MGMT 321Review For Examination One

Chapters 1-5 and 15

ManagingChapter 1

In General Industrial Management, Henri Fayol defined management as planning, organizing, leading and controlling money, manpower, material and information in order to achieve organizational goals efficiently and effectively.

Performance Measurement

• Efficiency:

Are we using resources productively to achieve our goals? (minimize input and maximize output)

• Effectiveness:

Are these the correct goals? Howmuch of them are we achieving?

Planning

Planning is the process of identifying and

selecting appropriate goals and courses of

action.

1. Define Vision, Values, Mission (VVM)

2. Decide goals (WHAT?)

3. Decide strategy (HOW?)

4. Set tactics: timetables, form teams, allocate resources, etc. (WHERE? WHEN? WHO?)

Organizing

Establishing a structure of relationships that enables people to work together to achieve goals efficiently and effectively

> Clarify authority

> Use cross-functional teams to breach

silos

Leading

• Communicate clear vision, values, mission, strategy and goals (involve entire organization in creating); empower and equip people to achieve them; hold them accountable

• “Getting the other fellow to do what you want him to when you want him to do it.” President Dwight Eisenhower

Controlling

• Monitor and evaluate individual and organizational performance and take actions to improve both.

• The “C” in Plan, Do, Check, Act (PDCA)

• What gets measured gets done.”

Peter Drucker

Building Competitive Advantage

• Decrease cost• Increase quality and value• Increase efficiency• Increase appropriate technology• Increase speed, flexibility and innovation• Increase responsiveness to customers• Improve continuously (kaizen)• Run scared: never get FDH

Evolution of Management ThoughtChapter 2

Job Specialization/Division of Labor

18th century economist Adam Smith observed that manufacturing went much faster and produced more when each worker specialized in one step instead of doing all steps himself.

Also described how the “invisible hand” of the marketplace priced products.

Scientific Management

Defined by Frederick W. Taylor in late1800’s; took Smith’s division of labor to new heights Focus on the process by breaking it down into steps Optimize each step through time-and-motion studies Reassemble the procedure into a new and more efficient

form which he called the “one best way” Codify it into Standard Operating Procedures (SOPs) Find workers whose skills best match the new way

Result: greatly enhanced efficiency and productivity

Scientific Management

Workers were to be paid a bonus for workexceeding fair levels of performance.• But management often didn’t reward superior

performance• Treated workers as “hands” ignoring brain and

heart• Specialized jobs became boring and dull• Disillusioned workers rebelled and purposely

under-performed• Resulting management-labor strife was fertile

ground for the rise of unions

Administrative Management

Propounded by Max Weber and based on the concept of bureaucracy – a formal system of organization and administration designed to maximize efficiency and effectiveness.

Principles of Bureaucracy

• Manager’s authority derives from position and performance, not social standing or contacts

• Clearly define each position’s responsibilities and relationship to other positions

• Arrange positions hierarchically (the many-layered cake)

• Clearly define rules and procedures to control behavior

Rules, Procedures, Norms

Rules:

Written instructions specifying actions to be taken (What)

Standard Operating Procedures (SOP’s):

A set of rules describing how to perform a certain task (How)

Norms:

Unwritten, but nonetheless understood, codes of conduct

Henri Fayol’s 14 Principles

• Division of Labor: but Fayol warned against its failings• Authority and Responsibility: flip sides of the

management coin – if you have one, you have the other• Unity of command: reporting to only one boss

minimizes confusion• Unity of Direction: a single plan that everyone follows• Equity: fair and impartial treatment of employees• Order: a logical structure optimizing organizational

performance and providing opportunity for advancement

Fayol’s Principles

• Line of Authority: clear chain of command• Centralization: power centralized at the top• Initiative: creativity, innovation and independent

action• Discipline: organization can’t function without

respectful employees• Subordination of Interest: interest of

organization supersedes interest of individual

Fayol’s Principles

• Uniform Pay: a clear, equitable and uniform payment system motivates high employee performance

• Stability of Tenure: long-term employment supports skill development

• Esprit de Corps: comradeship and shared enthusiasm foster devotion to organizational success

Behavioral Management

• Mary Parker Follett was concerned that Taylor’s emphasis on process ignored people. She focused on how managers should behave to motivate high employee performance.

• Workers should help analyze their jobs to improve performance (“brains” PLUS “hands”)

• This key practice underlies Toyota’s success.

Theories X and Y

Propounded by Douglas McGregor:

Theory X: Workers are lazy and must be closely supervised and controlled through reward and punishment.

Theory Y: Workers want to do a good job; make the job stimulating and empower them and they will perform for you.

