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MANAGEMENT Leading & Collaborating in a Competitive World

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MANAGEMENT: LEADING & COLLABORATING IN A COMPETITIVE WORLD, THIRTEENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2017, 2015, and 2013. 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.

1 2 3 4 5 6 7 8 9 LWI 21 20 19 18

ISBN 978-1-259-92764-5 MHID 1-259-92764-4

Director: Michael Ablassmeir Product Developer: Kelsey Darin Executive Marketing Manager: Debbie Clare Lead Content Project Manager: Christine Vaughan Content Project Manager: Keri Johnson Senior Buyer: Laura Fuller Lead Designer: David Hash Lead Content Licensing Specialist: Carrie Burger Cover Image: ©zlikovec/Shutterstock.com RF Compositor: SPi Global

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Bateman, Thomas S., author.|Snell, Scott, 1958- author.|Konopaske, Robert, author. Title: Management: leading & collaborating in a competitive world/Thomas S. Bateman, McIntire School of Commerce, University of Virginia, Scott A. Snell, Darden Graduate School of Business, University of Virginia, Robert Konopaske, McCoy College of Business, Texas State University. Description: Thirteenth edition.|New York, NY: McGraw-Hill Education, [2019] Identifiers: LCCN 2017048278|ISBN 9781259927645 (alk. paper) Subjects: LCSH: Management. Classification: LCC HD31.2 .B36 2019|DDC 658–dc23 LC record available at https://lccn.loc.gov/2017048278

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.

mheducation.com/highered

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For my parents, Tom and Jeanine Bateman, and Mary Jo, Lauren, T.J., and James

and

My parents, John and Clara Snell, and Marybeth, Sara, Jack, and Emily

and

My parents, Art and Rose Konopaske, and Vania, Nick, and Isabella

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THOMAS S. BATEMAN Thomas S. Bateman is Bank of America pro- fessor in the McIntire School of Commerce at the University of Virginia, teaching leadership and organizational behavior at undergraduate and graduate levels. For many years prior to joining the University of Virginia, he taught organizational behavior at the Kenan- Flagler Business School of the University of North Carolina to undergraduates, MBA students, PhD students, and practicing managers. He taught for two years in Europe as a visiting professor at the Institute for Management Development (IMD), one of the world’s leaders in the design and delivery of executive education. Professor Bateman earned his doctorate in business administration at Indiana University, and his BA from Miami University.

Professor Bateman is an active management researcher, writer, and consultant. He serves on the editorial boards of the Academy of Management Review, the Academy of Management Journal, and the Asia Pacific Journal of Business and Management. His articles appear in professional jour- nals such as the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Organizational Behavior, Human Relations, Journal of Macromarketing, and Proceedings of the National Academy of Sciences. His recent work on leadership and psychology in the domain of climate change appears in Nature Climate Change, Global Environmental Change, and The Conversation.

Tom’s long-time research interests center on proactive behavior (including leadership) by employees at all levels, with a recent turn toward scientists and public leadership. His consulting work has included a variety of organizations includ- ing Singapore Airlines, the Brookings Institution, the U.S. Chamber of Commerce, the Nature Conservancy, LexisNexis, Weber Shandwick, the Association of Climate Change Officers, and Chicago’s Field Museum of Natural History.

SCOTT A. SNELL Scott Snell is professor of business administration at the University of Virginia’s Darden Graduate School of Business. He teaches courses in leadership, organizational capability development, and human capital consulting. His research focuses on human resources and the mecha- nisms by which organiza- tions generate, transfer, and integrate new knowledge for competitive advantage.

He is co-author of four books: Managing People and Knowledge in Professional Service Firms, Management: Leading & Collaborating in a Competitive World, M: Management, and Managing Human Resources. His work has been published in a number of journals such as the Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Journal of Management Studies, and Human Resource Management, and he was recently listed among the top 100 most-cited authors in scholarly journals of management. He has served on the boards of the Strategic Management Society’s human capi- tal group, the Society for Human Resource Management Foundation, the Academy of Management’s human resource division, the Human Resource Management Journal, the Academy of Management Journal, and the Academy of Management Review. Professor Snell has worked with com- panies such as AstraZeneca, Deutsche Telekom, Shell, and United Technologies to align strategy, capability, and invest- ments in talent. Prior to joining the Darden faculty in 2007, he was professor and director of executive education at Cornell University’s Center for Advanced Human Resource Studies and a professor of management in the Smeal College of Business at Pennsylvania State University. He received a BA in psychology from Miami University, as well as MBA and PhD degrees in business administration from Michigan State University.

