The economy of ireland 13th edition pdf

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Thomas S. Bateman McIntire School of Commerce

University of Virginia

Scott A. Snell Darden Graduate School of Business

University of Virginia

Robert Konopaske McCoy College of Business

Texas State University

13e

MANAGEMENT Leading & Collaborating in a Competitive World

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MANAGEMENT: LEADING & COLLABORATING IN A COMPETITIVE WORLD, THIRTEENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2017, 2015, and 2013. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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

Library of Congress Cataloging-in-Publication Data

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

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

mheducation.com/highered

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

and

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

and

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

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

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

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

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

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

About the Authors

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Preface

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

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

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

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

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

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

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

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

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

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

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

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

Chapter 1 • New Management in Action about Mark Zuckerberg of

Facebook.

• New Social Enterprise about Bill Drayton of Ashoka.

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

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

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

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

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

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

Chapter 2 • New Management in Action about Jeff Bezos creating

Amazon’s organizational environment.

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

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

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

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

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

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

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

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

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

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

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

to a global brand.

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

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

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

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

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

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

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

neurial beginnings.

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

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

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

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

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

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

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

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

• New passage on organizational challenges associated with acquisitions.

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

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

decision making.

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

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

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

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

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

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

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

Chapter 4 • Updated Management in Action about Walt Disney

scripting its own success.

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

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

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

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

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

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

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

Chapter 5 • New Multiple Generations at Work about Millennials

being bullish on business.

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

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

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

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

sion at Apple.

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

• Updated example about changing workforce demographics.

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

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

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

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

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

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

leading PepsiCo to perform with purpose.

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

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

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

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

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

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

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

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

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

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

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

Chapter 8 • Updated Management in Action about leadership and

structural changes at General Motors.

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

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

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

• New Exhibit 8.2: “Examples of Differentiation.”

• New Exhibit 8.13: “A Network Organization.”

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

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

Chapter 9 • New passages about organizing around ordinary and

dynamic capabilities.

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

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

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

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

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

• New examples of small and large batch technologies.

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

to hire top talent.

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

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

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

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

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

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

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

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

• New passage about the role of board members in rela- tion to governance of companies.

• New passage about feedback control and its relationship to employee performance.

• New example of Toyota asking “Why?” to identify root causes of problems.

Chapter 17 • New Management in Action about Elon Musk being an

innovator extraordinaire.

• New Social Enterprise about India-based Piramal Sarvajal providing clean water via “Water ATMs.”

• New Multiple Generations at Work about tech-savvy Gen Z entering the workforce

• New Exhibit 17.1: “Innovation Types with Examples.”

• New passage about retailers like Macy’s in New York attracting young shoppers to stores.

• New example of virtual health care for annual patient visits reducing costs.

• New example of biosensor patches being applied to patients’ skin to monitor vital signs.

• New passage about Google’s FaceNet research team winning a facial recognition competition.

Chapter 18 • Updated Management in Action about Shell Oil’s lead-

ers facing off with investors over climate change.

• Updated Multiple Generations at Work about Millennials being ready for the future of work.

• New example of Sears losing its dominance in retail.

• New example of world-class centers in San Francisco, London, Munich, Warsaw, and Shenzen.

• New Exhibit 18.3: “Reasons for Resistance to Change.”

• New example of a manager at John Deere implementing change in a gradual manner.

• New Exhibit 18.8: “Opportunity Is Finding Ways to Meet Customers’ Needs.”

• New passage about big data, Internet of Things, and arti- ficial intelligence combining to make cities smarter.

• New Exhibit 18.9: “Learning Cycle: Explore, Discover, Act.”

• New example of the U.S. Department of Homeland Security setting cyber security goals.

• New example of Colorado-based New Belgium Brewery engaging in environmental and sustainability initiatives.

• New passage about how Ryan LLC rewards its employ- ees with 12 weeks of paid pregnancy leave and paid 4-week sabbaticals.

• New passage about Menlo Innovations offering employ- ees creative nonmonetary rewards.

• Updated passages about extrinsic rewards, empower- ment, and quality of work life.

Chapter 14 • Updated Management in Action about self-managed

teams working at Whole Foods Market.

• New Social Enterprise about co-working becoming more popular.

• Updated Multiple Generations at Work about preparing for global virtual teamwork.

• New passage about Cisco Systems relying on employee teams to remain competitive.

• New Exhibit 14.6: “A Four-Stage Model of Dispute Resolution.”

• New example of parallel teams and team-based rewards being used by organizations.

Chapter 15 • New Management in Action about music-sharing plat-

form SoundCloud encouraging the free flow of informa- tion among employees.

• Updated Social Enterprise about when the message is the story.

• New example of company review sites like Glassdoor. com and Salary.com attracting negative posts from employees.

• Updated passage about digital communication and social media.

• Updated passage about communication flowing through all parts of organizations.

• New example of Hilcorp, an oil and gas exploration company, using open book management.

