SECTION 2.1

IntroductionIn Section 2.1, you will learn the characteristics of managers, leaders, and entrepreneurs. You will also learn the management process that can be applied to a variety of companies. Section 2.1 Features Describe the management process through its four functions Distinguish between managers' styles, skills, and tools Explain the various leadership theories Distinguish between leaders' styles, powers, and tools Discuss the roles and skills of entrepreneurs Examine the various types of entrepreneurial structures

Management DefinedManagement is defined as the attainment of an organization’s strategies, goals, and objectives in an effective, efficient, economical, and productive manner. To this end, management is carried out through people by utilizing resources.   Managers make things happen through hiring employees and deploying resources to accomplish their goals and objectives.  Managers get their power from the organizational structure (that is, administrative power). This power comes from the manager’s job title or position status in the organization. Managers need the administrative power to provide stability, discipline, and continuity within the organization and to fulfill their roles and responsibilities. Managers share some common qualities with leaders in the areas of problem-solving, decision-making, and change implementation.  Management achieves its strategies, goals, and objectives through planning, organizing, directing, and controlling an organization's resources. Managers use a multitude of management skills and a variety of management styles to perform these functions. 

Planning DefinedPlanning defines where the organization wants to be in the future and how to get there. It describes action steps, detailed tasks, timelines for each task, and resources needed for each task. A lack of planning—or poor planning—can hurt an organization’s overall performance.  Plans are developed from strategies. Four types of plans include strategic, tactical, operational, and contingency plans. Tactical plans are derived or translated from the strategic plans, and operational plans are derived or translated from the tactical plans, in that order. Contingency plans are developed for all the other three types of plans because they also need backup plans.  These four types of plans are connected with each other in the correct sequence with their timelines:

Planning LevelsPlanning levels include corporate level (higher level), business unit level (middle level), and functional and departmental level (lower level), which are developed by managers at various levels of the company. The lower levels support the higher levels, meaning that functional level supports the business unit and corporate levels and that business unit level supports corporate level.  The four types of plans are each developed at a specific level, as outlined below: Strategic plans are developed at the corporate level and business unit level. Tactical plans are developed at the business unit level and functional level. Operational plans are developed at the functional level and at the department level. Contingency plans are needed if the original plan does not work out for some reason.  The planning process consists of six stages or steps: Analyzing external environment Assessing internal resources Establishing goals and objectives Developing action plans Implementing action plans Monitoring outcomes

Example 1: The strategic plan for KPX Company, a consumer product manufacturing company, is to produce and sell an eco-friendly dishwashing liquid brand in all retail stores in two years.

  Example 2: The tactical plan for KPX Company is to locate global supplier sources

to reformulate the eco-friendly dishwashing liquid brand and to fully test the product within one year.

  Example 3: The operational plan for KPX Company is to obtain commitments from

retailers that they will carry and sell the eco-friendly dishwashing liquid brand in all retail stores in six months after the product is made in factories.

  Example 4: The contingency plan for KPX Company is to develop alternate,

backup plans, if the original plan does not work out for some reason. A contingency plan is needed for each of the strategic, tactical, and operational plans.

OrganizingThe organizing function typically follows the planning function and reflects how the organization tries to accomplish the strategic plan.  Organizing involves the assignment of tasks, the grouping of tasks into jobs and departments, the assignment of authority, and the allocation of resources across the organization.  Organizing is important because it follows strategy in that strategy defines what to do and organizing defines how to do it. Organization structure is a tool that managers use to allocate resources for getting things accomplished.   There are five design approaches to organizing a business function: Establishing authority, responsibility, accountability, and delegation Developing organization charts Establishing span of control or span of management Organizing line and staff functions Organizing departments

DirectingDirecting is the use of influence to motivate employees to achieve organizational goals and objectives. Directing involves creating a shared culture and values, communicating goals to employees throughout the organization, and infusing employees with the desire to perform at a higher level. Directing involves motivating entire departments and divisions as well as those individuals working immediately with the manager.  Example: John, a marketing manager at KPT Corporation, called his ten employees for a monthly meeting to discuss corporate goals and objectives for the upcoming year. In the meeting, John distributed the document describing the corporate goals and objectives to all employees. Later, he reviewed the last year’s performance results for all employees. He then asked each employee to document their personal goals and objectives that match with that of the company’s goals and objectives. He asked them to submit their document in two weeks. Here, John wants to make sure that his employees clearly understood the company’s goals and objectives and to determine how much they could contribute to achieving the company’s goals and objectives with their personal goals and objectives.

ControllingControlling is the fourth and final function of management. Controlling helps measure whether a department or company is meeting its established plans and performance standards. Controlling is monitoring employees’ activities, determining whether the organization is on target toward its goals and making corrections as necessary.  Managers must ensure that the organization is moving toward its goals. New trends toward empowerment and employee trust have led many companies to place less emphasis on top-down controls and more emphasis on bottom-up controls in terms of training employees to monitor and correct themselves.   Information technology is also helping managers provide needed organizational control without strict top-down constraints. Companies can use computer programs to put more

constraints (for example, policies, procedures, and rules) on employees if managers believe the situation demands it.  Traditional controlling tools include operating budgets, capital budgets, analyzing financial statements for profitability and liquidity ratios, and adapting total quality management principles. Note that budgets can act as both planning and controlling tools.

Managers’ StylesThe quality of a decision is a direct reflection of how the decision maker processes information. Managers approach decision-making and problem-solving in very different ways, depending on the availability of such information. Their approaches, perceptions, and recommendations vary because their minds work differently.  Researchers have identified four management styles: Directive style Analytic style Behavioral style Intuitive style One is not superior to the other. In practice, many managers use a combination of directive, analytic, behavioral, and intuitive styles.  

Directive style focuses on “more telling and less doing.” This style comes across as a “command and control” style, representing an autocratic management style. Most employees get turned off with this style.   Analytic style managers tend to be logical, precise, and objective. They prefer routine assignments that require attention to detail and systematic implementation. Analytic style is good to use in building large, complex plans and forecasting involving projections.   Behavioral style takes into account employees' emotions and feelings. This style considers what people are saying, what they mean, and why they are saying it, requiring a participative management approach. Most employees favor this style.   Intuitive style managers are creative, intuitive, and comfortable in handling a dynamic and non-routine environment. They like to address broad issues and see things in complex patterns rather than as logically ordered bits and pieces. The intuitive style is good to use in brainstorming sessions and where traditional assumptions need to be challenged.

Managers’ SkillsManagement skills can be broadly classified as

Conceptual skill is the cognitive ability to see the organization as a whole and the relationship among its parts. It involves the manager’s thinking, information processing, and planning. It requires the ability to think strategically—to take the broad, long-term view. Conceptual skills are needed by all managers but are especially important for managers at the top. Many of the responsibilities of top managers, such as decision-making, resource allocation, and innovation, require a broad view.

Human skill is the manager’s ability to work with and through other people and to work effectively as a group member. It includes the ability to motivate, facilitate, coordinate, lead, communicate, and resolve conflicts. As globalization, workforce diversity, uncertainty, and competition for highly skilled,

knowledgeable workers increase, human skills become even more crucial. Here, focus is on emotional needs of employees instead of the physical needs related to the job.

Technical skill is the understanding of and proficiency in the performance of specific tasks. It includes mastery of the methods, techniques, and equipment involved in specific functions such as engineering, manufacturing, or finance. These skills are particularly important at lower organizational levels.    Many managers get promoted to their first management job by having excellent technical skills. However, technical skills become less important than human and conceptual skills as managers move up the hierarchy.

These skills aren't exhibited equally across management levels. They vary with the nature of the job, the level of decision-making, and the type of interaction with people.The following shows the order of importance of these skills, from highest to lowest, for three types of management.

Management Levels Management SkillsSupervisors Technical, Human, ConceptualManagers Technical, Human, ConceptualExecutives Human, Conceptual, Technical

Managers’ ToolsManagers can deploy several tools to motivate and control employees’ behavior with the ultimate goal of increasing their work-related performance. The use of each tool depends on the business situation, manager’s goals, and employee’s performance at a point in time.  Examples of these tools include  Management by objectives Management by example Management by exception Management by walking around

Management by ObjectivesManagement by objectives (MBO) is the process of improving an individual’s or a group’s job performance with clearly established objectives and high standards. MBO is also called management by results, management by standards, or management by authority, because an employee’s actual performance (results) is compared with the standards or objectives set for that employee.   An organization’s goals can be better achieved if the goals of superiors and subordinates are integrated with that of the organization’s goals. All levels of management should be involved in setting the objectives for their employees that align with the organization’s objectives—that is, all working toward common goals.   The essence of MBO is a formal, mental agreement between the superior and subordinate in the setting of goals for the upcoming year. They must agree in advance on the goals to be

achieved. Feedback mechanisms are necessary during the goal setting process and after the goals are accomplished (often during quarterly meetings).  A key requirement of MBO is unity of command, meaning that a subordinate’s performance is to be evaluated only by a single superior—the manager.  

Management by Example

Management by example is the ultimate test for all managers and leaders because it's leading by example—"walking the talk." It means practicing what is preached, putting the words into actions, or putting the plans to implementation. This is where most managers and leaders fall short, because management by example is not an easy thing to live by. It requires setting the right tone at the top of the management’s hierarchy.  Employees expect their managers to behave as those managers expect employees to behave, embodying the ideals of management by example.

Management by ExceptionManagement by exception is a practice where managers only focus on what goes wrong from the intended plan with the goal of correcting the problem. These managers don't focus on what's happening according to plan.  Management by exception considers the fact that managers have limited time and that their time should not be wasted to review and take action on every business transaction that goes through their work desk. This requirement is a waste of resources.   To reduce unnecessary workload, managers need to establish threshold levels for major type of transactions, and business rules need to be defined and programmed into computer systems. Any actual transaction that goes beyond the threshold level will be flagged and reported to management.   Examples of business rules: Notify the manager only when the actual revenues fall by 5% Notify the manager only when the actual expenses go up by 10% Notify the manager only when the actual profits fall by 3%

Management by Walking AroundManagement by walking around (MBWA) occurs when managers walk around their business facilities (offices, stores, and warehouses) to talk to employees to find out their problems first hand and to teach them about the company’s direction and management values.  