About the Authors

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ROBERT KONOPASKE Rob Konopaske is an associate professor of management and prin- ciples of management course coordinator in the McCoy College of Business at Texas State University. At the College, he also serves as the Director of the Institute for Global Business. A passionate educator who cares deeply about providing students with an excep- tional learning experience, Rob has taught numerous under- graduate, graduate, and executive management courses, including Introduction to Management, Organizational Behavior, Human Resource Management, International Human Resources Management, and International Business. He has received numerous teaching honors while at Texas State University, most recently the 2016 Presidential Distinction Award, 2014 Gregg Master Teacher Award, and 2012–2013 Namesake for the PAWS Preview new student socialization program (an honor bestowed annually upon eight out of approximately 2,000 faculty and staff). Rob earned his doctoral degree in business adminis- tration (management) at the University of Houston, a mas- ter in international business studies (MIBS) degree from the University of South Carolina, and a bachelor of arts

degree (Phi Beta Kappa) from Rutgers University. He has taught at the University of Houston, the University of North Carolina at Wilmington, and Florida Atlantic University.

Rob is co-author of several recent editions of six books: Management: Leading & Collaborating in a Competitive World, M: Management, Organizational Behavior and Management, Human Resource Management, Global Management and Organizational Behavior, and Organizations: Behavior, Structure, Processes. The eleventh edition of Organizations won a McGuffey Award (for longevity of textbooks and learning materials whose excellence has been demonstrated over time) from the national Text and Academic Authors’ Association.

Rob’s research has been published in such outlets as the Journal of Applied Psychology, Academy of Management Executive, Management International Review, Business Horizons, Human Resource Management, Journal of Business Research, Journal of Management Education, Nonprofit Management and Leadership, Journal of Managerial Psychology, and Human Resource Management Review. Dr. Konopaske currently serves on the editorial board of the International Journal of Human Resource Management.

Rob has lived and worked internationally, speaks three languages, and has held management positions with a large nonprofit organization and a Fortune 500 multinational firm. He consults, trains, and conducts research projects for a wide range of companies and industries. Current or for- mer clients include Credit Suisse, PricewaterhouseCoopers, Buffalo Wings & Rings, KPMG, New Braunfels Utilities, and Johnson & Johnson.

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Our goal is to keep you focused on delivering important “bottom line” results—to make sure you think continually about delivering the goods that make both you and your organization successful. Good management practices and processes are the keys to delivering the results that you want and your employer wants. This results-oriented focus of Management, 13th edition, is a unique highlight you will take away from this book.

Leading & Collaborating Yes, business is competitive. But it’s not that simple. In fact, to think strictly in terms of competition is overly cynical, and such cynicism can sabotage your performance. Along with a realistic perspective on competitive realities, important action elements in managerial success are collaboration and leadership. To succeed, teams and organizations need people to work with rather than against one another, Put another way, you can’t perform alone—the world is too complex, and business is too challenging.

You need to work with your teammates. Leaders and fol- lowers need to work as collaborators more than as adver- saries. Work groups throughout your organization need to cooperate with one another. Business and government, often viewed as antagonists, can work productively together. And today more than ever, companies that traditionally were competitors engage in joint ventures and find other ways to collaborate on some things even as they compete in others. Leadership is needed to make these collaborations work.

How does an organization create competitive advan- tage through collaboration? It’s all about the people, and it derives from good leadership.

Three stereotypes of leadership are that it comes from the top of the company, that it comes from one’s immedi- ate boss, and that it means being decisive and issuing com- mands. These stereotypes contain some truth, but realities are much more complex and challenging.

First, the person at the top may or may not provide effec- tive leadership—in fact, truly good leadership is far too rare. Second, organizations need leaders at all levels, in every team and work unit. This includes you, beginning early in your career, and this is why leadership is a vital theme in this book. Third, leaders should be capable of decisiveness and of giving commands, but relying too much on this tra- ditional approach isn’t enough. Great leadership is far more inspirational than that, and helps people both to think

Welcome to our 13th edition! Thank you to everyone who has used and learned from previous editions. We are proud to present to you our best-ever edition.

