Managing to learn sanderson 3 key attributes

Management RICHARD L. DAFT

Vanderb i l t Un i ve r s i t y

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Management RICHARD L. DAFT

Vanderb i l t Un i ve r s i t y

NINTH EDITION

© 2010, 2008 South-Western, Cengage Learning

ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, information storage and retrieval systems, or in any other manner—except as may be permitted by the license terms herein.

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Management, Ninth Edition Richard L. Daft, with the assistance of Patricia G. Lane

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With deep appreciation to Dorothy, the playwright and partner in my life, and to my parents, who started my life

toward outcomes that I could not understand at the time.

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vii

About the Author

Richard L. Daft, PhD, is the Brownlee O. Currey, Jr., Pro- fessor of Management in the Owen Graduate School of Management at Vanderbilt University. Professor Daft specializes in the study of organization theory and leadership. Dr. Daft is a Fellow of the Academy of Management and has served on the editorial boards of Academy of Management Journal, Administrative Sci- ence Quarterly, and Journal of Management Education. He was the associate editor-in-chief of Organization Science and served for three years as associate editor of Administrative Science Quarterly. Professor Daft has authored or co-authored 12 books, including Organization Theory and Design (South-Western, 2007), The Leadership Experience (South-Western, 2008), and What to Study: Generating and Developing Research Questions (Sage, 1982). He published Fusion Leadership: Unlocking the Subtle Forces That Change People and Orga-

nizations (Berrett-Koehler, 2000, with Robert Lengel). He has also authored dozens of scholarly articles, papers, and chapters. His work has been published in Administra- tive Science Quarterly, Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Accounting Organizations and Society, Management Science, MIS Quarterly, California Management Review, and Organi- zational Behavior Teaching Review. Professor Daft is currently working on a new book, The Executive and the Elephant. He also is an active teacher and consultant. He has taught management, leadership, organizational change, organizational theory, and organizational behavior. Professor Daft served as associate dean, produced for-profi t theatrical produc- tions, and helped manage a start-up enterprise. He has been involved in management development and consulting for many companies and government organizations, including the American Banking Association, Bridgestone, Bell Canada, the National Transportation Research Board, Nortel, TVA, Pratt & Whitney, State Farm Insur- ance, Tenneco, the United States Air Force, the United States Army, J. C. Bradford & Co., Central Parking System, Entergy Sales and Service, Bristol-Myers Squibb, First American National Bank, and the Vanderbilt University Medical Center.

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ix

Preface

Managing for Innovation in a Changing World In recent years, organizations have been buffeted by massive and far-reaching social, technological, and economic changes. Any manager who still believed in the myth of stability was rocked out of complacency when, one after another, large fi nancial insti- tutions in the United States began to fail. Business schools, as well as managers and businesses, were scrambling to keep up with the fast-changing story and evaluate its impact. This edition of Management addresses themes and issues that are directly rel- evant to the current, fast-shifting business environment. I revised Management with a goal of helping current and future managers fi nd innovative solutions to the prob- lems that plague today’s organizations—whether they are everyday challenges or once-in-a-lifetime crises. The world in which most students will work as managers is undergoing a tremendous upheaval. Ethical turmoil, the need for crisis management skills, e-business, rapidly changing technologies, globalization, outsourcing, global virtual teams, knowledge management, global supply chains, the Wall Street melt- down, and other changes place demands on managers that go beyond the techniques and ideas traditionally taught in management courses. Managing today requires the full breadth of management skills and capabilities. This text provides comprehensive coverage of both traditional management skills and the new competencies needed in a turbulent environment characterized by economic turmoil, political confusion, and general uncertainty.

In the traditional world of work, management was to control and limit people, enforce rules and regulations, seek stability and effi ciency, design a top-down hier- archy, and achieve bottom-line results. To spur innovation and achieve high per- formance, however, managers need different skills to engage workers’ hearts and minds as well as take advantage of their physical labor. The new workplace asks that managers focus on leading change, harnessing people’s creativity and enthusiasm, fi nding shared visions and values, and sharing information and power. Teamwork, collaboration, participation, and learning are guiding principles that help managers and employees maneuver the diffi cult terrain of today’s turbulent business environ- ment. Managers focus on developing, not controlling, people to adapt to new tech- nologies and extraordinary environmental shifts, and thus achieve high performance and total corporate effectiveness.

My vision for the ninth edition of Management is to present the newest manage- ment ideas for turbulent times in a way that is interesting and valuable to students while retaining the best of traditional management thinking. To achieve this vision, I have included the most recent management concepts and research and have shown the contemporary application of management ideas in organizations. I have added a questionnaire at the beginning of each chapter that draws students personally into the topic and gives them some insight into their own management skills. A chapter feature for new managers, called the New Manager Self-Test, gives students a sense of what will be expected when they become managers. The combination of established scholarship, new ideas, and real-life applications gives students a taste of the energy, challenge, and adventure inherent in the dynamic fi eld of management. The South- Western/Cengage Learning staff and I have worked together to provide a textbook better than any other at capturing the excitement of organizational management.

I revised Management to provide a book of utmost quality that will create in stu- dents both respect for the changing fi eld of management and confi dence that they can

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understand and master it. The textual portion of this book has been enhanced through the engaging, easy-to-understand writing style and the many in-text examples, boxed items, and short exercises that make the concepts come alive for students. The graphic component has been enhanced with several new exhibits and a new set of photo essays that illustrate specifi c management concepts. The well-chosen photographs provide vivid illustrations and intimate glimpses of management scenes, events, and people. The photos are combined with brief essays that explain how a specifi c management concept looks and feels. Both the textual and graphic portions of the textbook help students grasp the often abstract and distant world of management.

Focus on Innovation: New to the Ninth Edition The ninth edition of Management is especially focused on the future of management education by identifying and describing emerging ideas and examples of innovative organizations and by providing enhanced learning opportunities for students.

