Management 13th edition by schermerhorn and bachrach 2015

S C H E R M E R H O R N B A C H R A C H

LEARN SUCCEED

MANAGEMENT T H I R T E E N T H E D I T I O N

Management

JOHN R. SCHERMERHORN, JR. OHIO UNIVERSITY

DANIEL G. BACHRACH UNIVERSITY OF ALABAMA

THIRTEENTH EDITION

VICE PRESIDENT & EXECUTIVE PUBLISHER George Hoff man

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Library of Congress Cataloging in Publication Data:

Schermerhorn, John R.

Management / John R. Schermerhorn.—13th ed.

p. cm.

ISBN 978-1-118-84151-8 (unbound)

1. Management. I. Title.

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

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http://www.wiley.com/go/permissions
While you played

I wrote.

But always,

I was listening

and loving

you.

1984 It’s later now.

Don’t worry.

Time

means love shared,

by you

and me.

1986 Th ink

of all the fun

we have.

Here, there, everywhere,

doing things

together.

1989 Home,

now and forever,

will always be

wherever

I can be

with you.

1992 Time

has its ways,

doesn’t it?

Not enough,

not enough,

I often say.

1996

Hurry home

when you can.

Come laughing, sons.

Tell us

your

wonderful stories.

1999 Songs riding winds.

Mimi,

Uncle George,

Uncle Nelson.

Whispers and choirs.

Silence speaks.

2002 On the mountain,

by Irish lakes,

fi nd beauty and

peace.

Fairies dance

there.

2004 Mom loves

us, cats

and rainy days.

Nana and Poppy

loved us

too.

2007 Bookstores, museums,

stories, paintings.

And dreams.

We travel,

we laugh,

joined in life.

2009

While you work,

I’m starting to play

again.

Still listening,

and loving

you.

2011 When I

was young

I never knew

you would make

dreams

come true.

2013 No matter

the time

or day.

With a thought,

a memory,

I smile.

2015

From John

To my sons, John Christian and Charles Porter

From Dan

For Julie, Sammy, Eliana, Jakey, Jessica, Caleb, and Lilah—I love you!

iii

About the Authors Dr. John R. Schermerhorn, Jr., is the Charles G. O’Bleness Professor of Management Emeri-

tus in the College of Business at Ohio University, where he teaches graduate courses in manage-

ment and organizational behavior. Dr. Schermerhorn earned a PhD in organizational behavior

from Northwestern University, an MBA (with distinction) in management and international

business from New York University, and a BS in business administration from the State Univer-

sity of New York at Buff alo. He previously taught at Tulane University, the University of Vermont,

and Southern Illinois University at Carbondale, where he also served as head of the Department

of Management and associate dean of the College of Business Administration.

International experience adds a unique global dimension to Dr. Schermerhorn’s teaching

and writing. He holds an honorary doctorate from the University of Pécs in Hungary. He was

a visiting professor of management at the Chinese University of Hong Kong, on-site coordi-

nator of the Ohio University MBA and Executive MBA programs in Malaysia, and Kohei

Miura visiting professor at Chubu University in Japan. He has served as adjunct professor at

the National University of Ireland at Galway and advisor to the Lao-American College in

Vientiane, Laos. He presently teaches an MBA course at Università Politecnica Delle Marche

in Ancona, Italy, and PhD seminars in the Knowledge and Innovation Management doctoral

program at Bangkok University, Th ailand. At Ohio University he has twice been Director of

the Center for Southeast Asian Studies.

A member of the Academy of Management, Dr. Schermerhorn was chairperson of the

Management Education and Development Division. Management educators and students

alike know him as author of Exploring Management 4e (Wiley, 2014), Management 12e (Wiley,

2013), and co-author of Organizational Behavior 13e (Wiley, 2014). Dr. Schermerhorn has

also published numerous articles, including ones in the Academy of Management Journal,

Academy of Management Review, Academy of Management Executive, Organizational

Dynamics, Asia-Pacifi c Journal of Management, the Journal of Management Development, and

the Journal of Management Education.

Ohio University named Dr. Schermerhorn a University Professor, the university’s highest

campus-wide honor for excellence in undergraduate teaching. He is a popular guest speaker

at colleges and universities. He is available for student lectures and classroom visits, as well

as for faculty workshops on scholarly manuscript development, textbook writing, high

engagement teaching, and instructional and curriculum innovations.

Dr. Daniel G. Bachrach (Dan) is the Robert C. and Rosa P. Morrow Faculty Excellence Fellow

and Professor of Management in the Culverhouse College of Commerce and Business Admin-

istration at the University of Alabama, where he teaches graduate and undergraduate courses

in management. Dr. Bachrach earned a PhD in organizational behavior and human resource

management—with a minor emphasis in strategic management—from Indiana University’s

Kelley School of Business, an MS in industrial/organizational psychology from the University

of Wisconsin-Oshkosh, and a BA in psychology from Bates College in Lewiston, Maine.

A member of the Academy of Management and the Society for Industrial and Organiza-

tional Psychology, Dr. Bachrach serves on the editorial boards of the Journal of Applied Psy-

chology and Organizational Behavior and Human Decision Processes. He is co-editor of the

Handbook of Behavioral Operations Management: Social and Psychological Dynamics in

Production and Service Settings (Oxford University Press, 2014), co-author of Transformative

Selling: Becoming a Resource Manager and a Knowledge Broker (Axcess Capon, 2014), and

senior co-author of 10 Don’ts on your Digital Devices: Th e Non-Techie’s Survival Guide to Digital

Security and Privacy (Apress, 2014). Dr. Bachrach also has published extensively in a number

of academic journals including Organization Science, Journal of Applied Psychology, Strategic

Management Journal, Organizational Behavior and Human Decision Processes, Personnel Psy-

chology, Journal of Management, Leadership Quarterly, Production and Operations Manage-

ment, Journal of Operations Management, Journal of Supply Chain Management, and the

Journal of Personal Selling and Sales Management.

iv

Ohio University named Dr. Schermerhorn a

University Professor, the university’s highest

campus-wide honor for exellence in

undergraduate teaching.

Dr. Bachrach serves on the editorial boards

of the Journal of Applied Psychology and Organizational Behavior and Human Decision Processes.

Preface

From the beautiful cover of this book to the realities of organizations today, great accom-

plishments are much like inspired works of art. Whether one is talking about arranging

objects or bringing together people, technology, and other resources in organizational sys-

tems, it is a balancing act. But the results are spectacular when goals and talent combine to

create a lasting and positive impact.

Just as artists fi nd inspiration in all the senses that bring our world to life, managers fi nd

inspiration in daily experiences, from the insights of scholars, through relationships with

other people, and among the goals that guide organizations in an ever more demanding

society. And like artists, managers must master many challenges as they strive to create the

future from the opportunities of the present.

A well-managed organization—for profi t or nonprofi t, large or small—can build, mix, and

integrate all the beauties of human talent to achieve great things. Th is capacity for positive

impact through people is the goal bound into the pages of Management 13e. It is an oppor-

tunity to gain knowledge, fi nd inspiration, and learn practices that can help build the orga-

nizations we need to forge a better world.

New to Management 13e Management 13e has been revised and updated with a focus on real-world anchors for timely

content, student engagement in critical thinking about real-world and personal career

issues, and instructor opportunities for enriched classroom activities and assignments.

Timely content—All chapters have been updated. Examples of new and expanded coverage

include triple bottom line and shared value view (Chapter 3), disruptive innovation and human

sustainability (Chapter 4), reshoring and tax inversions (Chapter 5), social entrepreneurship and

crowdfunding (Chapter 6), data mining and analytics (Chapter 7), goal management and goal

downsides (Chapter 8 and Chapter 16), employment issues and controversies (Chapter 13),

followership and leadership (chapter 14), technology personality and mood contagion (Chap-

ter 15), and team virtuousness (Chapter 17).

Student engagement features—Student engagement is an embedded theme in Manage-

ment 13e. Look for these chapter features that bring life to disciplinary content: Analysis—

Make Data your Friend, Choices—Th ink Before You Act, Ethics—Know Right from Wrong,

Insight—Learn About Yourself, and Wisdom—Learn from Role Models. Each feature is

designed and visually presented to attract student attention and engage theme in refl ection

and critical thinking. Th ese features are introduced in the chapter opening page as part of

What to Look for Inside: Management Is Real.

Enriched Classroom Opportunities—Th e active and enriched classroom is also an embed-

ded theme in Management 13e. Look for these end-of-chapter opportunities that make it

easy to bring text content to life in discussions, activities, and individual and team assign-

ments: Evaluate Career Situations, Refl ect on the Self-Assessment, Contribute to the Class

Exercise, Manage a Critical Incident, Collaborate on the Team Activity, and Analyze the Case

Study. Th ese instructional enrichments are introduced in the chapter opening page as part

of What to Look for Inside: Skills Make You Valuable.