Our Goals Our mission with this text is to inform, instruct, and inspire. We hope to inform by providing descriptions of the impor- tant concepts and practices of modern management. We hope to instruct by describing how you can identify options, make decisions, and take effective action. We hope to inspire not only by writing in an interesting way but also by provid- ing a real sense of the challenges and fascinating opportuni- ties ahead of you. Whether your goal is starting your own company, leading a team to greatness, building a strong orga- nization, delighting your customers, or generally forging a positive and sustainable future, we want to inspire you to take meaningful action.

We hope to inspire you to be both a thinker and a doer. We want you to know the important issues, consider the con- sequences of your actions, and think before you act. But good thinking is not enough; management is a world of action. It is a world for those who commit to high performance.

Competitive Advantage The world of management is competitive, while also rich with important collaborative opportunities. Never before has it been so imperative to your career that you learn the skills of management. Never before have people had so many opportu- nities and challenges with so many potential risks and rewards.

You will compete with other people for jobs, resources, and promotions. Your employer will compete with others for contracts, clients, and customers. To survive the compe- tition, and to thrive, you must perform in ways that give you an edge that makes others want to hire you, buy from you, and do repeat business with you. Now and over time, you will want them to choose you, not the competition.

By this standard, managers and organizations must perform. Six essential performance dimensions are cost, quality, speed, innovation, service, and sustainability. When managed well, these performance dimensions deliver value to your customer and competitive advantage to you and your organization. Lacking performance on one or more of them puts you at a disadvantage. We elaborate on them all, throughout the book.

Preface

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differently and to work differently—including working col- laboratively toward outstanding results.

True leadership—from your boss as well as from you— inspires collaboration, which in turn generates results that are good for you, your employer, your customer, and all the people involved.

As Always, Currency and Variety in the 13th Edition It goes without saying that this textbook, in its 13th edition, remains on the cutting edge of topical coverage, updated throughout with both current business examples and recent management research. We continue to emphasize real results, sustainability, and diversity, themes on which we were early and remain current leaders.

While still organizing the chapters around the clas- sic management functions, we modernize those functions with a far more dynamic orientation. Looking constantly at change and the future, we describe the management func- tions as Delivering Strategic Value (for Planning), Building a Dynamic Organization (for Organizing), Mobilizing People (for Leading), and last but hardly least, Learning and Changing (for Controlling).

Special Features Every chapter offers a fascinating and useful portfolio of spe- cial boxed features that bring the subject matter to life in real time:

1. Management in Action, a hallmark feature, presents unfolding contemporary three-part cases about today’s business leaders and companies. The first part, “Manager’s Brief,” encourages students at the start of each chapter to begin thinking about one or more of that chapter’s major themes in the context of the current business scene. For example, Chapter 1 introduces Facebook’s Mark Zuckerberg and some of the challenges his company faces. The second Management in Action element, “Progress Report,” appears about halfway through each chapter and incorporates addi- tional chapter themes into the narrative. At each stage of this unfolding feature, we offer suggestions or questions for classroom discussion, in-class group work, or simply reflec- tion. Closing out the Management in Action three-part series is “Onward,” at the end of each chapter, which distills key aspects of the chapter and challenges students with questions for further consideration. Chapter 1’s closing “Onward” seg- ment reflects on what it might be like to work at Facebook.

2. Social Enterprise boxes offer examples illustrating chapter themes from outside the private sector. Many students are deeply interested in social entrepreneurs and enterprises, inherently and for future employment possi- bilities. Examples include: “Ashoka’s Bill Drayton, Pioneer of Social Entrepreneurship” (Chapter 1), “Are Business School Graduates Willing to Work for Social Enterprises?”

(Chapter 10), and “Piramal Sarvajal Provides Clean Water via ‘Water ATMs,’” (Chapter 17).

3. Multiple Generations at Work boxes discuss chapter themes from multigenerational perspectives, based on data rather than stereotypes, with a goal of strengthening what too often are difficult workplace relationships. Examples include: “Are ‘Portfolio Careers’ the New Normal?” (Chapter 2), “Crowdsourcing: An Inexpensive Source of Creative Ideas” (Chapter 3), and “Tech-Savvy Gen Z Is Entering the Workforce” (Chapter 17).