Learning Opportunities The ninth edition has taken a leap forward in pedagogical features to help students understand their own management capabilities and learn what it is like to manage in an organization today. New to this edition is an opening questionnaire that directly relates to the topic of the chapter and enables students to see how they respond to situations and challenges typically faced by real-life managers. New Manager Self- Tests in each chapter provide further opportunity for students to understand their management abilities. These short feedback questionnaires give students insight into how they would function in the real world of management. End-of-chapter questions have been carefully revised to encourage critical thinking and application of chap- ter concepts. End-of-chapter cases and ethical dilemmas help students sharpen their diagnostic skills for management problem solving.

Chapter Content Within each chapter, many topics have been added or expanded to address the cur- rent issues managers face. At the same time, chapter text has been tightened and sharpened to provide greater focus on the key topics that count for management today. This tightening has resulted in a shortening of the text from 21 to 19 chapters. The essential elements about operations and technology have been combined into one chapter. An appendix on entrepreneurship and small business has been provided for students who want more information on managing in small businesses start-ups.

Chapter 1 includes a section on making the leap from being an individual contribu- tor in the organization to becoming a new manager and getting work done primarily through others. The chapter introduces the skills and competencies needed to manage organizations effectively, including issues such as managing diversity, coping with glo- balization, and managing crises. In addition, the chapter discusses today’s emphasis within organizations on innovation as a response to a rapidly changing environment.

Chapter 2 continues its solid coverage of the historical development of management and organizations. It also examines new management thinking for turbulent times. The chapter includes a new section on systemic thinking and an expanded discussion of post-World War II management techniques. The fi nal part of the chapter looks at issues of managing the technology-driven workplace, including supply chain man- agement, customer relationship management, and outsourcing.

Chapter 3 contains an updated look at current issues related to the environment and corporate culture, including a new section on issues related to the natural environ- ment and managers’ response to environmental advocates. The chapter also illus- trates how managers shape a high–performance culture as an innovative response to a shifting environment.

PREFACE xi

Chapter 4 takes a look at the growing power of China and India in today’s global business environment and what this means for managers around the world. The chapter discusses the need for cultural intelligence, and a new section looks at under- standing communication differences as an important aspect of learning to manage internationally or work with people from different cultures. In addition, the complex issues surrounding globalization are discussed, including a consideration of the cur- rent globalization backlash. A new section on human resources points out the need for evaluating whether people are suitable for foreign assignments.

Chapter 5 makes the business case for incorporating ethical values in the organi- zation. The chapter includes a new discussion of the bottom-of-the-pyramid business concept and how managers are successfully applying this new thinking. The chapter also has an expanded discussion of ethical challenges managers face today, includ- ing responses to recent fi nancial scandals. It considers global ethical issues, as well, including a discussion of corruption rankings of various countries.

Chapter 6 provides a more focused discussion of the overall planning process and a new discussion of using strategy maps for aligning goals. This chapter also takes a close look at crisis planning and how to use scenarios. The chapter’s fi nal section on planning for high performance has been enhanced by a new discussion of intelli- gence teams and an expanded look at using performance dashboards to help manag- ers plan in a fast-changing environment.

Chapter 7 continues its focus on the basics of formulating and implementing strategy. It includes a new section on diversifi cation strategy, looking at how managers use unrelated diversifi cation, related diversifi cation, or vertical integration as strategic approaches in shifting environments. This chapter also looks at new trends in strat- egy, including the dynamic capabilities approach and partnership strategies.

Chapter 8 gives an overview of managerial decision making with an expanded dis- cussion of how confl icting interests among managers can create uncertainty regard- ing decisions. A new section on why managers often make bad decisions looks at the biases that can cloud judgment. The chapter also includes a new section on innova- tive group decision making and the dangers of groupthink.

Chapter 9 discusses basic principles of organizing and describes both traditional and contemporary organizational structures in detail. The chapter includes a discussion of organic versus mechanistic structures and when each is more effective. Chapter 9 also provides a description of the virtual network organization form.

Chapter 10 includes a more focused discussion of the critical role of managing change and innovation today. The chapter includes a new discussion of the ambidextrous approach for both creating and using innovations and has expanded material on exploration and creativity, the importance of internal and external cooperation, and the growing trend toward open innovation.

Chapter 11 includes an expanded discussion of the strategic role of HRM in building human capital. The chapter has new sections on coaching and mentoring and the trend toward part-time and contingent employment. New ways of doing background checks on applicants, such as checking their pages on social networks, are discussed, and the chapter also looks at the changing social contract between employers and employees.

Chapter 12 has been revised and updated to refl ect the most recent thinking on organiza- tional diversity issues. The chapter looks at how diversity is changing the domestic and global workforce and includes a new section on the traditional versus inclusive models for managing diversity. This chapter also contains new coverage of the dividends of diversity; an expanded discussion of prejudice, discrimination, and stereotypes; and a new look at the difference between stereotyping and valuing cultural differences. The chapter includes a new fi ve-step process for achieving cultural competence.

Chapter 13 continues its solid coverage of the basics of organizational behavior, includ- ing personality, values and attitudes, perception, emotional intelligence, learning and

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problem-solving styles, and stress management. Many exercises and questionnaires throughout this chapter enhance students’ understanding of organizational behavior topics and their own personalities and attitudes.

Chapter 14 has been enriched with a discussion of followership. The chapter empha- sizes that good leaders and good followers share common characteristics. Good lead- ership can make a difference, often through subtle, everyday actions. The discussion of power and infl uence has been expanded to include the sources of power that are available to followers as well as leaders. The discussions of charismatic, transforma- tional, and interactive leadership have all been revised and refocused.

Chapter 15 covers the foundations of motivation and also incorporates recent think- ing about motivational tools for today, including an expanded treatment of employee engagement. The chapter looks at new motivational ideas such as the importance of helping employees achieve work-life balance, incorporating fun and learning into the workplace, giving people a chance to fully participate, and helping people fi nd meaning in their work.