NNNeww ttoo MMMaanaagemmmmeennt 133e

v

vi PREFACE

Management 13e Philosophy Today’s students are tomorrow’s leaders and managers. Th ey are our hope for the future

during this time of social transformation. New values and management approaches are

appearing; organizations are changing forms and practices; jobs are being redefi ned and

relocated; the age of information is a major force in our lives; and, the intricacies of global-

ization are presenting major organizational and economic challenges.

Management 13e and its rich selection of timely examples and thought provoking

features for analysis and refl ection is designed for this new world of work. It is crafted to

help students understand that management is real and that is an everyday part of their

lives. By engaging with Management 13e, students explore the essentials of management

while also discovering their true potential for developing useful career skills. Th e con-

tent, pedagogy, and features of this edition were carefully blended to support manage-

ment educators who want their students to:

• grow in career readiness,

• become attractive internship and job candidates,

• gain confi dence in critical thinking,

• identify timely social and organizational issues,

• embrace lifelong learning for career success.

Management 13e Pedagogy Th e pedagogical foundations of Management 13e are based on four constructive balances

that are essential to higher education for business and management.

• Th e balance of research insights with formative education. As educators we must be

willing to make choices when bringing the theories and concepts of our discipline to

the attention of the introductory student. We cannot do everything in one course. Th e

goal should be to make good content choices that set the best possible foundations for

lifelong learning.

• Th e balance of management theory with management practice. As educators we

must understand the compelling needs of students to learn and appreciate the applica-

tions of the material they are reading and thinking about. We must continually bring to

their attention interesting and relevant examples.

• Th e balance of present understandings with future possibilities. As educators we

must continually search for the directions in which the real world of management is

heading. We must select and present materials that can both point students in the

right directions and help them develop the confi dence and self-respect needed to

best pursue them.

• Th e balance of what “can” be done with what is, purely and simply, the “right” thing

to do. As educators we are role models; we set the examples. We must be willing to take

stands on issues such as managerial ethics and social responsibility. We must be careful

not to let the concept of “contingency” betray the need for positive “action” and “account-

ability” in managerial practice.

Our students have pressing needs for direction as well as suggestion. Th ey have needs for

application as well as information. Th ey have needs for integration as well as presentation.

And they have needs for confi dence that comes from solid understanding. Our goal is to

put into your hands and into those of your students a learning resource that can help meet

these needs.

Management 13e is designed to help

students discover their true potential

and accept personal responsibilities for

developing career skills.

We are role models . . . we must be

willing to take stands on issues such

as managerial ethics and social

responsibility.

Our goal as educators should be to

make good content and pedagogical

choices that set the best possible foun-

dations for lifelong learning.

MMaanaggeeemmenttt 3ee oossoppp yyy

MMaanaggeeemmenttt 13ee PPeedaaggoggyy

viiPreface

Management 13e Highlights Management 13e introduces the essentials of management as they apply to organizations

and careers in a complex global society. Th e subject matter is carefully chosen to meet

AACSB accreditation guidelines, while still allowing extensive fl exibility to fi t various course

designs, class sizes, and delivery formats.

Th e timely chapter content off ers fl exibility in meeting a wide variety of course objectives

and instructor preferences. Th e chapters are organized in fi ve logical parts—Management,

Environment, Planning and Controlling, Organizing, and Leading. Th e parts and individual

chapters can be used in any order and combination. All chapters have been updated and

enriched with new features and examples from the latest current events.

Learning Model

Th e Management 13e learning model makes it easy for students to read, study, refl ect, and

use critical thinking. Th eir attention is focused on building management skills and compe-

tencies through active learning, and on discovering that management issues and themes

permeate current events that aff ect everyday living.

Each chapter opens with a compelling photo and quote, followed by a learning dash-

board that provides a Quick Start overview, list of Key Takeaways, and a What to Look for

Inside directory in two parts: Management Is Real—with features on Analysis, Choices,

Ethics, Insight, and Wisdom; and, Skills Make You Valuable—with features on Evaluate,

Refl ect, Contribute, Manage, Collaborate, and Analyze. Major Figures within chapters pro-

vide visual support for student comprehension as concepts, theories, and terms are intro-

duced. Where appropriate, Small Boxed Figures and Content Summaries are embedded in the

text to help clarify major points. Th e Management Learning Review section at the end of each

chapter helps students prepare for quizzes and exams by completing a Takeaway Question

Summary and Chapter Self-Test.

Self-Refl ection, Active Learning, and Critical Th inking

Th e What to Look for Inside guide in the chapter-opening learning dashboard points out the

many features in Management 13e that provide students with important opportunities for

self-refl ection, active learning, and critical thinking. Within each chapter, Management Is

Real features present current events, timely issues, and real people and situations to build

awareness and stimulate personal refl ection. Examples include:

MANAGEMENT IS REAL MAKE DATA YOUR FRIEND

Multiple Generations Meet and Greet in the Workplace

THINK BEFORE YOU ACT

Want Vacation? No Problem, Take as Much as You Want

KNOW RIGHT FROM WRONG

Social Media Searches Linked with Discrimination in Hiring

LEARN ABOUT YOURSELF

Self-Awareness and the Johari Window

LEARN FROM ROLE MODELS

Ursula Burns Moves from Student Intern to Fortune 500 CEO

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Management is Real features present

current events, timely issues, and

real people and situations to build

awareness and stimulate personal

refl ection.

Th e Management 13e learning model

makes it easy for students to study,

refl ect, and use critical thinking as they

read.

MMMaanaaggemmmeentt 33ee gg g ttts

viii PREFACE

Management 13e Teaching and Learning Resources

Instructor’s Resource Manual. Th e Instructor’s Resource Manual off ers helpful teaching ideas. It has advice on course development, sample assignments, and recommended activi-

ties. It also off ers chapter-by-chapter text highlights, learning objectives, lecture outlines,

class exercises, lecture notes, answers to end-of-chapter material, and tips on using cases.

Test Bank. Th is comprehensive Test Bank (available on the instructor portion of the Management 13e website) has more than 175 questions per chapter. Th e true/false,

multiple-choice, and short-essay questions vary in degree of diffi culty. All questions are

tagged with learning objectives, Bloom’s Taxonomy categories, and AACSB Standards. Th e

Computerized Test Bank allows instructors to modify and add questions to the master bank

and to customize their exams.

PowerPoint Presentation Slides. Th is robust set of slides can be accessed on the instructor portion of the Management 13e website. Lecture notes accompany each slide.

Pre- and Post-Lecture Quizzes. Included in WileyPLUS Learning Space, the Pre- and Post-Lecture Quizzes focus on the key terms and concepts. Th ey can be used as stand-alone

quizzes, or in combination to evaluate students’ progress before and after lectures.

Lecture Launcher Videos. Short video clips developed from CBS News source materials provide an excellent starting point for lectures or for general class discussion. Teaching

Notes are available and include video summaries and quiz and discussion questions.

Movies and Music. Th e Art Imitates Life supplement, prepared by Robert L. Holbrook of Ohio University, off ers tips for those interested in integrating popular culture and the

humanities into their courses. It provides innovative teaching ideas and scripts for using

movies and music to enrich day-to-day classroom activities. It is widely praised for increas-

ing student involvement and enthusiasm for learning. Th e Art Imitates Life supplement

off ers tips for those interested in integrating popular culture and the humanities into their

courses.

SKILLS MAKE YOU VALUABLE EVALUATE Career Situations: What Would You Do?

REFLECT On the Self-Assessment: Career Readiness “Big 20”

CONTRIBUTE To the Class Exercise: My Best Manager

MANAGE A Critical Incident: Team Leader Faces Test

COLLABORATE On the Team Activity: The Amazing Great Job Race

ANALYZE Th e Case Study: Trader Joe’s: Keeping a Cool Edge

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At the end of each chapter, Skills Make You Valuable features provide a variety of opportu-

nities to build management skills through individual and team learning activities. Examples

include:

Skills Make You Valuable features

provide a variety of opportunities to

build management skills through

individual and team learning activities.

anndd Leeaaarnninggg Reeesourccees

ixPreface

Practice Quizzes. An online study guide with quizzes of varying levels of diffi culty helps students evaluate their progress through a chapter. It is available on the student portion of

the Management 13e website.

Student Portfolio Builder. Th is special guide to building a student portfolio is complete with professional résumé and competency documentation templates. It is on the student

portion of the Management 13e website.