MBWA should be practiced regularly so that employees do not think that management is spying on them. It also helps to build a sense of camaraderie and team spirit. The idea is to build trust between management and employees.  MBWA is also called open-book management thinking, meaning that employees have the right to be informed about the company’s plans and activities because they have a big stake in the company’s well being. 

Leadership DefinedLeadership occurs when a leader mobilizes an organization’s resources to fulfill its mission and vision. Leaders have inherent power (personal and charismatic power) and built-in qualities such as motivation, inspiration, innovation, imagination, and vision.  Leadership power promotes creativity and change in the organization. Leaders share some common qualities with entrepreneurs in the areas of innovation, creativity, imagination, and vision. Note that there are few leaders and many managers in an organization.  Over the past several decades, leadership theories and styles have been slowly evolving due to constant research conducted on this mysterious topic. The evolution of leadership theories and styles can be presented in four ways:   Trait leadership theory Behavioral styles leadership theory Leadership grid Transformational leadership theories

Trait Leadership Theory

It was once assumed that leaders are born and not made. Later, this assumption was changed to accept that leadership traits are not completely inborn but can also be acquired through learning and experience. One way to approach a leader’s characteristics is to analyze autocratic and democratic leaders.  Research has shown that subordinates prefer managers who have a democratic style to those with an authoritarian (autocratic) or a laissez-faire (hands-off) style.   After much debate, researchers have agreed to five common traits of leaders: Intelligence Scholarship (education and knowledge) Dependability in exercising responsibilities Activity and social participation Socioeconomic status (that is, well known in the community due to job, title, or salary)

An autocratic leader is one who tends to centralize authority and rely on reward, coercive, and legitimate power (position power) to manage subordinates. Autocratic leaders work best in situations where failing to follow orders can lead to harm or damages, such as in the military, in a manufacturing plant, and on construction sites. 

A democratic leader is one who delegates authority to others, encourages participation, and relies on referent and expert power (personal power) to manage subordinates. Democratic leaders work best in situations where there's no one correct answer and many ideas must be considered to find the best course of action. Such workplaces include advertising firms, educational corporations or schools, and software design companies.

Behavioral Styles Leadership TheoryResearchers began turning their attention to patterns of leader behavior instead of concentrating on the personal traits of successful leaders. In other words, attention turned from who the leader was to how the leader actually behaved. Results of two research studies follow.   Initiating Structure and Consideration.  A team of Ohio State University researchers defined two independent dimensions of leader behavior as initiating structure (leader getting things organized and getting the job done) and consideration (degree of trust, friendship, respect, and warmth of a leader). It was concluded that high-initiating structure and high consideration was generally hailed as the best all-around style. Effective and Ineffective Supervisors.  A team of University of Michigan researchers focused on the behavior of effective and ineffective supervisors. The study classified two types of leaders: employee-centered leaders and job-centered leaders.   Employee-centered leaders (effective supervisors) establish high performance goals and display supportive behavior toward subordinates. Job-centered leaders (ineffective supervisors) are less concerned about goal achievement and human needs and more concerned about meeting schedules, keeping costs low, and achieving production efficiency.Research sources: http://www.leadership-central.com/behavioral-theories.html#axzz3jwIcOqw0http://www.referenceforbusiness.com/management/Int-Loc/Leadership-Theories-and-Studies.html

Leadership GridUniversity of Texas professors developed a leadership grid focusing on people and tasks, which are ranked on a scale of 1 to 9, where 1 is low and 9 is high.

Most managers prefer the 9,9 style for all situations, since this style correlates positively with better results, better mental and physical health, and effective conflict resolution.  Research sources: http://www.makeadentleadership.com/blake-and-mouton.htmlhttp://www.mindtools.com/pages/article/newLDR_73.htmhttp://www.leadership-central.com/managerial-grid.html#axzz3jwIcOqw0

Team management style (9, 9 style) is considered the most effective style of leadership and is recommended for managers because organization members work together to accomplish a task. This means the leader has high concern for both tasks and people as evidenced by personal commitment, mutual trust, and teamwork.   Country club management style (1, 9 style) occurs when primary emphasis is given to people rather than to work outputs.   Authoritarian management style (9, 1 style) occurs when efficiency in operations is the dominant orientation. This means concern for production and people are secondary.   Middle-of-the-road management style (5, 5 style) reflects a moderate amount of concern for both people and production. This means moderate concern for both people and production to maintain the status quo.   Impoverished management style (1, 1 style) denotes the absence of a management philosophy; managers exert little effort toward interpersonal relationships or work accomplishments. This means minimal concern for either production or people.

Transformational Leadership TheoriesTransformational leaders are characterized as visionaries who challenge people to achieve exceptionally high levels of morality, motivation, and performance. These leaders are

masters of change, have charisma, rely on referent power, and can envision a better future, effectively communicate that vision, and get others to willingly make it a reality.   There is a distinction between a transactional leader and a transformational leader. Transactional leaders monitor people so they do the expected, according to plan (that is, maintain status quo). In contrast, transformational leaders inspire people to do the unexpected, above and beyond the plan (fostering creative and productive growth).  At least four new theories of leadership are available in light of globalization, electronic commerce, employee diversity, and virtual organizations. They include   Level 5 leader Interactive leader Virtual leader Servant leader

A level 5 leader has no ego as he reaches the highest level in the management hierarchy in terms of knowledge, skills, and abilities. He or she gives credit for successes to subordinates while taking responsibility for failures.   An interactive leader is one who uses consensual and collaborative processes in problem-solving and decision-making by including subordinates. The leader's power is derived from relationship-building and caring attitudes instead of position power.    A virtual leader is one who is open-minded, flexible, and exhibits positive attitudes that focus on solution instead of problems. He or she is good at communicating, coaching, building relationships, and caring skills.   A servant leader operates on two levels: (1) to fulfill subordinates’ needs and goals and (2) to achieve the organization’s mission. He or she gives away power, ideas, information, recognition, and credit to subordinates. He or she connects the subordinate’s motives to the organization’s mission. The leader serves the subordinates and the organization. The servant leader is at the bottom and others are at the top.

Leaders’ PowersPower is needed in all organizations. Power must be used because managers need to influence those they depend on, such as employees. It's powerlessness, not power, that undermines organizational effectiveness. Power is the ability to manage all types of resources to accomplish something of value to the organization. These resources could be human, material, or informational.   Power affects organizational members in decision-making, behavior, and situations. Another dimension to power is to distinguish between “power over” (ability to dominate), “power to” (ability to act freely), and “power from” (ability to resist the demands of others).      Here, one needs to differentiate between authority and power, because it's often confusing.   Authority is the right to direct the activities of others. It's an officially sanctioned privilege that may or may not get results. Power is the demonstrated ability to get results. One may alternatively possess authority but have no power, possess no authority yet have power, or possess both authority and power.

A manager who gets subordinates to work hard on an important project has both authority and power.

Experts on power say that power is neutral; it's a tool that can be used in a positive or negative manner. Power exercised for power’s sake can be dangerous to all parties affected. The following are the five bases of power exhibited by leaders:  Reward power, gaining compliance through rewards. Coercive power, gaining compliance through fear or threat of punishment. Legitimate power, compliance based on one’s formal position; parallels formal authority (job title). It can be eroded by its frequent abuse or overuse. Referent power, compliance based on charisma, personal identification, or attraction and with no relation to job title. A charismatic leader is one who has the ability to motivate subordinates to transcend their expected performance. A charismatic leader is also a visionary leader who speaks to the hearts of subordinates, letting them be a part of his vision and their vision. Expert power, compliance based on the ability to dispense valued information and based on the knowledge or skills possessed by a person (for example, unique or special skills in computer technology, space technology, nuclear science, business strategy, or bioengineering fields).

Leaders’ ToolsA leader has several tools and techniques at his disposal to train, develop, and improve the performance of subordinates.  The five tools areJob rotation provides rotational opportunities for employees to move from job to job to provide them with a variety of tasks and mental stimulation. It is where new or current employees get training to broaden their work experience and to increase their overall knowledge, skills, and abilities.      Job rotation is a form of cross-functional training in preparing an employee for future jobs. It provides a well-rounded experience in other jobs, so an employee can take on a new job or more responsibilities in the current job. Note that the job rotation program is based on a manager’s career plans established for an employee, so the employee can reach his career goals.  For example, an employee doing a Job A now is sent to Job B, then to Job C, and comes back to Job A.  

Coaching is a method of instruction where the desired outcome is for the employee to obtain a certain level of knowledge or skills. Coaching is a thought-provoking and creative process that inspires the employees to maximize their personal and professional potential.  Coaching is a form of direct training where a supervisor or manager provides work assistance to an employee. Coaching is a more intense and detailed learning task than mentoring.

Delegation is a higher-level management right to transfer authority and responsibility to lower-level management. Lower-level management then develops managerial skills such as problem-solving and decision-making and learns how to take more responsibility and accountability for achieving results. Delegation involves developing and empowering the lower-level management. Although managers are encouraged to delegate, they often find it difficult to do so.    

Delegation is a process of assigning various degrees of authority to subordinates. It is not an all-or-nothing proposition. Authority may be passed along to subordinates; ultimate responsibility cannot be passed along because it stays with the manager who delegates. Thus delegation is the sharing of authority, not the abdication of responsibility.   Delegation is a form of functional training for an employee to take on more or greater responsibilities than the current job provides. It provides the delegate additional managing skills in problem-solving and decision-making. Experts say that it's good to delegate those activities the manager knows the best.