Chapter 16 begins with a discussion of how managers facilitate strategic conversa- tions by using communication to direct everyone’s attention to the vision, values, and goals of the organization. The chapter explores the foundations of good com- munication and includes a new section on gender differences in communication, an enriched discussion of dialogue, and a refocused look at the importance of effective written communication in today’s technologically connected workplace, including the use of new forms of manager communication such as blogs.

Chapter 17 includes a new section on the dilemma of teams, acknowledging that teams are sometimes ineffective and looking at the reasons for this, including such problems as free riders, lack of trust among team members, and so forth. The chapter then looks at how to make teams effective, including a signifi cantly revised discus- sion of what makes an effective team leader. The chapter covers the types of teams and includes a new look at effectively using technology in virtual teams. The chapter also includes a section on managing confl ict, including the use of negotiation.

Chapter 18 provides an overview of fi nancial and quality control, including Six Sigma, ISO certifi cation, and a new application of the balanced scorecard, which views employee learning and growth as the foundation of high performance. The dis- cussion of hierarchical versus decentralized control has been updated and expanded. The chapter also addresses current concerns about corporate governance and fi nding a proper balance of control and autonomy for employees.

Chapter 19 has been thoroughly revised to discuss recent trends in operations man- agement, information technology, and e-business. The chapter begins by looking at the organization as a value chain and includes an expanded discussion of supply chain management and new technologies such a radio frequency identifi cation (RFID). The discussion of information technology has been updated to include the trend toward user-generated content through wikis, blogs, and social networking. The chapter explores how these new technologies are being applied within organizations along with traditional information systems. The chapter also discusses e-commerce strate- gies, the use of business intelligence software, and knowledge management.

In addition to the topics listed above, this text integrates coverage of the Internet and new technology into the various topics covered in each and every chapter.

Organization The chapter sequence in Management is organized around the management functions of planning, organizing, leading, and controlling. These four functions effectively encompass both management research and characteristics of the manager’s job.

Part One introduces the world of management, including the nature of management, issues related to today’s chaotic environment, the learning organization, historical perspectives on management, and the technology-driven workplace.

PREFACE xiii

Part Two examines the environments of management and organizations. This sec- tion includes material on the business environment and corporate culture, the global environment, ethics and social responsibility, and the natural environment.

Part Three presents three chapters on planning, including organizational goal setting and planning, strategy formulation and implementation, and the decision-making process.

Part Four focuses on organizing processes. These chapters describe dimensions of structural design, the design alternatives managers can use to achieve strategic objec- tives, structural designs for promoting innovation and change, the design and use of the human resource function, and the ways managing diverse employees are signifi - cant to the organizing function.

Part Five is devoted to leadership. The section begins with a chapter on organiza- tional behavior, providing grounding in understanding people in organizations. This foundation paves the way for subsequent discussion of leadership, motivation of employees, communication, and team management.

Part Six describes the controlling function of management, including basic principles of total quality management, the design of control systems, information technology, and techniques for control of operations management.

Innovative Features A major goal of this book is to offer better ways of using the textbook medium to convey management knowledge to the reader. To this end, the book includes several innova- tive features that draw students in and help them contemplate, absorb, and comprehend management concepts. South-Western has brought together a team of experts to create and coordinate color photographs, video cases, beautiful artwork, and supplemental materials for the best management textbook and package on the market.

Chapter Outline and Objectives. Each chapter begins with a clear statement of its learning objectives and an outline of its contents. These devices provide an overview of what is to come and can also be used by students to guide their study and test their understanding and retention of important points.

Opening Questionnaire. The text grabs student attention immediately by giving the student a chance to participate in the chapter content actively by completing a short questionnaire related to the topic.

Take a Moment. At strategic places through the chapter, students are invited to Take a Moment to apply a particular concept or think about how they would apply it as a practicing manager. This call to action further engages students in the chapter con- tent. Some of the Take a Moment features also refer students to the associated New Manager Self-Test, or direct students from the chapter content to relevant end-of- chapter materials, such as an experiential exercise or an ethical dilemma.

New Manager Self-Test. A New Manager Self-Test in each chapter of the text provides opportunities for self-assessment as a way for students to experience management issues in a personal way. The change from individual performer to new manager is dramatic, and these self-tests provide insight into what to expect and how students might perform in the world of the new manager.

Concept Connection Photo Essays. A key feature of the book is the use of photo- graphs accompanied by detailed photo essay captions that enhance learning. Each caption highlights and illustrates one or more specifi c concepts from the text to rein- force student understanding of the concepts. Although the photos are beautiful to look at, they also convey the vividness, immediacy, and concreteness of management events in today’s business world.

Contemporary Examples. Every chapter of the text contains several written examples of management incidents. They are placed at strategic points in the chapter and are

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designed to illustrate the application of concepts to specifi c companies. These in-text examples—indicated by an icon in the margin—include well-known U.S. and inter- national companies such as Toyota, Facebook, UPS, LG Electronics, Google, Unilever, Siemens, and eBay, as well as less-well-known companies and not-for-profi t organi- zations such as Red 5 Studios, Strida, Genmab AS, ValueDance, and the U.S. Federal Bureau of Investigation (FBI). These examples put students in touch with the real world of organizations so that they can appreciate the value of management concepts.

Manager’s Shoptalk Boxes. A Manager’s Shoptalk box in each chapter addresses a specifi c topic straight from the fi eld of management that is of special interest to stu- dents. These boxes may describe a contemporary topic or problem that is relevant to chapter content, or they may contain a diagnostic questionnaire or a special example of how managers handle a problem. The boxes heighten student interest in the sub- ject matter and provide an auxiliary view of management issues not typically avail- able in textbooks.

