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CONTEMPORARYManagement

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CONTEMPORARYManagement

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CONTEMPORARY MANAGEMENT, ELEVENTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2016, and 2014. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-1-260-07509-0 (bound edition) MHID 1-260-07509-5 (bound edition)

ISBN 978-1-260-48866-1 (loose-leaf edition) MHID 1-260-48866-7 (loose-leaf edition)

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Library of Congress Cataloging-in-Publication Data

Names: Jones, Gareth R., author. | George, Jennifer M., author. Title: Contemporary management/Gareth R. Jones, Jennifer M. George, Jesse H. Jones

Graduate School of Business Rice University. Description: Eleventh edition. | New York, NY: McGraw-Hill Education, [2020] Identifiers: LCCN 2018048517| ISBN 9781260075090 (bound edition) | ISBN

1260075095 (bound edition) | ISBN 9781260488661 (loose-leaf edition) | ISBN 1260488667 (loose-leaf edition)

Subjects: LCSH: Management. Classification: LCC HD31 .J597 2020 | DDC 658--dc23 LC record available at https://lccn.loc.gov/2018048517

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw- Hill Education does not guarantee the accuracy of the information presented at these sites.

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BRIEF CONTENTS

Part One

Management

Chapter 1 Managers and Managing

Chapter 2 The Evolution of Management Thought

Chapter 3 Values, Attitudes, Emotions, and Culture: The Manager as a Person

Part Two

The Environment of Management

Chapter 4 Ethics and Social Responsibility

Chapter 5 Managing Diverse Employees in a Multicultural Environment

Chapter 6 Managing in the Global Environment

Part Three

Decision Making, Planning, and Strategy

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Chapter 7 Decision Making, Learning, Creativity, and Entrepreneurship

Chapter 8 The Manager as a Planner and Strategist

Chapter 9 Value Chain Management: Functional Strategies for Competitive Advantage

Part Four

Organizing and Controlling

Chapter 10 Managing Organizational Structure and Culture

Chapter 11 Organizational Control and Change

Chapter 12 Human Resource Management

Part Five

Leading Individuals and Groups

Chapter 13 Motivation and Performance

Chapter 14 Leadership

Chapter 15 Effective Groups and Teams

Part Six

Managing Critical Organizational Processes

Chapter 16

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Promoting Effective Communication

Chapter 17 Managing Conflict, Politics, and Negotiation

Chapter 18 Using Advanced Information Technology to Increase Performance

NAME INDEX ORGANIZATION INDEX

SUBJECT GLINDEX

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AUTHORS

Gareth Jones currently offers pro bono advice on solving management problems to nonprofit organizations in Houston, Texas. He received his BA in Economics/Psychology and his PhD in Management from the University of Lancaster, UK. He was formerly Professor of Management in the Graduate School of Business at Texas A&M University and earlier held teaching and research appointments at Michigan State University, the University of Illinois at Urbana-Champaign, and the University of Warwick, UK.

He continues to pursue his research interests in strategic management and organizational theory and his well-known research that applies transaction cost analysis to explain many forms of strategic and organizational behavior. He also studies the complex and changing relationships between competitive advantage and information technology in the 2010s.

He has published many articles in leading journals of the field, and his research has appeared in the Academy of Management Review, the Journal of International Business Studies, and Human Relations. An article about the role of information technology in many aspects of organizational functioning was published in the Journal of Management. One of his articles won the Academy of Management Journal’s Best Paper Award, and he is one of the most cited authors in the Academy of Management Review. He is, or has served, on the editorial boards of the Academy of Management Review, the Journal of Management, and Management Inquiry.

Gareth Jones has used his academic knowledge to craft leading textbooks in management and three other major areas in the management discipline: organizational behavior, organizational theory, and strategic management. His books are widely recognized for their innovative, contemporary content and for the clarity with which they communicate complex, real-world issues to students.

Jennifer George is the Mary Gibbs Jones Professor of Management and Professor of Psychology in the Jesse H. Jones Graduate School of Business at Rice University. She received her BA in Psychology/Sociology from Wesleyan University, her MBA in Finance from New York University, and her PhD in Management and Organizational Behavior from New York University. Prior to joining the faculty at Rice University, she was a professor in the Department of Management at Texas A&M University.

Professor George specializes in organizational behavior and is well known for her research on mood and emotion in the workplace, their determinants, and their effects on various individual and

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group-level work outcomes. She is the author of many articles in leading peer-reviewed journals such as the Academy of Management Journal, the Academy of Management Review, the Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Personality and Social Psychology, Organization Science, and Psychological Bulletin. One of her papers won the Academy of Management’s Organizational Behavior Division Outstanding Competitive Paper Award, and another paper won the Human Relations Best Paper Award. She is, or has been, on the editorial review boards of the Journal of Applied Psychology, Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Management, Organizational Behavior and Human Decision Processes, Organization Science, International Journal of Selection and Assessment, and Journal of Managerial Issues; was a consulting editor for the Journal of Organizational Behavior; was a member of the SlOP Organizational Frontiers Series editorial board; and was an associate editor of the Journal of Applied Psychology. She is a fellow in the Academy of Management, the American Psychological Association, the American Psychological Society, and the Society for Industrial and Organizational Psychology and a member of the Society for Organizational Behavior. She also has coauthored a textbook titled Understanding and Managing Organizational Behavior.

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PREFACE

Since the tenth edition of Contemporary Management was published, our book continues to be a leader in the management market. This tells us that we continue to meet the expectations of our existing users and attract new users to our book. It is clear that most management instructors share with us a concern for the need to continuously introduce new and emerging issues into the text and its examples to ensure that cutting- edge issues and new developments in the field of contemporary management are addressed.

In the new eleventh edition of Contemporary Management, we continue with our mission to provide students the most current and up-to-date account of the changes taking place in the world of business management. The fast-changing domestic and global environment continues to pressure organizations and their managers to find new and improved ways to respond to changing events in order to maintain and increase their performance. More than ever, events around the globe, rapid changes in technology, and economic pressures and challenges show how fast the success and even survival of companies can change. For example, the increasing complexity of the exchanges between global companies has profoundly affected the management of both large and small organizations. Today there is increased pressure on managers to find new management practices that can increase their companies’ efficiency and effectiveness and ability to survive and prosper in an increasingly competitive global environment.

In revising our book, we continue our focus on making our text relevant and interesting to today’s students—something that we know from instructor and student feedback engages them and encourages them to make the effort necessary to assimilate the text material. We continue to mirror the changes taking place in management practices by incorporating recent developments in management theory and research into our text and by providing vivid, current examples of how managers of companies large and small have responded to the changes taking place. Indeed, we have incorporated many new and contemporary examples in the new edition illustrating how founders, managers, and employees in a variety of types of organizations respond to the opportunities and challenges they face. These examples drive home to students how essential it is for them to develop a rich understanding of management theory and research and the ability to apply what they have learned in organizational settings.

The number and complexity of the strategic, organizational, and human resource

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challenges facing managers and all employees have continued to increase throughout the 2010s. In most companies, managers at all levels are playing catch-up as they work toward meeting these challenges by implementing new and improved management techniques and practices. Today relatively small differences in performance between companies, such as in the speed at which they can bring new products or services to market or in how they motivate their employees to find ways to improve performance or reduce costs, can combine to give one company a significant competitive advantage over another. Managers and companies that use proven management techniques and practices in their decision making and actions increase their effectiveness over time. Companies and managers that are slower to implement new management techniques and practices find themselves at a growing competitive disadvantage that makes it even more difficult to catch up. Thus many industries have widening gaps between weaker competitors and the most successful companies, whose performance reaches new heights because their managers have made better decisions about how to use a company’s resources in the most efficient and effective ways. In the rapidly changing and dynamic environment facing organizations today, effective managers recognize the vital role that creativity and innovation play in successfully anticipating and responding to these challenges as well as seizing the potential opportunities that they bring while mitigating the threats.

The issues facing managers continue to intensify as changes in the global environment, such as a tightening of the U.S. labor market and rising wages in China and other countries, impact organizations large and small. Similarly, increasing globalization means managers must respond to major differences in the legal rules and regulations and ethical values and norms that prevail in countries around the globe.

Moreover, the revolution in information technology (IT) continues to transform how managers make decisions across all levels of a company’s hierarchy and across all its functions and global divisions. The eleventh edition of our book addresses these ongoing challenges as IT continues to change at breakneck speed, especially in the area of artificial intelligence, blockchain technology, data analytics, and cybersecurity.

Other major challenges we continue to expand on in the new edition include the impact of the steadily increasing diversity of the workforce on companies and how this increasing diversity makes it imperative for managers to understand how and why people differ so they can effectively manage and reap the many benefits of a diverse workforce. Similarly, across all functions and levels, managers and employees must continuously search out ways to “work smarter” and increase performance. Using new IT to improve all aspects of an organization’s operations to boost efficiency and customer responsiveness is a vital part of this process. We have significantly revised the eleventh edition of Contemporary Management to address these challenges to managers and their organizations.

