Managers are the executive function of the organization, they create working systems rather than doing all

the work themselves. Management is the attainment of organizational goals in an effective and efficient manner though planning, organizing, leading and controlling organizational resources. The four management functions Planning: identifying goals and deciding on the tasks and use of resources needed to attain them. Organizing: reflects how to organize the plan, assigning tasks, delegating authority and allocating resources to departments. Leading: the use of influence to motivate employees to achieve organizational goals. Creating a shared culture and values and communicating goals to employees. Controlling: monitoring employees activities, keeping the organization on track and making corrections if needed. The other part of management is the attainment of organizational goals in an efficient and effective manner. An organization is a social entity that is goal directed and deliberately structured. Effectiveness is the agree to which the organization achieves a stated goal. Efficiency is the use of minimal resources to achieve a goal. The ultimate responsibility of managers is to achieve high performance. Management Skills Conceptual skill: the ability to see the organization as a whole system and the relationships among its parts. Involves information processing, planning liabilities and thinking strategically. Human skill: the ability to work with and through other people and effectively as a team. Involves motivating staff, coordinate, lead and communicate. Technical skill: the understanding of and proficiency in the performance of specific tasks. Includes: mastery of methods en techniques, specialized knowledge. Management skills are tested during turbulent times. One of the biggest blunders is managers s failure to adapt to the rapid pace of the change in the world around them. Other missteps include poor communication skills and failure to listen, treating employees as tools, inability to build a team characterized by mutual respect and trust. Management types. Vertical differences. There are three levels in hierarchy. First-level managers main concern is stimulating individual non-management employee performance. Their primary concern is the application of rules and procedures and accomplishing day-to-day goals. A middle manager is responsible for business units and major departments. They are responsible for implementing strategies and are concerned with the near future. Over the last years, the project manager became popular. A project manager is responsible for a temporary work project with different people from various functions and levels within the organization. Top managers are at the top of the hierarchy and are responsible for the entire organization. They are responsible for setting goals, designing strategies and making decisions for the longterm future. Horizontal differences. Functional managers are responsible for a department that performs a single tasks and has employees with similar training and skills. Line managers are responsible for manufacturing and marketing departments, staff managers are in charge of finance and human resource departments that support line departments. General managers are responsible for several departments that perform different functions.

Becoming a manager means a transformation in personal identity. You go from an individual identity (specialist, getting things done through own efforts, works independently) to a manager identity (generalist, getting things done through others, a network builder, works depending on others). Many new managers learn in a trial by fire, learning on the job as the go. Managerial activity is characterized by variety, fragmentation and brevity. Managers work is fast paced and requires flexibility. Manager roles. Manager activities can be organized into ten roles. A role is a set of expectations for ones behaviour. Informational (managing by information) - Monitor: seek and receive information, maintain personal contacts. - Disseminator: forward information to other organization members, send emails and make phone calls. - Spokesperson: transmit information to outsiders through speeches, reports and memos. Interpersonal (managing trough people) - Figurehead: perform ceremonial and symbolic duties. - Leader: direct and motivate, train and communicate with subordinates. - Liaison: maintain information links both inside and outside the organization. Decisional (managing through action) - Entrepreneur: initiate improvement projects, indentify new ideas. - Disturbance handler: take corrective action during crises, resolve conflicts among subordinates. - Resource allocator: decide who gets resources, make a schedule and budgets. - Negotiator: represent department during negotiation of union contracts, sales and purchases. The New Workplace The primary characteristic of the new workplace is the digitization of business. The old workplace is characterized by routine, specialized tasks and standardized control procedures. In the new workplace, work is free flowing and flexible. The empowered employees share knowledge . The new workplace is organized around networks rather than hierarchy and work is often virtual. Teams often have an interim manager, a manager who works on a project-by-project basis. New management competencies Empowering leadership style (create trust, regular communication, clear expectations) Collaborative relationships (collaboration across functions and hierarchical levels) Teambuilding skills An important challenge is to build a learning organization by creating a climate that values experimentation and risk taking technology, that tolerant mistakes and rewards the sharing of knowledge. How do social/political/economic forces influence organizations and the practice of management? Social forces: the aspects of a culture that influences relationships among people: their values, needs and behaviour. For example the changing attitude of Generation X (in their 30ies and 40ies) and Generation Y (or Nexters young workers). Political forces: the influence of political and legal institutions on people and organizations. Such as property rights, contract right, the justice system, the dominance of a free market system and the desirability of a self government.

Economic forces: forces that effect the availability, production and distribution of a societys resources among competing users. E very institution requires (material) resources, as much as ideas, information and knowledge.

Different perspectives. Classical perspective (19e 20e eeuw): rational approach, to make organizations efficient operating machines. Three subfields: - Scientific management: (Gilbreth/Taylor): focus on improving efficiency and labour productivity. Time and motion study. Find the best way to do the work, trained workers in standard methods. Workers were machines, ignoring social context and workers needs. - Bureaucratic organizations: (Weber/Smith/Babbage): emphasize on an impersonal rational basis through authority, responsibility, record keeping and the separation of management and ownership. Employee selection based on competence and qualifications. Now a negative association endless rules, dysfunctions: resistance of the human factor. - Administrative perspective: (Fayol/Parker/Follet/Barnhard): focus on total organization. Delineating the management functions. o Unity of command: 1 superior o Division of work: specialization o Unity of direction: 1 manager o Scalar chain: authority chain These principles are the five basic management functions: planning, organizing, commanding, coordination , controlling. Concepts of empowerment: facilitating rather than controlling employees. This lead to the informal organization and the acceptance theory of authority: people choose to follow management orders. Humanistic perspective (Parker/Follet and Barnhard): understanding human behavior, needs and attitudes in the workplace. - Human relations movement: satisfying employees basic needs. Effective control comes from within the individual worker enlightened treatment of employees. This lead to the Hawthorne studies: employees increased output when managers treated them better. Productivity increased from feelings of importance positive treatment of employees, cooperate and communicate. - Human resources perspective: (Maslov/McGregor): jobs should meet higher level needs by allowing workers to use their full potential. A cow gives more milk when satisfied. McGregor developed Theory X and Theory Y. o Theory X: Humans dislike work and will avoid it. People must be controlled to make them work. People want to be directed, have little ambition and want security above all. o Theory Y: Humans dont dislike work. A person will direct itself, if motivated and seeks responsibility. - Behavioural Sciences Approach: applies social science in an organization context, drawing from economics, psychology, sociology and other disciplines to understand employee behavior. Specifically organization development that applied the behavioural sciences to improve internal relationships and increase problem solving capabilities and effectiveness. Management science perspective: applied mathematics, statistics and other quantitative techniques to managerial problems.

Three recent trends: Systems theory: an extension of the humanistic perspective that describes organizations as open systems characterized by entropy, synergy and subsystem interdependence. A system is a set of interrelated parts that function as a whole. It consists of : 1. Inputs: material, human, financial or information resources. 2. Transformation process: managements use of production technology to change inputs in to outputs. 3. Outputs: the organizations products and services. 4. Feedback: knowledge of the results that influence the selection of inputs for the next cycle. 5. Environment: surrounding the organization, including: social, political and economic forces. Open systems must interact with the environment, closed systems not. Entropy is the tendency for a system to run down and die. Synergy means that the whole is greater than the sum of its parts. Subsystems depend on one another as parts of a system. Contingency view: extension of the humanistic perspective in which the successful resolution of organizational problems is thought to depend on managers identification of key variations in the situation at hand. The classical perspective was a universalist view, but this is a case view in which each situation is supposed to be unique and principles arent supposed to work in every situation. Total quality management: (Deming): focuses on managing the total organization to deliver quality to customers. Four elements: - Employee involvement: companywide participation is required. - Focus on customers: trying to meet their needs and expectations. - Benchmarking: how do others do it better and imitate or improve on it. - Continuous improvement: the implementation of small improvements on an ongoing basis.

Innovative management thinking for turbulent times. The learning organization: everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve and increase its capability. Essential idea: problem solving. Three characteristics: - Team based structure: collaboration and communication across departments and hierarchy. Employees on the team are given the information, tools and authority to respond creatively and flexibly. - Employee empowerment: unleashing the power and creativity of employees by giving them freedom, resources and skills to make decisions and perform effectively. People are the primary source of strength! - Open information: to identify needs and solve problems, people have to have information about what is going on. Managing the technology-driven workplace. Todays focus is on opportunities rather than efficiencies, which requires flexibility and creativity. E-business: work an organization does by using electronic linkages. E-commerce: business exchanges or transactions that occur electronically. - Business to consumer: selling products online. - Business to business: transactions between organizations. - Consumer to consumer: electronic markets by intermediaries. Supply chain management: managing the sequence of suppliers and purchasers, covering all stages of processing: from raw materials to final costumers.

Innovative technology in the workplace. Enterprise resource planning: unites a companys major business functions. Everyone has access to critical information. Knowledge management: make the companys intellectual capital open for sharing. To foster a culture of continuous learning and information sharing. Customer relationship management: system that helps companies track customers interaction with the firm and allow employees to call up information about past transactions. Outsourcing: contracting out selected functions or activities of an organization to others that can do the work more cost-efficiently. The external organizational environment includes all elements existing outside the organizations boundaries that have the potential to affect the organization. The general environment is the layer of the external environment that affects the organization indirectly. The task environment is the layer of external environment that directly influences the organizations operations and performance. The general environment is the outer layer of the environment with different dimensions. International dimension: portion of the external environment that represents events originating in foreign countries as well as opportunities for companies in other countries. Technological dimension: includes scientific and technological advancements in the industry and society at large. A massive change is the Internet! Sociocultural dimension: representing the demographic characteristics, norms, customs and values of the population within which the organization operates. A few influences: ageing workforce, globalization and diversity. Economic dimension: representing the overall economic health of the country or region in which the organization operates. Includes consumer purchasing power, unemployment rates and interest rates. - Legal political dimension: includes federal, state and local government regulations and political activities designed to influence company behaviour. There are two other influences on organizations: governmental bodies and pressure groups (groups that work to influence companies in a socially responsible way. Natural dimension: includes all elements that occur naturally on earth, including plants, animal, rocks and natural resources such as air, water and climate. Strong concerns about: - Eliminating nonbiodegradable plastic bags from the environment (greening disposal) - Improving efficiency of plants and factories (greening manufacturing) - Investing in cleaner technologies (greening use) The task environment includes sectors that have a direct working relationship with the organization. Customers: people and organizations who acquire goods or services from the organization. They have greater power today, because of the internet. Competitors: other organizations in the same industry or type of business that provides goods or services to the same set of customers. Suppliers: people and organizations that provide the raw materials the organizations use to produce its output. New influences: a global supply chain and a cooperative relationship. Labour market: the people available for hire by the organization. Forces affecting the market right now: - The growing need for computer-literate knowledge workers. - The necessity for continuous investment in human resources through recruitment, educating and training to compete in the borderless world. - The effect of international trading blocs, automation and outsourcing.

The organization environment relationship. Organizations care about the external environmental factors because they create environmental uncertainty. There are several strategies to reduce environmental uncertainty: - Boundary spanning roles: roles assumed by people and/or departments that link and coordinate the organization with key element in the external environment. They detect and process information about the environment and represent the organizations interest. Recently the use of business intelligence (software for spotting trends and patterns) is frequently used. This is related to competitive intelligence (CI) which refers to activities to get as much information as possible about ones rivals. - Interorganizational partnerships: reduce boundaries and increase collaboration with other organizations in order to adapt to the environment. Managers shift from an adversarial orientation (suspicion, competition, own profits, lawsuits, short term contracts) to a partnership orientation (trust, everyone profits, fair dealing, long term contracts). - Mergers and joint ventures are a step beyond strategic partnerships and reduce environmental uncertainty. A merger is the combining of two or more organizations into one. A joint venture is a strategic alliance or programme by two or more organizations. This typically occurs when a project is complex to deal with alone. Joint ventures are on the rise in order to keep pace with rapid technological change and competition in a global economy. The organization also has an internal environment: that includes the elements within the organizations boundaries. The internal culture (set of key values, beliefs, understandings and norms that members of an organization share) must fit the needs of the company strategy and the external environment. Culture can be analyzed at three levels. - Visible artifacts: such as dress, office layout, symbols, slogans and ceremonies. - Invisible expressed values: can be interpreted from the stories, language and symbols organization members use. - Invisible underlying assumptions and deep belief: the essence of culture can often be understood through symbols, heroes, slogans and stories. A symbol is an object, act or event that conveys meaning to others. A story is a narrative based on true events and repeated frequently and shard among organizational employees. A hero is a figure who exemplifies the deeds, character and attributes of a strong corporate culture. Heroes are role models for employees to follow. A slogan is a phrase or sentence that succinctly expresses a key corporate value. A ceremony is a planned activity at a special event that is conducted for the benefit of an audience. Environment and culture. A big influence on internal corporate culture is the external environment. Cultures can vary widely, but organizations within the same industry often reveal similar cultural characteristics. Encouraging healthy adaptation to the external environment leads to business success. Adaptive corporate cultures: - Behaviour: Managers pay close attention to customers and initiate change when needed to serve their interest. - Values: Managers care about customers, stockholders and employees. The strongly value people and processes that can create useful change. Unadaptive corporate cultures: - Behaviour: Managers tend to behave bureaucratically. As a result, they dont change their strategies quickly to adjust to changes in the business environment.

Values: Managers care mainly about themselves, their work group or some product associated with that group. The value risk reducing management more highly than leadership initiatives.

The right fit between culture, strategy and environment is associated with four categories of types of culture. These categories are based on two dimensions: - The extent to which the external environment requires flexibility or stability. - The extent to which a companys strategic focus is internal or external. Needs of the Flexibility Adaptability culture Involvement culture environment Stability Achievement culture Consistency culture

External focus Internal focus

Adaptability culture: a culture characterized by values that support the companys ability to interpret and translate signals from the environment into new behaviour responses. Achievement culture: a results orientated culture that values competitiveness, personal initiative and achievement. Involvement culture: a culture that places high value on meeting the needs of employees and values cooperation and equality. Consistency culture: a culture that values and rewards a methodical, rational, orderly way of doing things.

The one factor that increases a companys value the most is people and how they are treated. Corporate culture plays a key role in creating an organizational climate that enables learning and innovative responses to threat from the external environment, challenging new opportunities or organizational crises. Companies that succeed are those that pay attention to both cultural values and business performance. Attention to values Low High Good for short term bottom Both bottom line results and line, but is it sustainable? inspiration. Sustainable success via a high performance culture. May be going out of business. Strong culture is good for Little emphasis on results or moral, but can managers afford values. to keep it up without business results?

High attention to performance

Low attention to performance

A high high culture is a high performance culture: a culture based on a solid organizational mission or purpose that uses shared adaptive values to guide decisions and business practices and to encourage individual employee ownership of both bottom line results and the organizations cultural backbone. A cultural leader is a manager who uses signals and symbols to influence corporate culture. - The culture leader articulates a vision for the organizational culture that employees can believe in. - The cultural leader leads the day to day activities that reinforce the cultural vision.