Video Cases. The six parts of the text conclude with video cases, one per chapter, that illustrate the concepts presented in that part. The 19 videos enhance class discussion, because students can see the direct application of the management theories they have learned. Companies discussed in the video package include Recycline, Flight 001, and Numi Organic Teas. Each video case explores the issues covered in the video, allowing students to synthesize the material they’ve just viewed. The video cases culminate with several questions that can be used to launch classroom discussion or as homework. Suggested answers are provided in the Media Case Library.

Exhibits. Several exhibits have been added or revised in the ninth edition to enhance student understanding. Many aspects of management are research based, and some concepts tend to be abstract and theoretical. The many exhibits throughout this book enhance students’ awareness and understanding of these concepts. These exhibits con- solidate key points, indicate relationships among concepts, and visually illustrate con- cepts. They also make effective use of color to enhance their imagery and appeal.

Glossaries. Learning the management vocabulary is essential to understanding con- temporary management. This process is facilitated in three ways. First, key concepts are boldfaced and completely defi ned where they fi rst appear in the text. Second, brief defi nitions are set out in the margin for easy review and follow-up. Third, a glossary summarizing all key terms and defi nitions appears at the end of the book for handy reference.

A Manager’s Essentials and Discussion Questions. Each chapter closes with a sum- mary of the essential points that students should retain. The discussion questions are a complementary learning tool that will enable students to check their understand- ing of key issues, to think beyond basic concepts, and to determine areas that require further study. The summary and discussion questions help students discriminate between main and supporting points and provide mechanisms for self-teaching.

Management in Practice Exercises. End-of-chapter exercises called “Management in Practice: Experiential Exercise” and “Management in Practice: Ethical Dilemma” provide a self-test for students and an opportunity to experience management issues in a personal way. These exercises take the form of questionnaires, scenarios, and activities, and many also provide an opportunity for students to work in teams. The exercises are tied into the chapter through the Take a Moment feature that refers stu- dents to the end-of-chapter exercises at the appropriate point in the chapter content.

Case for Critical Analysis. Also appearing at the end of each chapter is a brief but substantive case that provides an opportunity for student analysis and class discus- sion. Some of these cases are about companies whose names students will recog- nize; others are based on real management events but the identities of companies and managers have been disguised. These cases allow students to sharpen their diagnos- tic skills for management problem solving.

PREFACE xv

Continuing Case. Located at the end of each part, the Continuing Case is a run- ning discussion of management topics appropriate to that part as experienced by General Motors Company. Focusing on one company allows students to follow the managers’ and the organization’s long-term problems and solutions in a sustained manner.

Supplementary Materials Instructor’s Manual. Designed to provide support for instructors new to the course, as well as innovative materials for experienced professors, the Instructor’s Man- ual includes Chapter Outlines, annotated learning objectives, Lecture Notes, and sample Lecture Outlines. Additionally, the Instructor’s Manual includes answers and teaching notes to end-of-chapter materials, including the video cases and the continuing case.

Instructor’s CD-ROM. Key instructor ancillaries (Instructor’s Manual, Test Bank, ExamView, and PowerPoint slides) are provided on CD-ROM, giving instructors the ultimate tool for customizing lectures and presentations.

Test Bank. Scrutinized for accuracy, the Test Bank includes more than 2,000 true/ false, multiple-choice, short-answer, and essay questions. Page references are indi- cated for every question, as are designations of either factual or application so that instructors can provide a balanced set of questions for student exams. Each question is also tagged based on AACSB guidelines.

ExamView. Available on the Instructor’s Resource CD-ROM, ExamView contains all of the questions in the printed Test Bank. This program is an easy-to-use test cre- ation software compatible with Microsoft Windows. Instructors can add or edit ques- tions, instructions, and answers, and select questions (randomly or numerically) by previewing them on the screen. Instructors can also create and administer quizzes online, whether over the Internet, a local area network (LAN), or a wide area network (WAN).

PowerPoint Lecture Presentation. Available on the Instructor’s Resource CD-ROM and the Web site, the PowerPoint Lecture Presentation enables instructors to custom- ize their own multimedia classroom presentation. Containing an average of 27 slides per chapter, the package includes fi gures and tables from the text, as well as outside materials to supplement chapter concepts. Material is organized by chapter and can be modifi ed or expanded for individual classroom use. PowerPoint slides are also easily printed to create customized Transparency Masters.

Study Guide. Packed with real-world examples and additional applications for help- ing students master management concepts, this learning supplement is an excellent resource. For each chapter of the text, the Study Guide includes a summary and com- pletion exercise; a review with multiple-choice, true/false, and short-answer ques- tions; a mini case with multiple-choice questions; management applications; and an experiential exercise that can be assigned as homework or used in class.

Video Package. The video package for Management, ninth edition, contains two options: On the Job videos created specifi cally for the ninth edition of Daft’s Man- agement and BizFlix videos. On the Job videos use real-world companies to illustrate management concepts as outlined in the text. Focusing on both small and large busi- ness, the videos give students an inside perspective on the situations and issues that corporations face. BizFlix are fi lm clips taken from popular Hollywood movies such as Failure to Launch, Rendition, and Friday Night Lights, and integrated into the ninth edition of Daft. Clips are supported by short cases and discussion questions at the end of each chapter.

Web Site (www.cengage.com/management/daft). Discover a rich array of online teaching and learning management resources that you won’t fi nd anywhere else.

www.cengage.com/management/daft
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Resources include interactive learning tools, links to critical management Web sites, and password-protected teaching resources available for download.

Premium Student Web Site (www.cengage.com/login). Give your students access to additional study aides for your management course. With this optional package, stu- dents gain access to the Daft premium Web site. There your students will fi nd inter- active quizzes, fl ashcards, PowerPoint slides, learning games, and more to reinforce chapter concepts. Add the ninth edition of Management to your bookshelf at www .cengage.com/login and access the Daft Premium Web site to learn more.

