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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

PREFACEx

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