Managing in a global environment. Business has become a unified global field, with trade barriers fallen and fast communication. The process of globalization has four distinct stages. 1. The domestic stage: domestically orientated, initial foreign involvement, little cultural importance, one best way assumption. 2. The international stage: export orientated, competitive positioning, great sense of cultural, many good ways assumption. 3. The multinational stage: multinational orientated, explosion of international operations, some cultural sensitivity, the least cost way assumption. 4. The global stage: global orientation, global development, cultural sensitivity is critical, many good ways assumption. Different marketing entry strategies. Global outsourcing: engaging in the international division of labour so as to obtain the cheapest sources of labour and supplies regardless of country. Also called off shoring. Exporting: maintains production in home country and transfers its products for sale in foreign countries. Countertrade: the barter of products for other products rather than sale for currency. Licensing: an organization in one country makes certain resources available to companies in another to participate in the production and sale of its products abroad. A special form of licensing is franchising: an organization provides its foreign franchisees with a complete package of materials and services. Direct investing: the organization is involved in managing its production facilities in a foreign country. Joint venture: a partnership: an organization shares costs and risks with another firm to build a manufacturing facility, develop new products or set up a sales and distribution network. Because of the complexity of todays global business environment is causing managers to develop alliance networks, that help companies reduce costs, enhance their competitive position and increase knowledge on a global scale. Wholly owned foreign affiliate or acquisition: a foreign subsidiary over which an organization has complete control. Greenfield venture: the most risky option, whereby a company builds a subsidiary from scratch in a foreign country. China and India. Foreign companies are investing more in business in China than anywhere else in the world. Multinationals based in the US and Europe manufacture products in China using design, software and services from India. Outsourcing is the most widespread approach and China can manufacture almost any product at much lower cost. Despite the advantages, operating smoothly in China isnt always guaranteed. China is relatively a very young market, with priority on personal experience rather than just image. India is a rising power in software design, services and precision engineering. International management: the management of business operations conducted in more than country. The fundamental tasks of business management (financing, production, distribution) dont change when a firm is transacting business across international borders. This is the same for the management functions, although manager will experience greater difficulties. The international business environment consists of the economic, legal political and sociocultural environment. The economic environment represents the economic conditions in the country in which the international organization operates.

Economic development differs widely among countries. Countries van be developing/less developed or developed. Measurement: per capita income (income per head of population). Infrastructure: a countrys physical facilities that support economic activities, such as airports, highways and telephone lines. Resource and product markets: managers must evaluate the market demand and access to resources in the country. Exchange rate: the rate at which a currency is exchanged.

The legal political environment. Businesses must deal with unfamiliar political system when they go international. Political risk: the risk of loss of assets, earning power or managerial control due to politically based events or actions by host governments Political instability: events such as riots, revolutions or government upheavals that affect the operations of an international company. The social cultural environment, include shared knowledge, beliefs and values as well as common modes of behaviour. There are five HOFSTEDE dimensions of social values that influence organizational en employee working relationships. o Power distance: the degree to which people accept inequality in power. o Uncertainty avoidance: a value characterized by peoples intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity. o Individualism and collectivism. Individualism is a preference for loosely knit social framework in which individuals are expected to take care of themselves. Collectivism is a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members interests. o Masculinity/femininity. Masculinity is a cultural preference for achievement, heroism, assertiveness work centrality and material success. Femininity reflects the values of relationships, cooperation, group decision making and quality of life. o Long term/short term orientation. Long term: a greater concern for the future and high value on thrift and perseverance. Short term: concern with the past and present and a high value on meeting social obligations. GLOBE project value dimensions: o Assertiveness: encourages toughness, assertiveness and competitiveness. o Future orientation: encourages planning for the future. o Uncertainty avoidance: the degree to which society feels uncomfortable with ambiguity. o Gender differentiation: the extent to which a country maximizes gender role differences. o Power distance: the extent to which people accept equality or inequality. o Societal collectivism: a tightly knit collectivist society. o Individual collectivism: the degree to which individuals take pride in being part of a close circle. o Performance orientation: the degree to which excellence and improvement is valued. o Humane orientation: the degree to which a society encourages people for being fair and caring. Communication differences. o High context culture: communication is used to enhance personal relationships. o Low context culture: communication is used to exchange facts and information.

Other cultural characteristics. o Linguistic pluralism: several languages in a country. o Dependence on spoken or written languages. o Religion, sacred objects and attitudes towards life. o Ethnocentrism: a cultural attitude marked by the tendency to regard ones own culture as superior to others.

International trade alliances. GATT (General Agreement on Tariffs and Trade): rules against discrimination and pro clear procedures and participation of lesser developed countries in international trade. WTO (World Trade Organization): monitors international trade and has legal authority to arbitrate disputes on some 400 trade issues. European Union: goal is to create a powerful single market system/increased competition and economies of scale. Sixteen countries have adopted the euro (European currency). NAFTA (North American Free Trade Agreement): merged the US, Canada and Mexico into the worlds largest tradition bloc. ASEAN (Association of South East Asian Nations) CAFTA (Central American Free Trade Agreement) FTAA (Free Trade Area of the Americas) The globalization backlash: people think of themselves as the loser of globalization, due to loss of jobs by outsourcing. It is not whether globalization is good or bad, but how business and government managers can work together to ensure that the advantages of a global world are fully and fairly shared. Multinational corporations are often called global, stateless or transnational corporations, but in business words we speak of multinational corporations (MNC): an organization that receives more than 25% of its total sales revenues from operations outside the parent companys home country. A few characteristics: Managed as an integrated worldwide business system in which foreign affiliates act in close cooperation with one another. Capital, technology and people are transferred among countries. Controlled by a single management authority that makes the key strategic decisions. Are presumed to exercise global perspective and regard the world as one market. There are ethnocentric (focus on home country), polycentric (focus on host countries) and geocentric (truly world orientated) multinational corporations. Working in a foreign country represents tremendous personal/organizational challenges. Managers will be most successful if they develop cultural intelligence: the ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioural responses. This enables a person to interpret unfamiliar situations and adapt quickly. Cultural intelligence includes three opponents that work together: Cognitive: a persons observation and learning skills and the ability to pick up on clues to understanding in order to know about local norms, customs, beliefs and taboos. Emotional: ones self confidence and self motivation, in order to deal with a culture shock: feelings of confusion, disorientation and anxiety that result from being immersed in a foreign culture. Physical: a persons ability to shift his/her speech patterns, expressions and body language to be in tune with people from a different culture. This refers to a persons ability to shift his speech patterns, expressions and body language to be in tune with a different culture.

Managing cross culturally. To be effective on an international level, managers need to interpret the culture of the country in which they are working and develop the sensitivity required to avoid making costly cultural blunders. Expatriates are employees who live and work in a country other than their own. There are several elements of cross cultural management: Human resources: managers consider global skills in the selection process, offer cross cultural training and foster language skills. Leading: different cultures have different leadership styles. Decision making: different cultures have different decision making styles. Motivating: people in different cultures are motivated by different types of rewards. Controlling: managers have to learn what they can and cannot do (hire and fire). Recent collapses and corporate financial scandals have made people distrust corporate leaders and have brought the topic of ethics near the top of companys priority list. Many companies are adopting zero tolerance policies. Corporate culture also lets employees know what beliefs the company supports and those it will not tolerate. Ethics is the code of moral principles and values that governs the behaviours of a person or group with respect to what is right or wrong. Human behaviour falls into three categories: 1. Codified law: values and standards written into the legal system. (Legal) 2. Free choice: the individual enjoys complete freedom. (Personal) Between those lies 3. Ethics: there are no specific laws, yet it does have standards based on shared principles. (Social) An ethical dilemma is a situation that arises when all alternative choices or behaviours are deemed undesirable because of potentially negative consequences, making it difficult to distinguish right from wrong. Most ethical dilemmas involve a conflict between the needs of the part and the whole. There are different approaches to deal with ethical dilemma. Utilitarian approach: ethical concept that moral behaviours produce the greatest good for the greatest number. This means that a manager considers the effects of each alternative and selects the one that optimizes the benefits for the greatest number of people. Individualism approach: the ethical concept that acts are moral when they promote the individuals best long term interests. This would create a greater ratio of good, if everyone uses self direction; the greater good is ultimately served. Moral rights approach: the ethical concept that moral decisions are those that best maintain the rights of those people affected by them. Six moral rights should be considered: o The right of free consent. Individuals are to be treated only as they knowingly and freely consent to be treated. o The right to privacy. Individuals have control of information about their private life. o The right of freedom of conscience. Individuals may refrain from carrying out orders that violates their moral or religious norms. o The right of free speech. Individuals may criticize truthfully the ethics or legality of others. o The right to due process. Individuals have the right to an impartial hearing and fair treatment. o The right to life and safety. Individuals have the right to live without endangerment or violation. Justice approach: the ethical concept that moral decisions must be based on standards of equity, fairness and impartiality. There are three types of justice:

o o

Distributive justice: the concept that different treatment of people should not be based on arbitrary characteristics. In the case of substantive differences, people should be treated differently in proportion to the differences among them. Procedural justice: the concept that rules should be clearly stated and consistently and impartially enforced. Compensatory justice: the concept that individuals should be compensated for the cost of their injuries by the party responsible and also that individuals should not be held responsible for matters over which they have no control.

A number of factors influence a managers ability to make ethical decisions. One important personal trait is the stage of moral development, which influences the manager: Pre conventional level: follows rules to avoid punishment. Acts in own interest. Obedience for its own sake. Conventional level: lives up to the expectations of others. Fulfills duties and obligations of social system. Upholds laws. Post conventional level: follows self chosen principles of justice and right. Aware that people hold different values and seeks creative solutions to ethical dilemmas. Balances concern for individual with concern for common good. Corporate social responsibility is the obligation of an organizations management to make decisions and take actions that will enhance the welfare and interest of society as well as the organization. There are four general categories of corporate social responsibility: Instrumental theories: focus one profit maximization and therefore considers CSR simply in terms of impact on profit maximization. Political theories: ascribe responsibilities to organization as part of the social contract that it assumes exist between business and society. Integrative theories: suggest that the long term success and profitability of organizations is closely allied to the well being of society. Ethical theories: apply ethics on organizations and deduct the responsibility of firm from universal norms and values and fundamental moral principles. An organizations performance affects stakeholders, but stakeholders can also have a tremendous effect on an organizations success. A stakeholder is a group within or outside the organization that has a stake in the organizations performance. Each stakeholder has different interests. There are primary stakeholders (shareholders, employees, customers, suppliers) and others (government, community). The bottom of the pyramid (BOP) concept is the idea that large corporations can both alleviate social problems and make a profit by selling goods and services to the worlds poorest people. There are two motives for the BOP concept: Companies are in business with the goal to make money, emerging economics provide a vast untapped markets. Companies can play an important role in addressing global poverty and other problems. Social enterprises are businesses that make money and invest it back into social or environmental goals. Often companies also use the idea of sustainability: economic development that generates wealth and meets the needs of the current population while preserving the environment for the needs of future generations. One model uses the shades of green to evaluate a companys commitment to environmental sociability. First shade: Legal approach: satisfy legal requirements regarding environmental conservation.

Second shade: market approach: respond to customers. Third shade: stakeholder approach: address multiple stakeholder concerns. Last shade: activist approach: sustainability: actively conserve the environment.

A model for evaluating corporate social responsibility with four criteria: First criterion: economic responsibility: the business is a economic unit above all: be profitable profit maximizing view. Second: legal responsibility: fulfill goals within legal framework: obey the law. Third: ethical responsibility: be ethical. Act with equity, fairness and respect the rights of individuals. Last: discretionary responsibility: organizational responsibility that is voluntary and guided by the organizations desire to make social contributions not mandated by economics, law or ethics. Management is responsible for creating and sustaining conditions in which people are likely to behave themselves. Ethical leadership means that managers are honest and trustworthy, fair in dealing with employees and that they behave ethically in order to give the right example. A code of ethics is a formal statement of the organizations values regarding ethics and social issues. Principle based statements: designed to affect corporate culture, define fundamental values. General statements are often called corporate credos. Policy based statements generally outline the procedures to be used in specific ethical situations. Ethical structures represent the various systems a company can use to implement ethical behaviour. An ethics or corporate responsibility committee is a group of executives assigned to oversee the organizations ethics by ruling on questionable issues and disciplining violators. A chief ethics officer is a company executive who oversees ethics and legal compliance. Ethics training are programmes to help employees to deal with ethical questions and values. Whistle blowing: the disclosure by an employee of illegal, immoral or illegitimate practices by the organization. Whistle blowing is risky, whistle blowers often lose their jobs. Most managers realize that paying attention to ethics and social responsibility is important. Research showed there is a positive relationship between social responsibility and financial performance. Companies that are good corporate citizens enjoy both superior reputations and superior financial performance. Global entrepreneurial activity is monitored by the Global Entrepreneurship Monitor, that has its goals making high quality research on entrepreneurial activity. When investigating (TEA) Total Entrepreneurship Activity, Gem divides the investigation in two tipes: High income countries (higher ratio of growth) Middle and low income countries. The U shaped relationship between per capita GDP and early stage entrepreneurial activity has been consistent. In countries with low levels of per capita income, there are a lot of small businesses. As per capita increases, there are larger and more established firms in the economy. Small businesses represent a vital and increasingly important part of the global economy due to: Economic changes: demand for services is booming, trend towards outsourcing gives entrepreneurs new opportunities. Globalization and increased competition: demands entrepreneurial behaviour and gives advantage to the flexibility and fast response that small businesses can offer.

New advancing technology: spawned new industries, new methods of producing/delivering goods and services. New opportunities and market niches: the growing sustainability movement, changing needs in the market.

A small business is independently owned and operated and which is not dominant in its field of operation. Most small business are manufacturing, retail or internet services. The impact of entrepreneurial companies is huge. Engine for job creation: small business create 65% of all new jobs. Engine for innovation: new or small firms are responsible for 55% of innovation. Entrepreneurship is the dynamic process of initiating a business venture, organizing the necessary resources and assuming the associated risk and rewards. An entrepreneur is someone who recognizes an idea for a business and carries it out. Small business: one that is independently owned and operated and which is not dominant in its field of operation. Different types of owners: Idealists: enjoy idea of working on something new, creative or meaningful. Optimizers: rewarded by satisfaction of being a business owner. Sustainer: like the change to balance work and personal life. Hard workers: enjoy putting in hours to build a large business. Jugglers: who like the chance a business gives them to handle everything themselves. Many entrepreneurs start with their business when they lose their job/during economic downturn and see their business as a better use of their time, talent and energy. Entrepreneurs often have backgrounds and characteristics that distinguish them from other people. Characteristics of entrepreneurs are as followed: Internal locus of control: belief by individuals that their future is within their own control and that external forces have little influence. On the opposite there is external locus of control, the belief by individuals that their future isnt within their control but is influenced by external forces. High energy level: work hard and long hours and are up for the struggle and hardships that come with being an entrepreneur. Need to achieve: a human quality linked to entrepreneurship in which people are motivated to excel and pick situations in which success is likely. Self confidence: people who start a business must act decisively and feel sure about their abilities and that they can deal with anything in the future. Awareness of passing time: impatient and feel a sense of urgency and seize the moment. Tolerance for ambiguity. The psychological characteristic that allows a person to be untroubled by disorder and uncertainty. Social entrepreneurship. Entrepreneurial leaders who are committed to both good business and changing the world. It combines the creativity, business acumen, passion and hard work of the traditional entrepreneur with a mission to change the world for the better. Launching an entrepreneurial start up. Starting with the idea: the idea is the easy part, however, entrepreneurs need the skills/experience to make the idea work as well as a markets need. Writing the business plan: a document specifying the business details prepared by an entrepreneur prior to opening an new business. Several characteristics:

o A clear vision. o Realistic finance projections. o Profile potential customers and the target market. o Include detailed information about the industry and competitors. o Highlight risks that may threaten business success. Choosing a legal structure: o Sole trader or proprietorship: an unincorporated business owned by an individual for profit. Pro: easy to start, few requirements and total control. Contra: personal finance risks. o Partnership: an unincorporated business owned by two or more people. Contra: disagreements. o Corporation: an artificial entity created by the state and existing apart from its owners. Pro: the corporation is liable for its actions, has a legal life and is sued instead of the owners. Contra: a lot of paperwork is required. Obtaining finance: the financing decision initially involves two options: o Debt financing: borrowing money that has to be repaid at a later date in order to start a business. Borrowing from friends, a bank loan. Angel financing: financing provided by a wealthy individual who believes in the idea for a start up and provides personal funds and advice to help get the business started. The Small Business Administration (SBA) provides a form of loan financing for people without substantial assets and minority groups. o Equity financing: financing that consists of funds that are invested in exchange for ownership in the company. A venture capital firm is a group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits.