Major Content Changes Encouraged by the number of instructors and students who use each new edition of our

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book, and based on the reactions and suggestions of both users and reviewers, we have revised and updated our book in the following ways. First, just as we have included new research concepts as appropriate, so too have we been careful to eliminate outdated or marginal management concepts. As usual, our goal has been to streamline our presentation and keep the focus on the changes taking place that have the most impact on managers and organizations. In today’s world of instant sound bites, videos, text messaging, and tweets, providing the best content is much more important than providing excessive content—especially when some of our students are burdened by time pressures stemming from the need to work long hours at paying jobs and meeting personal commitments and obligations.

Second, we have added new management content and have reinforced its importance by using many small and large company examples that are described in the chapter opening cases titled “A Manager’s Challenge”; in the many boxed examples featuring managers and employees in companies both large and small in each chapter; and in the “Case in the News” closing cases.

Chapter 1, for example, contains new and updated material on the way recent changes in IT and the products and services that result from it are affecting competition among companies. The chapter features a new opening feature about Microsoft CEO Satya Nadella and his quest to reboot the tech giant by encouraging staff to adopt a mind-set that is constantly learning and improving, retooling products and services to encourage efficiency and innovation, and placing a high value on diversity in the workplace. New chapter highlights include features about working as a city manager, managing a large emergency room facility, and recovering from a companywide ethical scandal at Wells Fargo. The chapter also contains an updated discussion and examples about managing a diverse workforce, including America’s best employers for diversity.

Chapter 2 opens with the story of how Comcast is rethinking the customer experience in an effort to sustain competitive advantage. The chapter continues to cover traditional management theories and how they have been modified to address changing work conditions in the global environment today. In addition, a new discussion focuses on the theory of dynamic capabilities, which encourages managers to use the organization’s past experience to shift focus when situations demand a different approach.

Chapter 3 updates material about the manager as a person and the way personal characteristics of managers (and all members of an organization) influence organizational culture and effectiveness. The chapter opens with a new “Manager’s Challenge” on Geisha Williams, the CEO of PG&E (one of the country’s largest gas and oil utilities) and the first Latina to run a Fortune 500 company. There is also new content about personality assessments, including the Myers-Briggs Type Indicator and the DiSC Inventory Profile, as well as chapter features on promoting ethical values in the hotel industry and understanding emotional intelligence in various cultures.

Chapter 4 provides updated material about the unethical and illegal behaviors of managers from various industries. We have updated our coverage of the many issues involved in acting and managing ethically, including an opening story about Tesla and its involvement in building microgrids to help restore power in Puerto Rico after the island suffered devastating damage from recent hurricanes. We also discuss new issues in ethics and provide conceptual tools to help students understand better how to make

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ethical decisions. We highlight issues related to worker safety, environmental responsibility, and regulations to protect consumer safety. Finally, we have updated coverage of the ethics of nonprofits and their managers as well as added chapter features on Accenture’s new chatbot that is helping to guide employee ethical behavior and a global organization that protects home-based apparel workers in foreign countries. The ethical exercise at the end of every chapter continues to be a popular feature of our book.

Chapter 5 focuses on the effective management of the many faces of diversity in organizations for the good of all stakeholders. A new “Manager’s Challenge” highlights the strategies Intel uses to effectively manage diversity in the workplace. We have updated chapter content, examples, and statistics for such issues as age, gender, race and ethnicity, disabilities, sexual orientation, and the pay gap between women and men. In addition, we have added a new discussion about implicit bias and how it affects most people’s actions and decisions in an unconscious manner. The chapter also provides expanded coverage of the way managers can leverage the increasing diversity of the population and workforce to reap the performance benefits that stem from diversity while ensuring that all employees are treated fairly. Finally, the discussion about sexual harassment has been revised to include recent statistics and information about the #MeToo movement, which impacts women in many different work situations.

Chapter 6 contains an integrated account of forces in both the domestic and global environments. A new “Manager’s Challenge” describes the challenges and opportunities Amazon faced as it tried to expand its e-commerce business to India. The chapter has also been revised and updated to reflect the way increasing global competition and free trade have changed the global value creation process. The chapter uses examples from the fashion industry, electronics industry, and the music-streaming industry to illustrate these issues. In addition, a new section describes the GLOBE project, which extends Hofstede’s work on national culture by examining additional dimensions that may impact how business is conducted in a variety of cultures and countries. The chapter also has an updated discussion about the challenges faced by expats in moving abroad, as well as strategies utilized by companies in an effort to become key suppliers to emerging global businesses.

Chapter 7 discusses the vital processes of decision making, learning, and creativity in organizations and their implications for managers and all employees. The chapter opens with a new “Manager’s Challenge” on how creativity and the ability to learn helped the management of 23andMe, an online genetic screening service, adapt its business when roadblocks almost derailed the company. We also include a discussion of the position of chief sustainability officer and examine how managers can make decisions to help ensure their actions contribute to sustainability. Also, we continue our discussion of social entrepreneurs who seek creative ways to address social problems to improve well-being by, for example, reducing poverty, increasing literacy, and protecting the natural environment. In addition, we expanded the discussion of strategies for creating and sustaining a learning organization and added features on

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decision-making strategies at a beauty-products startup and Western Union’s successful approach to constant learning throughout the organization.

As in the last edition, Chapter 8 focuses on corporate-, global-, and business-level strategies, and Chapter 9 discusses functional strategies for managing value chain activities. These two chapters make clear the links between the different levels of strategy while maintaining a strong focus on managing operations and processes. Chapter 8 continues the discussion of planning and levels of strategy, which focuses on how companies can use vertical integration and related diversification to increase long- term profitability. A new opening story describes the strategies put in place by Marriott International CEO Arne Sorenson and his management team to expand the company’s growth over the next few years. The chapter also includes updated examples of business-level strategies that focus on low-cost strategies in a world in which prices continue to be under pressure due to increased global competition. In Chapter 9 we continue to explore how companies can develop new functional-level strategies to improve efficiency, quality, innovation, and responsiveness to customers. We also added a discussion on the importance of value chain analysis for managers within any organization to help increase efficiency, reduce costs, and strengthen collaboration among various functional activities. In addition to coverage of TQM, including the Six Sigma approach, we include a discussion of the importance of customer relationship management (CRM) and the need to attract and retain customers especially during challenging economic times.

Chapters 10 and 11 offer updated coverage of organizational structure and control and discuss how companies have confronted the need to reorganize their hierarchies and ways of doing business as the environment changes and competition increases. In Chapter 10, for example, we discuss how McDonald’s CEO Steve Easterbrook made major organizational changes, including a move to the city for the company’s corporate headquarters, in an effort to revitalize and re-energize the company’s culture and overall business. We also continue to highlight examples that show how companies are designing global organizational structure and culture to improve performance. In Chapter 11 we continue this theme by looking at how companies are changing their control systems to increase efficiency and quality, for example. More generally, how to use control systems to increase quality is a theme throughout the chapter.

We have updated and expanded our treatment of the many ways in which managers can effectively manage and lead employees in their companies. For example, Chapter 12 opens with a new “Manager’s Challenge” that highlights how Home Depot’s strategic focus on hiring and retaining top workers in a tight labor market continues to pay off for the home improvement retail giant. The chapter also discusses best practices to recruit and attract outstanding employees, the importance of training and development, pay differentials, and family-friendly benefit programs. In addition, there is treatment of the use of background checks by employers, the use of forced ranking systems in organizations, and issues concerning excessive CEO pay and pay comparisons between CEOs and average workers, and updated statistics on U.S. union membership. Finally, we added a discussion on the recent trend of companies doing away with annual performance appraisals in an effort to provide real-time feedback and foster ongoing conversations about job performance, expectations, and growth and development. Chapter 13 continues coverage of prosocially motivated behavior,

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including examples of people who are motivated to benefit others. It also discusses the many steps managers can take to create a highly motivated workforce and the importance of equity and justice in organizations.

Chapter 14 highlights the critical importance of effective leadership in organizations and factors that contribute to managers being effective leaders, including a discussion of servant leadership. A new “Manager’s Challenge” describes the effective leadership demonstrated by the two recent CEOs of the Dana-Farber Cancer Institute. There is also a discussion of how managers with expert power need to recognize that they are not always right. The chapter also addresses how emotional intelligence may help leaders respond appropriately when they realize they have made a mistake, and it gives updated examples of leadership in a variety of organizations. Expanded and updated coverage of the effective management of teams, including virtual teams, is provided in Chapter 15, which opens with a new “Manager’s Challenge” that highlights how the U.S. Army has set up special teams to expedite innovation and cut through bureaucratic red tape, which historically has been a huge obstacle within military management and operations. The chapter also covers the problems that arise because of a lack of leadership in teams.

Chapter 16 includes coverage of effective communication and how, given the multitude of advances in IT, it is important to create opportunities for face-to-face communication. There is also information on the ethics of monitoring email and Internet use, including statistics on Internet usage both in the United States and in other countries around the world. Finally, there is also a discussion of social networking sites and why some managers attempt to limit employees’ access to them during the workday. Chapter 17 includes an updated discussion of the vital task of effectively managing conflict and politics in organizations and how to negotiate effectively on a global level. There are many new examples of how managers can create a collaborative work context and avoid competition between individuals and groups.