Example: Toyota’s experience at NUMMI

Organizational Environment Theory

No single best way to organize; optimize structure to the outside environment

• Mechanistic: centralized, many-layered, non-adaptive, slow to act and react

• Organic: decentralized, flat, aware, quick to react and adapt

Management EvolutionSummary

• From tall to flat• From rigid to flexible• From process to people• From totalitarian to team• From non-adaptive to adaptive• From command to collaboration• From internal focus to external focus (look

out the window, not into the mirror)

Management Evolution

• But Japanese companies have re-imported to America an emphasis on “process” that brings with it mentoring, managerial support and standard operating procedures

• Combined with humanistic (people-centered) management, this makes a powerful system

Values, Attitudes, CulturesChapter 3

Corporate Chemistry

• Why should we pay attention to it?

• To get things done efficiently and effectively.

Personality Traits

• Personality traits can determine the way managers think and feel, affecting their actions and behaviors

• Traits effective in one situation may not work in another

• Managers should be flexible and observant! Polish your people-picking skills to better match your people to situations where they are likely to succeed

The Big Six Personality Traits

• Extrovert: positive, sociable, outgoing and friendly

• Introvert: the opposite (brings a book to meals)• Agreeable: likable and affectionate; cares about

others • Open: has broad interests, original, a risk-taker• Conscientious: careful and persevering• Negative Affectivity: judgmental, critical of self

and others – but can be effective

Other Important Traits

• Internal Locus of Control: I’m in charge of my fate• External Locus of Control: Outside forces are in

charge of my fate• Need for Achievement: I am driven to meet internal

standards of high performance• Self-Esteem: I feel good about myself (high) or I doubt

my abilities (low)• Need for Affiliation: I want to be liked and accepted by

others (the herd instinct)• Need for Power: I want to control and influence others

to get things done

Values

• Terminal Values: where I want to end up

• Instrumental Values: how I want to get there

• Value System: who I am and what I believe (my hard wiring)

Organizational Culture

Shared beliefs, expectations, values, norms and work routines

• “The Toyota Way”, “The GE Way”, The J&J Way”, “The GM Way”, “The Ford Way”

• They create a strong culture that can be either effective or ineffective

• Often established and maintained by founding families who hire people like themselves

• Reinforced by initial success• Must evolve to remain effective

Ceremonies and Rites

• Rites of Passage: determine how individuals enter, climb and leave the organization

• Rites of Integration: reinforce common bonds among an organization’s members

• Rites of Enhancement: reinforce organizational commitment by recognizing and rewarding members

• THINK OF YOUR FRATERNITY, SORORITY OR TEAM

Ethics and Social ResponsibilityChapter 4

Ethics

The inner principles, values and beliefs that guide you in analyzing a situation and deciding the appropriate way to behave.

Your internal moral compass

Ethics and the Law

• Neither laws nor ethics are fixed; both slowly evolve over time

• Ethical beliefs lead to development of laws and regulations designed to encourage or discourage certain behaviors.

Ethics > Laws > Regulations

Ethics and Stakeholders

Stakeholders• Groups that have a “stake” in the company’s success or

failure (customers, employees, suppliers, distributors, stockholders, communities)

• When the law does not specify how to weigh the interests of one stakeholder group against those of another, a manager must decide

• Toyota’s philosophy “make every decision as if a customer is standing next to you” implies a customer-first stakeholder hierarchy: this is the principle the company has recently most violated

Stakeholder Versus Stockholder

• Most companies communicate a customer-first philosophy; far fewer actually practice it

• In order to satisfy customers better than your competitors, you must maximize efficiency and effectiveness. This maximizes the chance for success, benefiting all stakeholders -- including stockholders

• Many business-people overlook this principle, focusing instead on satisfying stockholders to the detriment of other stakeholders and the long-term success of the company

Ethical Dilemma

Key Ethical Questions

1. How do you rank the importance of each stakeholder group in a given situation?

2. How do you measure the benefits and harms that may be done to each group?

Ethical Decision Models

Utilitarian RuleProduces greatest good for greatest numberMoral Rights RuleBest maintains the accepted rights and privileges of those affected by itJustice RuleEquitably distributes both harm (pain) and benefit (gain) among stakeholder groupsPractical RuleFalls within acceptable societal norms (passes the “red-face” or “Mom” test)

Olson’s Rule

• The trust a company builds with its stakeholders (particularly customers) is its most important asset and a key component of brand strength

• Reputation and trust are built slowly over time by the daily decisions of every employee; both can be lost quickly

• As a manager, you will be in charge of this vital building task. Make ethical decisions. If your company’s culture won’t allow you to do so, find a company that will!

Social Responsibility

• Every company has an implied social contract with the communities where it does business. Certain minimum norms of corporate behavior are expected.

• Part of this unwritten agreement is Corporate Social Responsibility (CSR) – the way a company views its duty to make decisions that protect and promote the welfare of its stakeholders, including society as a whole.