Becoming a business owner. Start a new business. o Advantage: the ability to develop and design the business in your own way. o Disadvantage: it is risky and timely endeavor. Buy an existing business. o Advantage: may reduce risks, shortens time to get started, provides an existing track. o Disadvantage: might also give negatives legacies. Buy a franchise: an arrangement by 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. o Advantage: management help is provides by the owner, provide established name and advertising. o Disadvantage: lack of control, high costs. Participate in a business incubator: an innovation that provides shared office space, management support services and management advice to entrepreneurs. o Advantage: the expertise of a mentor and role model. Managing a growing business. After the start, continued business growth requires a shift in management style. Those who fail to adjust to a growing business can be the cause of the problems rather than the solution. Entrepreneurial businesses go through distinct stages of growth, with each stage requiring different management skills. Start up: the main problems are producing the product or service and obtaining customers. Survival: the businesses demonstrates that it is a workable business entity. It produces a product and has sufficient customers. Concerns are finance related. Success: the company is solidly based and profitable.

Take off: how to grow rapidly and finance that growth. The owners must learn to delegate and the company can become a big business. Resource maturity: company makes substantial financial gains, but these might come at the expense of the flexibility/ entrepreneurial spirit.

Management process: Planning. o Doesnt exist in most start ups, except for the business plan. Formal planning is usually only implement in the success stage. Most companies have the need to be on the web. Organizing. o In the first stages the organizations structure is typically informal. At about the success stage, managers are hired to take over organizing duties. Leading. o The driving force in the early stages of a company is the leaders vision, which shapes the corporate culture. o Leadership is important to attract and retain good people. Controlling: o In the success stage the owner should start implementing more structured control systems. Managers must plan where the organization should go in the future and for unexpected events. The company establishes a basic mission ad develops goals and objectives. Plans should meet environmental changes and expectations of stakeholders. Planning is fundamental to all organizations, everything stems from planning. A goal is a desired future state that the organization attempts to realize. A plan is a blueprint specifying the resource allocations, schedules and other actions necessary for attaining goals. The concept of planning is the act of determining the organizations goals and the means for achieving them. There are different levels of planning and goals in an organization. Goals at each level guide the organization. Lower management: operational goals: indentify the procedures needed at the lower levels. Middle management: tactical goals: focus on the actions a division must take to fulfill its part in the strategic plan. Top management: strategic goals: reflect commitment to organizational efficiency and effectiveness. Mission statement: external message for investors, customers, suppliers and the community. There are several purposes of goals and plan: Legitimacy: an organizations mission describe what the organization stands for and why it exists. It symbolizes legitimacy to external audiences. Source of motivation and commitment: goals enhance employees motivation and commitment by reducing uncertainty and clarifying what they should accomplish. Resource allocation: goals help managers decide where they need to allocate resources such as employees, money and equipment. Guides to action: goals an plans provide a sense of direction. They focus attention on specific targets. Rationale for decisions. Through goal setting and planning, managers clarify what the organization is trying to accomplish.

Standard of performance: because goals define desired outcomes, they serve a as performance criteria.

The organizational planning process: 1. Develop the plan: define mission, vision and set goals. 2. Translate the plan: define tactical plans, develop a strategy map and identify intelligence teams. 3. Plan operations: define operational plans and select measures and create crisis planning. 4. Execute the plan: use management, performance dashboard and decentralized responsibility. 5. Monitor and learn: hold planning and operational reviews. The overall planning process begins with a mission statement and goals for the organization as a whole. Organizational mission: the top of the goal hierarchy. A mission is the organizations reason for existence. Describes the values, aspirations and reason for being. A well defined mission is the basis for all other goals. The mission statement is a broadly stated definition of the organizations basic business scope and operations that distinguishes it from similar types of organizations. They outline the stated purpose and values to stakeholders. Goals and plans. o Strategic goals: are broad statement describing where the organization wants to be in the future and pertain to the organization as a whole rather than to specific divisions or departments. o Strategic plans: the action steps by which an organization intends to attain strategic goals. o Tactical goals: goals that define the outcomes that major divisions and departments must achieve for the organization to reach its overall goals. o Tactical plans: plans designed to help execute major strategic plans and to accomplish a specific part of the companys strategy. o Operational goals: specific, measurable results expected from departments, work groups and individuals within the organization,. o Operational plans: plans developed at the organizations lower levels that specify action steps toward achieving operation goals and that support tactical planning activities. Effectively designed organizational goals are consistent and mutually supportive so that the achievement of goals at low levels permits the attainment of high level goals. Individuals, teams and departments should be working in concert to attain specific goals. A popular technique is the strategy map: a visual representation of the key drivers of an organizations success, showing the cause and affect relationships among goals and plans. Managers use operational goals to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively. It is important to establish effective goals. Goals need to be specific and measurable. Effective goals should also have a defined time period that specifies the date on which goal attainment will be measured. Goals should cover key results areas. Goals should be challenging but realistic. They should also be linked to rewards, to motivate employees.

Or put like this: goals should be SMART. S: specific, significant, stretching. M: measurable, meaningful, motivational. A: agreed upon, attainable, achievable, acceptable, action-orientated. R: realistic, relevant, reasonable, rewarding. T: time-based, timely, tangible, trackable. Management by objectives (MBO) is a method of management whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance. Four major activities make MBO successful: 1. Set goals: corporate strategic goals, departmental goals and individual goals. 2. Develop action plans: defines the course of action need to achieve the stated goals. 3. Review progress: is important to ensure that action plans are working. Managers and employees shouldnt be locked into predefined behaviour. 4. Appraise overall performance: carefully evaluate whether annual goals have been achieved. Benefits: o Managers and employee efforts are focused on activities that will lead to goal attainment. o Performance can be improved at all company levels. o Employees are motivated. o Departmental and individual goals are aligned with company goals. Problems: o Constant change prevents MBO from taking hold. o An environment of poor employer-employee relations reduces effectiveness. o Mechanistic organizations and values that discourage participation can harm the process. o Too much paperwork saps energy. Single used plans are plans that are developed to achieve a set of goals that are unlikely to be repeated in the future. Program: plans for a one time goal. Might take several years to complete and is large is scope. Project: a one time set of plans. Smaller in scope and with a shorter horizon. Often part of a larger programme. Standing plans are ongoing plans that are used to provide guidance for tasks performed repeatedly within the organization. Policy: broad in scope, based on overall goals and defines boundaries. Rule: narrow in scope, describes how a specific action is to be performed. Procedure: a standard operating procedure, defines a precise series of steps to attain certain goals. Planning for a turbulent environment: Contingency plans: plans that define company responses to specific situations, such as emergencies, setbacks or unexpected conditions. Important factors such as economic downturns, declining markets and new development must be identified. Scenario building: looking at trends and discontinuities and imagining possible alternative futures to build a frame work within which unexpected future events can be managed. Crisis planning:

Crisis prevention: involves activities managers undertake to try to prevent crises form occurring and to detect warning signs of potential crises. It is critical to build open, trusting relationships with stakeholders. Crisis preparation: includes all the detailed planning to handle a crisis when it occurs. Designating a crisis management team and spokesperson. Creating a detailed crisis management plan. Setting up an effective communications system.

Planning for high performance. Traditional approaches. o Central planning department: a group of planning specialists who develop plans for the organization as a whole and its major divisions and departments and typically report directly to the president or CEO. High performance approaches: o Decentralized planning: managers work with planning experts to develop their own goals and plans and plan throughout the organization. o Stretch goals: a reasonable yet highly ambitious compelling goal that energizes people and inspires excellence. o Business performance dashboards. People make decisions every day without realizing their diverse decision making styles. Managers are referred to as decision makers. Organizations grow and prosper based on those decisions. A decision is a choice made from available alternatives. Decision making is the process of identifying problems and opportunities and then resolving them. Management decisions fall in two categories: Programmed decisions: a decision made in response to a situation that has occurred often enough to enable decision rules to be developed and applied in the future. Non programmed decision: a decision made in response to a situation that is unique, is poorly defined and largely unstructured, and has important consequences for the organization. Many involve uncertainty and complexity. Facing certainty and uncertainty. The difference between programmed and non programmed decisions relates to the degree of certainty or uncertainty that is dealt with in the decision making process. There are four positions: Certainty: the situation in which all the information the decision maker needs is fully available. Risk: a situation in which a decision has clear cut goals and good information is available, but the future outcomes associated with each alternative are subject to change. Uncertainty: the situation that occurs when managers know which goals they wish to achieve, but information about alternatives and future events is incomplete. Ambiguity and conflict: a condition in which the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define and information about outcomes is unavailable. A highly ambiguous situation can create a wicked decision problem, which are associated with conflicts over goals and decision alternatives, rapidly changing circumstances, fuzzy information and unclear links. Decision making models. Classical model: a decision making model based on the assumption that managers should make logical decisions that will be in the organizations best economic interests. Four underlying assumptions: o The decision maker operates to accomplish goals. Problems are precisely formulated and defined.

The decision maker strives for conditions of certainty. Criteria for evaluating alternatives are know. There is full information. The decision is rational and will make the decision that maximizes the attainment of organizational goals. The classical model is considered to be normative: an approach that defines how a decision maker should make decisions and provides guidelines for reaching an ideal outcome for the organization. It is most useful when applied to programmed decisions or decision characterized by certainty. Administrative model: a decision making model that describes how managers actually make decisions in situations characterized by non programmed decision, uncertainty and ambiguity. The administrative model is descriptive: an approach that describes how managers actually make decisions rather than how they should make decisions according to a theoretical idea. The administrative model recognizes the human and environmental limitations and is based on two concepts: o Bounded rationality: the concept that people have the time and cognitive ability to process only a limited amount of information on which to base decisions. o Satisficing: to choose the first solution alternative that satisfies minimal decision criteria, regardless of whether better solutions are presumed to exist. The administrative model is based on four assumptions: o Managers are unaware of problems or opportunities that exist in the organization. o Rational procedures are not always used, and when they are, they are confined to a simplistic view of the problem. o Managers searches for alternatives are limited because of human, information and resource constraints. o Most managers settle for satisfying rather than a maximizing solution. Another part of the administrative model is intuition: a quick apprehension of a decision situation based on past experience but without conscious thought. Political model: is used for non programmed decisions and resembles the real environment in which managers operate. Managers often engage is coalition building when making difficult decisions. A coalition is an informal alliance among managers who support a specific goal. Coalition building is the process of forming alliances among managers. The political model is based on four assumptions: o Organizations are made up of groups with diverse interests, goals and values. o Information is ambiguous and incomplete. o Managers dont have the time, resources or mental capacity to identify all dimensions of the problem and process all relevant information. o Managers engage in the push and pull of debate to decide goals and alternatives. Decisions are the result of bargaining among coalition members.

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Whether a decision is programmed or non programmed and regardless of the choice of model, there are always six steps associated with the decision making process: 1. Recognition of decision requirement. Managers have to make a decision when a problem or opportunity arises. A problem is a situation in which organizational accomplishments have failed to meet established goals. An opportunity is a situation in which managers see potential organizational accomplishments that exceed current goals. 2. Diagnosis and analysis of causes. Once a problem occurs, the understanding should be refined. Diagnosis is the step in the decision making process in which managers analyze underlying causal factors associated with the decision situation. When, were, how, to whom did the problem occur? 3. Development of alternatives. For programmed decisions are usually available within the organizations procedures. For non programmed decision however, developing new courses

of action is required. Managers may develop one or two solutions, but studies show that limiting the search for alternatives is a primary cause of decision failure in organizations. 4. Selection of desired alternative. Once alternatives are developed, one must be selected. The best alternative is one in which the solution best fits the overall goals and values of the organization and achieves the desired results using the fewest resources. Choosing among alternatives depends on risk propensity: the willingness to undertake risk with the opportunity of gaining an increased payoff. 5. Implementation of chosen alternative. Implementation is the step in the decision making process that involves using managerial administrative and persuasive abilities to translate the chosen alternative into action. Implementation requires communication, motivation and leadership. 6. Evaluation and feedback. In the evaluation stage, decision makers gather information that tells them how well the decision was implemented an whether it was effective in achieving its goals. Personal decision framework: not all managers make decision in the same way. There are different decisions styles: differences among people with respect to how they perceive problems and make decisions. There are four major styles: Directive style: used by people who prefer simple, clear cut solutions to problems. They often decide quickly. Analytical style: used by people who like to consider complex situations based on as much data as they can gather. Conceptual style: used by people who also like to consider a broad amount of information, but are more socially orientated and like to talk to others in order to find a solution. Behevioural style: often used by managers having a deep concern for others as individuals. They are concerned with the personal development of others and make decisions that help others achieve their goals. Managers sometimes make bad decisions. Most of them are errors in judgement. Awareness of the following biases can help managers: Being influenced by initial impressions. These impressions can influence our subsequent thoughts and judgement. Justifying past decisions: the danger of falling into the trap of making choices that justify past decisions. Seeing what you want to see: look only for information that supports the existing instinct or point of view and avoid information that contradicts it. Perpetuating the status quo: basing decisions on what has worked in the past and fail to explore new options. Being influenced by the problem framing: making a decision being influenced by other elements around the problem. Overconfidence: when people overestimate their ability to predict uncertain outcomes. Managers have unrealistic expectation of their ability to understand the risk and make the right choice. Innovative group decision making. Start with brainstorming: a technique that uses a face to face group to spontaneously suggest a broad range of alternatives for decision making or electronic brainstorming: bringing people together in an interactive group over a computer network to suggest alternatives (sometimes called brainwriting). Engage in rigorous debate: diverse points of view can bring a problem into focus and change ideas. A devils advocate is a decision making technique in which one individual is assigned

the role of challenging the assumptions and assertions made by the group to prevent premature consensus. Another approach is point counterpoint: a technique in which people are assigned to express competing points of view. Avoid groupthink: the tendency of people in groups to suppress contrary opinions. Know when to bail: people are hesitant to pull the plug on something that isnt working. Escalating commitment: continuing to invest time and resources in a failing decision.