• Updated passage about upward communication and open-door policies.

Chapter 16 • New Management in Action about electronic monitor-

ing of employees' health to control costs.

• Updated Social Enterprise about using multiple ways to measure social impact.

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Many individuals contributed directly to our develop- ment as textbook authors. Dennis Organ provided one of the authors with an initial opportunity and guidance in textbook writing. Jack Ivancevich did the same for one of the other authors. John Weimeister has been a friend and adviser from the very beginning. Thanks also to Christine Scheid for so much good work on previous editions and for continued friendship.

Enthusiastic gratitude to the entire McGraw-Hill Education team, starting with director Mike Ablassmeir, who—and this is more than an aside—spontaneously and impressively knew Rolling Stone’s top three drummers of all time. Mike has long provided deep expertise and an informed perspective, not to mention friendship and managerial cool in everything we do. Not technically an author, Mike is most certainly an educator for us and for the instructors and students who learn from the products he leads.

Special thanks to teammates without whom the book would not exist, let alone be such a prideworthy product:

Jamie Koch: so helpful, resourceful, enthusiastic, fast, and on top of everything;

Christine Vaughan: knowledgeable, tech-savvy, patient, always available to help us navigate the online authoring platform;

Debbie Clare: so creative, energetic, always thinking of unique ideas, and encouraging us to engage in new ways of sharing how much the 13th edition means to us;

Claire Hunter: positive, patient, easily amused (thank- fully), amazingly effective at keeping us on track and focused;

Kerrie Carfagno: great depth and breadth, in both expe- rience and knowledge, thanks for teaching even more stu- dents about our digital world;

Elisa Adams: eloquent, passionate, expressive, and remarkably good at meeting (or beating) deadlines.

Thanks to you all for getting some of our jokes, for being polite about the others, and for being fun as well as talented and dedicated throughout the project.

Finally, we thank our families. Our parents, Jeanine and Tom Bateman, Clara and John Snell, and Rose and Art Konopaske, provided us with the foundation on which we have built our careers. They continue to be a source of great support. Our wives, Mary Jo, Marybeth, and Vania, were encouraging, insightful, and understanding throughout the process. Our children, Lauren, T.J., and James Bateman; Sara, Jack, and Emily Snell; and Nick and Isabella Konopaske, provided an unending source of inspiration for our work and our nonwork. Thank you.

Thomas S. Bateman Charlottesville, VA

Scott A. Snell Charlottesville, VA

Robert Konopaske San Marcos, TX

A Team Effort This book is the product of a fantastic McGraw-Hill team. Moreover, we wrote this book believing that we are part of a team with the course instructor and with students. The entire team is responsible for the learning process.

Our goal, and that of your instructor, is to create a posi- tive learning environment in which you can excel. But in the end, the raw material of this course is just words. It is up to you to use them as a basis for further reflection, deep learn- ing, and constructive action.

What you do with the things you learn from this course, and with the opportunities the future holds, counts. As a man- ager, you can make a dramatic difference for yourself and for other people. What managers do matters tremendously.

Acknowledgments This book could not have been written and published with- out the valuable contributions of many individuals.

Special thanks to Lily Bowles, Taylor Gray, and Meg Nexsen for contributing their knowledge, insights, and research. Thanks to Michael Dutch for his contributions to the Instructor’s Manual and PowerPoint Presentations, as well as providing insights whenever we call upon him.

Our reviewers over the last 12 editions contributed time, expertise, and terrific ideas that significantly enhanced the quality of the text. The reviewers of the 13th edition are

Germaine Albuquerque Essex County College

Derek B. Bardell Delgado Community College

Andrew A. Bennett Old Dominion University

Harry Bernstein Essex County College

Jennifer Blahnik Lorain County Community College

Karen Bridgett Essex County College

Angela Bruns Baton Rouge Community College

John Ephraim Butt University of North Carolina–Charlotte

Holly A. Caldwell Bridgewater College

Frank Carothers Somerset Community College

Robert Cote Lindenwood University

Darrell Cousert University of Indianapolis

Tony Daniel Shorter University

John T. Finley Columbus State University

Roy Lynn Godkin Lamar University

Dan Hallock University of North Alabama

Anne Kelly Hoel University of Wisconsin–Stout

Carrie S. Hurst Tennessee State University

Sridharan Krishnaswami Old Dominion University

Debra D. Kuhl Pensacola State College

Thomas Norman California State University

Shane Spiller Western Kentucky University

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In this ever more competitive environment, there are six essential types of performance on which the organization beats, equals,

or loses to the competition: cost, quality, speed, innovation, service, and sustainability. These six performance dimensions,

when done well, deliver value to the customer and competitive advantage to you and your organization.

Throughout the text, Bateman, Snell, and Konopaske remind students of these six dimensions and their impact on the bottom

line with marginal icons. This results-oriented approach is a unique hallmark of this textbook.

