off the lights in the office. 7. The man who opened the drawer was the professor. 8. The professor ran down the corridor. 9. The drawer was never actually opened. 10. Three persons are referred to in this report. Scoring The correct answers in reverse order (starting with 10) are: ?, F, ?, ?, T, ?, ?, T, T, ?. Interpretation To begin, ask yourself if there was a difference between your answers and the correct ones. If so, why? Why do you think people, individually or in groups, may answer these questions incorrectly? Good planning depends on good decision making by the people doing the planning. Being able to distinguish ―facts‖ and understand one’s ―inferences‖ are important steps toward improving the planning process. Involving others to help do the same can frequently assist in this process.
Class Exercise 7: Strategic Scenarios Preparation In today‘s turbulent economic climate, it is no longer safe to assume that an organization that was highly successful yesterday will continue to be so tomorrow—or that it will even be in existence. Changing times exact the best from strategic planners. Think about the situations currently facing the following well-known organizations. Think, too, about the futures they may face. McDonald‘s Ford Sony Apple Computer Nordstrom United Airlines Yahoo! National Public Radio AT&T Ann Taylor The New York Times Federal Express Instructions Form into groups as assigned by your instructor. Choose one or more organizations from the prior list (or as assigned) and answer the following questions for the organization: 1. What in the future might seriously threaten the success, perhaps the very existence, of this organization? As a group, develop at least three such future scenarios. 2. Estimate the probability (0 to 100%) of each future scenario occurring. Copyright © 2021 John Wiley & Sons, Inc.
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3. Develop a strategy for each scenario that will enable the organization to successfully deal with it. 4. Thoroughly discuss these questions within the group and arrive at your best possible consensus answers. Be prepared to share and defend your answers in general class discussion.
Team Project 7: Contrasting Strategies Starbucks is the dominant name among coffee kiosks—how does Dunkin Donuts compete? Google has become the world‘s search engine of choice—can Bing ever catch up? Does it make a difference to you whether you shop for books at Amazon or Barnes & Noble, or buy gasoline from BP, Shell, or the local convenience store? Question How do organizations in the same industry fare when they pursue somewhat or very different strategies? Instructions 1. Look up recent news reports and analyst summaries for each of the following organizations: Coach and Kate Spade . . . Southwest Airlines and Delta Airlines . . . New York Times and USA Today . . . UnderArmour and Lululemon . . . National Public Radio and Sirius Satellite Radio. . . Coca-Cola and PepsiCo 2. Use this information to write a short description of the strategies that each seems to be following in the quest for performance success. 3. Compare the strategies for each organizational pair, with the goal of identifying whether or not one organization has a strategic advantage in the industry. 4. Try to identify other pairs of organizations and do similar strategic comparisons for them. 5. Prepare a summary report highlighting (a) the strategy comparisons and (b) those organizations whose strategies seem best positioned for competitive advantage.
Cases for Critical Thinking Dunkin’– Growth Feeds a Sweet Tooth Long before Starbucks was even a glimmer in anyone‘s entrepreneurial mind, Dunkin‘ Donuts was a well-known chain of coffee shops in the Northeast. Today, Dunkin‘ Donuts is a global player quickly expanding its food and coffee menus to ride the wave of fresh trends appealing to a generation of more health-conscious customers. It‘s a highly competitive industry and change is constantly on its menu. With Starbucks rethinking its positioning strategy and McDonald‘s offering a great tasting coffee at a reasonable price, Dunkin‘ Donuts is hoping that careful strategic planning will keep its customers ―Runnin on Dunkin.‖ Case discussion questions and suggested answers:
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1. DISCUSSION What does a Porter‘s Five Forces analysis suggest about the attractiveness of competing in the same industry as Starbucks? What are the strategic implications for Dunkin‘ Donuts? Porter's Five Forces model analyzes factors that influence a specific industry to help managers understand its competitive factors. An analysis of the factors would seem to indicate that the industry is very competitive and competitive advantages can be very quickly copied. The Five Factors as they apply to Dunkin’ Donuts and Starbucks might include:
New entrants - Dunkin’ and Starbucks sell breakfast beverages and pastries in an effort to expand its breakfast menu. Competition includes expansion by similar regional companies like Caribou Coffee and McDonald’s whose offerings include premium coffee. Customers - the bargaining power of buyers is very influential to the industry. The current recession has resulted in the closing of hundreds of Starbucks locations, while relatively few of the franchised Dunkin’ Donuts have closed. Substitute products - the large number of substitute beverages and breakfast alternatives makes this a huge factor in the industry. Suppliers - occasionally the supply of coffee beans is limited, driving up the cost of the beverage. Industry competition - Starbucks and other regional coffee shops; convenience stores like 7-Eleven and Circle K; fast food restaurants like McDonald’s and Burger King.
2. PROBLEM SOLVING Complete an up-to-date SWOT analysis for Dunkin‘ Donuts. If you were the CEO of the firm, what would you consider to be the strategic management implications of this SWOT analysis, and why? Strengths Brand Recognition
Weaknesses Debt levels
Opportunities International market expansion
Threats Competition from others High level of competition from the other quick service and fast casual brands: The other QSR brands like Starbucks, McDonalds and KFC pose a major competitive threat. Most of them have expanded internationally and enjoy a larger market share. Dunkin needs to catch up faster.
Customer Loyalty
Dunkin’ is nowhere near the level of penetration in developing countries as compared to others
Low calorie menu items / Healthier choices on menu
Healthier lifestyles and eating patterns (avoidance of high calorie/sugary foods) Increased awareness of healthy food choices
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Large variety of flavors of donuts and baked items
Low barrier to entry for competitors
Online marketing to increase customer basis
Known for its coffee
Perception of nonexistent healthy choices Conflict with franchise owners—poor relationships and numerous lawsuits Poor expansion in fast developing or newly developed economies: pace of growth in comparison to competitors is still slow.
Social media to increase customer base Expansion outside the United States (emerging markets)
Number of locations and international presence
Loyalty program
Years of experience/longevity Major sports team association (Red Sox)
Advertising and marketing programs and strategies Reputation for high quality, superior grade of coffee Largest seller of coffee by the cup Supply chain management – Centralized production designed to support growth for the Dunkin’ Donuts brand.
Currency fluctuations and stronger dollar rate affects the brand’s revenue. Childhood diseases on the rise (diabetes and obesity) Competition from local pastry and coffee shops
Product expansion
Competition from McDonald’s and Starbucks (coffee and donuts)
Coffee consumption on the rise in Asia, along with income levels Recessionary spending on ―comfort foods‖ and less expensive snacks compared to other storebought items Growth through franchising Continued store growth
Price of coffee beans
Awareness of Fair Trade policies for coffee bean purchases.
Increased raw material costs and coffee costs
The strategic management implications of this SWOT analysis Review current situation would include developing and implementing new strategies and evaluate results. 3. FURTHER RESEARCH Research the latest moves by Starbucks and other Dunkin‘s competitors. What is each doing that seems similar to and different from the approach of the other? Can you say that Dunkin‘ is on the right track? Is it carving out new market share? Or, is it going to be more of a copycat player in the industry? Latest news for: Starbucks: The company said it had reached its previously announced goal of hiring 10,000 U.S. military veterans and active-duty spouses a year ahead of schedule, and set a new, expanded goal of hiring 25,000 veterans and military spouses by 2025. Starbucks pledged to hire 10,000 refugees around the world, and did so by working with Copyright © 2021 John Wiley & Sons, Inc.
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the United Nations and other organizations to find and train refugee candidates. Former CEO, Howard Schultz also said Starbucks has hired 40,000 young Americans who aren’t employed or in school, far exceeding its goal of hiring 10,000 by 2018. Its next goal is to hire 100,000 by 2020. The company plans to open 12,000 new stores globally over the next five years, creating 240,000 jobs, 68,000 of them in the U.S. Incoming CEO Kevin Johnson will further develop Starbucks’ food and digital offerings.
New food offerings include New Seared Steak, Egg and Tomatillo Wrap, New Chicken & Quinoa Protein Bowl with Black Beans and Greens, New Vegan Lentils & Vegetables Protein Bowl with Brown Rice, Iced Coconutmilk Mocha Macchiato,
New offerings include iced espresso beverages featuring refreshingly cool coconutmilk, new Teavana Shaken Iced Tea Infusions and a delicious new highprotein breakfast wrap and lunch bowls.
The company is testing a lunchtime menu, called Starbucks Mercato, featuring graband-go salads and sandwiches made fresh daily.
On the digital front, some Ford vehicle owners should soon be able to place Starbucks orders using voice command in their cars.
Starbucks earlier this year had announced the ability to order by voice through Amazon’s Alexa platform (as well as through Starbucks’ own My Starbucks barista feature on its mobile app).
With the planned integration of Alexa into Ford vehicles, owners of the cars equipped with SYNC3 will be able to place voice orders for Starbucks beverages using Alexa.
Starbucks has introduced several new sandwiches and salads on its menu to increase sales in the U.S. in the slower afternoon and evening hours. With McDonald’s and Burger King offering specialty coffees, one way for Starbucks to increase its revenue is by offering food items. Starbucks announced that it will include calorie information on menu boards at all company-operated and licensed U.S. Starbucks. Opened first store in New Delhi, India and entered Vietnamese market. Expansion of company’s loyalty and renamed rewards program Industry-first innovation that will enable customers to earn rewards for grocery channel purchases that can be redeemed in Stabucks retail stores. Expansion of mobile payment platform Launch of new nonprofit corporation with a $1 million seed grant to introduce job skills, leadership and apprenticeship programs to young people across the company’s Expansion of mobile payments platform, which is generating over three million U.S. mobile payments per week. Dunkin’: Copyright © 2021 John Wiley & Sons, Inc.
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In summary, Dunkin’ Donuts is shortening its name to Dunkin’ to deemphasize its donuts (the company sells more coffee than donuts). It is focused on an improved customer experience and will implement a six-part plan to fuel U.S. strategic growth. Dunkin’ hopes to build its coffee culture and to position itself as a coffee leader.
The company is considering shortening its iconic brand name to simply ―Dunkin’,‖ to deemphasize its donuts. Because it sells more coffee than donuts, its brand differentiation is based on offering a combination of both. It is a response to the growing popularity of specialty coffee and declining consumption of carbonated soft drinks. Dunkin is focused on improving the restaurant experience for customers – by being fast, friendly and focused. In a recent year, Dunkin’ experienced negative comparable store sales in several key international markets largely as the result of consumers finding their discretionary spending negatively impacted by sluggish local economies and currency devaluation. Dunkin' most recently counted more than 12,300 Dunkin' Donuts franchises and more than 7,800 Baskin-Robbins restaurants. Following extensive consumer research, the company has undertaken the implementation of a six-part plan to fuel Dunkin’s strategic growth in the U.S. and better position the company as a beverage-led, on-the-go brand. The plan includes: building our coffee culture; faster and improved product innovation; targeted value and smart pricing; being a leader in digital; improving the restaurant experience; and driving consumer packaged goods and new channels. Over the past year, the company announced the launch of a line of Dunkin' Donuts branded ready-to-drink iced coffee beverages in the U.S. – and distributed by the Coca Cola Company. It will be sold in grocery chains, gas, drug and convenience stores, and Dunkin’ Donuts restaurants nationally. To increase restaurant traffic, Dunkin is helping franchisees make better informed decisions by providing analytical data around pricing and guest purchase decisions. In the next few years, Dunkin’ is focused on building a portfolio of category-leading beverages along with complementary food and bakery offerings – while improving the guest experience. They will simplify the number of food offerings to allow a more streamlined restaurant operations and improved execution. The company recently revealed a new ―Sip, Peel, Win‖ program on its cups. Lawsuit claims that Dunkin’ misleads about using blueberries in its products (when, in fact, it does not). The introduction of two chicken sandwiches (barbeque chicken and bacon-ranch chicken) on its menu is a step in the brand’s commitment to all-day menu items is a significant step in the brand’s commitment to all-day menu items. Dunkin’ is interested in expanding into non-traditional venues including colleges and universities, casinos, military bases, supermarkets, airports and travel centers. The company uses Social Media (Twitter Sweepstakes and Instagram) to introduce new products and promotions. They also have an app that provides coupons to loyal customers. DDSmart with better-for-you breakfast option menu is for healthy items such as oatmeal. Dunkin' Announces Shift to Eggs from Cage-Free Hens and Commitment to Eliminate Gestation Crates from its Supply Chain.
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What is similar? Focus on digital platform (order ahead, skip the line) Rewards program Focus on coffee Focus on service and increasing store foot traffic Focus on new and all-day menu items Healthy menu choices (calorie counts on Starbucks menus) Commitment to social responsibility and sustainable business practices What is different? Dunkin’ has positioned itself as a quick alternative to Starbucks. Starbucks is a hipper and trendier place to get a cup of coffee, while Dunkin’ fancies itself as a welcome place for any ordinary-Joe or Josephine. Dunkin’ is a place to grab a reasonably priced quick or to go cup of coffee while Starbucks is a more expensive product with a higher quality reputation. In other words, Dunkin’ is more the layman’s coffee with the feel of a fast food restaurant, while Starbucks, with its comfortable atmosphere and seating, appeals to a higher socioeconomic demographic. Is Dunkin’ on the right track? Is it carving out new market share? Yes, from some of its recent news items noted above, it appears to be targeting, in addition to its morning coffee and donut eaters, those interested in healthy food choices along and all-day menu items. Will it be a copycat player? It depends. Dunkin’ has carved out a different target customer than Starbucks -- one more focused on convenience and price.
Suggested Team Exercise for Chapter 7 Break the class into pairs or small (no more than four students) teams. Assign each team an industry (pick industries that students can relate to such as chocolate candy; automobiles; clothing; shoes; fast food; beer; cell phones; computers, etc.) Have each pair or team identify (and explain if needed): The company or product using a cost leadership strategy (example Chery from China) The company or product using a differentiation strategy (example Scion) The company or product using a focused cost leadership strategy (example Focus) The company or product using a focused differentiation strategy (example Porsche)
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CHAPTER 8 Organization Structure and Design It’s all about working together Chapter 8 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. The chapter begins with a definition of organizing, one of the management functions, and its importance to the other management functions. Organizing is the process of arranging people and other resources to work together so that goals can be carried out. Organizing involves dividing up the work to be done (division of labor) and coordinating results to achieve a common purpose. This chapter introduces students to the fundamentals of organizing, including the alternative structural forms employed by modern organizations. The chapter discusses the two primary organizational structures -- formal and informal. There is a lot to be learned from an organizational chart with regard to an organization‘s formal structure. A discussion of an organization‘s informal structure, and its good and bad points, is also reviewed. Next, common organizational structures are discussed. They include: functional, divisional, and matrix organizations. Potential advantages of functional structures are reviewed. Some recent developments, including team structures and network structures, are examined. The chapter concludes with trends in organization design or put another way, the choices managers make to configure their organizations to best meet the problems and opportunities posed by their environments. Other trends include flatter organizations (with fewer layers of management), delegating, empowering workers, decentralization, and staff reduction. Next, the topic of alternative work schedules and the importance of flexibility to attract the best workers is discussed. Last, the changing architecture of work becoming more virtual and Boundaryless is presented.
Chapter 8 Learning Objectives Learning Objective 8.1 Describe organizing as a managerial responsibility Learning Objective 8.2 Identify common types of organization structures Learning Objective 8.3 Discuss current trends in organizational design Copyright © 2021 John Wiley & Sons, Inc.
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Chapter 8 Lecture Outline Learning Objective 8.1 Explain Organizing as a Managerial Responsibility Organizing is one of the management functions. Organization charts describe the formal structures of organizations. Organizations also have informal structures. Informal structures have good points and bad points. Learning Objective 8.2 Identify the Most Common Organization Structures Functional structures group together people using similar skills. Divisional structures group together people by products, customers, or locations. Matrix structures combine the functional and divisional structures. Team structures make extensive use of permanent and temporary teams. Network structures make extensive use of strategic alliances and outsourcing. Learning Objective 8.3 Discuss Current Trends in Organizational Design Organizations are becoming flatter and using fewer levels of management. Organizations are increasing decentralization. Organizations are increasing delegation and empowerment. Organizations are becoming more horizontal and adaptive. Organizations are using more alternative work schedules. Organizations are embracing new physical and virtual architectures.
Chapter 8 Supporting Materials Figures Figure 8.1 What Is the Importance of Organizing in the Management Process? Figure 8.2 Informal Structures and the Shadow Organization. Figure 8.3 What Does a Typical Functional Organization Structure Look Like? Figure 8.4 The ‗Functional Chimneys‘ problem in organizations. Figure 8.5 What Are Some Ways Organizations Use Divisional Structures? Figure 8.6 How Does a Matrix Structure Combine Functional and Divisional Structures? Figure 8.7 How Do Team Structures Capture the Benefits of Cross-Functional Teams? Figure 8.8 How Do Network Structures Take Advantage of Strategic Alliances and Outsourcing? Figure 8.9 Contrasting Spans of Control in Tall and Flat Organization Structures. Figure 8.10 Three Steps in the Delegation Process. Figure 8.11 What Are the Major Differences Between Mechanistic and Organic Organization Designs? Figure 8.12 The Changing Architecture of Work Is Becoming More Virtual and Boundaryless. Copyright © 2021 John Wiley & Sons, Inc.
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What’s Inside Career Readiness: Skills Gap Found in College Students Choices: Hey Bosses, Get Out of Your Employees’ Way Ethics: Empowered into Exhaustion Analytics: Bosses May be Overestimating Their Delegating Skills Issues: Playing Musical Chairs to Increase Collaboration Insight for Personal Development: Empowerment Gets More Things Done Quick Case: Crowdsourcing Performance Reviews and Flattening Structures Applications TestPrep 8 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 8: Empowering Others o Class Exercise 8: Organizational Metaphors o Team Project 8: Network ―U‖ Case Snapshot: NPR: Many Voices Serving Many Need
Chapter Outline Learning Objective 8.1: Describe Organizing as a Managerial Responsibility.
Organizing is one of the management functions Organizing arranges people and resources to work toward a common goal Figure 8.1 What Is the Importance of Organizing in the Management Process? Organizing is one of the four management functions. It is the process of arranging people and resources to create structures so that they work well together in accomplishing goals. Key organizing decisions made by managers include those that divide up the work to be done, staff jobs with talented people, position resources for best utilization, and coordinate activities.
Organization charts describe the formal structures of organizations Organization structure is formal arrangement of people, tasks, positions, and reporting relationships Organization chart is a diagram of positions—job titles, and reporting relationships—the hierarchy of authority, within a team or organization o Division of labor - people and groups performing different jobs, ideally ones for which they are skilled o Formal structure - the ―official‖ structure, the way things are supposed to operate
DISCUSSION TOPIC
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To introduce this chapter, describe for the students the organization structure that exists at your college/university. Focus on why the college/university is organized as it is and what is accomplished through this organization form. Also, give attention to both the formal and informal structures of the organization.
Organizations also have informal structures Informal structure - a ―shadow‖ organization made up of unofficial but often critical working relationships between members (See Figure 8.2).
Informal structures have good points and bad points Social network analysis identifies the informal structure and their embedded social relationships that are active in an organization. Good points include employees assisting each other, providing emotional and social support, building friendships and helping the organization adapt to change. Bad points - Shadow structures can be susceptible to rumor, carry inaccurate information, breed resistance to change, and even distract members from their work..
DISCUSSION TOPIC Ask students to provide examples of informal organizational structures that they have encountered. Discuss how these informal structures helped or hindered the operation of the organization‘s formal structure. 8.1 Questions for discussion suggested answers 1) Why is organizing such an important management function? Organization is important because typically it enhances the opportunity for both efficiency and effectiveness in organizations. Organizing usually results in the most efficient use of financial and human resources. 2) If organization charts are imperfect, why bother with them? Even imperfect organization charts provide some sense of direction, responsibilities, and accountabilities. An analogy can be made to taking a trip without a map or a compass. 3) Could an organization consistently perform well without the help of its informal structure? It’s difficult to tell, since as a practical matter, every organization is going to have informal structure. Informal structures can provide enhanced communication and ideas and working relationships between sub-groups in organizations.
8.1 Career Situation: What Would You Do? As the new manager of a branch bank location, you will be supervising 22 employees, most of whom have worked together for a number of years. How will you identify the informal structure Copyright © 2021 John Wiley & Sons, Inc.
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of the branch? How will you try to use this structure to help establish yourself as an effective manager in the new situation? Student answers will vary. However, they all should identify that one of the first task should be to get to know and work well with the administrative assistant as this individual should be able to identify the ―clicks‖ in the workplace. Also, it’s increasingly common to use social network analysis to identify active informal structures. This analysis asks people to name others they ask for help most often, whom they communicate with regularly, and who energizes and de-energizes them. The results are depicted in a network map that shows how a lot of work really gets done.
Learning Objective 8.2: Identify the Most Common Organization Structures?
Functional structures group together people using similar skills Departmentalization – is the process of grouping together people and jobs into work units. The traditional forms are the functional, divisional, and matrix structures. Team and network structures are examples of horizontal structures designed to tap the power of technology, teams, collaboration, and networks. See Figure 8.3 for a depiction of typical functional structures Figure 8.3 What Does a Typical Functional Organization Structure Look Like? Functional structures are common in organizations of all types and sizes. In a typical business you might have vice presidents or senior managers heading the traditional functions of accounting, human resources, finance, manufacturing, marketing, and sales. In a bank, they may head such functions as loans, investments, and trusts. In a hospital, managers or administrators are usually in charge of functions such as nursing, clinics, and patient services. A functional structure groups people together into formal work units based on their similar skills and performing similar tasks. Example: Marketing, Finance, Production and Human Resources. Work well in smaller organizations and stable organizations Sharing of expertise within departments Functional chimneys (or functional silos) – when performance suffers due to a lack of communication, coordination, and problem solving across functions (See Figure 8.4) Potential advantages of functional structures: o Economies of scale make efficient use of human resources. o Functional experts are good at solving technical problems. o Training within functions promotes skill development. o Career paths are available within each function.
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Ask students to think about how the curriculum at their college/university addresses the different functions of business. Are marketing, finance, production, and human resource management, for instance, taught as stand-alone courses, or are they taught in some integrated fashion? As standalone courses, what does this convey to students about the functional chimneys of business? What does any integrated format convey about tearing down these functional chimneys?
Divisional structures group together people by products, customers, or locations See inset for advantages of divisional structures A divisional structure groups people together into formal work units based on their working on the same product, in the same area, or with similar customers. Figure 8.5 illustrates the concept. Figure 8.5 What Are Some Ways Organizations Use Divisional Structures? In products structures, divisions are based on the product or service provided, such as consumer products and industrial products. In geographic structures, divisions are based on geography or territories, such as an Asia–Pacific division and a North American division. In customer structures, divisions are based on customers or clients served, such as graduate students and undergraduate students in a university. Product - groups jobs and activities devoted to a single product or service Geographical - groups jobs and activities in the same location or region Customer - groups jobs and activities that serve the same customers or clients
Potential advantages of divisional structures: More flexibility in responding to environmental changes Improved coordination across functional departments Clear points of responsibility for product or service delivery Expertise focused on specific customers, products, and regions Greater ease in changing size by adding or deleting divisions. Matrix structures combine the functional and divisional structures A matrix structure combines functional and divisional approaches to emphasize projects or program teams. Sets up permanent teams that operate across functions to support specific products, projects, or programs Workers belong to at least two formal groups (a functional and a project group) and have two bosses Figure 8.6 How Does a Matrix Structure Combine Functional and Divisional Structures? A matrix structure is designed to combine the best of the functional and divisional forms. In a typical matrix, the normal functions create a traditional vertical structure, with heads of marketing and manufacturing, and so on. Then a new horizontal structure is added to create cross-functional integration. This is done using teams that are staffed by members from the functions.
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DISCUSSION TOPIC Ask students to consider the project teams on which they most likely have worked in one or more of their courses. Have them describe the challenges they have encountered in responding to the expectations of both the project team leader and the course instructor. Relate their descriptions to the preceding discussion of the advantages and disadvantages of matrix structures. Cross-functional teams are teams whose members come together from different functional departments, to work on a common task. Potential advantages of matrix structures: Performance accountability rests with program, product, or project managers. Better communication exists across functions. Teams solve problems at their levels. Top managers spend more time on strategy.
Team structures make extensive use of permanent and temporary teams Team structures use permanent and temporary cross-functional teams to improve lateral relations and solve problems, projects, and for day-to-day tasks Figure 8.7 How Do Team Structures Capture the Benefits of Cross-Functional Teams? Team structures make extensive use of teams to improve organizations through better communication and problem solving across functions. Some teams are temporary, such as a project team that convenes to create a new product and then disbands when finished. Other teams are more permanent. They bring together members from different functions to work together on standing issues and common problems, such as quality control, diversity management, labor-management relations, or health care benefits. See inset for advantages of team structures Potential advantages of team structures: Team assignments improve communication, cooperation, and decision making. Team members get to know each other as persons, not just job titles. Team memberships boost morale and increase enthusiasm and task involvement.
Network structures make extensive use of strategic alliances and outsourcing A network structure links a central core of full-time employees with outside suppliers and service contractors May lower costs, increase speed, and offers flexibility Potential advantages include: lower costs due to fewer full-time employees, better access to expertise through specialized alliance partners and contractors,
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and easy to grow or shrink with market conditions. Figure 8.8 How Do Network Structures Take Advantage of Strategic Alliances and Outsourcing? Organizations using network structures replace some full-time positions and functions with services provided by alliance partners and outsourcing contractors. In these structures, ―core‖ employees perform essential operations at the center of a ―network‖ that links them with a shifting mix of outside partners and contractors. The example in this figure shows that a small group of people can run a mail-order business in this manner. A lot of network activities are made easy and cost efficient by using the latest information technologies.
DISCUSSION TOPIC Ask the students if any of them have taken an online course that utilized a discussion board and perhaps required students to work together in some fashion over the Internet. Have them provide some details about these experiences and then relate the discussion to the concepts of virtual organizations. 8.2 Questions for discussion suggested answers 1) Why use functional structures if they are prone to functional chimneys problems? Despite their disadvantages, most companies use functional organizations because they offer opportunities for career development; mentoring; resource leveraging within the function; and improved communication within the function. 2) Could a matrix structure improve performance for an organization familiar to you? Matrix organizations are ideal for law firms, consulting firms, accounting firms, landscaping and construction companies, or other project-based organizations where skills can be leveraged over multiple projects. 3) How can the disadvantages of group decision making hurt team structures? Group decision making can hurt teams if : 1) the dominant members are incompetent, uncooperative or simply unwilling to work hard; 2) the team lacks technical expertise required to perform the tasks; the expert or competent team members are passive and do not fully participate or offer suggestions. Teams often suffer from ―the lowest common denominator‖ syndrome, where the ―weakest link‖ becomes the norm. 8.2 Career Situation: What Would You Do? The typical university business school is organized on a functional basis, with departments such as accounting, finance, information systems, management, and marketing all reporting to a dean. Practice your consulting skills. How would you redesign things to increase communication and collaboration across departments, as well as improve curriculum integration across all areas of study? Copyright © 2021 John Wiley & Sons, Inc.
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Student answers will vary. This should be a good team assignment and a presentation from each team at the end to generate a better integrated solution.
Learning Objective Question 8.3: Discuss Current Trends in Organizational Design.
Organizations are becoming flatter and using fewer levels of management Organizational design is the process of configuring organizations to meet environmental challenges. Span of control is the number of people directly reporting to an individual manager. Narrow - managers supervise a small number of people Wide - managers supervise a larger number of people Flatter organizational structures mean span of control is wider (See Figure 8.9) Organizations are increasing decentralization Centralization - top management keeps the power to make most decisions Decentralization - top management allows decision-making responsibility to be distributed throughout the organization to those who are best qualified. Technology makes it easier for top management to decentralize much decisionmaking responsibility yet stay informed about day-to-day performance results. Organizations are increasing delegation and empowerment Delegation is the process of entrusting work to others by giving them the right to make decisions and take action; involves deciding what work you should do yourself and what work you should allow others to accomplish Steps in delegation Assign responsibility Grant authority Create accountability Empowerment is the process of giving people the freedom to contribute ideas, make decisions, show initiative, and to do their jobs in the best possible ways
Organizations are becoming more horizontal and adaptive A bureaucracy emphasizes formal authority, rules, order, fairness, and efficiency Mechanistic designs are bureaucratic, using a centralized and vertical structure Organic designs are adaptable using a decentralized and horizontal structure Based on work of Burns and Stalker Figure 8.11 What Are the Major Differences Between Mechanistic and Organic Organizations Designs? Some indicators of a more organic design are decentralization, few rules and procedures, wider spans of control, sharing of tasks, use of teams and task forces, and informal or personal approaches to coordination. This organic design is most
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associated with success in dynamic and changing environments. The more mechanistic design has mainly bureaucratic features and is more likely to have difficulty in change environments but to be successful in more stable ones.
Organizations are using more alternative work schedules Compressed workweek - full time work is completed in less than five days. For example, a 4-40 work week means that employees work four 10 hours days and have an extra day off each week. Other compressed schedules are spread over two weeks. Flexible working hours or flextime offer employees a choice of starting and ending times each day, while still working an entire workday. Telecommuting, such as work-from-home or remote work, uses technology to allow workers to do their jobs from outside the office. coworking center - a place where telecommuters go to share office space outside the home. Job sharing - splits a job between two or more people who divide the responsibilities and schedule
Organizations are embracing new virtual architectures A virtual organization – uses information technologies to operate a constantly shifting network of alliances Figure 8.12 depicts how the structure of a virtual organization might change and evolve over time.
8.3 Questions for discussion suggested answers 1) Is ―empowerment‖ just a buzzword, or is it something that can really make a difference in organizations today? Organizations are increasing delegation and empowerment. The reductions in staff and levels of management have been enormous. Much of the ―shifting‖ of decisions and responsibilities that had previously been performed by upper levels of management has already been redistributed. The opportunities for added delegation and empowerment are significant. 2) Knowing your personality, will you fit in better with an organization that has a mechanistic or an organic design? This answer will vary by student. Probe their responses to make them identify aspects of their personality that makes their choice of organizational design a good fit. The self assessment "Organizational Design Preference" may be used before the activity or after the discussion. Students should report if their scores differed from their expressed preference. 3) How can alternative work schedules work to the benefit of both organizations and their members? Alternative work schedules lead to greater job satisfaction and often increase productivity. Employees are able to achieve work-life balance. Turnover is reduced and recruiting top talent is easier. Copyright © 2021 John Wiley & Sons, Inc.
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8.3 Career Situation: What Would You Do? As the owner of a small computer repair and services business you would like to allow employees more flexibility in their work schedules. But you also need consistency of coverage to handle drop-in customers as well as at-home service calls. There are also times when customers need what they consider to be ―emergency‖ help outside normal 8 a.m. to 5 p.m. office hours. A meeting with the employees is scheduled for next week. How can you work with them to develop a staffing plan that includes flexible work options that meet their needs as well as yours? While student answers will vary, they should come up with some combinations of flextime and also possibly compressed workweeks.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Skills Gap Found in College Students The data are sobering. Complex reasoning skills – four of ten college students graduate without it. Read a data plot, construct a clear argument, evaluate evidence in an argument, identify a logical fallacy – many students can‘t do them at graduation. Critical thinking and written communication – 14% of graduating seniors fail a standardized test and 25% score with only ―basic‖ skills. A survey of business owners reports that nine of 10 believe college graduates are ―poorly prepared‖ for work. Before COVID-19, universities were being criticized for downplaying academics in favor of extracurricular activities and recreation. Now, the online experience is front and center. How well have they reorganized to serve students‘ long-term needs? Student answers will vary. Students should be asked to compare before and now with COVIDmodified teaching and learning, what is working and what is not from their experience.
Issues: Playing Musical Chairs to Increase Collaboration Research indicates that workers spend roughly 40-60% of their interaction time every workday talking with their direct neighbors. They have only a 5-10% chance of interacting with someone even just a few steps away. One of the latest trends in office design is to move employees into new workspaces every few months, as a way to increase communication and collaboration. The regular moves end up putting employees from different departments and work functions into contact with one another. Seating assignments may be planned based on tasks, employees‘ personalities, or even done randomly.
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Ask students to discuss whether or not musical chairs in the office going a step too far and what their reaction is to this approach? Would they enjoy changing desks every month or so or hate it, and why? Analyze if this idea should be used in larger organizations or the usefulness of the approach really likely to be limited to smaller firms and startups employing a lot of new college graduates? Evaluate if this a useful way to break down ―functional silos,‖ or is it just a passing fad that will soon lose its appeal?
Quick Case: Crowdsourcing Performance Reviews and Flattening Structures It used to be that one of a manager‘s most important tasks was conducting annual performance reviews. Technology now offers a way to make reviews more timely while also flattening structures and reducing administrative costs. ―Bye-bye, manager!‖ some are saying as more performance reviews move online and crowdsourcing becomes the feedback mechanism of choice. More of us are going to be on the giving and receiving ends of online reviews and crowdsourced performance feedback in the future. But San Francisco State management professor John Sullivan worries that people may end up evaluating others whose jobs they don‘t know enough about. Online peer reviews are easy and cost effective, but are they good replacements for the formal sit-down with a team leader or manager? Ask students ―When does technology flatten a structure too far?‖ In addition to the what would you do questions, students may want to discuss their thoughts on their own view of a management career.
Analytics: Bosses May be Overestimating Their Managing Skills It seems like the managers surveyed in this study have pretty good opinions of themselves and their abilities to manage and lead. The manager in the preceding Ethics Check was probably one of the respondents. The discussion questions in the Your Interpretation section can be used in small group/large group discussion or in an online class discussion.
Ethics: Empowered into Exhaustion Many issues in this hypothetical situation are far too familiar in corporate life as organizations trim staff and create leaner structures. Doing more with less, being evaluated on "face time" rather than productivity, difficulty balancing family and work life all take a toll on workers as it has on "Overworked in Cincinnati." The ―Your Decision‖ questions probe the ethical issues that arise as management practices in flatter structures and out-of-touch upper management. Ask students to complete the questions as a take-home assignment or discussion for online classes.
Choices: Hey Bosses, Get Out of Your Employees’ Way
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―Sometimes the best management is no management at all.‖ At least that‘s what management scholar Robert I. Sutton says. Don‘t you wonder how many managers would really agree? Sutton claims there‘s a balance to be struck between being the active take-charge boss and the less assertive step-back-a-step boss. He quotes former Los Angeles Dodgers baseball manager Tommy Lasorda as the exemplar. ―I believe that managing is like holding a dove in your hand,‖ Lasorda says. ―If you hold it too tightly, you kill it. But if you hold it too loosely, you‘ll lose it.‖ Ask students to complete the questions in ―What‘s Your Take?‖ as a take-home assignment or discussion for online classes.
Insight for Personal Development: Empowerment Gets More Things Done It takes a lot of trust to be comfortable with empowerment—letting others make decisions and exercise discretion in their work. But if you aren‘t willing and able to empower others, you may try to do too much on your own and end up accomplishing too little. The fundamental, underlying reason for organizations is synergy—bringing together the contributions of many people to achieve some-thing that is much greater than any individual could accomplish alone. Many managers fail to empower others, and the result is that their organizations often underperform. Ask Students: How often do you get stressed out by group projects in your classes, feeling like you‘re doing all the work? Do you have a problem ―letting go‖ or letting others do their share of group assignments? The reason may be the fear of losing control. People with control anxiety often end up trying to do too much. This unfortunately raises the risks of missed deadlines and poor performance.
Skill Building Portfolio Terms to Define: Bureaucracy Centralization Compressed workweek Co-working center Cross-functional teams Customer structure Decentralization Delegation Departmentalization Division of labor Divisional structure Empowerment Flexible working hours Copyright © 2021 John Wiley & Sons, Inc.
Formal structure Functional chimneys, or functional silos, problem Functional structure Geographic structure
Informal structure
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Job sharing Matrix structure Mechanistic design Network structure Organic design Organization chart Organization structure Organizational design
Organizing Product structure Social network analysis Shadow organization Span of control Team structure Telecommuting Virtual organization
Test Prep 8 Multiple-Choice Questions 1. The main purpose of organizing as a management function is to
.
(a) make sure that results match plans (b) arrange people and resources to accomplish work (c) create enthusiasm for the needed work (d) link strategies with operational plans 2. An organization chart is most useful for
.
(a) mapping informal structures (b) eliminating functional chimneys (c) showing designated supervisory relationships (d) describing the shadow organization 3. Rumors and resistance to change are potential disadvantages often associated with
.
(a) virtual organizations (b) informal structures (c) functional chimneys (d) cross-functional teams 4. When an organization chart shows that vice presidents of marketing, finance, manufacturing, and purchasing all report to the president, top management is using a structure.
(a) functional (c) network
(b) matrix (d) product
5. The ―two-boss‖ system of reporting relationships is both a potential source of problems and one of the key aspects of structures.
(a) functional (c) network
(b) matrix (d) product
6. A manufacturing business with a functional structure has recently acquired two other businesses with very different product lines. The president of the combined company might consider using a structure to allow a better focus on the unique needs of each product area.
(a) virtual (b) team (c) divisional (d) network 7. An organization using a Copyright © 2021 John Wiley & Sons, Inc.
structure should expect that more problems will be solved at 8-181
lower levels and that top managers will have more time free to engage in strategic thinking.
(a) virtual (c) functional
(b) matrix (d) product
8. The functional chimneys problem occurs when people in different functions
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(a) fail to communicate with one another (b) try to help each other work with customers (c) spend too much time coordinating decisions (d) focus on products rather than functions 9. An organization that employs just a few ―core‖ or essential full-time employees and outsources a lot of the remaining work shows signs of using a structure.
(a) functional (c) network
(b) divisional (d) team
10. A ―tall‖ organization will likely have the same number of members.
spans of control than a ―flat‖ organization with
(a) wider (b) narrower (c) more ambiguous (d) less centralized 11. If a student in one of your course groups -volunteers to gather information for a case -analysis and the other members tell him to go ahead and choose the information sources he -believes are most important, the group is giving this student to fulfill the -agreed-upon task.
(a) responsibility (b) accountability (c) authority (d) values 12. The bureaucratic organization described by Max Weber is similar to the described by Burns and Stalker.
(a) adaptive (c) organic
organization
(b) mechanistic (d) horizontal
13. Which organization would likely be a good fit for a dynamic and changing external environment?
(a) vertical (c) organic
(b) centralized (d) mechanistic
14. Workers following a compressed workweek schedule most often work 40 hours in days.
(a) 3 ½ (c) 5
(b) 4 (d) a flexible schedule of
15. Which alternative work schedule is identified by Working Mother magazine as being used by all companies on its list of ―100 Best Employers for Working Moms‖?
(a) telecommuting (c) flexible hours
(b) job sharing (d) part-time
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Short-Response Questions 16. Why should an organization chart be trusted ―only so far‖? An organization chart depicts the formal structure of the organization. This is the official picture of the way things are supposed to be. However, the likelihood is that an organization chart quickly becomes out of date in today‘s dynamic environments. So one issue is whether or not the chart one is viewing actually depicts the current official structure. Second, there is a lot more to the way things work in organizations than what is shown in the organization chart. People are involved in a variety of informal networks that create an informal structure. It operates as a shadow lying above or behind the formal structure and also influences operations. Both the formal structure and informal structure must be understood; at best, an organization chart helps with understanding the formal one.
17. In what ways can informal structures be good for organizations? There are two major ways that informal structures can be good for organizations. First, they can help get work done efficiently and well. When people know one another in informal relationships, they can and often do use these relationships as part of their jobs. Sometimes an informal contact makes it a lot easier to get something done or learn how to do something than the formal linkages displayed on an organization chart. Second, being part of informal groups is an important source of potential need satisfaction. Being in an informal network or group can satisfy needs in ways that one’s job can’t sometimes and can add considerably to the potential satisfactions of the work experience.
18. How does a matrix structure combine functional and divisional forms? The matrix structure is organized in a traditional functional fashion in the vertical dimension. For example, a business might have marketing, human resources, finance, and manufacturing functions. On the horizontal dimension, however, it is organized divisionally in a product or project fashion, with a manager heading up each special product or project. Members from the functional departments are assigned to permanent cross-functional teams for each product or project. They report vertically to their functional bosses and horizontally to their product/project bosses. This two-boss system is the heart of the matrix organization.
19. Why is an organic design likely to be quicker and more flexible in adapting to changes than a mechanistic design? An organic design tends to be quicker and more flexible because it is very strong in lateral communication and empowerment. People at all levels are talking to one another and interacting as they gather and process information and solve problems. They don‘t wait for the vertical structure and ―bosses‖ to do these things for them. This means that as the environment changes, they are more
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likely to be on top of things quickly. It also means that when problems are complex and difficult to solve, they will work with multiple people in various parts of the organization to best deal with them.
Integration and Application Question 20. Imagine you are a consultant to your university or college president. The assignment is: Make this organization more efficient without sacrificing its educational goals. Although the president doesn‘t realize it, you are a specialist in network structures. You are going to suggest building a network organization, and your ideas are going to be radical and provocative. Questions: What would be the core of the network—is it the faculty members, who teach the various courses, or is it the administration, which provides the infrastructure that students and faculty use in the learning experience? What might be outsourced—grounds and facilities maintenance, food services, security, recreation programs, even registration? What types of alliances might prove beneficial—student recruiting, faculty, even facilities? A network structure often involves one organization ―contracting out‖ aspects of its operations to other organizations that specialize in them. The example used in the text was of a company that contracted out its mailroom services. Through the formation of networks of contracts, the organization is reduced to a core of essential employees whose expertise is concentrated in the primary business areas. The contracts are monitored and maintained in the network to allow the overall operations of the organization to continue even though they are not directly accomplished by full-time employees. There are many possibilities for doing something similar in a university. In one model, the core staff would be the faculty. They would be supported by a few administrators who managed contracts with outsourcing firms for things such as facilities maintenance, mail, technology support, lawns maintenance, food services, housing services, and even things like development, registrar, and student affairs. Another model would have the administrators forming a small core staff who contract out for the above and, in addition, for faculty who would be hired ―as needed‖ and on contracts for specific assignments.
Self-Assessment 8: Empowering Others Instructions Think of times when you have been in charge of a group—this could be a full-time or part-time work situation, a student work group, or whatever. Complete the following questionnaire by recording how you feel about each statement according to this scale. 1 = Strongly disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly agree When in charge of a team, I find that 1. Most of the time other people are too inexperienced to do things, so I prefer to do them myself. 2. It often takes more time to explain things to others than to just do them myself. 3. Mistakes made by others are costly, so I don‘t assign much work to them. 4. Some things simply should not be delegated to others. 5. I often get quicker action by doing a job myself. 6. Many people are good only at very specific tasks, so they can‘t be assigned additional responsibilities. Copyright © 2021 John Wiley & Sons, Inc.
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7. Many people are too busy to take on additional work. 8. Most people just aren‘t ready to handle additional responsibilities. 9. In my position, I should be entitled to make my own decisions. Scoring Total your responses and enter the score here [
].
Interpretation This instrument gives an impression of your willingness to delegate. Possible scores range from 9 to 45. The lower your score, the more willing you appear to be to delegate to others. Willingness to delegate is an important managerial characteristic: It is how you—as a manager—can empower others and give them opportunities to assume responsibility and exercise self-control in their work. With the growing importance of horizontal organizations and empowerment in the new workplace, your willingness to delegate is worth thinking about seriously.
Class Exercise 8: Organizational Metaphors Instructions 1. Start by answering the following questions using this scale: 5 = strongly agree 4 = agree somewhat 3 = undecided 2 = disagree somewhat 1= strongly disagree I prefer to work in an organization where: 1. Goals are defined by those in higher levels. 2. Work methods and procedures are specified. 3. Top management makes important decisions. 4. My loyalty counts as much as my ability to do the job. 5. Clear lines of authority and responsibility are established. 6. Top management is decisive and firm. 7. My career is pretty well planned out for me. 8. I can specialize. 9. My length of service is almost as important as my level of performance. 10. Management is able to provide the information I need to do my job well. 11. A chain of command is well established. 12. Rules and procedures are adhered to equally by everyone. 13. People accept the authority of a leader‘s position. 14. People are loyal to their boss. 15. People do as they have been instructed. 16. People clear things with their boss before going over his or her head. 2. Total your scores for all questions. Enter the score here [ ]. 3. Interpretation. This assessment measures your preference for working in an organization designed along ―organic‖ or ―mechanistic‖ lines. The higher your score (above 64), the more comfortable you are with a mechanistic design; the lower your score (below 48), the more Copyright © 2021 John Wiley & Sons, Inc.
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comfortable you are with an organic design. Scores between 48 and 64 can go either way. 4. Form into groups and compare scores and organizational design preferences. Discuss areas of similarity and difference. Prepare a report to the class that summarizes the organizational design preferences within your group and also highlights arguments for and against organic and mechanistic organizations as places to work.
Team Project 8: Network ―U‖ Instructions Form into groups as assigned by the instructor. In the group do the following: 1. Discuss the concept of the network organization structure as described in the textbook. 2. Create a network organization structure for your college or university. Identify the ―core staffing‖ and what will be outsourced. Identify how outsourcing will be managed. 3. Draw a diagram depicting the various elements in your Network ―U.‖ 4. Identify why Network ―U‖ will be able to meet two major goals: (a) create high levels of student learning and (b) operate with cost efficiency. 5. Present and justify your design for Network ―U‖ to the class.
1. DISCUSSION What are the implications of NPR‘s operating approach in contrast to that of for-profit media? How might this decision be related to NPR‘s not-for-profit status? What kinds of issues are likely to play a role in how successful this model is, moving forward, in light of the massive consolidation of the industry? For-profit media broadcasts content provided by the same source while NPR broadcasts media provided by numerous local affiliates. For-profit local affiliates are obligated to broadcast integrated content while NPR local affiliates can choose their own slates of programming. Forprofit has the goal of generating brand benefits for the parent company to create a larger market for its content while NPR has the goal of advancing the civic goal of helping to create a more informed and educated public. For-profit makes money through advertising while NPR gets money to pay for the services through funding campaigns, corporate underwriting, state and local government funding, contributions made by institutions of higher education, and allocations of the federally funded media organization. Student answers will vary for the last question. Students could discuss the viability of funding campaigns, corporations, government funding, etc. Students could discuss the availability of information via the Internet. Students could discuss satellite radio. 2. How does the structure of NPR relate to questions relating to branding? What about quality control? Would this kind of ―organic‖ organizational structure work in a not-for-profit setting? Why or why not? What other kinds of businesses might benefit from this kind of loose conglomeration? Why, specifically? What about higher education? Regarding branding, an organic structure does not impact branding since there is still an overarching ―parent‖ company. All the local affiliates are still affiliated with the parent NPR Copyright © 2021 John Wiley & Sons, Inc.
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which provides the branding. The parent NPR is providing content although the local affiliates do not have to use it. The local affiliate is choosing affiliation with NPR, so that local affiliate is choosing to accept the NPR brand. The goal of NPR is to create a more informed and educated public, so the local affiliates need to pursue this goal also. Regarding quality control, the ―test‖ would be whether the content is creating a more informed and educated public. As long as that is happening, the quality would be sufficient for NPR. This organic structure seems to be working for NPR, so it does work for not-for-profit organizations. Student answers will vary for the last three questions. Other organizations that might benefit from this could be gig economy companies because independent contractors could leverage the gig business goals but implement to meet their individual needs. The government may also benefit since it would allow local implementation of federal goals. 3. PROBLEM SOLVING Draw a diagram that shows what you believe NPR‘s present organizational structure looks like. Be sure to include all possible components in the structure. Consider this structure from the standpoint of an organization design consultant. How can this structure be improved? How can NPR provide even more compelling local and national content without losing its authenticity and independence from major commercial media sponsors? Student answers will vary. However, a good starting point for such a structure would be to look at Figure 8.8 in the text. 1. Network structures use information technology (IT) to link with networks of outside suppliers and service contractors. The case outlines NPR distributes content generated by 17 domestic and 17 global news bureaus in addition to including content from local affiliates if it is of interest nationally. It uses the internet and satellite to distribute content to local stations. The network structure may look similar to figure 8.8 with the national NPR in the center and the local affiliates branching out.
4. FURTHER RESEARCH What is the current state of the media industry today? Look into current trends and patterns orbiting major media organizations. Are there any emerging drawbacks from current approaches being used by major media companies today? What are some of the similarities and differences between the biggest players in the industry? What is the likely future of syndicates like NPR? What are the chances of survival for the ―public‖ or ―not for profit‖ model in light of the growing trends that you‘ve identified? What kinds of changes are organizations such as NPR likely going to have to make to continue to compete? This is a good exercise for outside research for students. They should focus on external environmental factors including competitors. Remind students that the research should center on the companies and not the specific broadcasts. Caution students to conduct their online research with objective media sources. The college library may offer free searches such as EBSCO Host that access a large number of Copyright © 2021 John Wiley & Sons, Inc.
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periodicals including industry publications that may provide thorough and accurate comparisons as well as current industry trends.
Suggested Team Exercise for Chapter 8 This exercise will only work in classrooms in the same physical setting (not distance learning). Break the class into teams of five. Supply each team with one stapler (with ample supply of staples) one small ―post it‖ type note pad a red pen a supply of paper clips. Tell the class that each team is a ―company.‖ Their product is a ―FoleyO.‖ The ―FoleyO‖ manufacturing process is as follows: Note: The instructor or Professor should have one example or ―prototype‖ to show each team as an example of the completed ―product‖. This will also be provided to a class ―inspector‖ (one for the entire class who will not be on any team but will get equal credit, if any given, for this exercise) as a template for ―quality control.‖ Products that match the ―prototype‖ will count as ―good‖ production or ―finished products.‖ All other will count as ―rejects‖ or ―scrap‖ production. 1) Pull one sheet off the ―post it‖ pad 2) Fold the sheet exactly in half 3) Staple the folded sides together by putting a staple at the very middle and top of the folded page-the staple must be horizontal or parallel to the paper 4) One student per team is the ―signer‖ who looks at the product which has gone through steps 1-3 above and must sign his or her initials legibly as a type of ―logo.‖ 5) Paper clips should be used for each set of 10 pages that have gone through steps 1-4 above. The instructor should tell the teams to meet and decide how they will organize their production. They may shuffle chairs etc. or face each other as they wish. (Note: students may decide to ―combine‖ steps-one student may do two tasks, but do not offer this suggestion unless someone asks the question. This is effectively comparable to downsizing for efficiencies, etc.) Allow 15 minutes from the ―start‖ time and call off the last minute by 15 second increments. When time has expired, each team should take their finished production to the inspector. The instructor should count each piece of abandoned paper by each team as a scrap product. These should be added to those rejected by the inspector as not meeting quality standards. a) Count the accepted (approved by the inspector) products b) Count the rejected products from above c) Multiply the Number of rejected products by 2 as a penalty for low quality production d) Subtract the total in ―c‘ from the total in ―a‖ This is the net ―good‖ production Copyright © 2021 John Wiley & Sons, Inc.
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e) Rank the teams You may wish to make this game more realistic by adding incentives (similar to piecework) for the top or winning team (maybe an added 5 points each on a future test or exam). This creates a high level of class energy and interest. Then, the teams should assess what went ―right‖ and ―wrong‖ on their teams. Did they match skills to jobs? Did they combine jobs? Did they change physical arrangements? Was speed (efficiency) more important than quality (effectiveness)? Finally, a combined class discussion will reinforce the values of organization (as well as planning).
CHAPTER 9 Organizational Cultures, Innovation, and Change Adaptability and Values Set the Tone Chapter 9 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. The chapter beings by essentially defining an organization‘s culture as its unique ―personality.‖ Examples are given to illustrate how an organization‘s culture shapes behavior and influences the performance of its members. Four culture types are presented followed by the various components of an organization‘s culture are explained as visible or observable, and they include heroes, rites, rituals, stories, and symbols. The chapter provides an explanation of an organization‘s core culture, which consists of its core values. The importance of a value-based management team to support a strong organizational culture is discussed. Next, the topic of innovation and how organizations approach, and support innovation is discussed. The various forms of innovation (process, product and business model) within an organization are reviewed. Also included are the important topics of sustainability and green innovation and social innovations as a way of solving society‘s problems. Commercializing innovation is discussed as a way to increase profits and sales. The chapter discusses the concept of disruptive innovation, or the creation of an innovative product or service that replaces prior practices and competitors (e.g. online video streaming replacing CDs rentals from a video store). Copyright © 2021 John Wiley & Sons, Inc.
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The last part of the chapter discusses how managers lead the process of organizational change. Transformational change or large-scale changes within an organization is discussed and described along with incremental, or more gradual change. Guidelines of how to lead transformational change is described. The three phases of planned change are identified and improvising as a critical force to the planned change process is discussed. The chapter provides a review of strategies used by managers to move people and systems toward change, including: force-coercion, rational persuasion, and shared power change. The characteristics of change leaders and how they deal with resistance to change is discussed, along with the various reasons people resist change.
Chapter 9 Learning Objectives: Learning Objective 9.1: Explain the nature of organizational culture. Learning Objective 9.2: Discuss how organizations support and achieve innovation. Learning Objective 9.3: Describe how managers lead the process of organizational change.
Chapter 9 Lecture Outline:
Learning Objective 9.1: Explain the Nature of Organizational Culture. o Organizational culture is the personality of the organization. o Organizational culture shapes behavior and influences performance. o Not all organizational cultures are alike. o The observable culture is what you see and hear as an employee or customer. o The core culture is found in the underlying values of the organization. o Value-based management supports a strong organizational culture.
Learning Objective 9.2: Discuss How Organizations Support and Achieve Innovation. o Organizations pursue process, product, and business model innovations. o Green innovations advance the goals of sustainability o Social innovations seek solutions to important societal problems. o Commercializing innovation turns new ideas into salable products. o Disruptive innovation uses new technologies to displace existing practices. o Innovative organizations share many common characteristics.