Chapter 18 has been revised and refreshed to discuss recent advances in information technology that continue to change the way we do business and the way we manage people. For example, a new “Manager’s Challenge” describes how software that applies artificial intelligence is being used as a management coaching system— ongoing feedback from employees defines areas in which a manager needs to improve his or her leadership. Other recent innovations such as data analytics, blockchain technology, and machine learning are also explored. In addition, cybersecurity and data privacy are highlighted as ongoing issues managers will need to address as technology continues to evolve quickly and impact their roles and responsibilities in any organization.

We feel confident that the major changes we have made to the eleventh edition of Contemporary Management reflect the changes occurring in management and the workplace; we also believe they offer an account of management that will stimulate and challenge students to think about their future as they look for opportunities in the world of organizations.

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Unique Emphasis on Contemporary, Applied Management In revising our book, we have kept at the forefront the fact that our users and reviewers are supportive of our attempts to integrate contemporary management theories and issues into the analysis of management and organizations. As in previous editions, our goal has been to distill new and classic theorizing and research into a contemporary framework that is compatible with the traditional focus on management as planning, leading, organizing, and controlling but that transcends this traditional approach.

Users and reviewers report that students appreciate and enjoy our presentation of management—a presentation that makes its relevance obvious even to those who lack exposure to a real-life management context. Students like the book’s content and the way we relate management theory to real-life examples to drive home the message that management matters both because it determines how well organizations perform and because managers and organizations affect the lives of people inside and outside the organization, such as employees, customers, and shareholders.

Our contemporary approach has led us to discuss many concepts and issues that are not addressed in other management textbooks, and it is illustrated by the way we organize and discuss these management issues. We have gone to great lengths to bring the manager back into the subject matter of management. That is, we have written our chapters from the perspective of current or future managers to illustrate, in a hands-on way, the problems and opportunities they face and how they can effectively meet them. For example, in Chapter 3 we provide an integrated treatment of personality, attitudes, emotions, and culture; in Chapter 4, a focus on ethics from a student’s and a manager’s perspective; and in Chapter 5, an in-depth treatment of effectively managing diversity and eradicating sexual harassment. In Chapters 8 and 9, our integrated treatment of strategy highlights the multitude of decisions managers must make as they perform their most important role—increasing organizational efficiency, effectiveness, and performance.

Our applied approach can also be clearly seen in the last three chapters of the book, which cover the topics of promoting effective communication; managing organizational conflict, politics, and negotiation; and using information technology in ways that increase organizational performance. These chapters provide a student-friendly, behavioral approach to understanding the management issues entailed in persuasive communication, negotiation, and implementation of advanced information systems to build competitive advantage.

Flexible Organization Another factor of interest to instructors is how we have designed the grouping of chapters to allow instructors to teach the chapter material in the order that best suits their needs. For example, the more micro-oriented instructor can follow Chapters 1 through 5 with Chapters 12 through 16 and then use the more macro chapters. The more

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macro-oriented professor can follow Chapters 1 and 2 with Chapters 6 through 11, jump to 16 through 18, and then use the micro chapters, 3 through 5 and 12 through 15.

Our sequencing of parts and chapters gives instructors considerable freedom to design the course that best suits their needs. Instructors are not tied to the planning, organizing, leading, and controlling framework, even though our presentation remains consistent with this approach.

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Students—study more efficiently, retain more and achieve better outcomes. Instructors— focus on what you love— teaching.

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this product. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. While the Contemporary Management teaching package makes no claim of any specific AACSB qualification or evaluation, we have within Contemporary Management labeled selected questions according to the eight general knowledge and skills areas.

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ACKNOWLEDGMENTS

Finding a way to integrate and present the rapidly growing literature about contemporary management and make it interesting and meaningful for students is not an easy task. In writing and revising the various drafts of Contemporary Management, we have been fortunate to have the assistance of several people who have contributed greatly to the book’s final form. First, we are grateful to Michael Ablassmeir, our director, for his ongoing support and commitment to our project and for always finding ways to provide the resources that we needed to continually improve and refine our book. Second, we are grateful to Haley Burmeister, our product developer, for so ably coordinating the book’s progress; and to Debbie Clare, our marketing manager, for giving us concise and timely feedback and information from professors and reviewers that have allowed us to shape the book to the needs of its intended market. We also thank Jessica Cuevas for executing an awe-inspiring design; Kathryn Wright for coordinating the production process; and Iliya Atanasov (Rice University) and Marcie Lensges (Xavier University) for their assistance with research. We are also grateful to the many colleagues and reviewers who gave us useful and detailed feedback and perceptive comments and valuable suggestions for improving the manuscript.

Producing any competitive work is a challenge. Producing a truly market-driven textbook requires tremendous effort beyond simply obtaining reviews of a draft manuscript. Our goal was simple with the development of Contemporary Management: to be the most customer-driven principles of management text and supplement package ever published! With the goal of exceeding the expectations of both faculty and students, we executed one of the most aggressive product development plans ever undertaken in textbook publishing. Hundreds of faculty have taken part in developmental activities ranging from regional focus groups to manuscript and supplement reviews and surveys. Consequently, we’re confident in assuring you and your students, our customers, that every aspect of our text and support package reflects your advice and needs. As you review it, we’re confident that your reaction will be, “They listened!”

We extend our special thanks to the faculty who gave us detailed chapter-by-chapter feedback during the development of the eleventh edition:

Amy S. Banta, Ohio University Charles Buchanan, The Ohio State University Alex Chen, University of Central Arkansas

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C. Brad Cox, Midlands Technical College Susie S. Cox, University of Arkansas at Little Rock Justin Gandy, Dallas Baptist University Shahbaz Gill, University of Illinois–Urbana Champaign Paul D. Johnson, University of Mississippi Rusty Juban, Southeastern Louisiana University Marcie Lensges, Xavier University John E. Lewis, Midlands Technical College Renee Nelms King, Eastern Illinois University Sandy Jeanquart Miles, Murray State University Ronald Purser, San Francisco State University Bruce Wayne Richardson, Northeastern State University–Broken Arrow Campus Steven A. Stewart, Georgia Southern University W. Alexander Williams Jr., Texas A&M University–Commerce

And our thanks also go to the faculty who contributed greatly to previous editions of Contemporary Management:

Jerry Alley, Aspen University M. Ruhul Amin, Bloomsburg University of Pennsylvania Lindy Archambeau, University of Florida Kelly Barbour-Conerty, Parkland College Gerald Baumgardner, Pennsylvania College of Technology Charles W. Beem, Bucks County Community College James D. Bell, Texas State University Danielle R. Blesi, Hudson Valley Community College Susan Blumen, Montgomery College Department of Business and Economics Jennifer P. Bott, Ball State University Edwin L. Bowman, Principal, Manhattanville College, Purchase, NY Charley Braun, Marshall University Reginald Bruce, College of Business, University of Louisville Murray Brunton, Central Ohio Technical College Judith G. Bulin, Monroe Community College, Rochester, New York Barry Bunn, Valencia Community College Aaron Butler, Warner Pacific College ADP Gerald Calvasina, Southern Utah University Bruce H. Charnov, Hofstra University Alexander Chen, University of Central Arkansas Jay Christensen-Szalanski, University of Iowa Jason W. Coleman, Wesley College Joy Colarusso, Daytona State College Renee Y. Cooper, Fashion Institute of Technology Robert Cote, Lindenwood University C. Brad Cox, Midlands Technical College

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Marian Cox Crawford, University of Arkansas–Little Rock

Susie S. Cox, University of Arkansas–Little Rock Cheryl Cunningham, Embry-Riddle Aeronautical University–Daytona Beach Teresa A. Daniel, Marshall University Thomas W. Deckelman, Owens Community College Richard S. DeFrank, University of Houston Fred J. Dorn, University of Mississippi D. Harold Doty, University of Southern Mississippi Max E. Douglas, Indiana State University Sandra Edwards, Northeastern State University Stewart W. Edwards, Northern VA Community College–Annandale William Eichenauer, Northwest State Community College Scott Elston, Iowa State University Richard Estrella, California Polytechnic University Valerie Evans, Kansas State University Bagher Fardanesh, Piaget Consulting Carla C. Flores, Ball State University Andrea Foster, John Tyler Community College Dane L. Galden, Columbus State Community College Jim Glasgow, Instructor, Villanova School of Business Monica Godsey, University of Nebraska Selina Griswold, The University of Toledo Kathy Hastings, Greenville Technical College Karen H. Hawkins, Miami Dade College Travis Lee Hayes, Chattanooga State Technical Community College Samuel Hazen, Tarleton State University Kim Hester, Arkansas State University Perry Hidalgo, Gwinnett Technical College Anne Kelly Hoel, University of Wisconsin–Stout Robert C. Hoell, Georgia Southern University Jenni Hunt, Southern Illinois University–Edwardsville Irene Joanette-Gallio, Western Nevada College Carol Larson Jones, Cal Poly Pomona, California Coy A. Jones, The University of Memphis Gwendolyn Jones, University of Akron Kathleen Jones, University of North Dakota Rusty Juban, Southeastern Louisiana University Jordan J. Kaplan, Long Island University School of Business Joanne E. Kapp, Siena College