Mentoring is advising, coaching, and nurturing a protégé to enhance his or her career development. The mentor can be anywhere in the same organization or may work elsewhere. A protégé may have more than one mentor.  Regular mentoring is a relationship in which experienced managers help employees in the earlier stages of their careers. Such a relationship provides an environment for conveying technical, people, and organizational skills. Not only does the inexperienced employee benefit, but the mentor may also enjoy the challenge of sharing his wisdom and knowledge.   Reverse mentoring is where older employees learn from younger ones because the latter group has some special skills that the former group doesn't. This approach will keep the older employees up to date on current special skills.

Job shadowing means that the protégé (the employee receiving the mentoring) closely follows and watches the mentor’s (the employee providing the mentoring) actions and goes wherever the mentor goes.  The purpose is to observe how the mentor communicates and behaves with other people, how the mentor makes decisions, how the mentor handles tasks, and so on. This direct, interactive, and visible learning experience is powerful and strong in that it stays with the protégé for a long time. Note that job shadowing is a part of mentoring.

These tools have a common purpose of learning and growing personally and professionally with the advice and experience of others. However, each tool is used in different situations adjusted to an employee’s specific needs. The goal of leaders’ tools is to make employees motivated in terms of getting them inspired and excited to make them ready for future leaders.

Entrepreneurship Defined

Entrepreneurship is defined as an economic enterprise founded by an entrepreneur who is characterized as a risk-taker, idea generator and implementer, opportunity grabber, change agent, and a value creator. The entrepreneur has the different mindset and a bigger mission and vision than a manager and leader to take advantage of uncertainty (risk). Note that there are very few entrepreneurs, few leaders, and many managers.

Entrepreneurs’ Roles and SkillsEntrepreneurs are unique individuals with an unparalleled mission and vision to achieve something new on their own better than others. They want to discover new products and services that are better than what currently exists. They want to explore something new and exciting that fulfills customers' needs in a way they didn't expect.   Entrepreneurs wear many hats and play diverse roles such as a leader, innovator, decision-maker, problem-solver, creator, discoverer, explorer, dreamer, thinker, doer, and above all, a trend setter.   Entrepreneurship skills are innate skills, meaning that some people are born with such skills, although some specific skills, such as presentation and writing skills, can be learned through training and development programs or learned from others through observation.

Characteristics of entrepreneurs:   They want to become the owners of their own destiny, not depend on others' mercy They're leaders, not followers They want to be independent, not depend on others They want to be self-employed, not employed by others They want to pay others, not be paid by others They like to give orders and instructions to others, not to take orders and instructions from others They defy and break the ground rules They challenge the status quo They do not easily accept “no” for an answer They question silo-thinking (narrow mindsets) They expect and accept failures and use the failures as a stepping-stone to success They're economic machines in terms of increasing a country’s gross domestic product (GDP) and employment levels and improving the standards of living for the country’s citizens

Types of Entrepreneurial BusinessesSeveral types of entrepreneurial businesses exist, and individuals need to choose a business that suits them in terms of what to achieve and how to achieve it. Some examples of these businesses include

  Startups or small businesses Licenses or franchises Joint ventures or cooperatives Strategic alliances or acquisitions  Note that the type of business selected depends on the financial resources and previous work experience of the entrepreneur. For example, entrepreneurs with limited financial resources can launch a small business, whereas entrepreneurs with significant financial resources can launch startups, licenses, franchises, or joint ventures.

Startups and Small BusinessesThe scope and size of startups or small businesses can vary significantly in terms of number of employees (1 to 100), the level of  technology (low-tech to high-tech), the type of work performed (making products or providing services), and the type of legal structure required (proprietorship, partnership, or corporation).  Startups and small business owners can apply to the US Small Business Administration (www.sba.gov) and to commercial banks for business loans to obtain the initial capital (one-time capital as investment) and working capital (ongoing capital to pay bills).  A small business or a startup owner needs to develop a business plan to monitor his own business progress and to get a loan from a bank, because banks ask for the business plan before granting a loan to the owner.

Startup vs. Small Business:  The following articles provide additional insight into the differences between the two types of entrepreneurial entities:  Article 1: https://blog.generalassemb.ly/difference-between-a-startup-and-a-small-business/ Article 2: http://www.forbes.com/sites/theyec/2012/08/15/are-you-building-a-small-business-or-a-startup/ Article 3: http://www.businessinsider.com/small-business- entrepreneur-startup-which-do-you-identify-with-2011-3

Business Plan ComponentsAt a minimum, the components of a business plan should include the following:   A business strategy showing mission, vision, goals, and strategies describing the major reason for the business to exist and what it wants to accomplish in the short-term and long-term.      An operations plan (including a manufacturing plan and service plan) describing the types of products to make or the types of services to be delivered to customers.   A marketing plan describing the major markets in which the products and services will be sold, marketing channels (wholesalers, distributors, or retailers), pricing strategies (low or high prices), and selling strategies (direct, online, or store).

  A financial plan containing projected income statement, balance sheet, and cash flow statements.   A people plan containing the type of employees to be hired (skilled or nonskilled and experienced or inexperienced) and how they will be trained and developed.  A sample business plan can be found here.

Licenses and FranchisesA license or franchise grants the right to provide a product or service or use a property. Fees are paid for such uses.  Licensing occurs when a firm gives permission to another firm to produce or package its product. Licensing agreements permit another firm to use its intellectual property (IP) in exchange for compensation, typically a royalty (a set amount or percentage paid to the IP holder per unit sold).  Licensing programs consist of proprietary information, such as patent rights or expertise that is licensed by the owner (licenser) to another party (licensee).  Franchising is a form of licensing in which an organization (owner, franchisor) provides its domestic or foreign franchisees with a complete assortment of products and services. It's a business arrangement in which the owner of a product or service allows others to purchase the right to distribute the product or service with help from the owner.  It's an agreement by which a firm provides specialized sales or service strategy, support assistance, and possibly an initial investment in the franchise in exchange for periodic fees. It grants a wholesaler, distributor, or retailer exclusive rights to sell a product or service in a specified area.

Examples of Licenses: Luxottica, an Italian sunglass manufacturer, holds the licenses to produce sunglasses for fashion brands Burberry, Tory Burch, Giorgio Armani, and many others. This means that these fashion companies "licensed," or gave permission to use, their brands to Luxottica to create sunglasses for them.   Examples of Franchises: Popular name brands such as McDonald’s, Pizza Hut, Subway, KFC, and Dunkin Donuts have various licensing and franchising agreements and operations both within and outside the United States.

Joint Ventures and CooperativesJoint ventures come in various forms, sizes, and locations. They're formed when two or more individuals or companies are united together to establish business operations either in domestic or foreign markets. They like to capitalize on each other’s resources, strengths, knowledge, skills, and expertise in fulfilling their mission. They share efforts, profits, assets, liabilities, risks, and duties. Other names for joint ventures include cooperatives and strategic alliances. A joint venture is an unincorporated business organization that usually exists for a limited time period.

 A joint venture differs from a proprietorship because the former is formed between two or more companies or individuals whereas the latter is formed with a single individual. Also, the life of a proprietorship is longer than a joint venture.   A joint venture differs from a partnership, which is formed to carry on a business over a considerable or indefinite period of time. Therefore, the life of a partnership is longer than a joint venture. Nonetheless, the law of partnerships generally governs a joint venture.   Joint ventures can take on many forms, such as the following: Example 1: A manufacturing or service operation in a domestic or a foreign country to produce goods or provide services.   Example 2: A joint venture involving major research conducted by two or more corporations with researchers participating from different countries.   Example 3: The use of natural resources such as minerals, coal, iron, copper, water, gold, and oil and gas.   Example 4: A financial group formed to acquire a certain tract of real estate land for subdivision and resale.

Strategic AlliancesA strategic alliance is formed when two or more domestic or foreign companies are banded together to achieve mutual economic benefits. Strategic alliances are similar to joint ventures and cooperatives.    A strategic alliance occurs when one company in one country works in collaboration with one or more companies in other countries to share rights, responsibilities, revenues, expenses, and profits as defined in a written agreement. Some common types of strategic alliances are research collaborations, a licensing program, and a co-promotion deal.  Mergers and acquisitions can take place between two companies to obtain synergies in terms of increased revenues and profits.

Example 1: An example of a domestic US strategic alliance occurs when a food retailer establishes a strategic alliance with a gas company in that customers who purchase $50 worth of groceries will get a five cents discount at the gas station.     Example 2: A strong local pizza store acquires a weaker local pizza store to capitalize on the brand name of the stronger pizza store.

SECTION 2.2

IntroductionIn Section 2.2, you will learn the types of skills required of both employees and managers. You will learn the nature of employee motivation. You will also learn the problem-solving and decision-making process. Section 2.2 Features Classify business skills

Describe core competencies Discuss employee motivation and apply them to various types of rewards Examine the problem-solving and decision-making process Discuss communication skills and apply them to negotiating skills Discuss conflict management skills and apply them to the various types of conflicts Classify team management skills

Business Skills DefinedEmployees acquire skills over several years based on their personal and professional goals. Business skills reflect knowledge and expertise that employees possess as part of their career development and growth plans. Business skills are classified as hard skills and soft skills.