Learning Objective 9.3: Describe How Managers Lead the Processes of Organizational Change. o Organizations and teams need change leaders o Organizational change can be transformational or incremental o Three phases of planned change are unfreezing, changing, and refreezing o Times of complexity require improvising in the change process o Managers use force-coercion, rational persuasion, and shared power change strategies. o Change leaders identify and deal positively with resistance to change.
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Chapter 9 Supporting Materials: Figures Figure 9.1 Four Culture Types Found in Organizations. Figure 9.2 What are the Main Components of Organizational Culture? Figure 9.3 How Do Organizations Commercialize Innovation? Figure 9.4 Characteristics of Highly Innovative Organizations. Figure 9.5 Change Leaders Versus Status Quo Managers. Figure 9.6 The Organizational Change Pyramid. Figure 9.7 What are the Change Leader Responsibilities in Lewin‘s Three Phases of Planned Change? Figure 9.8 What Happens When a Change Leader Uses Different Types of Change Strategies? What’s Inside Career Readiness: ―Go Along to Get Along‖ Culture is a Danger Signal Analytics: Family values put pressure on organization culture Choices: #OK Boomer Versus #OK Millennial Ethics: Hidden agendas in organizational change Insight: Get Comfortable with Tolerance for Ambiguity Issues: Saying Goodbye to ―High Fives‖ and Hello to Elbow Bumps at the Office Quick Case: Proposal for open office design and hotdesking Applications TestPrep 9 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 9: Tolerance for Ambiguity o Class Exercise 9: Force-Field Analysis o Team Project 9: Organizational Culture Walk Case Snapshot: Gamification- Games Fit the Corporate Culture
Chapter Outline: Learning Objective 9.1: What is the Nature of Organizational Culture?
Organizational culture is the personality of the organization Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members.
Organizational culture shapes behavior and influences performance Strong cultures - cultures which are clear, well-defined, and widely shared among members Socialization - the process through which new members learn the culture and values of the team or organization, as well as the behaviors and attitudes shared among its members
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Not all organization cultures are alike Understanding an organization‘s culture can be a real asset to employees and job hunters alike. No one wants to end up in a situation with a bad person–culture fit. Management scholars offer ideas for reading organizational cultures by asking questions about such things as structure, decision making, empowerment and worker involvement, the competitive style, teamwork, people orientation, and emphasis on outcomes. There are four different culture types (see Figure 9.1): Hierarchical Rational Entrepreneurial Team
DISCUSSION TOPIC A discussion of the shared beliefs and values that describe your college or university can be an effective method for getting students to think about organizational culture. Make sure the discussion examines who within your college/university community shares these values, and how these values influence the behavior of different members of your college/university community. By focusing on who shares these values you can explore whether or not your college/university has a strong culture. Alternatively, you can consider the possibility that there might be two or more subcultures operating within the organization.
The observable culture is what you see and hear as an employee or customer See Figure 9.2 What Are the Main Components of Organizational Culture? With a bit of effort, one can easily identify the organizational culture. The most visible part is the observable culture. It is shown in the stories, rituals, heroes, and symbols that are part of the everyday life of the organization. The deeper, below-the-surface part is the core culture. It consists of the values that influence the beliefs, attitudes, and work practices among organizational members.
The observable culture is what you see in people‘s behaviors and hear in their conversations. Includes how people dress at work, arrange their offices, speak to and behave toward one another, and talk about and treat their customers. It is found in stories, heroes, rituals, and symbols. DISCUSSION TOPIC
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Ask students to individually indentify the elements of observable culture (stories, heroes, rituals, and symbols) of an organization they are familiar with such as an employer or your college. Ask them to share their thoughts in a small group and have the small groups report to the class.
Core culture is found in the underlying values of the organization Core Values are beliefs and values shared by members of the organization Examples include performance excellence, innovation, social responsibility worker involvement, customer service and teamwork. Frequently included in mission statements
Value-based management supports a strong organizational culture Value-based management actively develops, communicates, and enacts shared values. Workplace spirituality includes practices that create meaning and community. It does not necessarily include religion. Common elements are meaningful work, respect for diversity, work-life balance, ethical behavior
DISCUSSION TOPIC The public ethical collapse of Enron in late 2001 was soon followed by numerous reports of other organizations’ ethical failures, large and small. In many instances, these ethical failures were eventually attributed to (a) organizational cultures that did not genuinely value ethical behavior and/or (b) leaders at the top of the organizational hierarchy who did not serve as an effective role model of ethical behavior. This is certainly the case with Enron. Discuss with the students their perceptions/knowledge of what happened at Enron, and the lessons/ insights that they have personally drawn from Enron’s ethical collapse.
9.1 Questions for discussion suggested answers 1) Can an organization achieve success with a good organizational design but a weak organizational culture? Companies with strong cultures are much more likely to outperform companies without that advantage, whether organizational design is strong or weak. Culture affects processes, motivation and execution in a direct fashion. A weak culture will adversely impact performance. 2) When you are in your local bank or any other retail establishment as a customer, what
do you see and hear around you that identifies its observable culture? Bank employees dress somewhat formally - often wearing suits or blazers, have shorter and no facial hair, less stylish or trendy dress, behave more rigidly, and are unlikely to make decisions that are not ―their job.‖ 3) What core values would you choose if you were creating a new organization and wanted to establish a strong performance-oriented culture? I would select the following core values: customer above all; employee freedom to fail, but with accountability for results; an ethical culture; number one or two in market share; pride in developing future managers; and continuous process improvement; Copyright © 2021 John Wiley & Sons, Inc.
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strong work ethic combined with a strong play ethic; sense of humor and a positive attitude. 9.1 Career Situation: What Would You Do? You have two really nice job offers and will soon have to choose between them. They are both in the same industry, but you wonder which employer would be the ―best fit‖ for you. Make a list of the key aspects of the cultures of these organizations that you would investigate to help make your job choice. Why are these aspects of organizational culture important to you? Student answers will vary.
Learning Objective 9.2: Discuss How Organizations Support and Achieve Innovation.
Organizations pursue process, product, and business model innovations Innovation is the process of developing new ideas and putting them into practice Process innovations create better ways of doing things such as faster processing of online product purchases or banking transactions Product innovations creates new or improved goods or services such as the Amazon Kindle or Barnes and Apple IPad Business model innovations create new ways of making money such as eBay and Netflix
Green innovations advance the goals of sustainability Green or sustainable innovation advances sustainability by creating ways to reduce the carbon footprint of an organization or its products Examples include replacing air travel with videoconferencing not only reduces travel costs but it also reduces carbon emissions and getting energy from biogas or solar energy cuts electricity costs and reduces air pollution..
Social innovations seek solutions to important societal problems Social innovation is business innovation driven by a social conscience Social entrepreneurship seeks new and unique ways to solve the world's social problems. Examples include the Graeme Bank making micro loans in Bangladesh; One Acre Fund lending money for helping farmers in Kenya; One Laptop Per Child distributing computers where little or no education is available; or Heifer International providing livestock to families around the world.
Commercializing innovation turns new ideas into salable products Commercializing innovation turns ideas into products, services or processes that the organization can use to produce profits. Idea creation Initial experimentation Feasibility determination
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Final application Reverse innovation or trickle-up innovation recognizes the potential for valuable innovations to be launched from lower organizational levels and diverse locations, including emerging markets.. Figure 9.3 How Do Organizations Commercialize Innovation?
In business it is the process of commercializing innovation that turns new ideas into actual products, services, or processes that can increase profits through greater sales or reduced costs. This requires management encouragement and support for idea creation (invention and the act of discovery), experimentation and feasibility determination, and final application (actually putting the tested idea into use).
Disruptive innovation uses new technologies to displace existing practices Disruptive innovation creates products or services that become so widely used that they largely replace prior practices and competitors. Harvard Scholar Clay Christensen defines it as ―the creation of an innovative product or service that starts out small scale and then moves ‗up market‘ to where it is so widely used that it displaces prior practices and competitors.‖ Online e-retailers have disrupted brick-and-mortar stores, online video gaming and movie and music streaming have disrupted ―buy and own‖ business models, and electric vehicle technologies are fast disrupting traditional internal combustion markets.
Innovative organizations share many common characteristics Innovative organizations incorporate innovation into the core values and culture of the organization. Common characteristics include (See Figure 9.4): Strategy includes innovation Culture values innovation Structure supports innovation Staffing builds talent for innovation Leadership drives innovation Skunkworks is a term used to describe special work units set free from the formal organizational structure and given separate locations, special resources, and their own managers, all with the purpose of achieving innovation..
9.2 Questions for discussion suggested answers 1) Are there any potential downsides to making organizational commitments to green innovation? A traditional view of business social responsibility is that the organization's mission is to create a return for the owners or investors. If social responsibility is not one of the core values of the organization or part of its mission, investors might become upset. Many organizations have social responsibility as a core value and would value green innovation as an important way to create sustainability and competitive advantage. 2) What are the biggest trouble points in a large organization that might prevent a great idea from becoming a commercialized innovation? Many factors might reduce support for innovation. Management may not support new Copyright © 2021 John Wiley & Sons, Inc.
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ideas; management may slow the process allowing competitors to reach the market faster; there may be a lack of focus on customer needs; a culture that does not value innovation; a structure that makes innovation difficult; or a lack of visionary staff. 3) What difference does a leader make in terms of how innovative an organization becomes? Organizational leaders play a huge role. Leaders set the culture and core values that would support innovation. Top managers must tolerate criticism and differences in opinion, eliminate barriers to innovation and willingness to fail. 9.2 Career Situation: What Would You Do? Take a look around your present organization, be it school or workplace. What three ideas can you come up with right away for possible innovations? How would your ideas, if implemented, benefit both the organization and society at large? What are the potential obstacles to getting your ideas implemented? What steps could you take as an ―innovation champion‖ to turn your ideas into real practices? Student answers will vary.
Learning Objective 9.3: Describe How Managers Lead the Processes of Organizational Change.
Organizations and teams need change leaders Change leaders take leadership responsibility for changing the existing pattern of behavior of another person or social system. Figure 9.5 shows a big difference between true change leaders and status quo managers.
Organizational change can be transformational and incremental Transformational change results in a major and comprehensive redirection of the organization Incremental change (tweaks and nudges people, systems, and practices to better align them with emerging problems and opportunities. Figure 9.6 shows the organizational change pyramid.
How to Lead Transformational Change: Establish a sense of urgency for change. Form a powerful coalition to lead the change Create and communicate a change vision. Empower others to move change forward Celebrate short-term wins, and recognize those who help. Build on success; align people and systems with new ways. Stay with it: keep the message consistent: champion the vision
Three phases of planned change are unfreezing, changing, and refreezing
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Kurt Lewin described planned change as a process with three phases Unfreezing - preparing a system for change Changing - making actual changes in the system Refreezing - stabilizing the system after change FIGURE 9.7 What Are the Change Leader’s Responsibilities in Lewin’s Three Phases of
Planned Change? Kurt Lewin identified three phases of the planned change process. The first is unfreezing, the phase where people open up and become receptive to the possibility of change. The second is changing, where the actual change happens and the new ways of doing things are put into place. Third is refreezing, the phase where changes are stabilized to become part of ongoing routines. Lewin believed that change agents often neglect unfreezing and move too quickly into the changing phase, thus setting the stage for change failures. They may also neglect refreezing, with the result that any achieved change has only temporary effects.
DISCUSSION TOPIC Have the students identify something they believe should be changed about the way your college or university operates. Then have them analyze how this change could be managed using the three-phase model of planned change for guidance. Times of complexity require improvising in the change process Improvisational change makes continual adjustments as changes are being implemented Managers use force-coercion, rational persuasion, and shared power change strategies Force-Coercion uses the power bases of legitimacy, rewards, and punishments as the primary inducements to change; most useful as an unfreezing strategy o Direct forcing - direct and unilateral command that change takes place o Political maneuvering - works indirectly to gain special advantage over other person in making the change Rational persuasion - bring about change through persuasion backed by special knowledge, information, facts, and rational argument Shared power - encourages people in a collaborative process of identifying values, assumptions, and goals from which support for change will naturally emerge
Figure 9.8 What Happens When a Change Leader Uses Different Types of Change Strategies?
Force-coercion strategies use authority, offers of rewards, and threats of punishment to push change forward. The likely results are, at best, temporary compliance. Rational persuasion strategies use information, facts, and logic to present a persuasive case in support of change. The likely outcomes are compliance with reasonable commitment. Shared power strategies engage others and allow them to participate in the change process, from initial planning through implementation. The high involvement tends to build more internalization and greater commitments to change.
Change leaders identify and deal positively with resistance to change Why people may resist change Fear of the unknown Disrupted habits Copyright © 2021 John Wiley & Sons, Inc.
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Loss of confidence Loss of control Poor timing Work overload Loss of face Lack of purpose
Positive resistance dealing tactics: Education and communication Participation and involvement Facilitation and support Negotiation and agreement Negative resistance dealing tactics: Manipulation and cooptation Explicit and implicit coercion 9.3 Questions for discussion suggested answers 1) When is it better to pursue incremental rather than transformational change? Not all changes are radical enough to be considered transformational. Incremental change faces mangers on a daily basis as changes are required in existing practices, procedures and policies. 2) Can the refreezing phase of planned change ever be completed in today‘s dynamic environment? It may not be possible to ―refreeze‖ change in a rapidly-changing environment. Lewin's three phase change process assumes a stable external environment. Few organizations enjoy the luxury of a predictable environment, particularly in challenging economic times such as a recession. Change in many organizations is indeed an ongoing daily part of the culture. Examples would be companies such as GE, Apple, Google, E-Bay, etc. 3)
Should managers avoid the force-coercion change strategy altogether? No, force-coercion may be needed in situations where the very survival of the company is at stake (GM) or if all other efforts have failed to convince a firmly entrenched opposition to a new process or policy.
9.3 Career Situation: What Would You Do? Times are tough at your organization, and, as the director of human resources, you have a problem. The company‘s senior executives have decided that 10% of the payroll has to be cut immediately. Instead of laying off people, you would like to have everyone cut back their work hours by 10%. This would cut the payroll but let everyone keep their jobs. You‘ve heard this idea isn‘t popular with all the workers. Some are already grumbling that it‘s a ―bad idea‖ and the company is just looking for excuses to ―cut wages.‖ How can you best handle this situation as a change leader?
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Student answers will vary. However, they should bring in the positive tactics to deal with resistance to change: 1) education and communication, 2) participation and involvement, 3) facilitation and support, and 4) negotiation and agreement.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: ―Go Along to Get Along‖ Culture is a Danger Signal ―Don‘t tell the boss‖… ―Don‘t bring it up.‖ These are warning signs of what experts call ―a tendency for people in large, hierarchical organizations to tell bosses what they want to hear.‖ GM‘s new CEO, Mary Barra was blindsided when historical product safety problems hit the news. She claimed a culture of the ―GM nod‖–agree but take no action, and the ―GM salute‖– directing responsibility to others, encouraged covering up rather than confronting problems. The Wall Street Journal calls this a culture of ―go along to get along.‖ Ask students if they have been in settings where something similar to the GM nod and GM salute was standard behavior? Where do shared expectations like this come from? Discuss what a leader can do to avoid the downsides of ―go along to get along.‖
Choices: #OK Boomer Versus #OK Millennial The phrase ―OK Boomer‖ has gone global. It has become the young generations‘ retort to ideas they consider outdated or off-base. When something or someone earns its own memes, you know it has arrived in social culture. But is it just a fun way to say, ―Sure, whatever,‖ or is it stepping over the line into being a dismissive insult? Ask students if they use these phrases. Where and how? The workplace is always going to be cross-generational, a microcosm of society at large. We spend lots of time working. Are exchanges of ―OK Boomer‖ and ―OK Millennial‖ really helpful? What responsibilities do each of us have to help build masterpieces out of generational puzzle pieces? Student answers will vary. However, it should be pointed out that the use of such phrases does have an undertone of dismissive insult or ―whatever‖ type attitude which in the workplace does not represent well.
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Issues: Saying Goodbye to ―High Fives‖ and Hello to Elbow Bumps at the Office Bring a bit of ritual to the office culture and increase performance. In pre-COVID-19 days, ―high fives‖ and ―handshakes‖ and ―bro hugs‖ were common celebratory and bonding behaviors. And, we generally liked them. But what‘s going on now and with what impact on morale? When was the last time you shared even a first bump with a coworker? Many—perhaps most—people are afraid to even try, given fears that range from virus contamination on the one hand to #MeToo concerns on the other. But what are the implications for organization cultures that previously thrived on coworker bonding rituals? Rituals are in at Salo LLC, a Minneapolis human resource management company. A ringing gong signals a deal that has been closed. You might even see a couple of employees doing a chest bump to celebrate a success. What‘s it all about? Answer: harnessing the power of organizational culture as a performance booster. Researchers note that many of us follow rituals before doing things—like the major league baseball player who tightens and re-retightens his batting gloves before each pitch. Some consider rituals confidence boosters. When rituals move into the office, they are linked with increased employee involvement and a higher sense of connection among team members. Of course, newcomers may have to be treated with extra care and changing times require changes to rituals as well. Discuss if this is taking organizational culture a step too far? Ask students if they would be comfortable in an office environment where chest bumps were part of the daily ritual and if they find such activities a source of celebration, camaraderie, and engagement?
Analytics: Family Values Put Pressure on Organization Cultures Pressure is on organizations to pay more attention to family values. Facts to Consider points to a number of different facts which have to do with workers (68%) who feel they don‘t have enough time for spouses and partners, those who don‘t feel they have enough time for their children (74%), and those who are caring for elderly or relatives (35%). Ask students what organizational culture issues are raised by family values and what employers should do to respond to them.
Ethics: Hidden Agendas in Organizational Change Sharing power is a popular choice when implementing a change strategy and is an approach that can generate a lot of good ideas and helps establish all-important ―buy-in‖ to support the proposed change. But what happens when the ideas offered and the ensuing conversations move in a direction that top management thinks is wrong? Some managers are afraid of losing influence while sharing power during organizational change and often resort to hidden agendas. They handpick key members to be on their change teams and ask them to take prominent roles in discussions and support only the ―right‖ ideas. The goal is to Copyright © 2021 John Wiley & Sons, Inc.
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make sure that change heads in the predetermined ―preferred‖ direction while still giving everyone involved a sense of being included and empowered. Ask students if they would handpick the leaders of a change effort in order to get their way if they were a manager—even if that meant that alternative points of view were likely to be excluded from the process? Discuss the ethical issues involved?
Quick Case: Proposal for Open Office Design and Hotdesking You are just starting to work with an architect on designs for a new office space for your fastgrowing tech startup. She proposes a design that does away with private offices, includes two or three personal cubicles with flexible dividers, and provides lots of flexible open spaces for casual and arranged meetings. She also proposes a shift to "hotdesking" for the sales representatives because they spend a lot of time away from the office. This means that they will not have permanent space and will instead "sign up" to use temporary cubicle desks when they come into the office. You really like the design concept because it supports collaboration and teamwork while also saving space and facilities costs as the firm grows. But you're worried about possible resistance because everyone is used to having private office space. So, you sit down to write a list of "pros" and "cons" for the architect's proposal. You also make some notes on how to engage the staff with these ideas in order to head off any problems. What's on your pros and cons list? What are your notes and what are their implications for how you will approach this change situation? What‘s your strategy? What kind of change
Insight for Personal Development: Get Comfortable with Tolerance for Ambiguity The next time you are driving somewhere and following a familiar route only to encounter a ―detour‖ sign, test your tolerance for ambiguity. Is the detour just a minor inconvenience? Do you go forward without any further thought? Or is it a big deal, perhaps causing you anxiety and anger? Do you show a tendency to resist change in your normal routines? Change creates anxiety and breaks us from past habits and conditions. Uncertainty puts many things out-side our immediate control. Depending on your tolerance for ambiguity, you may be more or less comfortable dealing with these realities. Ask students: Are you willing and able to work with less structure? Do you enjoy flexibility, setting your own goals, and making decisions? Are you excited by the prospect of change and new—as yet undefined—opportunities? It‘s important to find a good fit between your personal preferences for ambiguity and the pace and nature of change in the career field and organizations where you ultimately choose to work. To achieve this fit, you have to understand your own tolerance for ambiguity and how you are likely to react in change situations.
Suggested Exercises for Chapter 9 Break the class into teams and have the teams perform the following discussion task. Copyright © 2021 John Wiley & Sons, Inc.
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Identify a sports team at the college or professional level that exemplifies strong culture. Identify the key elements (symbols, heroes, stories, and rituals) of the observable culture of the team that you select.
Terms to Define Business model innovation Change leader Changing Commercializing innovation Core culture Core values Disruptive innovation Force-coercion strategy Green innovation Improvisational change Incremental change Innovation Observable culture Organizational culture Process innovations Product innovations
Rational persuasion strategy Refreezing Reverse innovation Shared power strategy Skunkworks Social business innovation Social innovation Social entrepreneurship Socialization Strong cultures Sustainable innovation Symbolic leader Transformational change Unfreezing Value-based management Workplace spirituality
Multiple-Choice Questions 1. Stories told about an organization‘s past accomplishments and heroes such as company founders are all part of what is called the culture. (a) observable (b) underground (c) functional (d) core 2. Planned and spontaneous ceremonies and celebrations of work achievements illustrate how _ helps build strong corporate cultures. the use of (a) rewards (b) structures (c) rites and rituals (d) core values 3. An organization with a strong culture is most likely to have (a) a tight, bureaucratic structure (b) a loose, flexible design (c) a small staff size (d) clearly communicated mission 4. Honesty, social responsibility, and customer service are examples of Copyright © 2021 John Wiley & Sons, Inc.
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become foundations for an organization‘s core culture. (a) rites and rituals (b) values (c) subsystems (d) ideas 5. Product innovations create new goods or services for customers, while innovations create new ways of doing things in the organization. (a) content (b) process (c) quality (d) task 6. The Kindle e-reader by Amazon and the iPad by Apple are examples of innovations. (a) business model (b) social (c) product (d) process 7. Movie downloads by subscription (Netflix) and advertising revenues from Internet searches (Google) are examples of innovations. (a) business model (b) social (c) product (d) process 8. Green innovation is most associated with the concept of (a) observable culture (b) core culture (c) sustainability (d) skunkworks
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9. The innovation process isn‘t really successful in an organization until a new idea is . (a) tested as a prototype (b) proven to be financially feasible (c) put into practice (d) discovered or invented 10. The basic role of a skunkworks is to . (a) add more bureaucratic structure to the innovation process (b) provide special free space in which people work together to achieve innovation (c) make sure that any innovation occurs according to preset plans Copyright © 2021 John Wiley & Sons, Inc.
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(d) give people free time in their jobs to be personally creative
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change results in a major change of direction for an organization, while makes small adjustments to current ways of doing things. (a) Frame breaking; radical (b) Frame bending; incremental (c) Transformational; frame breaking (d) Transformational; incremental
12. A manager using a force-coercion strategy is most likely relying on the power of to bring about planned change. (a) expertise (b) reference (c) legitimacy (d) information 13. The most participative of the planned change strategies is (a) negotiation and agreement (b) rational persuasion (c) shared power (d) education and communication 14. The responses most likely to be associated with use of a force-coercion change strategy are best described as (a) internalized commitment (b) temporary compliance (c) passive cooptation (d) active resistance
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15. When a change leader tries to deal with resistance by trying to covertly influence others, offering only selective information and/or structuring events in favor of the desired change, this is an example of . (a) rational persuasion (b) manipulation and cooptation (c) negotiation (d) facilitation Copyright © 2021 John Wiley & Sons, Inc.
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Short-Response Questions: 16. What core values might be found in high-performance organizational cultures? The core values that might be found in high-performance organizational cultures include such things as emphasize performance excellence, innovation, social responsibility, integrity, worker involvement, customer service, and teamwork. 17. What is the difference between process, product, and business model innovation? First, process innovations result in better ways of doing things. Second, product innovations result in the creation of new or improved goods and services. Third, business model innovations result in new ways of making money for the firm. 18. How do a manager‘s responsibilities for change leadership vary among Lewin‘s three phases of planned change? Lewin’s three phases of planned change are unfreezing, changing, and refreezing. In terms of the change leadership challenges, the major differences in attention would be as follows: unfreezing—preparing a system for change; changing—moving or creating change in a system; and refreezing—stabilizing and reinforcing change once it has occurred. 19. What are the possible differences in outcomes for managers using force-coercion and shared power change strategies? In general, managers can expect that others will be more committed and loyal to changes that are brought about through shared power strategies. Rational persuasion strategies can also create enduring effects if they are accepted. Force-coercion strategies tend to have temporary effects only.
Integration and Application Questions: 20. One of the common experiences of new college graduates in their first jobs is that they often ―spot things that need to be changed.‖ They are full of new ideas, and they are ready and quick to challenge existing ways of doing things. They are enthusiastic and well intentioned. But more often than most probably expect, their new bosses turn out to be skeptical, not too interested, or even irritated; co-workers who have been in place for some time may feel and act the same. Questions: What is the new employee to do? One option is to just forget it and take an ―I‘ll just do my job‖ approach. Let‘s reject that. So then, how can you be an effective change leader in your next new job? How can you use change strategies and deal with resistance from your boss and co-workers in a manner that builds your reputation as someone with good ideas for positive change? In any change situation, it is important to remember that successful planned change occurs only when all three phases of change—unfreezing, changing, and refreezing—have been taken care of. Thus, I would not rush into the changing phase. Rather, I would work with the people involved to develop a felt need for change based on their ideas and inputs as well as mine. Then I would proceed by supporting the changes and helping to stabilize them into everyday routines. I would also be sensitive to any resistance and respect that resistance as a signal that something important is being threatened. By listening to resistance, I would be in Copyright © 2021 John Wiley & Sons, Inc.
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a position to better modify the change to achieve a better fit with the people and the situation. Finally, I would want to take maximum advantage of the shared power strategy, supported by rational persuasion, and with limited use of force-coercion (if it is used at all). By doing all of this, I would like my staff to feel empowered and committed to constructive improvement through planned change. Throughout all of this I would strive to perform to the best of my ability and gain trust and credibility with everyone else; in this way I would be a positive role model for change.
Self-Assessment 9: Tolerance for Ambiguity Instructions Rate each of the following items on this seven-point scale. strongly agree 1 2 3 4 5 6 7 strongly disagree 1. An expert who doesn‘t come up with a definite answer probably doesn‘t know too much. 2. There is really no such thing as a problem that can‘t be solved. 3. I would like to live in a foreign country for a while. 4. People who fit their lives to a schedule probably miss the joy of living. 5. A good job is one where what is to be done and how it is to be done are always clear. 6. In the long run it is possible to get more done by tackling small, simple problems rather than large, complicated ones. 7. It is more fun to tackle a complicated problem than it is to solve a simple one. 8. Often the most interesting and stimulating people are those who don‘t mind being different and original. 9. What we are used to is always preferable to what is unfamiliar. 10. A person who leads an even, regular life in which few surprises or unexpected happenings arise really has a lot to be grateful for. 11. People who insist upon a yes or no answer just don‘t know how complicated things really are. 12. Many of our most important decisions are based on insufficient information. 13. I like parties where I know most of the people more than ones where most of the people are complete strangers. Copyright © 2021 John Wiley & Sons, Inc.
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14. The sooner we all acquire ideals, the better. 15. Teachers or supervisors who hand out vague assignments give a chance for one to show initiative and originality. 16. A good teacher is one who makes you wonder about your way of looking at things. Scoring To obtain a score, first reverse your scores for items 3, 4, 7, 8, 11, 12, 15, and 16 (i.e., a rating of 1 = 7, 2 = 6, 3 = 5, etc.). Next add up your scores for all 16 items. The higher your total, the higher your indicated tolerance for ambiguity.
Class Exercise 9: Force-Field Analysis Instructions 1. Form into your class discussion groups and review this model of force-field analysis—the consideration of forces driving in support of a planned change and forces resisting the change. 2. Use force-field analysis and make lists of driving and resisting forces for one of the following situations: (a) Because of rapid advances in Web-based computer technologies, the possibility exists that the course you are presently taking could be, in part, offered online. This would mean a reduction in the number of required class sessions but an increase in students‘ responsibility for completing learning activities and assignments through computer mediation. The dean wants all faculty to put at least part of their courses online. (b) A new owner has just taken over a small walk-in-and-buy-by-the-slice pizza shop in a college town. There are presently eight employees, three of whom are full-time and five of whom are part-time. The shop is open seven days a week from 10:30 a.m. to midnight. The new owner believes there is a market niche available for late-night pizza and would like to stay open each night until 4 a.m. She wants to make the change as soon as possible. (c) A situation assigned by the instructor. 3. Choose the three driving forces that are most significant for the proposed change. For each force, develop ideas on how it could be further increased or mobilized in support of the change. 4. Choose the three resisting forces that are most significant for the proposed change. For each force, develop ideas on how it could be reduced or turned into a driving force. 5. Be prepared to participate in a class discussion led by your instructor.
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What organizational cultures do we encounter and deal with every day, and what are their implications for employees, customers, and organizational performance? Instructions 1. In your team make two lists. List A should identify the things that represent the core cultures of organizations. List B should identify the things that represent the observable cultures of organizations. For each item on the two lists, identify one or more indicators that you might use to describe this aspect of the culture for an actual organization. 2. Take an organizational culture walk through a major shopping area of your local community. Choose at least three business establishments. Visit each as customers. As you approach, put your ―organizational culture senses‖ to work. Start gathering data on your Lists A and B. Keep gathering it while you are at the business and right through your departure. Take good notes and gather your thoughts together after leaving. Do this for each of the three organizations you choose. 3. Analyze and compare your data to identify the major cultural attributes of the three organizations and how they influence customers and organizational performance. 4. Use your results to make some general observations and report on the relationship between organizational cultures and performance as well as among organizational cultures, employee motivation, and customer satisfaction.
Case Snapshot: Gamification - Games Fit the Corporate Culture 1. DISCUSSION What arguments can you make that support the legitimation of gamification in an organization‘s culture? What examples can you give or create to justify your arguments? The new legitimacy of gaming in the corporate world is called ―gamification.‖ Games are being seen as a way to promote a culture of learning, leadership development, individualism, and fun, while also focusing attention on the company‘s bottom-line performance goals. Games are also being used among new recruits – asking applicants to play games to reflect the responsibilities of the current job opening as a way to assess their skills. Some companies are gamifying the training process for increased learning and retention. HR compliance uses gamification, too. Would you rather sit in a room for hours and listen to someone talk about sexual harassment or play a role-playing game that trains employees to identify conduct that constitutes sexual harassment? As long as the productivity and satisfaction are up, the argument for games can and should work. Gamification can also help improve communication among remote workers. 2. Discussion What arguments can you make against trying to make gamification part of an organization‘s culture? What examples can you give or create to justify your arguments? The arguments against games would be the waste of time and lack of team connection -- as it focuses on individualism. Some believe that gamification creates a false set of incentives and that it should not exclude other methods of learning. Still, there are others that believe that if gamification is money motivated that this can lead to a lack of motivation in the long term – especially for millennials who want to be engaged in meaningful work.
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3. PROBLEM SOLVING Consider yourself the go-to ―idea person‖ for friends who head two local organizations—a fire department and a public library. Both complain about morale problems and ask you for advice on creating a positive organizational culture. They want to know how your interest in gaming can be used to improve staff morale and performance. What will you suggest and why? Gamification may be able to help improve morale and performance in different types of organizational settings. However, it is going to depend on many different factors. Gamification with goals, contests, achievements, points, scoring and leaderboards may indeed help with morale. A gamification platform with high usage may connect employees with each other and create a more cohesive team. Gamification can be used to solve problems, maintain focus, get feedback or build brand loyalty. Depending on the goals of the fire department and library, there are numerous ways to implement gamification – and with varying results. 4. FURTHER RESEARCH Review how organizations, including major corporations, nonprofits, and the military, are using gaming. What role is gaming taking on in these settings, and how does its use affect the organizational cultures? What does the evidence suggest - is gamification merely a passing trend, or is it here to stay and may even grow in use in the future? Student answers will vary based on research. Here are a few actual examples: For Example: Delta Airlines had a hard time motivating their call center employees to complete their necessary training exercises. The company launched the game ―Ready, Set, Jet‖ which features mini-games where training missions are completed (such as helping a couple get from one airport to another as fast as possible), achievements are reached (visiting virtual tourist attractions), and rewards are collected (mock Skymiles). With these gamification techniques, Delta call center employees successfully completed four years worth of training in only one year. For Example: Microsoft needed local language translations checked for many of their products, but they were having a hard time getting their users to view their screens, check for accuracy, and reply with helpful feedback. By introducing a ―Language Quality Game‖ to their global company, native-speaking users were able to use their skills to identify translation issues and earn points on the company-wide leaderboard. This gamification technique greatly accelerated the pace at which Microsoft received the needed information. For Example: Quirky is a community-led invention platform that has gamified product development. It engages over 700,000 inventors to submit ideas for consumer products and the community votes on the best. The products that win badges go on to development after it wins the ―pricing game‖ and the community collaborates on the product name. This community effort of bringing forth the best-untapped ideas has created such a loyal following because (even though contributors don’t receive a tangible reward for their efforts) each of them is working toward developing an innovative product that they know consumers will want to purchase.
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Gamification Examples: AstraZeneca (a biopharmaceutical company) wanted to better communicate their corporate culture, improve the work environment, and create an effective team-building tool for their 500 agents spread over 100 different countries. The company uses a gamification platform named ―Go To Jupiter‖ to astounding results. This tool has seen an astounding usage rate of 97% with most of their agents even using the game outside of work time. From all over the world, this game has effectively connected their employees with each other and has created a more cohesive team. Source: ―How Gamification Works,‖ http://iactionable.com/how-gamification-works/ Additional examples: Top firms such as IBM, Khan Academy, SAP, and Nike are taking advantage of gamification. These firms were drawn to the idea of gamification due to the fact that games are being seen as a way to promote creativity, productivity, and satisfaction in the workplace and for consumers. For example, Nike uses a gaming platform to encourage higher performance among their consumers. Khan Academy uses gamification methods as learning tools to enhance student’s learning experiences. IBM uses gaming as a way for employees to stay connected and engaged due to the fact that many of their employees work from home or are required to travel frequently. SAP, a software company, uses games and a point system to assign sales leads and tackle environmental challenges. Gamification is modifying traditional workplace cultures and realigning them with pop culture trends. It is becoming a driver for motivation and enthusiasm in the workplace. Analysts are predicting that gamification will be a multi-billion dollar industry in the years to come. Brian Burke, and industry analyst, says that in order for companies to be successful in implementing gamification they must motivate employees to achieve their goals and overlap employee’s individual goals with business goals.
Suggested Team Exercise for Chapter 9 Break the class into teams and have the teams perform the following discussion task. Identify a sports team at the college or professional level that exemplifies strong culture. Identify the key elements (symbols, heroes, stories, and rituals) of the observable culture of the team that you select.
CHAPTER 10 Human Resource Management Nurturing Turns Potential into Performance
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Chapter 10 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter ten covers human resource management and its importance within the context of an organization. The primary responsibilities of the human resource function are detailed including recruiting, selection, socialization, training and career planning and development. Next, the laws and government legislation which protect against employment discrimination are covered and discussed. Equal employment opportunity, job discrimination and affirmative action are reviewed with an emphasis on the simple fact that laws cannot guarantee against discrimination. The employee value proposition is discussed as the exchange of value between what the organization offers the employee in return for his or her work contribution. The recruitment practices to attract qualified applicants are discussed, along with selection decisions and socialization and orientation strategies. A review of the importance of training to continue to develop employee skills is discussed, along with various techniques of reviewing performance or performance appraisal. Retention and career development strategies are discussed and the importance of diligence in career planning is reviewed. The last section focuses on issues in human resource management, which include job flexibility and work-life balance becoming top priorities for job seekers, the use of more independent contractors and part-time employees, compensation plans which influence recruitment and retention, the importance of fringe benefits to attract qualified employees, and the issue of labor relations and collective bargaining.
Chapter 10 Learning Objectives Learning Objective 10.1 Describe the purpose and legal context of human resource management. Learning Objective 10.2 Explain essential human resource management practices. Learning Objective 10.3 Summarize current issues in human resource management.
Chapter 10 Lecture Outline
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Learning Objective 10.1 Describe the Purpose and Legal Context of Human Resource Management.
Human resource management attracts, develops, and maintains a talented workforce. Strategic human resource management aligns human capital with organizational strategies. Laws protect against employment discrimination. Laws can‘t guarantee that employment discrimination will never happen.
Learning Objective 10.2 Explain Essential Human Resource Management Practices.
Recruitment attracts qualified job applicants. Selection makes decisions to hire qualified job applicants. Onboarding introduces new hires to the organization Training continually develops employee skills and capabilities. Performance reviews assess work accomplishments. Career development provides for retention and career paths.
Learning Objective 10.3 Summarize Current Issues in Human Resource Management.
Job flexibility and work–life balance are top priorities for job seekers. More people are working as independent contractors and contingency employees. Compensation plans influence recruitment and retention. Fringe benefits are an important part of compensation. Labor relations and collective bargaining are closely governed by law.
Chapter 10 Supporting Materials Figures Figure 10.1 Sample of U.S. Laws Against Employment Discrimination. Figure 10.2 A Psychological Contract Links Individuals and Organizations. Figure 10.3 Use a Behaviorally Anchored Rating Scale for Performance Appraisal. Figure 10.4 What Happens When Labor Relations Management Becomes Adversarial? What’s Inside Career Readiness: Lessons for a successful interview Analytics: Costs of Ignoring Internal Job Candidates Choices: Teammates know you, but should they pay you? Ethics: Human Resource Executives Worry About Performance Measurement Insight: Conscientiousness is a Career Booster Issues: The Evolving Role of HR in a Gig Economy Quick Case: Athletic director's dilemma Applications Copyright © 2021 John Wiley & Sons, Inc.
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TestPrep 10 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 10: Performance Review Assumptions o Class Exercise 10: Upward Appraisal o Team Project 10: The Future of Labor Unions Case Snapshot: RealRecruit: Protecting Student Athletes
Chapter Outline Learning Objective 10.1: What are the Purpose and Legal Context of Human Resource Management?
Human resource management attracts, develops, and maintains a talented workforce Human Resource Management (HRM) is the process of attracting, developing, and maintaining a high-quality workforce. Three major responsibilities of HRM include: 1. Attracting a quality workforce 2. Developing a quality workforce 3. Maintaining a quality workforce
DISCUSSION TOPIC Ask the students to describe what they expect from an employee-employer relationship. What do they expect to provide to an employer? What do they expect the employer to provide? Relate their stated expectations to the concept of a social contract.
Strategic human resource management aligns human capital with organizational strategies. Human capital is the talents people bring to organizations in the form of abilities, knowledge, experience, ideas, energies, and commitments. Strategic human resource management keeps an organization‘s human capital— people and their talents—always aligned with strategies and objectives. Person-job fit is the extent an individual‘s knowledge, skills, experiences, and personal characteristics are consistent with job requirements Person-culture fit is the extent an individual‘s values, interests, and behavior are consistent with the culture of the organization. Employee value proposition- packages of opportunities and rewards that make diverse and talented people want to belong to and work hard for the organization Human resource analytics mine employee data for insights helpful to strategic HRM.
Laws protect against employment discrimination Job discrimination - occurs when an organization denies employment or a job assignment or an advancement opportunity for reasons that are not performance relevant. See Figure 10.1 for a summary of laws designed to protect workers from job discrimination Pay—The Equal Pay Act of 1963 requires equal pay for women and men doing
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equal work. Title VII of the Civil Rights Act of 1964 (as amended) prohibits discrimination in employment based on sex, race, color, national origin, or religion. Age—The Age Discrimination in Employment Act of 1967 prohibits discrimination against persons older than 40; restricts mandatory retirement. Pregnancy—The Pregnancy Discrimination Act of 1978 prohibits employment discrimination against pregnant workers.. Disabilities—The Americans with Disabilities Act of 1990 prohibits discrimination against a qualified individual on the basis of disability.. Civil Rights Act of 1991 reaffirms Title VII of the 1964 Civil Rights Act; reinstates burden of proof byemployer and allows for punitive and compensatorydamages. Familymatters—The Familyand Medical Leave Act of 1993 allows employees up to 12 weeks of unpaid leave with job guarantees forchildbirth, adoption, or familyillness.
DISCUSSION TOPIC Ask the students if they have either witnessed or personally encountered any of the forms of discrimination described above. Without having them inappropriately reveal details, seek a general description of what happened and how it was handled by the organization.
Equal employment opportunity (EEO) – the right to employment without regard to sex, race, color, national origin, or religion. Title VII of the Civil Rights Act of 1964, amended by the Equal Employment opportunity Act of 1972 and the Civil Rights Act (EEOA) of 1991 protect these rights Intent is that employment should be based only on ability and job performance Generally applies to organizations that employ 15 or more people Affirmative action – is an effort to give employment preference to women and minority group members Affirmative action plans - designed to ensure that an organization‘s workforce represents women and minorities in proportion to their labor market availability Reverse discrimination - claims of discrimination by majority populations Bona fide occupational qualifications - criteria for employment that an organization can clearly demonstrate as relating to a person‘s capacity to perform a job Laws can't guarantee that employment discrimination will never happen Gender identity discrimination and sexual orientation discrimination occur when employment decisions are biased against someone due to their gender identity or sexual orientation. Under Title VII and its prohibition against sex discrimination, the EEOC protects LGBT (lesbian, gay, bisexual, and transgender) job applicants and job holders. Sexual harassment is behavior of a sexual nature that affects a person‘s employment situation. Pay discrimination - occurs when men and women are paid differently for doing equal work. Lilly Ledbetter Fair Pay Act allows workers to file discrimination claims longer than previously allowed.
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Pregnancy discrimination - penalizes a woman in a job or as a job applicant for being pregnant. Age Discrimination - Workers 40 and over are protected from employers making any employment decision based on age. Employee privacy is the right to privacy both on and off the job. 10.1 Questions for discussion with suggested answers 1) How might the forces of globalization affect human resource management in the future? Globalization will likely require that Human Resources: Be at least bi-lingual with departmental language skills mirroring those of the countries of employment Put a higher reliance on local interviewing and internet testing and screening Develop a higher need for technology skills among human resource professionals Maintain awareness and understanding of cultural differences between countries Be able to understand employment laws and employee protections in other countries 2) Are current laws protecting American workers against discrimination in employment sufficient, or do we need additional ones? Discriminatory practices still exist in spite of current laws, so new laws are frequently needed to protect against the discriminatory practices that slip past current laws. The Lilly Ledbetter Fair Pay Act modified the length of time workers have to file claims for pay discrimination in light of pay secrecy practices. The Genetic Information Nondiscrimination Act (GINA) was passed to respond to new technology that led to employers discriminating against workers with a genetic predisposition to illnesses such as carpal tunnel, heart disease, breast cancer, Alzheimer's Disease and many others. 3) What employee-rights issues and concerns would you add to those discussed here? Hiring of illegal workers is a major concern; many jobs are being lost to individuals who have broken the law and come into the U.S. across borders. It is clear and well-known that many employers are ―winking‖ at the laws. Students and Americans who would be able to work in those jobs do not have the opportunity because enforcement is so low, and employers continue the practice because such workers will work for much lower wages and with no or few benefits. Virtually every poll shows that a significant majority of Americans want the laws enforced that already exist, including large penalties and even imprisonment for those who flaunt the law. Some estimates are that as many as 30 million workers are in the United States illegally. 10.1 Career Situation: What Would You Do? If you were appointed to a student committee asked to investigate gender equity in sports on your campus, what would you propose the committee look at? Based on your understanding of
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campus affairs, what changes would you suggest in athletic funding and administration to improve gender equity? Student answers may vary- students can be divided into groups to discuss the various gender issues that may be present on their campus and to come up with possible suggestions for remedying these issues.
Learning Objective Question 10.2: Explain Essential Human Resource Management Practices.
Psychological contracts set the exchange of value between individuals and organizations Psychological contract- the exchange of value between the individual and the organization in an employment relationship Figure 10.2 depicts how the psychological contract links individuals and organizations
Recruitment attracts qualified job applicants Recruitment - what organizations do to attract qualified job applicants to an organization Realistic job preview - gives a candidate both the good points and bad points of the job and the organization DISCUSSION TOPIC
A good way to introduce the discussion of the recruitment process presented above is to see if any of your students are currently engaged in a job search. You can then ask students who respond affirmatively to describe their experiences with the recruiting process. This discussion typically helps students to see more clearly the relevance of recruiting from both a management perspective and their own personal perspectives as job candidates. Tips on how to succeed in Online Interviews Prepare ahead of time—Study the organization; carefully list your strengths and capabilities; have materials ready for note taking. Interview in private—Make sure you are in a quiet room, with privacy and without the possibility of interruptions; turn smart-phone and computer alerts off so that you are not interrupted. Dress professionally—Don‘t be casual, even though at home; dressing right increases confidence and sets a tone for your side of the conversation. Practice your ―voice‖ and ―screen presence‖—Your impression will be made quickly; how you sound and look counts; speak slowly, look at the camera, and enunciate clearly; it helps to smile when you talk because it will change the tone of your voice. Have reference materials handy—Your résumé and other supporting documents should be within easy reach.
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Have a list of questions ready—Don‘t be caught unprepared; intersperse your best questions during the interview. Ask what happens next—Find out how to follow up by telephone or e-mail; ask what other information you can provide; ask about the time frame for a decision. Follow up—Don‘t forget to send a thank-you email to reiterate your interest in the job.
Selection makes decisions to hire qualified job applicants Selection - involves choosing whom to hire from the pool of qualified job applicants. Reliability - means consistency -- means that a test gives consistent results over repeated measures. Validity - means predictability -- means that the test score is a good predictor of future job performance Assessment centers - evaluates a person‘s job potential by observing his or her performance in experiential activities designed to simulate daily work Work sampling - working on the actual job while observers grade your performance Job audition- trial hire where a job candidate is given a short-term employment contract in order to demonstrate their performance capabilities
DISCUSSION TOPIC Ask your students if they have ever been evaluated at an assessment center. Students with work experience or students, who are currently seeking employment, may have direct experience with this selection tool. If so, ask them to describe their experiences for the rest of the class.
Onboarding Introduces New Hires to the organization Socialization - the process of influencing the expectations, behavior, and attitudes of new members. Onboarding- program of activities that introduce a new hire to the policies, practices, expectations, and culture of the organization and its teams Orientation - sessions for new hires to communicate key information, set expectations, and answer questions
Training develops employee skills and capabilities Coaching - an experienced person provides performance advice to a new hire Mentoring - a new or early career employee is assigned as a protégé to someone senior in their area of expertise Reverse mentoring - younger employees serve as a mentor to senior executives, frequently providing expertise on technology and social media
Performance reviews assess work accomplishments Performance appraisal - a process of formally assessing and providing feedback on someone‘s work accomplishments
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Graphic rating scale - a checklist or scorecard for rating an employee on preselected personal traits or performance characteristic such as work quality, attendance, and punctuality Behaviorally anchored rating scale (BARS) - describes actual behaviors that exemplify various levels of performance achievement in a job See Figure 10.3 for a depiction of a Behaviorally anchored rating scale Critical incident technique – keeps an actual log of a person‘s effective and ineffective job behaviors 360 º feedback - gathers inputs from the many people that work and depend on the person being appraised (boss, subordinates, peer, and others) Multi-person comparison - rate people relative to each other Figure 10.3 What Does a Behaviorally Anchored Rating Scale Look Like? A behaviorally anchored rating scale (BARS) uses actual descriptions of positive and negative job behaviors to anchor rating points. In this example of how a customer service representative handles a merchandise return, various alternative behaviors are clearly identified. Consistent and documented rude or disrespectful behavior toward customers by a salesperson would earn a rating of “extremely poor.” This specificity makes the BARS more reliable and valid.
Career development provides for retention and career paths Career development - the process of managing how a person grows and progresses from one career stage to the next Career planning - the process of systematically matching career goals and individual capabilities with opportunities for their fulfillment
10.2 Questions for discussion suggested answers 1) Is it realistic to expect that you can get a realistic job preview during the interview process? The more successful the company, the more likely that job previews will be realistic. Successful companies recognize that they are attractive to recruits and need not portray the job opportunity unrealistically. For less successful companies and small companies, human nature combined with competition from more attractive employers makes realistic job interviews less likely. 2) If a new employer doesn‘t formally assign someone to be your coach or mentor, what should you do? Most companies do not assign a coach or mentor; this typically occurs through networking or spontaneous contacts in the course of working. A new employee should take the time to understand the organization and its culture then identify persons who would seem to be possible coaches. Often, coaches or mentors are not even aware they are doing ―coaching‖ or ―mentoring‖ yet the benefits still can occur. 3) What are some of the possible downsides to receiving 360 º feedback? The biggest ―downside‖ to 360 º feedback is the danger that a disgruntled subordinate or peer who is competing for promotion will ―sabotage‖ the rating by deliberately underrating or rating poorly the employee. The manager to whom the person reports needs to be cognizant of such possibilities and look at the holistic results of the ratings. Copyright © 2021 John Wiley & Sons, Inc.
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10.2 Career Situation: What Would You Do? After taking a new job as head of retail merchandising at a department store, you are disappointed to find that the salesclerks are evaluated on a graphic rating scale. It uses a simple list of traits to gauge their performance. You want to propose an alternative and better approach that will make performance reviews really valuable. Your boss says: ―Give me a plan.‖ Exactly what will you present as your proposal, and how will you present it to the salesclerks as well as the boss? Student answers will vary. Students should weigh the pros and cons of each performance review technique to determine the best option that will benefit both the performed sales clerks and the company as a whole.
Learning Objective Question 10.3 Summarize Current Issues in Human Resource Management.
Job flexibility and work-life balance are top priorities for job seekers Work-life balance involves balancing career demands with personal and family needs More people are working as independent contractors and contingency workers Independent contractors are not part of the organization‘s permanent workforce. They are hired on temporary contracts. Contingency workers are sometimes called permatemps. They supplement the fulltime workforce by working as-needed, part-time schedules, often on a long-term basis.
Compensation plans influence recruitment and retention Merit pay - ties compensation to performance. High performing employees receive larger pay increases. Bonus pay - provides one-time payments to employees based on performance accomplishments Profit sharing - distributes to employees a proportion of net profits earned by the organization in a performance period Gain sharing - allows employees to share in cost savings or productivity gains realized by their efforts. Stock options - the right to purchase shares of company stock at a fixed price in the future.
Fringe benefits are an important part of compensation Fringe benefits - nonmonetary compensation such as health insurance and retirement plans
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Family friendly benefits - help employees achieve better work-life balance. Examples include childcare and flextime Flexible benefits - allow employees to personalize benefits within a set dollar allowance Employee assistance programs - help employees cope with personal stresses and problems
DISCUSSION TOPIC Ask the students to identify the features that they would look for in a family-friendly company. Why do they consider these features to be important?
Labor relations and collective bargaining are closely governed by law Labor unions - organizations to which employees belong and that deal with employers on the workers‘ behalf; a collective ―voice‖ for their members for added power Labor contracts – a formal agreement between a union and an employer which typically specify the rights and obligations of employees and management with respect to wages, work hours, work rules, seniority, hiring, grievances, and other conditions of work Collective bargaining - the process that brings management and union representatives together in negotiating, administering and interpreting labor contracts Two-tier wage systems- pay new hires less than workers already doing the same jobs with more seniority See Figure 10.4 for a depiction of what happens when labor-management relations become adversarial See Figure 10.4 What Happens When Labor-Management Relations Become Adversarial? When union and management representatives meet in collective bargaining, it would be nice if things were always cooperative. Unfortunately, they sometimes turn adversarial, and each side has weapons at its disposal to make things hard for the other. Unions can resort to strikes, boycotts, and picketing. Management can use lockouts, strike-breakers, and court injunctions to force strikers back to work. Although each side can find justifications in defense of using such tactics, they can also come with high price tags in terms of lost worker earnings and company profits.
10.3 Questions for discussion suggested answers 1. Are we giving too much attention these days to the issues of work-life balance? No. The issue of work-life balance becomes a real concern as employees increasingly feel that there is little "down time" when they are connected to work nearly 24/7 via smart phones and the Internet. Globalization has increased business dependence on 24/7 availability for many businesses. Separation of personal and work life becomes a real concern when employees find it difficult to "unplug". 2. Can a good argument be made that merit pay just doesn‘t work? Many things must go right for merit pay to work. Systems can become quite complicated, so it must be clearly explained to and understood by employees. The system of performance appraisal must be seen as valid and fair by employees. The amount of Copyright © 2021 John Wiley & Sons, Inc.
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money offered must provide an incentive. Employees must see the pay as a valid incentive with clear criteria that fairly rewards those who deserve it. Failure of any of these will reduce its effectiveness. 3. Given economic trends, is it likely that unions will gain in future popularity? Unions are gaining popularity, but not in traditional occupations. The unions seeing increasing membership are those in the service industries such as public service and the hospitality industry. 10.3 Career Situation: What Would You Do? You have become aware of a drive to organize the faculty of your institution and have them represented by a union. The student leaders on campus are holding a forum to gather opinions on the pros and cons of a unionized faculty. Because you represent a student organization in your college, you are asked to participate in the forum. What will you say, and why? Student answers will vary.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Lessons for a successful interview Today‘s graduates face challenging times. The virus pandemic has affected job options and made employers careful and highly selective in hiring. Job seekers must get creative and those tricky interview questions have to be nailed... 100%. Can you handle this question? ―Tell me, exactly, what can you do for us?‖ Will you err by focusing on where you‘ve been and what you studied, instead of describing what you‘ve done and how you‘ve delivered results? Ask students to think of their target employer. Ask them when in a Zoom or Skype interview and the interviewer asks this opening question: ―Right from the start, what value can you add to the team we‘re hiring for?‖ Ask them to think about how they would answer today. But even more important, consider how they can prepare to make their answer stronger in six months or a year.