New questions in this edition further emphasize the bottom line. The Instructor’s Manual has answers to these questions.

Bottom Line

First Pages

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

Q

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In CASE You Haven’t Noticed . . . Bateman, Snell, and Konopaske have put together an outstanding selection of case studies of various lengths that highlight companies’ ups and downs, stimulate learning and understanding, and challenge students to respond.

Instructors will find a wealth of relevant and updated cases in every chapter, using companies—big and small—that students will enjoy learning about.

CHAPTER UNFOLDING CASES

Each chapter begins with a “Management in Action: Manager’s Brief” section that describes an actual organizational situation, leader, or company. The “Manager’s Brief” is referred to again within the chapter in the “Progress Report” section, showing the student how the chapter material relates back to the company, situation, or leader highlighted in the chapter opener. At the end of the chapter, the “Onward” section ties up loose ends and brings the material full circle for the student. Answers to Management in Action section questions can be found in the Instructor’s Manual.

SOCIAL ENTERPRISE

Social Enterprise boxes have been updated in each chapter to familiarize students with this fast-growing sector. Answers to Social Enterprise questions are included in the Instructor’s Manual.

MULTIPLE GENERATIONS AT WORK

In each chapter, a Multiple Generations at Work box has been updated added to highlight some of the intergenerational challenges faced by managers and employees today.

THE DIGITAL WORLD

The Digital World feature offers unique examples of how companies and other users employ digital/social media in ways that capitalize on various ideas in each chapter.

CONCLUDING CASES

Each chapter ends with a case based on disguised but real companies and people that reinforces key chapter elements and themes.

SUPPLEMENTARY CASES

At the end of each part, an additional case is provided for professors who want students to delve further into part topics.

Outstanding Pedagogy Management: Leading & Collaborating in a Competitive World is pedagogically stimulating and is intended to maximize student learning. With this in mind, we used a wide array of pedagogical features—some tried and true, others new and novel:

END-OF-CHAPTER ELEMENTS

• Key terms are page-referenced to the text and are part of the vocabulary-building emphasis. These terms are defined again in the glossary at the end of the book.

• Retaining What You Learned provides clear, concise responses to the learning objectives, giving students a quick reference for reviewing the important concepts in the chapter.

• Discussion Questions, which follow, are thought-provoking questions on concepts covered in the chapter and ask for opinions on controversial issues.

• Experiential Exercises in each chapter bring key concepts to life so students can experience them firsthand.

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Assurance of Learning This 13th edition contains revised learning objectives and learning objectives are called out within the chapter where the content begins. The Retaining What You Learned for each chapter ties the learning objectives back together as well. And, finally, our test bank provides tagging for the learning objective that the question covers, so instructors will be able to test material covering all learning objectives, thus ensuring that students have mastered the important topics.

Comprehensive Supplements INSTRUCTOR’S MANUAL

The Instructor’s Manual was revised and updated to include thorough coverage of each chapter as well as time-saving features such as an outline, key student questions, class prep work assignments, guidance for using the unfolding cases, video supplements, and, finally, PowerPoint slides.

TEST BANK

The Test Bank includes more than 100 questions per chapter in a variety of formats. It has been revised for accuracy and expanded to include a greater variety of comprehension and application (scenario-based) questions as well as tagged with Bloom’s Taxonomy levels and AACSB requirements.

POWERPOINT PRESENTATION SLIDES

The PowerPoint presentation collection contains an easy-to-follow outline including figures downloaded from the text. In addition to providing lecture notes, the slides also include questions for class discussion as well as company examples not found in the textbook. This versatility allows you to create a custom presentation suitable for your own classroom experience.

McGraw-Hill Customer Experience At McGraw-Hill, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our product specialists 24 hours a day to get product training online. Or you can search our knowledge bank of frequently asked questions on our support website. For customer support, call 800-331-5094, submit a support request using our contact us form, http://mpss.mhhe.com/contact.php, or visit www.mhhe.com/support. One of our technical support analysts will be able to assist you in a timely fashion.

MANAGER’S HOT SEAT

This interactive, video-based application puts students in the manager’s hot seat, building critical thinking and decision-making skills and allowing students to apply concepts to real managerial challenges. Students watch as 21 real managers apply their years of experience when confronting unscripted issues such as bullying in the workplace, cyber loafing, globalization, intergenerational work conflicts, workplace violence, and leadership versus management. In addition, Manager’s Hot Seat interactive applications, featuring video cases and accompanying quizzes, can be found in Connect.

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CREATE

Instructors can now tailor their teaching resources to match the way they

teach! With McGraw-Hill Create, www.mcgrawhillcreate. com, instructors can easily rearrange chapters, combine material from other content sources, and quickly upload and integrate their own content, such as course syllabi or teaching notes. Find the right content in Create by searching through thousands of leading McGraw-Hill textbooks. Arrange the material to fit your teaching style. Order a Create book and receive a complimentary print review copy in three to five business days or a complimentary electronic review copy via e-mail within one hour. Go to www.mcgrawhillcreate.com today and register.