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Renee N. King, Eastern Illinois University Deanna R. Knight, Daytona State College Mike Knudstrup, Florida Southern College Susan Kowalewski, D’Youville College Cynthia J. Lanphear, University of the Ozarks Jim Long, Southwestern Oklahoma State University Joyce Lopez, Missouri State University Margaret Lucero, Texas A&M–Corpus Christi Nicholas Mathys, DePaul University Daniel W. McAllister, University of Nevada–Las Vegas Christy McLendon Corey, University of New Orleans Chrisann Merriman, University of Mary Hardin–Baylor Douglas L. Micklich, Illinois State University Sandra Jeanquart Miles, Murray State University Carol T. Miller, Community College of Denver Don C. Mosley Jr., University of South Alabama Clive Muir, Stetson University Troy V. Mumford, Colorado State University Bahaudin G. Mujtaba, Nova Southeastern University Jane Murtaugh, College of DuPage Nanci D. Newstrom, Eastern Illinois University Catherine Nowicki, International Business College John Overby, The University of Tennessee at Martin Karen Overton, Houston Community College Eren Ozgen, Troy University, Dothan Campus Fernando A. Pargas, James Madison University Marc Pendel, Miller College of Business, Ball State University Susan A. Peterson, Scottsdale Community College Gary Renz, Webster University L. Jeff Seaton, University of Tennessee–Martin Gregory J. Schultz, Carroll University Marc Siegall, California State University–Chico Randi L. Sims, Nova Southeastern University Michaeline Skiba, Monmouth University–Leon Hess Business School Frederick J. Slack, Indiana University of Pennsylvania M. James Smas, Kent State University Gerald Smith, University of Northern Iowa Marjorie Smith, Mountain State University Susan D. Steiner, The University of Tampa Warren Stone, University of Arkansas at Little Rock Cynthia L. Sutton, Metropolitan State College of Denver Laurie Taylor-Hamm, California State University, Fresno Sabine Turnley, Kansas State University

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Isaiah O. Ugboro, North Carolina A&T State University Velvet Weems, Landingham, Kent State University John Weiss, Daytona State College William K. Wesley, Golden Gate University Elizabeth Wilson, Georgia Southwestern State University Jan Zantinga, University of Georgia

Please note that these lists do not include the more than 200 faculty members who reviewed or contributed to earlier editions of the text.

Finally, we are grateful to two incredibly wonderful children, Nicholas and Julia, for being all that they are and for the joy they bring to all who know them.

Gareth R. Jones

Jennifer M. George Jesse H. Jones Graduate School of Business Rice University

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CONTENTS

Part One | Management

Chapter 1 Managers and Managing 2

A MANAGER’S CHALLENGE

Satya Nadella Reboots Microsoft 3

Overview 4

What Is Management? 4 Achieving High Performance: A Manager’s Goal 5 |  Why Study Management? 6

Essential Managerial Tasks 6 Planning 6 | Organizing 7 | Leading 8 | Controlling 8 | MANAGER AS A PERSON: Making ER Visits as Painless as Possible 8 | Performing Managerial Tasks: Mintzberg’s Typology 9

Levels and Skills of Managers 10 Levels of Management 11 | Managerial Skills 13 | MANAGEMENT INSIGHT: Succeeding as a City Manager 14

Recent Changes in Management Practices 16 Restructuring and Outsourcing 16 | MANAGING GLOBALLY: Auto Production Thrives in

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Mexico 17 | Empowerment and Self-Managed Teams 17

Challenges for Management in a Global Environment 18 Building Competitive Advantage 18 | Maintaining Ethical and Socially Responsible Standards 20 | ETHICS IN ACTION: Fallout Continues from Wells Fargo Scandal 21 |  Managing a Diverse Workforce 22 | Utilizing New Technologies 23 | Practicing Global Crisis Management 23

Summary and Review 24 Management in Action 25 | Building Management Skills 25 | Managing Ethically 26 | Small Group Breakout Exercise 26 | Be the Manager 26 | Bloomberg CASE IN THE NEWS: “Amazon Effect” Is Hiking Pay and Fueling Land Rush in U.S. 27

Notes 28

Chapter 2 The Evolution of Management Thought 30

A MANAGER’S CHALLENGE

Comcast Rethinks the Customer Experience 31

Overview 32

Scientific Management Theory 32 Job Specialization and the Division of Labor 33 | F. W. Taylor and Scientific Management 34 | ETHICS IN ACTION: Ensuring Workers’ Rights 35 | The Gilbreths 36

Administrative Management Theory 37 The Theory of Bureaucracy 37 | Fayol’s Principles of Management 39 | MANAGEMENT INSIGHT: Getting from Good to Great 42

Behavioral Management Theory 42 The Work of Mary Parker Follett 42 | The Hawthorne Studies and Human Relations  43 | Theory X and Theory Y 44

Management Science Theory 46

Organizational Environment Theory 47 The Open-Systems View 47 | Contingency Theory 48 | Dynamic Capabilities 49

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Summary and Review 50 Management in Action 51 | Building Management Skills 51 | Managing Ethically 52 | Small Group Breakout Exercise 52 | Be the Manager 53 | Bloomberg CASE IN THE NEWS: The Retail Real Estate Glut Is Getting Worse 53

Notes 54

Chapter 3 Values, Attitudes, Emotions, and Culture: The Manager as a Person 56

A MANAGER’S CHALLENGE

CEO Illuminates a New Path for PG&E 57

Overview 58

Enduring Characteristics: Personality Traits 58 The Big Five Personality Traits 58 | MANAGER AS A PERSON: Openness to Experience Helps Lee Thrive 61 | Other Personality Traits That Affect Managerial Behavior 62 |  Additional Personality Assessments 63

Values, Attitudes, and Moods and Emotions 64 Values: Terminal and Instrumental 64 | ETHICS IN ACTION: Promoting Ethical Values in the Hotel Industry 65 | Attitudes 65 | ETHICS IN ACTION: Subaru Protects Jobs and the Environment 67 | Moods and Emotions 68

Emotional Intelligence 70 MANAGING GLOBALLY: Emotional Intelligence across Borders 70

Organizational Culture 71 Managers and Organizational Culture 72 | The Role of Values and Norms in Organizational Culture 74 | Culture and Managerial Action 77

Summary and Review 79 Management in Action 80 | Building Management Skills 80 | Managing Ethically 80 | Small Group Breakout Exercise 81 | Be the Manager 81 | Bloomberg Businessweek CASE IN THE NEWS: The Undergrad Fixing Finance 81

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Notes 83

Part Two | The Environment of Management

Chapter 4 Ethics and Social Responsibility 86

A MANAGER’S CHALLENGE

Musk Steers Tesla Ahead While Helping Others 87

Overview 88

The Nature of Ethics 88 Ethical Dilemmas 88 | Ethics and the Law 89 | Changes in Ethics over Time 89

Stakeholders and Ethics 90 Stockholders 91 | Managers 92 | Ethics and Nonprofit Organizations 93 |  Employees 94 | Suppliers and Distributors 94 | Customers 94 | Community, Society, and Nation 94 | MANAGEMENT INSIGHT: Keeping Things Clean and Green 95 | Rules for Ethical Decision Making 97 | Why Should Managers Behave Ethically? 99

Ethics and Social Responsibility 101 Societal Ethics 102 | ETHICS IN ACTION: Sourcing Diamonds Responsibly 102 |  Occupational Ethics 103 | Individual Ethics 103 | Organizational Ethics 104 | ETHICS IN ACTION: Chatbot Provides Ethical Guidance 106

Approaches to Social Responsibility 107 Four Different Approaches 108 | MANAGING GLOBALLY: Protecting Home-Based Workers 109 | Why Be Socially Responsible? 110 | The Role of Organizational Culture 110

Summary and Review 111 Management in Action 112 | Building Management Skills 112 | Managing Ethically 112 | Small Group Breakout Exercise 113 | Be the Manager 113 | Bloomberg Businessweek CASE IN THE NEWS: The Greening of Throwaway Stuff 113

Notes 115

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Chapter 5 Managing Diverse Employees in a Multicultural Environment  118

A MANAGER’S CHALLENGE

Inclusion for Women Engineers at Intel 119

Overview 120

The Increasing Diversity of the Workforce and the Environment 120 Age 121 | Gender 122 | Race and Ethnicity 123 |MANAGING GLOBALLY: SodaStream’s Oasis of Diversity 124 | Religion 124 | Capabilities/Disabilities 125 |  Socioeconomic Background 126 | Sexual Orientation 126 | Other Kinds of Diversity  127

Managers and the Effective Management of Diversity 127 Critical Managerial Roles 127 | FOCUS ON DIVERSITY: Managing Diversity Effectively at PwC 128 | The Ethical Imperative to Manage Diversity Effectively 130 | Effectively Managing Diversity Makes Good Business Sense 131

Perception 132 Factors That Influence Managerial Perception 133 | Perception as a Determinant of Unfair Treatment 134 | ETHICS IN ACTION: Disabled Employees Make Valuable Contributions  134 | Overt Discrimination 136