Issues: The Evolving Role of HR in a Gig Economy Now that we are living with the realities—health and economic— of a pandemic, it‘s time to face up to the evolving role of human resource management. The onslaught of COVID-19 with all of its wide-reaching consequences turned remote work into a routine, and not just an option. It caused massive unemployment with lingering job losses, layoffs, and furloughs. Job opportunities were as often found in short-term gigs and freelance contracts as they were in fulltime employment. We‘re all learning to adjust how we live and work in this ―new normal.‖ Copyright © 2021 John Wiley & Sons, Inc.
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Human resource management has to adjust, too. Ask students how can employers manage the ins-and-outs of gig work while still maintaining a strong full-time worker base? How do you onboard gig workers for short-term assignments and integrate them into project teams? How do you engage gig workers so that when next needed they‘ll choose to work with you rather than seek other options? And when you are on the ―worker‖ side of a gig, what will you be looking for and what will determine whether or not you‘ll accept another contract from the same employer?
Analytics: Costs of Ignoring Internal Job Candidates Why is it that just 28% of hiring managers consider hiring from within as an important source of job candidates? Why is it that less than a third of employers require that job vacancies be posted for review by internal candidates before looking outside? Why is it that employers ranked recruiting from the outside higher than recruiting ―highly skilled talent‖? Ask students can you see value in recruiters looking inside as well as outside when filling job vacancies? Can you also see why employers might assume that you do better bringing in someone new from the outside than by promoting from within? What does this survey suggest about the costs and benefits of inside and external recruiting? If you are an insider interested in advancement, what might you do to stay visible and attractive when job opportunities arise?
Ethics: Human Resource Executives Worry About Performance Measurement A survey of human resource executives published in The Wall Street Journal reveals they aren‘t pleased with the way managers in their organizations do performance reviews. Some are so concerned that they suggest dropping reviews altogether. Among survey findings:
30% of the HR executives believed that employees trust their employer‘s performance measurement system. 40% rated their performance review systems as B, and only 3% rated them as A. Many were concerned that managers aren‘t willing to face employees and give constructive feedback. Many also complained that employees don‘t have a clear enough understanding of what rates as good and bad performance.
Ask students is it really possible to have a performance measurement system that is respected by all? And if you can‘t, is it ethical to presume one exists? How can performance reviews, even with their limitations, better serve the needs of both employers and workers? And what about our new gig and remote work economy? How does performance measurement fit into this reality?
Choices: Teammates know you, but should they pay you?
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Traditionally, managers or team leaders made final pay raise decisions. But times may be changing in this world of increased crowdsourcing. Your pay may now be decided by your teammates, not your boss. Picture this. Fifteen members of a work team log into an online exchange run by their employer. Their task is to distribute a pool of 1,200 stock options as an annual bonus to their team-mates. The only rule is that they can‘t give any to themselves. Each person‘s final bonus options are the sum of what other team members give them. When the exchange closes, each individual gets notified of his or her bonus award and the distribution of bonuses awarded in the team—no names attached. The idea is that because teammates know one another best, they also know who deserves to be recognized at bonus time. Ask students to dicusss whether they have performed peer evaluations in teams and perhaps even assigned grades to team members. What‘s your take on this approach to bonuses? Does it really dig down to the level of truly rewarding individual contributions to team performance? Or is it a practice that potentially introduces more problems than it is worth?
Ethics: Human Resource Executives Worry About Performance Measurement A survey of human resource executives published in The Wall Street Journal reveals they aren‘t pleased with the way managers in their organizations do performance reviews. Some are so concerned that they suggest dropping reviews altogether. Among survey findings:
30% of the HR executives believed that employees trust their employer‘s performance measurement system. 40% rated their performance review systems as B, and only 3% rated them as A. Many were concerned that managers aren‘t willing to face employees and give constructive feedback. Many also complained that employees don‘t have a clear enough understanding of what rates as good and bad performance.
Ask students is it really possible to have a performance measurement system that is respected by all? And if you can‘t, is it ethical to presume one exists? How can performance reviews, even with their limitations, better serve the needs of both employers and workers? And what about our new gig and remote work economy? How does performance measurement fit into this reality?
Quick Case: Athletic director’s dilemma You are the athletic director at a large private university with a highly comprehensive, highly competitive intercollegiate athletics program. Most years the football team is ranked in the top 25 and is in the hunt for an NCAA Division I bowl game. The team captain has just presented you with a petition signed by 70% of the players that requests permission to start the process leading to unionization. The players aren‘t asking to be paid, but they believe it is in their best interests to have union protection when it comes to their physical well-being, academic progress, and financial affairs. Copyright © 2021 John Wiley & Sons, Inc.
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Since you are at a private university, the players are within their rights and can speak with unions such as the National College Players Association about representing them. The next step in the process will be for the players to distribute formal ―union cards‖ for signatures. If at least 30% sign the cards, they could ask the National Labor Relations Board to endorse their request to unionize. This is a complete surprise to you. In fact, you are so surprised that you‘re not sure what to do next. WHAT DO YOU DO? Before reaching for the telephone to call the football coach and university president, you decide to make notes on ―goals, critical issues, possible outcomes, and next steps.‖ What‘s on your list and why? How will you handle the implications of this request for the entire football team, other teams and their coaches, and the university as a whole? Reflect and React ―Underemployment… minimum wage workers….income inequality‖ – these are all topics and buzzwords of our day. In a perfect world where everyone worked for an employer that valued them and invested in their human capital, you‘d think these words wouldn‘t even be on our vocabulary lists. But the fact is that they are and that all employers are not ―the best.‖ What‘s it all mean to workers today and to those seeking jobs and careers in the future? How will you deal with the challenge of finding an employer that values you?
Insight for Personal Development: Conscientiousness is a career booster Conscientiousness is the degree to which an individual is achievement oriented, careful, hardworking, organized, persistent, responsible, and thorough. People who are low on conscientiousness tend to procrastinate, be laid back, less goal oriented, less driven by success, and less self-disciplined. Many employers tend to hire for attitude and train for skill. They try to identify future top performers by focusing on key personality characteristics that are likely to predict job success. Conscientiousness is often at the top of recruiters‘ ―must have‖ lists. Their search for clues about an individual job candidate‘s potential covers things such as those shown in the box. Conscientiousness is a personality characteristic that is positively related to work performance across a wide range of jobs. Get to Know Yourself Better Just how conscientious are you—not only in work and school situations but also in your everyday life? Take a conscientiousness test using the attributes listed in the box. Ask, ―How would others rate me on these same characteristics?‖ Can your credentials meet a recruiter‘s conscientiousness challenge? Why, or why not?
Terms to Define 360O feedback Affirmative action
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Behaviorally anchored rating scale (BARS) Bona fide -occupational -qualifications Bonus pay Career development Career planning Coaching Collective bargaining Contingency workers Critical-incident technique Employee assistance program Employee privacy Employee value proposition (EVP) Equal employment opportunity (EEO) Family-friendly benefits Flexible benefits Fringe benefits Gain sharing Gender Discrimination Graphic rating scale HR analytics Human capital Human resource management (HRM) Independent contractors Job audition Job discrimination Labor contract Labor union Mentoring Merit pay Multiperson comparison Onboarding Orientation Pay discrimination Performance appraisal Performance review Person-job fit Person-culture fit Pregnancy discrimination Profit sharing Psychological Contract
Selection Sexual harassment Sexual Orientation discrimination Socialization Stock options Two-tier wage systems Validity Work sampling Work-life balance
Realistic job previews Recruitment Reliability Reverse mentoring Copyright © 2021 John Wiley & Sons, Inc.
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Multiple-Choice Questions 1. Human resource management is the process of maintaining a high-quality workforce. (a) attracting (b) compensating (c) appraising (d) selecting
, developing, and
2. A is a criterion that organizations can legally justify for use in screening job candidates. (a) job description (b) bona fide occupational qualification (c) realistic job preview (d) BARS 3.
programs are designed to ensure equal employment opportunities for groups historically underrepresented in the workforce. (a) Realistic recruiting (b) Mentoring (c) Affirmative action (d) Coaching 4. Which of the following questions can an interviewer legally ask a job candidate during a telephone interview? (a) Are you pregnant or planning to soon start a family? (b) What skills do you have that would help you do this job really well? (c) Will you be able to work at least ten years before hitting the retirement age? (d) Do you get financial support from a spouse or companion who is also a wage earner? 5. An employment test that yields different results over time when taken by the same person lacks . (a) validity (b) reliability (c) realism (d) behavioral anchors 6. Which phrase is most consistent with a recruiter offering a job candidate a realistic job preview? (a) ―There are just no downsides to this job.‖ (b) ―No organization is as good as this one.‖ (c) There just aren‘t any negatives.‖ (d) ―Let me tell you what you might not like once you start work.‖ 7. Socialization of newcomers occurs during the (a) orientation (b) recruiting (c) selection (d) advertising
step of the staffing process.
8. The assessment center approach to employee selection relies heavily on evaluate a candidate‘s job skills. (a) intelligence tests (b) simulations and experiential exercises (c) 360º feedback (d) formal one-on-one interviews
to
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10. The selection technique known as asks a job candidate to actually perform on the job for a period of time while being observed by a recruiter. (a) mentoring (b) work sampling (c) job coaching (d) critical incident testing 10. The purpose of performance -appraisal is being addressed when a manager describes training options that might help an employee improve future performance. (a) development (b) evaluation (c) judgmental (d) legal 11. When a team leader must rate 10% of team members as ―superior,‖ 80% as ―good,‖ and 10% as ―unacceptable,‖ this is an example of the approach to performance appraisal. (a) graphic (b) critical-incident (c) behaviorally anchored rating scale (d) forced distribution 12. What is one of the reasons why employers are hiring more part-time or contingency workers? (a) It‘s hard to get people to work full-time anymore. (b) Part-timers are known to work much harder than full-timers. (c) Full-time employees don‘t have up-to-date job skills. (d) It’s easy to hire part-timers when you need them, and let them go when you don’t. 13. Whereas bonus plans pay employees for special accomplishments, gain-sharing plans reward them for . (a) helping to increase social responsibility (b) regular attendance (c) positive work attitudes (d) suggestions that lead to cost reductions 14. An employee with family problems that are starting to interfere with work would be pleased to learn that his employer had a(n) _____________plan. (a) employee assistance (b) cafeteria benefits (c) comparable worth (d) collective bargaining 15. When representatives of management and a labor union meet and negotiate the terms of a new labor contract, this process is known as . (a) boycotting (b) collective bargaining (c) picketing (d) wage negotiating
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Short-Response Questions: 16. Why is orientation important in the HRM process? Orientation activities introduce a new employee to the organization and the work environment. This is a time when the individual may develop key attitudes and when performance expectations will also be established. Good orientation communicates positive attitudes and expectations and reinforces the desired organizational culture. It formally introduces the individual to important policies and procedures that everyone is expected to follow. 17. How does mentoring work as an on-the-job training approach? Mentoring is when a senior and experienced individual adopts a newcomer or more junior person with the goal of helping him or her develop into a successful worker. The mentor may or may not be the individual’s immediate supervisor. The mentor meets with the individual and discusses problems, shares advice, and generally supports the individual’s attempts to grow and perform. Mentors are considered very useful for persons newly appointed to management positions. 18. When is an employment test or a performance appraisal method reliable? Any performance assessment approach should be both valid and reliable. To be valid it must measure accurately what it claims to measure—whether that is some aspect of job performance or personal behavior. To be reliable it must deliver the same results consistently—whether applied by different raters to the same person or when measuring the same person over time. Valid and reliable assessments are free from bias and as objective as possible. 110. How do the graphic rating scale and the BARS differ as performance appraisal methods? The graphic rating scale simply asks a supervisor to rate an employee on an established set of criteria, such as quantity of work or attitude toward work. This leaves much room for subjectivity and debate. The behaviorally anchored rating scale asks the supervisor to rate the employee on specific behaviors that had been identified as positively or negatively affecting performance in a given job. This is a more specific appraisal approach and leaves less room for debate and disagreement.
Integration and Application Questions: 20. Sy Smith is not doing well in his job. The problems began to appear shortly after Sy‘s job changed from a manual to a computer-based operation. He has tried hard but is just not doing well in learning how to use the computer to meet performance expectations. He is 45 years old and has been with the company for 18 years. Sy has been a great worker in the past and is both popular and influential among his peers. Along with his performance -problems, you have also noticed that Sy is starting to sometimes ―badmouth‖ the firm. Questions: As Sy‘s manager, what options would you consider in terms of dealing with the issue of his retention in the job and in the company? What could you do by way of career development for Sy, and why? Copyright © 2021 John Wiley & Sons, Inc.
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As Sy’s supervisor, you face a difficult but perhaps expected human resource management problem. Not only is Sy influential as an informal leader, he also has considerable experience on the job and in the company. Even though he is experiencing performance problems using the new computer system, there is no indication that he doesn’t want to work hard and continue to perform for the company. Although retirement is an option, Sy may also be transferred, promoted, or simply terminated. The latter response seems unjustified and may cause legal problems. Transferring Sy, with his agreement, to another position could be a positive move; promoting Sy to a supervisory position in which his experience and networks would be useful is another possibility. The key in this situation seems to be moving Sy out so that a computer-literate person can take over the job, while continuing to utilize Sy in a job that better fits his talents. Transfer and/or promotion should be actively considered both in his and in the company’s best interests.
Self-Assessment 10: Performance Review Assumptions Instructions In each of the following pairs of statements, check the one that best reflects your assumptions about performance evaluation. 1. (a) a formal process that is done annually (b) an informal process done continuously 2.(a) a process that is planned for subordinates (b) a process that is planned with subordinates 3.(a) a required organizational procedure (b) a process done regardless of requirements 4.(a) a time to evaluate subordinates‘ performance (b) a time for subordinates to evaluate their manager 5.(a) a time to clarify standards (b) a time to clarify the subordinate‘s career needs 6.(a) a time to confront poor performance (b) a time to express appreciation 7.(a) an opportunity to clarify issues and provide direction and control (b) an opportunity to increase enthusiasm and commitment 8.(a) only as good as the organization‘s forms (b) only as good as the manager‘s coaching skills Interpretation In general, the responses show more emphasis on the evaluation function of performance appraisal. This largely puts the supervisor in the role of documenting a subordinate‘s performance for control and administrative purposes. The b responses show a stronger emphasis on the counseling or development function. Here, the supervisor is concerned with helping the subordinate do better and with learning from the subordinate what he or she needs to be able to do better. Copyright © 2021 John Wiley & Sons, Inc.
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Class Exercise 10: Upward Appraisal Instructions Form into work groups as assigned by the instructor. The instructor will then leave the room. As a group, complete the following tasks: 1. Within each group create a master list of comments, problems, issues, and concerns about the course experience to date that members would like to communicate to the instructor. 2. Select one person from the group to act as a spokesperson who will give your feedback to the instructor when he or she returns to the classroom. 3. Before the instructor returns, the spokespersons from each group should meet to decide how the room should be physically arranged (placement of tables, chairs, etc.) for the feedback session. This arrangement should allow the spokespersons and instructor to communicate while they are being observed by other class members. 4. While the spokespersons are meeting, members remaining in the groups should discuss what they expect to observe during the feedback session. 5. The classroom should be rearranged. The instructor should be invited in. 6. Spokespersons should deliver feedback to the instructor while observers make notes. 7. After the feedback session is complete, the instructor will call on observers for comments, ask the spokespersons for their reactions, and engage the class in general discussion about the exercise and its implications.
Team Project 10: Future of Labor Unions Question What is the future for labor unions in America? Instructions 1. Perform library research to identify trends in labor union membership in the United States. 2. Analyze the trends to identify where unions are gaining and losing strength; develop possible explanations. 3. Consider talking with members of labor unions in your community to gather their viewpoints. 4. Consider examining data on labor union trends in other countries. 5. Prepare a report that uses the results of your research to answer the project question.
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Case Snapshot: RealRecruit: Protecting Student Athletes Among university sexual abuse cases reaching the public eye, the behaviors of players, coaches, athletics trainers, sports medicine practitioners, as well as university administrators, including presidents and members of boards of trustees, have been brought into question. What can be done to get on top of these situations before they get out of hand , and how can student athletes be protected? 1. DISCUSSION In what ways can an anonymous, Internet-enabled database be useful to any organization concerned about not just its performance, but also employee welfare? What are the possible drawbacks associated with a data-driven tool like the one offered by RealRecruit that depends on anonymous feedback and information? What are the pros and cons of having an outside provider play this kind of liaison role between employees and the organization? As a team leader, how might you use an anonymous survey-based approach to improve your relationships with team members? What kinds of questions might you ask? This is the value of things like an ombudsperson that currently exists for organizations. Employees are able to anonymously report to a third-party for resolution. This is also the function of Title IX. In general, anonymity gives some people the confidence to report issues that should improve employee welfare. The problem with any anonymous reporting is that some of it could be false. While it could be good to have an outsider help, it then makes the information more public which can be dangerous for all parties involved. For small organizations/schools, a third party provides more anonymity and increases the likelihood of an unbiased opinion. For the last two questions, student answers will vary. It depends on what a team leader wants to know. Based on the original intention of RealRecruit, it could be ―what is it like to be on a team with this particular team leader?‖ to get an inside view of the team. 2. DISCUSSION What impact can the presence of a company like RealRecruit have on the culture and operational activities of big-time athletics departments at universities? Is the feedback it makes available enough to change things? Can RealRecruit really help stem the tide of the kinds of scandals that have been so much in the news lately? How about applications of this technology to students who are not involved in athletics? Why or why not? In what ways might it help them as well? Ideally, RealRecruit will be the ―seeing‖ eye that prevents crimes and unethical behavior. Oversight does not fix all the problems though as the Sarbanes-Oxley Act has not stopped financial crimes and Title VII and Title IX have not stopped discrimination or sexual violence. While people know they are being watched, that does not mean some people will stop their behavior. As noted above, any anonymous reporting can help any people group including nonathletes and employees in an organization. 3. PROBLEM SOLVING You are the athletic director (AD) at a major Division I university and have direct or indirect responsibility for thousands of individuals. The university recently hired RealRecruit to provide information relating to your athletic program, and to help avoid the kind of scandal that led to the firing of your predecessor. Well, the first reports are in. You‘ve learned that there is illegal sports gambling going on among student athletes, including football and the men‘s basketball Copyright © 2021 John Wiley & Sons, Inc.
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program. This situation can lead to a major, national media-level scandal, and a multi-year NCAA post-season death sentence is also a real possibility. What do you do, and why? Be as specific as possible – build out your plan and timeline for dealing with this situation. Student answers will vary. First, the AD has to verify the reports. If they are true, then students could discuss the quality of student athletes as discussed in Section 13.3 where students need to understand that this behavior is not acceptable (socialization) and then training, coaching, and mentoring needs to occur. 4. FURTHER RESEARCH What is happening with RealRecruit? Are there any other up-and-coming players on the horizon in this business space? Is there room for more innovation in this area, something that could be developed by RealRecruit or a competitor? If you were a top university administrator, what would you like to have at your disposal to fend off scandalous events and protect your students – athletes and others? Student answers will vary.
Suggested Team Exercise for Chapter 10 Break the class into teams and have the teams perform the following discussion tasks: ―Identify five questions that you might ask during an interview process to help obtain a realistic view of what the company is ‗really like‘? ― As a group, reflect and discuss how your present or past employers (including part-time work) have provided performance appraisal information to you. Summarize your discussion to include the typical frequency, honesty, and value of the process. Also share any very poor or outstanding examples of how a ―boss‖ helped you improve as an employee.
CHAPTER 11 Leadership A Leader Lives in Each of Us Chapter Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion.
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Chapter 11 provides an overview of Leadership and its importance to the successful performance of any organization. The Chapter also looks at traits and styles of effective leadership, as well as varying theories regarding contingency leadership. The chapter begins with a definition of leadership, the process of inspiring others to work hard to accomplish important tasks. As such, the leading function is an essential component of effective management. This chapter focuses on the leading function and various theories of leadership. The chapter examines the sources of position power and personal power play in the leadership process. Next, it explores the nature of leadership, in general, and visionary leadership, in particular. The chapter describes the different traits and styles in the quest for effectiveness.
The chapter continues with a discussion of the contingency approaches to leadership. Under the contingency approach, particular attention is devoted to the managerial implications of Fiedler‘s contingency model, the Hersey-Blanchard situational leadership model, House‘s path-goal theory, the leader-member exchange theory, and the Vroom-Jago leader-participation model. Finally, the chapter explores current issues in leadership theory and practice, including transformational leadership, emotionally intelligent leadership, interactive leadership, moral leadership, and servant leadership.
Chapter 11 Learning Objectives Learning Objective 11.1 Describe the foundations for effective leadership. Learning Objective 11.2 Summarize insights of the contingency leadership theories. Learning Objective 11.3 Discuss current issues and directions in leadership development.
Chapter 11 Lecture Outline Learning Objective 11.1 Describe the Foundations for Effective Leadership. Leadership is one of the four functions of management. Leaders use position power to achieve influence. Leaders use personal power to achieve influence. Leaders bring vision to leadership situations. Leaders display different traits in the quest for leadership effectiveness. Leaders display different styles in the quest for leadership effectiveness. Learning Objective 11.2 Summarize Insights of the Contingency Leadership Theories. Fiedler‘s contingency model matches leadership styles with situational differences. The Hersey-Blanchard situational leadership model matches leadership styles with the Copyright © 2021 John Wiley & Sons, Inc.
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maturity of followers. House‘s path-goal theory matches leadership styles with task and follower characteristics. Leader-member exchange theory describes how leaders treat in-group and out-group followers. The Vroom-Jago model describes a leader‘s choice of alternative decision-making methods.
Learning Objective 11.3 Discuss Current Issues and Directions in Leadership Development. Transformational leadership inspires enthusiasm and great performance. Emotionally intelligent leadership handles emotions and relationships well. Interactive leadership emphasizes communication, listening, and participation. Moral leadership builds trust through personal integrity. Servant leadership is follower centered and empowering. ―Good old-fashioned‖ leadership is never out of style.
Chapter 11 Supporting Materials Figures Figure 11.1 Why Is Leading So Important in the Management Process? Figure 11.2 Sources of Power from the Position and the Person. Figure 11.3 What Are the Classic Leadership Styles? Figure 11.4 What Are the Best Matches of Leadership Style and Situation According to Fiedler‘s Contingency Model? Figure 11.5 What Are the Leadership Implications of the Hersey-Blanchard Situational Leadership Model? Figure 11.6 What Are the Essentials of Leader–Member Exchange Theory? Figure 11.7 What Are the Leadership Implications of the Vroom-Jago Leader-Participation Model? Figure 11.8 Five Emotional Intelligence Competencies for Leadership Success. What’s Inside Career Readiness: Building Charisma Through ―Leadership Speech‖ Analytics: Followers Report Shortcomings of Leaders Choices: Making ―no‖ part of the follower’s vocabulary Ethics: A Step Over the Line into Community Service Insight: There’s no substitute for integrity Issues: Leaders turn vision into inspiration Quick Case: Playing Favorites as a Team Leader Applications TestPrep 11 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 11: Least Preferred Co-Worker Scale o Class Exercise 11: Leading by Participation Copyright © 2021 John Wiley & Sons, Inc.
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o Team Project 11: Leadership Believe-It-Or-Not Case Snapshot: Zappos -- They Do It with Humor
Chapter Outline: Learning Objective 11.1: Describe the Foundations for Effective Leadership.
Leadership is the process of inspiring others to work hard to accomplish important tasks.
Leadership is one of the four functions of management Leading builds the commitments and enthusiasm for people to apply their talents to turn plans into action
Figure 11.1 Why is Leading so Important in the Management Process? Leading is one of the four management functions. It is the process of inspiring others to work hard to accomplish important tasks. Managers who are effective leaders act in ways that create high levels of enthusiasm among people to use their talents fully to accomplish tasks and pursue important plans and goals.
Leaders use position power to achieve influence Power is the ability to get someone else to do something that you want done; the ability to make things happen the way you want them to. The managerial power equation is: Managerial Power = Position Power x Personal Power. Position power - the power of a position and includes coercion, rewards, and legitimacy Reward power - the ability to offer something of value to achieve influence Coercive power - the ability to punish or withhold positive outcomes to influence others Legitimate power - the ability to influence through formal authority; the right by virtue of one‘s status as a manager, or the person in charge, to exercise control over persons in subordinate positions
Figure 11.2 Sources of Power from the Position and the Person. The Managerial Power Equation states that Managerial Power = Position Power × Personal Power. Position power relies on external sources. It includes the abilities to offer rewards, give punishments, and issue orders as a ―boss.‖ Person power comes from within the individual. It includes having personal expertise, positive reference, and useful relationships. Personal power - How much personal power you can mobilize through expertise, reference, and relationships often makes the difference between leadership success and failure Expert power - the ability to influence others because of special knowledge and skills Reference power - the ability to influence others because they admire and want to identify positively with you. Copyright © 2021 John Wiley & Sons, Inc.
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Relationship power comes from the ability to get things done through connections and social capital or from who you know. This power is part of social capital, the ability to get things done based on who you know.
Leaders bring vision to teams and organizations Vision is a clear sense of the future Visionary leadership - offers a clear sense of the future and an understanding of how to get there.
DISCUSSION TOPIC Ask the students if they have encountered any leaders who have had a truly significant effect on their lives. Have the students describe what these leaders did to have this impact and how they were affected. Then, to the extent possible, relate this discussion to visionary leadership. At this point, ask students to describe the types of power these leaders used and the impacts that were achieved.
Leaders display different traits in the quest for leadership effectiveness Research shows that physical characteristics make no difference Research has shown that people want leaders who are honest, competent, forwardlooking, inspiring, and credible Learning Activity - ask students to individually list the three most important characteristics they want in a leader. Next, put them in groups of three and have them compile their lists and come to a consensus on the top three. Ask them if they displayed any of the highly rated characteristics in their group interaction.
DISCUSSION TOPIC A way to demonstrate to students the objectives as well as the shortcomings of the trait approach to leadership is to ask them to identify the traits of effective leaders. Ask a generic question such as ―What are the traits of effective leaders?‖ and then record their responses. Alternatively, you could provide more direction and distinguish between physical and personality traits by asking, ―What do leaders look like?‖ and ―What personality characteristics do leaders typically possess?‖ If you use the former approach, you may want to record separately the physical and personality traits the students identify. Once a reasonable number of traits are listed, review them and cross out the physical traits such as tall, strong, and good-looking, which have not been substantiated by research. Also note that while the leadership traits of drive, desire to lead, motivation, honesty and integrity, selfconfidence, intelligence, knowledge, and flexibility are seen as desirable, researchers have not found a definitive, universal profile of leadership traits.
Traits Often Shared by Effective Leaders Drive Self-confidence Creativity Cognitive ability Business knowledge Motivation
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Flexibility Honesty and Integrity
Leaders display different styles in the quest for leadership effectiveness Leadership style is the recurring pattern of behaviors a leader exhibits Autocratic leaders hold on to authority and act in a unilateral "command and control" fashion Human relations leaders emphasizes people over task Democratic leaders encourage participation with a strong emphasis on both task and people Laissez-faire leaders is disengaged, showing little concern for people or tasks
Figure 11.3 What Are the Classic Leadership Styles? It is common to describe leaders in terms of how their day-to-day styles show concern for people and concern for task. In this figure the leader low in concern for both people and task is described as ―laissez-faire‖ and very ineffective. The leader high in concern for task but low in concern for people is ―autocratic‖ and focused on performance. The leader high in concern for people and low in concern for task has a ―human relations‖ style that focuses mainly on people and relationships. The ―democratic‖ leader is high in concern for both people and task. This person is often highly successful as a true team manager who is able to engage people to accomplish common goals.
11.1 Questions for discussion with suggested answers 1) When, if ever, is a leader justified in using coercive power? Coercive power may be needed in situations where there is a threat of danger to the manager, the employee themselves, or other employees. It may also be needed when an employee has lost emotional control or an open confrontation develops in the workplace. Finally, a crisis situation may require coercion if someone is reticent or unable to function because of fear. 2) How can a young college graduate gain personal power when moving into a new job as team leader? Personal power is acquired as people understand the leader as a person and what he or she has to offer. Likeable personal characteristics are a good way to start to acquire referent power which is the ability to influence others because they admire or want to positively emulate the leader. Another type of personal power is acquiring influence because of special knowledge or skills. Special computer, technical or other related skills that help a new employee gain recognition would be an example of expert power. Reverse mentoring mentioned in the previous chapter would be an example. 3) Why might a leader with a human relations style have difficulty getting things done in an organization? Human relations leaders may have problems if the workers were not well trained, the job was not clearly defined, they didn't value high performance or were a little too immature
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to understand how important their task was. A good example might be managing young workers in a fast food restaurant. 11.1 Career Situation: What Would You Do? Some might say it was bad luck. Others will tell you it‘s life and you‘ d better get used to it. You‘ve just gotten a new boss, and within the first week it was clear to everyone that she is as ―autocratic‖ as can be. The previous boss was very ―democratic,‖ and so is the next-higher-level manager, with whom you‘ve always had a good working relationship. Is there anything you and your co-workers can do to remedy this situation without causing anyone, including the new boss, to lose their jobs? Student answers will vary.
Learning Objective 11.2: Summarize Insights of the Contingency Leadership Theories.
Contingency leadership -- What is successful as a leadership style varies according to the situation and people involved.
Fiedler’s contingency model matches leadership styles with situational differences Least Preferred Co-Worker Scale (LPC) - instrument used to classify leadership styles as either task or relationship motivated The Least Preferred Co-worker Scale is the Self Assessment for this chapter on in the Skill-Building Portfolio See Figure 11.4 for a depiction of Fiedler‘s contingency model
Figure 11.4 illustrates the following concept: What Are the Best Matches of Leadership Style and Situation According to Fiedler’s Contingency Model? Fiedler believes that leadership success requires the right style-situation match. He classifies leadership styles as either task motivated or relationship motivated, and views them as strongly rooted in our individual personalities. He describes situations according to the leader‘s position power, quality of leader-member relations, and amount of task structure. In situations that are most favorable and unfavorable for leaders, his research shows the task-motivated style as the best fit. In more intermediate situations, the relationship-motivated style provides the best fit.
The Hersey-Blanchard situational leadership model matches leadership styles with the maturity of followers Hersey-Blanchard situational leadership model suggests that successful leaders adjust their styles based on the maturity of followers and their readiness to perform the task at hand Leadership styles can be adjusted based on the amount of "Task Behavior" or guidance required and "Relationship Behavior" or support required Delegating - low task, low relationship
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Participating - low task, high relationship Selling - high task, high relationship Telling - high task, low relationship
DICUSSION TOPIC Hersey and Blanchard‘s four levels of follower readiness can be compared to student classifications on a high school or college sports team. Freshmen are essentially low readiness subordinates who require a telling style of leadership. Sophomores are willing to assume more responsibility, but lack some of the skills; they respond well to a selling style. Juniors are able to handle more responsibility, but may lack confidence; they respond well to a participating style. Finally, since seniors are able, willing, and confident, they respond best to the delegating style. Figure 11.5 illustrates the concept What Are the Leadership Implications of the Hersey-Blanchard Situational Leadership Model? The Hersey-Blanchard situational leadership model suggests that successful leaders adjust their styles based on the maturity of followers or how willing and able they are to perform in a given situation. The four style-follower matches are: delegating style for able and willing followers; participating style for able but unwilling followers; selling style for unable but willing followers; and telling style for unable and unwilling followers.
House’s path-goal theory matches leadership styles with task and follower characteristics Path-goal theory suggests that leaders are effective when they help followers move along paths to achieve both work and personal goals Like Fiedler‘s approach, House‘s path-goal theory seeks fit between leadership and situation. But, unlike Fiedler, House believes that a leader can move back and forth among these four leadership styles Four leadership styles Directive leader —lets others know what is expected; gives directions, maintains standards Supportive leader —makes work more pleasant; treats others as equals, acts friendly, shows concern Achievement oriented leader —sets challenging goals; expects high performance, shows confidence Participative leader —involves others in decision making; asks for and uses suggestions Substitutes for leadership are factors in the work setting that direct work efforts without the involvement of a leader.
Leader-member exchange theory describes how leaders treat in-group and outgroup followers Leader-member exchange (LMX) recognizes that in many leadership situations, the leader does not treat everyone the same In-groups are considered the best performers and receive special high-exchange relationships with the leader
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Out-groups have low-exchange relationships with the leader and are often excluded from some information and privileges
FIGURE 11.6 illustrates the following What Are the Essentials of Leader–Member Exchange Theory? In-group members— the ―favorites‖—have high-quality exchange relationships with leaders and often get special rewards, assignments, privileges, and access to information. Out-group members—the ―also rans‖—have low quality exchange relationships and may be marginalized, ignored, and offered fewer benefits. The most satisfied and loyal followers are the in-group members.
The Vroom-Jago model describes a leader's choice of alternative decision-making methods Authority decision - is made by the leader and communicated to the group Consultative decision - is made by a leader after receiving input from the group Group decision - is made by the group members themselves
Figure 11.7: What Are the Leadership Implications of the Vroom-Jago Leader-Participation Model? Decision quality Decision acceptance Decision time The leader-participation model suggests that leaders are effective when they use the appropriate decision method to solve a problem situation. Three criteria govern the choice among possible authority, consultative, and team or group decisions: (1) decision quality—based on who has the information needed for problem solving; (2) decision acceptance—based on the importance of follower acceptance of the decision to its eventual implementation; and (3) decision time—based on the time available to make and implement the decision.
11.2 Questions for discussion with suggested answers 1) What are the potential career development lessons of Fiedler‘s contingency leadership model? Fiedler's contingency leadership model indicates that leadership success depends on a match between the leadership style of the leader, task structure, and the amount of position power the leader has. For career development, managers should understand their personal leadership style tendencies (take Self-Assessment 11: Least Preferred CoWorker Scale in the Skill-Building Portfolio) and understand how they must adjust to accommodate the workers, amount of task structure and how much control the manger has in the situation. Figure 11.3 illustrates the adjustments that must be made to be effective.
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2) What are the implications of follower maturity for leaders trying to follow the HerseyBlanchard situational leadership model? The Hersey-Blanchard situational leadership model suggests that successful leaders must know the maturity level or "readiness" of those they lead and adjust leadership style. There are four basic types of leadership to choose from based on the maturity or readiness of the employees. Delegating style works well with employees with a high degree of readiness, Selling works well with moderate to high readiness, Participative works with low to moderate readiness and telling works best with a low degree of follower readiness. 3) Is it wrong for a team leader to allow the formation of in-groups and out-groups in his or her relationships with team members? It would be better to put everyone in the in-group, allowing everyone equal access to information, assignments and privileges. Equity theory suggests that those in the outgroup would be less motivated and productive if they feel that their efforts do not receive the same rewards as the in-group. 11.2 Career Situation: What Would You Do? You‘ve just been hired as a visual effects artist by a top movie studio. But the team you are joining has already been together for about two months. There‘s obviously an in-group when it comes to team leader and team member relationships. This job is important to you; the movie is going to be great résumé material. But you‘re worried about the leadership dynamics and your role as a newcomer to the team. What can you do to get on board as soon as possible and be valued as a team member? Student answers will vary. Students should take into account the leader-member exchange theory regarding how in-group and out-group followers are treated.
Learning Objective 11.3: Discuss Current Issues and Directions in Leadership Development.
Transformational leadership inspires enthusiasm and great performance Charismatic leadership - the ability to inspire others in exceptional ways Transactional leadership - directs the efforts of others through tasks, rewards, and structures Transformational leadership - is inspirational and arouses extraordinary effort and performance
Qualities of Transformational Leaders Vision Charisma Symbolism Empowerment Intellectual Stimulation
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Integrity
Emotionally intelligent leadership handles emotions and relationships well Emotional intelligence (EI) - is the ability to manage our emotions in leadership and social relationships. (See Figure 11.8) Motivation and persistence - the ability to work hard for reasons other than money and status Self-awareness - the ability to understand our own moods and emotions Social awareness - the ability to empathize, to understand the emotions of others, and to use this understanding to better deal with them Self-management is the ability to think before acting and to be in control of otherwise disruptive impulses Relationship management is the ability to establish rapport with other in ways that build good relationships and influence their emotions in positive ways Emotional intelligence quotient (EQ) is a measure of a person‘s ability to manage emotions in leadership and social relationships.
DISCUSSION TOPIC Have the students spend eight to ten minutes of class time writing a brief self-assessment essay regarding the extent to which they perceive themselves as having developed each the above components of emotional intelligence. Have the students who are willing to do so contribute their examples as you discuss the components of emotional intelligence.
Interactive leadership emphasizes communication, listening, and participation Gender similarities hypothesis holds that males and females have similar psychological makeups Interactive leadership style - democratic, participative, and inclusive, often approaching problems and decisions through teamwork often associated with female leadership
Moral leadership builds trust through personal integrity Moral leadership - leaders who practice high ethical standards, build ethical cultures, and who both help and require others to behave ethically in their work Integrity - honest, credible, and consistent behavior that puts sound values into action and earns the trust of followers Moral Overconfidence – overly positive view of one‘s integrity and strength of character
Servant leadership is follower centered and empowering Servant leadership - based firmly on a commitment to serving others, to helping them use their talents to full potential while working together for organizations that benefit society Other-centered rather than self-centered; followers more important than the leader Empowerment - the process through which leaders give people job freedom and help them gain power to achieve influence within the organization
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―Good Old-Fashioned‖ Leadership is Never Out of Style Peter Drucker reminds us of the ―good old-fashioned‖ hard work that makes for a successful leader. o The basic building block for success as a leader is defining and establishing a sense of mission. o Accept leadership as a responsibility rather than a rank. o Earn and keep the trust of others
11.3 Questions for discussion with suggested answers 1) Should all managers be expected to excel at transformational leadership? No, most managers will not be able to excel at transformational leadership. This style requires a high degree of personal charisma and an ability to communicate vision which not all individuals possess. Additionally, it requires a high ability to make important and often difficult decisions with high consequences. This is also a rare trait. 2) Do women lead differently than men? The gender similarities hypothesis suggests that they have similar psychological properties and both are capable of effective leadership. That being said, our perceptions of men and women as leaders have been the focus of several studies. Some results include these facts: women tend to be less directive; more participative; strong on motivating others, emotional intelligence, persuasion, communication, mentoring others; and supportive of high quality work. 3) Is servant leadership inevitably moral leadership? Moral leadership involves integrity and ethical leadership, and putting values into action. Servant leadership means that leaders view leadership as a responsibility and value followers highly. Servant leadership seems to be a way one would demonstrate moral leadership.
11.3 Career Situation: What Would You Do? Okay, so it‘s important to be ―interactive‖ in leadership. By personality, though, you tend to be a bit withdrawn. In fact, if you could do things by yourself, that‘s the way you would behave. Yet here you are taking over as a manager as the first upward career step in your present place of employment. How do you master the challenge of succeeding with interactive leadership in the new role? Student answers will vary. Students should realize that to be an interactive leader it is important to be democratic, participative, inclusive, foster good communication, and approach problems head on.
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In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Building Charisma through ―Leadership Speech‖ Who really listens when you speak? Who seems ready to accept and act on what you are proposing? That‘s the test of ―leadership speech‖ - saying things in ways that cause others to respond positively. We‘re talking about people who have charismatic leadership skills that turn listeners into followers. Some skills are verbal - breaking things down into easy lists, using metaphors, telling stories, asking rhetorical questions, taking a moral stand, and setting high goals. Others are non-verbal - using voice modulations, gestures, and facial expressions to accent what you are saying. Instead of putting charismatic leadership on an unreachable pedestal, perhaps learning specific techniques of ―leadership speech‖ is a pathway to success. Ask students is there opportunity here for you to turn everyday conversations into influential acts of leadership?
Issues: Leaders Turn Vision into Inspiration Dr. Lorraine Monroe began her career in the New York City Schools as a teacher. She went on to find the Frederick Douglass Academy, a public school in Harlem named after an escaped slave, prominent abolitionist, and civil rights leader. She believes leadership must be vision driven and follower centered. Leaders must always start at the ―heart of the matter,‖ she says, and ―the job of a good leader is to articulate a vision that others are inspired to follow.‖ Everyone should know that they are valued and that their advice is welcome. While serving as a consultant on public leadership, she stated, ―We can reform society only if every place we live—every school, workplace, church, and family— becomes a site of reform.‖ Her many leadership ideas are summarized in what is called the ―Monroe Doctrine.‖ It begins with this advice: ―The job of the leader is to uplift her people—not just as members of and contributors to the organization, but as individuals of infinite worth in their own right.‖ Ask students if visionary leadership is something that works only at the very top of organizations? Should the leader of a work team also have a vision? Follower-centered leadership is high on Lorraine Monroe‘s list of priorities. What is there in the Monroe Doctrine that can help you succeed as a leader? Do you have what it takes to truly value people who look up to you for leadership?
Analytics: Followers report shortcomings of leaders Harris Interactive periodically conducts surveys of workers‘ attitudes toward their jobs and employers. The results for a query about how workers view ―leaders‖ and ―top managers‖ reveal lots of shortcomings: • 37% believe their top managers display integrity and morality. Copyright © 2021 John Wiley & Sons, Inc.
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• 39% believe leaders most often act in the best interest of organization. • 22% see leaders as ready to admit mistakes. • 46% believe their organizations give them freedom to do their jobs. • 25% of women and 16% of men believe their organizations pick the best people for leadership. • 33% of managers are perceived by followers as ―strong -leaders.‖ Ask students how the leaders they have experienced stack up—―strong or weak,‖ ―moral or immoral‖? Discuss what makes the most difference in the ways leaders are viewed in the eyes of followers?
Quick Case: Playing Favorites as a Team Leader One of your colleagues just returned from a leadership training session at which the instructor presented the LMX, or leader-member exchange, theory. Listening to her talk about the training caused to think about your own leader behaviors, and you came to a somewhat startling conclusion: You may be playing ―favorites.‖ In fact, the last person you recommended for promotion was a good friend and a member of your bi-weekly poker night club. Of course, he was competent and is doing a good job in the new position. But, as you think more about it, there were also two others on the team who may well have been equally good choices. Did you give them a fair chance when preparing your promotion recommendation, or did you short-change them in favor of your friend? Well, it‘s a new day for the team, and basically the start of the rest of your leadership career. Is your tendency toward favoritism wrong? Should it be corrected? What can you do as a team leader to make sure that tendencies toward favoritism don‘t disadvantage some members? What kinds of signals can you use to determine whether you are playing favorites?
Choices: Making ―no‖ part of the follower’s vocabulary McDonald’s Restaurant—A telephone caller claiming to be a police officer and having ―corporate‖ on the line, directs the assistant store manager to take a female employee into the back room and question her while he is on the line. The interrogation lasted three hours. The assistant manager followed ―Officer Scott‘s‖ instructions to the point where the 18-year-old employee is naked and doing jumping jacks. The hoax was discovered only when the assistant manager called her boss to check out the story. The caller was later arrested and found to have tried similar tricks at over 70 McDonald‘s restaurants. Managers are supposed to make decisions, and the rest of us are supposed to follow. Isn‘t that the conventional wisdom? But perhaps saying ―Yes‖ to an authority figure isn‘t always the correct thing to do. There may be times when it‘s best to disobey. Sooner or later someone in ―authority‖ is going to ask us to do something that seems odd or incorrect or just plain suspicious. And if what we are being asked to do is wrong but we still comply, we‘ll share the blame. It can‘t be excused with the claim: ―I was just following orders.‖ But who‘s prepared for the unexpected? If obedience isn‘t always the right choice, how do we know when it‘s time to disobey? Should we give students more training on both spotting bad directives and learning how to say ―No‖? Do Copyright © 2021 John Wiley & Sons, Inc.
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management courses have enough to say about tendencies to obey, how to double-check decisions to make sure our obedience is justified, and even about the price of disobedience? Is it possible to educate and train students to be ―principled‖ followers—ones who don‘t always follow orders and sometimes question them?
Ethics: A Step over the line into community service
What if your company’s CEO is active in a local community group? It sounds great and she gets a lot of press for philanthropy and leadership in the local Red Cross, homeless shelter, food bank, and more. The company’s reputation for social responsibility also gains from her outreach efforts. But, first thing this morning she appeared in your office and asked you to spend a good part of the workweek helping organize a fundraising event for one of her local charities. Caught off guard, you’ve given her a weak ―okay.‖
Now that you’ve had time to think a bit more about it, you’re not sure you should comply. After all, you’ve already got a lot of top priority work on your desk, there’s no direct connection between the charity and the firm’s business, and the charity isn’t one that you personally support.
Helping your boss with this request will obviously be good for her. You’ll also probably benefit from increased goodwill in your relationship with her. However, the organization could actually end up being worse off as your regular work slips behind schedule, affecting not only you but client activities that depend on you. Sure, you’re getting paid to do what she asks—but who benefits?
Ask students to discuss if it is ethical to help your manager in the situation just described? Are you doing a disservice to the organization’s other stakeholders if you go along with this request? Is it acceptable for a manager or team leader or top executive to ask others to help them with tasks and activities that are not directly tied to work? Just where would you draw the line on requests like these?
Insight for Personal Development: There’s no substitute for integrity Whether you call it ethical leadership or moral leadership, the lesson is the same: Respect flows toward leaders who behave with integrity. If you have integrity, you‘ll be honest, credible, and consistent in all that you do. This seems obvious. ―This is what we Selfless have been taught since Copyright © 2021 John Wiley & Sons, Inc.
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we were kids,‖ you might say. So, why are there so many well-publicized examples of leaders who act without integrity? Where, so to speak, does integrity go when some people find themselves in positions of leadership? CEO coach Kenny Moore says that our personal character gets ―revealed by how we treat those with no power.‖ Look closely at how people in leader-ship positions treat everyday workers—servers, technicians, custodians, and clerks, for example. Moore says that the ways we deal with people who are powerless ―brings out our real dispositions.‖ Get to Know Yourself Better exercise: Why is it that in the news and in everyday experience we so often end up wondering where leadership integrity has gone? Ask: How often have I worked for someone who behaved below the ―integrity line‖? How did I feel about it, and what did I do? Have students write a set of notes on their behavior in situations where their own leadership integrity could be questioned. What are some of the lessons available from this experience? Who are your leadership exemplars, the ones you most admire and want to emulate? At this point in your life, who is the real leader in you?
Terms to Define Authority decision Autocratic leader Charismatic leader Coercive power Consultative decision
Leadership Leadership style Legitimate power
Contingency leadership perspective
Managerial power equation Moral leadership Moral overconfidence
Democratic leader
Power
Emotional intelligence (EI) Emotional intelligence quotient (EQ) Empowerment Expert power
Referent power Reward power Servant leadership Social capital
Gender similarities hypothesis Group decision
Substitutes for leadership Transactional leadership Transformational leadership Vision
Human relations leader Integrity Interactive leadership Laissez-faire leader
Visionary leadership
Multiple-Choice Questions 1. When managers use offers of rewards and threats of punishments to try to get others to do Copyright © 2021 John Wiley & Sons, Inc.
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what they want them to do, they are using which type of power? (a) formal authority (b) position (c) referent (d) personal 2. When a manager says, ―Because I am the boss, you must do what I ask,‖ what power base is being put into play? (a) reward (b) legitimate (c) moral (d) referent 3. The personal traits that are now considered important for managerial success include (a) self-confidence (b) gender (c) age (d) personality
.
4. In the research on leader behaviors, which style of leadership describes the preferred ―highhigh‖ combination? (a) transformational (b) transactional (c) laissez-faire (d) democratic 5. In Fiedler‘s contingency model, both highly favorable and highly unfavorable leadership situations are best dealt with by a motivated leadership style. (a) task (b) vision (c) ethics (d) relationship 6. Which leadership theorist argues that one‘s leadership style is strongly anchored in personality and therefore very difficult to change? (a) Daniel Goleman (b) Peter Drucker (c) Fred Fiedler (d) Robert House 7. Vision, charisma, integrity, and symbolism are all attributes typically associated with leaders. (a) people-oriented (b) democratic (c) transformational Copyright © 2021 John Wiley & Sons, Inc.
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(d) transactional 8. In terms of leadership behaviors, someone who focuses on doing a very good job of planning work tasks, setting performance standards, and monitoring results would be described as . (a) task oriented (b) servant oriented (c) achievement oriented (d) transformational 9. In the discussion of gender and leadership, it was pointed out that some perceive women as having tendencies toward, a style that seems a good fit with developments in the new workplace. (a) interactive leadership (b) use of position power (c) command-and-control (d) transactional leadership 11. In House‘s path-goal theory, a leader who sets challenging goals for others would be described as using the leadership style. (a) autocratic (b) achievement-oriented (c) transformational (d) directive 11. Someone who communicates a clear sense of the future and the actions needed to get there is considered a leader. (a) task-oriented (b) people-oriented (c) transactional (d) visionary 12. Managerial Power = (a) Reward; Punishment (b) Reward; Expert (c) Legitimate; Position (d) Position; Personal
Power x
13. The interactive leadership style is characterized by (a) inclusion and information sharing (b) use of rewards and punishments (c) command-and-control behavior (d) emphasis on position power
Power.
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14. A leader whose actions indicate an attitude of ―do as you want and don‘t bother me‖ would be described as having a(n) leadership style. Copyright © 2021 John Wiley & Sons, Inc.
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(a) autocratic (b) country club (c) democratic (d) laissez-faire 15. The critical contingency variable in the Hersey-Blanchard situational model of leadership is . (a) follower maturity (b) LPC (c) task structure (d) emotional intelligence
Short-Response Questions: 16. Why are both position power and personal power essential in management? Position power is based on reward, coercion or punishment, and legitimacy or formal authority. Managers, however, need to have more power than that made available to them by the position alone. Thus, they have to develop personal power through expertise and reference. This personal power is essential in helping managers get things done beyond the scope of their position power alone. 17. Use Fiedler‘s terms to list the characteristics of situations that would be extremely favorable and extremely unfavorable to a leader. Leadership situations are described by Fiedler according to: Position power—how much power the leader has in terms of rewards, punishments, and legitimacy; leader-member relations—the quality of relationships between the leader and followers; task structure—the degree to which the task is clear and well defined, or open ended and more ambiguous. Highly favorable situations are high in position power, have good leader-member relations, and have structured tasks; highly unfavorable situations are low in position power, have poor leader-member relations, and have unstructured tasks. 18. Describe the situations in which House‘s path-goal theory would expect (a) a participative leadership style and (b) a directive leadership style to work best. According to House’s path-goal theory, the following combinations are consistent with successful leadership. Participative leadership works well, for example, when performance incentives are low and people need to find other sources of need satisfaction. Through participation the leader gains knowledge that can help identify important needs and possible ways of satisfying them other than through the available performance incentives. Directive leadership works well, for example, when people aren’t clear about their jobs or goals. In these cases, the leader can step in and provide direction that channels their efforts toward desired activities and outcomes. 19. How do you sum up in two or three sentences the notion of servant leadership? Servant leadership is basically other-centered and not self-centered. A servant leader is concerned with helping others to perform well so that the organization or group can Copyright © 2021 John Wiley & Sons, Inc.
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ultimately do good things for society. The person who accepts the responsibilities of servant leadership is good at empowering others so that they can use their talents while acting independently to do their jobs in the best possible ways.
Integration and Application Questions: 20. When Marcel Henry took over as leader of a new product development team, he was both excited and apprehensive. ―I wonder,‖ he said to himself on the first day in his new assignment, ―if I can meet the challenges of leadership.‖ Later that day, Marcel shares this concern with you during a coffee break. Question: How would you describe to Marcel the personal implications of current thinking on transformational and moral leadership and how they might be applied to his handling of this team setting? In his new position, Marcel must understand that the transactional aspects of leadership are not sufficient enough to guarantee him long-term leadership effectiveness. He must move beyond the effective use of task-oriented and people-oriented behaviors—the ―transactional‖ side of leadership, and demonstrate through his behavior and personal qualities the capacity to inspire others and lead with moral integrity—the ―transformational‖ side. A transformational leader develops a unique relationship with followers in which they become enthusiastic, highly loyal, and high achievers. Marcel needs to work very hard to develop positive relationships with the team members. But he must add to this a moral and ethical dimension. He must emphasize in those relationships‘ high aspirations for performance accomplishments, enthusiasm, ethical behavior, integrity and honesty in all dealings, and a clear vision of the future. By working hard with this agenda and by allowing his personality to positively express itself in the team setting, Marcel should make continuous progress as an effective and moral leader.
Self-Assessment 11: Least Preferred Co-Worker Scale Instructions Copyright © 2021 John Wiley & Sons, Inc.
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Think of all the different people with whom you have ever worked—in jobs, in social clubs, in student projects, or whatever. Next, think of the one person with whom you could work least well—that is, the person with whom you had the most difficulty getting a job done. This is the one person—a peer, boss, or subordinate—with whom you would least want to work. Describe this person by circling numbers at the appropriate points on each of the following pairs of bipolar adjectives. Work rapidly. There is no right or wrong answer. Pleasant Friendly Rejecting Tense Distant Cold Supportive Boring Quarrelsome Gloomy Open Backbiting Untrustworthy Considerate Nasty Agreeable Insincere Kind
8 8 1 1 1 1 8 1 1 1 8 1 1 8 1 8 1 8
7 7 2 2 2 2 7 2 2 2 7 2 2 7 2 7 2 7
6 6 3 3 3 3 6 3 3 3 6 3 3 6 3 6 3 6
5 5 4 4 4 4 5 4 4 4 5 4 4 5 4 5 4 5
4 4 5 5 5 5 4 5 5 5 4 5 5 4 5 4 5 4
3 3 6 6 6 6 3 6 6 6 3 6 6 3 6 3 6 3
2 2 7 7 7 7 2 7 7 7 2 7 7 2 7 2 7 2
1 1 8 8 8 8 1 8 8 8 1 8 8 1 8 1 8 1
Unpleasant Unfriendly Accepting Relaxed Close Warm Hostile Interesting Harmonious Cheerful Guarded Loyal Trustworthy Inconsiderate Nice Disagreeable Sincere Unkind
Scoring This is called the ―least-preferred co-worker scale‖ (LPC). Compute your LPC score by totaling all the numbers you circled; enter that score here [LPC = ]. Interpretation The LPC scale is used by Fred Fiedler to identify a person‘s dominant leadership style. Fiedler believes that this style is a relatively fixed part of one‘s personality and is therefore difficult to change. This leads Fiedler to his contingency views, which suggest that the key to leadership success is finding (or creating) good ―matches‖ between style and situation. If your score is 73 or above on the LPC scale, Fiedler considers you a ―relationshipmotivated‖ leader; if it is 64 or below on the scale, he considers you a ―task-motivated‖ leader. If your score is between 65 and 72, Fiedler leaves it up to you to determine which leadership style is most accurate.