Acknowledgments A gratifying experience for me was working with the team of dedicated professionals at South-Western who were committed to the vision of producing the best manage- ment text ever. I am grateful to Joe Sabatino, executive editor, whose enthusiasm, creative ideas, assistance, and vision kept this book’s spirit alive. Emma Newsom, managing developmental editor, provided superb project coordination and offered excellent ideas and suggestions to help the team meet a demanding and sometimes arduous schedule. Kimberly Kanakes, executive marketing manager, and Clint Kernen, marketing manager, provided keen market knowledge and innovative ideas for instructional support. Martha Conway, senior content project manager, cheerfully and expertly guided me through the production process. Tippy McIntosh contributed her graphic arts skills to create a visually dynamic design. Ruth Belanger, editorial assistant, and Sarah Rose, marketing coordinator, skillfully pitched in to help keep the project on track. Joe Devine deserves a special thank you for his layout expertise and commitment to producing an attractive, high-quality textbook. Additionally, BJ Parker, Copyshop, USA, contributed the Continuing Case.

Here at Vanderbilt I want to extend special appreciation to my assistant, Barbara Haselton. Barbara provided excellent support and assistance on a variety of proj- ects that gave me time to write. I also want to acknowledge an intellectual debt to my colleagues, Bruce Barry, Ray Friedman, Neta Moye, Rich Oliver, David Owens, Ranga Ramanujam, Bart Victor, and Tim Vogus. Thanks also to Deans Jim Bradford and Bill Christie who have supported my writing projects and maintained a positive scholarly atmosphere in the school. Another group of people who made a major con- tribution to this textbook are the management experts who provided advice, reviews, answers to questions, and suggestions for changes, insertions, and clarifi cations. I want to thank each of these colleagues for their valuable feedback and suggestions on the ninth edition:

David Alexander Christian Brothers University

Reginald L Audibert California State University—Long Beach

Burrell A. Brown California University of Pennsylvania

Paula Buchanan Jacksonville State University

Diane Caggiano Fitchburg State College

Bruce Charnov Hofstra University

Gloria Cockerell Collin College

Jack Cox Amberton University

Paul Ewell Bridgewater College

Mary M. Fanning College of Notre Dame of Maryland

Merideth Ferguson Baylor University

Karen Fritz Bridgewater College

Yezdi H. Godiwalla University of Wisconsin— Whitewater

James Halloran Wesleyan College

Stephen R. Hiatt Catawba College

Betty Hoge Bridgewater College

Jody Jones Oklahoma Christian University

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Jerry Kinard Western Carolina University

Sal Kukalis California State University—Long Beach

Joyce LeMay Bethel University

Wade McCutcheon East Texas Baptist College

Tom Miller Concordia University

W J Mitchell Bladen Community College

John Okpara Bloomsburg University

Lori A. Peterson Augsburg College

Michael Provitera Barry University

Abe Qastin Lakeland College

Holly Caldwell Ratwani Bridgewater College

Terry L. Riddle Central Virginia Commu- nity College

Thomas Sy California State University—Long Beach

Kevin A. Van Dewark Humphreys College

Noemy Watchel Kean University

Peter Wachtel Kean University

David C. Adams Manhattanville College

Erin M. Alexander University of Houston– Clear Lake

Hal Babson Columbus State Community College

Reuel Barksdale Columbus State Community College

Gloria Bemben Finger Lakes Community College

Pat Bernson County College of Morris

Art Bethke Northeast Louisiana University

Thomas Butte Humboldt State University

Peter Bycio Xavier University, Ohio

Diane Caggiano Fitchburg State College

Douglas E. Cathon St. Augustine’s College

Jim Ciminskie Bay de Noc Community College

Dan Connaughton University of Florida

Bruce Conwers Kaskaskia College

Byron L. David The City College of New York

Richard De Luca William Paterson University

Robert DeDominic Montana Tech

Linn Van Dyne Michigan State University

John C. Edwards East Carolina University

Mary Ann Edwards College of Mount St. Joseph

Janice M. Feldbauer Austin Community College

Daryl Fortin Upper Iowa University

Michael P. Gagnon New Hampshire Community Technical College

Richard H. Gayor Antelope Valley College

Dan Geeding Xavier University, Ohio

James Genseal Joliet Junior College

Peter Gibson Becker College

Carol R. Graham Western Kentucky University

Gary Greene Manatee Community College

Ken Harris Indiana University Southeast

Paul Hayes Coastal Carolina Commu- nity College

Dennis Heaton Maharishi University of Management, Iowa

Jeffrey D. Hines Davenport College

Bob Hoerber Westminster College

James N. Holly University of Wisconsin– Green Bay

Genelle Jacobson Ridgewater College

C. Joy Jones Ohio Valley College

Kathleen Jones University of North Dakota

Sheryl Kae Lynchburg College

Jordan J. Kaplan Long Island University

I would also like to continue to acknowledge those reviewers who have contrib- uted comments, suggestions and feedback on previous editions:

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J. Michael Keenan Western Michigan University