TEGRITY CAMPUS

Tegrity makes class time available 24/7 by automatically capturing

every lecture in a searchable format for students to review when they study and complete assignments. With a simple one-click start-and-stop process, you capture all computer screens and corresponding audio. Students can replay any part of any class with easy-to-use browser-based viewing on a PC or Mac. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. With patented Tegrity “search anything” technology, students instantly recall key class moments for replay online or on iPods and mobile devices. Instructors can help turn all their students’ study time into learning moments immediately supported by their lecture. To learn more about Tegrity, watch a twominute Flash demo at http://tegritycampus.mhhe.com.

BLACKBOARD® PARTNERSHIP

McGraw-Hill Education and Blackboard have teamed up to simplify your life. Now you and your students can access Connect and Create right from within your Blackboard course—all with one single sign-on. The grade books are

seamless, so when a student completes an integrated Connect assignment, the grade for that assignment automatically (and instantly) feeds your Blackboard grade center. Learn more at www.domorenow.com.

McGRAW-HILL CAMPUSTM

McGraw-Hill Campus is a new one-stop teaching and learning experience available to users of any

learning management system. This institutional service allows faculty and students to enjoy single sign-on (SSO) access to all McGraw-Hill Higher Education materials, including the award-winning McGraw-Hill Connect platform, from directly within the institution’s website. With McGraw-Hill Campus, faculty receive instant access to teaching materials (e.g., eTextbooks, test banks, PowerPoint slides, animations, learning objectives, etc.), allowing them to browse, search, and use any instructor ancillary content in our vast library at no additional cost to instructor or students. In addition, students enjoy SSO access to a variety of free content (e.g., quizzes, flash cards, narrated presentations, etc.) and subscription-based products (e.g., McGraw-Hill Connect). With McGraw-Hill Campus enabled, faculty and students will never need to create another account to access McGraw-Hill products and services. Learn more at www.mhcampus.com.

ASSURANCE OF LEARNING READY

Many educational institutions today focus on the notion of assurance of learning, an important element of some accreditation standards. Management: Leading & Collaborating in a Competitive World is designed specifically to support instructors’ assurance of learning initiatives with a simple yet powerful solution. Each test bank question for Management: Leading & Collaborating in a Competitive World maps to a specific chapter learning objective listed in the text. Instructors can use our test bank software, EZ Test, to easily query for learning objectives that directly relate to the learning outcomes for their course. Instructors can then use the reporting features of EZ Test to aggregate student results in similar fashion, making the collection and presentation of assurance of learning data simple and easy.

AACSB TAGGING

McGraw-Hill Education is a proud corporate member of AACSB International.

Understanding the importance and value of AACSB accreditation, Management: Leading & Collaborating in a Competitive World recognizes the curricula guidelines detailed in the AACSB standards for business

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McGRAW-HILL CUSTOMER EXPERIENCE GROUP CONTACT INFORMATION

At McGraw-Hill Education, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our Product Specialists 24 hours a day to get product training online. Or you can search our knowledge bank of Frequently Asked Questions on our support website. For Customer Support, call 800-331-5094 or visit www.mhhe.com/support. One of our Technical Support Analysts will be able to assist you in a timely fashion.

accreditation by connecting selected questions in the text and the test bank to the eight general knowledge and skill guidelines in the AACSB standards. The statements contained in Management: Leading & Collaborating in a Competitive World are provided only as a guide for the users of this product. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. While the Management: Leading & Collaborating in a Competitive World teaching package makes no claim of any specific AACSB qualification or evaluation, we have within Management: Leading & Collaborating in a Competitive World labeled selected questions according to the eight general knowledge and skills areas.

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©McGraw-Hill Education

McGraw-Hill Connect® is a highly reliable, easy-to- use homework and learning management solution that utilizes learning science and award-winning adaptive tools to improve student results.

73% of instructors who use Connect

require it; instructor satisfaction increases by 28% when Connect

is required.

Over 7 billion questions have been answered, making McGraw-Hill

Education products more intelligent, reliable, and precise.

Using Connect improves retention rates by 19.8%, passing rates by 12.7%, and exam scores by 9.1%.

▪ Connect content is authored by the world’s best subject matter experts, and is available to your class through a simple and intuitive interface.

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Quality Content and Learning Resources

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▪ SmartBook helps students study more efficiently by delivering an interactive reading experience through adaptive highlighting and review.

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©Hero Images/Getty Images

▪ Connect Insight® generates easy-to-read reports on individual students, the class as a whole, and on specific assignments.

▪ The Connect Insight dashboard delivers data on performance, study behavior, and effort. Instructors can quickly identify students who struggle and focus on material that the class has yet to master.