Organization structure is a powerful tool for reaching strategic goals and is often determined by its fit with the organizational structure. Organizing is the deployment of organizational resources to achieve strategic goals. Strategy defines what to do, organizing defines how to do it. The organization structure is the framework in which the organization defines how tasks are divided, resources are deployed and departments are coordinated and is defined as: 1) The set of formal tasks assigned to individuals and departments. 2) Formal reporting relationships, including lines of authority, decision responsibility, hierarchical levels and the span of managers control. 3) The design of systems to ensure effective coordination of employees across departments. The characteristics of the vertical structure are portrayed in the organization chart: the visual representation of a organizations structure. There are several important features of vertical structure. 1) Work specialization: the degree to which organizational tasks are subdivided into individual jobs, also called division of labour. High work specialization means that employees specialize in a single tasks. The current trend is moving away from this principle and make employees rotate among the jobs performed by the team. 2) Chain of command: an unbroken line of authority that links all individuals in the organization and specifies who reports to whom. o Unity of command: each employee is held accountable to only one supervisor. o Scalar principle: clearly defined line of authority that includes all employees. o Span of control: the number of people commanded by one managers. Authority: the formal and legitimate right of a manager to make decisions, issue orders and allocate resources to achieve organizationally desired outcomes. Three characteristics: o Authority is vested in organizational positions, not people. o Authority is accepted by subordinates. o Authority flows down the vertical hierarchy. Responsibility: the duty to perform the task or activity an employee has been assigned. o Responsibility without authority: difficult to get things done. o Authority without responsibility: can lead to tyranny. Accountability: the fact that the people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command. Accountability brings responsibility and authority into alignment. Delegation: the process managers use to transfer authority and responsibility to positions below them in the hierarchy. Most managers are encouraged to delegate to the lowest possible level in order to provide maximum flexibility. Line authority is form of authority in which individuals in management positions have the formal power to direct and control immediate subordinates. Line departments perform tasks that reflect the organizations primary goal and mission. Staff authority is a form of authority granted to staff specialists in their area of expertise. Staff departments include all those that provide specialized skills in support of line departments.

3) Span of management; the number of employees reporting to a supervisor, also called span of control, determines how closely a supervisor can monitor subordinates. The traditional view recommends around 7 subordinates per manager, however many organization have spans as high as 40 subordinates. This is possible when: 1. Work is stable and routine. 2. Subordinates perform similar tasks. 3. Subordinates are concentrated in a single location. 4. Subordinates are trained and need little direction. 5. Rules and procedures defining task activities are available. 6. Support systems and personnel are available for the manager. 7. Little time is required in non-supervisory activities. 8. Managers personal preference favours are large span. A tall structure is characterized by an overall narrow span of management and a relatively large number of hierarchical levels. A flat structure is characterized by an overall broad span of management and relatively few hierarchical levels. 4) Centralization and decentralization are defined by the hierarchical level where decisions are made. Centralization: the location of decision authority is near the top of organizational levels. Decentralization: the location of decision authority is near lower organizational levels. The trend is towards decentralization in order to: o Relieve the burden on top managers. o Make greater use of employees skills and abilities. o Ensure that decisions are made close to the action. o Permit more rapid response to external changes. Factors that influence centralization versus decentralization are: o Change and uncertainty in the environment lead to decentralization n order to make quick decisions. o The amount of (de)centralization should fit the organizations strategy. o Times of crisis and the risk of company failure leads to centralization. Another characteristic of organization structure is departmentalization: the basis on which individuals are grouped into departments and departments into the total organization. There are three traditional approaches: functional, divisional and matrix structures, and two innovative approaches: teams and virtual networks. 1) Functional structure: the grouping of positions into departments based on similar skills, expertise and resource use. o Each functional department is concerned with the organization as a whole. o Strong vertically design: decisions are made by those higher in the hierarchy. o : economies of scale and efficient resource use, unified direction. o : barriers for communication and coordination across functions, slow response and delay in decision making. 2) Divisional structure: an organization structure in which department are grouped based on similar organizational outputs. o Divisions are created as units with separate functional departments and focus on a single product line. o Encourages decentralization: decision making is pushed down. o : flexible and responsive, good coordination across functional departments, high concern for customers. o : coordination across divisions is poor, loses efficiency/economies of scale, lack of technical specialization. o Alternative: geographic or customer based divisions.

3) Matrix approach: an organization structure that utilizes functional and divisional chains of command simultaneously in the same part of the organization. o The success of the matrix structure depends on the abilities of people in key matrix roles, namely: o Two boss employees: employees who report to two supervisors simultaneously. o Matrix boss: the product or functional boss, responsible for one side of the matrix. o Top leader: the overseer of both the product and functional chains of command, responsible for the entire matrix. o : can be highly effective in complex environments, flexible and adaptable, efficient use of human resources. o : confusion and frustrations due to dual chain of command, time needed for conflict resolution. 4) Team based structure: structure in which the entire organization is made up of horizontal teams that coordinate their activities and work directly with customers to accomplish the organizations goals. o Cross functional teams: a group of employees from various functional departments that meet as a team to resolve mutual problems. o Permanent teams: a group of participants from several functions who are permanently assigned to solve ongoing problems of common interest. o : good communication across departments, flexible and adaptive to changes and high employee motivation due to freedom and empowerment. o : team members might experience conflicting loyalties, too much decentralization an lead to losing the big picture. 5) Virtual network structure: an organization structure that disaggregates major functions to separate companies that are brokered by a small headquarters organization. Trends like outsourcing, alliances and partnerships lead to virtual network structures. o Technology makes us able to exchange data so rapidly and smoothly that a connected network of suppliers, manufactures, assemblers and distributers can act like one seamless company. o Modular approach: the process by which a manufacturing firm uses outside suppliers to provide large components of the product, which are assembled into a final product by a few workers. o : flexibility and competitiveness at global scale, organization can constantly redefine itself. o : each partner act on self interest, uncertainty, hard to define shared goals and keeping employees motivated and loyal. Many companies are moving from vertical to horizontal structures, which are based on work processes rather than departmental functions. As organizations grow, two things happen: 1) New positions and departments are added to deal with factors in the external environment or new strategic needs. 2) Senior managers have to find a way to tie all of these departments together. Coordination is the quality of collaboration across departments. Coordination is always required, no matter what the organizational structure is. The problem of coordination is amplified in the international arena, because organizational unites are differentiated by distance, time difference, cultural values and language. In order to increase horizontal communication and cooperation in a vertical organization structure, there are innovations such as cross functional teams, task forces and project managers. Task force: a temporary team or committee formed to solve a specific short term problem involving several departments.

Cross functional teams: a group of employees from various functional departments that meet as a team to resolve mutual problems. Project manager: a person responsible for coordinating the activities of several departments on a fulltime basis for the completion of a specific project. The project manager is not a member of one of the departments being coordinated.

The next stage of improving a vertical organization structure is re-engineering to structure the organization into teams working on horizontal processes. Re-engineering is the radical redesign of business processes to achieve dramatic improvements in cost, quality, service and speed. Rather than focusing on narrow jobs, re-engineering emphasizes on core processes that cut horizontally across the company and involve teams of employees working to provide value directly to customers. A process is an organized group of related tasks and activities that work together to transform inputs into outputs and create value. However, re-engineering is difficult and 70% fails because of the expenses and time consuming efforts. Managers know which design or structure to use because of the contingency factors that influence organization structure. These factors are the contingency factors of strategy, environment and production technology. 1) Structure follows strategy. The functional structure is appropriate for achieving efficiency goals. The vertical structure uses task specialization and a chain of command to gain efficient use of resource, such as cost leadership strategy, but doesnt able the organization to be flexible. The horizontal teams are appropriate when the primary goal is innovation and flexibility, such as the differentiation strategy: trying to develop innovative products. 2) Structure reflects the environment. When the environment is stable, organizations use a mechanistic systems, which is typically rigid, vertical and centralized. In changing, uncertain environment, organizations use an organic system, which is more horizontal and decentralized. An uncertain environment causes three thing to happen within an organization: o Increased differences occur among departments, which creates barriers among departments. o The organization needs increased coordination o keep departments working together to overcome differences in departmental goals. o The organization must adapt to change and maintain flexible. 3) Structure fits the technology. Technology includes the knowledge, tools, techniques and activities used to transform organizational inputs into outputs, such as machinery, employee skills and work procedures. Manufacturing firms can be categorized according to three basic types of production technology. o Small batch production: a type of technology that involves the production of goods in batches of one or a few product designed to customer specification. Is used to make large, one of kind products and is a loose, flexible organic structure. o Mass production: a type of technology characterized by the production of a large volume of products with the same specifications, with standardized production runs and is considered a tight mechanistic vertical structure. o Continuous process production: a type of technology involving mechanization of the entire work flow and non-stop production, which is a loose, flexible organic structure. The difference among the three manufacturing technologies is called technical complexity: the degree to which complex machinery is involved in the production process to the exclusion of people. Centralization is higher in mass production technology and the administrative ratio and the percentage of indirect labour gets higher with each structure.

Service technology is technology characterized by intangible outputs and direct contact between employees and customers. In service organizations the horizontal communication is often high. Digital technology is technology characterized by the use of the internet and other digital processes to conduct or support business operations. Organizations based on digital technology tend to be flexible and decentralized and horizontal communication and collaboration are typically high. Digital technology encourages boundarylessness.

A common response to solving efficiency problems within organizations is to remove essentially structural constraints. Lack of organizational congruence may arise for many reasons, for example when the need to complement separation of functions isnt recognized or form the creeping duplication that may occur when a new structure is established and the old one isnt removed. Organizations that change successfully are both profitable and admired. The knowledge economy is being transformed into a creativity economy. More knowledge is outsourced and companies are evolving, generating economic value from creativity, imagination and innovation. Innovating technology used to be about the control of quality and costs. Todays innovation is about take corporate organizations built for efficiency and rewiring them for creativity and growth. Organizational change is the adoption of a new idea or behaviour by an organization. Successful change requires that organizations are capable of both creating and implementing idea which means that the organization must learn to be ambidextrous. The ambidextrous approach: incorporating structures and processes that are appropriate for both the creative impulse and for the systematic implementation of innovations. It encourages flexibility to innovate, but uses a more centralized standardized approach for implanting innovations. Product change is a change in the organizations product or service outputs. It is the primary way in which organizations adapt to changes in markets, technology and competition. Technology change: change that pertains to the organizations production process, often spurs product change.

There are three critical innovation strategies for changing products and technologies. 1) Exploration, the stage where ideas for new products and technology are born. o Creativity: the generation of novel ideas that might meet perceived needs or offer opportunities for the organization. Creative personality: originality, relaxed, focused to problem solving. Creative organizations: loosely structured, teamwork, experimentation, freedom and challenging participation. o Idea incubators: an in house programme that provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics. 2) Cooperation: creating conditions to facilitate internal and external coordination and knowledge. o Internal coordination: innovation from expertise from several departments simultaneously. Horizontal linkage model: an approach to product change that emphasizes shared development of innovations among several departments.

 Fast Cycle team: a multi functional team that is provided with high levels of resources and empowerment to accomplish an accelerated product development project. o External coordination: organizations look outside their boundaries to find new ideas. Open innovation: extending the search for and commercialization of new ideas beyond the boundaries of the organization. Crowd sourcing: an organization that takes a function that was once performed by employees and outsources it to an undefined network of people in the form of an open call. Unpaid amateurs then design products, create content or even tackle corporate problems. 3) Entrepreneurship: creating processes/structures to ensure that new ideas are carried forward for acceptance and implementation. o Idea champion: a person who sees the need for and champions productive change within the organization. Inventor: comes up with the idea, but doesnt have the ability to promote it for acceptance within the organization. Champion: believes in the idea, confronts the organization and gain political and financial support to bring the idea to reality. Sponsor: a high level manager who approves of the idea, protects it and removes major organizational barriers to acceptance. Critic: provides reality test and looks for shortcomings. o New venture team: a unit separate from the mainstream of the organization that is responsible for developing and initiating innovations. o Skunk works: a separate small, informal, highly autonomous and often secretive group that focuses on breakthrough ideas for the business. o New venture fund: a fund providing resources from which individuals and groups can draw to develop new ideas, products or businesses. People change: a change in the attitudes and behaviours of a few employees in the organization. Culture change: a major shift in the norms, values, attitudes and mindset of the entire organization.

There are two specific tools that can smooth the process of changing people and culture: 1) Training and development: training is one of the most frequently used approaches to change peoples mindset. Often training is provided to managers with the idea that their behaviour and attitudes will influence people throughout the organization and lead to culture change. 2) Organization development (OD): the application of behavioural science techniques to improve an organizations health and effectiveness through its ability to cope with environmental changes, improve internal relationships and increase learning and problem solving abilities. It can help address three types of problems: o Mergers/acquisitions: analyzing whether the administrative style and corporate culture of the two companies fit in order to smoothen the integration of the two firms. o Organizational decline/revitalization: managing conflicts, fostering commitments, and facilitating communication. o Conflict management: resolves conflicts such as those related to diversity and the global nature of todays organization. There are various specialized techniques to help meet organization development goals. Team building: a type of intervention that enhances the cohesiveness of departments by helping members learn to function as a team. Leads to incremental change.

Survey feedback: a type of intervention in which questionnaires on organizational climate and other factors are distributed among employees and their results reported back to them by a change agent. Leads to incremental change. Large group intervention: an approach that brings together participants from all parts of the organization to discuss problems or opportunities and plan for major change. Reflects an increasing awareness of the importance of dealing with the entire system, including external stakeholders in any significant change effort. This leads to a rapid transformation.

There are three stages for achieving behavioural and attitudinal change: 1) Unfreezing: the stage of organization development in which participants are made aware of problems to increase their willingness and motivation to change their behaviour. This diagnosis is often carried out by a change agent: an organization development specialist who contracts with an organization to facilitate change. 2) Changing: the intervention stage of organization development in which individuals experiment with new workplace behaviour. 3) Refreezing: the reinforcement stage of organization development in which individuals acquire a desired new skill or attitude and are rewarded for it by the organization. A new idea will not benefit the organization until it is in place and being fully used. Therefore, the final step is implementation, whereby managers should be aware of the reasons people resist change. 1) Need for change: many employees arent willing to change unless they perceive a problem or crisis. A performance gap is a disparity between existing and desired performance levels. 2) Resistance to change: people resist change for several reasons and understanding them can help managers implement change more effectively. Self interest: real or perceives loss of power or benefits. Lack of understanding or trust. Uncertainty: represents a fear of the unknown. Different assessments and goals: different people that are affected by the change will have a different assessment of the change. 3) Force field analysis: the process determining which forces drive and which resist a proposed change. By selectively removing forces that restrain change, the driving forces will be strong enough to enable implementation. 4) Implementation tactics: the other approach to managing implementations is to adapt specific tactics to overcome resistance. Communication and education: communicate solid information about the change to users and other who may resist the implementation. Participation: involve users and potential resisters in designing the change. Negotiation: using formal bargaining to win acceptance and approval of a desired change. Coercion: use formal power to force employees to change. Top management support: the visible support of top management helps overcome resistant employees to change. Human resource management: activities undertaken to attract, develop and maintain an effective workforce within an organization. Flatter organizations often require that managers throughout the organization play an active role in recruiting and selecting the right personnel, developing effective training programs or creating appropriate performance appraisal systems. The strategic approach to human resource management contains three key elements:

1) All managers are human resource managers. 2) Employees are viewed as assets and they give a company its competitive advantage. 3) Human resource management is a matching process: integrating the organizations strategy and goals with the correct approach to managing the firms human capital. Current strategic human resource management issues: Right people to become more competitive on a global basis. Right people for improving quality, innovation and customer service. Right people to retain during mergers/acquisitions. Right people to apply new IT for e-business. Human resource management activities and goals take place within the context of issues and factors affecting the entire organization. The competitive strategy of human resource management is changing in three primary ways: Building human capital. Human capital is the economic value of the knowledge, experience, skills and capabilities of employees. To build human capital, human resource management develops strategies for finding the best talent and enhancing their skills and knowledge. Another concern related to human capital is building social capital, which refers to the quality of interactions among employees and whether they share a common perspective. The success of global business strategies is closely tied to the effectiveness of organizations global human resource strategies. International Human Resource Management is a subfield of human resource management that addresses the complexity that results from recruiting, selecting, developing and maintain a diverse workforce on a global scale. Information technology is transforming human resource management and helping to meet the challenges of todays global environment. A human resource information system is an integrated computer system designed to provide data and information used in HR planning and decision making. Human resource management legislation: equal employment opportunity laws and directives in an attempt to balance pay for men/woman, avoid discrimination and fight sexual harassment. o Discrimination: the hiring or promoting of applicants based on criteria that are not job relevant. o Affirmative action: a policy requiring employers to take positive steps to guarantee equal employment opportunities for people within protected groups. o Sexual harassment: unwelcome advances or a request for sexual favours. Another current issue is the changing nature of careers. Old social contract. o Employee contributed loyalty and ability. o The company would provide wages, work and training throughout the employees work life. New social contract: o Based on the concept of employability rather than lifetime employment: individuals manage their own career. o Employees take more responsibility and control. o The organization provides training, opportunities and challenging work to enable people to continuously learn. o The new contract generally increases employee performance and therefore firm performance.