How to Manage Diversity Effectively 137 Steps in Managing Diversity Effectively 137

Sexual Harassment 140 Forms of Sexual Harassment 141 | Steps Managers Can Take to Eradicate Sexual Harassment 142 | MANAGEMENT INSIGHT: Providing Effective Anti-Harassment Training 142

Summary and Review 143 Management in Action 145 | Building Management Skills 145 | Managing Ethically 145 | Small Group Breakout Exercise 146 | Be the Manager 146 | Bloomberg Businessweek CASE IN THE NEWS: New Kids

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on the Board 146

Notes 147

Chapter 6 Managing in the Global Environment 152

A MANAGER’S CHALLENGE

Amazon Primed for Success in India 153

Overview 154

What Is the Global Environment? 155

The Task Environment 156 Suppliers 156 | ETHICS IN ACTION: Levi Strauss Motivates Global Suppliers to Treat Workers Well 157 | Distributors 158 | Customers 159 | Competitors  159 | MANAGER AS A PERSON: Spotify’s CEO Outplays the Competition 160

The General Environment 162 Economic Forces 163 | Technological Forces 163 | Sociocultural Forces 164 |  Demographic Forces 165 | Political and Legal Forces 165

The Changing Global Environment 166 The Process of Globalization 167 | Declining Barriers to Trade and Investment 167 |  Declining Barriers of Distance and Culture 168 | Effects of Free Trade on Managers 169

The Role of National Culture 170 Cultural Values and Norms 170 | Hofstede’s Model of National Culture 171 | The GLOBE Project 172 | National Culture and Global Management 173 | MANAGEMENT INSIGHT: Challenges Faced by Expats 174

Summary and Review 175 Management in Action 176 | Building Management Skills 176 | Managing Ethically 176 | Small Group Breakout Exercise 177 | Be the Manager 177 | Bloomberg Businessweek CASE IN THE NEWS: Europe’s Magic Bus Is California Dreaming 177

Notes 178

Part Three | Decision Making, Planning, and Strategy

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Chapter 7 Decision Making, Learning, Creativity, and Entrepreneurship  180

A MANAGER’S CHALLENGE

Creativity and Ability to Learn Keep 23andMe Strong 181

Overview 182

The Nature of Managerial Decision Making 182 Programmed and Nonprogrammed Decision Making 183 | The Classical Model  184 | MANAGEMENT INSIGHT: Curbing Overconfidence in Decision Making 185 | The Administrative Model 186

Steps in the Decision-Making Process 188 Recognize the Need for a Decision 189 | Generate Alternatives 189 | Assess Alternatives 190 | ETHICS IN ACTION: Ensuring Decisions Contribute to Sustainability  191 | Choose among Alternatives 192 | Implement the Chosen Alternative 192 | Learn from Feedback 192

Cognitive Biases and Decision Making 193 Confirmation Bias 193 | Representativeness Bias 193 | Illusion of Control 194 |  Escalating Commitment 194 | Be Aware of Your Biases 194

Group Decision Making 195 MANAGER AS A PERSON: Glossier Shines Because Founder Won’t Go It Alone 195 | The Perils of Groupthink 196 | Devil’s Advocacy and Dialectical Inquiry 196 | Diversity among Decision Makers 197

Organizational Learning and Creativity 197 Creating a Learning Organization 198 | MANAGING GLOBALLY: Constant Learning Keeps Western Union Relevant 199 | Promoting Individual Creativity 200 | Promoting Group Creativity 201

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Entrepreneurship and Creativity 202 Entrepreneurship and New Ventures 202 | Intrapreneurship and Organizational Learning  203

Summary and Review 204 Management in Action 206 | Building Management Skills 206 | Managing Ethically 206 | Small Group Breakout Exercise 207 | Be the Manager 207 | Bloomberg Businessweek CASE IN THE NEWS: Taylor Swift Wants Her Money Back 207

Notes 208

Chapter 8 The Manager as a Planner and Strategist 212

A MANAGER’S CHALLENGE

Sorenson Plans for Growth at Marriott 213

Overview 214

Planning and Strategy 214

The Nature of the Planning Process 215 Why Planning Is Important 215 | Levels of Planning 216 | Levels and Types of Planning 216 | Time Horizons of Plans 218 | Standing Plans and Single-Use Plans  219 | Scenario Planning 219 | MANAGER AS A PERSON: With CEO’s Guidance, LAX Projects Take Flight 220

Determining the Organization’s Mission and Goals 221 Defining the Business 221 | Establishing Major Goals 222

Formulating Strategy 222 SWOT Analysis 222 | The Five Forces Model 224

Formulating Business-Level Strategies 225 Low-Cost Strategy 226 | Differentiation Strategy 226 | Focused Low-Cost and Focused Differentiation Strategies 227

Formulating Corporate-Level Strategies 228 Concentration on a Single Industry 228 | Vertical Integration 228 | MANAGEMENT INSIGHT: Innovation Drives Michelin 229 | Diversification 231 | International

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Expansion 232 | MANAGING GLOBALLY: Early U.S. Wins Help FourKites Fly Overseas  233

Planning and Implementing Strategy 236

Summary and Review 236 Management in Action 238 | Building Management Skills 238 | Managing Ethically 238 | Small Group Breakout Exercise 239 | Be the Manager 239 | Bloomberg CASE IN THE NEWS: The Tiny Ikea of the Future, Without Meatballs or Showroom Mazes 239

Notes 241

Chapter 9 Value Chain Management: Functional Strategies for Competitive Advantage 244

A MANAGER’S CHALLENGE

Efficiency Frees Kraft Heinz to Innovate 245

Overview 246

Functional Strategies, the Value Chain, and Competitive Advantage 246 Functional Strategies and Value Chain Management 247 Value Chain Analysis 249

Improving Responsiveness to Customers 249 What Do Customers Want? 250 | MANAGING GLOBALLY: HappyOrNot Helps Customers Keep Their Customers Happy 250 | Managing the Value Chain to Increase Responsiveness to Customers 251 | MANAGEMENT INSIGHT: Need for Speed Pays Off for Panera 252 | Customer Relationship Management 253

Improving Quality 254 Total Quality Management 255 | MANAGER AS A PERSON: Using Six Sigma to Buy Time  257

Improving Efficiency 257 Facilities Layout, Flexible Manufacturing, and Efficiency 258 | MANAGEMENT INSIGHT: Boarding a Plane Shouldn’t Be This Difficult 259 | Just-in-Time Inventory and

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Efficiency 260 | Self-Managed Work Teams and Efficiency 261 | Process Reengineering and Efficiency 261 | Information Systems, the Internet, and Efficiency  262

Improving Innovation 263 Two Kinds of Innovation 263 | Strategies to Promote Innovation and Speed Product Development 263

Summary and Review 267 Management in Action 268 | Building Management Skills 268 | Managing Ethically 268 | Small Group Breakout Exercise 269 | Be the Manager 269 | Bloomberg Businessweek CASE IN THE NEWS: At KFC, a Bucketful of Trouble 269

Notes 270

Part Four | Organizing and Controlling

Chapter 10 Managing Organizational Structure and Culture 272

A MANAGER’S CHALLENGE

The Golden Arches Move Back to the City 273

Overview 274

Designing Organizational Structure 274 The Organizational Environment 275 | Strategy 275 | Technology 276 | Human Resources 276

Grouping Tasks into Jobs: Job Design 277 Job Enlargement and Job Enrichment 278 | MANAGEMENT INSIGHT: Pal’s Sudden Service Takes Training Seriously 278 | The Job Characteristics Model 279

Grouping Jobs into Functions and Divisions: Designing Organizational Structure  280

Functional Structure 280 | Divisional Structures: Product, Market, and Geographic  281 | MANAGER AS A PERSON: Theo Epstein Changes Cubs Culture and Wins Big 285 |  Matrix and Product Team Designs 286

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Coordinating Functions and Divisions 288 Allocating Authority 289 | Integrating and Coordinating Mechanisms 292

Organizational Culture 294 FOCUS ON DIVERSITY: Sodexo Serves Up a Culture of Diversity 295 | Where Does Organizational Culture Come From? 295 | MANAGEMENT INSIGHT: Warby Parker Keeps an Eye on Its Culture 296 | Strong, Adaptive Cultures versus Weak, Inert Cultures 299

Summary and Review 300 Management in Action 301 | Building Management Skills 301 | Managing Ethically 302 | Small Group Breakout Exercise 302 | Be the Manager 303 | Bloomberg CASE IN THE NEWS: Companies Have an Aha! Moment: Bullies Don’t Make the Best Managers 303

Notes 305

Chapter 11 Organizational Control and Change 308

A MANAGER’S CHALLENGE

Procter & Gamble Takes a Hard Look at Digital Ads 309

Overview 310

What Is Organizational Control? 310 The Importance of Organizational Control 311 | MANAGEMENT INSIGHT: Controlling Your Office Inbox 312 | Control Systems and IT 313 | The Control Process 314

Output Control 317 Financial Measures of Performance 317 | MANAGEMENT INSIGHT: Wanted: Problem Solvers & Team Players 319 | Organizational Goals 319 | Operating Budgets  320 | MANAGING GLOBALLY: Zero-Based Budgeting Spreads around the World 321 |  Problems with Output Control 321