Companion Website. Th e Management 13e website at www.wiley.com/college/ schermerhorn contains a myriad of tools and links to aid both teaching and learning,

including resources described earlier.

WileyPlus Learning Space

What is WileyPLUS Learning Space? It’s a place where students can learn, collaborate, and

grow. Th rough a personalized experience, students create their own study guide while they

interact with course content and work on learning activities.

WileyPLUS Learning Space combines adaptive learning functionality with a dynamic new

e-textbook for your course—giving you tools to quickly organize learning activities, manage

student collaboration, and customize your course so that you have full control over content

as well as the amount of interactivity between students.

You can:

• Assign activities and add your own materials

• Guide students through what’s important in the e-textbook by easily assigning specifi c

content

• Set up and monitor collaborative learning groups

• Assess student engagement

• Benefi t from a sophisticated set of reporting and diagnostic tools that give greater

insight into class activity

Learn more at www.wileypluslearningspace.com. If you have questions, please contact your

Wiley representative.

Acknowledgments Management 13e was initiated and completed with the support of our dedicated and help-

ful Project Editor, Jennifer Manias; Executive Editor, Lisé Johnson, who again rallied the

expertise of a great Wiley team; and Susan McLaughlin, a talented and dedicated “Jack of

all trades.” We all have benefi tted from the special support of George Hoff man (Publisher),

Yana Mermel (Editorial Operations Manager), Tom Nery (designer), Mary Ann Price (photo

research), Suzie Chapman (production), and Kelly Simmons and Amy Scholz (marketing).

We also thank the numerous colleagues—too many to list here—whose help with this book

at various stages of its life added to our understanding of management and management

education.

As always, John works with the support and encouragement of his wife Ann. She perse-

veres even when “the book” overwhelms many of life’s opportunities. Dan is grateful for the

love, support, and guidance of his wife Julie, and the opportunity to work with John.

Brief Contents 1 Management Today 3

2 Management Learning Past to Present 29

3 Ethics and Social Responsibility 51

Part One Management

Part Th ree Planning and

Controlling

7 Information and Decision Making 147

8 Planning Processes and Techniques 173

9 Control Processes and Systems 195

10 Strategy and Strategic Management 215

Part Five Leading 14 Leading and Leadership Development 317

15 Individual Behavior 339

16 Motivation Th eory and Practice 365

17 Teams and Teamwork 389

18 Communication and Collaboration 415

Part Two Environment 4 Environment, Innovation, and Sustainability 77

5 Global Management and Cultural Diversity 97

6 Entrepreneurship and New Ventures 123

Part Four Organizing 11 Organization Structures and Design 241

12 Organization Culture and Change 265

13 Human Resource Management 291

Management Cases for

Critical Th inking

Chapter Cases 438

Self-Test Answers 467

Glossary 477

Endnotes 491

Name Index 523

Organizational Index 526

Subject Index 529

x

Part One Management

1 Management Today 3

Working Today 4

Talent 4

Technology 5

Globalization 6

Ethics 6

Diversity 8

Careers and Connections 9

Organizations 10

Organizational Purpose 10

Organizations as Systems 10

Organizational Performance 11

Changing Nature of Organizations 12

Managers 12

What Is a Manager? 12

Levels of Managers 13

Types of Managers 14

Managerial Performance 14

Changing Nature of Managerial Work 14

Th e Management Process 16

Functions of Management 16

Managerial Roles and Activities 18

Managerial Agendas and Networks 19

Learning How to Manage 20

Technical Skills 21

Human and Interpersonal Skills 21

Conceptual and Critical-Th inking Skills 22

Management Learning Review 23

Summary 23

Self-Test 1 24

Management Skills & Competencies 25

Evaluate Career Situations: What Would You Do? 25 Refl ect on the Self-Assessment: Career Readiness “Big 20” 25 Contribute to the Class Exercise: My Best Manager 26

Manage a Critical Incident: Team Leader Faces Test 26 Collaborate on the Team Activity: Th e Amazing Great Job Race 27 Analyze the Case Study: Trader Joe’s 27

2 Management Learning Past

to Present 29

Classical Management Approaches 30

Scientifi c Management 30

Administrative Principles 31

Bureaucratic Organization 32

Behavioral Management Approaches 33

Follett’s Organizations as Communities 33

Th e Hawthorne Studies 35

Maslow’s Th eory of Human Needs 36

McGregor’s Th eory X and Th eory Y 37

Argyris’s Th eory of Adult Personality 37

Modern Management Foundations 39

Quantitative Analysis and Tools 39

Organizations as Systems 40

Contingency Th inking 41

Quality Management 42

Evidence-Based Management 43

Management Learning Review 45

Summary 45

Self-Test 2 46

Management Skills & Competencies 47

Evaluate Career Situations: What Would You Do? 47 Refl ect on the Self-Assessment: Managerial Assumptions 47 Contribute to the Class Exercise: Evidence-Based Management Quiz 48 Manage a Critical Incident: Th eory X versus Th eory Y 48 Collaborate on the Team Activity: Management in Popular Culture 49 Analyze the Case Study: Zara International 49

Contents

xi

xii CONTENTS

3 Ethics and Social Responsibility 51

Ethics 52

Laws and Values as Infl uences on Ethical Behavior 52

Alternative Views of Ethics 53

Cultural Issues in Ethical Behavior 55

Ethics in the Workplace 56

Ethical Dilemmas 56

Infl uences on Ethical Decision Making 57

Rationalizations for Unethical Behavior 60

Maintaining High Ethical Standards 61

Moral Management 61

Ethics Training 62

Codes of Ethical Conduct 62

Whistleblower Protection 63

Social Responsibility 64

Social Responsibility, Sustainability, and the Triple Bottom Line 64

Perspectives on Corporate Social Responsibility 65

Evaluating Corporate Social Performance 68

Corporate Governance 69

Management Learning Review 71

Summary 71

Self-Test 3 72

Management Skills & Competencies 73

Evaluate Career Situations: What Would You Do? 73 Refl ect on the Self-Assessment: Terminal Values 73 Contribute to the Class Exercise: Confronting Ethical Dilemmas 74 Manage a Critical Incident: Dealing with a Global Supply Chain 74 Collaborate on the Team Activity: Stakeholder Maps 75 Analyze the Case Study: Patagonia 75

Part Two Environment

4 Environment, Innovation,

and Sustainability 77

Th e External Environment 78

Economic Conditions 79

Legal-Political Conditions 79

Sociocultural Conditions 80

Technological Conditions 80

Natural Environment Conditions 82

Environment and Value Creation 83

Value Creation and Competitive Advantage 83

Uncertainty, Complexity, and Change 85

Environment and Innovation 85

Types of Innovations 86

Th e Innovation Process 86

Disruptive Innovation and Technology 87

Environment and Sustainability 88

Sustainable Development 89

Sustainable Business 89

Human Sustainability 90

Management Learning Review 91

Summary 91

Self-Test 4 92

Management Skills & Competencies 93

Evaluate Career Situations: What Would You Do? 93 Refl ect on the Self-Assessment: Tolerance for Ambiguity 94 Contribute to the Class Exercise: Th e Future Workplace 94 Manage a Critical Incident: It’s Also about Respect 94 Collaborate on the Team Activity: Organizational Commitment to Sustainability Scorecard 95 Analyze the Case Study: Timberland 95

5 Global Management and Cultural

Diversity 97

Management and Globalization 98

Global Management 99

Why Companies Go Global 99

How Companies Go Global 101

Global Business Environments 104

Global Businesses 107

Types of Global Businesses 107

Pros and Cons of Global Businesses 107

Ethics Challenges for Global Businesses 108

Cultures and Global Diversity 111

Cultural Intelligence 111

Silent Languages of Culture 112

xiiiContents

Tight and Loose Cultures 113

Values and National Cultures 114

Global Management Learning 115

Are Management Th eories Universal? 115

Intercultural Competencies 116

Global Learning Goals 116

Management Learning Review 117

Summary 117

Self-Test 5 118

Management Skills & Competencies 119

Evaluate Career Situations: What Would You Do? 119 Refl ect on the Self-Assessment: Global Intelligence 120 Contribute to the Class Exercise: American Football 120 Manage a Critical Incident: Silent Team Members 120 Collaborate on the Team Activity: Globalization Pros and Cons 121 Analyze the Case Study: Harley-Davidson 121