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Robust Analytics and Reporting

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www.mheducation.com/connect

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Brief Contents

PREFACE VII

PART ONE FOUNDATIONS OF MANAGEMENT 2

1. Managing and Performing 2

2. The External and Internal Environments 38

3. Managerial Decision Making 72

PART TWO PLANNING: DELIVERING STRATEGIC VALUE 102

4. Planning and Strategic Management 102

5. Ethics, Corporate Responsibility, and Sustainability 130

6. International Management 158

7. Entrepreneurship 188

PART THREE ORGANIZING: BUILDING A DYNAMIC ORGANIZATION 222

8. Organization Structure 222

9. Organizational Agility 250

10. Human Resources Management 276

11. Managing the Diverse Workforce 310

PART FOUR LEADING: MOBILIZING PEOPLE 340

12. Leadership 340

13. Motivating for Performance 370

14. Teamwork 402

15. Communicating 428

PART FIVE CONTROLLING: LEARNING AND CHANGING 458

16. Managerial Control 458

17. Managing Technology and Innovation 488

18. Creating and Leading Change 516

Notes 547

Glossary/Subject Index 594

Name Index 620

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Actively Manage Your Relationship with Your Organization 20 Survive and Thrive 21

MANAGEMENT IN ACTION ONWARD 22 Key Terms 23

Retaining What You Learned 23

Discussion Questions 24

Experiential Exercises 25

CONCLUDING CASE 27

APPENDIX A 28

KEY TERMS 34

DISCUSSION QUESTIONS 35

CHAPTER 2

The External and Internal Environments 38 MANAGEMENT IN ACTION MANAGER’S BRIEF 39 The Macroenvironment 41

The Economy 41 Technology 42 Laws and Regulations 43

MULTIPLE GENERATIONS AT WORK 44 Demographics 44 Social Issues 45 Sustainability and the Natural Environment 45

SOCIAL ENTERPRISE 46 The Competitive Environment 46

Competitors 47 New Entrants 48 Substitutes and Complements 49 Suppliers 50 Customers 50

MANAGEMENT IN ACTION PROGRESS REPORT 52 Environmental Analysis 52

CHAPTER 1

Managing and Performing 2 MANAGEMENT IN ACTION MANAGER’S BRIEF 3 Managing in a Competitive World 4

Globalization 4 Technological Change 5 Knowledge Management 6 Collaboration across Boundaries 6

MULTIPLE GENERATIONS AT WORK 7

THE DIGITAL WORLD 7 Managing for Competitive Advantage 8

Innovation 8 Quality 8 Service 9 Speed 9 Cost Competitiveness 10 Sustainability 11 Delivering All Types of Performance 11

The Functions of Management 12 Planning: Delivering Strategic Value 12 Organizing: Building a Dynamic Organization 12

SOCIAL ENTERPRISE 13 Leading: Mobilizing People 13 Controlling: Learning and Changing 14 Performing All Four Management Functions 14

MANAGEMENT IN ACTION PROGRESS REPORT 15 Management Levels and Skills 15

Top-Level Managers 15 Middle-Level Managers 16 Frontline Managers 16 Working Leaders with Broad Responsibilities 16 Must-Have Management Skills 17

You and Your Career 18 Be Both a Specialist and a Generalist 19 Be Self-Reliant 19 Connect with People 20

Contents

PART ONE FOUNDATIONS OF MANAGEMENT

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Identifying and Diagnosing the Problem 77 Generating Alternative Solutions 77 Evaluating Alternatives 78 Making the Choice 80 Implementing the Decision 80

MANAGEMENT IN ACTION PROGRESS REPORT 81 Evaluating the Decision 82

The Best Decision 82 Barriers to Effective Decision Making 83

Psychological Biases 83 Time Pressures 84

THE DIGITAL WORLD 85 Social Realities 85

Decision Making in Groups 85 Potential Advantages of Using a Group 85 Potential Problems of Using a Group 86

Managing Group Decision Making 87 Leadership Style 87 Constructive Conflict 87 Encouraging Creativity 89 Brainstorming 90

MULTIPLE GENERATIONS AT WORK 91 Organizational Decision Making 91

Constraints on Decision Makers 91 Organizational Decision Processes 92 Decision Making in a Crisis 92

MANAGEMENT IN ACTION ONWARD 94 Key Terms 95

Retaining What You Learned 95

Discussion Questions 96

Experiential Exercises 96

CONCLUDING CASE 98

PART ONE SUPPORTING CASE 99

Environmental Scanning 53 Scenario Development 53 Forecasting 54 Benchmarking 54

Actively Managing the External Environment 55 Changing the Environment You Are In 55 Influencing Your Environment 55 Adapting to the Environment: Changing the Organization 56 Choosing an Approach 58