Behavior Control 322 Direct Supervision 322 | Management by Objectives 323 | Bureaucratic Control  324 | Problems with Bureaucratic Control 325

Clan Control 326

Organizational Change 327

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Lewin’s Force-Field Theory of Change 327 | Evolutionary and Revolutionary Change  328 | Managing Change 328 | MANAGER AS A PERSON: Nordstrom Family Makes Changes to Stay Afloat 330

Summary and Review 332 Management in Action 333 | Building Management Skills 333  | Managing Ethically 333 | Small Group Breakout Exercise 334 | Be the Manager 334 | Bloomberg CASE IN THE NEWS: Beloved Guitar Maker Gibson Faces Crushing $560 Million Debt 334

Notes 336

Chapter 12 Human Resource Management 338

A MANAGER’S CHALLENGE

Strategic HR Management Helps Build a Strong Future 339

Overview 340

Strategic Human Resource Management 340 Overview of the Components of HRM 341

The Legal Environment of HRM 342

Recruitment and Selection 343 Human Resource Planning 344 | MANAGER AS A PERSON: Unilever Makes Talent Development Count 345 | Job Analysis 346 | External and Internal Recruitment  346 | The Selection Process 348 | FOCUS ON DIVERSITY: Recruiting Practices That Promote Diversity 348

Training and Development 351 Types of Training 352 | Types of Development 353 | Transfer of Training and Development 354

Performance Appraisal and Feedback 354 Types of Performance Appraisal 355 | Who Appraises Performance? 357 | Effective Performance Feedback 358 Recent Trends in Performance Appraisal 359

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Pay and Benefits 360 Pay Level 360 | MANAGEMENT INSIGHT: Treating Employees Well Leads to Satisfied Customers 360 | Pay Structure 361 | Benefits 362

Labor Relations 362 Unions 363 | Collective Bargaining 364

Summary and Review 364 Management in Action 366 | Building Management Skills 366 | Managing Ethically 366 | Small Group Breakout Exercise 367 | Be the Manager 367 | Bloomberg Businessweek CASE IN THE NEWS: Why Pay Equality Is Still Out of Reach 368

Notes 369

Part Five | Leading Individuals and Groups

Chapter 13 Motivation and Performance 372

A MANAGER’S CHALLENGE

Martha Firestone Ford Is a Motivating Force for Her Detroit Lions 373

Overview 374

The Nature of Motivation 374 MANAGING GLOBALLY: Seeking Intrinsic Motivation in Far-Flung Places 375

Expectancy Theory 377 Expectancy 377 | Instrumentality 378 | Valence 379 | Bringing It All Together 379

Need Theories 380 Maslow’s Hierarchy of Needs 380 | Alderfer’s ERG Theory 381 | Herzberg’s Motivator-Hygiene Theory 382 | McClelland’s Needs for Achievement, Affiliation, and Power 382 | Other Needs 383

Equity Theory 383 Equity 383 | Inequity 384 | Ways to Restore Equity 384 | FOCUS ON DIVERSITY: For

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Diversity to Motivate, It Must Come with Equity 385 | Equity and Justice in Organizations 386

Goal-Setting Theory 387

Learning Theories 388 Operant Conditioning Theory 388 | Social Learning Theory 391

Pay and Motivation 392 ETHICS IN ACTION: The Fairness of Merit Pay 392 | Basing Merit Pay on Individual, Group, or Organizational Performance 393 | Salary Increase or Bonus? 394 | Examples of Merit Pay Plans 395

Summary and Review 395 Management in Action 397 | Building Management Skills 397  | Managing Ethically 398 | Small Group Breakout Exercise 398  | Be the Manager 398 | Bloomberg Businessweek CASE IN THE NEWS: The Quest for Experienced Talent 399

Notes 400

Chapter 14 Leadership 404

A MANAGER’S CHALLENGE

Dana-Farber CEOs Provide the Right Leadership 405

Overview 406

The Nature of Leadership 406 Personal Leadership Style and Managerial Tasks 407 | Servant Leadership 407 | ETHICS IN ACTION: Servant Leadership at Zingerman’s 408 | Leadership Styles across Cultures  409 | Power: The Key to Leadership 409 | Empowerment: An Ingredient in Modern Management 411

Trait and Behavior Models of Leadership 412 The Trait Model 412 | The Behavior Model 413 | MANAGEMENT INSIGHT: Consideration at Costco 413

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Contingency Models of Leadership 415 Fiedler’s Contingency Model 416 | MANAGING GLOBALLY: International Differences in Leadership 418 | House’s Path–Goal Theory 418 | The Leader Substitutes Model  420 | Bringing It All Together 420

Transformational Leadership 421 Being a Charismatic Leader 422 | Stimulating Subordinates Intellectually 422 |  Engaging in Developmental Consideration 423 | The Distinction between Transformational and Transactional Leadership 423

Gender and Leadership 423

Emotional Intelligence and Leadership 424 MANAGEMENT INSIGHT: Being a High-EQ Leader 425

Summary and Review 426 Management in Action 427 | Building Management Skills 427 | Managing Ethically 427 | Small Group Breakout Exercise 428 | Be the Manager 428 | Bloomberg CASE IN THE NEWS: Amazon’s Other Jeff Steps into the Spotlight 429

Notes 430

Chapter 15 Effective Groups and Teams 434

A MANAGER’S CHALLENGE

Leading the Army’s Battle against Red Tape 435

Overview 436

Groups, Teams, and Organizational Effectiveness 436 MANAGEMENT INSIGHT: Team Members Need Soft Skills 437 | Groups and Teams as Performance Enhancers 438 | Groups, Teams, and Responsiveness to Customers 438 |  Teams and Innovation 439 | Groups and Teams as Motivators 439

Types of Groups and Teams 440 The Top Management Team 440 | Research and Development Teams 440 | Command Groups 441 | Task Forces 441 | Self-Managed Work Teams 441 | MANAGEMENT INSIGHT: Self-Managed Teams at W. L. Gore 442 | Virtual Teams 443 | Friendship Groups 445 | Interest Groups 445

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Group Dynamics 445 Group Size, Tasks, and Roles 445 | Group Leadership 448 | ETHICS IN ACTION: Leadership in Teams at ICU Medical 448 | Group Development over Time 449 | Group Norms 450 | Group Cohesiveness 452 | FOCUS ON DIVERSITY: Tapping into Team Members’ Diversity 455

Managing Groups and Teams for High Performance 456 Motivating Group Members to Achieve Organizational Goals 456 | Reducing Social Loafing in Groups 457 | Helping Groups to Manage Conflict Effectively 458

Summary and Review 459 Management in Action 460 | Building Management Skills 460 | Managing Ethically 461 | Small Group Breakout Exercise 461 | Be the Manager 461 | Bloomberg Businessweek CASE IN THE NEWS: The Power of Play 462

Notes 463

Part Six | Managing Critical Organizational Processes

Chapter 16 Promoting Effective Communication 466

A MANAGER’S CHALLENGE

How Boston Consulting Group Promotes Better Communication 467

Overview 468

Communication and Management 468 The Importance of Good Communication 468 | MANAGER AS A PERSON: Hyphen’s Goal for Employees: Be Heard at Work 469 | The Communication Process 470 | The Role of Perception in Communication 471 | The Dangers of Ineffective Communication 471

Information Richness and Communication Media 472 Face-to-Face Communication 473 | Spoken Communication Electronically Transmitted  474 | Personally Addressed Written Communication 474 | Impersonal Written

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Communication 475 | ETHICS IN ACTION: Tracking Email and Internet Use 476

Communication Networks 477 Communication Networks in Groups and Teams 477 | Organizational Communication Networks 478 | External Networks 479

Information Technology and Communication 480 The Internet 480 | Intranets 480 | Groupware and Collaboration Software 481

Communication Skills for Managers 482 Communication Skills for Managers as Senders 482 | MANAGEMENT INSIGHT: Making a Positive First Impression 483 | Communication Skills for Managers as Receivers 485 |  Understanding Linguistic Styles 486

Summary and Review 489 Management in Action 490 | Building Management Skills 490 | Managing Ethically 490 | Small Group Breakout Exercise 491 | Be the Manager 491 | Bloomberg CASE IN THE NEWS: Don’t Skype Me: How Microsoft Turned Consumers Against a Beloved Brand 492

Notes 493

Chapter 17 Managing Conflict, Politics, and Negotiation 496

A MANAGER’S CHALLENGE

How Anjali Sud Became Influential at Vimeo 497

Overview 498

Organizational Conflict 498 Types of Conflict 499 | MANAGEMENT INSIGHT: Intergroup Conflict at PulteGroup  500 | Sources of Conflict 501 | Conflict Management Strategies 503 | MANAGEMENT INSIGHT: Making Conflict Work for Top-Level Teams 504

Negotiation 506 Distributive Negotiation and Integrative Bargaining 506 | Strategies to Encourage Integrative Bargaining 507 | MANAGER AS A PERSON: Negotiating a Job Offer 509

Organizational Politics 509 The Importance of Organizational Politics 510 | Political Strategies for Gaining and