Examples of hard skills include Quantitative, analytical, and technical skills (for example, knowledge of basic mathematics, statistics, probability theories to advanced regression/correlation analysis, and forecasting techniques) Functional skills (for example, knowledge of accounting/finance, marketing, and operations) Managing skills (planning, organizing, directing, and controlling skills, which are the four basic functions of managers and executives) Management skills (containing conceptual, human, and technical skills possessed by supervisors, managers, executives, and leaders Application skills (the ability to put theory into practice; the ability to apply functional knowledge, say in marketing and operations) Integration skills (the ability to combine, for example, marketing’s functional knowledge with operation's functional knowledge and vice versa)

Examples of soft skills include Interpersonal skills mean people skills, dealing with an individual’s attitudes about others and behaviors toward others and asking whether a person can get along with other persons at the workplace. Communication skills (written and oral communications) Comprehension skills (understanding complex content in words, tables, charts, graphs, exhibits, and figures) Presentation skills (showing complex results in simple ways using tables, charts, graphs, exhibits, and figures) Time-management skills (utilizing time more efficiently and effectively) Implementation skills (bringing new initiatives to a successful completion) Coordination skills (for example, working together in collaboration with employees in different departments to achieve common goals and objectives)

Business SkillsWho Should Possess What Business Skills?  There's a controversy whether hard skills and soft skills can be acquired or learned. Hard skills such as quantitative and qualitative analysis, functional skills, managing and management skills can be acquired, learned, and/or improved through training and development programs. Note that some soft skills, such as interpersonal (people) skills, may

need little or no training, whereas the other types of soft skills, such as communications skills, comprehension skills, presentation skills, time-management skills, and implementation skills, can be fully acquired, learned, and/or improved through training and development programs.  All supervisors, managers, and executives need both hard skills and soft skills to perform their jobs more effectively and efficiently. However, the depth and the types of these skills needed depend on his or her level in the management hierarchy.  Example 1: General managers and executives need more depth in soft skills and less depth in hard skills due to their job requirements.  Example 2: Supervisors and managers need more depth in hard skills and less depth in soft skills due to their job requirements.

On the Job: Hard Skills vs. Soft Skills

Read the following articles and answer the questions below.  The first article advocates the importance of hard skills when searching for a job, while the second makes a case for soft skills. It's important to note that both types of skills are important; these articles simply share the writers' opinions on which is more important. Article 1: http://www.entrepreneur.com/article/238608 Article 2: http://www.mindtools.com/pages/article/newCDV_34.htm  Questions: Re-read the list of hard and soft skills. Which of these do you already posses? Besides the Penn Foster Introduction to Business course, what's your plan for developing hard skills? What's your plan for developing soft skills? Which skills do you want to focus on first?

Core Competencies DefinedCore competencies are defined as the unique and collective capabilities (training and know-how) and specific skills, experience, and education that a company has and its competitors don't have. For example, product design is a core competency of Apple Computers. Here, the scope of competencies includes competencies of employees, products, and services. The idea is that if employee’s competences are at a higher level, then a company’s products and services will be at a higher level because it's the employees who make products and deliver services. A solid linkage can be established between competency and quality in that highly competent employees can deliver high-quality products and services, and vice versa.  

Competence is an individual’s qualification necessary to carry out the assigned job duties and responsibilities. The competence-rich situation creates a competency gap between the company and its competitors.The higher the competency-richness level, the larger the competency gap. Of course, a company’s core competencies are a simple summation of all of its employees’ competencies. The goal of having all employees acquire the core competencies is to remove their talent gaps and skills gaps. Talent management means implementing and maintaining improvement programs to attract, acquire, develop, train, promote, and retain quality employees.

Levels of CompetenciesCore competencies are observable and measurable. They're a critical set of key knowledge, skills, abilities, and behaviors an employee needs to have in order to successfully perform his or her job functions or work efficiently, effectively, and productively. Core competencies can help ensure that a person’s performance, acting as an individual or as a member of a team, aligns with the organization’s mission and strategy.   Managers can ask themselves the following two basic questions:  Does my company have competent employees that it needs? Do my employees have multiple competencies (skills) so they can handle multiple job responsibilities as needed?  

Four competency levels can exist:Entry Level:           Novice, freshman (Low competency level) Example 1: For many employees, their first job in the workforce is often at the entry level, from where they move up to supervisors and managers. Entry-level jobs can include retail cashiers and sales associates, manufacturing assembly workers, and customer service representatives.  Example 2: Entry-level job titles could also include associate, representative, scheduler, coordinator, or planner. Please note that job titles vary with each company.

Journeymen Level:     Analysts and supervisors (Medium competency level)  Example: An accounting analyst gets promoted to accounting supervisor upon earning his/her Certified Public Accountant (CPA) designation, since the CPA shows mastery or competency of accounting.

Functional Level:         Functional level employees include engineers, accountants, architects, computer programmers, actuaries, and attorneys (high competency level).  A functional employee is a person with qualifications and a high degree of attainment in professional, scientific, technical, or other fields.

 Example 1: A corporate attorney handles all lawsuits filed against a company by insiders and outsiders. He or she also handles grievances filed by employees and labor unions regarding discrimination, working conditions, and other matters.  Example 2: An actuary working as an underwriter in a life insurance company refers to various published statistical data in terms of birth rates, mortality rates, population growth, and income data collected for different segments of a society when establishing premium rates.

Expert Level:        Subject matter experts (SMEs) are well-known in one industry or across industries with their in-depth knowledge and authoritative source in a subject matter (very high competency level). An SME is a general expert who is regarded as an authority with unusual competencies and skills by other persons in the profession, industry, and in the world. An SME’s visibility is high.  Example Michael E. Porter from the Harvard Business School is the well-known global subject matter expert in the area of corporate strategy.

MotivationAll employees, regardless of their level within an organization, need management’s additional attention to increase their motivation levels.  Motivation refers to the psychological process that gives a purpose and direction to human behavior. Motivation theories are generalizations about the “why” and “how” of purposeful behavior. The goal is to move individual employees toward achieving organizational objectives, including job performance. Management professor Robert Kreitner defines job performance as follows:

Both ability (skills and competence) and motivation (willingness to work hard) are necessary for effective and efficient job performance. Ability is acquired through education, training, and on-the-job experience. The individual’s motivational factors such as needs, satisfaction, expectations, and goals are affected by challenging work, rewards, and participation. Motivational factors are both inborn and learned.

Motivation ToolsManagers and leaders have several tools at their disposal to inspire employees to increase their job-related performance:  Job Design Motivation through job design

Motivation through job design deals with two specific strategies: fitting people to jobs (that is, finding the best person to fill a specific position) and fitting jobs to people (that is, assessing the requirements of a specific position and assigning it to a strong candidate with the assumption that they will master the additional roles of the position through training). Fitting jobs to people is better than fitting people to jobs.

The strategy of fitting jobs to people includes job enlargement (adds width to a job) and job enrichment (adds depth to a job). This strategy increases an employee’s motivation.

Rewards Motivation through rewards

 Every employee expects to be rewarded in some way for work performed. Rewards may include material and psychological payoffs for performing tasks in the workplace. Managers have found that job performance and satisfaction can be improved by properly administered rewards. Two types of rewards exist: extrinsic rewards and intrinsic rewards.   Example 1: Examples of extrinsic rewards include payoffs granted to the individual by other people, such as money, employee benefits, promotions, recognition (employee of the month), status symbols, and praise.   Example 2: Examples of intrinsic rewards include self- granted and internally experienced payoffs (sense of accomplishment, self-esteem, and self-actualization). An intrinsic reward is an internally generated benefit or satisfaction resulting from good work performed.

Employ participation : Motivation through employee participationParticipative management is defined as the process of empowering employees to assume greater control of the workplace. Employees may participate in setting goals, making decisions, solving problems, and designing and implementing organizational changes. Employee participation won't work if individual values and attitudes are not in tune with organizational change. Organizational factors (such as job design and corporate culture) and environmental factors (such as technological change and competition) also affect the participation process. Example: Two team-oriented approaches to employee participation include quality control circles and self-managed teams.

work schedules and services : Motivation through work schedules and servicesNew approaches such as flexible work schedules, family support services, and sabbaticals are aimed at enhancing employee motivation and increasing job performance. While employees like flexible work schedules, employers may not because of greater administrative expense, supervisory resistance, and inadequate coverage of job supervision.   Example: Examples of alternative work schedules include compressed workweeks (40 hours in fewer than 5 days), permanent part-time jobs (workweeks with fewer than 40 hours), and job sharing (complementary scheduling that allows two or more part-timers to share a single full-time job).

hard-sell and soft-sell tactics : Motivation through hard-sell and soft-sell tacticsIf no motivation other than the salary is present in an employee, then that employee’s quality and quantity of work will slowly deteriorate over a period of time. Something more is needed here. When motivating employees, managers can use general motivational strategies such as hard-sell or soft-sell tactics based on an employee’s personality type.   Example 1: Hard-sell tactics use pressure (pushy and aggressive behavior), toughness (mean and hard-nosed behavior), and rank-pulling (threats and intimidations) approaches, which can make an employee uncooperative and unfriendly. The outcome from using the hard-sell approach is a lose-lose situation.          Example 2: Soft-sell tactics use logical reasoning, emotional appeals, convincing, negotiating, non-threatening language, and praise approaches, which can make an employee listen and cooperate. The outcome from using the soft-sell approach is a win-win situation.

On the Job: Motivation Lessons from TV’s ‘Parks and Recreation’Read the following articles and answer the questions.  Both of these articles focus on motivation. The first advises that employees should be given a sense of ownership for the products they manufacture or the services they perform. The second takes anecdotes from the popular TV show Parks and Recreation to show what to do and what not to do to in a management position. Article 1:http://www.forbes.com/sites/datafreaks/2014/09/25/motivating-employees-has-almost-nothing-to-do-with-their-attitude-and-almost-everything-to-do-with-feelings-of-ownership/ Article 2:http://www.blogging4jobs.com/hr/hr-lessons-from-tvs-parks-and-recreation/#G1YqH8lmBrZhUTP0.97  Questions: What motivates you? How do you motivate others? What have you learned about motivation that surprised you?

Problem-Solving and Decision-Making SkillsProblem Defined   A problem exists when there is a gap between “what is” and “what should be.”  