Class Exercise 11: Leading by Participation Procedure
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1. For the 10 situations described here, decide which of the three styles you would use for that unique situation. Place the letter A, P, or L on the line before each situation‘s number. A—authority; make the decision alone without additional inputs P—consultative; make the decision based on group inputs L—group; allow the group to which you belong to make the decision Decision Situations 1. You have developed a new work procedure that will increase productivity. Your boss likes the idea and wants you to try it within a few weeks. You view your employees as fairly capable and believe that they will be receptive to the change. 2. Your main product has new competition in the industry. Your organization‘s revenues have been dropping. You have been told to lay off three of your ten employees in two weeks. You have been the supervisor for over one year. Normally, your employees are very capable. 3. Your department has been facing a problem for several months. Many solutions have been tried and have failed. You finally thought of a solution, but you are not sure of the possible consequences of the change required or its acceptance by the highly capable employees. 4. Flextime has become popular in your organization. Some departments let each employee start and end work whenever they choose. However, because of the cooperative effort of your employees, they must all work the same eight hours. You are not sure of the level of interest in changing the hours. Your employees are a very capable group and like to make decisions. 5. The technology in your industry is changing faster than the members of your organization can keep up. Top management hired a consultant who has given the recommended decision. You have two weeks to make your decision. Your employees are capable, and they enjoy participating in the decision-making process. 6. Your boss called you on the telephone to tell you that someone has requested an order for your department‘s product with a very short delivery date. She asked that you call her back with the decision about taking the order in 15 minutes. Looking over the work schedule, you realize that it will be very difficult to deliver the order on time. Your employees will have to push hard to make it. They are cooperative, capable, and enjoy being involved in decision making. 7. A change has been handed down from top management. How you implement it is your decision. The change takes effect in one month. It will personally affect everyone in your department. The acceptance of the department members is critical to the success of the change. Your employees are usually not too interested in being involved in making decisions. 8. You believe that productivity in your department could be increased. You have thought of some ways that may work, but you‘re not sure of them. Your employees are very experienced; almost all of them have been in the department longer than you have. 9. Top management has decided to make a change that will affect all your employees. You know that they will be upset because it will cause them hardship. One or two may even quit. The change goes into effect in 30 days. Your employees are very capable. 10. A customer has offered you a contract for your product with a quick delivery date. The offer is open for two days. Meeting the contract deadline would require employees to work nights and weekends for six weeks. You cannot require them to work overtime. Filling this profitable contract could help get you the raise you want and feel you deserve. However, if you Copyright © 2021 John Wiley & Sons, Inc.
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take the contract and don‘t deliver on time, it will hurt your chances of getting a big raise. Your employees are very capable. Form groups as assigned by your instructor. Share and compare your choices for each decision situation. Reconcile any differences, and be prepared to defend your decision preferences in general class discussion.
Team Project 11: Leadership Believe-It-Or-Not You would think leaders would spend lots of time talking with the people who make products and deliver services, trying to understand problems and asking for advice. But Business Week reports a survey that shows quite the opposite. Persons with a high school education or less are asked for advice by only 24% of their bosses; for those with a college degree, the number jumps to 54%. Question What stories do your friends, acquaintances, family members, and you tell about their bosses that are truly hard to believe? Instructions 1. Listen to others and ask others to talk about the leaders they have had or presently do have. What strange-but-true stories are they telling? 2. Create a journal that can be shared with class members that summarizes, role-plays, or otherwise communicates the real-life experiences of people whose bosses sometimes behave in ways that are hard to believe. 3. For each of the situations in your report, try to explain the boss‘s behaviors. 4. Also, for each of the situations, assume that you observed or heard about it as the boss‘s supervisor. Describe how you would ―coach‖ or ―counsel‖ the boss in order to turn the situation into a ―learning moment‖ for positive leadership development.
Case Snapshot: Narcissism—Good or Bad for Leadership?
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It‘s easy to use the word narcissism, but do we really get the meaning? It‘s a multi-faceted aspect of an individual‘s personality that consists of both positive and negative elements. While narcissistic CEOs can be charismatic, inspirational, and exciting, for example – which can make for an intriguing place to work – they can also be defensive and prone to resist and devalue the ideas and inputs of others – which can make for a hard and unpleasant place to work. . 1. DISCUSSION We‘ve all been in situations where someone‘s got to take charge – someone has to step up and, you name it – to make a decision, take the first step, write their name down, make a suggestion, take responsibility, say ―I‘ve got it!‖, lead the way, etc., etc. It can be hard to publicly take a stand, but that is what leaders do – they step up. How do you feel when someone else steps up, in a situation where you could have, but didn‘t? Can you identify differences between people who do, and people who don‘t, step up? Student answers will vary. 2. DISCUSSION When narcissism is present in a leader, how can it be harnessed by the leader, and by followers, to work to the positive rather than the negative? Is there a ―tipping point‖ up to which a bit of narcissism works to the positive, and then suddenly turns negative? If so, how can we find and recognize this tipping point in ourselves and take action to avoid it? Students should be able to identify the scenarios where either they or others have exhibited these traits. Although narcissistic leaders do this to protect their fragile ego, the behaviors may come across as charismatic, inspirational, exciting, and even bold to some followers. Many people enjoy and may thrive working for such leaders as they have bold visions and they work hard to achieve them. These leaders push the followers along with them and if successful, they accomplish great results. Case in point: Elon Musk. However, this can turn negative and can be demoralizing for followers as well when leaders whose words and actions are aimed to denigrate others and to devalue what others do, suggest, or achieve. Narcissistic leaders try to position themselves as exceptional and irreplaceable. When their fragile sense of self is challenged by others’ accomplishments or when they feel socially threatened, narcissistic leaders can be socially abusive and lash out. Students should recognize that one needs to have a very thick skin to work for such a leader. Narcissists who have the paradoxical trait of humility also may be able to foster an innovative culture. In their own case, they need to balance these traits with EQ.
3. PROBLEM SOLVING You have just been hired by CEO of a small, but quickly growing data analytics firm, that has an expanding customer base and a desperate need for go-getters to take charge of new customer segments, geographic territories, and product matrices. These are all high-class problems for a business to have, because it means that more, new, and different revenues are coming in faster and faster. Because this is a high-margin business, you‘ve been offered a great compensation Copyright © 2021 John Wiley & Sons, Inc.
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package, lots of opportunities for autonomy and essentially the chance to run your own business – your own portfolio of products, geographic region and customer base. You just graduate, and you‘ve been given a lot of responsibility – responsibility for assembling your own team, developing a strategic plan for your territory, executing a strategy, motivating your followers, giving your customers confidence, figuring it all out and making it happen. How might the different aspects of the narcissistic personality play a role in making this all happen? A narcissist’s larger-than-life personal ego can lead to great accomplishments when harnessed in the right ways. In leadership, for example, you’ll notice behaviors that are aimed to show that the leader is more intelligent, more important, and more worthwhile than everyone else. These traits have the potential of projecting the leader (you) as a charismatic, inspirational, exciting, and even bold to some followers. These traits have the potential of picking the right team members who see you as this larger-than-life character and buy into your vision, have a grand strategy for your territory, and actually work insane hard and bring the team along with you on that hard work to accomplish great things.
3. FURTHER RESEARCH There are a lot of different leadership approaches that have helped businesses to be successful – narcissistic personality is one of these, but as the case makes clear, there can be a lot of controversy when leaders are narcissistic. Do some research about famous CEOs – Jeff Bezos, Warren Buffett, Tim Cook, Michael Dell, Marilyn Hewson, Rupert Murdock, James Hackett, Charles Koch, Mike Parker – or others who you‘re interested in. From the news articles you read, what are some of the personality attributes they have in common? Are there broad similarities? Do you see evidence of narcissism in the stories you read? Has it seemed to help or hurt? In what ways? Student answers will vary. There are plenty of stories on corporate and political leaders and students should be able to find good material to prepare and discuss.
Suggested Team Exercise for Chapter 11 Break the class into teams and have the teams perform the following discussion tasks:
Ask students to individually list the three most important characteristics they want in a leader. Next, put them in groups of three and have them compile their lists and come to a consensus on the top three. Ask them if they displayed any of the highly rated characteristics in their group interaction. Could an outstanding leader in one organization move into an entirely different organization and still be an outstanding leader? For example, could a great football coach with evident leadership abilities be hired as a CEO of a large company such as General Motors and be equally successful? How important I expertise? Can you provide any ―real-life‖ examples of the ―transferability‖ or ―portability‖ of leadership?
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CHAPTER 12 Individual Behavior
There’s Beauty in Individual Differences Chapter 12 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter 12 begins with a discussion of perception, the process through which people receive and interpret information from the environment. A review of common perceptual distortions include: stereotypes, halo effects, selective perception, and projections. Examples are given of attribution errors, or the tendency to blame others when something goes wrong. A discussion of impression management or how others perceive us is covered. Next is a discussion of personality and a review of how personalities influence behavior. Various personality assessments are discussed, one of which is The Myers-Briggs, containing four dimensions. The ―Big Five‖ personality traits describing work-related individual differences are outlined and identified. They include extraversion, agreeableness, conscientiousness, emotional stability, and openness to experience. A few other personality traits like locus of control, authoritarianism, Machiavellianism, self-monitoring, narcissism and Type A are discussed. The chapter explores the topic of stress and its consequences. Constructive and destructive stresses are covered along with some tactics for managing stress. Finally, the influence of attitudes, emotions and moods on individual behavior is discussed. The chapter reviews the three components of attitude, a predisposition to act in a certain way toward people and environmental factors. Job satisfaction is presented first along with how it influences work behaviors. The complexity of the relationship between job satisfaction and work performance is examined. Next, the topic of emotional intelligence is addressed as an important human skill and leadership capability for managers to have. The difference between emotion, a strong feeling directed toward someone or something and a mood, positive or negative feelings or states of mind which can be persistent influences on one‘s behavior is explained.
Chapter 12 Learning Objectives: Learning Objective 12.1 Discuss how perceptions influence individual behavior. Learning Objective 12.2 Contrast how personalities influence individual behavior. Learning Objective 12.3 Explain how attitudes, emotions, and moods influence individual behavior. Copyright © 2021 John Wiley & Sons, Inc.
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Chapter 12 Lecture Outline: Learning Objective 12.1 Describe How Perceptions Influence Individual Behavior. Perception filters information received from our environment. Perceptual distortions can obscure individual differences. Perception can cause attribution errors. Impression management influences how others perceive us. Learning Objective 12.2 Contrast How Different Personalities Influence Individual Behavior. The Big Five personality traits describe important individual differences. The Myers-Briggs Type Indicator is a popular approach to personality assessment. Personalities vary on personal conception traits. Narcissistic personalities display self-involvement, arrogance, and entitlement. People with Type A personalities tend to stress themselves. Stress has consequences for work performance and personal health. Learning Objective 12.3 Explain How Attitudes, Emotions, and Moods Influence Individual Behavior. Attitudes predispose people to act in certain ways. Job satisfaction is a positive attitude toward one‘s job and work experiences. Job satisfaction influences work behaviors. Job satisfaction has a complex relationship with job performance. Emotions and moods are states of mind that influence behavior.
Chapter 12 Supporting Materials: Figures Figure 12.1 How Does Perception Influence Communication? Figure 12.2 Perception Contrasts Between Fundamental Attribution Error and Self-Serving Bias. Figure 12.3 Sample Myers–Briggs Personality Types. Figure 12.4 The Big Five Along with Personal Conception and Emotional Adjustment Personality Traits. Figure 12.5 Potential Destructive Consequences of Intense, Long-term Stress. Figure 12.6 Three Components of Attitudes. What’s Inside? Career Readiness: The death of work–life balance Analytics: Paying a high price for incivility at work Choices: Curbing bias in hiring decisions Ethics: My team leader is a workaholic Copyright © 2021 John Wiley & Sons, Inc.
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Issues: Smile Please. The Boss Is Tracking Your Happiness Quick Case: Come on, take your vacation already Insight: There’s no substitute for integrity
Applications TestPrep 12 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 12: Stress Test o Class Exercise 12: Job Satisfaction Preferences o Team Project 12: Difficult Personalities Case Snapshot: Panera- Growing a company with Personality
Chapter Outline: Learning Objective 12.1: Describe How Perceptions Influence Individual Behavior.
Perception filters information received from our environment Perception is the process through which people receive and interpret information from the environment See Figure 12.1 for a depiction of the effects of perception on communication
How Does Perception Influence Communication? Perception is the process of receiving and interpreting information from our environment. It acts as a screen or filter through which we interpret messages in the communication process. Perceptions influence how we behave in response to information received. Because people often perceive the same things quite differently, perception is an important issue in respect to individual behavior. Perceptual distortions can hide individual differences Common perceptual distortions:
Stereotypes occur when a person identifies someone with a group or category, and then use the attributes associated with the group or category to describe the individual Halo effect occurs when we use one characteristic of a person or situation to form an overall impression Selective perception is the tendency to single out for attention those aspects of a situation or person that reinforce or appear consistent with one‘s existing beliefs, needs, or actions Projection occurs when we assign our personal attributes to other individuals
Perception can cause attribution errors Attribution is the process of developing explanations for events and their causes Fundamental attribution error – a tendency to blame other people when things go wrong, regardless of whether it‘s their fault. Self-serving bias is the tendency for people to blame their personal failures or problems on external causes rather than accept personal responsibility. In short "it wasn't MY fault!" Figure 12.2 illustrates the significance of these attribution errors.
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Impression management influences how others perceive us Impression management – the systematic attempt to influence how others perceive us
12.1 Questions for discussion with suggested answers How do advertising firms use stereotypes to influence consumer behavior?
1)
Advertising uses stereotypes to help promote the appeal or products or services. Stereotypes help target products to the appropriate market such as men or women.
Are there times when a self-serving bias is actually helpful?
2)
There are not many situations where having self-serving bias is constructive; it can lead to poor decisions and deflect needed improvement in personal skills. The exception to this may be in entry level positions at a very early stage when it may instill confidence until one arms himself or herself with stronger skills.
3) Does the notion of impression management contradict the idea of personal -integrity? There is no conflict between trying to look your best or promote or market yourself with personal integrity. A conflict could occur if you did so at the expense of another person to gain an ―edge.‖ 12.1 Career Situation: What Would You Do? While standing in line at the office coffee machine, you overhear the person in front of you saying this to his friend: ―I‘m really tired of having to deal with the old-timers here. It‘s time for them to call it quits. There‘s no way they can keep up the pace and handle all the new technology we‘re getting these days.‖ You can listen and forget, or you can listen and act. What would you do or say here, and why? Student answers will vary as to whether they personally would choose to engage in this conversation and act or simply ignore. However, it should be understood that the comment made above is indicative of the stereotype held by the individual. ―Old-timers cannot keep up the pace and handle all the new technology we’re getting these days‖ is a generalization and they are never accurate and applicable to all individuals in the category. Students can be assigned outside research on age-based demographic info in the workplace and the characteristics associated with them.
Learning Objective 12.2: Contrast How Different Personalities influence Individual Behavior.
Personality is the combination of characteristics that makes us unique. The Big Five personality traits describe important individual differences Extraversion—An extravert is talkative, comfortable, and confident in interpersonal relationships; an introvert is more private, withdrawn, and reserved.
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Agreeableness—An agreeable person is trusting, courteous, and helpful, getting along well with others; a disagreeable person is self-serving, skeptical, and tough, creating discomfort for others. Conscientiousness—A conscientious person is dependable, organized, and focused on getting things done; a person who lacks conscientiousness is careless, impulsive, and not achievement oriented. Emotional stability—A person who is emotionally stable is secure, calm, steady, and self-confident; a person lacking emotional stability is excitable, anxious, nervous, and tense. Openness to experience—A person open to experience is broad minded, imaginative, and amenable to new ideas; a person who lacks openness is narrow minded, has few interests, and resists change. DISCUSSION TOPIC Have students describe themselves in terms of the Big Five personality traits. Also have them describe how their personality profile (in terms of these traits) seems to influence their behavior. You may wish to do this as an outside homework assignment.
The Myers-Briggs Type indicator is a popular approach to personality assessment Myers-Briggs type indicator - based on work of psychologist Carl Jung Four main dimensions of personality Extraversion/Introversion - how we relate to others Sensation/Intuition - how we gather information Thinking/Feeling - how we evaluate information Judging/Perceiving how we react to the outside world
Personalities vary on personal conception traits. Additional personality traits that can influence how people behave and work together include: Locus of control - the extent to which one believes what happens is within one‘s control. Internal- belief in personal control over success or failure, self confident External - belief that what happens is beyond personal control. Fate, luck and chance are strong influence. Less self confident. Authoritarianism - degree to which a person respects authority and accepts status differences. Machiavellianism -emotionally detached and uses power and political behavior to manipulate others Hi-Mach - exploitative, believes the ends justify the means even if questionable ethical behavior is necessary Low-Mach - allows other to exert power over them Self-monitoring - the degree to which someone is able to adjust and modify behavior in new situations
Narcissism
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Narcissistic personality - a persistent pattern of self-involvement, arrogance, and a sense of entitlement. At one extreme of the narcissistic personality is a strong desire for admiration. Narcissists have a grandiose sense of themselves—including their personal appearance—that requires constant reinforcement from others. The behaviors may come across as charismatic, inspirational, exciting, and even bold to some followers. At the other extreme of the narcissistic personality is almost constant worry, feelings of insecurity, and self-doubt. They continually seek approval from others to ease their deep, nagging concerns that they are just not good enough. They want to be praised for great accomplishments, and they will consciously build and engage in rivalries with others in their efforts to prove to themselves that they are superior.
People with Type A personalities tend to stress themselves Stress is a state of tension experienced by individuals facing extraordinary demands, constraints or opportunities Type A personality describes someone that is high in achievement orientation, impatience, and perfectionism Stressors - sources of stress
Stress has consequences for work performance and health Constructive stress is a positive influence on effort, creativity and diligence in work Destructive stress is dysfunctional when it is or seems to be so intense or long lasting that it overloads and breaks down a person‘s physical and mental systems Job burnout is a sense of physical and mental exhaustion that can be incapacitating both personally and professionally (See Figure 12.5) Workplace rage - overly aggressive behavior toward co-workers, bosses, or customers Flameout- when extreme agitation is communicated in interpersonal relationships or electronic messages Personal wellness - the pursuit of a personal health-promotion program
12.2 Questions for discussion with suggested answers 1) Which personality trait would you add to the Big Five to make it the Big ―Six‖? I would add ―effort.‖ Individuals vary significantly in their individual effort and energy expended at work. This may range from ―driven‖ and ―committed‖ to ―lazy‖ at the opposite extreme. 2) What are the advantages and disadvantages of having people of different MBTI types working on the same team? Diversity brings creativity to problem solving. Organizations need creative, outgoing, reflective, thoughtful, detail oriented and intuitive people to avoid "group think" and represent many points of view. 3) Can you be an effective manager and not have a Type A personality? Yes. Although many entrepreneurs and managers share type A characteristics there is a Copyright © 2021 John Wiley & Sons, Inc.
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strong need for managers with strong people skills that do not necessarily need to be as driven and focused as a type A manager. 12.2 Career Situation: What Would You Do? You‘ve noticed that one of your co-workers is always rushing, always uptight, and constantly criticizing herself while on the job. She never takes time for coffee when the rest of you do, and even at lunch it‘s hard to get her to stay and just talk for awhile. Your guess is that she‘s a Type A and fighting stress from some source or sources other than the nature of the job itself. How can you help her out? Student answers will vary. Medical research also indicates that too much stress can be bad for health. It reduces resistance to disease and increases the likelihood of hypertension, ulcers, substance abuse, overeating, and depression. But the good news is that it can be managed. The best stress management strategy is to prevent it from reaching excessive levels in the first place. If we know we have a Type A personality and can identify our stressors, we can often take action to avoid or minimize their negative consequences. And as managers, we can take steps to help others who are showing stress symptoms. Things like temporary changes in work schedules, reduced performance expectations, long deadlines, and even reminders to take time off can all help.
Learning Objective 12.3: Explain How Attitudes, Emotions, and Moods Influence Individual Behavior. o Attitudes predispose people to act in certain ways An attitude is a predisposition to act in a certain way toward people and environmental factors Cognitive dissonance is the discomfort we feel in situations where our attitude is inconsistent with our behavior See the Figure 12.6 for the three components of individual attitudes: cognition, affect, and behavior.
Job satisfaction is a positive attitude toward one’s job and work experiences Job satisfaction is the degree to which an individual feels positive or negative about various aspects of his job and work experiences
Job satisfaction influences work behaviors Withdrawal behaviors - such as absenteeism and turnover indicate employees are not satisfied with jobs Organizational citizenship behaviors - such as going the extra mile and willingness to do more than required Incivility - is antisocial behavior in the forms of disrespectful acts, social exclusion, and use of hurtful language. Bullying - is antisocial behavior that is intentionally aggressive, intimidating, demeaning, and/or abusive.
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Employee engagement - sense of belonging and connection with work and employer.
Job satisfaction has a complex relationship with job performance Modest link between job satisfaction and performance and vice versa Satisfaction causes performance. This is the happy worker is a productive worker viewpoint. There is probably a modest link between job satisfaction and performance. Performance causes satisfaction. A productive worker is often a happy worker. However, it‘s quite possible that someone might perform well but not experience lots of satisfaction. Rewards influence both satisfaction and performance. This is the strongest of the three relationships from a research perspective. High performance followed by rewards that are valued and perceived as fair is likely to create job satisfaction.
DISCUSSION TOPIC Ask those students who have been gainfully employed to describe what they found to be satisfying about their jobs. Also ask them to discuss how those things affected their work behavior.
Emotions and moods are states of mind that influence behavior Emotions - strong feelings directed toward someone or something Emotional Intelligence (EI) - ability to understand emotions and manage relationships effectively Moods - generalized positive and negative states of mind Mood contagion - influence of one's positive or negative moods onto others.
12.3 Questions for discussion with suggested answers 1) Is cognitive dissonance a good or bad influence on us? Cognitive dissonance can be both a good or negative influence on us. It may be easier to display a positive attitude even though our internal feelings are not satisfactory or happy. In that case, communications may lack candor. In other cases, most of us encounter aspects of our jobs or responsibilities that we disdain on occasion. Displaying a ―different‖ positive attitude may be incongruent, but may be more effective if we conclude that it is simply not ―a big deal.‖ 2) How can a manager deal with someone who has high job satisfaction but is a low performer? If a worker is satisfied but is performing at a low level, the best way to deal with such an employee is to discuss the performance with that employee. Then challenges and specific goals and deadlines for improved performance should be detailed and communicated clearly. 3) What are the lessons of mood contagion for how a new team leader should -behave? It's an old saying that attitudes are contagious. Mood contagion certainly backs that up.
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A new supervisor should demonstrate the moods or attitudes that he or she would like to see mirrored back by employees. 12.3 Career Situation: What Would You Do? Your team leader has just told you that some of your teammates have complained to him that you have been in a really bad mood lately and it is rubbing off on the others. They like you and point out that this isn‘t characteristic of you at all. They don‘t know what to do about it. Can they do anything to help? Is there anything your team leader might do? What is your responsibility here, and how can you best handle the situation? Student answers will vary. Researchers are very interested in mood contagion, the spillover effects of one’s mood onto others. It turns out that positive emotions of people can be ―contagious,‖ causing others to display more positive moods and also be both more attracted to them and willing to rate them more highly. As you might expect, such mood contagion can also have positive and negative effects on the moods of co-workers and teammates, as well as family and friends. In this situation, if needed you need to take some time off, talk things out and ―fix‖ the mood as it is having a contagion effect.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: The Death of Work-Life Balance The problem is: When does work end and leisure time begin? We used to "go" to work and then come "home" where we relaxed with family and pursued personal affairs. Now we work "on the go" anytime, from anywhere, and often at someone else's schedule.. Check your messages and social media several times at Thanksgiving? Do others expect you to be always online or do you have a compulsion to be online, or both. Are you addicted to your phone? What does ―balance‖ really mean anymore in today‘s work–life equation? How did you do on the test? Did your COVID-19 experience move you further into the world of not just remote work or study, but also of continuous virtual connections? What did you learn about yourself and your need for balance in a world where work and personal space are intricately woven together in a high-tech web?
Choices: Curbing bias in hiring decisions Study. Harvard scholars Iris Bohnet, Alexandra van Geen, and Max H. Bazerman asked 100 participants to act as candidates for a new job. They performed a variety of ―math and verbal tasks‖ chosen by the researchers because of the common gender stereotype that ―females are believed to be worse at math tasks and better at verbal tasks than males.‖ Another 554 study participants then acted as evaluators to select candidates from this set of 100 for a second round Copyright © 2021 John Wiley & Sons, Inc.
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of testing. They were given test results and gender for each candidate. Some evaluators were asked to evaluate the candidates one at a time while others directly compared male and female candidates. Findings. Gender stereotypes influenced the one-by-one evaluations, with female candidates more often chosen for further verbal testing and male candidates for further math testing. When male and female candidates were evaluated together, however, gender stereotypes largely disappeared. Ask Students: Does this research put its finger on a simple way to remove gender bias from human resource decisions? Is it time to stop assessing candidates one at a time and instead compare them to one another directly?
Quick Case: Come on, take your vacation already Once again Julie is leaving vacation days on the table. Out of the three weeks available to her this year she used just six days! She‘s always talking about things she‘d like to do in her free time, people she‘d like to spend more time with, and places she would like to visit. But it‘s all talk. She just works. You just heard on the radio that 15% of American workers don‘t take all their vacation days, and that some Europeans consider this something just short of crazy. The reporter said that some sacrifice vacations to create positive impressions in the quest for promotions. Others consider it a badge of honor – ―I haven‘t taken vacation in two years!‖ Still others just seem addicted to their work. Discuss whether or not it is a personal choice and none of the team leader‘s business if an employee uses their vacation? Is it something to worry about in terms of stress, burnout, and potential lost productivity? Ask students if Julie reported to them would they ―turn a blind eye‖ to this situation, or is it one that merits active intervention as team leader? Discuss what should be done and why?
Ethics: My team leader is a workaholic Dear Management Coach: I'm stuck. My new team leader is an absolute workaholic. I mean he's great in terms of personality, support, task direction - all things a great team leader is supposed to be. But the killer is that he just works all the time; I don't know if he ever sleeps. Come to the office a bit early, say 7:30am, he's already there. Do a bit extra and leave at 6pm, he's still hard at work. What I'm worried about is the hidden expectation in his behavior: "If I can do it you can too!" I'm ready to work hard and put in extra hours as needed. However, I have a personal life and lots of other responsibilities. I need this job and I like the work. I'm getting stressed out over what is going to come up when performance reviews are due in about two months. Should I confront him with my concerns? Ask students that they would do if they were the coach. How would they read the ethics issues? When a team leader works day and night, is this putting pressure on team members to do the same? Should a team leader who behaves this way "come clean" and tell everyone upfront that Copyright © 2021 John Wiley & Sons, Inc.
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they shouldn't let it influence their behavior? When team members see a leader or teammate behaving this way, should they bring the issue up to clarify expectations and make sure that the behavior pattern isn't a signal of personal problems that need attention?
Analytics: Paying a high price for incivility at work When rudeness rules the workplace loses in the bottom line are to be expected. Most managers say they are against incivility and try to stop it whenever they can. But it‘s also the case that managers don‘t have a good handle on the real costs incurred when employees are rude and disrespectful toward one another. When researchers asked 800 workers from different industries about how they responded when exposed to incivility at work, results showed: • 48% decreased work effort • 47% cut back time spent at work • 80% lost work time due to worry • 63% performed less well • 78% were less committed to the organization • 25% took frustration out on customers Ask students if they have ever been on the receiving end of incivility? Is incivility taking a toll on the teams and organizations in their lives? Is improved civility a hidden pathway to higher performance in workplaces? How can such improvements be achieved?
Issues: Smile Please. The Boss Is Tracking Your Happiness Sentiment-tracking software is available, accessible, and increasingly viewed as desirable by employers. Remote work, online collaboration tools, and smart devices put us in constant touch with coworkers, bosses, and customers. They also grant access to having our moods monitored as often as an employer wants. Sometimes it‘s a direct prompt—―choose the emoticon that best describes how you‘re feeling today.‖ Other times it‘s a software troll of e-mails, messages, and collaborations that looks for and analyzes key words and phrases showing positive and negative feelings. Ask students if they really want to have your state of mind checked by the boss as often as she or he likes? What are the benefits to you? What are the risks to you? Are a person‘s emotions, moods, and sentiments fair play in the employer-employee relationship? Just what is the line between a healthy dose of morale checking and an unhealthy intrusion into personal privacy?
Insight for Personal Development: There’s no substitute for integrity When it comes to understanding people‘s behavior, attitudes, and professional interactions with others, one of the most important distinctions can be their level of ambition, which is the desire
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to succeed, accomplish things, and achieve high goals. Ambition shows up in personality as a sense of competitiveness and the urge to get better or to be the best at something. Overly ambitious people may exaggerate their accomplishments to themselves and others. They also may try to do too much and end up accomplishing less than they would otherwise have accomplished. Ambitious people who lack integrity can get trapped by corruption and misbehavior driven by ambition. Get to Know Yourself Better gives the student an opportunity to review the ―personal differentiators‖ in the small box nearby. How do you score? Can you say that your career ambition is backed with a sufficient set of personal traits and skills to make success a real possibility? Ask others to comment on the ambition you display as you go about your daily activities. Write a short synopsis of two situations—one in which you showed ambition and one in which you did not.
Explore Yourself: Ambition People are different; our styles vary in the way we work, relate to others, and even in how we view ourselves. One of the differences you might observe when interacting with other people is in ambition, or the desire to succeed and reach for high goals. In our earlier discussion of Sir Richard Branson, he was described as ambitious. Do your students see themselves as ambitious? Do they have the drive to be successful as Sir Richard? Ambitious individuals have a high tolerance for stress. Students can evaluate their own stress tolerance by taking the stress test in the Skill-Building portfolio. Ambition is one of those traits that can certainly have a big impact on individual behavior. It is evident in how we act and what we try to achieve at work, at home, and in leisure pursuits. It comes out in personality as competitiveness and desire to be the best at something. The more we understand ambition in our lives, and the more we understand how personality traits influence our behavior, the more successful we‘re likely to be in accomplishing our goals and helping others do the same. Get to know yourself better by taking the Stress Test self-assessment and completing the other activities in the Exploring Management Skill-Building Portfolio.
Terms to Define
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Attitude Attribution Authoritarianism Bullying Cognitive dissonance Constructive stress Destructive stress Emotion Emotional intelligence Employee engagement Flameout Fundamental attribution error Halo effect Impression management Incivility Job burnout Type A personality Withdrawal behaviors Workplace rage
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Job satisfaction Locus of control Machiavellianism Mood Mood contagion Organizational citizenship behaviors Perception Personal wellness Personality Projection Selective perception Self-monitoring Self-serving bias Stereotype Stress
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Test Prep 12 Multiple-Choice Questions 1. Among the Big Five personality traits, _ indicates someone who tends to be responsible, dependable, and careful in respect to tasks. (a) authoritarian (b) agreeable (c) conscientious (d) emotionally stable 2. A person with a/an personality would most likely act unemotional and manipulative when trying to influence others to achieve personal goals. (a) extroverted (b) sensation-thinking (c) self-monitoring (d) Machiavellian 3. When a person tends to believe that he or she has little influence over things that happen in life, this indicates a/an personality. (a) low emotional stability (b) external locus of control (c) high self-monitoring (d) intuitive-thinker 4. How is a person with an authoritarian personality expected to act? (a) Strong tendency to obey orders. (b) Challenges the authority of others. (c) Tries to play down status differences. (d) Always flexible in personal behavior. 5. A new team leader who designs jobs for persons on her work team mainly ―because I would prefer to work the new way rather than the old,‖ is committing a perceptual error known as . (a) the halo effect (b) stereotyping (c) impression management (d) projection 6. If a manager allows one characteristic of a person—say, a pleasant personality—to bias performance ratings of that individual overall, the manager is falling prey to a perceptual distortion known as . (a) the halo effect (b) impression management (c) stereotyping (d) projection 7. Use of special dress, manners, gestures, and vocabulary words when meeting a prospective employer in a job interview are all examples of how people use _ in daily life. (a) the halo effect (b) impression management (c) introversion (d) mood contagion Copyright © 2021 John Wiley & Sons, Inc.
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8.
is a form of attribution error that involves blaming the environment for problems that we may have caused ourselves. (a) Self-serving bias (b) Fundamental attribution error (c) Projection (d) Self-monitoring 9. is a form of attribution error that involves blaming others for problems that they may not have caused for themselves. (a) Self-serving bias (b) Fundamental attribution error (c) Projection (d) Self-monitoring component of an attitude is what indicates a person‘s belief about something, 10. The while the component indicates a specific positive or negative feeling about it. (a) cognitive; affective (b) emotional; affective (c) cognitive; attributional (d) behavioral; attributional 11. The term for the discomfort someone feels when his or her behavior turns is inconsistent with a previously expressed attitude is . (a) alienation (b) cognitive dissonance (c) job dissatisfaction (d) job burnout 12. Job satisfaction is known from research to be a strong predictor of . (a) job performance (b) job burnout (c) conscientiousness (d) absenteeism 13. A person who is always willing to volunteer for extra work or to help someone else with his or her work is acting consistent with strong . (a) job performance (b) self-serving bias (c) emotional intelligence (d) organizational citizenship 14. A/an represents a rather intense but short-lived feeling about a person or a situation, whereas a/an _ describes a more generalized positive or negative state of mind. (a) stressor; role ambiguity (b) external locus of control; internal locus of -control (c) self-serving bias; halo effect (d) emotion; mood 15. Which statement about the job satisfaction–job performance relationship is most true based on research? (a) A happy worker will be a productive worker. (b) A productive worker will be a happy worker. (c) A productive worker well rewarded for performance will be a happy worker. (d) There is no relationship between being happy and being productive in a job. Copyright © 2021 John Wiley & Sons, Inc.
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Short-Response Questions 16. What is the most positive profile of Big Five personality traits in terms of positive impact on work behavior? All of the Big Five personality traits are relevant to the workplace. To give some basic examples, consider the following. Extroversion suggests whether or not a person will reach out to relate and work well with others. Agreeableness suggests whether or not a person is open to the ideas of others and willing to go along with group decisions. Conscientiousness suggests whether someone can be depended on to meet commitments and perform agreedupon tasks. Emotional stability suggests whether or not someone will be relaxed and secure, or uptight and tense, in work situations. Openness suggests whether someone will be open to new ideas or resistant to change. 17. What is the relationship between personality and stress? The Type A personality is characteristic of people who bring stress on themselves by virtue of personal characteristics. These tend to be compulsive individuals who are uncomfortable waiting for things to happen, who try to do many things at once, and who generally move fast and have difficulty slowing down. Type A personalities can be stressful for both the individuals and the people around them. Managers must be aware of Type A personality tendencies in their own behavior and among others with whom they work. Ideally, this awareness will help the manager take precautionary steps to best manage the stress caused by this personality type. 18. How does the halo effect differ from selective perception? The halo effect occurs when a single attribute of a person, such as the way he or she dresses, is used to evaluate or form an overall impression of the person. Selective perception occurs when someone focuses in a situation on those aspects that reinforce or are most consistent with his or her existing values, beliefs, or experiences. 19. If you were going to develop a job satisfaction survey, exactly what would you try to measure? Job satisfaction is an attitude that reflects how people feel about their jobs, work settings, and the people with whom they work. A typical job satisfaction survey might ask people to respond to questions about their pay, co-worker relationships, quality of supervisor, nature of the work setting, and the type of work they are asked to do. These questions might be framed with a scale ranging from ―very satisfied‖ to ―not satisfied at all‖ for each question or job satisfaction dimension.
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Integration and Application Questions: 20. When Scott Tweedy picked up a magazine article on ―How to Manage Health Care Workers,‖ he was pleased to find some apparent advice. Scott was concerned about poor performance by several of the respiratory therapists in his clinic. The author of the article said that the ―best way to improve performance is to make your workers happy.‖ Well, Scott was happy upon reading this and made a pledge to himself to start doing a much better job of ―making the therapists happy in the future.‖ Questions: Is Scott on the right track? Should he charge ahead as planned, or should he be concerned about this advice? What do we know about the relationship between job satisfaction and performance, and how can this understanding be used by Scott in this situation? Scott needs to be careful. Although there is modest research support for the relationship between job satisfaction and performance, there is no guarantee that simply doing things to make people happier at work will cause them to be higher performers. Scott needs to take a broader perspective on this issue and his responsibilities as a manager. He should be interested in job satisfaction for his therapists and do everything he can to help them to experience it. But he should also be performance oriented and understand that performance is achieved through a combination of skills, support, and motivation. He should be helping the therapists to achieve and maintain high levels of job competency. He should also work with them to find out what obstacles they are facing and what support they need—things that perhaps he can deal with in their behalf. All of this relates as well to research indications that performance can be a source of job satisfaction. And finally, Scott should make sure that the therapists believe they are being properly rewarded for their work since rewards are shown by research to have an influence on both job satisfaction and job performance.
Self-Assessment 12: Stress Test Instructions Complete the following questionnaire. Circle the number that best represents your tendency to behave on each bipolar dimension. Am casual about appointments1 2 3 4 5 6 7 8 Am never late for appointments Am not competitive 1 2 3 4 5 6 7 8 Am very competitive Never feel rushed 1 2 3 4 5 6 7 8 Always feel rushed Take things one at a time 1 2 3 4 5 6 7 8 Try to do many things at once Do things slowly 1 2 3 4 5 6 7 8 Do things fast Express feelings 1 2 3 4 5 6 7 8 ―Sit on‖ feelings Have many interests 1 2 3 4 5 6 7 8 Have few interests but work Scoring Total the numbers circled for all items, and multiply this by 3; enter the result here [ ].
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Points 120+ 106-129 100-105 90-99 below 90
Personality Type A+ A AB+ B
Class Exercise 12: Job Satisfaction Preferences Preparation Rank the following items from 1 = least important to 9 = most important to your future job satisfaction. My job will be satisfying when: 1. It is respected by other people. 2. It encourages continued development of knowledge and skills. 3. It provides job security. 4. It provides a feeling of accomplishment. 5. It provides the opportunity to earn a high income. 6. It is intellectually stimulating. 7. It rewards good performance with recognition. 8. It provides comfortable working conditions. 9. It permits advancement to high administrative responsibility. Instructions Form into groups as designated by your instructor. Within each group, the men should develop a consensus ranking of the items as they think women ranked them. The reasons for the rankings should be shared and discussed so they are clear to everyone. The women in the group should not participate in this ranking task. They should listen to the discussion and be prepared to comment later in class discussions. A spokesperson for the men in the group should share the group‘s rankings with the class. Optional Instructions Form into groups consisting entirely of men or women. Each group should meet and decide which of the work values members of the opposite sex will rank first. Do this again for the work value ranked last. The reasons should be discussed, along with the reasons why each of the other values probably was not ranked first—or last. A spokesperson for each group should share group results with the rest of the class.
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Team Project 12: Difficult Personalities Question What personalities cause the most problems when people work together in teams, and what can be done to best deal with them? Instructions 1. Do a survey of friends, family, co-workers, and even the public-at-large to get answers to these questions: a. When you work in a team, what personalities do you have the most difficulty dealing with? b. How do these personalities affect you, and how do they affect the team as a whole? c. In your experience and for each of the ―difficult personalities‖ that you have described, what have you found to be the best way of dealing with them? d. How would you describe your personality, and are there any circumstances or situations in which you believe others could consider your personality ―difficult‖ to deal with? e. Do you engage in any self-management when it comes to your personality and how it fits when you are part of a team? 2. Gather the results of your survey, organize them for analysis, and then analyze them to see what patterns and insights your study has uncovered. 3. Prepare a report to share your study with the rest of your class.
Case Snapshot: Panera - Growing a Company with Personality Panera Bread is in the business of satisfying customers. With fresh-baked breads, gourmet soups, and efficient service, the franchise has surpassed all expectations for success. But how did a startup food company grow so fast and so successfully? To answer this question, you have to study its founder Ron Shaich and admire his personality. Case discussion questions: 1. DISCUSSION How might consumers‘ perception of Panera‘s menu and atmosphere affect their dining experience and tendencies to return as customers? The menu and atmosphere support a perception of fast food or a bistro setting because of the counter service, serving food on trays and self-bussing of the tables. 2. DISCUSSION Describe how stereotypes about the fast-food industry might positively and negatively affect Panera. Do you think of Panera as a fast-food restaurant, or has the company managed to distinguish itself from this industry segment?
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Panera has certainly distinguished itself from the fast-food segment of the restaurant industry, and I don’t believe Panera is perceived as a fast-food restaurant. Panera can be thought of as quality food served quickly – a mass customization concept at work. This restaurant segment is commonly called ―fast casual.‖ Fast food suffers from the stereotype of unhealthy and inexpensive – both of which do not apply to Panera. In fact, Panera differentiates itself on the basis of high-quality ingredients – and this has allowed the fast-casual restaurant to justify somewhat higher prices than its fast-food rivals. Part of Panera’s identity is social consciousness and food quality and the company has made a name for itself by eliminating all artificial additives and preservatives in its foods, and more recently, posting calories and information about sugar in its soft drinks. With 25 million members and half of the company’s transactions made through the program, Panera’s loyalty program is one of the largest in the restaurant industry. 3. PROBLEM SOLVING What personality characteristics would you expect Panera‘s founder Ron Shaich to display? How would these characteristics help or hinder him during Panera‘s early entrepreneurship stage and during its continuing growth stage? As a leadership succession consultant, what would you identify as the three or four most important of Shaich‘s personal qualities that should be sought after in the next CEO, and why? Student answers will vary. Although much of Panera’s success can be attributed to Shaich’s leadership, eventually everyone can be and is replaced. As an organization grows and matures, the style of management needed usually change too. From the case, Shaich appears to have the personality of a classic entrepreneur- charismatic, enthusiastic, confident, hard-working, and willing to risk it all to attain his vision. Often, in strong organizational cultures the values of the founder can be reinforced through policies and programs that support those values. For example, when an organization values innovation, it should institute a reward system for employees who suggest viable new products or efficient new procedures. 4. FURTHER RESEARCH Find data reporting on Panera‘s recent sales and product initiatives. Find out more about Shaich and how his values and personality affect the company, its mission, and its strategies. Is Panera on the leading edge of its industry, or are other competitors—especially new entrants—starting to nip away at its traditional customers and markets? Does Panera seem to have what it takes to deal with shifting customer values and perceptions of the fast-food industry? Student answers will vary. This can be assigned as an out of class research project for a lively class discussion. Recently, Panera was acquired by JAB for more than $7 billion. JAB owns Krispy Kreme Donuts, Caribou Coffee and Peet’s Coffee and Tea. Shaich believes that being out of the public eye will allow him to focus more on long term goals without the pressure of showing results on a quarterly basis. What sets Panera apart from competitors is its focus on technology, innovation and its digital strategy. Sales from mobile, Web and kiosk made up 26% of the company’s total sales, Panera said, and an estimated 1.2 million digital orders are placed per week.
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If location and class size allow, consider either having your class visit a Panera location or invite a Panera manager to speak to your class.
Suggested Team Exercise for Chapter 12 Break the class into teams and have the teams discuss various techniques or methods that individuals in the team have found to be successful in dealing with stress. Each team should develop a list of ―tactics to deal with stress‖ based on their team discussions. After the teams have had sufficient time to develop their lists, have each team report and share their ideas with the rest of the class. Additional team exercise: Break the class into teams and ask the teams to consider each of the flowing communication scenarios and to discuss and summarize their answers to each scenario: 1. You are the CEO of a company and, because of very poor sales due to the recent recession, have determined that you need to terminate 10% of your workforce as a cost control measure. How would you communicate this message to all employees in a large company with multiple locations? 2. You need to advise an employee who works in customer service that he or she is too abrasive with customers based on surveys that you have received. Where and how would you communicate this issue? 3. You are the Manager of Employee Benefits and want to communicate a change in the car mileage reimbursement rate from $.55 a mile to $.50 a mile for use of employees‘ personal automobiles for company business. How would you do this? 4. You are the CEO of a pharmaceutical company and have just learned that the Food and Drug Administration has approved one of your drugs for use in cancer treatment. You need to advise your immediate executive staff. However, this is very sensitive information. How would you do this?
CHAPTER 13 Motivation Respect Unlocks Human Potential
Chapter 13 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion.
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Chapter 13 reviews motivation and the various theories that researchers have developed regarding this topic. Each theory is explored, including potential benefits and limitations or challenges. The theories are organized into human needs, thought processes and decisions, and reinforcement and their impact on motivation. The chapter begins by describing and examining in detail the major theories of work motivation. Next, the chapter explains the content motivation by looking at Maslow‘s hierarchy of needs theory, Alderfer‘s ERG theory, Herzberg‘s two-factor theory, McClelland‘s acquired-needs theory, and Core characteristics model. The cognitively-based process theories of motivation of equity theory, expectancy theory, and goal-setting theory are explored next. Reinforcement theory, which uses environmental consequences to explain motivation, follows.
Chapter 13 Learning Objectives
Learning Objective 13.1 Describe how human needs influence motivation to work. Learning Objective 13.2 Identify how thoughts and decisions affect motivation to work. Learning Objective 13.3 Explain how reinforcement influences motivation to work.
Chapter 13 Lecture Outline Learning Objective 13.1 Describe How Human Needs Influence Motivation to Work. Maslow described a hierarchy of needs topped by self-actualization. Alderfer‘s ERG theory deals with existence, relatedness, and growth needs. McClelland identified acquired needs for achievement, power, and affiliation. Herzberg‘s two-factor theory focuses on higher-order need satisfaction. The core characteristics model integrates motivation and job design. Learning Objective 13.2 Identify How Thoughts and Decisions Affect Motivation to Work. Equity theory explains how social comparisons motivate individual behavior. Expectancy theory focuses on individual decisions to work hard, or not. Goal-setting theory shows that the right goals can be motivating. Learning Objective 13.3 Explain How Reinforcement Influence Motivation to Work. Operant conditioning influences behavior by controlling its consequences. Positive reinforcement connects desirable behavior with pleasant consequences. Punishment connects undesirable behavior with unpleasant consequences.
Chapter 13 Supporting Materials:
Figures Figure 13.1 What Are the Opportunities for Need Satisfaction in Maslow‘s Hierarchy? Figure 13.2 What Are the Motivational Implications of Job Content and Job Context in Copyright © 2021 John Wiley & Sons, Inc.
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Herzberg‘s Two-Factor Theory? Figure 13.3 How Do Core Characteristics Influence -Motivation Through Job Design? Figure 13.4 The Dynamics of Social Comparison in Equity Theory. Figure 13.5 Expectancy Theory Terms and Their Motivational Implications. Figure 13.6 How Can Managers Use the Insights of the Expectancy Theory of Motivation? Figure 13.7 How Can Managers Use Reinforcement Strategies to Influence Work Behavior? What’s Inside Career Readiness: When a Job Becomes a Calling Analytics: Stay-at-Home Orders Bring Working from Home Here to Stay Choices: Pandemic and Income Inequality Fuel Calls for ―Fair‖ Pay Ethics: Information goldmine is an equity dilemma Insight: The Personal Side of Engagement Issues: Rewarding mediocrity begins at an early age Quick Case: Restaurant Chain Serves Up No-Tipping Policy Applications TestPrep 13 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 13: Two-Factor Profile o Class Exercise 13: Why We Work o Team Project 13: CEO Pay Case Snapshot: Salesforce.com – Instant Praise, Instant Criticism
Chapter Outline: Learning Objective 13.1: Describe How Human Needs Influence Motivation to Work.
Motivation forces within the individual that account for the level, direction and persistence of effort expended at work.
Maslow described a hierarchy of needs topped by self-actualization Abraham Maslow developed the theory of hierarchy of needs. A need is an unfulfilled physiological or psychological desire. See Figure 13.1 What Are the Opportunities for Need Satisfaction in Maslow’s Hierarchy? For higher-order need satisfaction, people realize self-actualization by doing creative and challenging work and participating in important decisions; they boost self-esteem through promotions and praise, and by having responsibility for an important job. For lower-order need satisfaction, people meet social needs through positive relationships with coworkers, supervisors, and customers; they achieve safety needs in healthy working conditions and a secure job with good pay and benefits; and they realize physiological
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needs by having reasonable work hours and comfortable work spaces.
Lower order needs are physiological, safety, and social needs Higher order needs are esteem and self-actualization Deficit principle states that a satisfied need is not a motivator of behavior Progression principle states that people try to satisfy lower level needs first, then move step-by-step up the hierarchy DISCUSSION TOPIC
You can generate discussion by asking students to identify the types of rewards that could be used to satisfy the various needs. Also have the students identify whether the rewards they cited are intrinsic or extrinsic and discuss how the different need levels are related to these types of rewards.
Alderfer’s ERG theory focuses on existence, relatedness, and growth needs Clayton Alderfer developed the ERG theory which collapses Maslow‘s five needs into three: Existence (desires for physiological and material well-being) Relatedness (desires for satisfying interpersonal relationships) Growth (desires for continued psychological growth and development) Frustration-regression principle says that an already satisfied lower-level need can be reactivated when a higher-level need cannot be satisfied.
McClelland identified acquired needs for achievement, power, and affiliation David McClelland identified three basic acquired needs that are central to understanding motivation: Need for achievement is the desire to do something better or more efficiently Need for power is the desire to control other people Need for affiliation is the desire to establish and maintain friendly and warm relations with other people There are also two types of power need: The need for personal power is exploitative and involves manipulation for the pure sake of self-gratification The need for social power involves the use of power in a fair and socially responsible way, one that is directed toward group or organizational objectives rather than personal ones.
DISCUSSION TOPIC McClelland uses a Thematic Apperception Test (TAT) to measure the strengths of the needs for achievement, power, and affiliation. The Thematic Apperception Test (TAT) is based on need
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interpretations of descriptions of various stimulus situations. To help students understand how this works, describe the following scenario: In one case, McClelland tested three executives using a photograph that showed a man sitting down and looking at family photos arranged on his work desk. One executive wrote of an engineer who was daydreaming about a family outing scheduled for the next day (need for affiliation). Another described a designer who had picked up an idea for a new gadget from remarks made by his family (need for power). The third saw an engineer who was intently working on a bridge-stress problem that he seemed sure to solve because of his confident look (need for achievement).
Herzberg’s two-factor theory focuses on higher-order need satisfaction The Explore Yourself feature directs students to take the Two Factor Profile Assessment in the Skill-building Portfolio. After the assessment, consider these discussion questions: How well does your current or a recent job provide for satisfier or hygiene factors as described by Herzberg? If students do not have jobs they can relate to, have them consider their educational experience in your class or college. How does this affect your motivation? How can these factors be modified to increase motivation and commitment?
Figure 13.2 illustrates Herzberg’s two-factor theory. What Are the Motivational Implications of Job Content and Job Context in Herzberg’s Two-Factor Theory? Scholars criticize this theory because of its research foundations. However, Herzberg makes an interesting and useful distinction between the motivational implications of job content and job context. He believes that you can‘t increase job satisfaction and motivation by improving hygiene factors in the job context, for example, by increasing wages. This only reduces levels of dissatisfaction. Instead, he argues in favor of improving satisfier factors in the job content, things like responsibility and recognition. In the two-factor theory, such changes are pathways to higher job satisfaction and motivation.
Satisfier factors (motivator factors) are part of job content; sense of achievement, feelings of recognition, a sense of responsibility, the opportunity for advancement, and feelings of personal growth
Hygiene factors are part of job context; working conditions, interpersonal conditions, interpersonal relations, organizational policies and administration, technical quality of supervision, and base wage or salary
Job satisfaction cannot be increased by improving the hygiene factors; you will only get less dissatisfaction. You can only improve job satisfaction by improving the satisfier factors
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DISCUSSION TOPIC For those students who have held jobs, ask them to identify work situations where they experienced satisfaction and work situations where they experienced dissatisfaction. For those students who have not held any jobs have them identify educational situations where they have experienced satisfaction or dissatisfaction. Have the students share their examples while you record them on the chalkboard or a flipchart. After all the examples have been recorded, have the class compare the satisfying and dissatisfying situations to Herzberg‘s hygiene factors and satisfier factors. The core characteristics model integrates motivation and job design Job design is the allocation of specific work tasks to individuals and groups Job enrichment increases job content by adding work planning and evaluating duties normally performed by the supervisor. Figure 13.3 How Do Core Characteristics Influence Motivation Through Job Design? Five "core" job characteristics include" Skill variety Task identity Task significance Autonomy Feedback from the job itself Jobs that are high in these characteristics provide job holders with experienced meaningfulness and responsibility as well as knowledge of results. Under the right contingency conditions—high growth need strength and satisfaction with job context—these critical psychological states are motivational and set the stage for positive job outcomes. 13.1 Questions for discussion with suggested answers 1) Was Maslow right in suggesting we each have tendencies toward self-actualization?
Yes, most humans want to be fulfilled doing whatever it is they are most skilled at and that makes them most happy. Very few are able to ever reach that pinnacle-but it is nevertheless a goal for most of us. 2) Is high need for achievement always good for managers?
The need for achievement is a mostly positive force and can result in a healthy drive for meaningful accomplishment as well as contributions to society. Taken to extremes or used unethically, it can result in undesirable, even dangerous behavior. Ruthless dictators or dishonest CEOs or corrupt politicians are examples of drive combined with a lack of ethics that has negative consequences. For most individuals with ethics, excessive drive can lead to an unhealthy balance between career and personal life/family happiness. 3) Why can‘t job enrichment work for everyone?