4. The Digital World feature offers unique examples of how companies and other users employ digital/social media in ways that capitalize on various ideas in each chapter. Students of course will relate to the social media but also learn of interesting examples and practice that most did not know before. Instructors will learn a lot as well!

That’s the big picture. We believe the management sto- ries in the boxed features light up the discussion and con- nect the major themes of the new edition with the many real worlds students will enter soon.

Up next is just a sampling of specific changes, updates, and new highlights in the 13th edition—enough to convey the wide variety of people, organizations, issues, and man- agement challenges represented throughout the text.

Chapter 1 • New Management in Action about Mark Zuckerberg of

Facebook.

• New Social Enterprise about Bill Drayton of Ashoka.

• New example of Yum! Brands having 43,000 restaurants in 135 countries.

• New Exhibit 1.1: “Staying Ahead of the Competition.”

• New example of entrepreneurial college students pitch- ing sustainable business ideas.

• New passage about artificial intelligence simplifying human-technology interfaces.

• New example of Quicken Loans Rocket Mortgage appli- cations taking minutes to complete.

• New passage about Facebook entering the job posting space to compete against LinkedIn.

Chapter 2 • New Management in Action about Jeff Bezos creating

Amazon’s organizational environment.

• New Multiple Generations at Work about “portfolio careers” becoming the new normal.

• New Social Enterprise about the Paris Agreement and combating climate change.

• New example of Microsoft’s HoloLens teaching medical students about human anatomy.

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• New passage about Wells Fargo’s incentive system lead- ing to a major corporate scandal.

• New example about Amazon suing companies that sell false positive reviews on its site.

• Revised Exhibit 5.2: “Examples of Decisions Made under Different Ethical Systems.”

• New example about Nabisco’s utilitarian decision to lay off 1,200 workers at a Chicago plant.

• Updated Exhibit 5.3: “Current Ethical Issues in Business.”

• New Exhibit 5.6: “A Process for Ethical Decision Making.”

• New example about Starbucks building Leadership Energy and Environmental Design (LEED) stores in 20 countries.

Chapter 6 • New Management in Action about Alibaba’s evolution

to a global brand.

• New example of Harley-Davidson’s marketing of motor- cycles to riders in international markets.

• New example of Chinese companies purchasing U.S. firms and divisions like Starwood Hotels, Smithfield Foods, and GE’s appliance business.

• Updated Exhibit 6.1: “Top 10 Global Firms.”

• New example of a small business, AppIt, expanding internationally by acquiring a software development company in India.

• New example about the Philippines becoming a popular location for outsourcing.

• New passage about McDonald’s collaborating with an Indian entrepreneur to adapt its menu (e.g., “Chicken Maharajah Mac”) to the vegetarian country.

Chapter 7 • New Management in Action about Starbucks’ entrepre-

neurial beginnings.

• New example about 28 million small businesses generat- ing over half of all jobs in the U.S.

• Updated Exhibit 7.2: “Successful Entrepreneurs Who Started in Their 20s.”

• New examples of franchises including Jimmy John’s and Jazzercise.

• Updated Multiple Generations at Work: “Millennial Entre- preneurs Can Learn from Others with More Experience.”

• New passage about Barbara Nascimento, founder of The Traveller Tours in Portugal, describing how to start a business.

• New example of Gordon Logan, CEO of Sports Clips, leveraging the skills of a top management team.

• Revised Exhibit 2.5: “Potential Substitutes and Complements.”

• New example of AstraZeneca losing patent protection of its $5 billion product, Crestor.

• New passage on organizational challenges associated with acquisitions.

• New example of Target investing in “green chemistry innovation.”

Chapter 3 • New Management in Action about Uber’s questionable

decision making.

• New example of General Electric using data analytics to improve efficiencies of digital wind farms.

• Updated Exhibit 3.2: “Comparison of Types of Decisions.”

• New passage about National Geographic’s “Wanderlust” social media photo competition.

• New Exhibit 3.3: “The Phases of Decision Making.”

• New example about IDEO suggesting ways to encourage employee creativity.

• New Exhibit 3.8: “Managing Group Decision Making.”

• New example about Havenly crowdsourcing feedback on its pricing and new product ideas.

Chapter 4 • Updated Management in Action about Walt Disney

scripting its own success.

• Revised Exhibit 4.1: “Decision-Making Stages and Formal Planning Steps.”