Gloria Komer Stark State College

Paula C. Kougl Western Oregon University

Cynthia Krom Mount St. Mary College

Mukta Kulkarni University of Texas–San Antonio

William B. Lamb Millsaps College

Robert E. Ledman Morehouse College

George Lehma Bluffton College

Cynthia Lengnick-Hall University of Texas–San Antonio

Janet C. Luke Georgia Baptist College of Nursing

Jenna Lundburg Ithaca College

Walter J. MacMillan Oral Roberts University

Myrna P. Mandell California State University, Northridge

Daniel B. Marin Louisiana State University

Michael Market Jacksonville State University

James C. McElroy Iowa State University

Dennis W. Meyers Texas State Technical College

Alan N. Miller University of Nevada–Las Vegas

Irene A. Miller Southern Illinois University

James L. Moseley Wayne State University

Micah Mukabi Essex County College

David W. Murphy Madisonville Community College

Nora Nurre Upper Iowa University

Tomas J. Ogazon St. Thomas University

Allen Oghenejbo Mills College

Linda Overstreet Hillsborough Community College

Ken Peterson Metropolitan State University

Clifton D. Petty Drury College

James I. Phillips Northeastern State University

Linda Putchinski University of Central Florida

Kenneth Radig Medaille College

Gerald D. Ramsey Indiana University Southeast

Barbara Redmond Briar Cliff College

William Reisel St. John’s University–New York

Terry Riddle Central Virginia Commu- nity College

Walter F. Rohrs Wagner College

Meir Russ University of Wisconsin– Green Bay

Marcy Satterwhite Lake Land College

Don Schreiber Baylor University

Kilmon Shin Ferris State University

Daniel G. Spencer University of Kansas

Gary Spokes Pace University

M. Sprencz David N. Meyers College

Shanths Srinivas California State Polytechnic University, Pomona

Jeffrey Stauffer Ventura College

William A. Stower Seton Hall University

Mary Studer Southwestern Michigan College

Bruce C. Walker Northeast Louisiana University

Mark Weber University of Minnesota

Emilia S. Westney Texas Tech University

Stan Williamson Northeast Louisiana University

Alla L. Wilson University of Wisconsin– Green Bay

Ignatius Yacomb Loma Linda University

Imad Jim Zbib Ramapo College of New Jersey

Vic Zimmerman Pima Community College

James Swenson Moorhead State University, Minnesota

Irwin Talbot St. Peter’s College

PREFACE xix

Andrew Timothy Lourdes College

Frank G. Titlow St. Petersburg Junior College

John Todd University of Arkansas

Philip Varca University of Wyoming

Dennis L. Varin Southern Oregon University

Gina Vega Merrimack College

George S. Vozikis University of Tulsa

Bruce C. Walker Northeast Louisiana University

Mark Weber University of Minnesota

Emilia S. Westney Texas Tech University

Stan Williamson Northeast Louisiana University

Alla L. Wilson University of Wisconsin– Green Bay

Ignatius Yacomb Loma Linda University

Imad Jim Zbib Ramapo College of New Jersey

Vic Zimmerman Pima Community College

I’d like to pay special tribute to my long-time editorial associate, Pat Lane. I can’t imagine how I would ever complete such a comprehensive revision on my own. Pat provided truly outstanding help throughout every step of writing the ninth edition of Management. She skillfully drafted materials for a wide range of chapter topics, boxes, and cases; researched topics when new sources were lacking; and did an absolutely superb job with the copyedited manuscript and page proofs. Her commitment to this text enabled us to achieve our dream for its excellence. I also want to pay tribute to Mary Draper, who stepped in to help with the research and revision of this edition. Mary also did a superb job with the copyedited manu- script and page proofs. We could not have completed this revision without Mary’s excellent assistance.

Finally, I want to acknowledge the love and contributions of my wife, Dorothy Marcic. Dorothy has been very supportive during this revision as we share our lives together. I also want to acknowledge the love and support from my fi ve daughters— Danielle, Amy, Roxanne, Solange, and Elizabeth—who make my life special during our precious time together. Thanks also to B. J. and Kaitlyn and Kaci and Matthew for their warmth and smiles that brighten my life, especially during our days together skiing and on the beach.

Richard L. Daft Nashville, Tennessee December 2008

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xxi

Part 1 INTRODUCTION TO MANAGEMENT

1 Innovative Management for Turbulent Times 2

2 The Evolution of Management Thinking 32

Part 2 THE ENVIRONMENT OF MANAGEMENT

3 The Environment and Corporate Culture 62

4 Managing in a Global Environment 94

5 Managing Ethics and Social Responsibility 128

Part 3 PLANNING

6 Managerial Planning and Goal Setting 158

7 Strategy Formulation and Implementation 184

8 Managerial Decision Making 212

Part 4 ORGANIZING

9 Designing Adaptive Organizations 242

10 Managing Change and Innovation 276

11 Managing Human Resources 306

12 Managing Diversity 340

Part 5 LEADING

13 Dynamics of Behavior in Organizations 376

14 Leadership 408

15 Motivating Employees 440

16 Managing Communication 470

17 Leading Teams 502

Part 6 CONTROLLING

18 Managing Quality and Performance 536 19 Managing the Value Chain, Information Technology,

and E-Business 568

APPENDIX A: MANAGING SMALL BUSINESS START-UPS 601

Glossary 625

Indexes 639

Brief Contents

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xxiii

Part 1 INTRODUCTION TO MANAGEMENT

1 Innovative Management for Turbulent Times 2 Are You Ready to Be a Manager? 3 Why Innovation Mat ters 4 The Defi nition of Management 4 The Four Management Functions 5

Planning 5 | Organizing 6 | Leading 6 Controlling 7

Organizational Performance 7 Management Skills 8

Conceptual Skills 8 | Human Skills 9 | Technical Skills 9 | When Skills Fail 10

Management Types 10 Vertical Differences 11 | Horizontal Differences 12

What Is It Like to Be a Manager? 13 Making the Leap: Becoming a New Manager 13

New Manager Self-Test: Manager Achievement 14 Manager’s Shoptalk: Do You Really Want To Be A Manager? 16

Manager Activities 17 | Manager Roles 18 Managing in Small Businesses and Nonprofi t Organizations 20 Management and the New Workplace 21

New Workplace Characteristics 21 | New Management Competencies 23

A Manager’s Essentials: What Have We Learned? 23 Discussion Questions 24 Management in Practice: Experiential Exercise 25 Management in Practice: Ethical Dilemma 26 Case for Critical Analysis 26 ON THE JOB VIDEO CASE 27

BIZ FLIX VIDEO CASE 28 Endnotes 29

2 The Evolution of Management Thinking 32 Are You a New-Style or an Old-Style Manager? 33 Management and Organization 34 Manager’s Shoptalk: Contemporary Management Tools 35 Classical Perspective 36