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Maintaining Power 510 | FOCUS ON DIVERSITY: Building Alliances at PepsiCo and Beyond 512 | Political Strategies for Exercising Power 513

Summary and Review 515 Management in Action 516 | Building Management Skills 516 | Managing Ethically 516 | Small Group Breakout Exercise 517 | Be the Manager 517 | Bloomberg CASE IN THE NEWS: Buy Now, Pay Later Helps JAB Billionaires Build Beverage Empire 517

Notes 519

Chapter 18 Using Advanced Information Technology to Increase Performance 522

A MANAGER’S CHALLENGE

With Butterfly, Software Becomes an Ever-Present Coach 523

Overview 524

Information and the Manager’s Job 524 Attributes of Useful Information 525 | What Is Information Technology? 526 |  Information and Decisions 526 | MANAGEMENT INSIGHT: Blockchain: More than Bitcoin Transactions 527 | Information and Control 528 | ETHICS IN ACTION: Users “Unlike” Facebook over Privacy Issues 530 | Information and Coordination 530

The IT Revolution 531 The Effects of Advancing IT 531 | IT and the Product Life Cycle 532 | MANAGEMENT INSIGHT: Amazon’s Alexa Goes to Work 533 | The Network of Computing Power 534

Types of Management Information Systems 535 The Organizational Hierarchy: The Traditional Information System 536 | Transaction- Processing Systems 536 | Operations Information Systems 537 | Decision Support Systems 537 | Artificial Intelligence and Expert Systems 538 | Enterprise Resource Planning Systems 538 | E-Commerce Systems 540

The Impact and Limitations of Information Technology 541 Strategic Alliances, B2B Network Structures, and IT 541 | Flatter Structures and

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Horizontal Information Flows 543

Summary and Review 543 Management in Action 545 | Building Management Skills 545 | Managing Ethically 545 | Small Group Breakout Exercise 546 | Be the Manager 546 | Bloomberg Businessweek CASE IN THE NEWS: Goggles with a Work Crew Inside 546

Notes 547

Name Index NI-1

Organization Index OI-1

Subject Glindex SGI-1

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CONTEMPORARYManagement

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Management part 1

CHAPTER 1

Managers and Managing

©Sam Edwards/age fotostock

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LO1-1

LO1-2

LO1-3

LO1-4

LO1-5

LO1-6

Learning Objectives

After studying this chapter, you should be able to:

Describe what management is, why management is important, what managers do, and how managers use organizational resources efficiently and effectively to achieve organizational goals.

Distinguish among planning, organizing, leading, and controlling (the four principal managerial tasks), and explain how managers’ ability to handle each one affects organizational performance.

Differentiate among three levels of management, and understand the tasks and responsibilities of managers at different levels in the organizational hierarchy.

Distinguish among three kinds of managerial skill, and explain why managers are divided into different departments to perform their tasks more efficiently and effectively.

Discuss some major changes in management practices today that have occurred as a result of globalization and the use of advanced information technology (IT).

Discuss the principal challenges managers face in today’s increasingly competitive global environment.

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A MANAGER’S CHALLENGE

Satya Nadella Reboots Microsoft

What difference can a manager make? After the success of its Windows operating system and Office software suite, Microsoft struggled to find a source of new growth. While earnings continued to rise, an unmoving stock price suggested that investors no longer saw a rosy future.1 This changed when Microsoft made Satya Nadella its third chief executive officer (CEO).

Nadella brought a fresh vision. Microsoft had defined its mission as a personal computer on every desk and in every home, running Micro-soft’s software. By the end of the millennium in most of the world, that mission was accomplished. It no longer illuminated a way forward. Nadella introduced a new mission: to “create technology so that others can create more technology,” enabling people and organizations to accomplish more.2 This is a view of technology being beneficial—for example, opening ways for people with disabilities to participate in the world more fully.

Nadella brought Microsoft a new kind of leadership, based on empathy. Empathy includes listening carefully for customer needs—information essential for providing relevant products and services.3 Nadella asks employees to use empathy with one another, too. Leading by example, he conducts town-hall meetings online, inviting employees to give live feedback by submitting anonymous emojis, which he reviews to gauge employee concerns.4 He also is known for listening attentively to employees’ ideas.

Nadella instructs employees to avoid a fixed mind-set, using existing skills to reach some endpoint and then staying put. He teaches a growth

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mind-set, based on learning and constantly improving. Nadella exemplifies this with his open mindedness toward his own performance. He has said that reflecting on his mistakes inspires him, as it motivates him to change.5 He shares this spirit in each of the leadership team’s weekly meetings by scheduling a presentation by employees who are working on something exciting. When employees try for growth but fall short, Nadella encourages them to push on and fix the problem.

Microsoft CEO Satya Nadella has brought a new perspective and vision to the tech giant. His leadership and focus on empathy and diversity are a winning combination.

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©Matt Winkelmeyer/Getty Images

Nadella values diversity. High-tech companies have been criticized as unfriendly to some employees, particularly women. In contrast, Nadella’s drive for a culture of empathy fosters an environment that recognizes all employees’ contributions. His goal is that Microsoft will not merely hire a diverse workforce, but enable employees to participate and thrive. Nadella is particularly committed to providing opportunities for persons with disabilities.

What prepared Nadella for all this? He knows the business well, having worked for Microsoft since age 25. Raised in Hyderabad, India, he earned a master’s degree in computer science from the University of Wisconsin– Madison and joined Microsoft after a few years with Sun Micro-systems. He accepted tough assignments and guidance from mentors, including a Netflix executive who took him to board meetings so Nadella could see that company’s agile decision making. He reads widely and is skillful at making connections among ideas. Being the father of three children, two with disabilities, has taught him the value of empathy and a desire to empower people to make change.6

Under Nadella’s leadership, Microsoft is exceeding expectations. It is getting involved in today’s cutting-edge technology. Employee morale and product quality have risen, and the market value of its stock has soared.7

Overview Managing today’s organizations is a complex affair, and seasoned leaders like Satya Nadella face multiple challenges from within and outside their organizations. To make decisions and lead others successfully, managers must possess a complex set of skills, knowledge, and abilities that help them interpret cues from the environment and respond accordingly.

In this chapter we consider what managers do and the skills, knowledge, and abilities they must possess to lead their organizations effectively. We also identify the different kinds of managers that organizations rely on to help guide them. Finally, we consider some of the challenges that managers must overcome to help their organizations prosper.

What Is Management?

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When you think of a manager, what kind of person comes to mind? Do you think of an executive like Satya Nadella, who helps direct his company? Or do you see a manager at a fast-food restaurant, who engages directly with employees and customers? Perhaps you think of a foreman at a manufacturing company? Regardless of how we view managers, they all share important characteristics. First, they all work in organizations. Organizations are collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes. Second, as managers, they are the people responsible for supervising and making the most of an organization’s human and other resources to achieve its goals.

organizations Collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes.

Management, then, is the planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively. An organization’s resources include assets such as people and their skills, know-how, and experience; machinery; raw materials; computers and information technology; and patents, financial capital, and loyal customers and employees.

management The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively.

Achieving High Performance: A Manager’s Goal One of the key goals that organizations try to achieve is to provide goods and services that customers value and desire. Satya Nadella’s principal goal is to manage Microsoft so that the company continues to leverage cutting edge technology and to innovate with new products and services for the global marketplace. Likewise, the principal goal of fast-food managers is to produce tasty and convenient food that customers enjoy and come back to buy. Finally, manufacturing managers must balance the quality needs of their consumers against the pressure to be cost-effective.

LO1-1 Describe what management is, why management is important, what managers do, and how managers use organizational resources efficiently and effectively to achieve organizational goals.

Organizational performance is a measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals. Organizational performance increases in direct proportion to increases in efficiency and effectiveness, as Figure 1.1 shows. What are efficiency and effectiveness?

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Figure 1.1 Efficiency, Effectiveness, and Performance in an Organization

High-performing organizations are efficient and effective.

organizational performance A measure of how efficiently and effectively a manager uses resources to satisfy customers and achieve organizational goals.

Efficiency is a measure of how productively resources are used to achieve a goal.8 Organizations are efficient when managers minimize the amount of input resources (such as labor, raw materials, and component parts) or the amount of time needed to produce a given output of goods or services. For example, Burger King develops ever more efficient fat fryers that not only reduce the amount of oil used in cooking but also speed up the cooking of french fries. UPS develops new work routines to reduce delivery time, such as instructing drivers to leave their truck doors open when going short distances.

efficiency A measure of how well or how productively resources are used to achieve a goal.