The rapid change in todays business brings new challenges for human resource management. Becoming an employer of choice: todays best companies recognize the importance of treating people fairly. An employer of choice is a company that is highly attractive to potential employees because of human resource practices that focus on intangibles rather than tangible benefits alone. Team and projects: people who used to work alone, now need to work in teams and succeed as a part of a group. Many of todays workers handle multiple tasks and responsibilities. Using temporary employees means a reduced payroll and benefit costs as well as increased flexibility. o Contingent workers: people who work of an organization, but not on a permanent or full time basis, including temporary placements, contracted professionals or leased employees. Technology trends: o Virtual team: a team made up of members who are geographically or organizationally dispersed, rarely meet face to face and do their work using advanced information technologies o Telecommuting: using computer and telecommunications equipment to perform work from home or another remote location. Work/life balance: o Telecommuting o Flexible scheduling: when and where employees do their job becomes less important. Many managers recognize that people have personal needs that require special attention. Downsizing: intentional reduction in the size of companys workforce. Downsizing often fails to achieve the intended benefits, but it can also lead to decreased moral and performance. The goal of human resource management is to attract individuals who show signs of becoming valued, productive and satisfied employees. The matching model: an employee selection approach in which the organization and the applicant attempt to match each others needs, interests and values. Job sculpting attempts to match people to jobs that enable them to fulfill deeply embedded life interests. There are four steps in attracting an effective workplace. 1. Human resource planning: the forecasting of human resource needs and the projected matching of individuals with expected job vacancies. It begins with exploring several issues to define the direction for the organizations human resource management strategy, such as: o how new technologies will affect the work systems. o The volume of the business in the next 5 to 10 years. o Turnover rate 2. Recruiting: the activities or practices that define the desired characteristics of applicants for the specific jobs. Sometimes also called talent acquisition or promote from within process. However, external recruiting, recruiting from outside the organization, is advantageous. Assessing organizational needs: basic building blocks of human resource management. o Job analysis: the systematic process of gathering and interpreting information about the essential duties, tasks and responsibilities of a job. o Job description: a concise summary of the specific tasks and responsibilities of a particular job. o Job specification: an outline of the knowledge, skills, education and physical abilities needed to adequately perform a job.

Realistic job preview: a recruiting approach that gives applicants all pertinent and realistic information about the job and the organization. It helps enhancing recruiting effectiveness and employee satisfaction. Legal considerations: recruiting practices conform to the law. o Affirmative action: the use of goals, timetable or other methods in recruiting to promote the hiring, development and retention of protected groups, personal historically underrepresented in the workplace. E-cruiting: one of the fastest growing approaches to recruiting. Extends the organizations recruiting range, offers access to wider pool of applicant and it saves time and money. Other recent approaches: getting referrals from current employees, cash awards for employees who can name people, non traditional sources. 3. Selecting: the process of determining the skills, abilities and other attributes a person needs to perform a particular job. Human resource professionals may use a combination of devices to obtain a valid prediction of employee job performance. Validity is the relationship between an applicants score on a selection device and his or her future actual job performance Application form: a device for collecting information about an applicants education, previous job experience and other background characteristics. Interview: two way communication channel that allows both the organization and the applicant to collect information that would otherwise be difficult. However, it has high face validity: it seems valid to employers, but is based on judgement. Some organizations use panel interviews or computer based interviews. Employment test: a written or computer based test designed to measure a particular attribute such as intelligence or aptitude. Assessment centers: a technique for selecting individuals with high managerial potential based on their performance on a series of simulated managerial tasks. After the selection, the next goal of human resource management is to develop employees into an effective workforce. 1) Training and development: a planned effort by an organization to facilitate employees learning of job related skills and behaviours. On the job training: a type of training in which an experience employee adopts a new employee to teach him or her how to perform job duties. o Cross training: a form of on the job training by moving people to various types of jobs within the organization, where they work with experienced employees to learn different tasks. o Mentoring: pairing a more experienced employee with a newcomer. o Orientation training: in which the newcomers are introduced to the organizations culture, standard and goals. o Classroom training: includes lectures, films and simulations and makes up 70% of all forma corporate training. o Self directed learning or programmed instruction contains of the use of books and manuals required for the employee to answer a series of questions. o Computer based training or e-training: web based raining/ Corporate university: an in house training and education facility that offers broad based learning opportunities for employees throughout their careers. Promotion from within: a way to further employee development and helps companies retain valuable people.

Workforce optimization: implementing strategies to put the right people in the right jobs, make the best use of employee talent, skills and develop human capital for the future. 2) Performance appraisal: the process of observing and evaluating an employees performance, recording the assessment and providing feedback to the employee. Human resource management concentrates on two things: Assessing performance accurately: jobs are multidimensional, hence, mangers should use a multidimensional appraisal form. This increases the usefulness of the appraisal and facilitates employee growth and development. o 360 degree feedback: a process that uses multiple raters, including self rating, to appraise employee performance and guide development. o Performance review ranking system in which managers evaluate employees based on a categorized scale. Performance evaluation errors: o Stereo typing: placing an employee into a class or category based on one or a few traits or characteristics. o Halo effect: a type of rating error that occurs when an employee receives the same rating on all dimensions regardless of his or her performance on individual ones. To overcome performance evaluation errors, there is the behaviourally anchored rating scale: a rating technique that relates an employees performance to specific job related incidents. Maintenance of the current workforce involves: 1) Compensation: monetary payments and nonmonetary goods/commodities uses to reward employees. Wage and salary systems should reflect strategy. o Job based pay: linking compensation to the specific tasks an employee performs o Skills based pay: employees with higher skill levels receive higher pay than those with lower skill levels. Also called competency based pay. Compensation equity: good managers strive to maintain a sense of fairness and equity within the pay structure and thereby fortify employee morale. o Job evaluation: the process of determining the value of jobs within an organization through an examination of job content. o Wage and salary surveys: surveys that show what other organizations pay incumbents in jobs that match a sample of key job selected by the organization. Pay for performance: incentive pay that ties at least part of compensation to employee effort and performance. Also called incentive pay. 2) Benefits: a compensation package requires more than money. o Benefits make up 40% of labour costs. o Some benefits are required by law (social security). o Others are voluntary (health insurance). 3) Termination: organization will lose employees, despite the best efforts of managers, due to retirement, mergers, cutbacks, downsizing or poor performance. The value of termination is twofold: Employees who are poor performance can be dismissed. Employers can use exit interviews: an interview conducted with departing employees to determine the reasons for their termination. By showing genuine concern in helping laid off employees, accompany communicates the value of human resource an helps maintain a positive corporate culture.

Diversity is no longer just the right thing to do, it is the single most important factor for organization performance. Companies that ignore diversity will have a hard time competing in a multicultural global environment. Increasingly diverse, yet more inclusive business landscape due to globalization, economic development and progressive recruitment policies. Progressive organizations are taking steps to attract/retain a workforce that reflects the cultural diversity of the population. Advantages: Access to a broader range of opinions Spurs greater creativity/innovation Obtain the best talent Reflect an increasingly diverse customer base Capitalize on new markets Compete more effectively in global marketplace organizations now recognize that the differences people bring to the workplace are valuable. These differences enable companies to compete globally and tap into rich sources of new talent. Diversity has become a key topic, partially due to changes in todays workplace/consumer base. Aging workforce: the average worker in many developed countries is older now, as the baby boomers continue to affect the workplace as this massive group of workers progresses through its life stages. Other changes in demographics, such as more women, ethnic minorities and immigrants are seeing job and advancement opportunities. Minority purchasing power. Growth in foreign born population. Companies that truly value diversity will recognize pay inequality and discrimination in the workplace and make progress toward eliminating them. For global organizations, social and cultural differences may create more difficulties and conflicts than any other sources. However, it is imperative that managers in organizations learn to understand local cultures and deal with them effectively. Communication differences: high context (people use communication primarily to build personal relationships, relationships and trust are more important than business) versus low context cultures (business relationships are impersonal). Communication is the most important factor to the successful fulfillment of outsourcing operations. Recruiting and training employees to work overseas (expatriates). Careful screening, selection and training of employees to serve overseas increase the potential for corporate global success. Diversity are all the ways in which employees differ. The traditional definition consisted only of inborn differences. The new inclusive model also includes acquired aspects. Managing diversity is creating a climate in which the potential advantages of diversity for organizational or group performance are maximized while the potential disadvantages are minimized. The dividends of diversity include: Better use of employee talent: not only attracting, but also advancing a diverse workforce. Increased understanding of the marketplace: better able to anticipate and respond to changing customer needs. Enhanced breadth of understanding in leadership positions: to have a fusion of the very best values and different perspective. Increased quality of team problem solving: different perspectives for a discussion will result in more creative ideas and solutions. Reduced costs associated with high turnover, absenteeism and lawsuit.

Managing diversity is understanding the complex attitudes, opinions and issues that already exist in the workplace. Prejudice: the tendency to view people who are different as being deficient. Discrimination: when someone acts out their prejudicial attitudes toward people who are the targets of their prejudice. Many governments have passed legislation to outlaw different types of discrimination. Stereotype: a rigid, exaggerated, irrational belief associated with a particular group of people. o Often based on false assumptions, media portrayals or impressions without any direct experience. o Assigns negative traits to members of a group. o Assumes that all members of a group have the same characteristics. Stereotype threat: a psychological experience of a person who, usually engaged in a task, is aware of a stereotype about his or her identify group suggesting that he or she will not perform well on that task. Ethnocentrism: the belief that ones own group or subculture is inherently superior to other groups or cultures. Monoculture: a culture that accepts only one way of doing things and one set of values and beliefs. The goal for organizations seeking cultural diversity is pluralism rather than a monoculture and ethno relativism rather than ethnocentrism. Ethno relativism is the belief that groups and subcultures are inherently equal. Biculturalism: the sociocultural skills and attitudes used by racial minorities as they move back and forth between the dominant culture and their own ethnic or racial culture. Pluralism: an environment in which the organization accommodates several subcultures, including employees who would otherwise feel ignored and isolated. Affirmative action: government mandated programmes that focus on providing opportunities to women and members of minority groups who previously faced discrimination. Affirmative action has facilitated greater recruitment, retention and promotion of minorities in some countries. Some groups argue that affirmative action leads to reverse discrimination. Stigma of incompetence is also associated with affirmative action. Despite years of progress by women in the workforce, many find their career goals are still unattainable or difficult to achieve. Men still have higher wages and faster promotions. Glass ceiling: invisible barrier that separates women and minorities from top management positions. o Glass wall: invisible barriers to important lateral movement within the organization. Opt out trend: many women never hit a glass ceiling because they choose to get off the fast track long before it comes into view. The female advantage: some think women might actually be better managers, because of collaborative, less hierarchical relationship orientated approach that fits todays global and multicultural environment. Cultural competence: the ability to interact effectively with people of different cultures. It is the result of a successful five step diversity plan. 1) Uncover diversity problems in the organization. A cultural audit is tool that identifies problems or areas needing improvement in a corporations culture. 2) Strengthen top management commitment. 3) Choose solutions to fit a balanced strategy .

4) Demand results and revisit the goals. 5) Maintain momentum to change the culture. As described in step 3, managers choose solutions to fit a balanced strategy. These initiatives may include: Changing structures and policies to facilitate and support diversity. Expanding recruitment efforts. Establishing mentor relationships to eliminate the glass ceiling. o A mentor is a higher ranking, senior organizational member who is committed to providing upward mobility and support to a protgs professional career. Managers need to overcome some of the barriers to mentor relationships between white males and minorities. Accommodating special needs: such as child care, maternity leave, flexible work schedules and telecommuting. Providing diversity training designed to educate people about the importance of diversity, make people aware of their own biases and teach them skills for communicating and working in a diverse workplace. The first step is diversity awareness: to make employees aware of the assumptions they make. The next step is diversity skills training: to help people learn how to communicate and work effectively in a diverse environment. Increasing awareness of sexual harassment. o Generalized: sexual remarks based on gender. o Inappropriate: not sexual threatening, but discomforting co workers. o Solicitation with promise of reward: purchasing sex. o Coercion with threat of punishment: using the threat to jeopardize the victims career. o Sexual crimes and misdemeanors: acts considered as felony crimes. Diversity initiatives help maintain a competitive advantage. Multicultural teams: teams made up of members from different national, racial, ethnic and cultural backgrounds. o Advantage: better problem solving and decision making, enhanced creativity and innovation. o Disadvantage: difficult to manage because of the increased potential for miscommunication and misunderstanding. Employee network groups: groups based on social identity, such as gender or race, and organized by employees to focus on concerns of employees from that group. o These networks are often creates informally by employees and membership is voluntary. Leadership is one of the most widely researched and discussed topics and depend on organization and situation. Some of the most attitudes and behaviours in an organization are those of its leaders. An organization is only as good as its leadership. Leadership is the ability to influence people toward the attainment of organizational goals and occurs among people, involves the use of influence and is used to attain goals. Contemporary leadership. Post heroic approach that focuses on the subtle, unseen and often unrewarded acts that good leaders perform every day. Is focused on humility: being unpretentious and modest rather than arrogant and prideful. Level 5 leadership: leaders should have a complete lack of ego and focus on o organization and results.

Interactive leadership: a leadership style characterized by values such as inclusion, collaboration, relationship building and caring. Minimizing personal ambition and developing others.