Scientifi c Management 37 | Bureaucratic Organizations 38 | Administrative Principles 40

Humanistic Perspective 41 Human Relations Movement 42 | Human Resources Perspective 43

New Manager Self-Test: Evolution of Style 44 Behavioral Sciences Approach 45

Management Science Perspective 46 Recent Historical Trends 47

Systems Theory 47 | Contingency View 48 | Total Quality Management 49

Innovative Management Thinking For Turbulent Times 50

The Learning Organization 50 Managing the Technology-Driven Workplace 50

A Manager’s Essentials: What Have We Learned? 52 Discussion Questions 52 Management in Practice: Experiential Exercise 53 Management in Practice: Ethical Dilemma 53 Case for Critical Analysis 54 ON THE JOB VIDEO CASE 55 BIZ FLIX VIDEO CASE 56 Endnotes 57 Continuing Case 60

3 The Environment and Corporate Culture 62 Are You Fit for Managerial Uncertainty? 63 The External Environment 64

General Environment 65

Manager’s Shoptalk: Creating Guanxi in China 67 Task Environment 69

The Organization–Environment Relationship 72 Environmental Uncertainty 72 | Adapting to the Environment 73

Part 2 THE ENVIRONTMENT OF MANAGEMENT

Contents

xxiv

The Internal Environment: Corporate Culture 75 Symbols 77 | Stories 77 | Heroes 77 Slogans 78 | Ceremonies 78

Environment and Culture 78 Adaptive Cultures 79 | Types of Cultures 79

New Manager Self-Test: Culture Preference 82 Shaping Corporate Culture for Innovative Response 82

Managing the High-Performance Culture 83 | Cultural Leadership 85

A Manager’s Essentials: What Have We Learned? 85 Discussion Questions 86 Management in Practice: Experiential Exercise 87 Management in Practice: Ethical Dilemma 87 Case for Critical Analysis 88 ON THE JOB VIDEO CASE 89 BIZ FLIX VIDEO CASE 90 Endnotes 91

4 Managing in a Global Environment 94 Are You Ready To Work Internationally? 95 A Borderless World 96 Getting Started Internationally 98

Exporting 98 | Outsourcing 99 | Licensing 99 Direct Investing 100 | China Inc. 101

The International Business Environment 102 The Economic Environment 103

Economic Development 103 | Resource and Product Markets 103 | Exchange Rates 104

The Legal-Political Environment 104 The Sociocultural Environment 105

Social Values 105 Manager’s Shoptalk: How Well Do You Play The Culture Game? 108

Communication Differences 109 | Other Cultural Characteristics 110

International Trade Alliances 111 GAT T and the World Trade Organization 112 | European Union 112 | North American Free Trade Agreement (NAF TA) 113

The Globalization Backlash 113 Multinational Corporations 114 Managing in a Global Environment 115

Developing Cultural Intelligence 115 | Managing Cross-Culturally 116

New Manager Self-Test: Are You Culturally Intelligent? 117 A Manager’s Essentials: What Have We Learned? 119 Discussion Questions 120 Management in Practice: Experiential Exercise 120 Management in Practice: Ethical Dilemma 121 Case for Critical Analysis 122 ON THE JOB VIDEO CASE 123 BIZ FLIX VIDEO CASE 124 Endnotes 124

5 Managing Ethics and Social Responsibility 128 Will You Be a Courageous Manager? 129 What Is Managerial Ethics? 130 Ethical Dilemmas: What Would You Do? 131 Criteria for Ethical Decision Making 132

Utilitarian Approach 132 Individualism Approach 132 | Moral-Rights Approach 133 | Justice Approach 133

Manager Ethical Choices 134 Manager’s Shoptalk: How to Challenge the Boss on Ethical Issues 136 New Manager Self-Test: Self and Others 137 What Is Corporate Social Responsibility? 138

Organizational Stakeholders 138 | The Bottom of the Pyramid 140

The Ethic of Sustainability 141 Evaluating Corporate Social Responsibilit y 142 Managing Company Ethics and Social Responsibilit y 144

Code of Ethics 144 | Ethical Structures 145 | Whistle-Blowing 146 | The Business Case for Ethics and Social Responsibility 147

A Manager’s Essentials: What Have We Learned? 148 Discussion Questions 148 Management in Practice: Experiential Exercise 149 Management in Practice: Ethical Dilemma 150 Case for Critical Analysis 150 ON THE JOB VIDEO CASE 151 BIZ FLIX VIDEO CASE 152 Endnotes 153 Continuing Case 156

6 Managerial Planning and Goal Setting 158 Does Goal Set ting Fit Your Management Style? 159 Overview of Goals and Plans 160

Levels of Goals and Plans 160 | Purposes of Goals and Plans 160 | The Organizational Planning Process 162

Goals in Organizations 162 New Manager Self-Test: Your Approach to Studying 163

Organizational Mission 163 Goals and Plans 164 | Aligning Goals with Strategy Maps 166

Part 3 PLANNING

CONTENTS

xxv

Operational Planning 167 Criteria for Effective Goals 168 | Management by Objectives 168 | Single-Use and Standing Plans 171

Manager’s Shoptalk: Regulating E-Mail in the Workplace 171 Planning for a Turbulent Environment 172

Contingency Planning 172 | Building Scenarios 173 | Crisis Planning 173

Planning for High Performance 175 Traditional Approaches to Planning 175 | High- Performance Approaches to Planning 175

A Manager’s Essentials: What Have We Learned? 178 Discussion Questions 178 Management in Practice: Experiential Exercise 179 Management in Practice: Ethical Dilemma 179 Case for Critical Analysis 180 ON THE JOB VIDEO CASE 181 BIZ FLIX VIDEO CASE 182 Endnotes 182

7 Strategy Formulation and Implementation 184 What Is Your Strategy Strength? 185 Thinking Strategically 186 New Manager Self-Test: Your Approach to Studying, Part 2 187 What Is Strategic Management? 188