Individuals recognize a problem when they feel frustrated, frightened, angry, or anxious about a situation. Organizations recognize problems when outputs and productivity are low; when quality of products and services is poor; when people are not cooperating, sharing information, or communicating; or when there is a dysfunctional degree of conflict among people in various departments.  When the gap between “what is” and “what should be” causes anxiety and inefficiency, something needs to be done to close the gap and to solve the problem. This requires a problem-solving process.  Effective written and oral communication skills are prerequisites to effective problem-solving skills

Problem-Solving Process

Problem-solving is a systematic process of bringing the actual condition closer to the desired condition. Although there are many ways to handle problems, the following four steps explain the process:   Step 1: Identify the problem. This step involves identifying and differentiating between symptoms and real problems. Managers often waste time and resources by addressing the symptoms; consequently, problems will recur. Note that defining a problem is a difficult task requiring several iterations. It has been said that “A problem well-defined is half-solved”. Solving an ill-defined and unstructured problem wastes time, money, and effort.   Step 2: Generate alternative solutions. This step involves developing a few viable solution choices so they can be fully reviewed and developed. Each alternative should have a cost and benefit analysis.   Step 3: Select a solution. Usually, the least costly option with the most benefits is chosen. Here, a consensus-building approach is needed from all parties involved.     Step 4: Implement and evaluate the solution. This last step puts the solution into operation. Later, the solution should be analyzed to determine if this is the right solution. If not, the process should start again at the first step.     Examples of Business Problems When expenses are increasing and revenues are decreasing When suppliers are delivering their materials unusually late When supplier’s quality levels are slowly deteriorating When employees’ healthcare costs are increasing in relation to their payroll amounts When a problem like this occurs, a manager can use the four-step process to solve it.

Facilitating Problem-SolvingBusiness problems are solved either by individuals or by groups. The most neglected area of problem-solving is human resources, the people who participate in the problem-solving group. The group leader can encourage new ideas and creativity in group members by following these guidelines.   Practice effective listening, because people think much more rapidly than they speak. Effective listening is the best way to gather information. Try not to be distracted. Practice “stroking”. A stroke is a unit of recognition. Provide recognition to people and ideas. Positive stroking makes people feel more important and secure and invites more ideas and creativity. Discourage “discounting” (that is, not paying attention). When discounting is high, group members will feel reluctant to respond to questions and will constantly be ready to attack or retreat. This isn't a healthy climate for successful problem-solving, and it encourages dysfunctional behavior and uncooperative attitudes among group members. Keep the group members informed about progress and what's expected of them.

Problem-Solving Tools and Techniques Below are examples of tools and techniques to solve problems: Brainstorming.  Brainstorming encourages uninhibited flow of new ideas; the more ideas, the better. Example: Marcus, a production manager in a manufacturing company, is faced with a severe waste problem in production operations. In a meeting with his employees, he requested his staff to come up with a wide variety of ideas (small or big) thinking through either individually or in a group setting to solve the waste problem.  

Trial-and-error approach.  Trial-and error experimentation requires a tedious and persistent search for the solution. It exhausts all possible solutions until the right one is found. Example: It takes a hit or miss approach where individuals experiment various solutions until the right one is found.        Investigative questions.  The scope includes asking six investigative questions—What, Where, Why, When, Who, and How—to understand the root causes of issues. Example: Journalists often use the 5Ws and 1H as a way to drill-down an issue to determine the root causes and their scope and size.   Divide and conquer concept.  The “divide and conquer” concept breaks down a large, complex problem into several smaller and solvable problems to make solving the overall problem easier. Example: Jeff, an IT manager, is developing a large healthcare medical system for the entire company and the project is already behind the schedule and over budget. An IT senior manager advised Jeff to break the large project into several modules because managing several small-size modules is much easier than solving one large-size module. Lateral thinking.  Lateral thinking involves outside-the-box thinking, that is, expanding and approaching solutions indirectly, creatively, and abnormally. People with inside-the-box thinking can find it difficult to solve a problem because they can't clearly and fully see the world outside the problem. Example: A manager of a customer service department has many issues and problems with customer returns and service levels. Customers are complaining about the rigid policies, procedures, and delays in returns. The manager, who is using inside-the-box thinking, was unable to find common solutions agreeable to customers because the manager is not putting himself in customer shoes (i.e., outside-the-box thinking).

Problem-Solving Tools and Techniques Below are examples of tools and techniques to solve problems: Analogy.  Analogy is using a solution that solved a similar, past problem; it assumes that the old and the new problems are similar. Example: An advertising manager is developing an ad campaign for a new product in new markets. He is using the same campaign theme that worked well for a current product in new markets. Later, he learned the hard way that the same theme did not work for the new product.       Pareto charts.  Pareto charts can be drawn to separate the "vital few" from the "trivial many." It's based on the 80\20 rule, that is, 20 percent of items contribute to 80 percent of problems.     Example: Joann, an accounting manager, found that her employees are working busily in solving problems regardless of their priorities. Later, she developed the Pareto chart describing each problem and its frequency of occurring. Based on the outcome of the chart, she instructed her employees to work on the most important problems first (vital few) and work on the less important problems next (trivial many).  Storyboards.  Storyboarding is a group problem-solving technique to create a picture of relevant information. A storyboard can be created for each group that's making decisions. A positive outcome of storyboarding is that it takes less time than interviewing. Many employees can get involved in problem-solving, not just managers.     Example: Larry, a marketing manager, organized three groups to solve a marketing problem. Then, each group was requested to create a visual storyboard independently and they worked on describing the problem and identifying possible solutions. The results of each group are combined to determine an effective solution.       Humor.  In addition to being a powerful tool to relieve tension and hostility, humor is a problem-solving tool. When correctly executed, it opens the mind to seek creative solutions to the problem. Humor can be

in the form of jokes, quips, games, puns, and anecdotes. However, humor should not be sarcastic or scornful. Example: Cindy, a finance manager, is faced with a large problem in collecting receivables from customers. She collected best practices in the accounts receivables, yet nothing seems to work for her unique situation. Then, she asked her staff to go and play games in the company's premises. Later, the staff came back with viable solutions that fit with the business situation.

Decision DefinedA decision is choosing a specific course of action. Decision-making is the probability of success resulting from a decision made with uncertainty. Risk is unique to decision-making and is an integral part of it, because the final decision outcome could be either a wrong decision or a right decision. Decision-making reduces or increases the risk, depending on the quality of the decision-making and the level of uncertainty. There is no standardized structure for the decision-making process, because each decision maker has a different value system and knowledge base.   Decisions are made for the following reasons: To increase revenues, decrease costs, increase profits, and increase market share To seek new business opportunities such as mergers, acquisitions, and divestitures To acquire new major assets of buildings and equipment, which become a part of the capital budget To hire, train, promote, discipline, or fire employees To select new suppliers, vendors, consultants, and contractors To solve problems, knowing that good decisions can be applied to solve wrong problems and that bad decisions can be applied to solve the right problems.

Classification of DecisionsOne way to classify decisions is to put them into major action categories such as strategic decisions, tactical decisions, and operational decisions. Note the linkage between decisions, plans, and strategies, as shown below.Strategic decisions are made to support strategic plans which, in turn, are derived from the corporate strategies.Tactical decisions are made to support tactical plans which, in turn, are derived from the tactical strategies.Operational decisions are made to support operational plans which, in turn, are derived from the operational strategies.  

Many Facets of Decision-MakingManagers and executives make decisions. The type of decision made mainly depends on the level of that manager or executive in the organization’s hierarchy. To accommodate this variety, many facets of decision-making exist:  Sequential and non-SequentialSequential versus non-sequential decision-making  Sequential decision-making is the process of successively solving interrelated sub-problems comprising a large complex problem. It uses the principle of divide and conquer. Decision C cannot be made until decisions A and B are made. In other words, decisions are made one step at a time.   Most of senior managements’ decisions are non-sequential in nature to solve strategic issues, and most lower-level management makes sequential decisions to solve operational issues. Generally speaking, senior management has to make many interrelated decisions at the same time.

Static and dynamic

Static versus dynamic decision-making

Static decisions are fixed decisions that occur one at a time. Dynamic decisions change as the circumstances change. Example 1: An example of a static decision is to reorder item P whenever its inventory level falls down to 10 units. Example 2: An example of a dynamic decision is to reduce prices to meet a competitor’s increased competition.

Structured and unstructured

Structured versus unstructured decision-making Structured decisions have formal rules, while unstructured decisions have no rules. Structured decisions can mean programmed decision-making and unstructured decisions can mean non-programmed decision-making. Structured models have rigid rules to the decision processes and are programmed to perform routinely without much human involvement. All unstructured decision models are rational within their own limits and boundaries and have no rules.   Example 1: Examples of structured decisions include production scheduling, inventory reordering, and materials requirements planning.   Example 2: Examples of unstructured decision models include decision support systems and executive support systems.   Example 3: Company meetings, interviews, job recruiting, and problem-solving processes could be either structured or unstructured, where the latter wastes resources.

Programmed and non-programmed

Programmed versus non-programmed decision-making  Programmed decisions are those that are repetitive and routine, requiring definite procedures (automatic decisions). Decision rules are behind the programmed decisions procedures. Programmed decisions serve the needs of operating management.   In contrast, non-programmed decisions are unstructured and novel; there are no set patterns for handling them (ad hoc decisions). There are no decision rules behind non-programmed decision-making. Every situation is different, unique, and complex, requiring innovative and creative problem-solving approaches. Higher-level managers are associated with the non-programmed decisions.   Example 1: When you sign up for a monthly auto pay with your credit card companies, it is an example of programmed decision on your part.   Example 2: Examples of non-programmed decisions are employee hiring decisions, supply order decisions, consumer loan decisions, and pricing decisions.

Routine and non-routine decisions Routine decisions involve structured and expected tasks. Non-routine decisions involve unstructured and non-programmed tasks. Clerks and computers are involved in routine programmed decisions. Higher levels of management deal with non-routine decision-making while lower-level management handles routine decisions. Example 1: Examples of routine decisions include inventory reordering procedures, employee work schedules, production scheduling, machine loading and scheduling, and truck scheduling. Example 2: Examples of non-routine decisions involve new product introductions, merger and acquisition of companies, and pricing decisions.