• New passage about General Motors and Lyft forming an alliance to create a fleet of on-demand autonomous vehicles.

• Revised Exhibit 4.3: “Hierarchy of Goals and Plans.”

• New passage about Chipotle’s challenges with recent food-safety events.

• New Exhibit 4.5: “The Strategic Management Process.”

• New passage about Elon Musk committing to enable human travel to Mars.

• New example of the U.S. Environmental Protection Agency’s methane-to-energy projects.

Chapter 5 • New Multiple Generations at Work about Millennials

being bullish on business.

• New Social Enterprise about India’s Barefoot College, a college for the poor by the poor.

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• New example of the U.S. government considering major changes to the H-1B temporary visa program.

• New passage on companies settling discrimination law- suits brought by employees.

Chapter 11 • New Management in Action about diversity and inclu-

sion at Apple.

• Updated Social Enterprise about managing diversity at Change.org.

• Updated example about changing workforce demographics.

• Updated Exhibit 11.3: “Top Ten Most Powerful Women Executives.”

• New example of Kaiser Permanente, AT&T, and MasterCard continuing their strong commitment to diversity.

• Updated example of the number of women in leadership positions in S&P 500 companies.

• New example of percentage of individuals with disabili- ties who are employed.

• Updated Exhibit 11.6: “Some Top Executives of Color.”

Chapter 12 • Updated Management in Action about Indra Nooyi’s

leading PepsiCo to perform with purpose.

• New Social Enterprise about Elizabeth Hausler’s engi- neering of disaster-proof homes.

• New example of Richard Branson, CEO of Virgin Group, envisioning a world powered by renewable energy by 2050.

• New Exhibit 12.4: “Sources of Leader Power.”

• Updated example of famous leaders including Margaret Thatcher, Nelson Mandela, Julius Caesar, and George Washington.

• New example of servant leadership philosophies at Zappos, Whole Foods Market, and the Container Store.

• New example of how Cheryl Bachelder, CEO of Popeye’s Louisiana Kitchen, used active listening to increase store sales by 25 percent.

• New passages about lateral, intergroup, and shared leadership.

Chapter 13 • Updated Management in Action about what makes soft-

ware company, SAS, such a great place to work.

• Updated Multiple Generations at Work about Millennials wanting to fulfill higher-order needs.

• Updated Social Enterprise about giving veterans a renewed sense of purpose.

Chapter 8 • Updated Management in Action about leadership and

structural changes at General Motors.

• Updated Social Enterprise about Kiva’s approach to organizing.

• Updated Multiple Generations at Work about online networks replacing traditional hierarchies.

• New examples of Shake Shack, Microsoft, and Sanofi using top management teams.

• New Exhibit 8.2: “Examples of Differentiation.”

• New Exhibit 8.13: “A Network Organization.”

• New examples of how Southwest Airlines, MasterCard, SAP, and Target are integrating marketing and commu- nications functions.

• New example of how the Internal Revenue Service is organized around customer groups.

Chapter 9 • New passages about organizing around ordinary and

dynamic capabilities.

• New example of Canon’s core capability in innovative image technology.

• New example about Dr Pepper Snapple Group, Coca- Cola, and PepsiCo forming an alliance to cut by 25 percent the amount of sugar in their soft drinks by 2025.

• Revised Exhibit 9.2: “How I’s Can Become We’s.”

• New example of Walmart’s CEO trying to reduce bureaucracy while encouraging employees to take more initiative.

• New example of Capital One using predictive analytics to make credit card offers to customers.

• New examples of small and large batch technologies.

Chapter 10 • Updated Management in Action about Google’s ability

to hire top talent.

• Updated Social Enterprise about business school gradu- ates working for social enterprises.

• Updated Multiple Generations at Work about college students needing soft skills.

• New example about Kayak, Etsy, and W. L. Gore creat- ing unique organization cultures.

• New Exhibit 10.1: “An Overview of the HR Planning Process.”

• New examples about John Deere and Siemens Energy finding creative ways to train young employees through a combination of academic and hands-on training.

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• Updated Multiple Generations at Work about companies shifting to more frequent performance reviews.

• New passage about Chipotle Mexican Grill trying to cor- rect its food-safety challenges.

• New example of Home Depot using six sigma to improve customer checkout processes.

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