A primary distinction between management and leadership is that management promotes stability, order and problem solving within the existing structure. Leaderships promotes vision, creativity and change. Traits bare distinguishing personal characteristics, such as intelligence, values and appearance. The inability to define effective leadership based solely on trait led to an interest in looking at the behaviour of leaders. Two basic metacategories were identified: task orientated and people orientated behaviour. Ohio State Studies. Consideration: a type of behaviour that describes the extent to which the leader is sensitive to subordinates, respects their ideas and feelings and establishes mutual trust. Initiating structure: a type of leader behaviour that describes the extent to which the leader is task orientated and direct subordinate work activities towards goal attainment. These are independent factors, meaning that leaders could have four different styles. The high-high style achieved better performance and greater satisfaction than others. Michigan Studies. Employee centered leaders: focused on high performance goals and displayed supportive behaviour towards subordinates. Job centered leaders: tended to be less concerned d with goal achievement and human needs in favour of meeting schedules and achieving production efficiency. The leadership grid: a two dimensional leadership theory that measures the leaders concern for people (high or low) and the concern for production (high or low). There are five major style: 1) High people High production: Team management: the most effective. Work accomplishment from committed people, interdependence and relationships of trust and respect. 2) High people Low production: Country club management: thoughtful attention to the needs of people, a friendly organization and work tempo. 3) Low people High production: Authority compliance: efficiency in operations results form arranging conditions of work in a way that human elements hardly interfere. 4) Low people Low production: Impoverished management: minimum effort to get required work done. 5) Middle people middle production: Middle of the road management: a balance between the necessity to get out work and maintaining peoples moral. Contingency approach: a model of leadership that describes the relationship between leadership styles and specific organizational situations. The situational theory is a contingency approach to leadership that links the leaders behavioural style with the task readiness of subordinates. Hersey and Blanchard: characteristics of followers and determining appropriate leadership behaviour. o Telling style: high concern for tasks, low concern for people. Highly directive style giving explicit directions. o Selling style: high concern for both tasks and people. The leader explains decisions and gives subordinates a chance to gain clarity and understanding about work tasks.

Participating style: high concern for people, low concern for tasks. The leader shares ideas in the decision making process. o Delegating style: low concern for both people and tasks. The leader provides little direction and little support. To apply the model, the leader diagnoses the readiness level of the followers and adopts the appropriate style. Fiedlers: apply leaders style (task or people orientated) to organizational situation. o Is the situation favourable or unfavourable? Highly favourable: when leader-member relationships are positive, tasks are highly structured and the leader has formal authority over the followers, who have respect and trust in their leader. Highly unfavourable: when leader-member relationships are poor, tasks are unstructured and the leader has little authority. Followers have little respect for their leader. To apply Fiedlers theory, the leader needs to know if he has a people or task orientated style. Secondly, he has to diagnose the situation and conclude if it is a favourable or unfavourable one. Matching leader style to the situation: o Task orientated leaders excel in the favourable situation because everyone gets along and the task is clear. o The people orientated leader performs better in situations of intermediate favourability because human relations skills are important in achieving high group performance. Path Goal theory: a contingency approach to leadership specifying that the leaders responsibility is to increase subordinates motivation by clarifying the behaviours necessary for task accomplishment and rewards. Consists of leader behaviour and the use of rewards to meet subordinates needs. o Leader behaviour. Supportive leadership: show concern for subordinates well being and personal needs. The leader is open, friendly and approachable. Directive leadership: the leader tells subordinates exactly what to do and includes lots of planning, schedules and performance goals. Participative leadership: the leader consults with subordinates about decisions. Achievement leadership: the leader set clear and challenging goals for subordinates. Stresses improvement over current performance. o Use of rewards. Supportive leadership provides social support to encourage the subordinates to do the work and receive the rewards. Directive leadership is used to give instructions to the subordinates, so that they can perform the task and receive the rewards. Participative leadership is used to change the situation. Achievement leadership is used to challenge the subordinates. By discussing with the subordinates, the leader will know which rewards is appropriate to give. Substitutes for leadership: situational variables can be so powerful that they actually substitute for or neutralize the need for leadership. o A substitute: a situational variable that makes a leadership style unnecessary or redundant. o A neutralizer: a situational variable that counteracts a leadership style and prevents the leader from displaying certain behaviours. Leaders should adopt a style that complements the organizational situation.

Some leadership approaches are more effective than others. The transactional leader is a leader who clarifies subordinates role and task requirement, initiates structure, provides rewards and displays consideration for subordinates. The excel at management functions and try to run things efficiently. The charismatic leader is a leader who has the ability to motivate subordinates to transcend their expected performance. Their impact comes from: o Stating a lofty vision of an imagined future that employees identify with. o Shaping a corporate value system for which everyone stands . o Trusting subordinates and earning their complete trust in return. They are skilled in creating a vision: an attractive, ideal future that is credible yet not readily attainable. The transformational leader is a leader distinguished by a special ability to bring about innovation and change. They have a positive impact on their followers. Followership. The first dimension is the quality of independent critical thinking (mindful of the effects of their own behaviour on achieving organizational goals) versus dependent uncritical thinking (accepts supervisors idea without thinking). The second dimension is active (fully participating) versus passive (need of constant supervision) behaviour. This results in five types of followers: o Alienated follower: a passive, but critical thinker. Often people who are capable, but only focus on the shortcoming of their boss. o Conformist: a active, uncritical thinker. Carries out any order regardless of the nature of the request . o Pragmatic survivor: has qualities of all four extremes. This type uses whatever style best benefits with the situation. o Passive follower: is a passive and uncritical thinker. They show no initiative or responsibility. o Effective follower: both a critical thinker and active in the organization. They develop equitable relationships with their leaders and are capable of self management. The definition of leadership is the ability to influence people to achieve goals. Power is the potential ability to influence others behaviour. Influence is the effect a persons actions have on the attitudes, values, beliefs or behaviour of others. The traditional power is position power, gained by the position someone holds. Legitimate power: power that sterns form a formal management position in an organization and the authority granted to it. Reward power: power that results from the authority to bestow rewards on other people. Coercive power: power that sterns from the authority to punish or recommend punishment. Personal power comes from internal sources such as a persons knowledge or characteristics. Expert power: power that sterns from special knowledge or skill in the tasks performed by subordinates. Referent power: power that results from characteristics that command subordinates identification with respect, admiration and desire emulate the leader. Other sources: Personal effort. Network of relationships. Leaders often use a combination of influence strategies, but they fall into basic categories.

1) Use rational persuasion: use facts, data and logical argument to persuade people. 2) Make people like you. Effective leaders strive to create goodwill. 3) Rely on the rule of reciprocity. Leaders can influence other through the exchange of benefits and favours. 4) Develop allies. Effective leaders develop network of allies. 5) As for what you want. Another way to influence people is to make a direct and personal request. 6) Make use of higher authority. Leaders can gain support of people higher up to back them up. 7) Reward the behaviours you want. Servant leaders are leaders who work to fulfill subordinates needs and goals as well as to achieve the organizations larger mission. Moral leaders are leaders who distinguish right from wrong and choose to do right in the practice of good leadership. Motivation is the arousal, direction and persistence of behaviour. Employee motivation affects productivity. A managers job is to channel motivation. There are two types of rewards: Intrinsic rewards: the satisfaction received in the process of performing an action. Extrinsic rewards: a reward given by another person. There are four distinct perspectives on employee motivation. 1) Traditional approach (F.W. Taylor). The systematic analysis of an employees job for the purpose of increasing efficiency. Economic rewards were provided to employees with high performance. This was also known as the economic man. 2) Human relations approach replaced the economic man. The idea that workers had social needs lead to the birth of the social man. 3) Human resource approach carries the concept of the economic and social man further to introduce the concept of the whole person. The theory suggest that employees are motivated by many factors. An example is the Theory X and Theory Y by McGregor. The human resource method laid the groundwork for contemporary perspectives on employee motivation. 4) Contemporary approach is dominated by three types of theories. Content theories: a group of theories that emphasize the needs that motivate people. People have basic needs that translate into an internal drive that motivates behaviours in an attempt to fulfill the needs. o Hierarchy of needs theory by Maslov: a content theory that proposes that people are motivated by five categories of organizational needs. Physiological needs: adequate heat, air and basic salary. Safety needs: safe job, fringe benefits and job security. Belongingness needs: the desire for good relationships with co-workers and participation in a work group. Esteem needs: a motivation for recognition, increase in responsibility and high status. Self actualization needs: providing opportunities to grow, be creative and acquire training for challenging assignments. Low order needs take priority, they must be satisfied before higher order needs are activated. o ERG theory: a modification of the needs hierarchy theory that proposes three categories of needs: Existence needs: the needs for physical well being. Relatedness needs: the needs for satisfactory relationships with others.

Growth needs: the needs that focus on the development of human potential and the desire for personal growth and increased competence. The movement up the hierarchy is more complex, reflecting a frustration regression principle: the idea that failure to meet a high order need may cause a regression to an already satisfied lower order need. o Two factory theory. There are two dimensions: The area of satisfaction with motivators: factors that influence job satisfaction based on fulfillment of high level needs such as achievement, recognition, responsibility and opportunity for growth The area of dissatisfaction with hygiene factors: factors that involve the presence or absence of job dissatisfiers, including working conditions, pay, company policies and interpersonal relationships. Hygiene factors and motivators both influence employees motivation. Providing hygiene factors will eliminate dissatisfaction, but will not motivate workers to high achievement levels. By adding recognition, challenge and performance workers will achieve greater satisfaction. o Acquired needs theory (McClelland): certain types of needs are acquired during the individuals lifetime. Need for achievement: the desire to accomplish something difficult. Need for affiliation: the desire to form close personal relationships. Need for power: the desire to influence or control others. Process theories: a group of theories that explain how employees select behaviours with which to meet their needs and determine whether their choices were successful. o Equity theory: a process theory that focuses on individuals perceptions of how fairly they are treated relative to others. If people perceive their compensation as equal to what others receive for similar contributions, they will accept that as fair and equal. A state of equity is a situation that exists when the ratio of one persons outcomes to inputs equals that of anothers. Inequity occurs when input-to-outcome ratios are out of balance. The most common methods for reducing a perceived inequity are: Change inputs: increase or decrease ones inputs to the organization. Change outcomes: a person may change is outcomes on request. Distort perceptions: they may artificially increase the status attached to their jobs to bring equity into balance. Leave the job to find a more favourable balance of rewards. o Expectancy theory: a process theory that proposes that motivation depends on individuals expectations about their ability to perform tasks and receive desired rewards. The expectancy theory is based on effort, performance and outcomes associated with high performance. EP expectancy: expectancy that putting effort into a given task will lead to high performance. PO expectancy: expectancy that successful performance of a task will lead to the desired outcome. Valence is the value or attraction an individual has for an outcome. Managers responsibility is to help subordinates meet their needs and at the same time attain organizational goals. o Goal setting theory: a motivation theory in which specific, challenging goals increase motivation and performance when the goals are accepted by subordinates and these subordinates receive feedback to indicate their progress toward goal achievement. The four key components are as follows: Goal specificity: the degree to which goals are concrete and unambiguous. Goal difficulty: hard goals are more motivating than easy ones.

Goal acceptance: employees have to buy into the goals and become committed to them. Feedback: people get information about how well they are doing in progressing towards goal achievement. Reinforcement theory: a motivation theory based on the relationship between a given behaviour and its consequences. o Reinforcement tools. Behaviour modification: the set of techniques by which reinforcement theory is used to modify human behaviour. The basic assumption is law of effect: the assumption that positively reinforced behaviour tends to be repeated and unreinforced or negatively reinforced behaviour tends to be inhibited. Reinforcement: anything that causes a given behaviour to be repeated or inhibited. There are four reinforcement tools: Positive reinforcement: the administration of pleasant and rewarding consequence following a desired behaviour. Avoidance learning: the removal of an unpleasant consequence following a desired behaviour. Also called negative reinforcement. Punishment: the imposition of unpleasant outcomes on an employee. Extinction: the withdrawal of a positive reward. o Schedule of reinforcement: the frequency with which and intervals over which reinforcement occurs. Continuous reinforcement schedule: a schedule in which every occurrence of the desired behaviour is reinforced. Partial reinforcement schedule: a schedule in which only some occurrences of the desired behaviour reinforced. Fixed interval schedule: rewards employees at specified time intervals. Fixed ratio schedule: reinforcement occurs after a specified number of desired responses. Variable interval schedule: reinforcement is administered at random times that cannot be predicted by the employee. Variable ratio schedule: based on a random number of desired behaviours rather than on variable time periods.

A job in an organization is a unit of work that a single employee is responsible for performing. Jobs are important consideration for motivation because performing better may provide rewards that meet employees needs. Job design is the application of motivational theories to the structure of work for improving productivity and satisfaction. There are different approaches to job design: Job simplification: a job design whose purpose is to improve task efficiency by reducing the number of tasks a single person must do. Job rotation: a job design that systematically moves employees from one job to another to provide them with variety and stimulation. Job enlargement: a job design that combines a series of tasks into one new, broader job to give employees variety and challenge. Job enrichment: a job design that incorporates achievement, recognition and other high level motivators into the work. Job characteristics model: a model of job design that comprises core job dimensions, critical psychological states and employee growth-need strength. Work redesign is the altering of jobs to increase both the quality of employees work experience and their productivity. There are five core dimensions that determine a jobs motivational potential:

Skill variety: the number of diverse activities that compose a job and the number of skills used to perform it. Leads to experienced meaningfulness of work. Task identity: the degree to which the job is perceived as important and having impact on the company or consumers. Leads to experienced meaningfulness of work. Autonomy: the degree to which the worker has freedom, discretion and self determination in planning and carrying out tasks. Influences experienced responsibility. Feedback: the extent to which doing the job provides information back to the employee about his or her performance. Leads to knowledge of actual results. The impact of the five job characteristics leads to the personal and work outcomes of high work motivation, performance and satisfaction. The final component of the job characteristics model is called employee growth-need strength, which means that people have different needs for growth and development. There are two recent motivational trends empowering employees and framing work to have greater meaning. Empowering people to meet higher needs. Empowerment is the delegation of power and authority to subordinates. People have a need for self efficacy, which is the capacity to produce results or outcomes, to feel that they are effective. There are four elements that enable employees to act more freely. o Employees receive information about company performance. o Employees have knowledge and skills to contribute to the company. o Employees have the power to make substantive decisions. o Employees are rewarded based on company performance. Another way is giving meaning to work. o Purpose driven: people have a sense that what they dong matters and makes a positive difference in the world. o Engagement: engaged employees are more satisfied and motivated because they feel appreciated by their supervisors and the company. To stay connected with employees and customers and shape company direction, managers must excel at personal communications. Managers communication is purpose directed, in that it directs everyones attention toward the vision, values and desired goals of the team or organization. Managers facilitate strategic conversation: dialogue across boundaries and hierarchical levels about the team or organizations vision, critical strategic themes and the values that help achieve important goals. Effective managers use many communication methods, including selecting rich channels of communication; facilitating upward, downward and horizontal communication and understanding and using non verbal communication. Communication is the process by which information is exchanged and understood by two or more people, usually with the intent to motivate or influence behaviour. Communication is not just sending information, it is sharing it. Communication is usually complex. There are two elements in every communication situation: The sender is anyone who wishes to convey an idea to others. The receiver is the person to whom the message is sent. o The sender encodes the idea by selecting symbols with which to compose a message. o The message is the tangible formulation of an idea to be sent to a receiver. o The message is sent through a channel, the carrier of communication.

o o

The receiver decodes the symbols to interpret the meaning of the message. Feedback is the response by the receiver to the senders communication.