Tools and Techniques for Decision-MakingBelow are examples of tools and techniques to facilitate decision-making

Decision table.  A decision table documents rules used to select one or more actions based on one or more conditions. These conditions and their corresponding actions can be presented either in a matrix or tabular form.  Decision trees.  A decision tree is a graphical representation of possible decisions, events or states of nature resulting from each decision with its associated probabilities, and the outcomes of the events or states of nature. The decision problem displays the sequential nature of the decision-making situation.  Flowcharts.  Flowcharts help a decision-maker in analyzing a large, complex problem. Flowcharts and decision trees show flow or sequencing of events and actions. Unlike the decision tree, the flowchart doesn't show outcome probabilities.  

 Payoff table.  A payoff table is a tabular representation of the payoffs for a decision problem. It shows losses and gains for each outcome of the decision alternatives.

Cost-benefit analysis.  Cost-benefit analysis is a decision procedure where the expected costs and benefits of alternative actions are compared. One chooses the action for which the expected value of the benefits minus the expected value of the costs is greatest.  Success-failure analysis.  Success-failure analysis is a qualitative approach to brainstorm conditions for both success and failure. A T-column can be used with headings "What will Guarantee Success" and "What will Guarantee Failure."  Reality check.  The reality check decision is tested in the pseudo-real world conditions. A T-column is used with headings "Our Expectations" and "Our Concerns" to facilitate the analysis.  Risk analysis.  Risk analysis is the analysis of possible risks to be encountered and the means to handle them that can be performed. A two-column chart can be created with headings "Anticipated Risks" on the left-side and "Actions to Overcome Risks" on the right side.

Decision-Making vs. Problem-SolvingDecision-making and problem-solving are not the same, because they have two different time dimensions. Decision-making is future-oriented, and problem- solving is past-oriented. Decision-making deals with major risk, while problem-solving deals with resolving existing issues.

Although the element of ‘risk’ is different between decisions and problems, they are intertwined in that a decision is needed to fix a problem. Although decisions are made to solve problems, some bad decisions create more problems, causing a circular effect. Problems come first and decisions come next. Note that current decisions are made to fix past problems, to detect and solve current problems, and to prevent future problems from occurring. Also note that future management decisions are influenced to some degree by past decisions.   Example 1: Examples of decision-making situations include investing in a new product line, buying new equipment, and selecting an employee for a key position.   Example 2: Examples of problem-solving situations include handling a tardy employee, correcting a poor-quality production, and working with a slow-paying customer.

Communication DefinedOne thing that's common to all four functions of management (planning, organizing, directing, and controlling) is communication. Communication involves two or more people. Communication can be either formal or informal and includes both written and oral forms.  

The effectiveness of organizational communication can be increased with clear verbal and written messages with little or no noise. Nonverbal communications (body language and messages sent through actions, not words) and listening skills (the art of receiving messages) are also important.

Research source: https://www.projectmanagement.com/blog-post/18979/Are-Your-Communication-Habits-Good-Enough--

Formal and Informal CommunicationFormal communication channels are those that flow within the chain-of-command and outside the chain-of-command. There are four types: Downward communication refers to the messages and information sent from a higher-level to a lower-level in the management hierarchy (e.g., goals, strategies, mission, vision, directives, policies, procedures, and performance feedback).   

Upward communication refers to the messages and information transmitted from a lower-level to a higher-level in the management hierarchy (e.g., grievances and disputes, routine progress and performance reports, suggestions for

Horizontal communication refers to the lateral or diagonal exchange of messages and information among peers or coworkers, occurring within or across departments (such as intradepartmental problem-solving requests, interdepartmental coordination on joint projects, and use of task forces and committees). Horizontal communication is important in learning organizations with teams solving problems. improvement, and problems and exceptions). 

Diagonal communication refers to the exchange of messages and reports from a lower-level employee in one department to a higher-level employee in another department and vice versa. This communication occurs only when the manager of the lower-level employee is fully informed and gives permission to initiate such communication. This type of communication occurs when conducting special studies and projects. Note that this type of communication violates the chain-of-command management principle because the subordinate is receiving orders from two superiors. 

Formal communication channels are based on formal organizational charts between and among employees and managers, either in the same department or other departments.  Informal communication channels exist that do not consider the organization’s formal organizational chart and chain-of-command and include two main forms:

MBWA means higher-level employees (like executives and senior managers) talk directly with the lower-level employees (such as hourly workers at factory, office, or warehouse) by walking around to learn about problems and issues confronting them, as well as to share their key ideas and values. These meetings are informal and unannounced.   

A grapevine is an unofficial and informal communication system spread through word-of-mouth. It sometimes conflicts with the formal system, and at other time it complements and reinforces it. The grapevine will remain in organizations as long as people are working in a group environment. It has both positive and negative sides. From a positive side, the grapevine communication can help management learn how employees truly feel about policies, procedures, and programs—a type of

feedback mechanism. On the other hand, a negative consequence to the grapevine is rumors. Another place for spreading rumors is at the "water cooler."

On the Job: Assess Your Communications SkillsThe following link takes you to a self-assessment quiz to see where your communication skills stand. Take the quiz and assess yourself.  Answer the questions truthfully, and think about your answers. You may learn something you didn't know about your communication skills or style.Quiz: http://www.mindtools.com/pages/article/newCS_99.htm  Questions: What surprised you about the quiz? Are you satisfied with your communication skills?

Negotiations DefinedNegotiation is a decision-making process among different parties with different preferences. Negotiation is gaining the favor of people from whom we want things such as money, justice, status, and recognition.   Traditionally, negotiation takes a win–lose attitude, which is based on power, position, and competition. Here, one person’s success is achieved at the expense of the success (loss) of others. It takes something away from the other party. A win–win attitude is based on high principles and cooperativeness among parties. Here, one person’s success is not achieved at the expense of the success of others, but rather both parties succeed and get something they want.   Four outcomes are possible in a negotiation process involving two parties:

Of course, each party's goal is to win the negotiation. Successful collaborative negotiations depend upon finding out what the other side really wants and showing them a way to get it while still getting what you want. It's the definition of a win-win situation.

On the Job: Preparing for Negotiations

Read the articles and answer the following questions. According to some negotiation experts, an individual can prepare for a negotiation to put his or her best foot forward. The following articles help in understanding how to prepare for an upcoming negotiation with scripts, sample positions, and a checklist.  Article 1:http://www.sportsbusinessdaily.com/Journal/Issues/2015/03/02/Opinion/From-the-Field-of-Negotiation.aspx   Article 2: http://www.sellingpower.com/content/article/?a=3743/scripts-to-help-you-negotiate-better-deals  Article 3: http://www.businessknowhow.com/marketing/negotiationchecklist.htm Questions: Buying a car is one type of negotiation. What are other types of negotiations you may face in the future? Which elements of the negotiation checklist do you see yourself using in future negotiations? How will you prepare and practice for your next negotiation? 

Conflict DefinedSocial scientists say that conflict is inevitable between people, and without conflict there is no major personal change or social progress. Conflict is based on scarcity of power, availability of resources, social position, and difference in value structure between individuals.   Conflict is the medium by which problems are recognized and solved. Conflict is closely related to change and interpersonal dealings. It refers to all kinds of opposition or antagonistic interaction.   Conflict management involves accepting or even encouraging constructive conflict as necessary to minimize the destructive form of conflict. Despite its drawbacks of creating friction, conflict has some benefits. It can spur technological development, encourage personal and intellectual growths, and help renew business organizations.   Example: A manager creates a constructive conflict on purpose by introducing a work-related healthy competition among his employees to get the best out of them. A reward is given to the employee who handled the competition best.  Conflict comes in a variety of ways, such as Disruptive and destructive Realistic and unrealistic Functional and dysfunctional

Disruptive and Destructive ConflictTo be human is to experience conflict. This conflict arises due to differences in personal values, opinions, desires, habits, and needs of people. It's impossible for people to rise completely above selfishness, betrayals, misrepresentations, anger, and strain. The best way to depict conflict is on a scale of disruptive and destructive dimensions, as shown in the image to the right.  Conflict at best is disruptive and at worst is destructive. Once it erupts, conflict is difficult to control. Disruptive conflict is temporary and not harmful, and it's generally caused by few employees due to their personal grudges. Destructive conflict has a tendency to expand until it consumes all the things and people it touches.

Realistic and Unrealistic ConflictWhen two or more people are together for any length of time, some conflict will be generated. That's inevitable. Social scientists make an important distinction between two types of conflict: realistic conflict and unrealistic conflict.   Realistic conflict, which is based on rationality, arises from opposed needs, goals, means, values, or interests. Realistic conflict can be resolved by focusing on the emotions first followed by reasonable problem-solving methods. Realistic conflict can occur when there's a shortage of resources and when there are excessive demands from customers.   Unrealistic conflict, which is based on irrationality, arises from ignorance, error, tradition, prejudice, dysfunctional organizational structure, win-lose types of competition, hostility, or the need for tension release. Unrealistic conflict creates unwarranted tension between people and can cause unnecessary destruction. It should be handled very carefully, and it can be prevented to some extent. An unrealistic conflict occurs when employees feel a request or demand is unrealistic, even if the manager believes it's a realistic request.

Example 1: Realistic conflict occurs when a marketing department manager is requesting a special and complicated cost analysis report from the accounting manager on an emergency basis. The accounting manager didn't have additional staff to prepare this special report for the marketing manager and thus feels the strain of this unexpected workload. Example 2:  An example of unrealistic conflict occurs when a manager asks a project team leader to finish a project in two weeks when a comparable previous project took three weeks to finish. The priorities of the two levels of employees are different, and thus conflict is created.