To encourage efficiency, CEO Nadella has led Microsoft in a comprehensive retooling of the company’s products and services since he took the helm less than five years ago. He has eliminated unsuccessful product lines while expanding others and continues to foster a collaborative environment in which he encourages employees to be fearless in their efforts to help transform the company into a digital powerhouse.9

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Effectiveness is a measure of the appropriateness of the goals that managers have selected for the organization to pursue and the degree to which the organization achieves those goals. Organizations are effective when managers choose appropriate goals and then achieve them. Some years ago, for example, managers at McDonald’s decided on the goal of providing breakfast service to attract more customers. The choice of this goal proved smart: Sales of breakfast food accounted for more than one-third of company revenues over the years. In 2015, in an effort to increase overall sales, McDonald’s management made the decision to serve breakfast all day long, a strategy that has been successful and well received by consumers.10 High-performing organizations such as Apple, McDonald’s, Walmart, Intel, Home Depot, Accenture, and Habitat for Humanity are simultaneously efficient and effective. Effective managers are those who choose the right organizational goals to pursue and have the skills to utilize resources efficiently.

effectiveness A measure of the appropriateness of the goals an organization is pursuing and the degree to which the organization achieves those goals.

Why Study Management? The dynamic and complex nature of modern work means that managerial skills are in demand. Organizations need individuals like you, who can understand this complexity, respond to environmental contingencies, and make decisions that are ethical and effective. Studying management helps equip individuals to accomplish each of these tasks.

In a broader sense, individuals generally learn through personal experience (think the “school of hard knocks”) or the experiences of others. By studying management in school, you are exposing yourself to the lessons others have learned. The advantage of such social learning is that you are not bound to repeat the mistakes others have made in the past. Furthermore, by studying and practicing the behaviors of good managers and high-performing companies, you will equip yourself to help your future employer succeed.

The economic benefits of becoming a good manager are also impressive. In the United States, general managers earn a median wage of $99,310, with a projected growth rate in job openings for 5% to 9% between now and 2026.11

Finally, learning management principles can help you make good decisions in nonwork contexts. If you’re coaching a child’s baseball team, organizing a charity 5K run, planning your financial budget, or starting a new business, good management principles will help you understand others, make quality decisions, and improve your personal success.

Essential Managerial Tasks The job of management is to help an organization make the best use of its resources to

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achieve its goals. How do managers accomplish this objective? They do so by performing four essential managerial tasks: planning, organizing, leading, and controlling. The arrows linking these tasks in Figure 1.2 suggest the sequence in which managers typically perform them. French manager Henri Fayol first outlined the nature of these managerial activities around the turn of the 20th century in General and Industrial Management, a book that remains the classic statement of what managers must do to create a high-performing organization.12

Figure 1.2 Four Tasks of Management

Managers at all levels and in all departments—whether in small or large companies, for-profit or not-for-profit organizations, or organizations that operate in one country or throughout the world—are responsible for performing these four tasks, which we look at next. How well managers perform these tasks determines how efficient and effective their organizations are.

LO1-2 Distinguish among planning, organizing, leading, and controlling (the four principal managerial tasks), and explain how managers’ ability to handle each one affects organizational performance.

Planning To perform the planning task, managers identify and select appropriate organizational goals and courses of action; they develop strategies for how to achieve high performance. The three steps involved in planning are (1) deciding which goals the

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organization will pursue, (2) deciding what strategies to adopt to attain those goals, and (3) deciding how to allocate organizational resources to pursue the strategies that attain those goals. How well managers plan and develop strategies determines how effective and efficient the organization is—its performance level.13

planning Identifying and selecting appropriate goals; one of the four principal tasks of management.

As an example of planning in action, consider Microsoft’s recent innovation in artificial intelligence (AI) with its app, Seeing AI, which uses computer vision to audibly help blind and visually impaired people “see” the world around them through narration on an iOS device. Users can customize the voice it uses to verbalize observations and set how fast the voice talks. In addition, the app boasts currency recognition (e.g., U.S. dollars, British pounds, Euros), can detect the color of specific objects like clothing, recognizes handwriting, and includes a musical light detector to alert users with an audible tone to light in a specific environment. Microsoft says this last feature will save users from touching a hot bulb or LED battery to check if it’s working. To date, the app has been downloaded more than 100,000 times since its release in 2017 and is now available in 35 countries.14

Organizing Organizing is structuring working relationships so organizational members interact and cooperate to achieve organizational goals. Organizing people into departments according to the kinds of job-specific tasks they perform lays out the lines of authority and responsibility between different individuals and groups. Managers must decide how best to organize resources, particularly human resources.

organizing Structuring working relationships in a way that allows organizational members to work together to achieve organizational goals; one of the four principal tasks of management.

The outcome of organizing is the creation of an organizational structure, a formal system of task and reporting relationships that coordinates and motivates members so they work together to achieve organizational goals. Organizational structure determines how an organization’s resources can be best used to create goods and services. As Microsoft shifts its focus from PCs and software to cloud services and other innovations, management continues to face the issue of how best to structure or reorganize different groups within the organization. For example, Microsoft recently announced a new model to help explain the restructuring of its sales force. For fiscal year 2018, Microsoft reorganized its commercial field sales team around two customer segments: enterprise customers and small, medium, and corporate (SMC) customers. According to executive vice president Judson Althoff, Microsoft’s highest growth opportunities will be in the enterprise sector, with specialist sales teams focused on new

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business. Going forward, Microsoft will continue to target six high-priority vertical markets: manufacturing, financial services, retail, health, education, and government.15 We examine the organizing process in detail in Chapters 10 through 12.

organizational structure A formal system of task and reporting relationships that coordinates and motivates organizational members so they work together to achieve organizational goals.

Leading An organization’s vision is a short, succinct, and inspiring statement of what the organization intends to become and the goals it is seeking to achieve—its desired future state. In leading, managers articulate a clear organizational vision for the organization’s members to accomplish, and they energize and enable employees so everyone understands the part he or she plays in achieving organizational goals. Leadership involves managers using their power, personality, influence, persuasion, and communication skills to coordinate people and groups so their activities and efforts are in harmony. Leadership revolves around encouraging all employees to perform at a high level to help the organization achieve its vision and goals. Another outcome of leadership is a highly motivated and committed workforce. Microsoft’s more than 120,000 employees appreciate the core values of their leadership, especially CEO Nadella’s refreshing new focus on collaboration and innovation, which contributes to their success as a workforce. Likewise, Nadella’s 25-year tenure with the tech giant gives him a competitive edge in knowing what works, what doesn’t, and how better to relate to his employees. We discuss the issues involved in managing and leading individuals and groups in Chapters 13 through 16.

leading Articulating a clear vision and energizing and enabling organizational members so they understand the part they play in achieving organizational goals; one of the four principal tasks of management.

Controlling In controlling, the task of managers is to evaluate how well an organization has achieved its goals and to take any corrective actions needed to maintain or improve performance. For example, managers monitor the performance of individuals, departments, and the organization as a whole to see whether they are meeting desired performance standards. Satya Nadella learned early in his career about the importance of monitoring performance to ensure that his organization realized its profit objectives. When these goals fall short, Nadella and Microsoft’s management team must find ways to improve performance.

controlling Evaluating how well an organization is achieving its goals and taking action to maintain or improve performance; one of the four principal tasks of management.

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The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effectiveness. To exercise control, managers must decide which goals to measure—perhaps goals pertaining to productivity, quality, or responsiveness to customers—and then they must design control systems that will provide the information necessary to assess performance—that is, determine to what degree the goals have been met. The controlling task also helps managers evaluate how well they themselves are performing the other three tasks of management—planning, organizing, and leading—and take corrective action. For an example of a manager who excels at controlling, see the “Manager as a Person” feature.

MANAGER AS A PERSON

Making ER Visits as Painless as Possible

Working closely with employees can help managers control daily operations and increase efficiencies, even in a busy ER department. ©monkeybusinessimages/Getty Images

If you’ve ever had the misfortune of visiting a hospital’s emergency room, you know the hardest part can be waiting for a doctor. And on the hospital’s side, ERs have their own challenges from serving patients who are often in desperate situations. The best case, then, is to have a manager like Erin Daley, the ER director for Mercy Medical Center in Massachusetts.

Daley says that since her days as a nursing student, she has loved “everything” about working in an emergency room.16 She sees an exciting challenge in the way each patient’s arrival can require the staff to restructure all their activities to meet the most pressing need. Thriving in that environment, Daley spent a decade in Mercy’s ER, moving up

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from staff nurse to charge nurse to clinical nurse supervisor. The supervisory position gave her experience in hiring and scheduling. From there, she moved up to the nurse manager position, adding duties related to the productivity of the nursing staff.17

In her role as ER director, Daley focuses on improving the department’s performance in meeting objectives for efficiency and quality of care. While keeping costs within her $65 million budget, she has found ways her staff can move patients through the system faster while improving survey scores for patient satisfaction. Under her watch, Mercy’s ER has also cut the rate of patients who leave before they have been seen by a doctor. In a further measure of quality performance, Mercy has won awards for superior care of patients who experience strokes.18

Daley’s approach involves working with her team to study exactly what steps occur to take a patient through the process of getting care. Team members look for any wasted steps they can cut to improve efficiency. They set up a process that sorts patients who have less severe conditions in which they don’t need a bed from those with more serious conditions. Those in the first group are seen in one room and then discharged, while the others follow a separate process. Before this process was implemented, beds were too often filled with patients who didn’t really need them. The team also set up systems for treating ER patients as a “whole person,” not just a broken leg or a drug overdose. This means educating patients about their conditions, planning what will happen after their release, and following up to help manage their recovery.19