Communication can easily break down, especially since managers are communicating globally. There are many factors that impact the potential failure of communication. There are different communication channels to choose. Channel richness is the amount of information that can be transmitted during a communication episode. The capacity of an information channel is influenced by three characteristics: 1. The ability to handle multiple cues simultaneously. 2. The ability to facilitate rapid, two way feedback. 3. The ability to establish a personal focus for the communication. o Channels with high channel richness (face to face, telephone) are personal and two way, but is difficult to disseminate. o Channels with low channel richness (letters, reports, electronic messages) are easy to disseminate and permanently recorded, but are impersonal and one way. Instant messaging (IM) is electronic communication that allows users to see who is connected to a network and share information instantly. Its important to select the appropriate channel, which depends on whether the message is routine or non routine. Non routine message are typically ambiguous and involve great potential for misunderstanding. These are effectively communicated by selecting rich channels. Routine messages are simple and straightforward and are efficiently communicated to a channel lower in richness. Communication is used to persuade and influence people is becoming more critical. Directives are no longer the task of managers and they must communicate frequently and easily with others. However, many managers have communication apprehension. Communication apprehension is an individuals level of fear or anxiety associated with interpersonal communications. Effective persuasion involves listening, being responsive and showing that you care. Non verbal communication is communication transmitted through actions and behaviours rather than through words. It occurs mostly face to face. There are three sources in face to face communication: verbal, vocal tone and facial expressions. We are all natural face readers, but facial expressions can be misinterpreted. Listening is the skill of receiving messages to accurately grasp facts and feelings to interpret the genuine meaning. Another aspect of management communication concerns the organization as a whole and they flow downward, upward and horizontally. Formal communication channel: a communication channel that flows within the chain of command or task responsibility defined by the organization. o Downward communication: messages sent from top management down to subordinates (through speeches, newsletters, bulletin boards). It usually encompasses the following topics: Implementation of goals and strategies: informs about targets. Job instructions and rationale: informs about how to do a specific task. Procedures and practices: defines the organizations policies and rules. Performance feedback: appraises how well individuals are doing at their jobs. Indoctrination: designed to motivate employees to adopt the organizations mission and values. A problem with downward communication is drop off: the distortion or loss of message content.

Upward communication: messages transmitted from the lower to the higher levels in the organizations hierarchy (through message boxes, open door policies and face to face conversations). There are five types of information communicated upwards: Problems and exceptions: in order to make managers aware of difficulties. Suggestions for improvement. Performance reports: inform management how individuals and departments are performing. Grievances and disputes: employee complaints that travel up for a possible solution. Financial and accounting information. o Horizontal communication: the lateral or diagonal exchange of messages among peers or co-workers. It usually falls into one of three categories: Intradepartmental problem solving: concern task accomplishment. Interdepartmental coordination: facilitate the accomplishment of joint projects or tasks. Change initiatives and improvement: designed to share information among teams and departments. Team communication channels is based on two characteristics: the extent to which communication is centralized and the nature of the teams task. o A centralized network: a team communication structure in which team members communicate through a single individual to solve problems or make decicions. o A decentralized network: a team communication structure in which team members freely communicate with one another and arrive at decisions together. Decentralized networks are slower for simple problems, but for more complex problems, the decentralized communication network is faster. Personal communication channels: communication channels that exist outside the formally authorized channels and do not adhere to the organizations hierarchy of authority. These informal channels are the primary way information spreads and work gets accomplished. There are three types. o Personal networking: the acquisition and cultivation of personal relationships that cross departmental, hierarchical and even organizational boundaries. Build it before you need it. Never eat lunch alone. Make it win-win. Focus on diversity. o The grapevine: an informal, person-to-person communication network of employees that is not officially sanctioned by the organization. Employees use grapevine rumours to fill in information gaps and clarify management decisions. o Management by wandering around: a communication technique in which managers interact directly with workers to exchange information. Managers mingle and develop positive relationships with employees and learn directly from them about their department or organization. o Using the written word, it is important to have good writing matters. Respect the leader, dont waste his time and pay attention to your grammar and spelling. Know your point and get to it. Write clearly rather than impressively. Get a second opinion.

Todays environment requires knowledge workers and relationships with employees. To build trust, managers incorporate the following ideas:

Open communication: sharing all types of information throughout the company, across functional and hierarchical levels. Open communication runs counter to the traditional flow of selective information downward from supervisors to subordinates. Dialogue: a group communication process aimed at creating a culture based on collaboration, fluidity, trust and commitment to shared goals. Crisis communication : managers can develop four primary skills for communicating in a crisis. o Maintain your focus: dont be overwhelmed by the situation. o Be visible: presence during a crisis is important. o Get the awful truth out to prevent rumours and misunderstandings. o Communicate a vision for the future. Feedback and learning: evaluate the help individuals and the organization learn and improve.

There are multiple barriers to communication. Barriers can be categorized as those that exist at the individual or at the organizational level. Individual barriers: o Interpersonal barriers include problems with emotions and perceptions held by employees. o Selecting the wrong channel or medium for sending a communication can be a problem. o Semantics: the meaning of words and the way they are used. o Inconsistent cues between verbal and non-verbal communications. Organizational barriers: o Status and power differences: low power people may be reluctant to pass bad news, while high power people may not pay attention. o Differences across departments in terms of needs and goals interfere with communications. o The absence of formal channels. o The communication flow doesnt fit the organizations task. o Poor coordination, so that different parts of the organization work in isolation without knowing whats going on. Overcoming communication barriers. Individual skills. o Active listening. o Selecting the appropriate channel. o Understanding each others perspective. o Management by wandering around to check communications with others. Organizational actions: o Create a climate of trust and openness. o Use formal information channels in all directions. o Use multiple channels, including formal and informal. o Make the structure fit communication needs. o Create a system of feedback and learning. Teams are a great way to gain management experience and have become a primary way organizations work. Good teams are highly productive, but teams arent always successful. A team is a unit of two or more people who interact and coordinate their work to accomplish a specific goal. The team concept implies a sense of shared mission and collective responsibility.

Team effectiveness begins with the organizational context, which includes structure, environment, culture, strategy and control systems, but also the type of team, its characteristics and composition. These influence team processes as the stage of development, cohesiveness, norms and conflict resolution. Those ultimately influence the teams working effectiveness: which is based on three outcomes: Productive output: pertains to the quality and quantity of task outputs. Personal satisfaction: pertains to the teams ability to meet the personal needs of its members and hence maintain their commitment. The capacity to adapt and learn: the ability of teams to bring greater knowledge and skills to job tasks and enhance the potential of the organization to respond to new treats or opportunities. There are different types of teams. Formal team: a team created by the organization as part of the formal organization structure. o Vertical team: a formal team composed of a manager and his or her subordinates in the organizations formal chain of command. o Horizontal team: a formal team composed of employees from about the same hierarchical level, but from different areas of expertise. Cross functional team: group of employees from different departments formed to deal with a specific activity. They allow members to exchange information, generate suggestions, develop new ideas and assist in the development of new practices. Committee: a long-lasting, sometimes permanent team in the organization structure created to deal with tasks that recur regularly. o Special purpose teams: a team created outside the formal organization to undertake a project of special importance or creativity. Fast cycle teams: set up to work on projects that top management deems highly important. Employee involve through teams is designed to increase participation of employees in decision making. o Problem solving teams: typically 5 to 12 hourly employees from the same department who meet to discuss ways of improving quality, efficiency and the work environment. o Self directed team: a team consisting of 5 to 20 multi-skilled workers who rotate jobs to produce an entire product or service, often supervised by an elected member. Team members take over member duties and work with minimum supervision. Both teams typically include the following elements: The team includes employees with several skills and functions. The team is given access to resources such as information and equipment. The team is empowered with decision making authority. There are two new types of team in the globalization of business. Virtual teams: a team made up of members who are geographically or organizationally dispersed, rarely meet face to face and do their working using advanced information technologies. Many virtual teams are cross functional teams that emphasize solving customer problems or completing specific projects. Managers as team leaders should consider the following critical issues when building virtual teams. o Select the right team members, who have the right mix of skills, knowledge and personality.

Manage socialization to get to know one another and understand the appropriate behaviour. o Foster trust and have clear expectations of one another. o Effectively manage communications. Global teams: a work team made up of members of different nationalities whose activities span multiple countries; may operate as a virtual team or meet face to face. They face enormous challenges, such as the gaps of time, distance and cultural differences which can impact communication, decision making and work pace.

Team characteristics. Size. Numerous studies found that smaller team perform better. Teams need to be large enough to incorporate the diverse skills need to complete a task, but also need to be small enough to communicate efficiently and effectively. o Small teams (2-5 members) show more agreement, exchange more opinions and report more satisfaction. o Large teams (10 or more) tend to have more disagreements and often has subgroups. Communication becomes difficult and tends to be less friendly. o As the size increases, so does the number of free riders: a person who benefits from team membership but does not make a proportionate contribution to the teams work. Also called social loafing. Diversity. Teams require a variety of skills, knowledge and experience, so heterogeneous team tend to be more effective than homogeneous teams. Member roles. For teams to be successful, they must be structured to both maintain its member social well being and accomplish its task. o Task specialist role: a role in which the individual devotes personal time and energy to helping the team accomplish its task. Initiate ideas and propose new solutions. Give opinions on task solutions. Seek information for task relevant facts. Summarize ideas. Energize: stimulate the team when energy drops. o Socio emotional role: a role in which the individual provides support for team members emotional needs and social unity. Encourage their contributions. Harmonize and help disagreeing parties reach agreement. Reduce tension: draw off emotions when the atmosphere is tense. Follow: agree to others ideas. Compromise: shift own opinions to maintain team harmony. o Dual role: a role in which the individual both contributes to the teams task and supports members emotional needs. o Non participator role: a role in which the individual contributes little to either the task or members socio emotional needs. Team processes. The stages of team development. o Forming: the stage of team development characterized by orientation and acquaintance. o Storming: the stage of team development in which individual personalities and roles, and resulting conflicts emerge. o Norming: the stage of team development in which conflicts developed during the storming stage are resolved and team harmony and unity emerge.

Performing: the stage of team development in which members focus on problem solving and accomplishing the teams assigned task. o Adjourning: the stage of team development in which members prepare for the teams disbandment. Team cohesiveness: the extent to which team members are attracted to the team and motivated to remain in it. There are multiple influences that stimulate cohesiveness: team interaction, shared goals and personal attraction to the team. The outcome of team cohesiveness falls into two categories: morale and productivity. Moral is higher in cohesive teams because of a friendly environment. Cohesive teams are producing more uniform and have the potential to be productive. A team norm is a standard of conduct that is shared by team members and guides their behaviour. o Critical events establish an important precedent. Any critical event can lead to the creation of a norm. o Primacy means that the first behaviours that occur in a team often set a precedent for later team expectations. o Carryover behaviours bring norms into the team from outside. o Explicit statements symbolize what counts and thus have considerable impact. Conflict is an antagonistic interaction in which one party attempts to block the intentions or goals of another. A healthy level of conflicts helps avoid groupthink: the tendency for people to be so committed to a cohesive team that they are reluctant to express contrary opinions. Abilene paradox is the tendency to go along with others for the sake of harmony. There are several factors for people to engage in a conflict. o Scarce resources such as money, information and supplies. o Communication breakdown which results in misperceptions and misunderstandings. o Personality clashes occur when people dont get along and defer in personality. o Goal differences.

There are different styles to handle conflict. Competing style reflects assertiveness to get ones way, should be used during emergencies. Avoiding style is neither assertive nor cooperative, should be used when there is no chance of winning. Compromising style reflects a moderate amount of assertiveness and cooperativeness and is used when goals on both sides are equally important. Accommodating style reflects a higher degree of cooperativeness, works best when people realize they are wrong. Collaborating style reflects a high degree of both cooperativeness and assertiveness and enables both parties to win. There are different techniques for a conflict among people and departments. Super ordinate goal: a goal that cannot be reached by a single party. Mediation: the process of using a third party to settle a dispute. Negotiation: a conflict management strategy whereby people engage in give and take discussions and consider various alternatives to reach a joint decision that is acceptable to both parties. o Integrative negotiation: a collaborative approach to negotiation that is based on a win-win assumption, whereby the parties want to come up with a creative solution that benefits both sides of the conflict. o Distributive negotiation: a competitive and adversarial negotiation approach in which each party strives to get as much as it can, usually at the expense of the other party.

Achieving a win-win situation is based on four key strategies. o Separate the people from the problem. o Focus on interests, not current demands. o Generate many alternatives for mutual gain. o Insist that results be based on objective standards. The bargaining zone is the range between on partys minimum reservation point and the other partys maximum reservation point. o A positive bargaining zone occurs when the minimum and maximum points of the parties overlap. o A negative bargaining zone occurs when the ranges do not overlap and parties have to fall back on BATNA, the best alternative to a negotiated agreement; a previously determined choice of what a party will do if an acceptable agreement cannot be reached through negotiation. Managers need to project power and maintain standards. Yet, even the best control mechanisms will prove useless if they can be easily circumvented. Control is an important issue facing every manager in every organization. New managers sometimes have difficulty keeping people productive without killing their motivation and productivity. A lack of effective control can damage an organizations health and reputation. Quality control ensures that goals are being met, products are being made, customers are getting the desired services and employees are upholding company ethics. Organizational control: the systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets and standards of performance. Effectively controlling an organization requires information about performance standards and actual performance as well as actions to correct any deviations from the standards. most organizations focus on measuring and controlling financial performance. Yet, they increasingly recognize the need to measure other intangible aspects of performance. Balanced scorecard: a comprehensive management control system that balances traditional financial measures with measures of customer service, internal business processes and the organizations capacity for learning and growth. o Financial performance: reflects short and long term financial performance, measured by net income en return on investment. o Customer service: measures customer retention and satisfaction. o Business process: focus on production and operating statistics. o Potential for learning and growth: focuses on how well resources and human capital are managed for the organizations future. Managers record, analyze and discuss these various metrics to determine how well the organization is achieving its strategic goal. The balanced scoreboard is a tool for managing performance only if it is clearly linked to a well defined organizational strategy and goals. All well designed control models involve the use of feedback to determine whether performance meets established standards. The feedback control model. o Establish strategic goals. o Establish standards of performance; against which to compare organizational activities. o Measure actual performance. o Compare performance to standards; when performance deviates from a standard, managers must interpret the deviation. If adequate: Do nothing or provide reinforcement.

If inadequate: Take corrective action. Budgetary control: the process of setting targets for an organizations expenditures, monitoring results and comparing them to the budget, and making changes as needed. A responsibility center is an organizational unit under the supervision of a single person who is responsible for its activity. o Expense budget: a budget that outlines the anticipated and actual expenses for a responsibility centre. o Revenue budget: a budget that identifies the forecasted and actual revenues of the organization. o Cash budget: a budget that estimates and reports cash flows on a daily or weekly basis to ensure that the company has sufficient cash to meet its obligations. o Capital budget: a budget that plans and reports investments in major assets to be depreciated over several years. Involves evaluating whether assumptions about the return on investments are holding true. Top down budgeting: a budgeting process in which middle and lower level managers set departmental budget targets in accordance with overall company revenues and expenditures specified by top management. Bottom up budgeting: a budgeting process in which lower level managers build their departments resource needs and pass them up to top management for approval.