The Internal Environment of Organizations: Culture and Climate 58

Organization Culture 58

THE DIGITAL WORLD 60

MANAGEMENT IN ACTION ONWARD 61 Organizational Climate 61

Key Terms 62

Retaining What You Learned 62

Discussion Questions 64

Experiential Exercises 64

CONCLUDING CASE 67

APPENDIX B 68

KEY TERMS 70

CHAPTER 3

Managerial Decision Making 72 MANAGEMENT IN ACTION MANAGER’S BRIEF 73 Characteristics of Managerial Decisions 74

Lack of Structure 74 Uncertainty and Risk 75

SOCIAL ENTERPRISE 76 Conflict 76

The Phases of Decision Making 77

PART TWO PLANNING: DELIVERING STRATEGIC VALUE

CHAPTER 4

Planning and Strategic Management 102 MANAGEMENT IN ACTION MANAGER’S BRIEF 103 An Overview of Planning Fundamentals 104

The Basic Planning Process 104

SOCIAL ENTERPRISE 107

Levels of Planning 108 Strategic Planning 108 Tactical and Operational Planning 109 Aligning Tactical, Operational, and Strategic Planning 110

Strategic Planning 111

MANAGEMENT IN ACTION PROGRESS REPORT 112 Step 1: Establishing Mission, Vision, and Goals 113 Step 2: Analyzing External Opportunities and Threats 114

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THE DIGITAL WORLD 116 Step 3: Analyzing Internal Strengths and Weaknesses 116 Step 4: SWOT Analysis and Strategy Formulation 118

MULTIPLE GENERATIONS AT WORK 120 Step 5: Strategy Implementation 123 Step 6: Strategic Control 124

MANAGEMENT IN ACTION ONWARD 125 Key Terms 126

Retaining What You Learned 126

Discussion Questions 127

Experiential Exercises 128

CONCLUDING CASE 129

CHAPTER 5

Ethics, Corporate Responsibility, and Sustainability 130 MANAGEMENT IN ACTION MANAGER’S BRIEF 131

It’s a Big Issue 132 It’s a Personal Issue 133

MULTIPLE GENERATIONS AT WORK 134 Ethics 135

Ethical Systems 135 Business Ethics 137 The Ethics Environment 137

THE DIGITAL WORLD 140 Ethical Decision Making 141 Courage 142

MANAGEMENT IN ACTION PROGRESS REPORT 143 Corporate Social Responsibility 144

Contrasting Views 146 Reconciliation 146

The Natural Environment and Sustainability 147 A Risk Society 147

SOCIAL ENTERPRISE 148 Ecocentric Management 149 Environmental Agendas for the Future 150

MANAGEMENT IN ACTION ONWARD 151 Key Terms 151

Retaining What You Learned 152

Discussion Questions 153

Experiential Exercises 154

CONCLUDING CASE 155

CHAPTER 6

International Management 158 MANAGEMENT IN ACTION MANAGER’S BRIEF 159 Managing in Today’s (Global) Economy 160

International Challenges and Opportunities 160 Outsourcing and Jobs 162

The Geography of Business 163 Western Europe 164 Asia: China and India 165 The Americas 166

SOCIAL ENTERPRISE 167 Africa and the Middle East 167

Global Strategy 168 Pressures for Global Integration 168 Pressures for Local Responsiveness 169 Choosing a Global Strategy 170

MANAGEMENT IN ACTION PROGRESS REPORT 172 Entry Mode 173

Exporting 173 Licensing 174 Franchising 174 Joint Ventures 175 Wholly Owned Subsidiaries 175

Working Overseas 176 Skills of the Global Manager 177 Understanding Cultural Issues 177

MULTIPLE GENERATIONS AT WORK 180 Ethical Issues in International Management 181

THE DIGITAL WORLD 182

MANAGEMENT IN ACTION ONWARD 182 Key Terms 183

Retaining What You Learned 183

Discussion Questions 184

Experiential Exercises 185

CONCLUDING CASE 186

CHAPTER 7

Entrepreneurship 188 MANAGEMENT IN ACTION MANAGER’S BRIEF 189 Entrepreneurship 192

Why Become an Entrepreneur? 192 What Does It Take to Succeed? 193 What Business Should You Start? 194

SOCIAL ENTERPRISE 197 What Does It Take, Personally? 199 Success and Failure 200

MANAGEMENT IN ACTION PROGRESS REPORT 201

THE DIGITAL WORLD 202 Common Management Challenges 202 Increasing Your Chances of Success 204

MULTIPLE GENERATIONS AT WORK 209 Corporate Entrepreneurship 209

Building Support for Your Idea 210 Building Intrapreneurship 210 Management Challenges 210 Entrepreneurial Orientation 211

MANAGEMENT IN ACTION ONWARD 212

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CHAPTER 8

Organization Structure 222 MANAGEMENT IN ACTION MANAGER’S BRIEF 223 Fundamentals of Organizing 224

Differentiation 224 Integration 225

The Vertical Structure 226 Authority in Organizations 226 Hierarchical Levels 227 Span of Control 228 Delegation 229 Decentralization 230