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Not everyone approaches work with the maturity or intellect necessary to desire more responsibility or self-control in work. Young part-time workers and temporary workers among others may desire job simplification rather than job enrichment. 13.1 Career Situations: What Would You Do? Two student workers are being considered for promotions at a campus recreation center that you manage. One works really well with people and seems to thrive on teamwork and social interaction. The other tackles tough jobs with enthusiasm and always wants to do her best, while preferring to do things alone rather than with others. The center‘s staff is expanding and you have the flexibility to design jobs to best fit each student. What jobs would you create for them, and why? Student answers will vary. They should come up with options such as those jobs that deal with student interactions, events management, etc. can be designed for the social and team-oriented student whereas projects that demand less of teamwork etc. can be developed for the other student.
Learning Objective 13.2: Identify How Thoughts and Decisions Affect Motivation at Work.
Equity theory explains how social comparisons motivate individual behavior J. Stacy Adams developed this theory. Figure 13.4 illustrates the concept. Equity Theory -- Based on the logic of social comparisons, it pictures us continually checking our rewards for work accomplished against those of others; any perceived inequities in those comparisons will motivate us to engage in behaviors which correct the inequities Perceived negative inequity -- feeling uncomfortable at being unfairly treated. People who feel underpaid, for example, may experience disappointment or even a sense of anger. They will be motivated to restore perceived equity to the situation. This might be done by reducing work efforts to compensate for missing rewards, asking for more rewards or better treatment, or even by quitting the job. Perceived positive inequity is associated with a sense of guilt; and the individual restores perceived equity by increasing the quantity or quality of work, taking on more difficult assignments or working overtime DISCUSSION TOPIC
Ask students to think about a job they have held or currently hold. Next, ask them if they feel they were rewarded fairly. Many are likely to say that they were not paid enough, or that the work was not challenging enough. From here on, you can use these students‘ experiences as examples of people who have experienced negative inequity. Be sure to ask them how they responded to the inequity. In nearly all cases, students will indicate that they exhibited one of the responses to perceived inequity that are listed below.
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Expectancy theory focuses on the decision to work hard, or not. Developed by Victor Vroom. Figure 13.5 illustrates the concept. Motivation = Expectancy x Instrumentality x Valence Expectancy is a persons‘ belief that working hard will result in high task performance (sometimes called effort-performance expectancy) Instrumentality is a persons‘ belief that successful performance will lead to rewards (sometimes called performance-outcome expectancy) Valence is the value a person assigns to the possible rewards and other work-related outcomes To have high expectancies, people must believe in their abilities. Self-efficacy is a person‘s belief that they are capable of performing a task. To have high instrumentalities, people must perceive that their performance accomplishments will be followed by desired work outcomes To have high and positive valences, people must value the outcomes associated with high performance
See Figure 13.6 How Can Managers Use the Insights of the Expectancy Theory of Motivation? This summarizes the management implications of expectancy theory. Managers should act in ways that maximize expectancies, instrumentalities, and valences for others. To maximize expectancy, they need to hire capable workers, train and develop them continuously, and communicate goals and confidence in their skills. To maximize instrumentality, managers must clarify and stand by performance-reward linkages. Finally, to maximize valence, they need to understand individual needs and try to tie work outcomes to important sources of need satisfaction.
Goal-setting theory shows that the right goals can be motivating Developed by Edwin Locke Goal-setting theory says that task goals can be highly motivating, but only if they are the right goals and if they are set in the proper way DISCUSSION TOPIC A useful way to help students understand the multiplier effect of expectancy theory is to relate it to their own academic experiences. Ask students to think about their motivation in their various classes. Do they believe that if they work hard, they will be able to achieve a high level of performance (expectancy)? If they succeed in performing well, do they expect to be rewarded with a high grade (instrumentality)? Finally, do they value a high grade (valence)? If the answer to any of these questions is ―no,‖ their motivation will suffer.
How to Make Goal Setting Work for You Set specific goals—avoid more generally stated ones, such as ―Do your best.‖ Set challenging goals—when realistic and attainable, they motivate better than easy ones. Build goal acceptance and commitments—people work harder for goals they accept and believe in. Clarify goal priorities—expectations should be clear on which goals to pursue first. Provide feedback on goal accomplishment —people need to know how well they are doing. Reward goal accomplishment —give reinforcement; don‘t let accomplishments pass unnoticed. Allow participation when setting goals— people are more likely to accept and commit to accomplishing goals when they help set them
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Goal Setting and Participation -- When managers and team members participate in goal setting and performance review, members are likely to be more motivated. Participation increases understanding of task goals, increases acceptance and commitment to them, and creates more readiness to receive feedback related to goal accomplishment Goal-Setting Downsides -- poorly set and poorly managed goals can have downsides that turn them into performance negatives rather than positives.
13.2 Questions for discussion with suggested answers 1) Is it against human nature to work harder as a result of perceived positive -inequity? People are as different as snowflakes and their motives are equally complex. Some may see positive inequity figure that they deserve it and choose not to work any harder. Others will feel real guilt and work harder because they want to appear to earn the rewards of the positive inequity. Ask students what they would do if they felt a grade on a paper or case was overly generous. Would they work harder next time or not? Does it make a difference if others know the grade? 2) Can a person with low expectancy ever be motivated to work hard at a task? Expectancy is the belief that hard work will result in achieving a desired level of task performance. Low expectancy would indicate that a worker wouldn't believe that working hard would achieve the expected level of performance. This would likely create a worker that put forth a half-hearted effort because he or she didn't believe that working any harder would help. This may be pretty common for new employees learning a complex task, or someone learning to play an instrument or learning a new sport like snowboarding. In most of these cases, it takes a manager, teacher or coach to help develop expectancy in the discouraged newcomer. 3) Will goal-setting theory work if the goals are fixed and only the means for achieving them are open for discussion? It's very common to have goals established without input from workers. Deciding how to best accomplish the goals may be empowering and motivational. 13.2 Career Situations: What Would You Do? It‘s apparent that something is wrong with Kate. Her great performance as a Web designer got her promoted to team leader for Web Design Services. But you notice that she now appears anxious, stressed, and generally unhappy in the new assignment. This is quite a contrast from the highly motivated and happy Kate you knew in her old job. What might be wrong here, and what can you, as her supervisor, do to help fix it? Student answers will vary. However, a candid conversation needs to take place with Kate with regards to is it equity or expectancy that is becoming an issue.
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Learning Objective 13.3: Explain How reinforcement influence motivation to work.
Operant conditioning influences behavior by controlling its consequences Law of effect says that people generally repeat behavior that results in a positive outcome and avoid behavior that results in a negative outcome Operant conditioning is the process of applying the law of effect to influence behavior by manipulating its consequences
See Figure 13.7 How Can Managers Use Reinforcement Strategies to Influence Work Behavior? To strengthen quality work, a supervisor might use positive reinforcement by praising the individual or negative reinforcement by no longer complaining to him about poor-quality work. To discourage poor-quality work, a supervisor might use extinction (withholding things that are positively reinforcing, such as outcomes) or punishment (associating the poor-quality work with unpleasant results for the individual).
Operant conditioning uses four reinforcement strategies Positive reinforcement strengthens or increases the frequency of desirable behavior by making a pleasant consequence contingent on its occurrence Negative reinforcement strengthens or increases the frequency of desirable behavior by making the avoidance of an unpleasant consequence contingent on its occurrence Punishment decreases the frequency of or eliminates undesirable behavior by making an unpleasant consequence contingent on its occurrence Extinction decreases the frequency of or eliminates undesirable behavior by making the removal of a pleasant consequence contingent on its occurrence
Positive reinforcement connects desirable behavior with pleasant consequences Shaping is the creation of a new behavior by the positive reinforcement of successive approximations to it Law of contingent reinforcement states: for a reward to have maximum reinforcing value, it must be delivered only if the desired behavior is exhibited Law of immediate reinforcement states: the more immediate a reward after the desired behavior is exhibited, the greater the reinforcing value of the reward. Table 13.1 list guidelines for using these laws in the workplace.
Guidelines for positive reinforcement Positive Reinforcement: Clearly identify desired work behaviors, maintain a diverse inventory of rewards, inform everyone what must be done to get rewards, recognize individual differences when allocating rewards, follow the laws of immediate and contingent reinforcement
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DISCUSSION TOPIC Tampa Electric uses punishment in an interesting way. The company gives an oral reminder to employees who come in late, mistreat a colleague, or do a sloppy job. Next comes a written reminder. Then a paid day off is scheduled –– it‘s called a ―decision-making leave day.‖ After this day off employees must agree orally or in writing that they will be on their best behavior for the next year. This is an all-or-nothing chance to reform; employees who don‘t shape up are terminated. Since the process is documented, it‘s perfectly legal.
Punishment connects undesirable behavior with unpleasant consequences Punishment tries to eliminate undesirable behavior by making an unpleasant consequence contingent with its occurrence. To punish an employee, for example, a manager may deny a valued reward – such as verbal praise or merit pay or deliver an unpleasant outcome – such as a verbal reprimand or a pay reduction. All too often, punishment is done too frequently and poorly. Guidelines for punishment Punishment: Tell the person what is being done wrong, tell the person what is being done right, make sure the punishment matches the behavior, administer the punishment in private, follow the laws of immediate and contingent reinforcement. DISCUSSION TOPIC
An excellent way to introduce the material on reinforcement theory is to conduct a ―shaping exercise.‖ This exercise involves the following steps: 1. 2. 3.
4. 5. 6. 7.
Solicit a volunteer from the class to serve as an employee. Ask the volunteer if he or she has ever seen or heard of the ―shaping exercise‖ before; if he/she has, find a new volunteer. Explain to the class that the volunteer will be the employee and the class will serve as a composite manager/supervisor. The manager will try to shape the employee‘s behavior by yelling hot, hot whenever the employee engages in a behavior that approximates the desired response. Conversely, whenever the employee engages in a behavior that does not resemble the desired behavior, the manager will say cold, cold. Ask the volunteer to leave the room for a few minutes. Tell the class that they want the employee to walk backwards. Ask the employee to step back into the room. Run the exercise.
You will find that the class is usually able to shape the desired response with remarkable speed. The class usually enjoys this exercise, and it provides an excellent lead-in to the discussion of the law of effect and shaping, since hot, hot was as a positive outcome which increased the desired response, while cold, cold served as a negative outcome which effectively decreased undesirable responses.
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13.3 Questions for discussion with suggested answers 1) Is operant conditioning a manipulative way to influence human behavior? One of the concerns that many people have regarding operant conditioning is that it is, in fact, a manipulative methodology. Nevertheless, in certain situations, especially shortterm in nature, it is an effective technique. 2) When is punishment justifiable as a reinforcement strategy? Punishment is appropriate when an employee has performed poorly, endangered others, committed a crime, or other serious offenses or incidents. Progressive discipline policies apply punishment for unacceptable behavior in the workplace. 3) Is it possible for a manager, or parent, to only use positive reinforcement? It is not likely that a manager or parent will only be able to use positive reinforcement. Humans will make mistakes and not always operate at perfectly or even at a high level. 13.3 Career Situations: What Would You Do? You can predict with great confidence that when Jason comes to a meeting of your student team, he will spend most of his time cracking jokes, telling stories, and otherwise entertaining other team members. He doesn‘t do any real work. In fact, his behavior makes it hard for the team to accomplish much in its meetings. But Jason‘s also a talented guy. How can you put reinforcement theory to work here and turn Jason the mischief maker into a solid team contributor? Student responses will vary. However, they should be able to bring in the following: Positive reinforcement strengthens or increases the frequency of desirable behavior by making a pleasant consequence contingent on its occurrence Negative reinforcement strengthens or increases the frequency of desirable behavior by making the avoidance of an unpleasant consequence contingent on its occurrence Punishment decreases the frequency of or eliminates undesirable behavior by making an unpleasant consequence contingent on its occurrence Extinction decreases the frequency of or eliminates undesirable behavior by making the removal of a pleasant consequence contingent on its occurrence Positive Reinforcement guidelines: Clearly identify desired work behaviors, maintain a diverse inventory of rewards, inform everyone what must be done to get rewards, recognize individual differences when allocating rewards, follow the laws of immediate and contingent reinforcement Punishment guidelines: Tell the person what is being done wrong, tell the person what is being done right, make sure the punishment matches the behavior, administer the punishment in private, follow the laws of immediate and contingent reinforcement.
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Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: When a Job Becomes a Calling All of a sudden, Gabe Scuderi‘s job became a purpose . . .after 24 years. Pre-COVID-19 he was just another worker helping to make a disinfectant spray. But then Lysol became a ―must-have‖ item, and Gabe realized what he did was essential to everyone‘s health and welfare. ―It was the first time I felt this isn‘t only a job.‖ he says. ―We‘re on the front lines . . . literally helping to save the entire world right now.‖ Ask students to discuss their current or past jobs and explore the job versus calling. How can their job be viewed as making a difference? Does it help seeing it from a different perspective?
Choices: Pandemic and Income Inequality Fuel Calls for ―Fair‖ Pay The Economic Policy Institute (EPI) reports that from 1978 to 2018, the pay of U.S. CEOs grew 940% while that of the average worker grew by 12%. At last report, CEOs earned about 278 times more than the workers. Although CEOs greatly out earned them, the top 0.1% of wage earners did very well, too. Their pay grew 340% over the same period. The EPI concludes: ―Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with.‖ The EPI report identifies options for addressing income inequality and the pay levels of CEOs and high earners: Raise marginal tax rates for top earners, add a luxury tax on earnings above a certain amount, and institute governance changes that give shareholders and other stakeholders more ―say on pay.‖ Ask students: How about it? Where do you stand on these suggestions? Or, isn‘t the whole CEO/average worker pay gap a big deal for you? Is there a motivational issue here, one that might influence your career decisions? What about the income inequality issue? Is it fair, or not, to criticize the pay of high earners from a social justice point of view?
Ethics: Information Goldmine is an Equity Dilemma In this Ethics Check feature, a worker opens a huge can of perceived inequity worms when she finds a list of confidential co-worker salaries in a photocopier. The You Decide questions focus on the ethics of sharing the information, but the application to chapter 13 don't stop there. Consider discussing: How does Equity Theory explain the worker's anger and depression upon finding out she earned less that workers she perceived as not working as hard as she does? If she enjoyed her job before she learned of the pay inequity, why did she lose motivation over the salary discrepancy. Does this disprove Herzberg's two-factor theory?
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COVID-19 changed things, and some seem to be for the better. Remote work, work-from-home, telecommuting, whatever you want to call it, is one of the benefactors. Yes, lots of people were already doing this at least some of the time. But the virus pandemic put many, many people on remote work schedules and do you know what? . . . It turns out to be a ―home run‖ in the new rules of working. Twitter told employees that they can continue working from home ―‗forever‘ if they wish,‖ as long as their roles and situations allow it. College students experienced the same drop-off-the-cliff into online remote learning as many workers did. How about you? Was the experience great, okay, just acceptable? What did you really miss from not being on campus, in class, and face-to-face with instructors and classmates? Were the trade-offs worth it? How about those online collaboration skills you‘ve gained? Shouldn‘t they be added to the resume as a critical part of your skill set? And looking forward a few years, will you be seeking ways to make remote work part of your job and a positive influence on your work–life balance? And if you are or will be an employer, what measures will you put in place to assess the performance gains and losses from redefining jobs to include a substantial portion of remote working opportunities?
Issues: Rewarding mediocrity begins at an early age Your child plays soccer. She gets to have fun, have some exercise, make friends, and experience coaching and teamwork. But does she deserve a trophy at the end of the season? One parent complained to the local newspaper that every player on his son‘s team got a trophy and that ―this practice of rewarding mediocrity begins at an early age.‖ Members of the Millennial generation have been called ―trophy kids‖ that grow up getting so much positive reinforcement that they come to believe that ―satisfactory‖ is really ―excellent‖ and that ―effort‖ is the same as ―accomplishment.‖ A faculty member once gave a B- grade to a student on a small quiz early in course. The student complained: ―I won‘t get an A in this course now… You‘ve ruined my grade point average… I‘ll never get into law school.‖ One week later she dropped the course. A Pac-13 basketball coach criticizes parents for not teaching their kids accountability. ―I know parents who go to a school and say, ‗Why did he get a C? I was there when he was working hard, doing homework.‖ What would B. F. Skinner say? Discuss if we have reached the point in society that young children are given so much positive reinforcement for less than stellar performance that they fail to distinguish between hard work and real performance accomplishment? Are parents, teachers, and team leaders falling into the trap of ―satisfactory underperformance,‖ positively rewarding as excellent anything a bit better than poor-average performance?
Quick Case: Restaurant chain serves up no tipping policy Most restaurant servers rely on tips to make a decent living from below-minimum-wage jobs. So, how about a “no tip” policy combined with a higher hourly wage? You've just gotten startup funding for a new campus diner. As part of your planning, you attended business development seminar where the CEO of a fast-growing restaurant chain described her success with a no-tipping policy. On the customer side she said: “We don’t really feel that folks
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should have to pay something additional for us to appreciate that they’re choosing us over another restaurant.” Customers don’t have to worry whether they should add 10-15-20 percent to their bills. On the server side, she added: “One of our beliefs is that you have to appreciate, and value serving others and not expect something extra for it.” Servers don’t have to worry about how much they’ll earn, they’re already at or above minimum wage. Ask students to discuss if this CEO on to something that should be copied? Is she getting reinforcement, right? What are the motivational pros and cons of a no-tipping policy?
Insight for Personal Development: The Personal Side of Engagement One of the hot topics in management these days is engagement. You might think of it as personal initiative and the willingness to ―go the extra mile‖ at work. Differences in job engagement show up many ways. Is someone enthusiastic or lethargic, diligent or lazy, or willing to do more than • expected or willing to do only what is expected? There is a great deal of variation in employees‘ work engagement and in students‘ school engagement. Consider your experiences as a customer. When you‘re disappointed, perhaps with how a banking transaction or a flight delay is handled, ask: Would a high level of employee engagement generate better customer service in such situations? How about engagement by your teammates in your management course? What do you see and what would you predict for the future of your classmates based on their engagement as students? Get to Know Yourself Better Ask: ―How engaged am I in projects at school and at work? Ask also: ―What could my instructor do to increase my engagement? By the same token, what could I do?‖ Write a summary of your answers. Discuss their implications for both (a) your remaining time as a student and (b) your future career and your future actions in the workplace. Follow Up Get to know yourself better by taking the Team Leader Skills self-assessment and completing other activities in the Exploring Management Skill-Building Portfolio.
Terms to Define Existence needs Expectancy Extinction Growth needs Higher-order needs Hygiene factors Instrumentality Job design Job enrichment Law of contingent reinforcement Law of effect Copyright © 2021 John Wiley & Sons, Inc.
Law of immediate reinforcement Lower-order needs Motivation Need Need for achievement Need for affiliation Need for personal power Need for power Need for social power Negative reinforcement Operant conditioning 14-291
Perceived negative inequity Perceived positive inequity Positive reinforcement Punishment Relatedness needs
Satisfier factors Self-efficacy Shaping Valence
Multiple-Choice Questions Multiple-Choice Questions 1. Maslow‘s progression principle stops working at the level of needs. (a) growth (b) self-actualization (c) achievement (d) self-esteem 2. Lower-order needs in Maslow‘s hierarchy correspond to needs in ERG theory. (a) growth (b) affiliation (c) existence (d) achievement 3. A worker high in need for power in McClelland‘s theory tries to use power for the good of the organization. (a) position (b) expert (c) personal (d) social 4. In the theory of motivation, an individual who feels underrewarded relative to a co-worker might be expected to reduce his or her work efforts in the future. (a) ERG (b) acquired needs (c) two-factor (d) equity 5. Which of the following is a correct match? (a) McClelland–ERG theory (b) Skinner–reinforcement theory (c) Vroom–equity theory (d) Locke–expectancy theory 6. In Herzberg‘s two-factor theory, base pay is considered a/an factor. (a) hygiene (b) satisfier (c) equity (d) higher-order 7. The expectancy theory of motivation says that Motivation = Expectancy Instrumentality . (a) Rewards (b) Valence (c) Equity (d) Growth 8. When a team member shows strong ego needs in Maslow‘s hierarchy, the team leader should find ways to link this person‘s work with . (a) compensation tied to team performance (b) individual praise and recognition (c) social interaction with other team members (d) challenging individual performance goals 9. When someone has a high and positive ―expectancy‖ in expectancy theory of motivation, this Copyright © 2021 John Wiley & Sons, Inc.
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means that the person . (a) believes he can achieve performance -expectations (b) highly values the rewards being offered (c) sees a performance–reward link (d) believes rewards are equitable 10. The law of states that behavior followed by a positive consequence is likely to be repeated, whereas behavior followed by an undesirable consequence is not likely to be repeated. (a) reinforcement (b) contingency (c) goal setting (d) effect 11. When a job allows a person to do a complete unit of work, it is high on which core characteristic? (a) task identity (b) task significance (c) task autonomy (d) feedback 12. is a positive reinforcement strategy that rewards successive approximations to a desirable behavior. (a) Extinction (b) Negative reinforcement (c) Shaping (d) Merit pay 13. The purpose of negative reinforcement as an operant conditioning technique is to . (a) punish bad behavior (b) discourage bad behavior (c) encourage desirable behavior (d) cancel the effects of shaping 14. The premise of reinforcement theory is that: (a) behavior is a function of environment (b) motivation comes from positive expectancy (c) higher-order needs stimulate hard work (d) rewards considered unfair are de-motivators 15. Both Barry and Marissa are highly motivated students. Knowing this, an instructor can expect them to be in the management course. (a) hard working (b) high performing (c) highly satisfied (d) highly dissatisfied
Short-Response Questions: 16. What preferences does a person high in the need for achievement bring to the workplace? People high in need for achievement will prefer work settings and jobs in which they have: (1) challenging but achievable goals, (2) individual responsibility, and (3) performance feedback. 17. How can a team leader use goal-setting theory in working with individual team members?
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One way for a team leader to use goal-setting principles in working with team members is to engage them in a process of joint goal-setting and performance review. In an earlier chapter on planning and controlling, this type of approach was described as ―management by objectives.‖ It is really a good application of goal-setting theory. Participation of both team leader and team member in goal setting offers an opportunity to choose goals to which the member will respond and which also will serve the team and organization as a whole. Furthermore, through goal setting, the team leader and team member can identify performance standards or targets. Progress toward these targets can be positively reinforced by the team leader. This type of approach harnesses the power of goal-setting theory by putting the team leader and team member together in a process where specific, challenging, and measureable goals can be set, and the team member can feel that he or she has helped set them. 18. What are three ways a worker might react to perceived negative inequity over a pay raise? When perceived inequity exists an individual might (1) quit the job, (2) speak with the boss to try and increase rewards to the point where the inequity no longer exists, or (3) decide to reduce effort to the level that seems consistent with the rewards being received. 19. How can shaping be used to encourage desirable work behaviors? Shaping encourages the formation of desirable work behaviors by rewarding successive approximations to those behaviors. In this sense, the behavior doesn’t have to be perfect to be rewarded—it just has to be moving in the right direction. Over time and with a change of reinforcement scheduling from continuous to intermittent, such rewards can end up drawing forth the desired behavior.
Integration and Application Questions: I overheard a conversation between two Executive MBA students. One was telling the other: ―My firm just contracted with Musak to have mood music piped into the offices at various times of the workday.‖ The other replied: ―That‘s a waste of money; there should be better things to do if the firm is really interested in increasing motivation and performance.‖ Question: Is the second student right or wrong, and why? The use of Muzak would be considered improvement in a hygiene factor under Herzberg’s two-factor theory. Thus, it would not be a source of greater work motivation and performance. Herzberg suggests that job content factors are the satisfiers or motivators. Based in the job itself, they represent such things as responsibility, sense of achievement, and feelings of growth. Job context factors are considered sources of dissatisfaction. They are found in the job environment and include such things as base pay, technical quality of supervision, and working conditions. Whereas improvements in job context such as introduction of Muzak make people less dissatisfied, improvements in job content are considered necessary to motivate them to high-performance levels.
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Self-Assessment 13: Two-Factor Profile Instructions On each of the following dimensions, distribute a total of 10 points between the two options. For example: Summer weather (7) 1. Very responsible job ( ) 2. Recognition for work accomplishments workers 3. Advancement opportunities at work( ) 4. Opportunities to grow and learn on the job 5. A job that I can do well () employer 6. A prestigious or high-status job ( )
(3) ( ) ( )
Winter weather Job security ( ) Good relations with co-
( ) ( ) ( )
A boss who knows his/her job well ( ) Good working conditions Supportive rules, policies of
( )
A high base wage or salary
Scoring Summarize your total score for all items in the left-hand column and write it here. MF = Summarize your total score for all items in the right-hand column and write it here. HF = . Interpretation The MF score indicates the relative importance that you place on the motivating, or satisfier, factors in Herzberg‘s two-factor theory. This shows how important job content is to you. The HF score indicates the relative importance that you place on hygiene, or dissatisfier, factors in Herzberg‘s two-factor theory. This shows how important job context is to you.
Class Exercise 13: Why We Work Preparation Read this ―ancient story.‖ In days of old, a wandering youth happened upon a group of men working in a quarry. Stopping by the first man, he said: ―What are you doing?‖ The worker grimaced and groaned as he replied: ―I am trying to shape this stone, and it is backbreaking work.‖ Moving to the next man, the youth repeated the question. This man showed little emotion as he answered: ―I am shaping a stone for a building.‖ Moving to the third man, our traveler heard him singing as he worked. ―What are you doing?‖ asked the youth. ―I am helping to build a cathedral,‖ the man proudly replied.
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Instructions In groups assigned by your instructor, discuss this short story. (1) Ask and answer the question: ―What are the motivation and job design lessons of this ancient story?‖ (2) Have members of the group role-play each of the stonecutters as they are answering this additional question: ―Why are you working?‖ Have someone in the group be prepared to report and share the group‘s responses with the class as a whole.
Team Project 13: CEO Pay Question What is happening in the area of executive compensation and what do you think about it? Instructions 1. Check the latest reports on CEO pay. Get the facts and prepare a brief report as if you were writing a short, informative article for Fortune magazine. The title of your article should be ―Status Report: Where We Stand Today on CEO Pay.‖ 2. Address the equity issue: Are CEOs paid too much, especially relative to the pay of average workers? 3. Address the pay-for-performance issue: Do corporate CEOs get paid for performance or for something else? What do the researchers say? What do the business periodicals say? Find some examples to explain and defend your answers to these questions. 4. Address the social responsibility issue: Should CEOs accept pay that is many times the amounts that workers receive? 5. Take a position: Should a limit be set on CEO pay? If not, why not? If yes, what type of limit should be set? Who, if anyone, should set these limits—the government, company boards of directors, or someone else?
Practice Critical Thinking: Salesforce – Instant Praise, Instant Criticism Instead of waiting a year for a performance review, how would you like to know where you stand and always get immediate feedback about how you‘re doing? Some human resource professionals call the annual performance review a ―little more than a dysfunctional pretense.‖ Enter Salesforce Rypple, a software solution which allows online questions to be posed to peers and managers, including: ―What did you think of my presentation?‖ or ―What can be done better?‖ Would more instantaneous feedback provide instant gratification? Or not? Case discussion questions and suggested answers: 1. DISCUSSION Is the annual performance review— past its ―sell by‖ date, or just in need of some revisions? If real-time reviews are available using software such as Salesforce‘s Work.com, is there a need for an annual performance review? An academic review showed that two-thirds of 600 employees interviewed say the appraisal has zero or even negative effects on performance after the feedback is administered. In essence, critics argue that the performance review does not provide motivation for employees – very few Copyright © 2021 John Wiley & Sons, Inc.
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are motivated by criticism -- even when it is labeled ―constructive.‖ Most employees find the review anxiety-provoking, stressful, demeaning, and one-sided. Many find themselves scared and surprised during the process. Add to that, a performance review that neatly fits into a box on a form. Most companies conduct this type of review. The annual review can motivate some employees to evaluate their tenure with the company and whether, after many (or not so many) years, things still ―fit.‖ Of course, evaluating compensation, job progression, and career advancement is always part of the employee’s ―internal‖ annual review. For some, the review is a time of reflection and its ―motivational consequences‖ may propel a new job search. For those ready for new challenges that the company is unable to provide, it may be the time to begin a new job search. Some employees see the rewards of a flexible work schedule and adequate work-life balance as enough of a reward. The review can bring up a number of different emotions, so it is as much a review by the employee of the company as much as it is the company reviewing an employee. Advocates of the annual performance review argue that some performance reviews, when done correctly, can motivate. After all, what are goals without the control process? Focusing on future plans and goals can inspire and motivate employees. Having specific targets, coaching and providing feedback and keeping employees engaged can have positive motivational consequences. Motivation happens when performance is reviewed on an ongoing, daily basis – this may be what Culbert refers to as ―doing something stupid more often.‖ Some purport to ongoing feedback as a means of increasing motivation and effectiveness. 2. DISCUSSION What are some of the potential benefits of having ―real-time‖ evaluation of your performance? What kinds of things can organizations do differently when employees have this kind of immediate feedback available to them? What about the flip side? Is there a downside? What are some of the potential drawbacks of giving employees immediate feedback? Can feedback be ―too‖ immediate – that is, close to the situation? Why? In what ways? Real-time evaluation could help employees improve what they are doing immediately or help them keep doing what they are doing well. Employers could, likewise, keep better track of poorly performing employees so that they can fire them with approval from Human Resources or reward them appropriately during an annual performance review. The main downside is that it could be a way to punish employees rather than reward them. There are also long-term effects to some behaviors. If all feedback is immediate, it does not capture the long-term impacts of how an employee behaves. If an employee is typically getting positive immediate feedback but there are negative long-term effects, it could be hard to ―punish‖ the employee for those behaviors since negative feedback would be a surprise to that employee. 3. PROBLEM SOLVING
1. You‘ve just taken a new job in human resource management and the organization‘s president gave you this high-priority task: Give us a plan that can make performance reviews motivating to the recipients and their bosses alike. ―I‘m tired,‖ she says, ―of hearing everyone complain that annual reviews are demotivating. We need to review performance. Surely there are ways that we can make ours more valuable.‖ As you sit down to think about this assignment, make Copyright © 2021 John Wiley & Sons, Inc.
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a few notes on what you believe the major issues are and the types of things you might recommend. Use insights from motivation theories to justify what‘s on your list. Is it possible to take the subjectivity out of performance reviews so that they become more acceptable and motivational for recipients? According to Culbertson, the notion of objectivity is absurd. Research shows that most employees who switch bosses end up with a dramatically different evaluation from a new boss. To remove the subjective annual performance review, Culbertson recommends what he calls a straight-talk ―performance preview,‖ which is an ongoing discussion which takes place every time a boss and subordinate don’t agree that they are working well together. Instead of criticizing a subordinate, it is the responsibility of the boss to figure out how to work with an ―imperfect‖ employee. According to Culbertson, ―Previews are problem-solving, not problemcreating, discussions about how ―we as teammates‖ are going to work together even more effectively and efficiently than we've done in the past. They feature descriptive conversations about how each person is inclined to operate, using past events for illustrative purposes, and how we worked well or did not work well individually and together.‖ This takes away the subjectivity which can oftentimes create cynicism, and what Culbertson called ―cover-your-butt‖ activities, which reduce productivity because of the time and effort they take. Another way to get rid of the subjectivity of performance reviews is to conduct a 360 degree performance review (discussed in chapter 10). With this sort of review, feedback is provided by a variety of individuals with whom the employee interacts, rather than just one, usually a boss. A manager could use a number of the motivational theories discussed in the chapter to build a better approach to performance reviews. They include:
Maslow’s Hierarchy of Needs: Understanding an employee’s lower order needs and higher order needs Alderfer’s ERG Theory: Understand the existence, relatedness and growth needs of each employee. Herzberg’s Two-Factor Theory: Understanding the importance of hygiene factors such as Security, status, relationship with subordinates, personal life, salary, work conditions, relationship with supervisor and company policy and administration and motivational factors such as Growth prospectus job advancement, responsibility, challenges, recognition and achievements.
4.
FURTHER RESEARCH How about the real-time and Web-based approach to performance reviews offered by Salesforce? Do some research and identify the latest developments with it and others like it. Is this online approach to performance assessment the right pathway to a more motivated workforce? What does the evidence say about benefits? What downsides are users reporting? Overall, what‘s the current verdict on Salesforce Rypple and similar products—good for bosses, good for employers, good for employees? 2. Latest developments: Cloud-based human resource management systems have grown in popularity. Competitors to Salesforce include SuccessFactors (purchased by SAP), Workday, Copyright © 2021 John Wiley & Sons, Inc.
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Taleo, Ultimate Software, and Cornerstone OnDemand. Is this online approach to performance assessment the right pathway to a more motivated workforce? Hard to say. Some of its advantages include: time savings (which reduces the cost to the organization), increased workflow efficiency (necessary parties can see online), goals (company, department, individual) can be accurately aligned and set, progress meeting goals can be tracked more closely and on an ongoing basis. Ad-hoc reporting capabilities, a central repository and better company-wide tracking capabilities. Disadvantages include: removal of personal interaction and a face-to-face meeting – it may be difficult to come up with a career plan online. Costly mistakes with online only review (room to misinterpret and inconsistent messages). Does automating always streamline? What downsides might it have for employees who are in the digital immigrant rather than digital native category? The same downsides digital immigrants face with all other tasks which require the use of technology. It might also bring to light the true ―digital immigrants.‖ Verdict at this point in time: Answers will vary. Its success may very well depend upon the culture of the workplace.
Suggested Team Exercise for Chapter 13 Break the class into teams and have the teams to consider and develop responses to each of the following questions: 1. Can ‗fear‘ motivate? Have you ever played a sport or been in a class where fear improved your performance? 2. You are a manager of a local fast food operation (such as Domino‘s Pizza). You recognize that most of your employees are working to earn money for college or working only until they can find another job. (Turnover is very high in the fast food industry). Your boss, a regional manager, has given you authority to design programs to reduce turnover and help lengthen employee stays. What ideas would you submit and why? 3. You have just been hired as manager of a department in a new company. After watching employee performance after your first six months, you are surprised that one of your best supervisors, a female, is making $40,000 for the same position that a male counterpart (who is also performing his job well) with similar experience and skills, is making $50,000. Neither presumably knows what the other makes since pay is confidential (but you aren‘t certain that employees don‘t share such information). How would you handle this issue?
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CHAPTER 14 Teams and Teamwork Two Heads Really Can Be Better Than One Chapter 14 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Chapter 14 covers the topic of teams and their importance within organizations. They various types of teams are explored. The benefits as well as the potential pitfalls of teams are reviewed. Finally, ways to improve team effectiveness are examined, along with the variables that impact team performance. The initial portion of the chapter describes the importance of understanding teams and teamwork, including the benefits of teams to an organization and its members, some of the common performance problems found with teams, how organizations are networks of teams and informal groups, increasingly common virtual teams in organizations, and self-managing teams. The focus of the chapter subsequently shifts to the topic of building blocks of successful teamwork. Topics include having the right members on a team to accomplish tasks, the importance of the right setting and size, the processes needed for effectiveness, the impact of norms or standards of conduct and cohesiveness on teams, the importance of task and maintenance roles, and how communication networks certainly make or break team performance. The five stages of team development are reviewed along with the concept of distributed leadership. The chapter concludes by examining the collaborative approach to improving group process and performance, various team strategies for decision making, the potential pitfalls of groupthink, how conflict occurs, and the tendencies toward cooperativeness and assertiveness which create various conflict management styles.
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Learning Objective 14.1 Discuss the importance of teams and teamwork. Learning Objective 14.2 Identify the building blocks of successful teamwork. Learning Objective 14.3 Describe how managers create and lead high-performance teams.
Chapter 14 Lecture Outline
Discuss the Importance of Teams and Teamwork. Learning Objective 14.1
Teams offer synergy and other benefits Teams can suffer from performance problems. Organizations are networks of formal teams and informal groups. Organizations use committees, task forces, and cross-functional teams. Virtual teams are increasingly common in organizations. Self-managing teams are a form of job enrichment for groups.
Identify the Building Blocks of Successful Teamwork. Learning Objective 14.2
Teams need the right members to be effective. Teams need the right setting and size to be effective. Teams need the right processes to be effective. Teams move through different stages of development. Team performance is affected by norms. Team performance is affected by cohesiveness. Team performance is affected by task and maintenance activities. Team performance is affected by communication networks.
How Managers Create and Lead High-Performance Teams. Learning Objective 14.3 Discuss
Team building helps members work better work. Teams benefit from good use of decision methods. Teams suffer when groupthink leads to bad decisions.
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Teams benefit from good conflict management.
Chapter 14 Supporting Materials Figures Figure 14.1 Different Roles That Managers Play in Teams. Figure 14.2 What Are the Management Implications of Self-Managing Teams? Figure 14.3 What Are the Foundations of Team Effectiveness? Figure 14.4 The Critical Zone for Diversity in Team Development. Figure 14.5 What Are the Criteria for Assessing the Process Maturity of a Team? Figure 14.6 How Do Norms and Cohesiveness Influence Team -Performance? Figure 14.7 What are the distributed leadership roles in teams? Figure 14.8 What Communication Networks Are Used in Teams? Figure 14.9 What Are the Five Common Styles of Conflict Management? What’s Inside Career Readiness: Online Meetings Can Be Challenging Analytics: Unproductive Meetings are Major Time Wasters Choices: Can Disharmony Build a Better Team? Ethics: Social Loafing May Be Closer Than You Think Insight: Don’t Short Your Team Contributions Issues: Diversity and Inclusion Need a Voice in the C-Suite Quick Case: Removing the Ear Buds to show team spirit Applications TestPrep 14 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 14: Team Leader Skills o Class Exercise 14: Understanding Team Dynamics o Team Project 14: Superstars on the Team Case Snapshot: Auto Racing- When the Driver Takes a Back Seat
Chapter Outline Learning Objective 14.1: Why Is It Important to Understand Teams and Teamwork?
Teams offer synergy and other benefits A team is a collection of people with complementary skills who work together to accomplish shared goals while holding each other mutually accountable for performance results. Teamwork is people working together to accomplish a shared goal. Synergy is the creation of a whole that exceeds the sum of its parts. DISCUSSION TOPIC
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A good way to introduce teamwork pros and cons is to ask students how they feel about participating in teams. You will usually receive both highly positive and highly negative opinions. Students who have been members of successful athletic, social, extracurricular, classbased, and/or work teams will likely have quite positive attitudes. Those with less favorable experiences, such as students who have encountered nonproductive teams in their classes, will likely be more skeptical of the utility of teams. For these students, the quip ―A camel is a horse designed by a committee!‖ may ring true. Point out that despite their potential drawbacks, teams are an essential organizational resource that all organizational members but especially managers and leaders must understand in order to tap the full potential of teams.
Teams can suffer from performance problems Social loafing is the presence of ―free-riders‖ who slack off and allow other team members to do most of the work To prevent social loafing: rewarding individuals for their contributions Make task assignments more interesting Keep group size small Other problems can be personality conflicts, differences in work styles, ambiguous agendas, or members who can‘t or won‘t do group work.
Organizations are networks of formal teams and informal groups A formal team is officially designated for a specific organizational purpose Department Work units Teams Divisions Figure 14.1 shows that managers play more than one role in groups and teams. An informal group, an informal structure of an organization, comes from natural or spontaneous relationships among people. Interest groups Friendship groups Support groups
DISCUSSION TOPIC To get students involved in discussing various types of organizational teams, ask them to identify the different types of teams to which they have belonged while working for an organization or during their educational career or both. These examples can be related to the different types of teams that are discussed below. This exercise helps students relate to the material and recognize its relevance to their own experiences.
Organizations use committees, task forces, and cross-functional teams A committee brings together people outside of their daily job assignments to work in a small team for a specific purpose; the task agenda is specific and ongoing Project teams or task forces bring together people on a temporary basis from various parts of the organization to work on common problems
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Cross-functional team has members from different functional units Employee-involvement team has members who meet on a regular basis to apply their expertise to continuous improvement Quality circle is a group of workers that meets regularly to discuss and plan specific ways to improve work quality
Virtual teams are increasingly common in organizations The virtual team, also called Distributed team, is a group of people who work together and solve problems through computer-mediated interactions, rather than face to face interactions
Tips to Remember: Steps to Successful Virtual Teams: Choose the best technology platform and test it out before the meeting starts. Get the right team members together and keep the team size manageable. Make sure everyone has an agenda beforehand, is clear about expected outcomes, and knows what they should do to be well prepared. Set aside time for introductions and casual conversations before the formal meeting begins. Don‘t waste time, keep things on task and moving, and respect everyone‘s schedules and time zones. Make sure everyone feels safe and respected, keep all members engaged, and pay special attention to introverts who may be shy and less outspoken. Conclude by summarizing what has been achieved and decided. Remind everyone about future deliverables, who needs to do what, and when the next meeting will be held. Communicate your appreciation for the team‘s time and efforts. Consider setting up a ―virtual watercooler‖ or online meeting space where team members can interact outside of the meeting structure.
Self-managing teams are a form of job enrichment for groups Self-managing teams - have authority to make decisions about how they share and complete their work. Figure 14.2 illustrates the concept of the management implications of self-managing teams: Members of self-managing teams make decisions together on team membership, task plans and job assignments, training and performance evaluations, and quality control. Because they essentially manage themselves in these ways, they no longer need a traditional supervisor or department head. Instead, the team leader performs this role with the support of team members. The team leader and team as a whole report to the next higher level of management and are held accountable for performance results.
14.1 Questions for discussion with suggested answers 1) Do committees and task forces work better when they are given short deadlines? Teams can perform well under shorter deadlines, as long as the deadlines are realistic. Copyright © 2021 John Wiley & Sons, Inc.
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Most teams seem to plan and organize better under some targeted deadline that produces modest pressure to get things done and goals accomplished. Exceptions would be for complex projects such as systems integration, construction or surgery where rushing may contribute to mental judgment errors; or creative teams that need for freedom. 2) Are there some things that should be done only by face-to-face teams, not virtual ones? Interviews and important customer sales or service visits are examples of situations that are more effective when done face-to-face. This allows for improved personal interaction, as well as reading body language. Face to face allows for more "channel richness". 3) Why do people in teams often tolerate social loafers? Most people do not want to confront others-it is not a comfortable feeling for many people. This is particularly true if the parties are likely to have ongoing contact at work or other daily interactions. 14.1 Career Situation: What would you do? It‘s time for the first meeting of the task force that you have been assigned to lead. This is a big opportunity for you, since it‘s the first time your boss has given you this level of responsibility. There are seven members of the team, all of whom are your peers and coworkers. The task is to develop a proposal for increased use of flexible work schedules and telecommuting in the organization. What will your agenda be for the first meeting, and what opening statement will you make? Student answers will vary.
Learning Objective 14.2: Identify the Building Blocks of Successful Teamwork. An effective team should be accomplishing three output goals – task performance, member satisfaction, and viability for future action Inputs that affect team performance Team size - Number of members; even-odd number Nature of the task - clarity and complexity Organizational setting - the key issue is support in information, resources, technology, rewards, and structures Membership composition - the mix of abilities, values, personalities and diversity See Figure 14.3 for a depiction of the foundations of team effectiveness: An effective team achieves high levels of task performance and member satisfaction and remains viable for the future. The foundations of effectiveness begin with inputs—things such as membership composition, nature of the task, resources and support in the organizational setting, and team size. The foundations of effectiveness further rest with team process—how well the members utilize their talents and other inputs to create the desired outputs. Key process factors on any team include the stages of development, norms and cohesion, task and maintenance activities,
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communication, and decision making.
Teams need the right members to be effective. Ability counts in team membership. In an ideal world, team members, talents, and interests fit well with the job. Team diversity counts in team membership. It represents the mix of skills, experiences, backgrounds, and personalities among team members. It is easier to manage relationships among members of homogeneous teams – those whose members have similar characteristics. It is more difficult to manage relationships among members of heteterogeneous teams – those whose members are quite dissimilar from one another.
Teams need the right setting and size to be effective Organizational setting influences team outputs. Team size also makes a difference. The number of potential interactions increases exponentially as teams increase in size. Ideal team size: The general answer is five to seven members for creative tasks.
Teams need the right processes to be effective Team process is the way team members work together to accomplish tasks. Team Effectiveness = Quality of Inputs + (Process Gains – Process Losses) The process of any team is called group dynamics, which include how members get to know one another, develop expectations and loyalty, communicate, handle conflicts, and make decisions. Team IQ – ―the ability for teams to perform well,‖ according to scholar and consultant, Daniel Goleman. ―Champion‖ teams, according to Goleman, excel because their members know how to use their talents in cooperation with others and are able to handle occasional disharmony and interpersonal conflicts.
Teams move through different stages of development Forming stage-initial task orientation and interpersonal testing Storming stage-period of high emotionality and conflict Norming stage-members begin to coordinate their efforts as a working unit and tend to operate with shared rules of conduct Performing stage-team is more focused, organized, and well-functioning Adjourning stage-members prepare to achieve closure and disband, ideally with a sense that they have accomplished important goals Figure 14.4 illustrates the critical zone for diversity in team development. DISCUSSION TOPIC
Ask students to describe their experiences with different teams within the context of stages of team development. What happened for them at each stage? How do the students‘ experiences compare to the ideas presented above? Did anyone have an experience wherein the team seemed
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to get stuck at one particular stage say, the storming stage? What happened, and what insights does it provide? Figure 14.5 illustrates criteria for assessing the maturity of a team: What Are the Criteria for Assessing the Process Maturity of a Team? Teams vary greatly in the degree of maturity they achieve and demonstrate in day-today behavior. These criteria are helpful for assessing the development and maturity of a team as it moves through various phases—from forming to storming to norming to performing. We would expect that teams would start to show strong positives on these criteria as members gain experience with one another in the norming stage of team development. We would expect teams to have consistently strong positive scores in the performing stage.
Teams performance is affected by norms Norms are behaviors expected of team members; rules or standards that guide behaviors Performance Norm is the level of work effort and performance that members are expected to contribute. Team virtuousness indicates the extent to which members adopt norms that encourage shared commitments to moral behavior.
DISCUSSION TOPIC Ask students to provide examples of both positive and negative performance norms that they have encountered on the different teams where they were members. Discuss how these norms influenced the members‘ behavior.
Team Performance is Affected by Cohesiveness Cohesiveness is the degree to which members are attracted to and motivated to remain part of a team Figure 14.6 depicts how norms and cohesiveness impact team performance Group norms are expected behaviors for team members; cohesiveness is the strength of attraction members feel toward the team. When cohesiveness is high, conformity to norms is high. Positive performance norms in a highly cohesive group create a desirable situation, with high-performance outcomes likely. However, negative performance norms in a highly cohesive group can be troublesome; conformity by members to the negative norms creates low-performance outcomes.
Team performance is influenced by task and maintenance activities Task activities contribute directly to the team‘s purpose. Maintenance activities support the emotional side of teams as an ongoing social system. Distributed leadership makes every member continually responsible for recognizing and taking actions when task or maintenance activities are needed.
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Disruptive behaviors such as aggressiveness, excessive joking and non-participation cause problems and limit effectiveness. Figure 14.7 lists the distributed leadership role within teams Teams functions with a combination of task and maintenance activities that both appointed leaders and all members are responsible for providing. Task activities directly move the task forward while maintenance activities support the emotional health and social cohesion of the team as a whole. An additional and important distributed leadership responsibility in teams in the avoidance of personal displays of disruptive behaviors and also the discouragement of disruptive behaviors by others. DISCUSSION TOPIC Ask students to describe examples of task activities, maintenance activities, and disruptive or dysfunctional activities that they have encountered in their group experiences.
Team performance is influenced by communication networks Decentralized communication networks - all members communicate directly with each other. Centralized communication networks - when members divide up the work and then simply coordinate the final results. Restricted communication networks exist when subgroups fail to adequately communicate with one another, become antagonistic and restrict communication. See Figure 14.8 for a depiction of the communication networks: Members of teams communicate and interact together in different ways. A decentralized structure is where all members communicate with one another. It works best when tasks are complex and the need for information sharing is high. When tasks are simple and easily broken down into small parts, a centralized structure works well. It coordinates members‘ communications through one central point. A restricted communication network sometimes forms when subgroups break off to do separate work or due to member alienation. Any lack of communication between the subgroups can create performance problems.
14.2 Questions for d iscussion with suggested answers 1. What happens if a team can‘t get past the storming stage? Teams that cannot get past the storming stage usually complete the work quickly (and consequently, poorly), just to get ―it over with.‖ Some teams may dissolve altogether. 2. What can a manager do to build positive performance norms on a work team? Copyright © 2021 John Wiley & Sons, Inc.
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• Act as a positive role model. • Reinforce the desired behaviors with rewards. • Control results by performance reviews and regular feedback. • Train and orient new members to adopt desired behaviors. • Recruit and select new members who exhibit the desired behaviors. • Hold regular meetings to discuss progress and ways of improving. • Use team decision-making methods to reach agreement. 3. Why would a manager ever want to reduce the cohesion of a work group? Sometimes, employees can be so cohesive they ―protect‖ each other and resist change that may seem to adversely affect another member of the group. They may also, intentionally or unintentionally, shield the manager from ―bad news‖ and by so doing, lose opportunities for improvement. Groupthink is more likely to occur in cohesive teams. 14.2 Career Situations: What Would You Do? For quite some time now, you‘ve been watching the performance of your work team slowly deteriorate. Although everyone seems to like one another, the ―numbers‖ in terms of measured daily accomplishments have now fallen to an unacceptable level. It‘s time to act. What will you look at to identify likely problem issues? What steps might you take to get this team back on track and improve its overall effectiveness? Student answers will vary. Students should think about what makes an effective team: high task performance, team member satisfaction, and viability for the future, as well as the foundations of team effectiveness such as member composition, the nature of tasks, team size, organizational settings, and team processes.
Learning Objective 14.3: Discuss How Managers Create and Lead HighPerformance Teams.
Team building can improve teamwork and performance Team building is a set of planned activities to analyze how well a team functions and make constructive changes to improve teamwork and performance
Teams benefit when they use the right decision methods Decision making is a process of selecting a course of action from alternatives Consensus means that after thorough discussion, most team members favor one decision alternative and the other members agree to support it Best teams don‘t limit themselves to just one decision-making method. In decision by lack of response, one idea after another is suggested without any discussion taking place. In decision by minority rule, the leader, manager, committee head, or some other authority figures makes a decision for the team. Decision by majority rule is one of the most common way teams make decisions when early signs of disagreement arise. It is consistent with democratic methods.
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Decision by consensus – teams are often encouraged to try for decision by consensus. This is where the full discussion leads to most members favoring one alternative, with other members agreeing to support it. Decision by unanimity means all team members agree on the course of action to take.
Teams suffers when groupthink leads to bad decisions Groupthink is the tendency for members of highly cohesive groups to lose their critical thinking ability
Table 14.1 lists symptoms of groupthink: Illusions of invulnerability—Members assume that the team is too good for criticism or is beyond attack. Rationalizing unpleasant and disconfirming data—Members refuse to accept contradictory data or to thoroughly consider alternatives. Belief in inherent group morality—Members act as though the group is inherently right and above reproach. Stereotyping competitors as weak, evil, and stupid—Members refuse to look realistically at other groups. Applying direct pressure to deviants to conform to group wishes—Members refuse to tolerate anyone who suggests the team may be wrong. Self-censorship by members—Members refuse to communicate personal concerns to the whole team. Illusions of unanimity—Members accept consensus prematurely, without testing its completeness. Mind guarding—Members protect the team from hearing disturbing ideas or outside viewpoints. DISCUSSION TOPIC Ask the students whether they have ever been in a group that succumbed to groupthink. If so, have them describe what happened and relate it to the symptoms of groupthink.
Teams benefit when conflicts are well managed Conflicts can occur over substantive or emotional issues A conflict is a disagreement among people. Substantive conflict - involves disagreements over such things as goals and tasks, the allocation of resources, rewards, policies and procedures, and job assignments Emotional conflict - involves disagreements from feelings of anger, distrust, dislike, fear, and resentment, as well as relationship problems. Avoidance is when everyone withdraws and pretends that conflict doesn‘t really exist, hoping that it will go away. Accommodation plays down differences and highlights similarities and areas of agreement. Both accommodation and avoidance create lose-lose conflict, where no one achieves his or her true desires.
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Competition is when one party wins through superior skill or outright domination. Compromise occurs through trade-offs. Both compromise and competition are forms of win-lose conflict, where each party strives to gain something at the other party‘s expense. Figure 14.9 illustrates the five common styles of conflict management and how they relate to cooperation and assertiveness. In conflict situations, a combination of cooperative and aggressive behaviors results in five possible conflict management styles. Competition occurs when aggression dominates our behavior, and accommodation occurs when cooperation dominates. Avoidance occurs with both low aggression and cooperation, whereas compromise occurs with moderate amounts of both. When both cooperation and aggression are high, true collaboration and problem solving are more likely to occur. Collaboration tries to find and address the problem and reconcile the real differences underlying a conflict. Collaboration is the most effective conflict resolution style and is a form of winwin conflict that tries to resolve things to the mutual benefit of all conflicting parties. Conflict Resolution removes the reasons for the conflict. 14.3 Questions for discussion with suggested answers 1) How does consensus differ from unanimity in group decision making? Unanimity involves everyone agreeing to a course of action. Consensus means that everyone has participated in the discussion, but not all agree on a first choice of action. The minority agrees to support the choice of the majority. 2) Is groupthink found only in highly cohesive teams, or could it exist in pre--cohesive ones? Groupthink exists in highly cohesive teams out of a desire for unanimity. Pre-cohesive teams may arrive at a unanimous solution because some group members are not committed enough to honestly contribute (social loafing). 3) When is it better to avoid conflict rather than directly engage in it? When a problem is minor with few or no consequences, it is likely ―not worth it.‖ This is particularly true when it involves a person who may be experiencing personal issues such as divorce, a death in the family, or serious illness. Another reason to avoid a conflict may be if more information will be available at a future point that may resolve the issue. 14.3 Career Situations: What Would You Do? The members of the executive compensation committee that you are chairing show a high level of cohesiveness. It‘s obvious that they enjoy being part of the committee and are proud to be on the organization‘s board of directors. But the committee is about to approve extraordinarily high bonuses for the CEO and five other senior executives. This is occurring at a time when executive Copyright © 2021 John Wiley & Sons, Inc.