In every organization, managers need to watch how well the organization is performing financially. Financial controls can also be useful indicators of other kinds of performance problems and uses: Financial statements: the basic information used for financial control. o Balance sheet: a financial statement that shows the firms financial position with respect to assets and liabilities at a specific point in time (Assets are what the company owns, liabilities are the firms debts). o Income statement: a financial statement that summarizes the firms financial performance for a given time interval; sometimes called a profit-and-loss statement. Financial analysis. : evaluate financial reports that compare organizations performance with earlier data and enables the manager to see whether the organization is improving or not. The most common method: ratios. o Liquidity ratio: a financial ratio that indicates the organizations ability to meet its current debt obligations. Current ratio (current assets / current liabilities). o Activity ratio: a financial ratio that measures the organizations internal performance with respect to key activities, defined by management. Inventory turnover (total sales / average inventory). Conversion ratio (purchase orders / customer inquiries). o Profitability ratio: a financial ratio that describes the firms profits in term of a source of profits. Profit margin on sales (net income / sales). Gross margin (profit / total sales). Return on total assets (ROA) (net income / total assets) o Leverage ratios: leverage refers to funding activities with borrowed money. Debt ratio (total debt / total assets). In connection with the shift to employee participation and empowerment, many companies are adopting a decentralized rather than hierarchical control process. Most organization display some aspects of both, but generally emphasize on one or the other. Hierarchical control: the use of rules, policies, hierarchy of authority, reward systems and other formal devices to influence employee behaviour and assess performance. Hierarchical

techniques can enhance organizational efficiency and effectiveness. However, it is associated with too much control, which can backfire. Decentralized control: the use of organizational culture, group norms and a focus on goals, rather than rules and procedures, to foster compliance with organizational goals. Empowerment, effective socialization and training of all contribute to internal standards that provide self control. The culture is adaptive and the managers recognize the importance of culture for uniting individual and organizational goals. o Open book management: sharing financial information and results with all employees in the organization. Showing how his/her job fits into the big picture and affects the financial future of the organization. It ties employee rewards to the companys overall success. The goal is to get every employee thinking and acting like a business owner. o Total quality management (TQM): an organization wide commitment to infusing quality into every activity through continuous improvement. Total quality management became attractive by the successful implementation in Japan and focuses on teamwork, increasing customer satisfaction, lower cost, collaborating employees and managers across department. Quality circle: a group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work. Benchmarking: the continuous process of measuring products, services and practices against major competitors or industry leaders. Six sigma: a quality control approach that emphasizes a relentless pursuit of higher quality and lower costs. Traditionally no more than 3.4 defects per million parts. Based on a five step methodology referred to as DMAIC (define, measure, analyze, improve and control). Reduced cycle time: a cycle time is the steps taken to complete a company process. Reducing it, improves overall company performance. Continuous improvement: the implementation of a large number of small incremental improvements in all areas of the organization on an ongoing basis. Has the highest success. Total quality management doesnt always work. Six sigma isnt appropriate for all types of organizations. Many contingency factors can influence the success of a TQM program. - Positively: high skill tasks, focus on job enrichment, emphasis on teamwork and participation. - Negatively: unrealistically high management expectations, middle management frustration over loss of authority, dissatisfaction among workers. International quality standards: one impetus for TQM is the increasing significance of the global economy. Many countries have adopted a universal benchmark for quality managers practices: ISO 9000 standards: a set of standards that represent an international consensus of what constitutes effective quality management, as outlined by the International Organization for Standardization. New financial control systems for providing effective financial control: Economic value added (EVA): a control system that measures performance in terms of after tax profits minus the cost of capital invested in tangible assets. Market value added (MVA): a control system that measures the stock markets estimate of the value of a companys past and expected capital investment projects. Activity based costing (ABC): a control system that identifies the various activities needed to provide a product and allocates costs accordingly.

Corporate governance: the system of governing an organization so the interest of corporate owners are protected.

The internet now influences the lives/jobs of many managers. However, it also has its drawbacks. Therefore, the strategic use of IT is one of the defining aspects of organization success in todays world. IT and e-business have changed the way organizations work and present new challenges to managers. Information technology (IT): the hardware, software, telecommunications, database management, and other technologies used to store, process and distribute information. IT can connect people around the world for the exchange of information and ideas. Boundaries are no longer important. Knowledge management: the process of systematically gathering knowledge, making it widely available throughout the organization and fostering a culture of learning. Data leads to information, which leads to knowledge. o Knowledge management portal: a single point of access for employees to multiple sources of information that provides personalized access on the corporate intranet. o Wiki: website that allows anyone with access, inside or outside the organization, to create, share and edit content through a simple browser based user interface. Data warehousing: the use of a huge database that combines all of companys data and allows users to access the data directly, create reports and obtain answers to what-if questions. o Business intelligence (BI): the high tech analysis of data from multiple sources to indentify patterns and relationships that might be significant. Includes activities such as data mining: searching out and analyzing data from multiple sources. IT enables managers to design job to provide people with more intellectual engagement and more challenging work. It significantly speeds up the work processes, cuts costs and increases efficiency. With IT, managers can change the locus of knowledge by providing information to people who would not otherwise receive it. It enables employees to make decisions and provide better customer service. On major problem is the company can experience an overload of information. Information fatigue syndrome: new mental disorder caused by too much information. Managers can alleviate the problem and improve information quality by: o Ensuring that suppliers of IT and CIOs work closely together with employees to identify the kinds of data they really need. o To executives should be actively involved in setting limits by focusing the organization on key strategies. A management information system (MIS) is a computer based system that provides information and support for effective managerial decision making. It typically supports strategic decision making needs of mid level and top management and includes: Decision support systems (DSS): an interactive, computer based system that uses decision models and specialized databases to support organization decision makers. They are information reporting systems: a system that organizes information in the form of pre specified reports that managers use in day to day decision making. Executive information system (EIS): a management information system designed to facilitate strategic decision making at the highest levels of management by providing executives with easy access to timely and relevant information. A business performance dashboard: a system that pulls data from a variety of organizational systems and databases; gauges the data against key performance metrics, pulls out the right information and delivers information to managers in a graphical, easy to interpret format. Groupware: software that works on a computer network or the internet to facilitate information sharing, collaborative work and group decision making.

Another key IT component is the enterprise resource planning (ERP) system: a networked information system, that collects, processes and provides information about an organizations entire enterprise, from identification of customer needs and receipt of orders to distribution of products and receipts of payments. It links all these activities to a network. In addition to better internal information management and information sharing there are customer relationship management (CRM) systems: system that help companies track customers interactions with the firm and allow employees to call up information on past transactions. There is no longer a one way relation with customers. The force that is fuelling growth on the internet isnt a start up and also not an established company, but instead the power has shifted to individuals since the emerge of the world wide web (WWW): a collection of central servers for accessing information on the internet. Managers are able to monitor what is being said about the company, implement damage control strategies, track down what the majority of the world is thinking and post blogs to communicate with customers. A blog: web log that allows individuals to post opinions and ideas. Social networking: online interaction in a community format where people share personal information and photos, produce and share all sorts of information and opinions, or unify activists and raise funds. Peer to peer file sharing: file sharing that allows PCs to communicate directly with another over the internet, bypassing central database, servers, control points and webpages. Blogs and social networking have the potential to shape up every business for good or bad. There are two broad categories of information systems widely used: Operation information system: a computer based information system, that supports a companys day to day operations. o Transaction processing system (TPS): a type of operations information system that records and processes data resulting from routine business transactions such as sales, purchases and payroll. o Process control system: a computer system that monitors and controls ongoing physical processes, such as temperature or pressure changes. o Office automation system: a system that combines modern hardware and software to handle the tasks of publishing and distributing information. Management information systems typically support the strategic decision making needs of high level managers. The purpose of both systems is to translate data: raw, unsummarized and unanalyzed facts and figures into information: data that have been converted into a meaningful and useful context for the receiver. In recent years most companies have incorporated the internet as part of their IT strategy. E-business: any business that takes place by digital processes over a computer network rather than in physical space. o Electronic data interchange (EDI): a network that links the computer systems of buyers and sellers to allow the transmission of structured data primarily for ordering, distribution and payables and receivables. o E-commerce: business exchanges or transactions that occur electronically. Key components of e-business: o Intranet: an internal communications system that uses the technology and standards of the internet but is accessible only to people within the organization. o Extranet: an external communications system that uses the internet and is shared by two or more organizations.

The first step towards a successful e-business is to determine why they need one to begin with. Failure to align e-business initiative with corporate strategy can lead to failure. There are two strategic approaches: Market expansion: an internet division allows a company to establish direct links to customers and expand into new markets. The organization can provide access around the clock to a worldwide market. Increasing efficiency: e-business is seen primarily as a way to improve the bottom line by increasing productivity and cutting costs. Managers have to decide how to best integrate bricks and click, how to blend their traditional operations with an internet initiative. In house division: offers tight integration between the online business and the organizations traditional operation. Partnership: the bricks and mortar companies get the expertise and services of a world class internet business without having to hire more people with IT expertise and build the capabilities themselves. When business were first setting up websites, managers envisioned that doing business all over the world would be easy. However, the global e-market cant be approached as if it were on homogeneous area. Organizations that want to succeed are tailoring their website to address differences in language, regulations, payment systems and consumer preferences. An B2B marketplace is an electronic market place set up by an intermediary where buyers and sellers meet. In addition to open public marketplaces, companies set up private marketplaces to link with a specially invited group of suppliers and partners. Strategic success depends on efficient operations, particularly in todays competitive and global environment. The organization is a system used for transforming inputs into outputs. At the centre of this transformation is the technical core: the heart of the organizations production of its product or service. The organization can be thought of as a value chain. Operations management is the field of management that focuses on the physical production of goods or services and uses specialized techniques for solving manufacturing problems. Operations management applies to all organizations. Manufacturing organization: an organization that produces physical goods. Service organization: an organization that produces non physical outputs that require customer involvement and cannot be stored in inventory. Despite the differences, they face similar operational problems, such as scheduling, materials, supplies and quality and productivity. Operations strategy is the recognition of the importance of operations to the firms success and the involvement of operations managers in the organizations strategic planning. The best way to control operations is trough strategic planning. Managers focus on four major outcomes to build a highly effective operations system: Achieving superior customer responsiveness. Companies that are more responsive to customers and provide good value are more competitive. Achieving superior innovation with speed and flexibility. Innovation leads to betters products and production methods. Achieving superior quality. Builds brand name reputation and enables companies to charge higher prices. Achieving superior efficiency.

To adopt a strategic approach, operations managers appreciate that their operations are not independent of other activities. Integrating every company along the supply chain mains a quicker response to end customers. Supply chain management: managing the sequence of suppliers and purchasers, covering all stages of processing form obtaining raw material to distributing finished goods to final customers. Most recent: e-supply chain: creates a seamless, integrated link that stretches from customers to suppliers using the internet. Organizations used to spread purchases among suppliers to encourage them to compete with one another. However, with the need for integration, more companies cultivate intimate relationships with a few carefully selected suppliers. They way a product or service is designed affects its appeal for customers. It also affects how easy or expensive operations will be. Some product designs are difficult to execute properly. To prevent such problems, many businesses are using design for manufacturability and assembly (DFMA). The focus is on simplicity, making the product easy and inexpensive to manufacture. DFMA has four objectives: Producibility: the degree to which a product can actually be produced. Cost: the sum of materials, labour, design and transportation. Quality: the excellence of the product or service. Reliability: the degree to which the customer can count on the product or service. Services have an additional requirement: timing: the degree to which the provision of a service meets the customers delivery requirements. Procurement is purchasing supplies, services and raw materials for use in the production process. Once a product or service has been designed and systems set up for procurement of materials, the next steps are: Process layout: a facilities layout in which machines that perform the same function are grouped together in one location. The advantage is the potential for economies of scale and reduced costs. The drawback is that the path of production might be complicated. Product layout: a facilities layout in which machines and tasks are arranged according to the sequence of steps in the production of a single product. Cellular layout: a facilities layout in which machines dedicated to sequences of production are grouped into cells in accordance with group technology principles. Fixed position layout: a facilities lay out in which the product remains in one location and the required tasks and equipment are brought to it. A goal for todays operations managers is to find the right combination of technology and management. Three advances in manufacturing and service operations: Radio frequency identification (RFID) uses electronic tags that identify and track individual items. Flexible manufacturing systems: a small or medium sized automated production line that can be adapted to produce more than one product line. Cad/CAM. o CAD (computer aided design): a production technology in which computers perform new product design. o CAM (computer aided manufacturing): a production technology in which computers help guide and control the manufacturing system. o Product life cycle management (PLM): manufacturing software that manages a product form creation through development, manufacturing, testing and even maintenance in the field. At some point, every organization must decide on the location of facilities. The most common approach is to select one, is to do a cost benefit analysis. Capacity planning is the determination and adjustment of the organizations ability to produce products and services to match customer

demand. Organizations can do several things to increase capacity: create additional shifts, make people work overtime, expand and add more equipment or subcontract extra work to other firms. A large portion of the operations managers job consist of inventory management. Inventory is the goods that the organization keeps on hand for use in the production process up to the point of selling the final product to customers. Finished goods inventory: inventory consisting of already produced items that have yet to be sold. Work in process inventory: inventory composed of the materials that are still moving through the stages of the production process. Raw materials inventory: inventory consisting of the basic inputs to the organizations production process. Inventory management is vitally important to organizations, because inventory sitting idle costs money. Inventory is recognized as an unproductive asset. E-business systems allow tight inventory control and enable the retailers to eliminate excess inventory. There are four specific techniques for inventory management. Economic order quantity (EOQ): an inventory management technique designed to minimize the total of ordering and holding costs for inventory items. Orderings costs are costs associated with placing the order. Holding costs are the costs for keeping items on hands. The EOQ formula includes ordering costs (C), holding costs (H) and annual demand (D). o EOQ: The reorder point (ROP) is the most economical level at which an inventory item should be reordered consists of: annual demand (D), time period (T), lead time (L). ROP = x (L) The EOQ works well when inventory items are independent of one another. Dependent demand inventory is inventory in which item demand is related to the demand for other inventory items. The most common used system for handling this is material requirement planning (MRP): a dependent demand inventory planning and control system that schedules the precise amount of all materials required to support the production of desired end products. Just in time (JIT) inventory systems: an inventory schedule system that schedules materials to arrive precisely when they are needed on a production line (also called stockless system, kanban system). Logistics: the activities required to physically move materials into the companys operations facility and to move finished products to customers. Distribution is the movement of finished products to customers; also called order fulfillment. Lean manufacturing is a manufacturing process using highly trained employees at every stage of the production process to cut waste and improve quality. Technology plays a key role, however the heart of the process is people. In order for lean manufacturing to work, managers must instill the necessary attitudes: concern for quality, employee empowerment and culture of creativity. Productivity is the organizations output / its inputs. It influences the well-being of the entire society as well as the company. Productivity can be improved by increasing the amount of outputs or reducing the number of inputs. Total factor productivity: total outputs to the inputs / labour, capital, materials and energy. Partial productivity: output / cost of the output. There are two areas for improving productivity: Employee productivity: increasing means having workers produce more output in the same time period.

Management productivity: having mangers do a better job of running the business.