Corporate Social ResponsibilityObstructionist ApproachCompany behaves unethically and illegallyDefensive ApproachCompany meets the letter but not the spirit of the lawAccommodative ApproachCompany behaves legally and ethically, trying to balance interests of various stakeholdersProactive ApproachCompany actively embraces CSR, using resources to promote the interests of all stakeholders

CSR

• Currently, CSR is most likely to be a defensive strategy carried out in an accommodative way to protect the company’s long-term interests

• But public opinion about CSR continuously evolves and should be carefully monitored by management so that company practices stay in step with expectations

Managing Diverse EmployeesChapter 5

Diversity

Differences among people in age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background and capabilities/disabilities

Important U.S. Laws Protecting Diversity/outlawing discrimination

• 1963 Equal Pay• 1964 Title VII of the Civil Rights Act• 1967 Age Discrimination in Employment• 1978 Pregnancy Discrimination• 1990 Americans with Disabilities• 1991 Civil Rights Act• 1993 Family and Medical Leave

Dealing with Diversity

• Note holy days on the corporate calendar, provide flexible time for them and schedule meetings around them

• Accommodate disabilities with reasonable special arrangements

• Educate and train employees to understand, respect and value diversity and not discriminate

• Consider providing domestic-partner benefits (most major U.S. employers now do so)

Dealing with Diversity

• Lead by example• Have clearly stated zero-tolerance policies

against discrimination of any kind• Investigate thoroughly and react quickly

and firmly if discrimination occurs• Don’t allow an underperforming employee

to use discrimination as an excuse if your investigation shows it isn’t (tip: build a paper trail)

Managing Diversity

Distributive JusticeDistribute raises, promotions, titles and other resources/rewards based on performance and organizational contribution, not personal characteristics Procedural JusticeDistribute outcomes to organizational members based on fair procedures: careful performance reviews taking into account environmental obstacles and ignoring irrelevant personal characteristics.

Diversity As An Asset

Diversity is a Business Asset• Variety of backgrounds and viewpoints

enhances creativity and innovation while improving decision-making

• Also provides a more attuned “match” between companies and an increasingly diverse marketplace

• Can increase retention of valued employees• Customers, business partners, and the public

expect corporations to be diverse and practice CSR

Perception

• Smart managers work to become aware of their filters and blind spots and factor offsets for them into their decision-making; question yourself!

• Discrimination – whether overt or unintentional -- is illegal unethical, unproductive and dumb!

How to Manage Diversity

• Secure top-management support.• Provide on-going training to build awareness of personal

“filters”, diversity’s benefits, and respect for differences• Institute and enforce strong “zero-tolerance” anti-

discrimination policies• Reward employees for promoting/supporting diversity

(you get the behavior you reward)• Pay close attention to employee performance appraisal

and promotion processes (what gets measured gets done)

• Incorporate respect for diversity into the corporate culture

Groups and TeamsChapter 15

• A team is a group, but a group is not necessarily a team.

• Difference is a matter of degree; team is more intense, more cohesive, more focused and driven to achieve a specific, shared goal

Groups and Teams

• A team is more effective than a single person at achieving goals because it has MORE of everything: diversity of experience and viewpoint, brains, ideas, energy, resources, time and brainstorming capability

• Team members bring their “silo” to meetings, balance each other’s strengths/weaknesses, and inspire each other’s creativity

• Teams also make everyone feel part of something larger, generating satisfaction and high performance

Group/Team Dynamics

• Group size can affect team effectiveness; hard to reach decisions in teams larger than 7 to 9 persons

• If necessary the team can flex by temporarily adding members when more resources are required and then rotate them back out

Team Dynamics: Conformity, Deviance, Cohesiveness• Team is a three-legged stool requiring balance:

(1) conformity

(2) deviance

(3) cohesiveness• Deviance (diversity of experience and viewpoint)

the spice that flavors the white bread of conformity. But too much deviance can derail a team’s focus and direction – disrupting productivity and goal achievement.

Team Cohesiveness

• Cohesiveness is the third leg of the team “stool.”

Too much cohesiveness can lead to a narrow focus on team goals with too little awareness of what other teams in the company are doing and how everything must fit together.

• In order to assure high performance, managers must align team with total organization goals and balance all three legs of the team stool

Social Loafing

• Social loafing is the tendency of some team members to take a free ride on the efforts of others

• Minimize it by assuring no place to hide

> Keep membership small

> Clarify individual responsibilities

> Demand accountability and results

Assuring High Team Performance

• YOU GET THE BEHAVIOR YOU REWARD!

• Reward the team as well as each member with – for example – a two-check, double-bonus (team and individual) system.

Toyota Team Tips

• Check your ego and rank at the door.• Practice the three C’s – Cooperation,

Communication and Consideration (RESPECT).• Pick a team role: organizer, translator, leader,

facilitator, etc.• Establish milestones to track progress; then

meet them.• Listen more than you talk, but be willing to re-

direct discussion to keep things on track.• Plan and run efficient meetings: agenda

beforehand summaries and assignments after