Functional and Dysfunctional ConflictConflict can be divided into two types, functional conflict and dysfunctional conflict. Functional conflict is preferable to dysfunctional conflict.  The benefits of functional conflict are increased effort and improved performance, enhanced creativity, and personal development and growth. It's like expressing anger in a constructive manner, without actually showing the anger. Functional conflict is always encouraged for obvious reasons.Functional conflict example: A manager of a production department in a manufacturing company gives competing work assignments to his employees to come up with creative ways to reduce waste in the production process. He announces a reward for the employee for the best creative idea.

The signs and symptoms of dysfunctional conflict include indecision, resistance to change, destructive emotional outbursts, apathy, and increased political maneuvering. The goal of management is to resolve or neutralize the dysfunctional conflict, which is always discouraged for obvious reasons.Dysfunctional conflict example: Manager A in Department A doesn't like Manager B in Department B for personal and professional reasons. Manager A is playing political games in not providing requested information to Manager B, using his employees as an excuse by saying that they are very busy in doing their work.

On the Job: Reducing Personal ConflictRead the following suggestions to reduce personal conflict.  Although it's impossible to totally eradicate conflict, personal conflict prevention and control methods can avert much needless strife (unrealistic conflict). Both individuals and organizations need to develop prevention and control methods. Robert Bolton recommends five methods to reduce the amount of conflict, as follows.   Reduce roadblocks means using fewer roadblocks to diminish the amount of conflict. Ordering (dominating), threatening, judging, name-calling, and other roadblocks are conflict-promoting interactions, so don't use them.   Improve listening skills means listening to another person when he or she has a strong need or a problem. This helps the other person dissipate “negative” emotions.  

Improve assertion skills means enabling a person to get his needs met with minimal strife. By asserting when needs arise, one can prevent the buildup of emotions that so often cause conflict. Both listening skills and assertion skills help to clear up two major sources of conflict: errors and lack of information.  Improve awareness skills means knowing what behaviors are likely to start a needless conflict between people. Possessing the awareness skills can eliminate many types of confrontations. Certain words, looks, or actions tend to “trigger” specific people into conflict. These behaviors may be rooted in early childhood experiences. Some people can sense that a "storm is brewing."   Achieve a win-win result with collaborative problem-solving methods. In collaborative problem-solving, once the people discover they have conflicting needs, they join together to find a common solution acceptable to both. It entails redefining the problem, discovering alternatives, and focusing on overlapping interests. In this process, neither person surrenders to or dominates the other. Because no one loses, no one gives up or gives in, and because all parties benefit, this is often called a win-win way of dealing with conflicting needs.

Team Managing SkillsSelecting employees to become team members is the most important and difficult task for supervisors, managers, and leaders alike. The selection is based on an individual’s job skills, experience, and attitudes. The selection is a difficult task because it's the team members that can make or break the team, since the success of the team entirely depends on the success of each member. Selecting the wrong team members will make the entire team less effective. Managers and leaders need to establish and manage teams successfully, because a team consists of individuals with different personalities, behaviors, and goals. Understanding team dynamics is very critical in terms of facilitating positive interactions. Team-managing skills include planning, organizing, directing, and controlling skills to guide the team members and to evaluate their performance.

The scope of team managing skills includes the following skills:

Diversity Management Skills   Treating all employees at the workplace fairly and equally without showing prejudice, bias, and discrimination is the hallmark of possessing diversity management skills.   Today, most organizations hire a mix of employees with different genders; different skill sets; different skin colors, nationalities, and ethnicities; different languages with varied communication tones and sounds; and different attitudes, behaviors, and cultures—it is indeed a very diverse and complex workplace.   This complex workplace requires all employees, supervisors, managers, and leaders to be open-minded and to have high levels of tolerance and acceptance to ambiguity and diversity. Obtaining sensitivity training and playing role-playing games are suggested to each and every employee in order to treat other employees fairly and equally.

Public-Service Skills   As a part of social responsibility, the scope of public- servicing skills is large and includes such things as  (1) making monetary donations to charities and other legal and eligible religious organizations

 (2) sponsoring and/or participating in various public and social events such as community services and fundraising programs  (3) helping disabled citizens  (4) providing educational assistance to underprivileged students  Society at large expects business corporations to provide these types of public services.

Organizational Skills   The scope of organizational skills applies to both supervisors and managers and includes knowing how to perform job analysis; knowing how to develop job or position descriptions; learning how to draw organizational charts; knowing how to coordinate a person’s work with others’ work; knowing how to set priorities among competing tasks; staying away from playing organizational politics; and understanding how to conduct employee performance appraisals and evaluations.   Skills such as work planning, work organizing, and work completion ideas (preparing a to-do-list with a timeline can help in this area), combined with time-management skills (that is, watching not to exceed the time allocations to a specific task) can improve the overall organizational skills of supervisors and managers.

Project Management Skills   The scope of project management skills includes knowing how to manage a project’s success factors such as time, cost, schedule, performance, and risk; and knowing how to control these factors to realize or increase a project’s success rate. Here, “time” refers to the overall timeframe from the beginning of a project to the end of the project, and “schedule” means specific start and end dates for each activity in the project.

SECTION 2.3

IntroductionIn Section 2.3, you'll learn how teams and groups are formed and used within organizations. You'll also learn the factors affecting team performance. Section 2.3 Features Discuss the nature of working groups Discuss the nature of teams and apply them to team performance Differentiate between committees and task forces Discuss the nature of focus groups

Working Groups DefinedA working group is defined as a unit of two or more individuals (typically 5 to 10 employees) who interact with and interdepend on each other to accomplish goals and objectives. A working group is a mix of functional department employees who have some

degree of mutual interaction, shared objectives, and a common purpose. Employees join groups for various reasons to satisfy their personal and professional goals, to make decisions, and to solve problems.   Department employees who join working groups are composed of engineers, accountants, marketers, researchers, architects, scientists, and senior analysts.  Working groups are established to handle major tasks or projects such as developing new products and services; designing new automobiles; developing operating and capital budgets; constructing new offices, factories, and warehouses; researching new medical drugs; experimenting with new treatment of diseases; and formulating the organization’s strategies and plans.

Teams DefinedA team is defined as a unit of two or more individuals (typically 3 to 6 employees) who share a common purpose and who possess collective responsibilities to achieve a common goal together. The size of a team is typically much smaller than the size of a working group. A team is a type of working group that has additional characteristics such as a high degree of interdependency, coordinated interaction, and a strong sense of personal responsibility and autonomy for achieving specified common outcomes.   Types and Nature of Teams   In most organizations today, employees work in a team environment to achieve management’s goals and objectives. The easiest way to classify teams is in terms of those created as part of the organization’s official structure (formal teams) and those unofficially created by employees to discuss their common concerns and problems (informal teams). Sometimes, informal teams can be more powerful than formal teams because the informal teams have no inhibitions and limitations while the formal teams do.

Formal TeamsTwo types of formal teams are vertical and horizontal.        A vertical team is composed of a manager and his or her subordinates in the formal chain of command. Sometimes called a functional team or a command team, the vertical team may in some cases include three or four levels of hierarchy within a functional department. Typically, the vertical team includes a single department in an organization.   Example 1: The third-shift nursing team on the second floor of St. Luke’s Hospital is a vertical team that includes nurses and a supervisor.   Example 2: A financial analysis department, a quality control department, an accounting department, and a human resource department are all examples of command teams. Each is created by the organization to attain specific goals through members’ joint activities and interactions.        A horizontal team is composed of employees from the same hierarchical level but from different areas of expertise. A horizontal team, or a cross-functional team, is drawn from several departments, is given a specific task, and may be disbanded after the task is completed.  

Example: The two most common types of horizontal teams are task forces and committees.

Informal TeamsAn informal team, in contrast with the formal team, is created by employees of an organization where they discuss or criticize the company’s policies and procedures, talk about the organizational politics, and share the common problems and concerns. Informal teams have informal leaders to organize the informal meetings.  When a company’s policies and procedures are outdated, management may listen to informal teams and update such policies and procedures. This is an example of positive contribution from informal teams.  The major difference between the formal teams and the informal teams is that the former is bound by the organization’s rules and structures and the latter is bound by no rules and loose structures. Employees can join or leave the informal team at any time and as they wish. The best examples of informal teams are grapevine sessions and meetings at "the water cooler."

Team PerformanceSimply becoming a member of a team doesn't guarantee high performance by itself. Chances are the knowledge, skills, and abilities of an employee that make him or her a successful contributor to an organization don't necessarily ensure the same success as a team member or a team leader. A team member needs to know team dynamics in terms of (1) knowing what makes teams work, (2) knowing how to gain insight on members' behavior and culture, and (3) understanding his or her own strengths and limitations.

 

Assessing and Measuring a Team’s Performance   Coaching and mentoring can help a team member achieve higher performance and become a productive member, which eventually increases the team’s overall performance. Measuring a team-related performance can be approached at the individual-level and team-level:

Individual Behavior      Employees can be measured on how well they work with team members.  Examples of these types of measures include the degree to which (1) the employee participates in team meetings, (2) the employee volunteers for team projects, (3) the employee communicates with members in a constructive and non-threatening manner, and (4) other members find that the employee is pleasant to work with and fosters cooperation.   Individual Results Employee work products that contribute to the final team product or service can be assessed and verified. Examples of these types of measures include error rates, the timeliness of the delivered product or service, the number and the quality of suggestions made, or the accuracy of data provided.          

Team Processes  The team can be measured on its internal group dynamics.  These types of measures could address (1) how well the team works together as a group, (2) the effectiveness of team meetings, (3) the ability of the team to reach consensus, and (4) the team’s problem-solving techniques.   Team Results The team can be measured on its work results or products. Examples of these types of measures include (1) the number of claims, cases, or transactions completed in a time period, (2) the use, acceptance, and understandability of the team’s final report, (3) the number of customer requests for the team’s report, and (4) the subscription rate of the team’s newsletter.       