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pay is getting lots of criticism from the press, unions, and the public at large. What can you do to make sure groupthink doesn‘t cause this committee to make a bad decision? Student answers will vary. Students should reflect on the symptoms of groupthink so that they will be able to perceive any negative changes within the committee. You can also give the committee some space, assign a group evaluator, or even bring in outsiders to participate and offer advice.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Online Meetings Can Be Challenging Did you ever wonder how to handle conflict, move decisions along, and keep everyone motivated in team meetings? Well, those things are difficult enough face-to-face. They‘re another set of challenges altogether when you take the meeting online. All the fundamentals of teams and teamwork are still there, but as one observer says: ―Online meetings may be a normal part of a team‘s everyday workflow, but how to make them maximally efficient can be a bit of a head-scratcher.‖ Ask students are you prepared now to participate and lead virtual teams for career success? Are you strong enough in the nature of teamwork to put it all online?.
Ethics: Social Loafing May Be Closer Than You Think Three scenarios with common themes of individual behavior in teams are presented that will provide fertile ground for student comments and discussion about their personal experience in teams. The ―You Decide‖ questions probe students' views of social loafing in a team environment: Whether you call it social loafing, free-riding, or just plain old slacking off, the issue is the same. What right do some people have to sit back in team situations and let other people do all or most of the work? Is this ethical? Does everyone in a group have an ethical obligation to do his or her fair share of the work? And when it comes to John, does the fact that he is going to be honest with the other committee members make any difference? Isn‘t he still going to be a loafer that gets credit with the boss for serving on the committee? Would it be more ethical for him to decline becoming a part of this committee?
Analytics: Unproductive Meetings are Major Time Wasters Too many of the meetings end up wasting valuable time that could be better spent doing other Copyright © 2021 John Wiley & Sons, Inc.
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things. Here are some data from a survey of senior managers:
65% complain that meetings keep them from more important work 72% say meetings are unproductive and inefficient 64% say meetings detract from ―deep thinking‖ about tasks and problems that are genuinely challenging. 62% say meetings actually make it harder rather than easier to build strong teams
If meetings are a necessary evil, so to speak, what can be done about them? Advice is widely available and ranges from agenda setting tips to time limits to even standing up rather than sitting down. But in the final analysis, the data speak for themselves. Too many of us are asked to spend too much time in meetings, many of which are poorly run and get in the way of real productivity. If the benefits of meetings are to be realized, we all have to step up and do our parts. Do these data match your experiences with team meetings? Given the common complaints about meetings, what can a team leader do to improve them? Think about the recent meetings you have attended. In what ways were the best meetings different from the worst ones? Did your behavior play a significant role in both these cases?
Issues: Diversity and Inclusion Need a Voice in the C-Suite It‘s a rare company that gives diversity and inclusion a seat at the C-suite‘s table. Only 1% of S&P 500 companies report having a corporate level diversity and inclusion officer. Some 43% do have lower-level positions assigned to ―D&I‖ but 56% don‘t even have that. Do you see diversity and inclusion as primarily a workforce and staffing/recruiting/development issue in human resource management, or do you see it in the broader way envisioned by Carter? Does it make sense that organizations do better across the board when they integrate D&I at a strategic level in all aspects of executive decision making? Does Carter‘s point about having a D&I voice at the table make sense? If it‘s not at the table, but buried at lower levels in the management hierarchy, is its full potential achievable?
Quick Case: Removing the Ear Buds to Show Team Spirit Sean has just started a new job on your team where everyone works in an open plan office. He‘s just out of college, acts happy and is really getting into his new responsibilities. A music lover, he wears ear buds during the day while working. But yesterday an older colleague came over and offered him this unsolicited advice. ―You should take off the headphones in the office,‖ she said. ―It‘s not the way we do things here. People are starting to say that you aren‘t a team player.‖ Now Sean has come to you as his team leader. He wants to know if he‘s in the wrong or in the right. ―And by the way,‖ he says: ―I like music and it helps me to work better.‖ There‘s no company policy against headphones in the office, but the ―advice‖ he‘s getting suggests he‘s taken individuality a step too far in this team setting. Copyright © 2021 John Wiley & Sons, Inc.
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Headphones are as common in some offices as they are on the streets. But, when someone puts the headphones on the message being broadcast – intended or not, may be: Don‘t disturb! What do you say to Sean, and why? What do you say to the teammates and team as a whole, and why? Is this an opportunity to build new norms with the team or is it a case of ―headphones on, team spirit off‖?
Choices: Can Disharmony Build a Better Team? ―There is no ‗I‘ in team!‖ they say. But basketball superstar Michael Jordan once said: ―There is an ‗I‘ in win.‖ What‘s his point? Jordan is suggesting that someone as expert as him at a task shouldn‘t always be subordinated to the team. Rather, it‘s the team‘s job to support his talents so they shine their brightest. Given what we know about teams and your students‘ personal experiences with them, should we be finding ways to accommodate the superstar on a team… or avoid them?
Insight for Personal Development: Don’t Short Your Team Contributions Positive team contributions are things that members do to help one another to succeed at their tasks and to enjoy the experience of being on the team. Scene—NBA basketball court: Scholars find that basketball teams win more games the longer the players have been together. Why? Researchers claim it‘s a ―teamwork effect.‖ Sports teams whose members have played together the longest tend to win more games because the players get to know each other‘s moves and playing tendencies. Players develop a sense, over time, of what their teammates are thinking and where they will be on the court before they get there. Knowledge of other team members increases the benefits of team contributions.
Explore Yourself: More on Team Contributions We need to be able to contribute as team members in many different ways so that our teams can reach their performance potential. But experience proves time and time again that teams often underperform or, at least, lose time and effectiveness as members struggle with a variety of process difficulties. Take a good, hard look at the teams that you participate in. While so doing, make a realistic self-assessment of your team contributions as well as those of other members. Ask: How can the insights of this chapter help me build team skills so that I can help turn teamwork potential into real team achievements? Get to know yourself better by taking the self-assessment on Team Leader Skills and completing the other activities in the Exploring Management Skill-Building Portfolio.
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Accommodation Avoidance Centralized communication network Cohesiveness Collaboration Committee Competition Compromise Conflict Conflict resolution Consensus Cross-functional team Decentralized communication network Decision making Disruptive behaviors Distributed leadership Distributed team Effective team Emotional conflict Employee involvement team Formal team Groupthink Heterogeneous teams
Homogeneous teams Informal group Maintenance activity Norm Performance norm Project team Quality circle Restricted communication network Self-managing team Social loafing Substantive conflict Synergy Task activity Task force Team Team building Team diversity Team effectiveness equation Team IQ Team process Team virtuousness Teamwork Virtual team
Multiple-Choice Questions 1.
occurs when a group of people is able to achieve more than its members could by working individually. (a) Distributed leadership (b) Consensus (c) Team viability (d) Synergy 2. One of the recommended strategies for dealing with a group member who engages in social loafing is to . (a) redefine tasks to make individual contributions more visible (b) ask another member to encourage this person to work harder (c) give the person extra rewards and hope he or she will feel guilty (d) just forget about it 3. An effective team is defined as one that achieves high levels of task performance, high member satisfaction, and . (a) resource efficiency (b) team viability (c) group consensus (d) creativity 4. In the open-systems model of teams, the .is an important input factor. (a) communication network Copyright © 2021 John Wiley & Sons, Inc.
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(b) decision-making method (c) performance norm (d) diversity of membership 5. A basic rule of team dynamics might be stated this way: The greater the .in a team, the greater the conformity to norms. (a) membership diversity (b) cohesiveness (c) task clarity (d) competition among members 6. The team effectiveness equation states the -following: Team Effectiveness = Quality of Inputs ( .– Process Losses). (a) Process Gains (b) Leadership Impact (c) Membership Ability (d) Problem Complexity 7. Members of a team become more motivated and better able to deal with conflict during the .stage of team -development. (a) forming (b) norming (c) performing (d) adjourning
8. A team member who does a good job at summarizing discussion, offering new ideas, and clarifying points made by others is providing leadership by contributing .activities to the group process. (a) required (b) task (c) disruptive (d) maintenance 9. A team performing very creative and unstructured tasks is most likely to succeed using . (a) a decentralized communication network (b) decisions by majority rule (c) decisions by minority rule (d) more task than maintenance activities 10. One way for a manager to build positive norms within a team is to . (a) act as a positive role model (b) increase group size (c) introduce groupthink (d) isolate the team 11. The best way to try to increase the cohesiveness of a team would be to . (a) start competition with other groups (b) add more members (c) reduce isolation from other groups (d) increase the diversity of members Copyright © 2021 John Wiley & Sons, Inc.
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12. A .decision is one in which all -members agree on the course of action to be taken. (a) consensus (b) unanimous (c) majority (d) synergy 13. Groupthink is most likely to occur in teams that are . (a) large in size (b) diverse in membership (c) high performing (d) highly cohesive 14. When people are highly cooperative but not very assertive in a conflict situation, the likelihood is that they will be using which conflict management style? (a) avoidance (b) authoritative (c) accommodation (d) collaboration 15. The interpersonal conflict management style with the greatest potential for true conflict resolution is . (a) compromise (b) competition (c) avoidance (d) collaboration
Short-Response Questions: 16. What are the major differences among a task force, an employee involvement group, and a self-managing team? In a task force, members are brought together to work on a specific assignment. The task force usually disbands when the assignment is finished. In an employee involvement group, perhaps a quality circle, members are brought together to work on an issue or task over time. They meet regularly and always deal with the same issue/task. In a self-managing team, the members of a formal work group provide self-direction. They plan, organize, and evaluate their work, share tasks, and help one another develop skills; they may even make hiring decisions. A true self-managing team does not need the traditional ―boss‖ or supervisor, since the team as a whole takes on the supervisory responsibilities. 17. How can a manager influence team performance by modifying group inputs? Input factors can have a major impact on group effectiveness. In order to best prepare a group to perform effectively, a manager should make sure that the right people are put in the group (maximize available talents and abilities), that these people are capable of working well together (membership characteristics should promote good relationships), that the tasks are clear, and that the group has the resources and environment needed to perform up to expectations.
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18. How do cohesiveness and performance norms together influence team performance? A team’s performance can be analyzed according to the interaction between cohesiveness and performance norms. In a highly cohesive group, members tend to conform to group norms. Thus, when the performance norm is positive and cohesion is high, we can expect everyone to work hard to support the norm—high performance is likely. By the same token, high cohesion and a low performance norm will act similarly—low performance is likely. With other combinations of norms and cohesion, the performance results will be more mixed. 19. What are two symptoms of groupthink and two possible remedies for them? The book lists several symptoms of groupthink along with various strategies for avoiding groupthink. For example, a group whose members censure themselves to refrain from contributing ―contrary‖ or ―different‖ opinions and/or whose members keep talking about outsiders as ―weak‖ or the ―enemy‖ may be suffering from groupthink. This may be avoided or corrected, for example, by asking someone to be the ―devil’s advocate‖ for a meeting and by inviting in an outside observer to help gather different viewpoints.
Integration and Application Questions: 20. Valeria Martinez has just been appointed manager of a production team operating the 11 p.m. to 7 a.m. shift in a large manufacturing firm. An experienced manager, Valeria is pleased that the team members seem to really like and get along well with one another, but she notices that they also appear to be restricting their task outputs to the minimum acceptable levels. Question:
How
might
Valeria
improve
this
situation?
Valeria is faced with a highly cohesive group whose members conform to a negative or lowperformance norm. This is a difficult situation that is ideally resolved by changing the performance norm. In order to gain the group’s commitment to a high-performance norm, Valeria should act as a positive role model for the norm. She must communicate the norm clearly and positively to the group. She should not assume that everyone knows what she expects of them. She may also talk to the informal leader and gain his or her commitment to the norm. She might carefully reward high-performance behaviors within the group. She may introduce new members with high-performance records and commitments. And she might hold group meetings in which performance standards and expectations are discussed, with an emphasis on committing to new high-performance directions. If attempts to introduce a high-performance norm fail, Valeria may have to take steps to reduce group cohesiveness so that individual members can pursue higher-performance results without feeling bound by group pressures to restrict their performance.
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Self-Assessment 14: Team Leader Skills Instructions Consider your experiences in groups and work teams. Ask: ―What skills do I bring to team leadership situations?‖ Then complete the following inventory by rating yourself on each item using this scale. 1 = Almost never 2 = Seldom 3 = Sometimes 4 = Usually 5 = Almost always 1. I facilitate communications with and among team members between team meetings. 2. I provide feedback/coaching to individual team members on their performance. 3. I encourage creative and out-of-the-box thinking. 4. I continue to clarify stakeholder needs/expectations. 5. I keep team members‘ responsibilities and activities focused within the team‘s objectives and goals. 6. I organize and run effective and productive team meetings. 7. I demonstrate integrity and personal commitment. 8. I have excellent persuasive and influence skills. 9. I respect and leverage the team‘s cross-functional diversity. 10. I recognize and reward individual contributions to team performance. 11. I use the appropriate decision-making style for specific issues. 12. I facilitate and encourage border management with the team‘s key stakeholders. 13. I ensure that the team meets its team commitments. 14. I bring team issues and problems to the team‘s attention and focus on constructive problem solving. 15. I provide a clear vision and direction for the team. Scoring and Interpretation Add your scores for the items listed next to each dimension below to get an indication of your potential strengths and weaknesses on seven dimensions of team leadership. The higher the score, the more confident you are on the particular skill and leadership capability. When considering the score, ask yourself if others would rate you the same way. 1, 9 2, 10 3, 11 4, 12 5, 14 6, 14 7, 8, 15
Building the team Developing people Team problem solving/decision making Stakeholder relations Team performance Team process Providing personal leadership
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Class Exercise 14: Understanding Team Dynamics Preparation Think about your course work team, a team you are involved with in another campus activity, or any other team situation suggested by your instructor. Use this scale to indicate how often each of the following statements accurately reflects your experience in the group. 1 = always 2 = frequently 3 = sometimes 4 = never 1. My ideas get a fair hearing. 2. I am encouraged to offer innovative ideas and take risks. 3. Diverse opinions within the group are encouraged. 4. I have all the responsibility I want. 5. There is a lot of favoritism shown in the group. 6. Members trust one another to do their assigned work. 7. The group sets high standards of performance excellence. 8. People share and change jobs a lot in the group. 9. You can make mistakes and learn from them in this group. 10. This group has good operating rules. Instructions Form groups as assigned by your instructor. Ideally, this will be the group you have just rated. Have all group members share their ratings, and then make one master rating for the group as a whole. Circle the items for which there are the biggest differences of opinion. Discuss those items and try to find out why they exist. In general, the better a group scores on this instrument, the higher its creative potential. If everyone has rated the same group, make a list of the five most important things members can do to improve its operations in the future. Nominate a spokesperson to summarize the group discussion for the class as a whole.
Team Project 14: Superstars on the Team During a period of reflection following a down cycle for his teams, Sasho Cirovski, head coach of the University of Maryland‘s men‘s soccer, came to a realization. ―I was recruiting talent,‖ he said. ―I wasn‘t doing a very good job of recruiting leaders.‖ With a change of strategy, his teams moved back to top-ranked national competition. Question What do you do with a ―superstar‖ on your team? Instructions 1. Everywhere you look—in entertainment, in sports, and in business—a lot of attention these days goes to the superstars. What is the record of teams and groups with superstars? Do they really outperform the rest? 2. What is the real impact of a superstar‘s presence on a team or in the workplace? What do they add? What do they cost? Consider the potential cost of having a superstar on a team in the equation Benefits – Cost = Value. What is the bottom line of having a superstar on the team? Copyright © 2021 John Wiley & Sons, Inc.
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3. Interview the athletic coaches on your campus. Ask them the previous questions about superstars. Compare and contrast their answers. Interview players from various teams. Ask them the same questions. 4. Develop a set of guidelines for creating team effectiveness in a situation where a superstar is present. Be thorough and practical.
Case Snapshot: Auto Racing--When the Driver Takes a Back Seat In the world of competitive auto racing, the drivers are the sport‘s rock stars. They‘re courted by sponsors, adored by fans, and made the subject of interview after interview by the racing press. While it goes without saying that drivers are absolutely essential to earning a trophy, racing enthusiasts, teammates, and especially drivers will tell you that they can‘t win the race by themselves—it takes a successful team to win a race. Although three of the major forms of professional auto racing—NASCAR, Formula One, and rally car racing—each use different vehicles, rules, and team structures, teamwork is the common denominator among them. Ray Evernham, former crew chief and team manager for Hendrick Motorsports‘ DuPont car, describes teamwork this way: ―We‘re all spark plugs. If one doesn‘t fire just right, we can‘t win the race. So, no matter whether you are the guy that‘s doing the fabricating or changing tires on Sundays and that‘s the only job responsibility you have, if you don‘t do your job then we‘re not going to win. And no one is more or less important than you.‖ 1. DISCUSSION What formal and informal groups would you expect to find in a complete racing team? What roles could each play in helping the team toward a winning season? Formal groups are units developed by the organization. So, in this case, the office/management personnel, mechanics, pit crew members, and those responsible for designing and building the car, would some be examples of formal groups. In terms of informal groups, those that emerge from relationships and shared interests would be considered as informal groups. I would expect to find informal relationships based on such factors as common interests, being of a similar age, having a similar family status, (children, divorced, etc.), seniority, doing similar jobs, and/or having the same hobbies (hunting, fishing, etc.). 2. DISCUSSION Racing teams and their leaders make lots of decisions—from the pressures of race day to the routines of everyday team management. When and in what situations are these decisions made by authority rule, minority rule, majority rule, consensus, or unanimity? How do these decision-making approaches fit certain times and situations but not others? Defend your answer. Student answers will vary. This can be given as class project where a different team takes a different auto racing and/or teams and research their team approaches. Decisions made by: Copyright © 2021 John Wiley & Sons, Inc.
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Authority rule: Although this is time efficient, the quality of the decision depends on whether the authority figure has the necessary information. Because timing is everything in the race car industry, decisions might often times be made this way. Minority rule: Two or three people dominate the rest of the team – less urgent decisions where more time can be taken can certainly be made this way. Majority rule: decisions around marketing or sales promotion may be made this way within a group context – but certainly not time-sensitive or urgent decisions. Consensus: These are important decisions – because they require debate, reasoning and exchange. Unanimity: while this may be difficult to achieve, this may be a decision related to safety for the drivers, for example. A decision by unanimity means all team members agree on a course of action. This is the ideal state of affairs, but it is very difficult to reach.
2. PROBLEM SOLVING Assume you have been retained as a team-building consultant by a famous racing team pit crew whose performance fell badly during the prior season. Design and explain a series of team-building activities you will use to engage team members to strengthen their trust in each other and improve their individual and collective efforts. Some team building exercises to instill/build trust:
Have your employees take turns staring into each other’s eyes for 60 seconds. Not only will they become better at maintaining eye contact, they should connect with one another on some level.
Go to a large open field. Break your team into pairs, with one member blindfolded. Instruct them to hold hands. The person who can see then leads the blindfolded member from a slow walk to a short, fast run. Swap the blindfold and repeat the process.
Split your employees into groups of about 10 people. Have them all stand on similar-size tarps or plastic sheets. Make sure the tarps aren’t so big that they make the game simple. The goal of this activity is to flip the tarp over without anyone breaking contact with it. The group that is able to do it quickest wins.
Assemble an obstacle course of sorts. Blindfold your employees and have them get into a line. Give them a rope and tell them to all grab onto it. Have the team try to navigate the obstacle course. They’re allowed to talk — so leadership will be displayed and trust will develop.
Have your employees stand in a circle holding a rope. Blindfold them and tell them to drop the rope. Next, tell them to take a couple steps away from where they were standing. Now, have them return to the rope and try to work together to lay it out in a perfect square
Source: https://www.tinypulse.com/blog/team-building-activity-trust Copyright © 2021 John Wiley & Sons, Inc.
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3. FURTHER RESEARCH Choose a racing team of interest to you. Research the team, its personnel, and its performance in the most recent racing season. Try to answer this question: What accounts for this team‘s success or lack of success—driver talent, technology, teamwork, ownership/leadership, or all four? List at least three lessons from your analysis of the racing team that might be valuable and transferable to teams and organizations in any setting? Student answers will vary. Hendrick Motorsports has been in the NASCAR business for over 30 years -- and the driver lineup includes Jeff Gordon, Dale Earnhardt Jr., Jimmy Johnson and Kasey Kahne. The longevity of the team’s ownership and the driver talent has kept them on top for over three decades.
Additional Exercises for Chapter 14 Break the class into teams and have the teams to consider and develop responses to each of the following questions: 5. Today online learning is growing at a very fast rate. What type of courses do you think are best suited for online learning? Which courses are least suited for online learning? Explain your reasoning for each answer. 6. What are the limitations of online learning as contrasted with traditional ―classroom learning‖? What are the advantages of it?
CHAPTER 15 Communication Listening is the Key to Understanding Chapter 15 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. Communication is at the heart of the managerial process and it should be thought of as the glue that binds together the four functions of planning, organizing, leading and controlling.
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This chapter begins by examining the concept of social capital and how communication by managers centers primarily around building social capital, the support and help from others to get things done. Next, the process of interpersonal communication, distinguishing between effective and efficient communication, and exploring the roles of persuasion and credibility in communication are discussed. Next, various communication barriers are described in detail, including information filtering, poor choice of channels, poor written or oral expression, failure to recognize nonverbal signals, and physical distractions, along with cross-cultural challenges. Specific means of improving communication are then presented, including transparency and openness, interactive management, use of electronic media, active listening, constructive feedback, and space design.
Chapter 15 Learning Objectives: Learning Objective 15.1 Explain the nature of communication and what makes it effective. Learning Objective 15.2 Identify the major barriers to effective communication. Learning Objective 15.3 Discuss ways to improve communication with people at work.
Chapter 15 Lecture Outline: Learning Objective 15.1 Explain the Nature of Communication and What Makes It Effective. Communication helps to build social capital. Communication is a process of sending and receiving messages with meanings attached. Communication is effective when the receiver understands the sender‘s messages. Communication is efficient when it is delivered at low cost to the sender. Communication is persuasive when the receiver acts as the sender intends. Learning Objective 15.2 Identify the Major Barriers to Effective Communication. Poor use of channels makes it difficult to communicate effectively. Poor written or oral expression makes it difficult to communicate effectively. Failure to spot nonverbal signals makes it difficult to communicate effectively. Information filtering makes it difficult to communicate effectively. Overloads and distractions make it difficult to communicate effectively. Learning Objective 15.3 Discuss Ways to Improve Communication with People at Work. Active listening helps people say what they really mean. Constructive feedback is specific, timely, and relevant. Office spaces can be designed for interaction and communication. Transparency and openness ensure that accurate information is shared. Appropriate online behavior can facilitate better communication. Sensitivity and etiquette can improve cross-cultural communication.
Chapter 15 Supporting Materials: Figures Copyright © 2021 John Wiley & Sons, Inc.
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Figure 15.1 What Are the Major Elements of Interpersonal Communication? Figure 15.2 How Does Noise Interfere with the Communication Process? Figure 15.3 Office Designs Send Different Messages to Visitors. What’s Inside Career Readiness: Organizations push weekly happiness surveys Analytics: Value of Performance Reviews Gets Increasing Scrutiny Choices: Embrace Open Information and Remove Doubts Ethics: Blogging is easy, but bloggers beware Insight: Collaboration begins with communication and networking Issues: Master the science of persuasion and gain influence Quick Case: I just got a mediocre performance review Applications TestPrep 15 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 15: Feedback and Assertiveness o Class Exercise 15: Communication and Teamwork Dilemmas o Team Project 15: How Words Count Case Snapshot: Snapchat—Snap the Story of the Moment
Chapter Outline: Learning Objective 15.1: What Is Communication, and When Is It Effective?
Communication helps to build social capital Social capital is the capacity to attract support and help from others to get things done. This relates to who you know and how well you relate to them. The American Management Association asked members to rate the communication skills of their managers. Only 22% rated them ―high.‖
Communication is a process of sending and receiving messages with meanings attached Communication is the interpersonal process of sending and receiving symbols with messages attached to them Involves a sender encoding an intended message into meaningful symbols, both verbal and nonverbal; he or she sends the message through a communication channel to a receiver; the receiver then decodes or interprets the meaning; when present, feedback reverses the process and conveys the receiver‘s response back to the sender See Figure 15.1 for a depiction of the communication process
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The communication process begins when a sender encodes an intended meaning into a message. This message is then transmitted through a channel to a receiver. The receiver next decodes the message into perceived meaning. Finally, the receiver may transmit feedback back to the sender. The communication process is effective when the perceived meaning of the receiver is the same as the intended meaning of the sender.
Communication is effective when the receiver understands the sender’s message Messages aren't always interpreted by the receiver in the way the sender intended. Effective communication takes place when the receiver fully understands the message in the way the sender intended.
DISCUSSION TOPIC One way to enhance the discussion of the communication process is to focus on the lecture mode of teaching. As the teacher/lecturer, you are occupying the role of sender, whereas the students are receivers. To communicate with students, you use a variety of symbols including spoken and written words, gestures, transparencies, PowerPoint slides, etc. to send them messages. As receivers, the students decode these messages into perceived meanings, which may or may not be the same as the intended meanings. Continuing with this example, you can introduce the concepts of effective and efficient communication by noting that while you can communicate quite ―efficiently‖ with students through straight lectures, their involvement and feedback is needed to insure ―effective‖ communication. Finally, you can preview the discussion of communication barriers by asking students to identify sources of ―noise‖ which sometimes interfere with the effectiveness of lectures. An added benefit of this discussion is that instructors may obtain some useful feedback on their lecturing styles. Communication is efficient when it is delivered at low cost to the sender Efficient communication is when communication occurs at minimum cost in terms of resources expended Cost includes time, expense and convenience
Communication is persuasive when the receiver acts as the sender intends Persuasive communication is getting someone else to accept, support, and act consistent with the sender‘s message Credible communication-trust, respect, and integrity in the eyes of others Charisma is the ability to inspirationally persuade and motivate others. Charismatic leadership tactics are communication techniques people use to make themselves more ―leader-like‖ and be perceived by others as influential and trustworthy.
15.1 Questions for discussion with suggested answers 1) Why do recruiters place so much emphasis on the communications skills of job candidates? It would be hard to find a job that does not include "effective communication skills among the requirements. The ability to communicate information and ideas is essential to success in the workplace. This may be particularly true in situations where distance is a factor and face-to-face communication is minimal such as telecommuters or online communication Copyright © 2021 John Wiley & Sons, Inc.
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2) Can you describe a work situation where it‘s okay to accept less communication effectiveness to gain communication efficiency? Twitter would be a good example of a communication that isn't very effective because it limits the number of characters allowed, but is very efficient because it can be sent quickly and can be accessed immediately. If more information is necessary, a more effective medium can be used such as calling the sender on the phone, speaking in person or sending an e-mail. 3) What can a manager do to gain the credibility needed for truly persuasive communication? Credibility takes place when a sender has the trust and respect of the receiver. Students will have many ideas about how to earn trust and respect. At the foundation of most responses will be the fact that a track record of honest and sincere communication builds trust and respect and eventually, credibility. 15.1 Career Situation: What Would You Do? Your boss just sent a text message that he wants you at a meeting starting at 3 p.m. Your daughter is performing a music program at her elementary school at 2:45 p.m., and she wants you to attend. You‘re out of the office making sales calls and have scheduled appointments to put you close to the school in the early afternoon. The office is a long way across town. Do you call the boss, text him, or send him an email? What exactly will you say in your response to his message? Student answers may vary. It is always better to have a personal conversation with a superior if the boss is receptive to such communication. If a client’s needs appointments are critical then it should be addressed with the boss but if the boss doesn’t understand or relate to the family priorities, maybe you need to rethink your fit with the company.
Learning Objective 15.2: Identify the Major Barriers to Effective Communication. Figure 15.2 illustrates the concept of how different types of noise interfere with the communication process: The following types of noise can interfere with the effectiveness of communication and are important to understand: Semantic problems in the forms of poor written or oral expression, the absence of feedback, improper choice and use of communication channels, physical distractions, status differences between senders and receivers, and cultural differences can all in one way or another complicate the communication process. Unless these factors are given attention, they can reduce communication effectiveness.
Noise is anything that interferes with the communication process Learning activity - Ask students to make a list of "noise" that interferes with the communication process in your classroom. Their list will may include: environmental noise, texting, Facebook on laptops, neighbors talking, hunger, listening in a second language, faculty speaking in a boring, monotone way . . . .
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DISCUSSION TOPIC You can demonstrate the impact of noise on the communication process by having 5 or 6 students play a round of ―telephone‖ in class. The first student reads a selected written paragraph, whispering it to the second student. The second student repeats the message from memory, as accurately as possible, whispering to the third student, and so on. Compare the message, as recited by the last student, to the original paragraph.
Poor use of channels makes it difficult to communicate effectively. Communication channel is the medium used to carry a message Channel richness is the capacity of a communication channel to effectively carry information
Poor written or oral expression makes it difficult to communicate effectively Communication needs to be clear to be understood. Managers need to practice written communication and presentation skills
Failure to spot nonverbal signals makes it difficult to communicate effectively Nonverbal communication takes place through gestures, expressions, posture and use of interpersonal space. Mixed messages result when words communicate one message while actions, body language or appearance communicates something else.
DISCUSSION TOPIC A fun way to illustrate the power of nonverbal communication is to call on volunteers to ―act out‖ various emotions without speaking verbally. Specifically, you may whisper to one volunteer to ―act angry,‖ another to ―be sad,‖ another to ―be happy,‖ etc. Alternatively, you may ask one student to portray all of these emotions, plus any others that you choose. Then you can ask the students‘ classmates to guess which emotion is being portrayed.
Information filtering makes it difficult to communicate effectively Information filtering is intentional distortion of information to make it more favorable to the recipient Unpleasant information is minimized or eliminated
Overloads and distractions make it difficult to communicate effectively Overloads and distractions are common causes of communication problems in our personal and work lives.
15.2 Questions for discussion with suggested answers 1) When is texting not an appropriate way to convey a message in a work situation? Text is a low context medium, but it is very inexpensive. That means that it is not very effective, but very efficient. Messages that require high effectiveness would not be a good choice for text. An example might be anything that might need clarification with two way communication, or a complex message about a sensitive subject, like a firing, discipline Copyright © 2021 John Wiley & Sons, Inc.
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or even compliment. This might be a tough sell to students that feel that texting can convey about anything. 2) If someone just isn‘t a good writer or speaker, what can he or she do to improve communication skills? A great idea would be to take a college writing or speech class. If that isn't an option, reading articles, going to workshops, joining an organization like Toastmasters, taking a Dale Carnegie class or even reading this chapter would be a good start. 3) How can a higher-level manager avoid the problem of filtering when lower-level staffers pass information upward to her? A manager that is approachable and displays emotional intelligence will find that direct reports are much more comfortable in presenting information of any kind. A policy of "Management by Wandering/Walking Around (MBWA)" will help employees feel that the manger is accessible and approachable. 15.2 Career Situation: What Would You Do? As the leader of your work team, some members have come to you and pointed out that there is no way they can complete the current project on time. In fact, they expect to be at least two weeks late. This is a ―pet‖ project for your boss, and your understanding is that she has a lot riding on its success for her career advancement. She is aloof and very formal in her dealings with you. Now you‘re stuck in the middle between her and your team. What actions will you take, and why? Student answers will vary. Effective communication is very important in this situation as well as the channel of communication. A face-to-face meeting will be the best method for delivering this information.
Learning Objective 15.3: Discuss Ways to Improve Communication With People at Work.
Active listening helps others to say what they really mean Active listening is the process of taking action to help someone else say what they really mean Rules for active listening Listen for message content Listen for feelings Respond to feelings Note all cues Paraphrase and restate
Constructive feedback is specific, timely, and relevant Feedback is the process of telling other people how you feel about something they did or said, or about the situation
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DISCUSSION TOPIC Divide the class into groups of four or five students. Using the guidelines for providing constructive feedback, have each group devise a plan for how they would go about providing feedback to a fellow team member who is not carrying his/her fair share of the team‘s work load. Select two or three of the teams to share their feedback plans with the entire class.
How to Give Constructive Feedback Choose the right time—Give feedback at a time when the receiver seems most willing or able to accept it. Be genuine—Give feedback directly and with real feeling, based on trust between you and the receiver. Be specific—Make feedback specific rather than general; use clear and recent examples to make points. Stick to the essentials—Make sure the feedback is valid; limit it to things the receiver can be expected to do something about. Keep it manageable—Give feedback in small doses; never give more than the receiver can handle at any particular time.
Office designs can encourage interaction and communication Proxemics is the study of the way we use and communicate with space Physical distance between people conveys varying intentions in terms of intimacy, openness, and status as they communicate with one another Figure 15.3 illustrates office designs that send different messages to visitors.
Transparency and openness build trust in communication Communication transparency involves being honest and openly sharing accurate and complete information. Open book management provides employees with accurate information about the employer's financial status
Appropriate online behavior is a communication essential E-mail, text, and social networking communication may or may not be appropriate in the organization or circumstance. Know your audience and plan the best medium for the message
Sensitivity and etiquette can improve cross-cultural communication Ethnocentrism is a major source of intercultural difficulties Ethnocentrism is the tendency to consider one‘s culture superior to all others Cultural etiquette is the use of appropriate manners and behaviors when communicating with people from other cultures
15.3 Questions for discussion with suggested answers
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1) Which rules for active listening do you think most people break? Most people do not listen to message content. This can occur because they are formulating a response or are distracted. 2) Is transparency in communications a sure winner, or could a manager have problems with it? MBWA cannot be the sole source of information for a manager. It may contain employee bias or error. But MBWA is a very effective tool for building trust and communication and credibility with employees. 3) How could you redesign your office space, or that of your instructor or boss, to make it more communication friendly? The desk should face visitors as they enter through the open door; the environment should be at least comfortable, if not inviting-a side chair would be helpful in this regard. A small conference table either round or oval in design would enable open communication. 15.3 Career Situation: What Would You Do? The restaurant you own and manage is being hit hard by a bad economy. The number of customers is down, as is the amount of the average dinner bill. You employ a staff of 12, but you‘re going to have to cut back or go to job sharing so that the payroll covers no more than 8. One of the servers just told you that someone is tweeting that the restaurant is going to close its doors after the coming weekend. Loyal customers and staff are ―buzzing‖ about the news and it‘s starting to travel more widely. How do you deal with this situation? Student answers will vary. Students should recognize that this is a case of communication transparency.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Organizations push weekly happiness surveys ―Does your team leader listen to you?‖ ―Is your manager responsive to questions?‖ ―Did you get a sense of accomplishment from your work last week?‖ ―What challenges are you facing today?‖ These are the types of questions that some organizations are routinely asking employees to answer – not once a year, not occasionally, but every week. Called ―quick-fire polls‖ or ―pulse surveys‖ they are online versions of the traditional morale survey. Questions are asked, answered, and analyzed in real time. It‘s a chance for employers to listen and learn, but some worry that ―it can get a little bit like homework.‖ Employers believe pulse surveys give them early warnings about morale and office problems. Ask students their opinions on pulse surveys and if they are just another distraction that routinely Copyright © 2021 John Wiley & Sons, Inc.
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pops up in a screen window, or real chances to improve communication and employee engagement?
Issues: Master the Science of persuasion and gain influence Two scenes are presented. The first has to do with hoteliers wanting to wash fewer towels. The second has to do with restaurant servers wanting to maximize tips. Each offers a lesson to do so. Can these lessons be turned into advice for leaders? Leadership is complicated in any setting. But it ultimately requires success at influencing other people. Do a self-check of your success in leadership situations: To what extent is ―persuasion‖ part of your leadership skill portfolio? How about the leaders you work with: Do they pass or fail as masters of the science of persuasion? And if persuasion is so important, should we spend more time learning and practicing how to do it really well?
Choices: Embrace Open Information and Remove Doubts Transparency is in and secrecy is falling by the wayside in more organizations. In many ways it‘s a cornerstone of collaborative organizations. But is there a limit to how much co-workers should know about each other? Openness about financials, pay, and other matters is supposed to be a good thing—motivating employees and removing concerns about equity. Right? But what about the possible downsides? Which way would you like to work—your pay and others known to everyone… or nobody else? Or, can you come up with an alternative that would work for all?
Analytics: Value of Performance Reviews Gets Increasing Scrutiny Surveys show people aren‘t always pleased with the way managers in their organizations do performance reviews. Some are so concerned that they suggest dropping them altogether. Check these findings from a survey of human resources executives: • 30% believe that employees trust their employer‘s performance measurement system. • 60% give their performance management systems ―C‖ grades or worse. • Top concerns are that managers aren‘t willing to face employees and give constructive feedback, and employees don‘t have a clear understanding of what differentiates good and bad performance. • Some employers are doing away with annual performance reviews and replacing them with quarterly reviews focusing on feedback, support, and goals. Others are using apps and software to enable real-time peer reviews after projects and meetings. Still others do compensation reviews annually and then ask managers to hold frequent one-on-one meetings so that everyone is always up to date on their performance and the manager‘s expectations. Ask students is it really possible to have a performance measurement system that is respected by managers and workers alike? Do the data reported here fit with your own experiences? What are their implications for management practice? Will we soon see a dramatic increase in the number
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of employers who shift away from formal annual reviews and replace them with something less formal and more timely?
Quick Case: I just got a mediocre performance review A good friend just called and wants to meet for a heart-to-heart chat after work. She was really frantic over a performance review that was a lot lower than what she had been expecting. The review was compounded by the fact that it was her first in a new job and with a new manager. She worried not only that her efforts weren‘t being appreciated, but also that the mediocre review would hurt her chances for future promotion at the company.‘ ―I just got a mediocre performance review,‖ she said, ―and it totally blindsided me. I went into the manager‘s office with a smile on my face and expecting congratulations for my hard work in this new job.‖ Instead, I got the following message: ―You‘ve actually done quite well, but you should know that I never give anyone high ratings to start with. That doesn‘t leave any room for improvement.‖ How do you prepare for this meeting? What should you be ready to say, and not say? She views you as a trusted friend and counselor. How can you play these roles and really help her deal with the situation in the best possible ways?
Ethics: Blogging is Easy, But Bloggers Beware Catherine Sanderson is one of the growing number of employees that have lost their jobs because they discussed work in their blogs. The questions in You Decide ask readers to compare blogs to other situations that question the ethics of sharing work experiences with the general public. How does the situation differ when viewed from the perspective of employer versus the employee perspective? To add a little educational controversy: What if it was a student blogging about what goes on in class or posting comments about a professor on www.ratemyprofessor.com? Would it be any different if professors shared their experience about students on a blog?
Insight for Personal Development: Collaboration begins with communication and networking Recruiters give communication and networking skills high priority when screening candidates for college internships and first jobs. They‘re looking for candidates who can communicate well both orally and in writing. Recruiters also want people who network well with others for collaboration and teamwork and who gain social capital through communication and networking so they can handle conflicts and negotiate successfully. If you‘re like most people, there‘s work to be done to master these challenges. Ask Students: Can you convince a recruiter that you are ready to run effective meetings? . . . write informative reports? . . . deliver persuasive presentations? . . . conduct job interviews? . . . Copyright © 2021 John Wiley & Sons, Inc.
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use e-mail and social media well? network well with peers and mentors? . . . keep conflicts constructive and negotiations positive? Where does social capital rank on your own list of personal strengths? Ask friends, coworkers, and family members to rate your communication and networking skills. Turn these ratings into a personal development ―To Do‖ list that you can share with your instructor.
Terms to Define Active listening Channel richness Charisma Charismatic leadership tactics Communication Communication channel Communication transparency Credible communication Cultural etiquette Effective communication Efficient communication
Electronic grapevine Ethnocentrism Feedback Information filtering Mixed message Noise Nonverbal communication Open-book management Persuasive communication Proxemics Social capital
Multiple-Choice Questions 1. Who is responsible for encoding a message in the communication process? (a) Sender (b) Receiver (c) Observer (d) Consultant 2. Issues of ―respect‖ and ―integrity‖ are associated with (a) noise (b) filtering (c) credibility (d) ethnocentrism
in communication.
3. Which is the best example of a team leader providing descriptive rather than evaluative feedback to a team member? (a) You are a slacker. (b) You are not responsible. (c) You cause me lots of problems. (d) You have been late to meetings three times this month. 4. When interacting with an angry co-worker who is complaining about a work problem, a manager skilled at active listening would most likely try to . (a) delay the conversation until a better time (b) point out that the conversation would be better held at another location (c) express displeasure in agreement with the coworker‘s complaint (d) rephrase the co-worker’s complaint to encourage him to say more Copyright © 2021 John Wiley & Sons, Inc.
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5. When the intended meaning of the sender and the interpreted meaning of the receiver are the same, communication is . (a) effective (b) persuasive (c) passive (d) efficient 6. What happens when a communication is persuasive? (a) The receiver understands the message. (b) The sender feels good about the message. (c) The receiver acts as the sender intended. (d) The sender becomes a passive listener. 7. How can a manager build the credibility needed for persuasive communications? (a) Offer rewards for compliance with requests. (b) Clarify penalties for noncompliance with requests. (c) Remind everyone that she or he is the boss. (d) Work hard to establish good relationships with others. 8. One of the rules for giving constructive feedback is to make sure that it is always . (a) general rather than specific (b) indirect rather than direct (c) given in small doses (d) delivered at a time convenient for the sender 9. When a worker receives an e-mail memo from the boss with information about changes to his job assignment and ends up confused because he doesn‘t understand it, the boss has erred by making a bad choice of for communicating the message. (a) words (b) channels (c) nonverbals (d) filters 10. The safest conclusion about privacy in electronic communications is (a) it‘s guaranteed by law (b) it‘s not a problem (c) it really doesn’t exist (d) it can be password protected 11. A/An is higher in channel richness than a/an (a) memo; voice mail (b) letter; video conference (c) chat message; e-mail (d) voice mail; telephone conversation
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12. The negative effects of status differences on communication between lower and higher levels in organizations show up in the form of . (a) filtering (b) MBWA (c) ethnocentrism (d) passive listening 13. A manager who understands the influence of proxemics in communication is likely to . (a) avoid sending mixed messages (b) arrange work spaces to encourage interaction (c) be very careful choosing written words (d) send frequent e-mail messages to team members
14. When a person‘s words say one thing but his or her body language suggests something quite different, the person is sending . (a) a mixed message (b) noise (c) social capital (d) destructive feedback 15. If a visitor to a foreign culture makes gestures commonly used at home even after learning that they are offensive to locals, the visitor can be described as . (a) a passive listener (b) ethnocentric (c) more efficient than effective (d) an active listener
Short-Response Questions: 16. What is the goal of active listening? The manager’s goal in active listening is to help the subordinate say what he or she really means. To do this, the manager should carefully listen for the content of what someone is saying, paraphrase or reflect back what the person appears to be saying, remain sensitive to nonverbal cues and feelings, and not be evaluative. 17. Why do managers sometimes make bad decisions based on information received from their subordinates? Well-intentioned managers can make bad decisions when they base decisions on bad information. Because of the manager’s position of authority in the organization, those below him or her may be reluctant to communicate upward information that they believe the manager Copyright © 2021 John Wiley & Sons, Inc.
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doesn’t want to hear. Thus, they may filter the information to make it as agreeable to the manager as possible. As a result of this filtering of upward communication, the manager may end up with poor or incomplete information and subsequently make bad decisions. 18. What are four errors team leaders might make when trying to give constructive feedback to team members? The four major errors in giving constructive feedback would be (1) being general rather than specific, (2) choosing a poor time, (3) including in the message irrelevant things, and (4) overwhelming the receiver with too much information at once. 19. How does ethnocentrism influence cross-cultural communication? Ethnocentrism is when a person views his or her own culture as superior to others. It can interfere with cross-cultural communication when the ethnocentrism leads the person to ignore cultural signals that indicate his or her behavior is inappropriate or offensive by local cultural standards. With the ethnocentric attitude of cultural superiority, the individual is inclined not to change personal ways or display the sensitivity to local cultural ways that are necessary to effective communication.
Integration and Application Questions: 20. Glenn was recently promoted to be the manager of a new store being opened by a large department store chain. He wants to start out right by making sure that communications are always good between him, the six department heads, and the 50 full-time and part-time sales associates. He knows he‘ll be making a lot of decisions in the new job, and he wants to be sure that he is always well informed about store operations. He also wants to make sure everyone is always ―on the same page‖ about important priorities. Put yourself in Glenn‘s shoes. Questions: What should Glenn do right from the start to ensure that he and the department managers communicate well with one another? How can he open up and maintain good channels of communication with the sales associates? Glenn can do a number of things to establish and maintain a system of communication with his employees and for his department store branch. To begin, he should, as much as possible, try to establish a highly interactive style of management based on credibility and trust. Credibility is earned through building personal power through expertise and reference. With credibility, he might set the tone for the department managers by using MBWA—―managing by wandering around.‖ Once this pattern is established, trust will build between him and other store employees, and he should find that he learns a lot from interacting directly with them. Glenn should also set up a formal communication structure, such as bimonthly store meetings, where he communicates store goals, results, and other issues to the staff, and in which he listens to them in return. An e-mail system whereby Glenn and his staff could send messages to one another from their workstation computers would also be beneficial.
Self-Assessment 15: Feedback and Assertiveness Instructions For each statement below, decide which of the following answers best fits you. Copyright © 2021 John Wiley & Sons, Inc.
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1 = Never true 2 = Sometimes true 3 = Often true 4 = Always true 1. I respond with more modesty than I really feel when my work is complimented. 2. If people are rude, I will be rude right back. 3. Other people find me interesting. 4. I find it difficult to speak up in a group of strangers. 5. I don‘t mind using sarcasm if it helps me make a point. 6. I ask for a raise when I feel I really deserve it. 7. If others interrupt me when I am talking, I suffer in silence. 8. If people criticize my work, I find a way to make them back down. 9. I can express pride in my accomplishments without being boastful. 10. People take advantage of me. 11. I tell people what they want to hear if it helps me get what I want. 12. I find it easy to ask for help. 13. I lend things to others even when I don‘t really want to. 15. I win arguments by dominating the discussion. 15. I can express my true feelings to someone I really care for. 16. When I feel angry with other people, I bottle it up rather than express it. 17. When I criticize someone else‘s work, they get mad. 18. I feel confident in my ability to stand up for my rights. Scoring and Interpretation Aggressiveness tendency score—Add items 2, 5, 8, 11, 15, and 17. Passiveness tendency score—Add items 1, 4, 7, 10, 13, and 16. Assertiveness tendency score—Add items 3, 6, 9, 12, 15, and 18. The maximum score in any single area is 24. The minimum score is 6. Try to find someone who knows you well. Have this person complete the instrument also as it relates to you. Compare his or her impression of you with your own score. What is this telling you about your behavior tendencies in social situations?
Class Exercise 15: Difficult Conversations Instructions 1. Identify from the list below the three activities that you find most uncomfortable when part of a team. (a) Telling a friend that she or he must stop coming late to team meetings (b) Pointing out to a team member that his or her poor performance is hurting the team (c) Asking teammates to comment on your criticism of the consensus that seems to be emerging on a particular issue (d) Telling a teammate who has problems working with others on the team that he or she has to do something about it (e) Responding to a team member who has just criticized your performance (f) Responding to a team member who has just criticized your attitude toward the team (g) Responding to a team member who becomes emotional and defensive when you criticize his or her performance (h) Having a teammate challenge you to justify your contributions to a discussion
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2. Form three-person teams as assigned by your instructor. Identify the three behaviors with which each person indicates the most discomfort. 3. Have each team member practice performing these behaviors with another member, while the third member acts as an observer. Be direct, but try to perform the behavior in an appropriate way. Listen to feedback from the observer, and try the behaviors again, perhaps with different members of the group practicing each behavior. 4. When finished, discuss the overall exercise, and be prepared to share highlights of the exercise with the rest of the class.
Team Project 15: How Words Count Question What words do people use in organizations that carry meanings that create unintended consequences for the speaker? Research Directions 1. Brainstorm with others to make a list of words that you have used or heard used by people and that cause other persons to react or respond negatively and even with anger toward the person speaking them. 2. For each word on the list, write its ―positive‖ meaning and ―negative‖ meaning. 3. Choose two or three of the words that seem especially significant. Write role-plays that display speakers using each word in the positive sense in conversations and in which the words are interpreted positively by the receivers. 4. For these same words, write role-plays that display speakers using each word conversationally with positive intentions but in which they are interpreted negatively by the receiver. 5. Explain the things that make a difference in how the same words are interpreted by receivers. 6. Draft a report that explains how people in organizations can avoid getting trapped unintentionally in problems caused by poor choice and/or use of words in their conversations.
Practice Critical Thinking: Snapchat – Snap the Story of the Moment Copyright © 2021 John Wiley & Sons, Inc.
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We are in the midst of a constantly shifting technology landscape, and this pace of change is leading to an extremely fluid intersection of culture, communication, social media, and business. There may be no other social media company that so closely captures this intersection as Snapchat, at least for the moment . . . There has always been a generation gap separating how people in distinct generations interact with one another, develop social expectations, talk, dress, think, and act. And, today, there are differences in how they use, think, and interact with technology. Generation X—which is closest in proximity to the millennial generation—did not grow up with the technologies that predominate the current social media landscape. Neither did the baby boomers. In contrast, millennials were born into a world where the Internet was already widespread, and the use of social media was second nature. Although more and more baby boomers and gen-Xers are logging on to Facebook, the popular site has seen a decline in popularity among millennials. (Twitter has also seen a decline among younger users.) Snapchat is different from more ―traditional‖ social media sites because its content—Snaps—is, by definition, transitory. Send a Snap, and it‘s gone in 10 seconds. Add a Snap to your Story, and it‘s there for 24 hours. But, either way, the content disappears. Snapchat is all about the ―now‖—what is happening at this moment. Case discussion questions and suggested answers: 1. DISCUSSION As a society, we are reading less and watching/viewing more. What implications does this shifting societal trend have for the ways that leaders communicate within their organizations? How managers communicate with employees?How organizations communicate with customers? What are the implications of these trending patterns for how organizations train employees? Motivate employees? Can you be as detailed in video-based communication as you can via written communica-tion? What are some of the benefits of shift ing communication patterns? What are some of the potential liabilities? How leaders communicate with employees: through social and collaboration tools – online and less person-to-person / face-to-face contact. More written contact. How organizations communicate with customers: same as above How organizations communicate with customers: same as above Implications of these trending patterns for how organizations train employees? Using media and online training/simulated environments/gamification. Motivate employees? Financial, perks, through reward-based systems of learning (sometimes gamification) and performance incentives. Can you be as detailed in video-based communication as you can via written communication? It depends. Sometimes, yes - even more so. Sometimes, no. What are some of the benefits of shifting communication patterns? Computer technology has narrowed the decision time span. Decisions can be made faster/sooner to enable competitive differentiation. What are some of the potential liabilities? Misunderstanding due to the large variety of communication and networking skills of a multi-generational workplace.
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2. PROBLEM SOLVING You‘ve been hired by Snapchat‘s CEO Evan Spiegel to explain to gen-Xers (your parents) and baby boomers (your grandparents) how to use Snapchat, how to make it part of their everyday lives, and how it could be useful to them at work. How would you describe the way you, personally, use Snapchat? How would you explain how this way of communicating can be applied across generational lines? What kinds of analogies might you use to describe Snapchat? How is it different from/better than either Facebook or Twitter? Why does Snapchat more effectively capture the way that millennials communicate, and why should this also apply for different generations of potential users? Be as specific as possible. How to use Snapchat: There are five main screens to using the Snapchat app: the primary camera, and the four you get to by swiping in a direction. Swipe up, you get the profile screen. Swipe down, the memories area where you can save snaps. Swiping left gets you to the screen with your messages. Swipe right and you have the 24-hour stories from your friends (along with those from brands). The main screen of Snapchat, a camera app, is fairly simple. Ignoring the various icons that mostly serve to notify you that something interesting is happening elsewhere, and it’s a pretty simple camera app. Tap the white circle to take a picture, tap and hold to take video. Swipe left, and you’re at the messages screen, which is where you go to view new snaps. Swipe to the right, and you’ll get to the Stories screen. This is where you’ll be able to find the 24-hour Stories that your friends have posted, along with a slew of branded content from companies like BuzzFeed, Mashable, ESPN, Vice, and more. Swiping up takes you to your profile, for lack of a better term. Here’s where you can add friends, accept or deny requests, and browse your friend list. Snapchat stories are groups of images or videos that don’t vanish after the usual 1 to 10 seconds. How students personally use Snapchat will vary. However, Snapchat is used to communicate via messaging or stories. Analogies used to describe Snapchat: student answers will vary. How it differs from Facebook: The possibility of parents, teachers and future employers on Facebook means that millennials' actions on the network may indeed have social consequences. Facebook’s efforts to increase their user base beyond young people may have had a profound impact on the social networking site – a victim of its own success. As a more direct sharing app, Snapchat is unfiltered (unlike Instagram, which has filters for a more ―visually‖ perfect image). Snapchat allows users to send snaps for up to 10 seconds (and then they disappear). A user has to ―tap‖ each person they choose to send it to and only a few are convenient to send at a time. It’s less of a mass-broadcast (more selective) and there is less
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social pressure and seeking of validation (through ―likes‖ on Facebook and ―hearts‖ on Instagram. Enter Snapchat, which allows users to send snaps for up to 10 seconds, after which they disappear. Since users have to tap each person they'd like to send it to, only a few of which are convenient to send to at a time, Snapchat lets millennials broadcast their lives only to people that they care about. There's no sense of warped virtual validation that arises via Facebook "likes" or Instagram "hearts" and no social pressure to conform to a public persona. Snapchat avoids the traps of Facebook and Instagram by keeping private lives private — a social network that isn't too social. Why does Snapchat more effectively capture the way that millennials communicate, and why should this also apply for different generations of potential users? 3. FURTHER RESEARCH Look into the newest social media companies discussed in the business press as potential or likely IPOs over the next year or so. What are the attributes of the companies getting the most ―buzz‖ in the press‖? Do you see any common characteristics across these companies? Are there any that stand out? If you had to specify what, precisely, differentiates companies getting the most current buzz, which standout attributes would you choose? Are there more ―video-driven‖ companies out there today? Does Snapchat have an emerging rival? In what ways does Snapchat represent a specific threat to larger rival Facebook? Is Facebook positioned to compete in the ―this is me now‖ space currently dominated by Snapchat? If not, what could Facebook do on the acquisition side to remain competitive moving forward? Social media companies getting the most ―buzz‖ in the press: Facebook, YouTube, Instagram, Twitter, Redditt. Snapchat is the most recent social media company to go public. Advertising spending on the app is estimated to reach nearly $1 billion in an upcoming year. However, Facebook and Google realized advertising revenues of $5 billion and $1.7 billion respectively. Common characteristics: All companies are unique and innovative. And each has its own differentiator and unique audience. All have the purpose of sharing content and communication. However, Facebook is the largest. Standout and standout attributes: This answer will vary, but most would say that Facebook is a standout. The company recently reached 2 billion users. Other standouts include Instagram, owned by Facebook. More video-driven companies out there today? Yes, Facebook recently added a ―Facebook Live‖ feature which allows for a live video feed. Snapchat’s emerging rival? Answers will vary, but many agree that Snapchat’s closest rival is Instagram – a Facebook subsidiary. Some also suggest Facebook as a rival. In fact, Facebook CEO Mark Zuckerberg attempted to buy Snapchat for $3 billion in 2013. However, with Copyright © 2021 John Wiley & Sons, Inc.