6 Entrepreneurship and New

Ventures 123

Th e Nature of Entrepreneurship 124

Who Are the Entrepreneurs? 124

Characteristics of Entrepreneurs 126

Female and Minority Entrepreneurs 128

Social Entrepreneurship 129

Entrepreneurship and Small Business 131

How Small Businesses Get Started 131

Why Small Businesses Fail 132

Family-Owned Small Businesses 133

Small Business Development 134

New Venture Creation 135

Life Cycles of Entrepreneurial Firms 135

Writing a Business Plan 136

Choosing a Form of Ownership 137

Financing a New Venture 139

Management Learning Review 141

Summary 141

Self-Test 6 142

Management Skills & Competencies 143

Evaluate Career Situations: What Would You Do? 143

Refl ect on the Self-Assessment: Entrepreneurial Orientation 143 Contribute to the Class Exercise: Entrepreneurs Among Us 144 Manage a Critical Incident: Craft Brewery in—or Out—of the Money? 145 Collaborate on the Team Activity: Community Entrepreneurs 145 Analyze the Case Study: In-N-Out Burger 145

Part Th ree Planning and Controlling

7 Information and Decision Making 147

Information, Technology, and Management 148

Information and Information Systems 148

Data Mining and Analytics 149

Business Intelligence and Executive Dashboards 150

Problem-Solving and Managerial Decisions 151

Managers as Problem Solvers 152

Problem-Solving Approaches and Styles 152

Structured and Unstructured Problems 154

Crisis Problems 154

Problem-Solving Environments 155

Th e Decision-Making Process 156

Step 1—Identify and Defi ne the Problem 157

Step 2—Generate and Evaluate Alternative Courses of Action 158

Step 3—Choose a Preferred Course of Action 159

Step 4—Implement the Decision 160

Step 5—Evaluate Results 161

At All Steps—Check Ethical Reasoning 161

Decision-Making Pitfalls and Creativity 162

Decision Errors and Traps 162

Creativity in Decision Making 164

Management Learning Review 167

Summary 167

Self-Test 7 168

Management Skills & Competencies 169

Evaluate Career Situations: What Would You Do? 169 Refl ect on the Self-Assessment: Cognitive Style 169 Contribute to the Team Exercise: Lost at Sea 170 Manage a Critical Incident: Asking for a Raise 170

xiv

Collaborate on the Team Project: Crisis Management Realities 171 Analyze the Case Study: Amazon.com 171

8 Planning Processes

and Techniques 173

Why and How Managers Plan 174

Importance of Planning 174

Th e Planning Process 175

Benefi ts of Planning 176

Planning and Time Management 177

Types of Plans Used by Managers 178

Long-Range and Short-Range Plans 178

Strategic and Tactical Plans 179

Operational Plans 179

Planning Tools and Techniques 182

Forecasting 182

Contingency Planning 182

Scenario Planning 183

Benchmarking 184

Staff Planning 185

Implementing Plans to Achieve Results 185

Goal Setting 185

Goal Management 187

Goal Alignment 187

Participation and Involvement 188

Management Learning Review 190

Summary 190

Self-Test 8 191

Management Skills & Competencies 192

Evaluate Career Situations: What Would You Do? 192 Refl ect on the Self-Assessment: Time Management Profi le 192 Contribute to the Team Exercise: Personal Career Planning 192 Manage a Critical Incident: Policy on Paternity Leave for New Dads 193 Collaborate on a Team Activity: Th e Future Workplace 193 Analyze the Case Study: Walgreens 193

9 Control Processes and Systems 195

Why and How Managers Control 196

Importance of Controlling 196

Types of Controls 197

Internal and External Control 198

Th e Control Process 201

Step 1—Establish Objectives and Standards 202

Step 2—Measure Actual Performance 202

Step 3—Compare Results with Objectives and Standards 203

Step 4—Take Corrective Action 204

Control Tools and Techniques 205

Project Management and Control 205

Inventory Control 205

Breakeven Analysis 206

Financial Controls 206

Balanced Scorecards 207

Management Learning Review 209

Summary 209

Self-Test 9 210

Management Skills & Competencies 211

Evaluate Career Situations: What Would You Do? 211 Refl ect on the Self-Assessment: Internal/External Control 211 Contribute to the Class Exercise: After-Meeting/ Project Remorse 212 Manage a Critical Incident: High Performer but Late for Work 212 Collaborate on the Team Activity: Building a Balanced Scorecard 213 Analyze the Case Study: Electronic Arts 213

10 Strategy and Strategic

Management 215

Strategic Management 216

Competitive Advantage 216

Strategy and Strategic Intent 217

Levels of Strategy 218

Strategic Management Process 219

Essentials of Strategic Analysis 220

Analysis of Mission, Values, and Objectives 220

SWOT Analysis of Organization and Environment 222

Five Forces Analysis of Industry Attractiveness 223

Corporate-Level Strategy Formulation 224

Portfolio Planning Model 225

Growth and Diversifi cation Strategies 226

Retrenchment and Restructuring Strategies 227

Global Strategies 228

Cooperative Strategies 229

CONTENTS

xv

Business-Level Strategy Formulation 229

Competitive Strategies Model 230

Diff erentiation Strategy 230

Cost Leadership Strategy 230

Focus Strategy 231

Strategy Implementation 232

Management Practices and Systems 232

Strategic Control and Corporate Governance 232

Strategic Leadership 234

Management Learning Review 235

Summary 235

Self-Test 10 236

Management Skills & Competencies 237

Evaluate Career Situations: What Would You Do? 237 Refl ect on the Self-Assessment: Intuitive Ability 237 Contribute to the Class Exercise: Strategic Scenarios 238 Manage a Critical Incident: Kickstarting a Friend’s Business Idea 238 Collaborate on the Team Activity: Contrasting Strategies 239 Analyze the Case Study: Dunkin’ Donuts 239

Part Four Organizing

11 Organization Structures

and Design 241

Organizing as a Management Function 242

What Is Organization Structure? 242

Formal Structures 243

Informal Structures and Social Networks 243

Traditional Organization Structures 244

Functional Structures 245

Divisional Structures 246

Matrix Structures 249

Horizontal Organization Structures 250

Team Structures 250

Network Structures 251

Boundaryless Structures 253

Organizational Designs 254

Contingency in Organizational Design 255

Mechanistic and Organic Designs 256

Trends in Organizational Designs 257

Management Learning Review 260

Summary 260

Self-Test 11 261

Management Skills & Competencies 262

Evaluate Career Situations: What Would You Do? 262 Refl ect on the Self-Assessment: Empowering Others 262 Contribute to the Class Exercise: Organizational Metaphors 262 Manage a Critical Incident: Crowdsourcing Evaluations to Cut Management Levels 263 Collaborate on the Team Activity: Designing a Network University 263 Analyze the Case Study: Nike 263

12 Organization Culture and Change 265

Organizational Cultures 266

Understanding Organizational Cultures 266

Observable Culture of Organizations 268

Values and the Core Culture of Organizations 269

Multicultural Organizations and Diversity 272

Multicultural Organizations 272

Organizational Subcultures 273

Power, Diversity, and Organizational Subcultures 274

Organizational Change 276

Models of Change Leadership 276

Transformational and Incremental Change 278

Phases of Planned Change 278

Change Strategies 281

Resistance to Change 283

Management Learning Review 285

Summary 285

Self-Test 12 286

Management Skills & Competencies 287

Evaluate Career Situations: What Would You Do? 287 Refl ect on the Self-Assessment: Change Leadership IQ 287 Contribute to the Class Exercise: Force-Field Analysis 288 Manage a Critical Incident: Proposal for Open Offi ce Design and Hotdesking 288 Collaborate on the Team Activity: Organizational Culture Walk 288 Analyze the Case Study: Gamifi cation 289

Contents

xvi

13 Human Resource Management 291

Human Resource Management 292

Human Resource Management Process 292

Strategic Human Resource Management 293

Legal Environment of Human Resource Management 294

Attracting a Quality Workforce 298

Human Resource Planning 298

Recruitment Process 298

Selection Techniques 300

Developing a Quality Workforce 303

Onboarding and Socialization 303

Training and Development 304

Performance Management 305

Maintaining a Quality Workforce 307

Flexibility and Work–Life Balance 307

Compensation and Benefi ts 308

Retention and Turnover 310

Labor–Management Relations 311

Management Learning Review 312

Summary 312

Self-Test 13 313

Management Skills & Competencies 314

Evaluate Career Situations: What Would You Do? 314 Refl ect on the Self-Assessment: Performance Assessment Assumptions 314 Contribute to the Class Exercise: Upward Appraisal 315 Manage a Critical Incident: Athletic Director’s Dilemma 315 Collaborate on the Team Activity: Future of Labor Unions 315 Analyze the Case Study: Two-Tier Wages 315