Rewarding Team PerformanceNote that the team’s performance, not an individual’s performance, should be the basis for giving rewards and recognition for team achievements. A team’s contribution to the success of an organization can be recognized through cash awards and non-cash awards. Research has proven that non-cash awards are more effective than cash awards due to their long-lasting value.    

Note that some employees may prefer cash awards only due to their tangible nature whereas others may prefer non-cash awards only due to their intangible nature. Cash awards are not long-lasting because they can be quickly spent and gone, whereas the non-cash awards can remain in employees’ offices and homes for a long-time to come. Also, cash awards cannot be displayed publicly whereas the non-cash awards can.

Cash Awards Examples of cash awards include cash currency, gift cards, cash cards, gas cards, travel cards, dinner cards, plastic cards (debit or credit), and checks.   Non-Cash Awards Honorary and informal recognition awards such as a trophy, a plaque, a mug, a t-shirt, verbal praise in a group, and a handwritten thank you card from a manager. Other recognitions include “Employee of the Month,” displayed on a bulletin board with a picture and assigned a special parking space, “Thanks! You Made a Difference,” a “Certificate of Appreciation,” and a special write-up with a picture in the company’s newsletter.   

Factors Affecting Groups and TeamsGroups and teams can become assets (strengths and benefits) of an organization when they are managed and directed properly, correctly, and timely; otherwise they can become liabilities (weaknesses and costs). Examples of assets and liabilities are shown to the right.  It's important to note that conflicts can occur within the working groups and teams, between different groups, and between different teams due to the different goals, roles, and responsibilities they are expected to take. Understanding the human behavior of the individuals in a group or team is important to keep them functioning properly. Group synergy can be achieved if all individuals in a group or team are working together towards achieving a common goal; otherwise, group conflicts can easily occur.   Two types of conflict can exist in groups: intergroup conflict and intra-group conflict. Intergroup conflict occurs between groups and intragroup conflict occurs within groups. Conflicts can be solved, in part, by implementing collaboration and compromising practices and by understanding the roles and objectives of members. Also, note that conflicts can arise from a member’s own biases, values, and beliefs about others.

Assets:  Group synergy, goal congruence, breadth of information, diversity of information, strong or high-degree of cohesion (bonding of members and becoming loyal members), acceptance of solutions, and legitimacy of a process  Liabilities:  Group conflicts, time-consuming processes, adherence to group conformity, goal incongruence, group think, group shift, group polarization, strong or high degree of cohesion, domination of discussions by few members, ambiguous responsibility, and a loss of personal accountability

On the Job: Team DynamicsRead the three articles from Harvard Business Review and answer the questions about team dynamics. 

The first article shows the positives and negatives of forming a team. The second article focuses on what team members expect from other members and from team leaders. The third article shows team leaders how they can form a "true team," that is, one that functions efficiently and with a common purpose. Article 1: https://hbr.org/2015/03/introverts-extroverts-and-the-complexities-of-team-dynamics  Article 2: https://hbr.org/2010/08/four-things-groups-want-that-l  Article 3: https://hbr.org/2011/06/turn-your-group-into-a-true-te  Article 4:https://hbr.org/2017/01/great-teams-are-about-personalities-not-just-skills

Questions: Have you worked with any extroverts or introverts in a formal or informal setting? How would you describe the teams and groups of which you are a member? How effective do you think they are? How can they be improved? How are you going to put these insights into practice on the job?

Committees DefinedA committee is a group of high-level executives and/or board members who solve major specific problems confronting the organization.  A committee generally is long-lived and may even be a permanent part of the organization’s structure. Membership on a committee usually is decided by a person’s title or position rather than by personal expertise. A committee often needs official representation, compared with selection for a task force, which is based on personal qualifications for solving a problem. Committees typically are formed to deal with tasks that recur regularly. Committees are more powerful and visible than working groups, teams, task forces, and focus groups due to their high-level management representation (especially with senior managers, officers, and board members) and big-picture perspectives taken, as they deal with major and challenging issues and problems facing the entire organization. In other words, the committees’ outcomes have a more far-reaching effect on the organization than the other types of groups and teams.      People join committees to make decisions and solve problems. Committees use a horizontal organization structure and offer several advantages such as allowing organization members to exchange information, generating suggestions for coordinating the organizational units that are represented, developing new ideas and solutions for existing organizational problems, and assisting in the development of new organizational practices and policies.

Types of CommitteesSimilar to teams, several types of committees exist for a specific purpose. Examples of committees include governance, audit, executive compensation, special, nominating, finance, advisory, employee benefits, ethics, public policy, technology, ad-hoc, steering, and standing committee.

 Note that the number of committees depends on the size of a company in that large companies may need several committees and that small companies may need fewer committees. Also, note that the number of committees can shrink or expand based on the needs of a company and the philosophy of senior management and the board of directors.  Committees have high visibility and high impact on organizations due to their strategic-level representation of executive management and the board members as their decisions affect the entire company. The outcome of a committee’s work is a new or revised policy, plan, or procedure to make either current things better or future things even better. Committees are employed in both private and public organizations, managed by committee chairpersons, and they take big-picture perspectives.  

Task Forces DefinedA task force is a small team of qualified employees and senior analysts from several functional departments who are temporarily brought together to work on a specific issue or problem at hand and find solutions. These employees and analysts can deal with complex and intricate company matters. The task force is dissolved after the work is completed and a report is issued to management discussing its findings and recommendations. A task force can be created to develop, implement, monitor, and share information through communication.  Task forces are an example of a horizontal structure and offer several advantages, similar to committees, and are found in public sector and private sector organizations. A task force can be established to work on a specifically defined, single, temporary task or activity. Similar to working groups, teams, and committees, task forces make decisions and solve problems.   Example: Examples of specific policy issues to address in task forces include operations analysis, climate change, use of social media websites at work, use of personal email addresses for work and vice versa, and use of personal mobile devices for business work and vice versa.  

Examples of Task ForcesTask forces have low to average visibility and low to moderate impact on organizations due to their operational-level representation of functional department employees as their decisions affect specific parts of a company.  The outcome of a team’s work is a new or revised solution in the form of a plan or procedure to make either current things better or future things even better. Task forces are employed in both private and public organizations, managed by task force heads or chairpersons, and take big-picture perspectives.  Four examples of task forces follow:Example 1: A fast-food restaurant chain has established a task force in response to its employees going on a nationwide strike to raise the minimum wages. This task force will study the positive and

negative effects of the increased wages on the chain’s revenues, costs, and profits for both short-term and long-term, as well as increasing the standards of living for employees.  

Example 2: A manufacturing company experienced a sudden increase of 20% in last month’s production costs in one of its factories. A skilled task force is established representing the production, procurement, and finance departments to analyze the reasons for the cost increase.  During this analysis, the task force used cause and effect diagrams to identify the real reasons for the increase in production costs. The root causes were traced to faulty materials received from one of its suppliers, which caused rework in the factory. A report was issued to management describing the findings and suggestions.

Example 3: In consultation with environmental researchers, academics, and private corporations, the United States Environmental Protection Agency jointly with the Department of Energy established a task force to find out the reasons and solutions for climate change. The goal is to determine the impact of climate change on the environment, human life, animal life, and plant life.

Example 4: A large private corporation established a task force representing major departments, including the information technology department, to study how employees are using social media websites at work, what company mobile devices are used for personal use, and what personal mobile devices are used for company purpose. The outcome of this task force work is to determine whether current policies are adequate to address these issues and, if not, what new policies are required.

Focus Groups DefinedFocus groups obtain people’s opinions, experiences, and suggestions in improving products and services. A focus group is a large group of knowledgeable individuals (say 6 to 12 participants) collected from either inside or outside of an organization, or both.  Focus groups participate in intense discussions of both positive and negative aspects of products or services. The success of a focus group depends on the quality of individuals selected for the focus group.   Marketing management is a heavy user of focus groups when it introduces new products and services and when it upgrades existing products and services. Unlike working groups, teams, committees, and task forces, focus groups don't actually make decisions or solve problems by themselves; instead, they provide data and information (that is, their ideas and opinions) to management for it to make decisions and solve problems. In other words, focus groups are decision-aids to management.

Examples of Focus GroupsA focus group is a qualitative-based discussion group invited from a segment of the customer or citizen base, to discuss (1) the features, functions, uses, and experiences of an existing or planned product or service, or (2) social and public issues.   Focus groups are led by a facilitator working from a predetermined questionnaire. Focus groups produce a rich body of data expressed in the respondents’ own words and context. They represent an important data- gathering tool for discovery and exploration of ideas and opinions. They're a choice between individual-based interviews or focus-group-based

interviews. Although the primary purpose of focus groups is to gather qualitative data, collecting quantitative data is the secondary purpose.  The outcome of a focus group’s work is a new or clarified solution in the form of customer or citizen advice and a plan of action to make either current things better or future things even better. Focus groups are employed in both private and public organizations, and they're the only type of group that uses facilitators or moderators to guide the group’s work.  Three uses of focus groups follow: Example 1: Analyze Customer Service Issues   A customer service department can find out what its customers are thinking. The output from this focus group will be useful in reformulating the customer service department’s policies and procedures to serve the current customers better. The ultimate goal of a customer service department is to make customers happy and satisfied and turn them into repeat and loyal customers for life, which is not an easy thing to do. Example 2: Assess Customer Needs and Wants   The marketing department of a consumer products company can conduct customer analysis from the current base of major customer groups, dealers, distributors, and retailers to find out what customers think about the company’s products and services. The goal is to listen to the voice of the customers regarding how to improve the quality and performance of products and services. The output from this focus group is used to redesign and redevelop the current products and services based on customer suggestions.  

Example 3: Solve Public and Social issues   A group of citizens consisting of residents and law enforcement officers is brought together to discuss the pros and cons of installing traffic red light video cameras at busy intersections to prevent car accidents and to fine violators. The output from this focus group is used to decide whether to install or de-install the traffic cameras.