The Horizontal Structure 232 The Functional Organization 232

SOCIAL ENTERPRISE 234 The Divisional Organization 234 The Matrix Organization 236

MANAGEMENT IN ACTION PROGRESS REPORT 237 The Network Organization 239

MULTIPLE GENERATIONS AT WORK 241 Organizational Integration 241

THE DIGITAL WORLD 242 Coordination by Standardization 242 Coordination by Plan 242 Coordination by Mutual Adjustment 243 Coordination and Communication 243

Looking Ahead 245

MANAGEMENT IN ACTION ONWARD 245 Key Terms 246

Retaining What You Learned 246

Discussion Questions 247

Experiential Exercises 247

CONCLUDING CASE 249

CHAPTER 9

Organizational Agility 250 MANAGEMENT IN ACTION MANAGER’S BRIEF 251 The Responsive Organization 252 Strategy and Organizational Agility 253

MULTIPLE GENERATIONS AT WORK 254 Organizing around Core Capabilities 254 Strategic Alliances 255 The Learning Organization 256 The High-Involvement Organization 256

Organizational Size and Agility 257 The Case for Big 257 The Case for Small 257 Being Big and Small 258

SOCIAL ENTERPRISE 259

MANAGEMENT IN ACTION PROGRESS REPORT 260 Customers and the Responsive Organization 260

Customer Relationship Management 260

THE DIGITAL WORLD 262 Quality Initiatives 262 Reengineering 264

Technology and Organizational Agility 265 Types of Technology Configurations 265 Organizing for Flexible Manufacturing 266 Organizing for Speed: Time-Based Competition 268

Final Thoughts on Organizational Agility 270

MANAGEMENT IN ACTION ONWARD 271 Key Terms 271

Retaining What You Learned 272

Discussion Questions 272

Experiential Exercises 273

CONCLUDING CASE 274

PART THREE ORGANIZING: BUILDING A DYNAMIC ORGANIZATION

Key Terms 212

Retaining What You Learned 212

Discussion Questions 214

Experiential Exercises 214

CONCLUDING CASE 217

PART TWO SUPPORTING CASE 217

APPENDIX C 219

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CHAPTER 10

Human Resources Management 276 MANAGEMENT IN ACTION MANAGER’S BRIEF 277 Strategic Human Resources Management 278

The HR Planning Process 279

SOCIAL ENTERPRISE 280 Staffing 282

Recruitment 282 Selection 283

THE DIGITAL WORLD 284 Workforce Reductions 286

Developing the Workforce 290 Training and Development 290

MULTIPLE GENERATIONS AT WORK 291

MANAGEMENT IN ACTION PROGRESS REPORT 292 Performance Appraisal 292

What Do You Appraise? 293 Who Should Do the Appraisal? 294 How Do You Give Employees Feedback? 295

Designing Reward Systems 296 Pay Decisions 296 Incentive Systems and Variable Pay 297 Executive Pay and Stock Options 298 Employee Benefits 299 Legal Issues in Compensation and Benefits 299 Health and Safety 300

Labor Relations 300 Labor Laws 301 Unionization 301 Collective Bargaining 302 What Does the Future Hold? 303

MANAGEMENT IN ACTION ONWARD 304 Key Terms 304

Retaining What You Learned 305

Discussion Questions 306

Experiential Exercises 306

CONCLUDING CASE 308

CHAPTER 11

Managing the Diverse Workforce 310 MANAGEMENT IN ACTION MANAGER’S BRIEF 311 Diversity: A Brief History 312 Diversity Today 313

The Changing Workforce 314

MULTIPLE GENERATIONS AT WORK 316 The Age of the Workforce 320

Managing Diversity and Affirmative Action 321 Advantage through Diversity and Inclusion 321 Challenges of Diversity and Inclusion 322

MANAGEMENT IN ACTION PROGRESS REPORT 325 Multicultural Organizations 325 How to Cultivate a Diverse Workforce 326

Top Management’s Leadership and Commitment 326

SOCIAL ENTERPRISE 327 Organizational Assessment 327 Attracting Employees 328 Training Employees 329 Retaining Employees 329

THE DIGITAL WORLD 330

MANAGEMENT IN ACTION ONWARD 332 Key Terms 332

Retaining What You Learned 332

Discussion Questions 334

Experiential Exercises 334

CONCLUDING CASE 336

PART THREE SUPPORTING CASE 337

PART FOUR LEADING: MOBILIZING PEOPLE

CHAPTER 12

Leadership 340 MANAGEMENT IN ACTION MANAGER’S BRIEF 341

What Do We Want from Our Leaders? 342

MULTIPLE GENERATIONS AT WORK 343 Vision 343 Leading and Managing 345

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Leading and Following 346

Power and Leadership 346 Sources of Power 346

Traditional Approaches to Understanding Leadership 348 Leader Traits 348 Leader Behaviors 349 The Effects of Leader Behavior 351 Situational Approaches to Leadership 353