Part Five Leading

14 Leading and Leadership

Development 317

Th e Nature of Leadership 318

Leadership and Power 319

Leadership and Vision 320

Leadership and Service 321

Leadership and Followership 322

Leadership Traits and Behaviors 322

Leadership Traits 322

Leadership Behaviors 323

Classic Leadership Styles 324

Contingency Approaches to Leadership 325

Fiedler’s Contingency Model 325

Hersey-Blanchard Situational Leadership Model 326

House’s Path–Goal Leadership Th eory 327

Leader–Member Exchange Th eory 328

Leader-Participation Model 329

Personal Leadership Development 330

Charismatic and Transformational Leadership 330

Emotional Intelligence and Leadership 331

Gender and Leadership 331

Moral Leadership 333

Drucker’s “Good Old-Fashioned” Leadership 333

Management Learning Review 334

Summary 334

Self-Test 14 335

Management Skills & Competencies 336

Evaluate Career Situations: What Would You Do? 336 Refl ect on the Self-Assessment: Least-Preferred Co-Worker Scale 336 Contribute to the Class Exercise: Most Needed Leadership Skills 337 Manage a Critical Incident: Playing Favorites as a Team Leader 337 Collaborate on the Team Activity: Leadership Believe-It-or-Not 337 Analyze the Case Study: Zappos 337

15 Individual Behavior 339

Perception 340

Perception and Psychological Contracts 341

Perception and Attribution 341

Perception Tendencies and Distortions 342

Perception and Impression Management 344

Personality 345

Big Five Personality Dimensions 345

Myers-Briggs Type Indicator 346

Technology Personality 347

Personal Conception and Emotional Adjustment Traits 348

CONTENTS

xvii

Attitudes 350

What Is an Attitude? 350

What Is Job Satisfaction? 351

Job Satisfaction Trends 352

Job Satisfaction Outcomes 352

Emotions, Moods, and Stress 355

Emotions 355

Moods 355

Stress and Strain 356

Management Learning Review 359

Summary 359

Self-Test 15 360

Management Skills & Competencies 361

Evaluate Career Situations: What Would You Do? 361 Refl ect on the Self-Assessment: Self- Monitoring 361 Contribute to the Class Exercise: Job Satisfaction Preferences 362 Manage a Critical Incident: Facing Up to Attributions 362 Collaborate on the Team Activity: Diffi cult Personalities 363 Analyze the Case Study: Panera Bread 363

16 Motivation Th eory and Practice 365

Individual Needs and Motivation 366

Hierarchy of Needs Th eory 366

ERG Th eory 367

Two-Factor Th eory 368

Acquired Needs Th eory 370

Process Th eories of Motivation 370

Equity Th eory 371

Expectancy Th eory 373

Goal-Setting Th eory 374

Self-Effi cacy Th eory 376

Reinforcement Th eory 377

Th e Law of Eff ect 377

Reinforcement Strategies 378

Positive Reinforcement 378

Punishment 379

Motivation and Job Design 379

Job Simplifi cation 380

Job Enrichment 380

Alternative Work Schedules 381

Management Learning Review 384

Summary 384

Self-Test 16 385

Management Skills & Competencies 386

Evaluate Career Situations: What Would You Do? 386 Refl ect on the Self-Assessment: Student Engagement Survey 386 Contribute to the Class Exercise: Why We Work 387 Manage a Critical Incident: Great Worker Won’t Take Vacation 387 Collaborate on the Team Activity: CEO Pay . . . Too High, or Just Right? 387 Analyze the Case Study: SAS 387

17 Teams and Teamwork 389

Teams in Organizations 390

Teamwork Pros 391

Teamwork Cons 391

Meetings, Meetings, Meetings 392

Organizations as Networks of Groups 393

Trends in the Use of Teams 393

Committees, Project Teams, and Task Forces 393

Cross-Functional Teams 394

Self-Managing Teams 394

Virtual Teams 395

Team Building 396

How Teams Work 397

Team Inputs 398

Stages of Team Development 399

Norms and Cohesiveness 401

Task and Maintenance Roles 402

Communication Networks 403

Decision Making in Teams 405

Ways Teams Make Decisions 406

Advantages and Disadvantages of Team Decisions 406

Groupthink 407

Creativity in Team Decision Making 408

Management Learning Review 409

Summary 409

Self-Test 17 410

Management Skills & Competencies 411

Evaluate Career Situations: What Would You Do? 411 Refl ect on the Self-Assessment: Team Leader Skills 411

Contents

xviii

Contribute to the Class Exercise: Work Team Dynamics 412 Manage a Critical Incident: Th e Rejected Team Leader 412 Collaborate on the Team Activity: Superstars on the Team 413 Analyze the Case Study: Auto Racing 413

18 Communication and

Collaboration 415

Th e Communication Process 416

Eff ective Communication 416

Persuasion and Credibility in Communication 417

Communication Barriers 418

Cross-Cultural Communication 421

Improving Collaboration through

Communication 422

Transparency and Openness 422

Use of Electronic Media 422

Active Listening 424

Constructive Feedback 425

Space Design 425

Managing Confl ict 426

Functional and Dysfunctional Confl ict 426

Causes of Confl ict 426

Confl ict Resolution 427

Confl ict Management Styles 427

Structural Approaches to Confl ict Management 428

Managing Negotiation 429

Negotiation Goals and Approaches 430

Gaining Agreements 430

Negotiation Pitfalls 431

Th ird-Party Dispute Resolution 431

Management Learning Review 433

Summary 433

Self-Test 18 434

Management Skills & Competencies 435

Evaluate Career Situations: What Would You Do? 435 Refl ect on the Self-Assessment: Confl ict Management Strategies 435 Contribute to the Class Exercise: Feedback Sensitivities 436

Manage a Critical Incident: Headphones on in the Offi ce 436 Collaborate on the Team Activity: How Words Count 437 Analyze the Case Study: Twitter 437

Management Cases for

Critical Th inking

1 Trader Joe’s—Keeping a Cool Edge 440

2 Zara International—Fashion at the Speed

of Light 441

3 Patagonia—Leading a Green Revolution 442

4 Timberland —From Bootmaker to

Earthkeeper 444

5 Harley-Davidson —Style and Strategy with a

Global Reach 445

6 In-N-Out Burger —Building Th em Better 447

7 Amazon.com —One E-Store to Rule Th em All 448

8 Walgreens—Staying One Step Ahead 449

9 Electronic Arts—Inside Fantasy Sports 450

10 Dunkin’ Donuts—Betting Dollars on Donuts 451

11 Nike—Spreading Out to Win the Race 453

12 Gamifi cation—Finding Legitimacy in the

New Corporate Culture 454

13 Two-Tier Wages —Same Job, Diff erent Pay 455

14 Zappos—Th ey Did It with Humor 456

15 Panera Bread—Growing a Company

with Personality 457

16 SAS—Business Success Starts on the Inside 458

17 Auto Racing—When the Driver Takes

a Back Seat 459

18 Twitter—Rewriting (or Killing)

Communication 461

Self-Test Answers 467

Glossary 477

Endnotes 491

Name Index 523

Organizational Index 526

Subject Index 529

CONTENTS

Management THIRTEENTH EDITION

Zappos CEO Tony Hsieh believes in happiness. His goal is “to set up an environment where the personalities, creativities, and individuality of all diff erent employees come out and shine.”

Brad Swonetz/Redux Pictures

Management

Today Everyone needs management skills

1 Key Takeaways

■ Recognize the challenges

of working in the new

economy.

■ Describe the nature of

organizations as work

settings.

■ Discuss what it means

to be a manager.

■ Explain the functions,

roles, and activities of

managers.

■ Identify essential

managerial skills and

discuss how they are

learned.

C H A P T E R Q U I C K STA RT

Management is part of our everyday lives. We manage ourselves, we manage

relationships, we manage families, and we manage teams and co-workers. Now is

a good time to study the fundamentals of management, learn more about your

capabilities, and start building skills for career and life success.

MANAGEMENT IS REAL MAKE DATA YOUR FRIEND

Multiple Generations Meet and Greet in the Workplace

THINK BEFORE YOU ACT

Want Vacation? No Problem, Take as Much as You Want

KNOW RIGHT FROM WRONG

Social Media Searches Linked with Discrimination in Hiring

LEARN ABOUT YOURSELF

Self-Awareness and the Johari Window

LEARN FROM ROLE MODELS

Ursula Burns Moves from Student Intern to Fortune 500 CEO

SKILLS MAKE YOU VALUABLE ■ EVALUATE Career Situations:

What Would You Do?