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Facebook’s financial resources, the company could easily copy Snapchat’s features and its user base of 2 billion will immediately have access as part of the Facebook universe. Instagram launched ―Stories‖ on its app – a feature that copies Snapchat’s ―Stories‖ feature.
Suggested Team Exercise for Chapter 15 Break the class into teams and ask the teams to consider each of the flowing communication scenarios and to discuss and summarize their answers to each scenario: 7. You are the CEO of a company and, because of very poor sales due to the recent recession, have determined that you need to terminate 10% of your workforce as a cost control measure. How would you communicate this message to all employees in a large company with multiple locations? 8. You need to advise an employee who works in customer service that he or she is too abrasive with customers based on surveys that you have received. Where and how would you communicate this issue? 9. You are the Manager of Employee Benefits and want to communicate a change in the car mileage reimbursement rate from $.55 a mile to $.50 a mile for use of employees‘ personal automobiles for company business. How would you do this? 10. You are the CEO of a pharmaceutical company and have just learned that the Food and Drug Administration has approved one of your drugs for use in cancer treatment. You need to advise your immediate executive staff. However, this is very sensitive information. How would you do this?
CHAPTER 16 Diversity and Global Cultures Copyright © 2021 John Wiley & Sons, Inc.
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There are many faces in the neighborhood Chapter 16 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. This chapter begins by examining the importance of diversity in the workplace. As the population ages, it also becomes more ethnically diverse. The concept of inclusion and diversity is discussed. Multicultural organizations displaying commitments to diversity are discussed next, along with characteristics of multicultural organizations. Some of the common issues plaguing minorities and women are listed. The challenges created by organizational subcultures (by gender, age, ethnicity, nationality, and even occupation) are reviewed and lastly, why top leaders should make diversity a top priority is discussed. Next, the chapter‘s focus turns to culture shock, a result of feeling confused and uncomfortable when dealing with an unfamiliar culture. The concept and importance of cultural intelligence is discussed as a way to deal with and adapt to foreign cultures. The silent languages of cultures are listed, and the tightness and looseness of cultures by social norms and their degree of sanctioning within societies is reviewed. The five dimensions of national cultures are listed and the topic of intercultural competencies as essential career skills is covered.
Chapter 16 Learning Objectives Learning Objective 16.1: Discuss what we need to know about diversity in the workplace. Learning Objective 16.2: Explain what we need to know about diversity among global cultures.
Chapter 16 Lecture Outline
Learning Objective Question 16.1: Discuss What We Need to Know About Diversity in the Workplace. o Inclusion drives the business case for diversity. o Multicultural organizations cultures value and support diversity. o Diversity bias exists in many situations o Organizational subcultures create diversity challenges. o Managing diversity is a leadership priority.
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Learning Objective Question 16.2: Explain What We Should Know About Diversity Among Global Cultures. o Culture shock is discomfort in cross-cultural situations. o Cultural intelligence is an ability to adapt to foreign cultures. o The ―silent‖ languages of cultures include context, time, and space. o Cultural tightness and looseness varies around the world. o Hofstede‘s model identifies five value differences among national cultures. o Intercultural competencies are essential for career skills.
Chapter 16 Supporting Materials: Figures Figure 16.1 How do glass ceilings constrain career advancement for women and minorities? Figure 16.2 A Continuum of Three Leadership Approaches to Diversity. Figure 16.3 How do countries compare on Hofstede’s five dimensions of national cultures? What’s Inside Career Readiness: Discrimination Fears Over Social Media Use in Hiring Analytics: Employee disengagement varies among world cultures Choices: Physical Attractiveness and Implicit Bias Ethics: Gender Quotas Add More Women to Corporate Boards Insight: Diversity puts maturity to a test Issues: Explanations vary for motherhood wage gap Quick Case: Silent team members Applications TestPrep 16 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 16: Diversity Awareness o Class Exercise 16: Alligator River Story o Team Project 16: Job Satisfaction Around the World Case Snapshot: Call Center, Inc.: How May I Help You?
Chapter Outline: Learning Objective 16.1: Discuss What We Need to Know About Diversity in the Workplace.
Diversity describes attributes such as national origin, race, gender, age, sexual orientation, and other individual differences. o Surface-level diversity consists of more visible attributes such as age, race, gender, and ethnicity.
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o Deep-level diversity consists of psychological attributes such as personality and values. Inclusion drives the business case for diversity Revolving door syndrome refers to high employee turnover among minorities and women. Inclusion -the degree to which an organization is open to anyone who can perform a job, regardless of race, sexual preference, gender, or other diversity attribute A diverse and inclusive workplace is good for morale Research company Catalyst says that companies with a greater percentage of women on their boards outperform those whose boards have low female representation
Multicultural organizations value and support diversity Multicultural organization - based on pluralism and operates with inclusivity and respect for diversity Multicultural organizations display commitments to diversity like those listed below: Table 16.1 ―Characteristics of a Multicultural Organization‖ Pluralism—Members of minority and majority cultures influence key values and policies. Structural integration—Minority-culture members are well represented at all -levels and in all responsibilities. Informal network integration—Mentoring and support groups assist career -development of minority-culture members. Absence of prejudice and discrimination—Training and task force activities support the goal of eliminating culture-group biases. Minimum intergroup conflict—Members of minority and majority cultures avoid destructive conflicts.
Diversity Bias Exists in Many Situations Glass Ceiling is a hidden barrier to career advancement of women and minorities Leaking pipeline problem shows up in male dominant organizational. It occurs as women drop out of upward career tracks because of glass ceilings and other obstacles, including a lack of family-friendly human resource policies. Microaggressions are disrespectful, demeaning, and hurtful sexism and racism behaviors Unconscious bias or implicit bias -- An embedded prejudice that is largely unconscious and which results in discriminatory treatment of others Biculturalism is the display of majority culture characteristics that seem necessary to succeed in the work environment The glass closet is when lesbians, gays, bisexuals, and transgender workers hide their sexual orientation and gender identities.
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Figure 16.1 illustrates the concept of how glass ceilings constrain career advancement for women and minorities: Organizations consist of a majority culture (often white males) and minority cultures (including women, people of color, and other minorities). It is likely that members of the majority culture will dominate higher management levels. One of the potential consequences is a “glass ceiling” effect that, although not publicized, acts as a barrier that sometimes makes it difficult for women and minorities to advance and gain entry into upper management.
Organizational subcultures can create diversity challenges Organizational subcultures are informal groupings of people that form around gender, age, race and ethnicity, and even job functions Ethnocentrism is the belief that one‘s membership group or subculture is superior to all Occupational subcultures develop as people form shared identities around the work that they do. Racial and ethnic subcultures -- exist among people from various races, language groups, regions, and countries. Gender subcultures are common to form among persons that share the same gender identities. In the double-bind dilemma, female leaders are criticized when they act consistent with both female and male subculture stereotypes. Generational subcultures – age is the basis for generational subcultures in organizations. Managing diversity is a leadership priority
Figure 16.2 illustrates continuum of leadership approaches to diversity described by R. Roosevelt Thomas Affirmative action commits the organization to hiring and advancing minorities and women Valuing diversity commits the organization to education and training programs designed to help people better understand and respect individual differences Managing diversity is always seeking ways to make an organization truly multi cultural and inclusive
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DISCUSSION TOPIC Point out to students that diversity maturity is relevant to how they deal with relationships in the educational environment as well as in the workplace. Have the students assess their own diversity maturity within their college/university community, by answering Yes or No to the following questions: Do you accept responsibility for improving your performance? Do you understand diversity concepts? Do you make decisions about other based on their abilities? Do you understand that diversity issues are complex? Are you able to cope with tensions in addressing diversity? Are you willing to challenge the way things are? Are you willing to learn continuously?
16.1 Questions for discussion with suggested answers 1) What subcultures do you see operating at work and/or in school, and how do they affect relationships and daily events? Possible subculture groups students may observe include ethnic groups, religious groups, men, women, non-traditional students and foreign students. Interest groups such as students with different majors, fans of anime, theater, video games, and athletes. 2) What are some of the things organizations and leaders can do to reduce diversity bias faced by minorities and women in the workplace? Leaders of organizations need to proactively support and articulate the very real benefits of diversity – its benefits to new products and services, stronger global sensitivity resulting in more markets and customers, and a learning opportunity for employees. The message needs to be, much like attention to new products or processes, diversity is integral to the company’s strategic success. 3) What does the existence of an affirmative action policy say about an organization‘s commitment to diversity? Existence of an affirmative action policy alone may not be evidence that an organization has truly committed to a proactive diversity policy. In some situations, such policies follow years of poor practices resulting in problems necessitating such policies. The Los Angeles Police force is such an example. One of the key issues in the Rodney King beating ―fallout‖ was an under-representation of minorities on the force relative to the Los Angeles population proportions. Affirmative action may initially have been instilled as a compliance strategy to correct long-term issues. True integration and acceptance of diverse cultures and employees within a workforce may take a much longer time for effectiveness.
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16.1 Career Situation: What Would You Do? One of your co-workers brought along his friend to lunch. When discussing his new -female boss, the friend says: ―It really irritates me not only that she gets the job just because she‘s a woman, but she‘s also Hispanic. There‘s no way that someone like me had a chance given her pedigree. And she now has the gall to act as if we‘re all one big happy team and the rest of us should accept her leadership. As for me, I‘ll do my best to make it difficult for her to succeed.‖ It was uncomfortable for you just to hear this. Your co-worker looks dismayed but isn‘t -saying anything. What do you do? Will you just let the comment go, or do something more? Student answers will vary. Students based on their personality and perspectives will approach this situation differently. Some will argue that such comments should not be tolerated in any progressive organization and or ―friendship‖ whereas, others will suggest that this is one individual’s opinion, and all are entitled to their opinions. However, it should be brought to students’ attention that more times than not, injustice and failure in progression takes place not because of action of one or few individuals but because of inaction or silence of many.
Learning Objective 16.2: Explain What We Should Know About Diversity Among Global Cultures.
Culture shock is discomfort in cross-cultural situations Culture shock is feelings of confusion and discomfort when in or dealing with an unfamiliar culture Stages of adjustment to a new culture (or culture shock), include: Confusion Small victories Honeymoon Irritation and anger Reality
Cultural intelligence is an ability to adapt to different cultures Cultural intelligence (or CQ) is the ability to adapt to new cultures and work well in situations of cultural diversity. People with high CQ have high cultural self-awareness and flexibility Willingness to learn from what is unfamiliar; modification of behaviors to act with sensitivity to another culture‘s ways DISCUSSION TOPIC
If any of your students have lived or traveled abroad, ask them to describe their experiences and relate them to the stages of adjusting to a new culture.
The ―silent‖ languages of cultures include context, time, and space High-context cultures - what is said or written may convey only part of the real message
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The rest must be interpreted from nonverbal signals and the situation as a whole—things such as body language, physical setting, and even past relationships among the people involved Low-context cultures - most communication tales place via the written or spoken word (U.S., Canada, and Germany) Monochronic cultures - one in which people do things one at a time Polychronic cultures - one in which people try to work on many different things at once, perhaps not in any particular order (Egypt) Proxemics— how people use and value space
Cultural tightness and looseness varies around the world In a tight culture, such as ones found in Korea, Japan, or Malaysia, social norms are strong and clear. Prevailing, well-known norms guide behavior. In a loose culture, such as ones found in Australia, Brazil, or Hungary, social norms are mixed and less clear cut. People may be less concerned with them, and conformity will vary. A mix of tightness or looseness on a cross-cultural team may result in soft or unstated conflict and missed performance opportunity.
Hofstede’s model identifies value differences among national cultures See Figure 16.3 for a depiction of how countries compare on Hofstede‘s five dimensions of national cultures: Countries vary on Hofstede‘s five dimensions of value differences in national cultures. For example, Japan scores somewhat comparatively higher on power distance and substantially higher on uncertainty avoidance and masculinity; the United States is much more individualistic and short-term thinking.. Imagine what this might mean when international business executives try to make deals or when representatives of national governments try to work across these cultural boundaries.
Power distance is the degree to which a society accepts or rejects the unequal distribution of power among people in organizations and society Uncertainty avoidance the degree to which a society tolerates risk and uncertainty Individualism-collectivism is the degree to which a society emphasizes individuals and their self-interests Masculinity-femininity is the degree to which a society values assertiveness and materialism rather than feelings, relationships and quality of life Time orientation is the degree to which a society emphasizes short-term or longterm goals Ecological fallacy is acting with the mistaken assumption that a generalized cultural value applies equally and always to all members of the culture
Intercultural competencies are essential career skills Intercultural competencies, skills and personal characteristics help us function successfully in cross-cultural situations. They are ―must haves‖ for career success.
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Perception management – a person must be inquisitive and curious about cultural differences and be flexible and nonjudgmental when interpreting and dealing with situations in which differences are at play. Relationship management – a person must be genuinely interested in others, sensitive to their emotions and feelings, and able to make personal adjustments while engaging in cross-cultural interactions. Self-management – a person must have a strong sense of personal identity, understand their own emotions and values, and be able to stay self-confident even in situations that call for personal adaptations due to cultural differences. 16.2 Questions for discussion with suggested answers 1) Should religion be included on Hall‘s list of the silent languages of culture? Religion could be considered a silent language. An example would be Muslims washing their feet which may not be understood by non-Muslims. Religions also involve many rituals and gestures which may be misinterpreted. 2) Which of Hofstede‘s cultural dimensions might pose the greatest challenges to U.S. managers working in Asia, the Middle East, or Latin America? Cultures in the United States and the Middle Eastern cultures differ greatly on the dimension of in-group collectivism. The Middle East is high on this measure, meaning that people there tend to be much more loyal and cohesive toward families and organizational memberships. The United States culture ranks low on this measure. Another key difference would be the role and dress of females in each country. The Middle East scores low on gender egalitarianism. 3) Even though cultural differences are readily apparent around the world, is the trend today for cultures to converge and become more like one another? With advances in the speed and quality of technology and communications, people globally are becoming increasingly exposed to other countries’ cultures and practices. An example in the United States is the homogenization of shopping malls and the seeming disappearance of regional accents. 16.2 Career Situation: What Would You Do? You‘ve just been asked to join a team being sent to China for 10 days to discuss a new software development project with your firm‘s Chinese engineers. It‘s your first trip to China or Asia. In fact, you‘ve only been to Europe as part of a study tour when in college. The trip is scheduled four weeks from today. What can you do to prepare for the trip and for your work with Chinese colleagues? What worries you the most about the trip and how well you‘ll do in the unfamiliar cultural circumstances? Student answers will vary. Students should bring up that reading up on and understanding the ―silent‖ languages of cultures include context, time, and space as well as other aspects of the culture will be crucial. Also, if possible when preparing, talk to some Chinese individuals in the company or in the community to understand the dos and don’ts. Copyright © 2021 John Wiley & Sons, Inc.
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Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Discrimination fears over social media use in hiring Yes, so we‘ve all been warned about the damage to our reputations and careers from inappropriate social media activity. When so many recruiters are checking the social media histories of job applicants, there may be more at issue than privacy concerns alone. How do the employment laws on discrimination apply to this new practice? The U.S. Equal Employment Opportunity Commission is examining how an employer‘s peek at a job candidate‘s postings on Twitter, Instagram, and other social sites may affect discrimination in hiring. Ask students: If recruiters can‘t legally ask an interviewee ―Are you married or pregnant?‖ or ―What is your sexual preference?‖ what are the legalities of them seeking answers to these questions from the Internet? And if recruiters do find social media information on one candidate but not on another, does this amount to discrimination that both aren‘t being treated equally?
Choices: Physical Attractiveness and Implicit Bias Implicit bias, discrimination driven by unconscious biases, is a key concern of human resource executives. The intent is to remove from employment decisions any criteria that aren‘t talent driven and performance related. But bias that is ―implicit‖ is by definition ―hidden,‖ ―deep,‖ ―subliminal,‖ and ―unrecognized.‖ In other words, it‘s hard to control. What about implicit bias based on physical attractiveness? Does appearance influence who gets hired, who gets retained, who gets promoted, who gets the raise? Most would admit it shouldn‘t, that appearance is beside the point. Choices like these are supposed to be performance based. Yet implicit bias is sticky. One researcher concludes that ―. . . even for a hiring manager that knows of this tendency and forces himself/herself to suppress it, it is still an influence.‖ Ask students have you ever experienced or witnessed such discrimination? Have you ever played the ―beauty card‖ to gain preferential treatment in a work situation? Have you ever held the ―beauty card‖ against someone else and used it to degrade their performance accomplishments? That said, is physical appearance something that can ever be removed completely from employment decision making? How should we deal with this tricky form of implicit bias?
Analytics: Employee Disengagement Varies Among World Cultures The Gallup organization regularly measures employee engagement around the world. One recent result showed the following rankings in respect to employees who self report as ―actively disengaged‖ from their work.
Australia and New Zealand – 16%
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United States and Canada – 18% Latin America – 19% Western Europe – 20% Central and Eastern Europe – 26% East Asia – 26%
Discuss why disengagement in the Australia, New Zealand, the United States, and Canada, is less than that reported in the other regions. Could there be a cultural explanation for the results, or is it more an economic issue? Ask students if they are surprised that even the best countries report 16% active disengagement?
Issues: Explanations vary for motherhood wage gap The difference in earnings between mothers and non-mothers is called the "motherhood wage gap." Where and why does it exist? The answer to question one is pretty much everywhere. Some findings from world surveys indicate that it is higher in developing than developed countries, that it increases with size of family, and that it tends to fall with the presence of female versus male children. So, what about question two - why does it exist at all? Explanations for the motherhood wage gap are several. The economic explanation is that employment interruption to bear children causes women to seek less training, go for lower wage jobs, and go for flexible jobs versus higher-paying ones. The sociological explanation is that women suffer due to role stereotypes, poor access to childcare, and employment in lower-paid female-dominant occupations. The comparative institutionalist explanation is that women do better in countries with supportive policies on maternity and paternity leaves and where there is less income inequality overall. The implementation explanation is that even where protections against discrimination exist, the laws are poorly and unevenly implemented resulting in unfair treatment of women in the workforce. Ask students if they would you agree that the "motherhood wage gap" is a real issue in our society and discuss possible explanations? Do they view this whole issue with a sense of optimism or pessimism, and why?
Quick Case: Silent Team Members The course instructor assigned teams to complete a case study in two parts spaced two weeks apart. Part A requires a preliminary oral presentation; Part B requires a final presentation and written report. Your team has five members, including two internationals from Japan and Indonesia. The team held three face-to-face meetings to finish Part A. The internationals were present and seemed interested, but they didn‘t directly contribute. The other members and you created the preliminary presentation, and assigned short parts for everyone to deliver. The Japanese and Indonesian team members didn‘t do well. They struggled with their oral presentation and didn‘t contribute during the question and answer session. The instructor said the team's presentation wasn't focused and well integrated. She said things would have to go much
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better on Part B to earn a high grade. The team is scheduled to meet tonight to recap Part A and start work on Part B. What can you say and do at this meeting to set the stage for higher performance on Part B? How might team dynamics and cross-cultural diversity have contributed to the Part A results? What insights from cultural models might explain the behavior of your international teammates? How can they be fully engaged so that the team takes best advantage of all of talents going forward? What role can you play during future team meetings to help accomplish this goal?
Ethics: Gender Quotas Add More Women to Corporate Boards It‘s old news that women are underrepresented on corporate boards. Even though the situation is improving, there is still a lot of progress yet to be made. Consulting firm PwC reports that women now hold board seats at the majority of S&P 500 firms, but fill more than two seats at just 25% of them. Global data show women holding 15% of board seats. The number doubles to 34% for countries that set specific gender quotas and levy noncompliance penalties. Ask Students what is your view of quotas and penalties as a means of increasing female representation on corporate boards? Are quotas the best way to advance women into these roles? Do quotas need to be backed up by fines and penalties in order to work? What about the ―trickledown effect‖? Can the imposition of quotas at the board level make a difference on diversity at all levels in the future? And how about the United States? Is Europe setting the ethics standard and we are lagging behind Or, is there good justification for our hesitation to embrace board quotas for women?
Explore Yourself: Diversity Maturity Today‘s organizations and the nature of our global workforce demand diversity maturity from anyone who is serious about career success. Being mature about diversity means being able to answer a confident ―yes‖ to questions such as these: • Do you accept responsibility for improving your performance? • Do you understand diversity concepts? • Do you make decisions about others based on their -abilities? • Do you understand that diversity issues are complex? • Are you able to cope with tensions in addressing -diversity? • Are you willing to challenge the way things are? • Are you willing to learn continuously? Be honest; admit where you still have work left to do. Use your answers to help set future goals to ensure that your actions, not just your words, consistently display positive diversity values. Get to know yourself better by taking the self-assessment on Diversity Awareness and completing the other activities in the Exploring Management
Terms to Define
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Biculturalism Cultural intelligence Culture shock Diversity Ecological fallacy Ethnic or national subcultures Ethnocentrism Gender subcultures Generational subcultures Glass ceiling High-context culture Inclusivity Individualism--collectivism Intercultural Competencies Leaking pipeline problem Loose Culture Low-context culture Managing diversity Masculinity-femininity Microaggressions Monochronic culture Multicultural organization Occupational subcultures Organizational subcultures Polychronic culture Power distance Proxemics Revolving Door Syndrome Tight Culture Time orientation Uncertainty avoidance Unconscious bias
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Multiple-Choice Questions 1. Which statement is most consistent with arguments that diversity is good for -organizations? (a) Having a diverse workforce guarantees success. (b) Diversity is easy to manage because it is already valued by all people. (c) Diverse workforces are good at dealing with diverse customers. (d) When workforces are diverse, organizations can spend less on training. 2. When members of minority cultures feel that they have to behave similar to the ways of the majority culture, this tendency is called (a) biculturalism (b) particularism (c) the glass ceiling effect (d) multiculturalism 3. The beliefs that older workers are not creative and prefer routine, low-stress jobs are stereotypes that might create bad feelings among members of different subcultures in organizations. (a) gender (b) generational (c) functional (d) ethnic 4. Among the three leadership approaches to diversity identified by Thomas, which one is primarily directed at making sure that minorities and women are hired by the organization? (a) equal employment opportunity (b) affirmative action (c) valuing diversity (d) managing diversity 5. Pluralism and the absence of discrimination and prejudice in policies and practices are two important hallmarks of . (a) the glass ceiling effect (b) a multicultural organization (c) quality circles (d) affirmative action 6. The term helps describe an organization that fully integrates members of minority cultures and majority cultures. (a) Equal employment opportunity (b) Affirmative action (c) Revolving door syndrome (d) Pluralism 7. When members of the marketing department stick close to one another, as well as share jokes and even a slang language, the likelihood is that a/an subculture is forming. (a) occupational (b) generational (c) gender (d) ethnic 8. When someone experiences culture shock on a study abroad trip, the first stage is likely to be one of anxiety caused by confusion in the new cultural setting. What is the next stage in culture shock? Copyright © 2014 John Wiley & Sons, Inc.
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(a) Experiencing a sense of confidence from small victories in dealing with differences. (b) Displaying outright irritation and anger at the ways of this new culture. (c) Wanting to give up and go home immediately. (d) Accepting reality and enjoying the good and bad aspects. 9. When dealing with proxemics as a silent language of culture, what is the issue of most concern? (a) How people use the spoken word to communicate. (b) How people use nonverbal to communicate. (c) How people use time to communicate. (d) How people use space to communicate. 10. In cultures, members tend to do one thing at a time; in members tend to do many things at once. (a) monochronic; polychronic (b) universal; particular (c) collectivist; individualist (d) neutral; affective
cultures,
11. When a foreign visitor to India attends a dinner and criticizes as ―primitive‖ the local custom of eating with one‘s fingers, he or she can be described as acting in a/an way. (a) culturally intelligent (b) polychronic (c) monochronic (d) ethnocentric 12. In a high-context culture we would expect to find (a) low uncertainty avoidance (b) high power distance (c) use of monochronic time (d) emphasis on nonverbal and verbal -communication
.
13. It is common in Malaysian culture for people to value teamwork and to display great respect for authority. Hofstede would describe this culture as high in both . (a) uncertainty avoidance and feminism (b) universalism and particularism (c) collectivism and power distance (d) long-term orientation and masculinity 14. On which dimension of national culture did the United States score highest and Japan score highest in Hofstede‘s original survey research? (a) masculinity, femininity (b) long-term, short-term (c) individualism, masculinity (d) high uncertainty avoidance, collectivism 16. If someone commits what Hofstede calls the ―ecological fallacy,‖ what are they likely to be doing? (a) Disregarding monochronic behavior. (b) Assuming all members of a culture fit the -popular stereotype. (c) Emphasizing proxemics over time orientation. (d) Forgetting that cultural intelligence can be learned. Copyright © 2014 John Wiley & Sons, Inc.
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Short-Response Questions: 16. What is the difference between valuing diversity and managing diversity? An approach of valuing diversity shows through leadership a commitment to helping people understand their differences, often through education and training programs. An approach of managing diversity, according to Roosevelt Thomas, is a step beyond in that it is where the leadership commits to changing the culture of the organization to empower everyone and create a fully inclusive environment where human resources are respected and fully utilized. 17. How can subculture differences create diversity challenges in organizations? There are numbers of subcultures that form in organizations and can become the source of perceived differences as people work with one another across subculture boundaries. Examples of common organizational subcultures include those based on age, gender, profession, and work function. If younger workers stereotype older workers as uncreative and less ambitious, a team consisting of an age mix of members might experience some difficulties. This illustrates an example of problems among generational subcultures. 18. If you were asked to give a short class presentation on the ―silent languages‖ of culture, what cultural issues would you talk about and what examples would you give? The anthropologist Edward Hall identified communication context, time, and space as silent languages of culture. High-context cultures rely on nonverbal and situational cues as well as the spoken word to convey messages, whereas low-context cultures are more focused on what is being said. An American businessperson might press an Indonesian client to sign a contract immediately, whereas the body language of the client might say she doesn’t want to, even though she is offering a reluctant ―okay‖ in their conversation. Monochromic cultures deal with time in a linear fashion, whereas polychromic cultures view it as more nonlinear and dynamic. Whereas the American schedules time, saves time, and tries to meet time deadlines (monochromic behavior), a Mexican might be less concerned about time budgeting like this and more likely to act flexibly in terms of time schedules and engagements. Proxemics involves the use of space in communication. If you observe Americans in conversation, there is likely to be a modest amount of distance maintained between speakers. But in Italy the conversation is likely to take place in much closer face-to-face conditions, and this would likely make the American a bit uncomfortable. 19. In what ways can the power distance dimension of national culture become an important issue in management? Organizations are power structures, and the way people view and respond to power differences in organizations can be very significant in how they operate. In a national culture where power distance is high, there would be a tendency in organizations to respect persons of authority—perhaps defer to them, use job titles and formal greetings, and refrain from challenging their views in public meetings. In a low or moderate power distance culture, by contrast, there might be more informality in using first names without job titles and being more casual in relationships and even in public disagreements with views expressed by senior people.
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Integration and Application Questions: 20. A friend in West Virginia owns a small manufacturing firm employing about 50 workers. His son spent a semester in Japan as an exchange student. Upon return, he said to his dad: ―Boy, the Japanese really do things right; everything is organized in teams; decisions are made by consensus, with everyone participating; no one seems to disagree with anything the bosses say. I think we should immediately start more teamwork and consensus decision making in our factory.‖ Questions: The friend asks you for advice. Using insights from Hofstede‘s framework, what would you say to him? What differences in the Japanese and American cultures should be considered in this situation, and why? The friend must recognize that the cultural differences between the United States and Japan may affect the success of group-oriented work practices such as quality circles and work teams. The United States was the most individualistic culture in Hofstede’s study of national cultures; Japan is much more collectivist. Group practices such as the quality circle and teams are natural and consistent with the Japanese culture. When introduced into a more individualistic culture, these same practices might cause difficulties or require some time for workers to get used to. At the very least, the friend should proceed with caution, discuss ideas for the new practices with the workers before making any changes, and then monitor the changes closely so that adjustments can be made to improve them as the workers gain familiarity with them and have suggestions of their own. Self-Assessment 16: Diversity Awareness Instructions Indicate ―O‖ for often, ―S‖ for sometimes, and ―N‖ for never in response to each of the following questions as they pertain to where you work or go to school. 1. How often have you heard jokes or remarks about other people that you consider offensive? 2. How often do you hear men ―talk down‖ to women in an attempt to keep them in an inferior status? 3. How often have you felt personal discomfort as the object of sexual harassment? 4. How often do you work or study with persons of different ethnic or national cultures? 5. How often have you felt disadvantaged because members of ethnic groups other than yours were given special treatment? 6. How often have you seen a woman put in an uncomfortable situation because of unwelcome advances by a man? 7. How often does it seem that African Americans, Hispanics, Caucasians, women, men, and members of other minority demographic groups seem to ―stick together‖ during work breaks or other leisure situations? 8. How often do you feel uncomfortable about something you did and/or said to someone of the opposite sex or a member of an ethnic or racial group other than yours? 9. How often do you feel efforts are made in this setting to raise the level of cross-cultural
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understanding among people who work and/or study together? 10. How often do you step in to communicate concerns to others when you feel actions and/or words are used to the disadvantage of minorities? Interpretation There are no correct answers for the Diversity Awareness Checklist. The key issue is the extent to which you are sensitive to diversity issues in the workplace or university. Are you comfortable with your responses? How do you think others in your class responded? Why not share your responses with others and examine different viewpoints on this important issue?
Class Exercise 16: Alligator River Story Read this story. Instructions 1. After reading the story, rank the five characters in the story beginning with the one you consider the most offensive and ending with the one you consider the least objectionable. That is, the character who seems to be the most reprehensible to you should be entered first in the list, then the second most reprehensible, and so on, with the least reprehensible or objectionable being entered fifth. Of course, you will have your own reasons for why you rank them in the order that you do. Very briefly note these, too. 2. Form groups as assigned by your instructor (at least four persons per group with gender mixed). Each group should (a) Elect a spokesperson for the group (b) Compare how the group members have ranked the characters (c) Examine the reasons used by each of the members for their rankings (d) Seek consensus on a final group ranking 3. After completing the prior steps, discuss in the group the outcomes and reasons for agreement or disagreement on the rankings. Pay particular attention to any patterns that emerge. 4. Have a spokesperson be prepared to discuss the results of the exercise and the discussion within your group with the rest of the class. Team Project 16: Job Satisfaction Around the World Question Does job satisfaction vary around the world, and does it reflect differences in national cultures? Instructions 1. Gather together recent reports on job satisfaction among workers in the United States. 2. Gather similar data on workers in other countries—for example, Canada, the United Kingdom, Germany, Brazil, Mexico, Japan, India. 3. Compare the job satisfaction data across countries to answer the project question.
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4. Consider pursuing your results further by researching how the various countries compare on working conditions, labor laws, and related matters. Use this information to add context to your findings. 5. Prepare a report to share your study with the rest of your class.
Case Snapshot: Unconscious Bias—The Struggle to Get Comfortable Being Uncomfortable Unconscious bias is one of the major themes behind today‘s diversity initiatives, and it‘s not a ―walk in the park‖ as we might say. It‘s well known that any biases we take with us to work can have profound implications for critical organizational functioning, cultural norms, and relationships. Such unconscious biases – also known as implicit social cognition – are stereotypes and attitudes that influence how people respond to others, making assumptions that can have important consequences. Importantly, people mostly aren‘t even aware of or recognize the presence of unconscious biases. Unconscious biases can permeate organizations, and can influence work policies and practices relating to recruitment, retention, performance management, promotion, and the treatment of customers waiting in line for a cup of coffee. Case discussion questions and suggested answers: 1. DISCUSSION In what ways are the actions and decisions of customer-facing employees potentially impacted by unconscious biases? Do you think that you have unconscious biases? How might unconscious biases impact the ways that employees react to, 1) a service failure involving an employee and a customer? 2) a successful client interaction leading to repeat business? 3) a major sale leading to a positive change in revenue? 4) a major accident leading to damaged equipment and injuries on the factory floor? Student answers will vary. Customer-facing employees can potentially be impacted by unconscious biases in many different ways: they can be cold and poor-responsive towards the customer, not willing to work with them, not listen to their actual needs/questions, second guessing their agendas, etc. Such service failures have a potential of not only negatively affecting the reputation of the firm and customer loyalty but also potential litigation. On the other hand, a successful client interaction will have the opposite (positive) impact. Word of mouth advertising is the best form of publicity and positive DEI experiences by customers can do wonders for repeat business and eventual impact on revenue and profits. If there is a major accident leading to damaged equipment and injuries on the factory floor, employees with unconscious biases may have the tendency to blame it on the minority employees if they are involved.
2. DISCUSSION
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Starbucks hit the diversity news for all of the wrong reasons. A white store manager called the police, after a white employee asked two black men to leave the store when one of the men asked to use the restroom before making a purchase. What role might unconscious bias have played in the escalation of this situation from a customer interaction into the historic, corporate racial bias incident it became? Students should be encouraged to think about this from the viewpoint of everything that has been going on with racial profiling and police brutality or use of unnecessary force by police cases and how they could have an impact on the unconscious biases aspect of employees who are also watching these events play out in the media.
3. PROBLEM SOLVING As a consultant, you‘re chosen by Caribou – a competitor of Starbucks – to assist with the development of a training intervention focused on helping employees to reduce their own unconscious biases. You have been asked to propose several approaches that might help the coffee giant to advance its DEI agenda, and to enhance its corporate culture. What kinds of approaches are out there? What kinds of approaches might you suggest that Caribou Coffee consider using to improve its DEI outcomes and culture? Why? This answer will vary. Students can be given this as an assignment to research what kinds of approaches are out there and develop an integrated suggested approach for the company. 4. FURTHER RESEARCH Gather the latest information on DEI trends. What is happening in the DEI space today? Did Starbucks make the right moves following this racial bias incident? How did this incident and its aftermath impact corporate sales and reputation? What can be said about Starbucks and its approach to diversity today? Is it a role model for Caribou and other competitors? Is it a firm to be praised in DEI training and used as a benchmark for excellence by others? What is your take on a ―changing cultural consciousness‖ and its implications for you and your career? A good reference article on DEI: Williams, J.C. and White, J.D., Update Your DE&I Playbook, Harvard Business Review, July 15, 2020, (https://hbr.org/2020/07/update-your-dei-playbook) It appears that Starbucks has taken a solid corporate wide approach in offering the frontline debiasing training. Hopefully, this filters up in modifying the HR systems and middle and top management approaches in unconscious bias. Overall, Starbucks has been a role model corporate citizen in DEI efforts. Students can research Starbucks and some of their competitors for a benchmarked comparison and offer suggestions. Students can refer to the following: Starbucks Equity, Inclusion and Diversity Timeline at their website link: https://stories.starbucks.com/press/2019/starbucks-equity-and-inclusion-timeline/
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Community Involvement Exercise Break the class into teams of three or four and ask each group to identify how many ―cultures‖ and/or ―subcultures‖ are in their group? These may be related to ethnic, religious, age, gender, etc. differences. Have them develop a list and then share it with the entire class. Ask them to discuss how may in their group can speak and read more than one language? Another question would be to ask students how many learned English as a second language. Compare the number of languages spoken by native English speakers versus the number spoken by those who learned another language first. Ask them to summarize the implications of their findings as they apply to a manager's role.
CHAPTER 17 Globalization and International Business Going Global Has Its Ups and Downs Chapter 17 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. The chapter begins by defining globalization, a global economy, and outsourcing. Next is a list of why businesses go global. A common international business activity, global sourcing, is discussed – and explained is the concept of a global supply chain, or how businesses purchase materials, manufacturing, and services worldwide. Next, a review of market entry approaches is given. In addition, joint ventures, global strategic alliances, and foreign subsidiaries are discussed. Next, the chapter describes the global business environment with its legal and political systems, trade agreements and barriers, and economic alliances. Global businesses and what they do, including the advantages and disadvantages of global corporations for host countries is explained. Ethical problems such as corruption, sweatshops and child labor are examined. Next, the concept of a global corporation and how it operates is discussed, along with how their operations can be controversial at home and abroad. There is a review of host-country complaints and home-country complaints. Ethical challenges faced by managers of global corporations are discussed. The four functions of management within the context of a global Copyright © 2021 John Wiley & Sons, Inc.
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business are examined. The importance of leading global operations requires universal leadership skills and global managers well versed working in different cultures.
Chapter 17 Learning Objectives
Learning Objective 17.1 Discuss how globalization affects international business. Learning Objective 17.2 Explain the challenges and controversies of global corporations. Chapter 17 Lecture Outline
Learning Objective 17.1 Discuss How Globalization Affect International Business. Globalization increases interdependence of the world’s economies. Businesses go global for many reasons. Global sourcing is a common international business activity. Export/import, licensing, and franchising are market entry forms of international business. Joint ventures and wholly owned subsidiaries are direct investment forms of international business. Different legal systems and economic nationalism pose international business challenges. Copyright © 2021 John Wiley & Sons, Inc.
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Regional economic alliances shape the international business context. Learning Objective 17.2 Explain the Challenges and Controversies Facing Global Corporations.
Global corporations have extensive operations in many countries. The actions of global corporations can be controversial. Managers of global corporations face ethics challenges. Planning and controlling are complicated in global corporations. Organizing can be difficult in global corporations. Leading is challenging in global corporations.
Chapter 17 Supporting Materials Figures Figure 17.1 How Does a T-Shirt Travel through the World‘s Global Economy? Figure 17.2 Companies Go Global in Ways That Range from Market Entry Initiatives to Direct Investments in Foreign Operations. Figure 17.3 What Can Go Right and Wrong in Relationships Between Global -Corporations and Their Host Countries? Figure 17.4 How Firms Might Use a Global Area Structure and a Global Product Structure to Organize International Operations. What’s Inside Career Readiness: The Risks of Overreliance on Global Suppliers Analytics: Corruption and Bribes Haunt Global Business Ethics: Do We Need a Stress Test for Global Supply Chains? Issues: Globalism, Pandemics, and the New World Order of Supply Chains Insight: Cultural Intelligence Opens Door to Opportunity Quick Case: 16 hours to J-burg Applications TestPrep 17 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 17: Global Intelligence o Class Exercise 17: American Football o Team Project 17: Globalization Pros and Cons Case Snapshot: Harley Davidson – Style and Strategy with a Global Reach
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Learning Objective 17.1: Discuss How Globalization Affect International Business.
Figure 17.1 illustrates the path that a t-shirt takes from the point the cotton is grown in Texas to its purchase in Florida by author Pietra Rivoli in The Travels of a T-Shirt in the Global Economy. The t-shirt eventually ends up as used clothing in a market in Tanzinia. The people, countries and economies it touches make for interesting reading.
Globalization increases interdependence of the world’s economies Global economy - an economy in which labor and resource supplies, capital and product markets, and business competition are worldwide in scope Globalization - process of growing interdependence among elements of the global economy Insourcing - creation of domestic jobs by foreign employers Global sourcing- shifts local jobs to foreign locations as businesses save costs by employing or contracting for lower-wage labor and buying lower-priced products and services in foreign countries Businesses go global for many reasons. o International business - conducts commercial transactions across national boundaries. o Reasons a business may "go international" Profits Customers Suppliers Capital Labor Economic development
Global Sourcing is a common international business activity Figure 17.2 illustrates that companies go global in ways that range from market entry initiatives to direct investments in foreign operations. Global Supply Chain refers to the network of outsourcing suppliers and contractors of a firm. Reshoring moves foreign production and jobs back to domestic locations.
Export/Import, licensing, and franchising are market entry forms of international business Exporting is selling locally made products in foreign markets Importing is buying foreign-made products and selling them in domestic markets Licensing agreements occur when foreign firms pay a fee for rights to make or sell another company‘s products in a specified region Franchising is when a foreign firm buys the rights to use another‘s name and operating method in its home country
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Joint ventures and wholly owned subsidiaries are direct investment forms of international business. A joint venture is a co-ownership arrangement in which the foreign and local business agree to pool resources, share risks, and jointly operate the new business A foreign subsidiary is a local operation completely owned and controlled by a foreign firm Often very expensive and therefore entails more risk Greenfield venture - foreign subsidiary is established by building an entirely new operation in a foreign country.
DISCUSSION TOPIC Prior to discussing this chapter in class, have each student find a recent newspaper or magazine article that relates to globalization issues. Articles can easily be found in business publications such as The Wall Street Journal, Business Week, Fortune, and Forbes, as well as many other publications such as the ―Money‖ section of USA Today, or popular magazines such as Time and Newsweek. Each student should be prepared to discuss his/her article in class. Choose several students to talk about the key ideas in their selected articles, and ask the entire class to help identify how these ideas relate to the challenges of globalization.
Different legal systems and economic nationalism pose international business challenges Common legal problems faced by international businesses involve taxes, incorporation practices and business ownership, negotiation and implementation of contracts, handling of foreign exchange, and protection of intellectual property such as patents, trademarks, and copyrights. Economic nationalism is a desire for self-sufficiency and less dependence on foreign suppliers of essential goods and services. World Trade Organization (WTO) is a global institution that was established to promote free trade and open markets around the world Member nations now number 161 Members are given the most favored nation status - gives a trading partner the most favorable treatment for imports and exports For extended learning, consider accessing the WTO "for students" site and encourage them to try some of the interactive learning Chapters. The URL is http://www.wto.org/english/forums_e/students_e/students_e.htm Nontariff barriers are nontax policies that governments enact to discourage imports, such as quotas and import restrictions Tariffs are taxes governments levy on imports from abroad Protectionism is a call for tariffs and other favorable treatment to protect domestic producers from foreign competition. Regional economic alliances shape the international business context
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NAFTA, the North American Free Trade Agreement, creates a trade zone that frees the flows of goods and services, workers, and investments among the United States, Canada, and Mexico. In 2020, the United States, Canada, and Mexico agreed to replace NAFTA with the USMCA, the United States Mexico Canada Agreement. European Union or EU is both a regional economic and political alliance. The EU now comprises 27 countries that are integrating politically with a European Parliament and economically by removing barriers to cross-border trade and business development. APEC, Asia-Pacific Economic Cooperation, links 21 nations to promote free trade and investment in the Pacific region. Southern Africa Development Community, SADC, links 14 southern African countries in trade and economic development efforts to improve prosperity and living standards for their citizens. DISCUSSION TOPIC Divide the class into small discussion groups. Assign each group one of the following four geographic regions: Europe, the Americas, Asia and the Pacific Rim, or Africa. Have the groups spend 10-12 minutes identifying the potential challenges and opportunities that these areas face in the context of the global economy. Have each group report out to the entire class with a brief summary of its key discussion points. 17.1 Questions for discussion with suggested answers 1) Why would a government want to prohibit a foreign firm from owning more than 49% of a local joint venture? Ownership of more than 49% constitutes at least an equal control of voting and ownership, and may mean majority control if over 50% legal majority. Majority control (voting and legal control) is power in any organization. In some ventures, such as sensitive defense or shipping industries, such control may be perceived as a national security risk. 2) Are joint ventures worth the risk of being taken advantage of by foreign partners, as with GM‘s ―Chery‖ case in China? Many laws such as the Foreign Corrupt Practices Act may, in fact, put U.S. companies at a disadvantage compared to other countries. Many American executives, owners, investors, and employees complain that there is not a ―level playing field‖ in laws that protect the environment, worker safety, child labor exploitation, bribery etc. and that these laws results in an unfair competitive advantage that unfairly tilts toward other countries. 3) What aspects of the U.S. legal environment might prove complicated for a Russian firm starting new operations in the United States?
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The Russian company will need to become familiar with anti-trust laws, occupational health and safety, equal opportunity, and sexual harassment laws and regulations. Other laws may include incorporation and business ownership, intellectual property, contracts and foreign currency exchange. Tariffs may also be placed on imports of materials from Russia. 17.1 Career Situation: What Would You Do? Your new design for a revolutionary golf putter has turned out to be a big hit with friends and players on the local golf courses. So, you decide to have some made, start selling them, and see if you can make a business out it. A friend says: ―Go to China, someone there will build it cheap and to your quality standard.‖ But you‘re not sure. Sending your design to China for manufacturing is worrisome, and there‘s a side of you that would really like to have ―Made in America‖ stamped on the clubs. Make a list of positives and negatives of manufacturing in each place. What factors are likely to drive your final decision on global versus local sourcing? Student answers will vary. A key item that students should bring up is the quality and control over the production/design. As a small business person, the legal/political environment may be quite strenuous to deal with. The cost may be a little more domestically, however, the control and the known legal system offers a level of comfort to entrepreneurs.
Learning Objective 17.2: Explain the Challenges and Controversies Facing Global Corporations.
Global corporations have extensive operations in many countries A global corporation, also known as a multinational corporation (MNC) has extensive operations in several foreign countries and derives a substantial portion of its sales and profits from international sources Transnational corporations operate worldwide without being identified with one national home Nestlé a good example Total integration of global operations, make decisions from a global perspective, and employ senior executives from many different countries For extended learning, consider showing students the Nestlé international website at www.nestle.com. The section on their global brands is an interesting view of their global reach. DISCUSSION TOPIC
An easy way to get students involved in a discussion at this point is to ask them to provide examples of global corporations or MNCs. Students should be able to quickly generate a long list of MNCs. Engage in some discussion of where these firms have their operations and what types of products or services they provide.
The actions of global corporations can be controversial
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Globalization Gap involves large global firms growing larger and more quickly than smaller firms and even countries are able to grow. The WTO reports that 51 of the 100 largest economies are global firms and that they control 70% of world trade 90% based in Northern Hemisphere Figure 17.3 depicts what can go right and wrong in relationships between a MNC and its host country
When things go right, both the global corporation, or MNC, and its host country gain. The global firm gets profits or resources, and the host country often sees more jobs and employment opportunities, higher tax revenues, and useful technology transfers. But when things go wrong, each finds ways to blame the other.
Host-country complaints about MNCs: o Excessive profits o Economic domination o Interference with government o Hires best local talent o Limited technology transfer o Disrespect for local customs MNC complaints about host countries: o Profit limitations o Overpriced resources o Exploitative rules o Foreign exchange o restrictions o Failure to uphold contracts Tax inversion - when a U.S.-based MNC buys a firm in a low-tax country and uses that firm to shield itself from having to pay U.S. taxes on foreign earnings.
Managers of global corporations face ethics challenges Corruption - illegal practices to further one‘s business interests The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. companies to engage in corrupt practices overseas May put U.S. firms at a competitive disadvantage, particularly in countries that consider commissions or bribes to be a cost of doing business Sweatshops - places were employees work long hours for low wages and often in poor, even unsafe, conditions Child labor - the full-time employment of children for work otherwise done by adults
Conflict Minerals Conflict minerals are ones where wealth gained from their sale helps pay for armed violence.
Planning and controlling are complicated in global corporations Currency risk - possible profit loss because of fluctuating exchange rates Weak dollar - more dollars are necessary to buy one Euro. This is bad for U.S. tourists, but may be good for U.S. companies that have strong sales in Europe, because U.S. products become more affordable to European buyers
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Political risk - potential losses because of instability and political changes in foreign countries Political risk analysis - forecasts how political events may have an impact on foreign investments
Organizing can be difficult in global corporations Global area structure - arranges production and sales functions into separate geographical units and assigns a top manager to oversee them Global product structure - gives worldwide responsibilities to product group mangers who are assisted by area specialists on the corporate staff See Figure 17.4 ―How can multinational corporations organize for success in their global operations?‖ for a depiction of both of the above organization structures
When the international side of a business grows, the structure often gets complicated. One approach is a global area structure, which assigns senior managers to oversee all product operations in major parts of the world. Another is the global product structure, in which area specialists advise other senior managers on business practices in their parts of the world.
Leading is challenging in global corporations Global managers - managers aware of international developments and competent in working across cultures
17.2 Questions for discussion suggested answers 1) Should becoming a transnational corporation be the goal of all MNCs? Yes, becoming transnational is in the interests of all companies that seek growth in sales and profits and new product and process ideas. Examples would include Coca-Cola, Ikea, McDonald’s, Accenture, and many other companies. 2) Is there anything that global firms and host governments can do to avoid conflicts and bad feelings with one another? The best deterrent to conflict between a host country and a MNC is the proactive involvement of the MNC in supporting and respecting the culture and people of the host country. This also calls for greater social responsibility in being involved within local communities. 3) Are laws such as the Foreign Corrupt Practices Act unfair to American companies trying to compete around the world? They certainly present challenges. Chapter Three explains that what is considered ethical can vary across cultures. The Foreign Corrupt Practices Act seems to take a stand that looks like Ethical Imperialism or the view that one's own ethical standard must be imposed on others. Cultural Relativism, or the belief that context alone determines ethical behavior would dictate "when in Rome, do as the Romans do". This would respect the local culture or laws, possible creating an ethical dilemma for the global manager from the U.S. If global managers from other countries operate with a cultural relativism view, while U.S. managers are held to an Ethical Imperialism view because of the
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Foreign Corrupt Practices Act, the U.S. company many view the act as unfairly restricting the ability to compete. Career Situation: What Would You Do? You‘ve just learned that one of your favorite brands of sports shoes is being investigated for being made in sweatshop conditions at factories in Asia. It really disturbs you, but the shoes are great. A student group on campus has a campaign to boycott the brand. Will you join the boycott, or not, and why? How effective are such consumer threats? Is it still too easy for global firms to get away with bad behaviors? If so, what can and should be done about it?
Student responses will vary.
Teaching Notes In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: The Risks of Overreliance on Global Suppliers The U.S. FDA reports that only 28% of firms making critical ingredients for pharmaceuticals used by American consumers are located in the United States. ―China is the go-to source for ibuprofen, hazmat suits, rubber gloves, surgical masks, ventilators, . . . probably toilet paper, for all we know,‖ says a Forbes magazine article. And all that turned out to be a major problem when the virus pandemic hit. Chinese suppliers were shut down, and the rest of the world grappled with the risks of overreliance on one country to provide medicines and supplies. Governments were challenged by surging populism calling for more self-sufficiency in critical industries ranging from health care to food production and more. They are still trying to sort things out, with approaches varying from one country to the next. Ask students has the COVID-19 pandemic and its aftermath caused you to rethink the risks of letting low costs drive decisions on where pharmaceuticals get made? How about food security? Should agriculture and farming be specialized among nations? Just where should we go from here to take best advantage of global business opportunities while minimizing the risks?
Choices: Nobel Prize Winner Wants Global Firms to Fight Poverty Should global businesses balance the pursuit of profit with genuine efforts to do public good? A strong and positive ―Yes!‖ is the answer offered by economist and Nobel Peace Prize winner Muhammad Yunus. He gained fame for creating the Grameen Bank to offer microcredit loans to help to fight poverty in his home country of Bangladesh. The bank loans small amounts (as low as $30) to applicants of low income (96% of whom are women) so they can start their own small businesses and establish financial independence. This model of microfinance has now spread around the world, serving some 200 million borrowers. Ask students when a multinational company travels into countries where social problems such as poverty, disease, and illiteracy are present, should it find a way to help? Can the social business model work in the global business context? Or is this something most likely to remain ―unusual‖ rather than ―common‖ in the future? Do you agree that global corporations can become powerful tools for eliminating social problems? Why, or why not?
Issues: Globalism, Pandemics, and the New World Order of Supply Chains Copyright © 2021 John Wiley & Sons, Inc.
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The virus pandemic hit everyone hard. One of the most sensational impacts was the uncertainties and difficulties of obtaining prescription drugs, medicines, and health care supplies like masks and gloves. A large percentage of these products were sourced from foreign suppliers that not only had their own production problems with stay-at-home orders in their communities, but also with governments that wanted their citizens served first. Ask students to reflect on the following questions: Why weren‘t firms better prepared to handle global supply chain disruptions when COVID-19 hit? Is it time to slow down the free trade movement, institute tougher export controls, and subsidize the costs of reshoring and growing critical industries? Have we learned from this crisis how to better manage future opportunities and risks of globalization? We can, but should we bring supply chains home or at least closer to it? But, at a minimum, it‘s going to take a lot of time and money. Where‘s the tipping point? What should we be doing in the interim and how do we deal with other nations with the same goals?