Purpose of Strategy 188 | Levels of Strategy 190 The Strategic Management Process 191

Strategy Formulation Versus Execution 191 | SWOT Analysis 192

Formulating Corporate-Level Strategy 194 Portfolio Strategy 194 | The BCG Matrix 194 | Diversifi cation Strategy 195

Formulating Business-Level Strategy 196 Porter’s Five Competitive Forces 196 | Competitive Strategies 198

New Trends in Strategy 199 Innovation from Within 200 | Strategic Partnerships 200

Global Strategy 200 Globalization 201 | Multidomestic Strategy 202 | Transnational Strategy 202

Strategy Execution 203 Manager’s Shoptalk: Tips for Effective Strategy Execution 204

A Manager’s Essentials: What Have We Learned? 205 Discussion Questions 206 Management in Practice: Experiential Exercise 206 Management in Practice: Ethical Dilemma 207 Case for Critical Analysis 207 ON THE JOB VIDEO CASE 208 BIZ FLIX VIDEO CASE 209 Endnotes 210

8 Managerial Decision Making 212 How Do You Make Decisions? 213 Types of Decisions and Problems 214

Programmed and Nonprogrammed Decisions 214 | Facing Certainty and Uncertainty 215

Decision-Making Models 217 The Ideal, Rational Model 217 | How Managers Actually Make Decisions 218

New Manager Self-Test: Making Important Decisions 220

Political Model 221 Decision-Making Steps 222

Recognition of Decision Requirement 222 | Diagnosis and Analysis of Causes 222 | Development of Alternatives 223 | Selection of Desired Alternative 224 | Implementation of Chosen Alternative 224 | Evaluation and Feedback 225

Personal Decision Framework 226 Why Do Managers Make Bad Decisions? 227 Innovative Group Decision Making 228 Manager’s Shoptalk: Evidence-Based Management 229

Start with Brainstorming 229 Engage in Rigorous Debate 230 | Avoid Groupthink 230 | Know When to Bail 231

A Manager’s Essentials: What Have We Learned? 231 Discussion Questions 232 Management in Practice: Experiential Exercise 232 Management in Practice: Ethical Dilemma 233 Case for Critical Analysis 234 ON THE JOB VIDEO CASE 235 BIZ FLIX VIDEO CASE 236 Endnotes 237 Continuing Case 240

9 Designing Adaptive Organizations 242 What Are Your Leadership Beliefs? 243 Organizing the Vertical Structure 244

Work Specialization 244 | Chain of Command 245 | Span of Management 247

Manager’s Shoptalk: How to Delegate 248 Centralization and Decentralization 250

Departmentalization 250 Vertical Functional Approach 252 | Divisional Approach 252 | Matrix Approach 254 | Team

Part 4 ORGANIZING

CONTENTS

xxvi

Approach 255 | The Virtual Network Approach 256 | Advantages and Disadvantages of Each Structure 258

Organizing for Horizontal Coordination 260 The Need for Coordination 260 | Task Forces, Teams, and Project Management 262 Reengineering 263

Struc ture Follows Strategy 264 New Manager Self-Test: Authority Role Models 266 A Manager’s Essentials: What Have We Learned? 268 Discussion Questions 268 Management in Practice: Experiential Exercise 269 Management in Practice: Ethical Dilemma 270 Case for Critical Analysis 270 ON THE JOB VIDEO CASE 272 BIZ FLIX VIDEO CASE 272 Endnotes 273

10 Managing Change and Innovation 276 Are You Innovative? 277 Innovation and the Changing Workplace 278 Changing Things: New Products and Technologies 279

Exploration 279 | Cooperation 281 Entrepreneurship 284

New Manager Self-Test: Taking Charge of Change 286 Changing People and Culture 287

Training and Development 287 | Organization Development 287

Implementing Change 291 Need for Change 291 | Resistance to Change 291

Manager’s Shoptalk: Making Change Stick 292 Force-Field Analysis 293 | Implementation Tactics 294

A Manager’s Essentials: What Have We Learned? 296 Discussion Questions 296 Management in Practice: Experiential Exercise 297 Management in Practice: Ethical Dilemma 298 Case for Critical Analysis 299 ON THE JOB VIDEO CASE 300 BIZ FLIX VIDEO CASE 301 Endnotes 301

11 Managing Human Resources 306 Getting the Right People on the Bus 307 The Strategic Role of HRM Is to Drive Organizational Performance 308

The Strategic Approach 308 | Building Human Capital to Drive Performance 309 | Globalization 311

The Impac t of Federal Legislation on HRM 311 New Manager Self-Test: What Is Your HR Work Orientation? 313 The Changing Nature of Careers 314

The Changing Social Contract 314 | Innovations in HRM 315

Finding the Right People 316 Human Resource Planning 317 | Recruiting 318 Selecting 321

Manager’s Shoptalk: What Makes a Good Interview Go Bad? 323 Managing Talent 324

Training and Development 324 | Performance Appraisal 326

Maintaining an Effective Workforce 329 Compensation 329 | Benefi ts 330 Termination 330

A Manager’s Essentials: What Have We Learned? 331 Discussion Questions 332 Management in Practice: Experiential Exercise 332 Management in Practice: Ethical Dilemma 333 Case for Critical Analysis 334 ON THE JOB VIDEO CASE 335 BIZ FLIX VIDEO CASE 336 Endnotes 336

12 Managing Diversity 340 Do You Know Your Biases? 341 The Changing Workplace 342

Diversity in the United States 343 | Diversity on a Global Scale 345

Manager’s Shoptalk: A Guide for Expatriate Managers in America 346 Managing Diversity 346

What Is Diversity? 346 | Dividends of Workplace Diversity 348

Factors Shaping Personal Bias 350 Prejudice, Discrimination, and Stereotypes 350 | Ethnocentrism 352