■ REFLECT On the Self-Assessment: Career Readiness “Big 20”

■ CONTRIBUTE To the Class Exercise: My Best Manager

■ MANAGE A Critical Incident: Team Leader Faces Test

■ COLLABORATE On the Team Activity: The Amazing Great Job Race

■ ANALYZE Th e Case Study: Trader Joe’s: Keeping a Cool Edge

what to look for inside >

3

4 CHAPTER 1 ■ Management Today

W elcome to Management 13/e and its theme of personal development

for career success. We live and work in a very complex world. Unem-

ployment and job scarcities, ethical miscues by business and government

leaders, fi nancial turmoil and uncertainties, environmental challenges, and

complex global economics and politics are regularly in the news. Today’s

organizations are fast changing, as is the nature of work itself. Talent and

technology reign supreme in the most desired jobs. Learning, performance, and

fl exibility are in as individual attributes; habit, complacency, and free-riding

are out. Employers expect the best from us, and the best employers provide

us with inspiring leadership and supportive work environments full of

respect, involvement, teamwork, and rewards. 1

Working Today TAKEAWAY 1 What are the challenges of working in the new economy?

Talent • Technology • Globalization • Ethics • Diversity Careers and Connections

In her book Th e Shift: Th e Future of Work Is Already Here, scholar Lynda Gratton describes

why things are changing so quickly today and how young people can navigate their careers

through these changes. “Technology shrinks the world but consumes all of our time,” Grat-

ton says; “globalization means we can work anywhere, but must compete with people from

everywhere.” 2 What does the changing nature of work mean as you plan for career entry and

advancement? You can’t expect a guarantee of long-term employment in today’s workplace.

More and more jobs have to be continually earned and re-earned through everyday perfor-

mance and accomplishments. And in times of continuous change, you have to accept that

your career will be defi ned by “fl exibility,” “free agency,” “skill portfolios,” and “entrepreneur-

ship.” Th ere is also no escaping the fact that your career success will require a lot of initiative,

self-awareness, and continuous learning. Th e question is: Are you ready?

Talent

A study by management scholars Charles O’Reilly and Jeff rey Pfeff er found that high-

performing companies are better than their competitors at getting extraordinary results

from employees. “Th ese companies have won the war for talent,” they argue, “not just by

being great places to work—although they are that—but by fi guring out how to get the best

out of all of their people, every day.” 3

People and their talents—what they know, what they learn, and what they achieve—are the

crucial foundations for organizational performance. Th ey represent what managers call

intellectual capital, which is the combined brainpower and shared knowledge of an organi-

zation’s employees. 4

Intellectual capital is a strategic asset that organizations can use to trans-

form human creativity, insight, and decision making into performance. Intellectual capital also

is a personal asset, one to be nurtured and continually updated. It is the package of intellect,

skills, and capabilities that sets us apart, and that makes us valuable to potential employers.

Th ink about the personal implications of this intellectual capital equation: Intellectual

Capital 5 Competency 3 Commitment.5 What does it suggest in terms of developing your talents for career success? Competency represents your personal talents or job-related

capabilities. Although extremely important, by itself competency won’t guarantee success.

You have to be committed. Commitment represents how hard you work to apply your tal-

ents and capabilities to important tasks. Both are essential. Having one without the other

won’t allow you to achieve important career goals or to meet even basic performance

requirements. It takes both competency and commitment to generate intellectual capital.

LEARN MORE

ABOUT

Intellectual capital is the collective

brainpower or shared knowledge of a

workforce.

Competency represents your personal

talents or job-related capabilities.

Commitment represents how hard

you work to apply your talents and

capabilities to important tasks.

WWWooorkkkiingg TTTooddaayyW

5Working Today

Workplace talents in today’s age of information, technology, and change are dominated

by knowledge workers whose minds—their creativity and insight—are critical assets. 6

Futurist Daniel Pink says we will soon enter a conceptual age where the premium will be on

“whole mind” competencies. Th ose who have them will be both “high concept”—creative

and good with ideas—and “high touch”—joyful and good with relationships. 7 Management

scholar and consultant Gary Hamel talks about a creative economy “where even knowledge

itself is becoming a commodity” and “the most important diff erentiator will be how fast you

can create something new.” 8 Mastering these intellectual challenges requires ongoing devel-

opment of multiple skill sets that always keep your personal competencies aligned with—

and at the forefront of—emerging job trends.

Technology

Technology continuously tests our talents and intrudes into every aspect of our lives. Th ink

Skype, Twitter, Instagram, Facebook, and more. We are continuously bombarded with

advertisements for the latest developments—from smartphones to smart apparel to smart

cars to smart homes, and from tablets to mini-tablets to e-readers. We struggle to keep up

with our social media involvements, stay connected with messaging, and deal with inboxes

full of e-mail and voice mail. It is likely that, right now, you are reading this “book” on your

favorite tablet or smartphone rather than in its traditional form. Given what has already

happened with how we use technology, what will things look like tomorrow?

A knowledge worker is someone

whose mind is a critical asset to

employers.

Is the notion of a “9 to 5” job about to become a relic? What happens as younger workers advance into management? How can baby boomers and millennials work well with each other? Th e

changing mix of ages and attitudes in the workplace is putting the

pressure on traditional employment practices. Here’s some survey

data to consider.

■ 60% of millennials change their fi rst jobs after three years and

employers spend $15,000 to $25,000 recruiting replacements.

■ Th e best predictor of job loyalty for millennials is “a good culture

fi t.”

■ 45% of millennials rate workplace fl exibility higher than pay and

71% hope co-workers will become a “second family.”

■ 68% of millennials get high scores for being enthusiastic

about work, 45% for being team players, and 39% for being

hardworking.

■ 73% of boomer managers get high scores for being hardworking,

55% for being team players, 21% for fl exibility, and 16% for inclu-

sive leadership.

■ 72% of college students say they want “a job where I can make

an impact.”

WHAT ARE THE IMPLICATIONS?

How do these fi ndings compare with your own career prefer- ences or what you hear from people you know? How might this evidence infl uence your approach to seeking a job? What char- acteristics and practices defi ne your ideal employer? What can employers do to attract and retain talented millennials while keeping older generations happy? Is what’s good for millenni- als necessarily good for everyone? How can managers effec- tively integrate people with varying needs and interests so employees from different generations work together with respect and pride?

analysis> MAKE DATA YOUR FRIEND > 72% of college students want “a job where I can make an impact.”

Multiple Generations Meet and Greet in the New World of Work

© Hero Images/Corbis

6 CHAPTER 1 ■ Management Today

It is critical to build and to maintain a high Tech IQ—the ability to use current technolo-

gies at work and in your personal life, combined with the commitment to keep yourself

updated as technology continues to evolve. Whether you’re checking inventory, making a

sale, ordering supplies, sourcing customers, prioritizing accounts, handling payrolls, recruit-

ing new hires, or analyzing customer preferences, Tech IQ is indispensable. More and more

people spend at least part of their workday “telecommuting” or “working from home” or in

“mobile offi ces.” Workplaces are full of “virtual teams” with members who meet, access com-

mon databases, share information and fi les, make plans and decisions, solve problems

together, and complete tasks without ever meeting face to face. Tech IQ is a baseline foun-

dation for succeeding in this fast-changing world of technological innovation.

Even fi nding work and succeeding in the job selection process today involves skilled use

of technology. Poor communication, sloppy approaches, and under-researched attempts do

not work in the world of electronic job search. Filling in your online profi le with the right key

words does work. Many employers use sophisticated software to scan online profi les for

indicators of real job skills and experiences that fi t their needs. Most recruiters today also

check social media for negative indicators about applicants.

Globalization

You can’t function National boundaries hardly count anymore in the world of business. 9

Over 5 million Americans work in the United States for foreign employers. 10

We buy cars like

Toyota, Nissan, BMW, and Mercedes that are assembled in America. We buy appliances

from the Chinese fi rm Haier and Eight O’Clock coff ee from India’s Tata Group. Top managers

at Starbucks, IBM, Sony, Ford, and other global companies have little need for the words

“overseas” or “international” in their vocabulary. Th ey operate as global businesses serving

customers around the globe. Th ey source materials and talent wherever in the world it can

be found at the lowest cost.

Th ese are among the many consequences of globalization, which is the worldwide inter-

dependence of resource fl ows, product markets, and business competition. 11

Under its infl u-

ence, government leaders worry about the competitiveness of nations, just as corporate

leaders worry about business competitiveness. 12

Countries and people are interconnected

through labor markets, employment patterns, and fi nancial systems. We are hardly sur-

prised anymore to fi nd that our customer service call is answered in Ghana, CT scans are

read by a radiologist in India, and business records maintained by accountants in the

Philippines.