Ethics: Do We Need a Stress Test for Global Supply Chains? This Ethics Check feature explains the need for stress test for global supply chain. You Decision questions probe students' thoughts on the need and efficacy of such a test.
Analytics: Corruption and Bribes Haunt Global Business The Facts to Consider feature lists the best and worst countries for corruption and bribery. Use these additional questions for class discussion: What criteria would you use to evaluate the level of corruption in a country? What criteria would you use to evaluate the level of bribery? Visit the website of Transparency International at http://www.transparency.org/. Have the rankings changed? How have the rankings of the United States changed in recent years? How does corruption impact you as a consumer or employee?
Quick Case: 16 hours to J-burg Just sit back and relax, the flight is underway and you are sitting in business class on South African Airways flight 204 from JFK to Johannesburg. It's your first overseas assignment as an auditor for Deloitte and you've been rushing to prepare. You're flying in alone but will be met by four team members from Deloitte's local office in what they call "J-burg." You expect to be in country about a week. But, it all happened so fast. One day you're in the office finishing a local audit, that afternoon the boss calls and says he's sending you to Johannesburg, and three days later you're on the plane. It's taken all your interim time to finish the last project, pack, and talk with family. It turns out that your mother isn't really happy, she's not sure a single woman should be sent alone on this job. From your standpoint, though, an international assignment is a real statement that the company believes in your abilities. You even think this might be something you'd like to do more of. Copyright © 2021 John Wiley & Sons, Inc.
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Other than a short "meet-and-greet" video conference with the J-burg team and a description of the project from your boss, you haven't received any other preparation. Now that you're onboard SA204, the question is: Do you have what it takes to succeed with this assignment in a new country and culture? The flight is 16 hours long and you've decided to make some notes on "things I should do and not do." What's on your list and why? As a good auditor, you also decide to self assess on your readiness for cross-cultural teamwork in South Africa. So, you make a balance sheet of "personal assets and liabilities." What goes into each column?
Terms to Define APEC Child labor Conflict minerals Corruption Currency risk EU Economic nationalism Exporting Foreign Corrupt Practices Act Foreign subsidiary Franchising Global economy Global manager Global sourcing Global strategic alliance Globalization Globalization gap Greenfield venture Importing Insourcing
International business Joint venture Licensing Most favored nation status Global corporation or Multinational Corporation (MNC) NAFTA Nontariff barriers Political risk Political risk analysis Protectionism Reshoring SADC Sweatshop Tariffs Transnational corporation USMCA World Trade Organization (WTO)
Multiple-Choice Questions 1. In addition to gaining new markets, businesses go international in the search for . (A) Political risk (b) protectionism (c) lower labor costs (d) most favored nation status 2. When boot-maker Rocky Brands bought 70% ownership of a manufacturing company in the Dominican -Republic, Rocky was engaging in which form of international business? (a) import/export (b) licensing (c) foreign subsidiary Copyright © 2021 John Wiley & Sons, Inc.
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(d) joint venture 3. When Limited Brands buys cotton in Egypt and has pants sewn from it in Sri Lanka according to designs made in Italy and then sells the pants in the United States, this is a form of international business known as . (a) licensing (b) importing (c) joint venturing (d) global sourcing 4. When foreign investment creates new jobs that are filled by local domestic workers, some call the result as opposed to the more controversial notion of outsourcing. (a) globalization (b) insourcing (c) joint venturing (d) licensing 5. When a Hong Kong firm makes an agreement with the Walt Disney Company to use the Disney logo and legally make jewelry in the shape of Disney cartoon characters, Disney is engaging in a form of international business known as . (a) exporting (b) licensing (c) joint venturing (d) franchising 6. One major difference between an international business and a transnational corporation is that the transnational tries to operate . (a) without a strong national identity (b) in at least six foreign countries (c) with only domestic managers at the top (d) without corruption 7. The Foreign Corrupt Practices Act makes it illegal for . (a) U.S. businesses to work with subcontractors running foreign sweatshop operations (b) foreign businesses to pay bribes to U.S. government officials (c) U.S. businesses to make ―payoffs‖ abroad to gain international business contracts (d) foreign businesses to steal intellectual -property from U.S. firms operating in their countries 8. The World Trade Organization, or WTO, would most likely become involved in disputes between countries over _ . (a) exchange rates (b) ethnocentrism (c) nationalization (d) tariffs and protectionism 9. The athletic footwear maker New Balance discovered that exact copies of its running shoe Copyright © 2021 John Wiley & Sons, Inc.
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designs were on sale in China under the name ―New Barlun.‖ This is an example of a/an problem in international business. (a) most favored nation (b) global strategic alliance (c) joint venture (d) intellectual property rights 10. When the profits of large international businesses are disproportionately high relative to those of smaller firms and even the economies of some countries, this is called . (a) return on risk for business investment (b) the globalization gap (c) protectionism (d) most favored nation status 11. If a new government seizes all foreign assets of global firms operating in the country, the loss to foreign firms is considered a risk of international business. (a) franchise (b) political (c) currency (d) corruption 12. Who gains most when the dollar weakens versus a foreign currency such as the Brazilian real? (a) American consumers of Brazilian products. (b) Brazilian firms selling products in America. (c) American firms selling products in Brazil. (d) Brazilian consumers of European products. 13. Which of the following is identified by researchers as a universal inhibitor of leadership success across cultures? (a) Being positive. (b) Acting autocratic. (c) Being a good planner. (d) Acting trustworthy. 14. If an international business firm has separate vice presidents in charge of its Asian, African, and European divisions, it is most likely using a global structure. (a) product (b) functional (c) area (d) matrix 15. Which is the definition of a truly ―global manager?‖ (a) A manager who is competent working across cultures (b) A manager who travels internationally on business at least once a year (c) A manager who lives and works in a foreign country Copyright © 2021 John Wiley & Sons, Inc.
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(d) A manager who is employed by a transnational corporation
Short-Response Questions: 16. What is the difference between a joint venture and a wholly owned subsidiary? In a joint venture the foreign corporation and the local corporation each own a portion of the firm—e.g., 75% and 25%. In a wholly owned subsidiary, the foreign firm owns the local subsidiary in its entirety. 17. List three reasons why host countries sometimes complain about MNCs. The relationship between an MNC and a host country should be mutually beneficial. Sometimes, however, host countries complain that MNCs take unfair advantage of them and do not include them in the benefits of their international operations. The complaints against MNCs include taking excessive profits out of the host country, hiring the best local labor, not respecting local laws and customs, and dominating the local economy. Engaging in corrupt practices is another important concern. 18. What does it mean in an international business sense if a U.S. senator says she favors ―protectionism‖? If a senator says she favors ―protectionism‖ in international trade, it basically means that she wants to make sure that domestic American firms are protected against foreign competitors. In other words, she doesn’t want foreign companies coming into America and destroying through competition the local firms. Thus, she wants to protect them in some ways such as imposing import tariff s on the foreign firms’ products or imposing legal restrictions on them setting up businesses in America. 19. What is the difference between currency risk and political risk in international business? Currency risk in international business involves the rise and fall of currencies in relationship with one another. For an American company operating in Japan, currency risk involves the value of the dollar vis-ã -vis the yen. When the dollar falls relative to the yen (requiring more of them to buy 1 yen), it means that buying products and making investments in Japan will be more costly; the ―risk‖ of this eventuality needs to be planned for when business relationships are entered in foreign countries. Political risk is the potential loss in one’s investments in foreign countries due to wars or political changes that might threaten the assets. An example would be a Socialist government coming into power and deciding to ―nationalize‖ or take over ownership of all foreign companies. Integration and
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Integration and Application Question 20. Picture yourself sitting in a discussion group at the local bookstore and proudly signing copies of your newly published book, Business Transitions in the New Global Economy. A book buyer invites a comment from you by stating: ―I am interested in your point regarding the emergence of transnational corporations. But, try as I might, a company like Ford or Procter & Gamble will -always be ‗as American as Apple pie‘ for me.‖ Questions: How would you respond in a way that both (a) clarifies the difference between a multinational and a transnational corporation, and (b) explains reasons why Ford or P&G may wish not to operate as or be viewed as ―American‖ companies? This issue of MNC versus transnational is growing in importance. When a large global company such as Ford or IBM is strongly associated with a national identity, the firm might face risk in international business when foreign consumers or governments are angry at the firm’s home country; they might stop buying its products or make it hard for them to operate. When the MNC has a strong national identity, its home constituents might express anger and create problems when the firm makes investments in creating jobs in other countries. Also, when the leadership of the MNC views itself as having one national home, it might have a more limited and even ethnocentric approach to international operations. When a firm such as Ford or P&G operates as a transnational, by contrast, it becomes a global citizen and, theoretically at least, is freed from some potential problems identified here. Because a transnational views the world as its home, furthermore, its workforce and leadership are more likely to be globally diverse and have broad international perspectives on the company and its opportunities.
Self-Assessment 17: Global Intelligence Instructions Use the following scale to rate yourself on these 10 items. 1= Very poor 2 = Poor 3 = Acceptable 4 = Good 5 = Very good 1. I understand my own culture in terms of its expectations, values, and influence on communication and relationships. 2. When someone presents me with a different point of view, I try to understand it rather than attack it. 3. I am comfortable dealing with situations where the available information is incomplete and the outcomes unpredictable. 4. I am open to new situations and am always looking for new information and learning opportunities. Copyright © 2021 John Wiley & Sons, Inc.
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5. I have a good understanding of the attitudes and perceptions toward my culture as they are held by people from other cultures. 6. I am always gathering information about other countries and cultures and trying to learn from them. 7. I am well informed regarding the major differences in the government, political, and economic systems around the world. 8. I work hard to increase my understanding of people from other cultures. 9. I am able to adjust my communication style to work effectively with people from different cultures. 10. I can recognize when cultural differences are influencing working relationships, and I adjust my attitudes and behavior accordingly. Interpretation To be successful in the global economy, you must be comfortable with the cultural diversity that it holds. This requires a global mindset that is receptive to and respectful of cultural differences, global knowledge that includes the continuing quest to know and learn more about other nations and cultures, and global work skills that allow you to work effectively across cultures. Scoring The goal is to score as close to a perfect 5 as possible on each of the three dimensions of global intelligence. Develop your scores as follows: • Items (1 + 2 + 3 +4)/4 Global Mindset Score—The extent to which you are receptive to and respectful of cultural differences. • Items (5 +6 +7)/3 Global Knowledge Score—Your openness to know and learn more about other nations and cultures. • Items (8 + 9 + 10)/3 Global Work Skills Score—Your capacity to work effectively across cultures. Class Exercise 17: American Football Instructions Form into groups as assigned by the instructor. In the group, do the following: 1. Discuss American football—the rules, the way the game is played, the way players and coaches behave, and the roles of owners and fans. 2. Use American football as a metaphor to explain the way U.S. corporations run and how they tend to behave in terms of strategies and goals. 3. Prepare a class presentation for a group of visiting Japanese business executives. In this presentation, use the metaphor of American football to (1) explain American business strategies and practices to the Japanese and (2) critique the potential strengths and weaknesses of the American business approach in terms of success in the global marketplace. Team Project 17: Globalization Pros and Cons Question Copyright © 2021 John Wiley & Sons, Inc.
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―Globalization‖ is frequently in the news. You can easily read or listen to both advocates and opponents. What is the bottom line? Is globalization good or bad, and for whom? Instructions 1. What does the term ―globalization‖ mean? Review various definitions, and find the common ground. 2. Read and study the scholarly arguments about globalization. Summarize what the scholars say about the forces and consequences of globalization in the past, present, and future. 3. Examine current events relating to globalization. Summarize the issues and arguments. What is the positive side of globalization? What are the negatives that some might call its ―dark‖ side? 4. Consider globalization from the perspective of your local community or one of its major employers. From their perspectives, is globalization a threat or an opportunity, and why? 5. Take a position on globalization. State what you believe to be the best course for government and business leaders to take. Justify your position.
Case Snapshot: Harley Davidson – Style and Strategy with a Global Reach Although the company had been exporting motorcycles ever since it was founded, it was not until the late 1980s that Harley-Davidson management began to think seriously about international markets. New ads were developed specifically for different markets, and rallies were adapted to fit local customs. The company also began to actively recruit and develop dealers in Europe and Japan. It purchased a Japanese distribution company and built a large parts warehouse in Germany. Harley is currently the number one motorcycle brand in five European countries, and number two in four countries. This sustained buying has earned Harley four consecutive quarters of sales and market share growth in Europe. Harley has learned from its international activities and continues to make inroads in overseas markets including China and India. Case discussion questions and suggested answers: 1. DISCUSSION If you were CEO of Harley-Davidson, how would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales? Advantage Exports: Much of Harley’s growth is from exports of its product, well-known for being ―Made in the USA.‖ Copyright © 2021 John Wiley & Sons, Inc.
Disadvantages Exports: Expansion in export markets is vital to Harley’s existence, but there can be political and legal issues which preclude its entry into certain 17-380
Exporting is vital to its business strategy of ―Made in the USA.‖ Harley Davidson has grown sales internationally through dealer expansion and greater control. There are over 100 new international dealers in India, China and Brazil. To date, there are more international dealers than U.S. dealers. Exporting is still fairly simple, low cost and investment risk. Joint Ventures: joint venture with Porsche AG of Stuttgart, Germany and Japan. Sharing knowledge, marketing, and technology. Decreases capital risk involved, leverage Porsche’s relationship with the German government, local facilities, managerial skills, and market know-how. Wholly owned subsidiaries: shorter turnaround times, lower shipping costs. Greater quality and supply chain control.
markets (namely, India). If marketing and distribution channels change, this could impact business. Lack of knowledge of a foreign market. High transportation costs. Trade barriers and tariffs Problems with local agents Exchange rate fluctuations, duties and taxes
Joint Ventures: Privacy and proprietary issues, including decisions, policies and differences in execution strategies. Differences in culture, management styles, and motivation(s) for entering the joint venture. Wholly owned subsidiaries: Laws of another country, taxes, and tariffs, political and economic pressures. Capital investment and outlay.
Each can be a good choice under the circumstance, but key for Harley, above all else, is to maintain its ―Made in the USA‖ reputation. 2. DISCUSSION In America, Harley has shifted the positioning of its products away from simply motorcycles and more toward being status symbols of a particular lifestyle. What are the implications of cultural factors for positioning in other countries that Harley has targeted for growth—ones like Japan, China, France, and Brazil? With Asian, African, and South American societies leaning toward Western culture and all it has to offer, Harley‘s positioning itself as a ―way of life‖ instead of a producer of products fits well. Appealing to the ‗rebel‘ side of human nature, those customers in Asia, Africa, and South America show their individuality and non-conformity by owning and riding a Harley. As such, just as in the United States, Harley will see success in these other markets, not by being a producer of motorcycles, but rather as a ―way of life.‖ 3. PROBLEM SOLVING If you were advising Harley‘s CEO on business expansion in sub-Saharan Africa, what would you recommend in terms of setting up sales centers and manufacturing sites in countries like South Africa, Kenya, and Zimbabwe? When a new location is targeted, what would you suggest as the proper role for locals to play? Should they run everything, or should there be a mix of locals and expatriates? And if the CEO wants to send expatriates from the United States into some locations, what selection criteria would you recommend, and why?
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Currently, Harley Davidson has three dealerships located in Africa. Since Harley-Davidson prides itself on ―Made in the USA,‖ it may not make sense to recommend any type of manufacturing of its motorcycles in South Africa, Kenya or Zimbabwe. For its retail dealers, it may make sense for locals to sell its vehicles. When sending expatriates to some locations, a selection criterion of product knowledge and cultural intelligence makes good sense. 4. FURTHER RESEARCH Is it accurate to say that Harley is still ―on top of its game‖? How well is the company performing today in both domestic and global markets? Who are its top competitors in other parts of the world, and how well does Harley compete against them? Does the electric Harley have what it takes to fuel the company‘s next stage of global growth? Harley’s most recent quarterly reports: Harley-Davidson, Inc. (NYSE:HOG) second quarter 2017 diluted EPS decreased 4.5 percent to $1.48 compared to $1.55 in the second quarter of 2016. Second quarter net income was $258.9 million on consolidated revenue of $1.77 billion versus net income of $280.4 million on consolidated revenue of $1.86 billion for the same period in 2016. ―We are pleased with our ability to deliver strong margins in the quarter despite challenging market conditions, particularly in the U.S.,‖ said Matt Levatich, president and CEO, Harley-Davidson. ―Given U.S. industry challenges in the second quarter and the importance of the supply and demand balance for our premium brand, we are lowering our full-year shipment and margin guidance.‖ Harley-Davidson worldwide retail motorcycle sales were down 6.7 percent in the second quarter compared to the same period in 2016. Harley-Davidson retail motorcycle sales in the U.S. were down 9.3 percent compared to the year-ago quarter, with the overall U.S. industry down for the same period. Harley-Davidson's U.S. market share for the quarter was 48.5 percent in the 601cc-plus segment. Harley-Davidson’s international retail sales decreased 2.3 percent compared to the second quarter in 2016. For the first six months of a recent year, Harley-Davidson’s net income was $445.2 million on consolidated revenue of $3.27 billion compared to six-month previous year net income of $530.9 million on consolidated revenue of $3.61 billion. Through six months, worldwide retail motorcycle sales were down 5.7 percent from the same period a year earlier. ―Our long-term strategy, focused on building the next generation of Harley-Davidson riders, is our true north. Our new product investment is one pillar of our long-term strategy to build riders globally and we are energized by the strength of our new model year motorcycles coming later this summer.‖ Harley-Davidson aims to attract more women, minorities, and younger riders. The company has cut its product development time by 30% to get new models to market quicker. The company hopes that its union will accept more flexible work rules, as it continues to consolidate operations to increase efficiency. Retail Harley Davidson retail sales in emerging markets grew 30% in a recent year. Competitors: Honda, Kawasaki, Ultra, Triumph, Viper, Polaris Industries. Copyright © 2021 John Wiley & Sons, Inc.
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Suggested Team Exercise for Chapter 17 International Business Research Organize the class into teams of three or four. Assign each team a country to research in depth. I recommend that you select major emerging economies such as India or China, as well as countries that may be somewhat obscure to increase interest. Each team should have a different country. (You could assign this as an individual assignment, as well). Each team should prepare a presentation to the class on their assigned country. Two excellent websites that you may refer the teams to use, among other resources, are: The CIA World Factbook: https://www.cia.gov/cia/publications/factbook/index.html and also NationMaster.com: http://www.nationmaster.com/index.php Each team should provide a thorough report to the rest of the class based on their research including some of the following (much more could be added if you wish to make this an in-depth project):
Using a globe, show the country‘s location How big is the country? Compare it to another country or state What are the country‘s primary natural resources? What is the population size? Provide the birth and death rates. What is the life expectancy at birth and how does this compare to the United States? How many internet users are there? What is (are) the primary religion(s)? What is the primary language? What is the literacy rate (%) of the entire population? What type of government? What is the name of the capitol? What currency is used in the country. Provide an overview of the economy. What are the main industries, exports, imports? What is the GDP per capita? (This is a good relative indicator of a country‘s wealth or poverty that takes into consideration population size). Compare this to the Unites States. Crime or other issues or risks identified.
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Assign each student (this may be an individual assignment, or you may prefer to use pairs or small teams) a global corporation for a research assignment. Some companies may be duplicated based on class size, but this will not detract from the value of the exercise. They should obtain the following information (you may select all or parts of these questions for a large or small assignment): In how many countries does the company have operations or facilities? Provide a summary with sources to support this finding. Does the company have any subsidiaries or joint ventures or other forms of operating? Where is the corporate headquarters located? How many employees does the company have in total? Provide an analysis of the percentage of sales by country or region for the company for a recent fiscal (financial) year. How is the company organized structurally (organization chart)?
CHAPTER 18 Entrepreneurship and Small Business Taking Risks Can Make Dreams Come True Chapter 18 Overview Each Chapter contains several inset features designed to assist the student reader in applying the concepts to relevant examples. Career Readiness illustrates how experiences and activities relate to work performance. Analytics introduces research or trends that may be used for class discussion in the classroom or online for distance learning. Choices provides students with an opportunity to evaluate various sides of an issue in order to make an informed decision. Ethics profiles the issue of tracking technology to monitor worker behavior. Insight profiles the importance of critical thinking. Issues explores samples of debated topics in business and strategy. Quick Case presents a business-related scenario for class analysis and discussion. The objective of this chapter is to familiarize a student with the nature of entrepreneurship, small business, and new venture creation, so one can consider starting a business and, by doing so, make a personal contribution to society. Entrepreneurship is an important aspect of the contemporary business world. Entrepreneurship fuels success in a highly competitive business environment. The chapter begins by defining the terms entrepreneurship and entrepreneur, and then, with examples, discusses the characteristics, attitudes, background and interests of entrepreneurs. Personality traits and shared characteristics are discussed. The roles of women and minorities in entrepreneurship are described next, and common myths about entrepreneurs are examined. The Copyright © 2021 John Wiley & Sons, Inc.
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uniqueness of social entrepreneurship is examined, along with the entrepreneurs who are part of the movement to create impact through their ventures. The chapter then focuses on the importance of small businesses as mainstays in the economy and the ways of establishing small businesses, with particular emphasis being placed on entrepreneurial opportunities that may be developed through the Web, and with unique challenged faced by family businesses. Consideration is also given to the reasons for small business failures, and the types of aid available to these start-ups. Next, the chapter discusses important issues that arise in the creation of new business ventures, and describes the life cycle of the entrepreneurial firm and the managerial challenges that are encountered at each stage of the life cycle. The chapter concludes by examining practical managerial matters, such as, the mechanics of writing a business plan, the choice of a legal form of business ownership, and the options for financing the business.
Chapter 18 Learning Objectives
Learning Objective 18.1 Describe entrepreneurship and the characteristics of entrepreneurs. Learning Objective 18.2 Discuss the nature of small business and how to start one. Chapter 18 Lecture Outline
Learning Objective 18.1 What is Entrepreneurship, and Who Are Entrepreneurs? Entrepreneurs are risk-takers who spot and pursue opportunities. Entrepreneurs face risks of failure in their drives to succeed. Copyright © 2021 John Wiley & Sons, Inc.
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Entrepreneurs often share similar backgrounds and experiences. Entrepreneurs often share similar personality traits. Women and minority entrepreneurs are growing in numbers. Social entrepreneurs seek novel solutions to pressing social problems. Learning Objective 18.2 Discuss the Nature of Small Businesses and How to Start One.
Small businesses are mainstays of the economy. Small businesses must master three life-cycle stages. Family-owned businesses can face unique challenges. Many small businesses fail within five years. Assistance is available to help small businesses get started. A small business should start with a sound business plan. There are different forms of small business ownership. There are different ways of financing a small business.
Chapter 18 Supporting Materials Figures Figure 18.1 Entrepreneurship Career Checkup: How Do You Score on These Characteristics of Entrepreneurs? Figure 18.2 What Are the Stages in the Life Cycle of an Entrepreneurial Firm? Figure 18.3 Eight Reasons Why Many Small Businesses Fail. What’s Inside Career Readiness: Hobby First, New Business Startup Second Analytics: COVID-19 Is Not the Only Crisis Hitting Minority Entrepreneurs Ethics: Grad-School Start-Up with Social Mission Takes on Global Competitors Insight: Risk Taking has its Ups and Downs Issues: Students are crowdfunding their human capital Copyright © 2021 John Wiley & Sons, Inc.
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Quick Case: Money’s tight. How do we grow further?
Applications TestPrep 18 Multiple-Choice Questions Skill Building Portfolio o Self-Assessment 18: Entrepreneurship Orientation o Class Exercise 18: Entrepreneurs Among Us o Team Project 18: Community Entrepreneurs Case Snapshot: In-N-Out Burger: Building Them Better
Chapter Outline: Learning Objective 18.1: Describe Entrepreneurship and the Characteristics of Entrepreneurs? 4. Entrepreneurs are risk takers that spot and pursue opportunities Mompreneurs pursue business opportunities they spot as mothers. Entrepreneurship - is risk-taking behavior in pursuit of business success. Entrepreneur - person willing to take risks to pursue opportunities that others either fail to recognize or view as problems Serial entrepreneur - someone who starts and runs new ventures—business and nonprofit—over and over again, moving from one interest and opportunity to the next First-mover advantage – comes from being first to exploit a niche or enter a new market Examples of successful entrepreneurs include: Sara Blakely, founder of Spanx Shawn Corey Carter, better known as Jay-Z, and founder of Roc Nation and Rocawear Earl Graves, founder of Earl G. Graves Ltd, a multimedia company including Black Enterprise.com Anita Roddick, founder of The Body Shop, PLC Entrepreneurs face risks of failure in their drives to succeed ―Risk‖ is a core word in the definitions of entrepreneurs and entrepreneurship. Entrepreneurs often share similar characteristics and backgrounds See Table 18.1 for debunking common myths about entrepreneurs • Entrepreneurs are born, not made. Not true! Talent gained and enhanced by experience is a foundation for entrepreneurial success. • Entrepreneurs are gamblers. Not true! Entrepreneurs are risk takers, but the risks are informed and calculated. Copyright © 2021 John Wiley & Sons, Inc.
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• Money is the key to entrepreneurial success.
Not true! Money is no guarantee of success. There‘s a lot more to it than that; many entrepreneurs start with very little. • You have to be young to be an entrepreneur. Not true! Age is no barrier to entrepreneurship; with age often come experience, contacts, and other useful resources. • You have to have a degree in business to be an entrepreneur. Not true! But it helps to study and understand business fundamentals.
5. Entrepreneurs often share similar personality traits 4) Personality traits common among entrepreneurs 5) Internal locus of control 6) High energy level 7) High Need for achievement 8) Tolerance for ambiguity 9) Self-confidence 10) Passion and action orientation 11) Self-reliance 12) Flexibility 6. The veteran’s advantage in entrepreneurship includes strong organizational skills and tolerance for risk. See Figure 18.1 for Entrepreneurship Career Checkup DISCUSSION TOPIC To make the discussion of entrepreneurship more personally meaningful for students, ask them to describe themselves in terms of each of the above characteristics of entrepreneurs. Also ask if any of the students are thinking about becoming entrepreneurs and whether there are any students who are not likely or interested in becoming entrepreneurs. Have these two opposing groups of students describe themselves to the class in terms of the above characteristics, and then have the class examine the two descriptions for any differences. Women and minority entrepreneurs are growing in numbers Necessity-based entrepreneurship - start of new business because of no other employment options or other closed doors such as hitting glass ceilings Obstacles to minority entrepreneurship—as with female entrepreneurship—are real: Less than 1% of the available venture capital in the United States goes to minority entrepreneurs Only about 30% of loan applications by Black business owners get approved versus 60% of those by whites Social entrepreneurs seek novel solutions to pressing social problems Social entrepreneurs are persons whose entrepreneurial ventures pursue ways to help solve pressing social problems. Copyright © 2021 John Wiley & Sons, Inc.
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Impact entrepreneurship - pursuing business initiatives with the goal of helping society at large solve ―grand challenges‖ that we now face 18.1 Questions for discussion with suggested answers
Does an entrepreneur always need to have first-mover advantage in order to -succeed? While first-mover advantage provides a strong base for success, there are many examples of entrepreneurs who have improved products or services and gained market share and success. Toyota and Honda are two examples of companies that have taken significant market share from ―first-mover‖ Ford. Netflix has done very well in the movie rental business, even though it was years behind Blockbuster. Donato’s and Papa John’s pizza also have performed well, although Domino’s clearly had the first mover advantage in the delivered pizza industry.
Are there any items on the list of entrepreneurial characteristics that are ―must-haves‖ for someone to succeed in any career, not just entrepreneurship? Every one of the traits that is important for entrepreneurs are also important for career success.
Could growth of necessity-driven entrepreneurship be an indicator of some deeper problems in our society? Necessity-driven entrepreneurship often is the result of a lack of opportunities for minorities who, therefore, need to form their own business for economic needs. The shifting of many jobs to other countries has also resulted in downsizings and terminations in many cases, again forcing many to start their own businesses for economic survival. Necessity-driven entrepreneurship has existed since the very founding of our country.
18.1 Career Situation: What Would You Do? After reading the examples in this chapter, you‘re struck by the potential for you to try entrepreneurship. Indeed, you‘re thinking now that it would be very nice to be your own boss, do your own thing, and make a decent living in the process. But how do you get started? One possibility is to start with ideas passed around among your friends and family. Or perhaps there‘s something that has been on your mind as a great possible business idea. So, tell us about it. What ideas do you have? What would you like to pursue and why? Student responses will vary.
Learning Objective 18.2: Discuss the Nature of Small Businesses and How to Start One. 4) Small businesses are mainstays of the economy A small business has fewer than 500 employees according to the Small Business Administration (SBA), is independently owned and operated and does not dominate its industry. Almost 99% of businesses meet this definition. Copyright © 2021 John Wiley & Sons, Inc.
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They provide employment for 47.5% of private-sector workers. Small businesses employ 43% of high-tech workers such as scientists, engineers, and computer programmers. They produce more patents-per employee than large firms, receive 35% of federal government contract dollars, and export more than $400 billion of goods and services annually. The vast majority have fewer than 20 employees, and more than half are home based. Franchise—where a business owner sells to another the right to operate the same business in another location Business model - business intends to make a profit by generating revenues that are greater than costs Start-up - a new and temporary venture that is trying to discover a profitable, scalable business model for future success DISCUSSION TOPIC
Ask the students if they know any entrepreneurs. If they do, have them describe their perceptions of these entrepreneurs with respect to the above myths. Do the myths fit or not? Why or why not?
Small businesses must master three life-cycle stages See Figure 18.2 for a depiction of the typical progression of a small business Birth stage - where the entrepreneur struggles to get the new venture established and survive long enough to really test the marketplace Breakthrough stage - where the business model begins to work well, growth takes place, and the complexity of the business expands significantly Maturity stage - where the entrepreneur experiences market success and financial stability, but also has to face competitive challenges in a dynamic environment Family-owned businesses can face unique challenges Family-owned businesses - those owned and financially controlled by family members. They represent the largest percentage of businesses operating worldwide Family business feud - when family members disagree over how the business is run Succession problem - the issue of who will run the business when the current head leaves A succession plan - clearly spells out how leadership transition and related matters, including financial ones, are to be handled when the time for changeover occurs DISCUSSION TOPIC Ask the students if any of their families have their own businesses. For those students whose families do have their own businesses, ask them to describe for the class some of the challenges and joys that they have witnessed or experienced with a family-owned business. This discussion can be used as a bridge to the following material.
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Many small businesses fail within five years Data show that about 50% of start-up businesses fail within five years. Reasons small businesses fail (See Figure 18.3) Insufficient financing Lack of expertise Lack of expertise Lack of strategy and strategic leadership Poor financial control Growing too fast Lack of commitment Ethical failure
Assistance is available to help small business get started Business incubators offer services to help new businesses get started Help includes offices, and access to expertise and financing. Small Business Development Centers offer help to entrepreneurs and small business owners A small business should start with a sound business plan 1. Business plan - describes the goals for a new business, its operating plans, and the required financing 2. Banks and senior managers want to see a well-developed and justified business plan before committing funds 3. Once your ideas start to take shape, here are the elements to include in a typical business plan: o Executive summary—business purpose, highlights of plan o Industry analysis—nature of industry, economic trends, legal or regulatory issues, risks o Company description—mission, owners, legal form o Products and services—major goods or services, uniqueness vis-à-vis competition o Market description—size, competitor strengths and weaknesses, 5-year sales goals o Marketing strategy—product characteristics, distribution, promotion, pricing o Operations description—manufacturing or service methods, suppliers, controls o Staffing—management and worker skills needed and available, compensation, human resource systems o Financial projection—cash flow projections 1 to 5 years, breakeven points o Capital needs—amount needed, amount available, amount being requested o Milestones—timetable for completing key stages of new venture
There are different forms of small business ownership a. Sole Proprietorship - an individual that pursues business for a profit 3. this is the most common form of ownership 4. owner has personal liability for all business debts and claims
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b. Partnership - when two or more people agree to contribute resources to start and operate a business together i. Limited - a general partner and one or more limited partners whose losses are limited to their investment ii. General - simplest and most common form; owners share management and liability iii. Limited liability partnerships - usually professionals such as accountants, lawyers and doctors; limits the liability of the partners c. Corporation - usually ―Inc.‖ is a legal entity that exists separately from its owners a. Grants the right to engage in contracts b. The corporation is responsible for its own liabilities c. Life of its own d. Major disadvantage is the cost to incorporate e. The benefit corporation, or B-Corp, is a corporate form for businesses whose stated goals are to combine making a profit with benefiting society and the environment. f. Limited liability corporation (LLC) - combines the advantages of sole proprietorship, partnership, and corporations
There are different ways of financing a small business a. Debt financing - borrowing money that must be repaid with interest over time 1. Requires collateral that pledges personal or business assets b. Equity financing - exchanging ownership shares for outside investment monies; this money does not need to be paid back c. Venture capitalists- capital investments made by individuals or companies that pool capital to invest in new ventures; hope is that initial stake will can become profitable when the company becomes successful d. Initial Public Offering (IPO) - when the shares in the business are sold to the public at large, usually beginning to be traded on one of the major stock exchanges e. Angel investor - a wealthy investor willing to invest in return for equity in a new venture f. In crowdfunding, new ventures go online to get start-up financing for their businesses from crowds of investors.
18.2 Questions for discussion with suggested answers 5. Given the economic importance of small businesses, what could local, state, and federal
governments do to make it easier for them to prosper? Economic incentives such as abatements, subsidized labor force training, and tax credits all make sense to support and attract small businesses. 6. If you were asked to join a small company, what would you look for as potential success
indicators in its business plan? I would look at several areas: 1) the financial strength; 2) the strategic competitive differential if any; 3) the quality and leadership of the owner(s); and success to date. Copyright © 2021 John Wiley & Sons, Inc.
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7. Why might the owner of a small but growing business want to be careful when accepting
big investments from venture capitalists? Venture capitalists can adversely affect a business through micro-management and overinvolvement. If the company does not perform according to plan, most agreements allow venture capitalists to gain majority or total voting and operating control; it is entirely possible the initial owners and key executives may be terminated in such instances. Also, many venture capital deals or agreements contain onerous terms for the founders. 18.2 Career Situation: What Would You Do? At this point, your start-up textbook-rating Web site is attracting potential investors. One angel investor is willing to put up $150,000 to help move things to the next level. But presently you and your two co-founders haven‘t done anything to legally structure the business. you‘ve operated on personal resources and a ―handshake‖ agreement among friends. What‘s the best course of action to legally set up the company? What‘s your best option for getting the financing needed for future growth while still protecting your ownership? Student responses will vary. They should explore all the options for forms of business and come to a conclusion that corporation, probably LLC, may be a better option for the type and size of business. Angel investors, venture capital, and bank financing are good options for financing in its current state.
Teaching Notes: Hobby First, New Business Startup Second In this section, ideas, exercises, and assignments are provided to assist you in integrating the concepts in Exploring Management for your students, especially the special features of the text.
Career Readiness: Hobby First, New Business Startup Second A lot of us dream about it, but not many do it. But, ―Yes!‖ it is possible to turn a hobby into a business. And you don‘t have to rush it. There‘s nothing wrong with taking it slow when trying to turn a hobby and leisure-time interest into a profit-making business. People who do so are ―not simply interested in exploiting an opportunity in the market, but they‘re doing something usually for the love of the activity,‖ says Stephen Lipmann of Miami University. His colleague Phillip Kim of Babson College adds: ―They‘re doing something they enjoy, so they‘re not likely to give up.‖ Ask students if there is a business opportunity lurking in one of their pastimes and leisure interests? Discuss if they would like to be a business owner – part-time or full-time, and enjoy the benefits it might bring? Is now a good time to start thinking about new venture possibilities in your life? Or, has the economic impact of the coronavirus pandemic turned you away from such thinking?
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Analytics: COVID-19 Is Not the Only Crisis Hitting Minority Entrepreneurs This feature provides statistics on COVID-19 and structural and racial and gender disparities in business ownership in minority-owned businesses in the U.S. This activity can be used in class or online for discussion in addition to the question in the "Your thoughts?" section. Assign each student (this may be an individual assignment, or you may prefer to use pairs or small teams) the task to identify two successful businesses started by minorities along with businesses facing these multiple crises. Teams will provide a brief background on the entrepreneur, the concept of the business, and what are governments doing to address this?
Ethics: Grad-School Start-Up with Social Mission Takes On Global Competitors The founders—David Gilboa, Neil Blumenthal, Andrew Hunt, and Jeffrey Raider—wrote a Web-driven business plan that many questioned at first. Could eyeglasses be sold over the Internet? The Warby Parker answer was: ―Of course!‖ If you‘re in doubt, and especially if you wear glasses, check out the offerings on warbyparker.com. You can buy stylish glasses for as low as $95—frames with Rx lenses and free shipping. All this is made possible by the founders‘ careful analysis of the industry and its supply chains. Ask students is the Warby Parker form of caring capitalism the business model of the future? Does it attract you as a potential employee? Does it attract you in terms of a template for entrepreneurship that you might pursue, alone or in partnership with others? Take a moment and think about the possibilities. Warby Parker attached the market for eyeglasses. What other industries and products are potentially open to similar entrepreneurial initiatives?
Choices: Successful Craft Brewery Owners Gift Company to Employees The Arnolds are transferring ownership of the brewery to their 60+ employees. Under an employee-ownership plan, employees will use profits from the brewery to purchase it outright over five years. At that point the Arnolds will act as advisors to their former employees as they run the company. Discuss with the students the views for and against gifting your company to employees? Should more entrepreneurs consider employee ownership at the maturity stage of the business life cycle? Is an entrepreneur‘s legacy one that only their families get to enjoy? Or, is the notion of ―family‖ in a small business a bigger concept, one that includes employees as well?
Quick Case: Money’s tight. How do we grow further? We‘re just about a year into full-time work on a high-school tutoring service called BeUrBest. It offers tutoring to underprivileged students at ―cost.‖ Tutors work for free, donating their time, while the fees collected pay for operating costs. It‘s been popular. We‘ve already branched out into two neighboring communities and are about to host an out-of-state visitor who heard about us from a relative. But, here‘s the problem. Our bare-bones budget allows no office frills and pays only basic staff wages. We want to grow but need money for expansion and also to attract and support an ever-increasing pool of volunteer tutors. Two ideas are on the table. 1 – Offer Copyright © 2021 John Wiley & Sons, Inc.
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tutoring also to students who can pay ―market‖ fees, and use the extra income for growth. 2 – Connect with community charities and civic organizations to attract financial sponsorships and donations. BeUrBest is your baby – you had the idea and you started it. But now the original model is being tested. Which option for obtaining growth financing do you prefer —#1 or #2— and why? Can you come up with other options that could keep BeUrBest growing while also sticking true to your social business model? Or, should you take growth off the table and be content serving one or just a few local communities?
Issues: Students are Crowdfunding their human capital Crowdfunding is an interesting option for entrepreneurs, but the question posed has to do with how far the practice should go. If an undergraduate student at an art and design school needs money to pay back student loans and fund a startup company, he can go online to upstart.com and there are investors willing to front him the money in return for a portion of what he earns in the future. He signs on and takes in $38,500. Does it make sense to have equity stakes in human capital? Discuss with the students the views for and against student crowdfunding – the practice of crowdfunding human capital.
Terms to Define Angel investor Benefit Corporation Business incubator Business model Business plan Corporation Crowdfunding Debt financing Entrepreneur Entrepreneurship Equity financing Family business Family business feud Franchise First-mover advantage General partnership Impact entrepreneurship Initial public offering (IPO) Intrapreneur Limited liability corporation (LLC) Limited partnership Copyright © 2021 John Wiley & Sons, Inc.
Necessity-based -entrepreneurship Partnership Serial entrepreneur Small business Small business development centers Social entrepreneur Sole proprietorship Start-ups Succession plan Succession problem Venture capitalists Veteran‘s advantage
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Multiple-Choice Questions 1. An entrepreneur who thrives on uncertainty displays (a) high tolerance for ambiguity (b) internal locus of control (c) need for achievement (d) action orientation 2.
is a personality characteristic common among entrepreneurs. (a) External locus of control (b) Inflexibility (c) Self-confidence (d) Low self-reliance
3. When a new business is quick to capture a market niche before competitors, this is (a) intrapreneurship (b) an initial public offering (c) succession planning (d) first-mover advantage 4. Almost (a) 40 (c) 75
% of U.S. businesses meet the definition of ―small business.‖ (b) 99 (d) 81
5. A small business owner who wants to pass the business to other family members after retirement or death should prepare a plan. (a) retirement (b) succession (c) partnership (d) liquidation 6. A common reason new small businesses often fail is (a) the owner lacks experience and business skills (b) there is too much government regulation (c) the owner tightly controls money and finances (d) the business grows too slowly 7. A pressing problem faced by a small business in the birth or start-up stage is (a) gaining acceptance in the marketplace (b) finding partners for expansion (c) preparing the initial public offering (d) getting management professional skills 8. A venture capitalist that receives an ownership share in return for investing in a new business is providing financing. (a) debt (b) equity (c) limited (d) corporate 9. In (a) debt (c) partnership
financing, the business owner borrows money as a loan that must be repaid. (b) equity (d) limited
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10. If you start a small business and want to avoid losing any more than the original investment, what form of ownership is best? (a) sole proprietorship (b) general partnership (c) limited partnership (d) corporation 11. The first element in a good business plan is (a) an industry analysis (b) a marketing strategy (c) an executive summary (d) a set of performance milestones 12. Trends in U.S. small businesses show (a) a growing number owned by minorities (b) fewer small businesses using the Internet (c) large businesses creating more jobs (d) fewer small businesses family owned 13. A protects small business owners from personal liabilities for losses. (a) sole proprietorship (b) franchise (c) limited partnership (d) corporation 14.
take ownership shares in a new venture in return for start-up funds. (a) Business incubators (b) Angel investors (c) SBDCs (d) Intrapreneurs
15.
makes social entrepreneurship unique. (a) Lack of other career options (b) Focus on international markets (c) Refusal to finance by loans (d) Commitment to solving social problems
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Short-Response Questions: 16. What is the relationship between diversity and entrepreneurship? Entrepreneurship is rich with diversity. It is an avenue for business entry and career success that is pursued by many women and members of minority groups. Data show almost 40% of U.S. businesses are owned by women. Many report leaving other employment because they had limited opportunities. For them, entrepreneurship made available the opportunities for career success that they lacked. Minority-owned businesses are one of the fastest-growing sectors, with the growth rates highest for Hispanic-owned, Asian-owned, and African American-owned businesses in that order. 17. What major challenges are faced at each life cycle stage of an entrepreneurial firm? The three stages in the life cycle of an entrepreneurial firm are birth, breakthrough, and maturity. In the birth stage, the leader is challenged to get customers, establish a market, and find the money needed to keep the business going. In the breakthrough stage, the challenges shift to becoming and staying profitable and managing growth. In the maturity stage, a leader is more focused on revising/maintaining a good business strategy and more generally managing the firm for continued success and possibly more future growth. 18. What are the advantages of a limited partnership form of ownership? The limited partnership form of small business ownership consists of a general partner and one or more ―limited partners.‖ The general partner(s) play an active role in managing and operating the business; the limited partners do not. All contribute resources of some value to the partnership for the conduct of the business. The advantage of any partnership form is that the partners may share in profits, but their potential for losses is limited by the size of their original investments. 19. What is the difference, if any, between a venture capitalist and an angel investor? A venture capitalist is an individual or group of individuals that invests money in new startup companies and gets a portion of ownership in return. The goal is to sell their ownership stakes in the future for a profit. An angel investor is a type of venture capitalist, but on a smaller and individual scale. This is a person who invests in a new venture, taking a share of ownership, and also hoping to gain profit through a future sale of the ownership.
Integration and Application Questions:
You have a great idea for an Internet-based start-up business. A friend advises you to clearly link your business idea to potential customers and then describe it well in a business plan. ―You won‘t succeed without customers, she says, and you‘ll never get a chance if you can‘t attract financial backers with a good business plan.‖ Questions: What questions will you ask and answer to ensure that you are customer-focused in this business? What are the major areas that 18-398
you would address in your initial business plan? The friend is right—it takes much forethought and planning to prepare the launch of a new business venture. In response to the question of how to ensure that you are really being customer-focused in the new start-up, I would ask and answer the following questions to frame my business model with a strong customer orientation. ―Who are my potential customers? What market niche am I shooting for? What do the customers in this market really want? How do these customers make purchase decisions? How much will it cost to produce and distribute my product/service to these customers? How much will it cost to attract and retain customers?‖ Following an overall executive summary, which includes a commitment to this customer orientation, I would address the following areas in writing up my initial business plan. The plan would address such areas as company description—mission, owners, and legal form—as well as an industry analysis, product and services description, marketing description and strategy, staffing model, financial projections with cash flows, and capital needs.
Self-Assessment 18: Entrepreneurship Orientation Instructions Answer each of the following questions. 1. What portion of your college expenses did you earn (or are you earning)? (a) 50% or more (b) less than 50% (c) none 2. In college, your academic performance was/is (a) above average. (b) average. (c) below average. 3. What is your basic reason for considering opening a business? (a) I want to make money. (b) I want to control my own destiny. (c) I hate the frustration of working for someone else. 4. Which phrase best describes your attitude toward work? (a) I can keep going as long as I need to; I don‘t mind working for something I want. (b) I can work hard for a while, but when I‘ve had enough, I quit. (c) Hard work really doesn‘t get you anywhere. 5. How would you rate your organizing skills? (a) superorganized (b) above average (c) average (d) I do well to find half the things I look for. 6. You are primarily a(n) (a) optimist. (b) pessimist. (c) neither. 7. You are faced with a challenging problem. As you work, you realize you are stuck. You will most likely (a) give up. (b) ask for help. (c) keep plugging; you‘ll figure it out. 8. You are playing a game with a group of friends. You are most interested in (a) winning. (b) playing well. (c) making sure that everyone has a good time. (d) cheating as much as possible. 9. How would you describe your feelings toward failure? (a) Fear of failure paralyzes me. (b) Failure can be a good learning experience. (c) 18-399
Knowing that I might fail motivates me to work even harder. (d) ―Damn the torpedoes! Full speed ahead.‖ 10. Which phrase best describes you? (a) I need constant encouragement to get anything done. (b) If someone gets me started, I can keep going. (c) I am energetic and hardworking—a self-starter. 11. Which bet would you most likely accept? (a) a wager on a dog race (b) a wager on a racquetball game in which you play an opponent (c) Neither. I never make wagers. 12. At the Kentucky Derby, you would bet on (a) the 100-to-1 long shot. (b) the odds-on favorite. (c) the 3-to-1 shot. (d) none of the above. Scoring Give yourself 10 points each for answers 1a, 2a, 3c, 4a, 5a, 6a, 7c, 8a, 9c, 10c, 11b, 12c; total the scores and enter the result here [I = ]. Give yourself 8 points each for answers 3b, 8b, 9b; enter total here [II = ]. Give yourself 6 points each for answers 2b, 5b; enter total here [III = ]. Give yourself 5 points for answer 1b; enter result here [IV = ]. Give yourself 4 points for answer 5c; enter result here [V = ]. Give yourself 2 points each for answers 2c, 3a, 4b, 6c, 9d, 10b, 11a, 12b; enter total here [VI = ]. The other answers are worth 0 points. Total your summary scores for I 1 II 1 III 1 IV 1 V 1 VI and enter the result here: My Entrepreneurship Potential Score is . Interpretation This assessment offers an impression of your entrepreneurial profile (EP). It compares your characteristics with those of typical entrepreneurs, according to this profile: 1001 5 Entrepreneur extraordinaire; 80–99 = Entrepreneur; 60–79 = Potential entrepreneur; 0–59 = Entrepreneur in the rough.
Class Exercise 18: Entrepreneur Role Models Michael Gerber, author and entrepreneur, says: ―The entrepreneur in us sees opportunities everywhere we look, but many people see only problems everywhere they look.‖ Instructions 1. Think about the people you know and deal with. Who among them is the best example of a successful entrepreneur? Write down their name and also a brief justification for your choice. 2. Think about your personal experiences, interests, and ideas that might be sources of personal entrepreneurship. Jot down a few notes that set forth some tentative plans for turning at least one into an actual accomplishment. 3. Form teams as assigned by the instructor. Within the team share both (a) your example of a successful entrepreneur and (b) your personal entrepreneurship plan. 4. Choose one as your team‘s ―exemplar‖ entrepreneurs to share with the class at large. Focus 18-400
on the entrepreneur as a person, the entrepreneur‘s business or nonprofit venture, what factors account for success and/or failure in this case, and what the entrepreneur contributes to the local community. 5. Choose one of the entrepreneurship plans from among your teammates and be prepared to share and explain it as well with the class at large.
Team Project 18: Community Entrepreneurs Entrepreneurs are everywhere. Some might live next door, many own and operate the small business of your community, and you might even be one. Question Who are the entrepreneurs in your community and what are they accomplishing? 1. Read the local news, talk to your friends and other locals, and think about where you shop. Make a list of the businesses and other organizations that have an entrepreneurial character. Be as complete as possible – look at both businesses and nonprofits. 2. For each of the organizations, do further research to identify the persons who are the entrepreneurs responsible for them. 3. Contact as many of the entrepreneurs as possible and interview them. Try to learn how they got started, why, what they encountered as obstacles or problems, and what they learned about entrepreneurship that could be passed along to others. Add to these questions a list of your own: What do you want to know about entrepreneurship? 4. Analyze your results for class presentation and discussion. Look for patterns and differences in terms of entrepreneurs as persons, the entrepreneurial experience, and potential insights into business versus social entrepreneurship. 5. Consider writing short cases that summarize the ―founding stories‖ of the entrepreneurs you find especially interesting.
Case Snapshot: In-N-Out Burger—Building Them Better 1. Discussion Rich Snyder was 24 years old when he assumed leadership of In-N-Out after his father passed away. In what ways do you think his young age was an asset or a liability for his leadership? Does age really matter in entrepreneurship? A company with a strong culture won't be as quickly affected by an immature leader; however, Snyder seems to have all of the qualifications mentioned in the chapter including a family background in entrepreneurship, so his young age may have been an energizing factor. 2. Discussion In an era of fusion cuisine and extreme fajitas, is In-N-Out‘s long-term strategy of offering only four simple food items still on track? How about the firm‘s approach to employees? Does it give them an edge over the fast-food competition?
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This organization has minimized this risk and actually turned it into a competitive advantage. Technically the company offers only four food items on its menu. However, the not so secret ―secret menu‖ offers many additional items that allow patrons to customize their meals. Although there are copies of this secret menu for sale on E-Bay at a suggested bid of $14.99, InN-Out-Burger actually lists these choices on its website. These options go far beyond those offered at most fast food chains and include such selections as half of a burger (ideal for children) and no salt added to one‘s fries. 3. Problem Solving A would-be entrepreneur walks into your bank and asks to receive financing for a business plan modeled after In-N-Out‘s approach and extremely simple menu. But all the ingredients would come from local suppliers and growers within a 30-mile radius of town. Is this a winning recipe deserving of financing from your bank? What would you like to see in the business plan before approving the loan? As a banker, I would know that the restaurant business has the highest rate of failure among all types of small businesses. I would be interested in how much research this person had done on the consumer demand for this type of restaurant and the availability of local suppliers. Fast food is a mature over capacity industry that has many strong, well-capitalized competitors. An additional consideration would be the viability and limitations of using only suppliers located within thirty miles. With today‘s transportation efficiencies and effective supply chain distribution systems, this may unnecessarily limit the entrepreneur‘s ability to purchase goods at competitive prices. Low pricing in consumer minds is almost synonymous with fast food. While this is an interesting concept, it is probably better suited to a traditional style restaurant where he could appeal to this niche target market than to the fast food sector. As this business plan was presented, I would not risk the bank‘s funds supporting this proposal. 4. Further Research Imagine you were asked by In-N-Out Burger to research current industry and social trends, and consumer values and tastes. Write an ad campaign that coincides with the current market landscape and still adheres to In-N-Out‘s core values: quality, consistency, friendliness, and cleanliness. How would your ad appeal to customers in ways that the ads from the big chains—McDonald‘s, Wendy‘s, and Burger King—do not? How would you use social media as part of this ad campaign? And, what can you do that would make this ad so attractive that it goes viral on YouTube? While students‘ answers may vary depending on where they obtain their information on fast food industry trends, this organization has ―promoted‖ itself quite successfully through sales promotion such as T-shirts, bumper stickers, etc. and word of mouth from satisfied customers. Students need to keep in mind that these techniques have helped to hold down costs and should be utilized to the fullest especially through the use of social media.
Suggested Team Exercise for Chapter 18 Assign teams the task of developing a small business that you delegate. They should 18-402
1) Visit the SBA website http://www.sba.gov/ and see firsthand the many resources and information provided. You may want the team to provide a brief summary of the benefits of the website as a preliminary assignment before 2) below, or as an integral part of that presentation. 2) The SBA site has very useful link to sample real business plans provided by the SBA as a free service /reference. Each team should select a different business plan to review and present that plan to the class as if they were presenting it to a bank. Every member should be required to participate. They should use Power Point slides and, of course, cite the SBA website as their source.
Additional Team Activity An additional assignment for the class is to have teams of students provide their concept for a business that they think would be a success using the Internet. As part of this concept, they should name the target ―audience‖ or likely customer base; the rationale for its success; a clever name for the business; and how the company would generate sales or revenues. To make this more interesting, the instructor may make it more ―real-world‖ and have teams present their concept in a ―pitch‖ to a panel of ―venture capitalists‖ (this should include the teacher and perhaps a volunteer fellow faculty member or a neutral student who will get some form of extra credit for participating); the panel in turn will challenge the ―entrepreneurs‖ ideas and select a 1st, 2nd and 3rd place winner, who may receive extra credit points or added points on the next exam.
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