One controversial consequence of globalization is job migration, which is the shifting of

jobs from one country to another. While the United States has been a net loser to job migra-

tion, countries like China, India, and the Philippines have been net gainers. Politicians and

policymakers regularly debate the costs of job migration as local jobs are lost and communi-

ties lose economic vitality. One side looks for new government policies to stop job migration

and protect U.S. jobs. Th e other side calls for patience, arguing that the national economy

will grow jobs in the long run as the global economy readjusts.

Th e fl ip side of job migration is reshoring, which is the shift of manufacturing and jobs

back home from overseas. As global manufacturing and transportation costs rise along with

worries about intellectual property protection in countries like China, manufacturing fi rms

including Caterpillar, Ford, and General Electric are doing more reshoring. 13

When Intel

announced an expansion of its semiconductor plant in Arizona, an industry analyst said:

“Th e huge advantage of keeping manufacturing in the U.S. is you don’t have to worry about

your intellectual property walking out the door every evening.” 14

Ethics

It’s old news now that Bernard Madoff was sentenced to 150 years in jail for a Ponzi scheme

costing investors billions of dollars. But the message is still timely and crystal clear: Commit

white-collar crime and you will be punished. 15

Madoff ’s crime did terrible harm to numerous

individuals who lost their life savings, charitable foundations that lost millions in charitable

Tech IQ is the ability to use technology

and to stay updated as technology

continues to evolve.

Globalization is the worldwide inter-

dependence of resource fl ows, product

markets, and business competition.

Job migration occurs when fi rms shift

jobs from a home country to foreign

ones.

Reshoring occurs when fi rms move

jobs back home from foreign locations.

7Working Today

gifts, and employees who lost their jobs. Our society also paid a large price as investors’ faith

in the business system was damaged by the scandal. Although very high profi le, the Madoff

scandal was by no means a unique or isolated case of bad behavior by a lone executive. Fresh

scandals regularly make the news.

Th e issues here move beyond criminal behavior and into the broader notion of ethics—a

code of moral principles that sets standards for conduct that is “good” and “right” versus

“bad” and “wrong.” 16

At the end of the day we depend on individuals, working at all organi-

zational levels, to conduct themselves in ethical ways. And even though ethics failures get

most of the publicity, you’ll fi nd many examples of managers who demonstrate moral lead-

ership and integrity. Believing that most CEOs are overpaid, the former CEO of Dial Corpo-

ration, Herb Baum, once gave his annual bonus to the fi rm’s lowest-paid workers. 17

In his

book Th e Transparent Leader, he argues that integrity is a key to leadership success and that

the responsibility for setting an organization’s ethical tone begins at the top.

One indicator of ethics in organizations is the emphasis given to social responsibility and

sustainability practices. Patagonia, for example, states its commitment to a responsible econ-

omy “that allows healthy communities, creates meaningful work, and takes from the earth

only what it can replenish.” 18

Another ethics indicator is the strength of corporate governance.

Th ink of it as the active oversight of top management decisions, corporate strategy, and fi nan-

cial reporting by a company’s board of directors.

Ethics set moral standards of what is

“good” and “right” in one’s behavior.

Corporate governance is the active

oversight of management decisions and

performance by a company’s board of

directors.

subtle cues—background photos and quotes, for example, on

the candidates’ religion (Muslim or Christian) and sexuality

(gay or straight). Results showed that Muslims (2%) were less

likely to be called for follow-up interviews than Christians

(17%). Sexuality cues made no significant difference in call-

back rates. It’s against U.S. employment law to use religion or

sexuality as hiring criteria, but the researchers point out that

discrimination based on social media investigations can be

unconscious rather than intentional, with the employer show-

ing the bias without realizing it. Professor Acquisti says: “By

and large, employers avoid asking questions about these traits

in interviews. But now technology makes it easier to find that

information.” Other social media cues at risk of discriminatory

behavior are photos of women showing pregnancies or chil-

dren, and applicants with names often associated with ethnic,

racial, or religious communities.

WHAT DO YOU THINK?

Facebook offers privacy settings to shield from public consump- tion information intended only for friends. But does this go far enough to protect individual privacy? Is it ethical for employers to use social media to “peek” at the personal lives of prospec- tive candidates? Should there be laws preventing them from do- ing so? What about individual responsibility? Given so much publicity on social media use by recruiters, shouldn’t job seekers be informed and aware enough to screen out potentially harmful and discriminatory information? Are these job seekers at fault if negative consequences result when they don’t?

ethics> KNOW RIGHT FROM WRONG > Subtleties in social media postings can contribute to discrimination in the recruitment process.

Social Media Searches Linked with Discrimination in Hiring

It’s no secret that a growing number of employers (more than a third) browse the Web and follow social media to gather information and impressions about job candidates. It is also well

known that inappropriate postings can hurt you. So much so that

people are increasingly trying to edit the bad things out of their

public profi les. New research reported from Carnegie Mellon

University, however, also suggests that subtleties in social media

postings can contribute to discrimination in the recruitment pro-

cess. One of the researchers, Professor Alessandro Acquisti, said:

“Th ere is so much information we reveal about ourselves online,

sometimes in ways we do not even realize.”

Researchers distributed 4,000 résumés to job posting sites

and associated the résumés with Facebook profiles offering

Loic Venance/AFP/Getty Images, Inc.

8 CHAPTER 1 ■ Management Today

Diversity

Th e term workforce diversity describes the composition of a workforce in terms of gender,

age, race, ethnicity, religion, sexual orientation, and able-bodiedness. 19

Th e changing demo-

graphics in society are well recognized. Members of minority groups now constitute more

than one-third of the U.S. population, and women may soon outnumber men in the U.S.

workforce. 20

By the year 2050, African Americans, Native Americans, Asians, and Hispanics

will be the new majority, and by 2050 the U.S. Census Bureau also expects that more than

20% of the population will be at least 65 years old.

Despite these changes, the way we deal with diversity in the workplace remains compli-

cated. Women now lead global companies like IBM, PepsiCo, Xerox, and Kraft, but they

hold only just 4% of all top jobs in American fi rms and 5% in large fi rms worldwide. 21

Th e

proportion of women at the top is growing, but female CEOs are also getting fi red at a

higher rate than their male counterparts. 22

People of color hold just 11% of executive jobs

in the Fortune 500, and among the CEOs there are six African-Americans, eight Asians, and

eight Hispanics. 23

Why aren’t there more women and people of color leading organizations? To what

extent does diversity bias still infl uence recruitment and selection decisions? Researchers

have found that résumés with white-sounding fi rst names, such as Brett, receive 50% more

responses from employers than equivalent résumés with black-sounding fi rst names, such

as Kareem. 24

Researchers also note that white leaders are viewed as more successful than

Workforce diversity describes workers’

diff erences in terms of gender, race, age,

ethnicity, religion, sexual orientation,

and able-bodiedness.

“Frankness,” “sharp humor,” “willingness to take risks,” “deep industry knowledge,” “technical prowess.” Th ese are all phrases used to describe Ursula Burns, CEO of Xerox Corporation.

She started as a mechanical engineering intern and moved up

to become the fi rst African American woman to head a Fortune

500 fi rm. Her experience and leadership skills were well matched

to the job’s many challenges.

In her prior role as president, Burns made tough decisions to

downsize the fi rm, close manufacturing operations, and change

the product mix. She also knew how to work well with the fi rm’s

board. Director Robert A. McDonald of Procter & Gamble says:

“She understands the technology and can communicate it in a

way that a director can understand it.”

A working mother and spouse, Burns was raised in a low- income

environment by a single mom in New York City public housing. She

says her mom “did everything you could imagine” and was “amazing.”

Th e advice she passed along included: “Don’t get confused when you

are rich and famous.” Burns studied hard, earned a master’s degree in

mechanical engineering from Columbia University, and from there

started the internship with Xerox. Th e rest is corporate history.

Pride in her achievements comes across loud and clear when

Burns talks about her work. “I’m in this job because I believe I

earned it through hard work and high performance,” she says. “Did

I get some opportunities early in my career because of my race and

gender? Probably . . . I imagine race and gender got the hiring guys’

attention. And the rest was really up to me.”

FIND INSPIRATION

Ursula Burns’s trajectory from student intern to CEO of a Fortune 500 fi rm is impressive. What career lessons are here for others to follow? Which special skills and personal characteristics may have helped Burns grow into her corporate leadership role? She’s an African American woman who grew up poor. How can her success in the male-dominated corporate environment serve as a role model for others?

wisdom> LEARN FROM ROLE MODELS > “I’m in this job because I believe I earned it through hard work and high performance.”

Ursula Burns Moves from Student Intern to Fortune 500 CEO

Ramin Talale/Bloomberg/Getty Images

9Working Today

minority leaders, and that white leaders are expected to succeed because of competence

while non-white leaders are expected to succeed despite incompetence. 25

Th e stage for diversity bias is set by prejudice—which is the display of negative, irrational

opinions and attitudes regarding members of diverse populations. An example of bias is linger-

ing prejudice against working mothers. Th e nonprofi t Families and Work Institute reported

that in 1977 49% of men and 71% of women believed that mothers can be good employees; by

2008 the fi gures had risen to 67% and 80%. 26

Don’t you wonder why there isn’t 100% support

for working mothers? And, how do you account for a study that sent faux résumés to recruiters

and found that the least desirable candidates were women with children? 27

Prejudice becomes active discrimination when minority members are unfairly treated

and denied the full benefi ts of organizational membership. One example of discrimination

is a manager inventing reasons not to interview a minority job candidate. Another example

is a supervisor who refuses to promote a working mother for fear that parenting responsibil-

ities will make it hard for her to do a good job. Th is thinking shows a subtle form of discrim-

ination called the glass ceiling eff ect, an invisible barrier or ceiling that prevents women

and minorities from rising to top jobs.

Scholar Judith Rosener warns that discrimination of any sort leads to “undervalued

and underutilized human capital.” 28

To avoid this problem the position of chief diversity

offi cer, or CDO, is gaining stature in organizations. Its presence recognizes that diversity

is not only a moral issue but an opportunity for real performance gains. Th e job of CDO is

to make sure the work environment allows women and minorities to fl ourish, and fully

utilizes their talents. 29

Careers and Connections

When the economy is down and employment markets are tight, the task of fi nding a career

entry point can be daunting. It always pays to remember the importance of online résumés

and job searches, and the power of social networking with established professionals. In addi-

tion, job seekers should consider internships as pathways to fi rst-job placements. But every-

thing still depends on the mix of skills you can off er a potential employer and how well you

communicate those skills. Picture yourself in a job interview. Th e recruiter asks this ques-

tion: “What can you do for us?” How do you reply? Your answer can set the stage for your

career success . . . or something less.

British scholar and consultant Charles Handy uses the analogy of the shamrock

organization to highlight the challenges of developing skill portfolios that fi t the new work-

place. 30

Th e fi rst leaf in the shamrock is a core group of permanent, full-time employees who

follow standard career paths. Th e number of people in this fi rst leaf is shrinking. 31

Th ey are

being replaced by a second leaf of “freelancers” and “independent contractors” who off er

specialized skills and talents on a contract basis, then change employers when projects are

completed. 32

Full-time employees are also

being replaced by a third leaf of temporary

part-timers. Th ey often work without bene-

fi ts and are the fi rst to lose their jobs when

an employer runs into economic diffi culties.

Th e fact is that you will have to succeed in a

free-agent economy, one where people

change jobs more often and work on fl exible

contracts with a shifting mix of employers over

time. Skills like those in the nearby box must

be kept up-to-date and portable. 33

Th ey can’t

be gained once and then forgotten. Th ey must

be carefully maintained and upgraded all the

time. All this places a premium on your capac-

ity for self-management—being able to

assess yourself realistically, recognize strengths

and weaknesses, make constructive changes,

and manage your personal development.

Prejudice is the display of negative,

irrational attitudes toward members of

diverse populations.

Discrimination actively denies

minority members the full benefi ts of

organizational membership.

Th e glass ceiling eff ect is an invisible

barrier limiting career advancement of

women and minorities.

Mastery: You need to be good at something; you need to be able to contribute

real value to your employer.

Networking: You need to know people and get connected; networking with

others within and outside the organization is essential.

Entrepreneurship: You must act as if you are running your own business,

spotting ideas and opportunities and pursuing them.

Technology: You have to embrace technology; you have to stay up-to-date and

fully utilize all that is available.

Marketing: You need to communicate your successes and progress—both

yours personally and those of your work team.

Renewal: You need to learn and change continuously, always improving

yourself for the future.

Early Career Survival Skills

A shamrock organization operates

with a core group of full-time long-term

workers supported by others who work

on contracts and part-time.

In a free-agent economy people

change jobs more often, and many

work on independent contracts with a

shifting mix of employers.

Self-management is the ability to

understand oneself, exercise initiative,

accept responsibility, and learn from

experience.

10 CHAPTER 1 ■ Management Today

Connections count highly in the free-agent economy. Th ey open doors to opportunities

and resources that otherwise wouldn’t be available. People with connections gain access to

valuable information about potential jobs and often score more interviews and better jobs

than those without connections. While in the past the best connections may have been lim-

ited to people who had gone to the “right” kinds of schools or came from the “right” kinds of

families, this is no longer the case. Social networking tools—such as LinkedIn, Facebook,

Google1, and Reddit—that connect users with similar interests have become the great equalizer. Th ey make the process of connecting much easier and more democratic than ever

before. Importantly, they are readily available ways for you to make connections that can help

with job searches and career advancement.

Social networking is the use of

dedicated websites and applications to

connect people having similar interests.

Organizations TAKEAWAY 2 What are organizations like as work settings?

Organizational purpose • Organizations as systems Organizational performance • Changing nature of organizations

As pointed out earlier, what happens from this point forward in your career is largely up to

you. So, let’s start with organizations. In order to make good employment choices and per-

form well in a career, you need to understand the nature of organizations and recognize how

they work as complex systems.

Organizational Purpose

An organization is a collection of people working together to achieve a common purpose.

It is a unique social phenomenon that enables its members to perform tasks far beyond the

reach of individual accomplishment. Th is description applies to organizations of all sizes

and types that make up the life of any community, from large corporations to small

businesses, as well as such nonprofi t organizations as schools, government agencies, and

community hospitals.

Th e broad purpose of any organization is to provide goods or services of value to

customers and clients. A clear sense of purpose tied to “quality products and services,”

“customer satisfaction,” and “social responsibility” can be an important source of organi-

zational strength and performance advantage. IBM’s former CEO, Samuel Palmisano,

once said: “One simple way to assess the impact of any organization is to ask the question:

How is the world diff erent because it existed?” 34

Whole Foods founder John Mackey

answers by saying: “I think that business has a noble purpose. It means that businesses

serve society. Th ey produce goods and services that make people’s lives better.” On the

Whole Foods website this is stated as a commitment to “Whole Foods—Whole People—

Whole Planet.” 35

Organizations as Systems

All organizations are open systems that interact with their environments. Th ey do so in a

continual process of obtaining resource inputs—people, information, resources, and

capital—and transforming them into outputs in the form of fi nished goods and services for

customers. 36

LEARN MORE

ABOUT

An organization is a collection of

people working together to achieve a

common purpose.

An open system transforms resource

inputs from the environment into

product outputs.

Learning Check 1

TAKEAWAYQUESTION 1 What are the challenges of working in the new economy?

BE SURE YOU CAN • describe how intellectual capital, ethics, diversity, globalization, technology, and the changing nature of

careers infl uence working in the new economy • defi ne intellectual capital, workforce diversity, and globalization • explain how

prejudice, discrimination, and the glass ceiling can hurt people at work

OOOrrggaannnizzatttioonnsO

11Organizations

As shown in Figure 1.1, feedback from the environment indicates how well an organiza-

tion is doing. When Starbucks started a customer blog, for example, requests for speedier

service popped up. Th e company quickly made changes that eliminated required signatures

on credit card charges less than $25. Salesforce.com is another company that thrives on

feedback. It set up a website called Idea Exchange to get customer suggestions, even asking

them at one point to vote on a possible name change—the response was “No!” 37

Gathering

and listening to customer feedback is important; without loyal customers, a business can’t

survive. When you hear or read about bankruptcies, they are stark testimonies to this fact of

the marketplace.

Organizational Performance

Organizations create value when they use resources well to produce good products and take

care of their customers. When operations add value to the original cost of resource inputs,

then a business organization can earn a profi t—selling a product for more than the costs of

making it, and a nonprofi t organization can add wealth to society—providing a public

service like fi re protection that is worth more than its cost.

One of the most common ways to assess performance by and within organizations is

productivity. It measures the quantity and quality of outputs relative to the cost of inputs.

And as Figure 1.2 shows, productivity involves both performance eff ectiveness and perfor-

mance effi ciency.

Performance eff ectiveness is an output measure of task or goal accomplishment. If you

are working as a software engineer for a computer game developer, performance eff ective-

ness may mean that you meet a daily production target in terms of the quantity and quality

of lines of code written. Th is productivity helps the company meet customer demands for

timely delivery of high-quality gaming products.

Productivity is the quantity and quality

of work performance, with resource

utilization considered.

Performance eff ectiveness is

an output measure of task or goal

accomplishment.

Resource inputs

The environment supplies

Product outputs

People Money Materials Technology Information