MANAGEMENT IN ACTION PROGRESS REPORT 357 Contemporary Perspectives on Leadership 358

Charismatic Leadership 358 Transformational Leadership 359 Authenticity 360 Opportunities for Leaders 361

SOCIAL ENTERPRISE 362 A Note on Courage 362

Developing Your Leadership Skills 363 How Do I Start? 363

THE DIGITAL WORLD 364 What Are the Keys? 364

MANAGEMENT IN ACTION ONWARD 364 Key Terms 365

Retaining What You Learned 365

Discussion Questions 367

Experiential Exercises 367

CONCLUDING CASE 368

CHAPTER 13

Motivating for Performance 370 MANAGEMENT IN ACTION MANAGER’S BRIEF 371 Motivating for Performance 372 Setting Goals 373

Goals That Motivate 373 Stretch Goals 374 Limitations of Goal Setting 374 Set Your Own Goals 375

Reinforcing Performance 375 (Mis)Managing Rewards and Punishments 376 Managing Mistakes 378 Providing Feedback 378

Performance-Related Beliefs 378 The Effort-to-Performance Link 379 The Performance-to-Outcome Link 379 Impact on Motivation 380 Managerial Implications of Expectancy Theory 380

MANAGEMENT IN ACTION PROGRESS REPORT 381 Maslow’s Need Hierarchy 381

Understanding People’s Needs 381

MULTIPLE GENERATIONS AT WORK 383

Alderfer’s ERG Theory 383 McClelland’s Needs 384 Need Theories: International Perspectives 384

Designing Motivating Jobs 385 Job Rotation, Enlargement, and Enrichment 385

SOCIAL ENTERPRISE 386 Herzberg’s Two-Factor Theory 387 The Hackman and Oldham Model of Job Design 387 Empowerment 388

Achieving Fairness 390 Assessing Equity 390 Restoring Equity 391 Procedural Justice 391

Employee Satisfaction and Well-Being 392

THE DIGITAL WORLD 393 Quality of Work Life 393

MANAGEMENT IN ACTION ONWARD 394 Psychological Contracts 394

Key Terms 395

Retaining What You Learned 395

Discussion Questions 396

Experiential Exercises 397

CONCLUDING CASE 399

CHAPTER 14

Teamwork 402 MANAGEMENT IN ACTION MANAGER’S BRIEF 403 The Contributions of Teams 404 Types of Teams 404

MULTIPLE GENERATIONS AT WORK 406 Self-Managed Teams 406

MANAGEMENT IN ACTION PROGRESS REPORT 407 How Groups Become Real Teams 408

Group Processes 408 Critical Periods 409

THE DIGITAL WORLD 410 Teaming Challenges 410 Why Groups Sometimes Fail 410

Building Effective Teams 411 Performance Focus 411 Motivating Teamwork 412 Member Contributions 412

SOCIAL ENTERPRISE 413 Norms 413 Roles 414 Cohesiveness 414 Building Cohesiveness and High-Performance Norms 416

Managing Lateral Relationships 417 Managing Outward 417

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PART FIVE CONTROLLING: LEARNING AND CHANGING

CHAPTER 16

Managerial Control 458 MANAGEMENT IN ACTION MANAGER’S BRIEF 459 Bureaucratic Control Systems 461

The Control Cycle 461

SOCIAL ENTERPRISE 463 Approaches to Bureaucratic Control 465

MULTIPLE GENERATIONS AT WORK 467 Management Audits 468 Budgetary Controls 469 Financial Controls 471 Problems with Bureaucratic Control 474

MANAGEMENT IN ACTION PROGRESS REPORT 475 Designing Effective Control Systems 476

The Other Controls: Markets and Clans 480 Market Control 480

Clan Control: The Role of Empowerment and Culture 482

MANAGEMENT IN ACTION ONWARD 483 Key Terms 483

Retaining What You Learned 483

Discussion Questions 485

Experiential Exercises 485

CONCLUDING CASE 487

CHAPTER 17

Managing Technology and Innovation 488 MANAGEMENT IN ACTION MANAGER’S BRIEF 489 Technology and Innovation 490

Technology Life Cycle 491 Diffusion of Technological Innovations 492

Lateral Role Relationships 418 Managing Conflict 418 Conflict Styles 419 Being a Mediator 420 Electronic and Virtual Conflict 421

MANAGEMENT IN ACTION ONWARD 422 Key Terms 422

Retaining What You Learned 423

Discussion Questions 424

Experiential Exercises 424

CONCLUDING CASE 425

CHAPTER 15

Communicating 428 MANAGEMENT IN ACTION MANAGER’S BRIEF 429 Interpersonal Communication 430

One-Way versus Two-Way Communication 430 Communication Pitfalls 431 Mixed Signals and Misperception 432 Oral and Written Channels 433 Digital Communication and Social Media 433

MULTIPLE GENERATIONS AT WORK 436

THE DIGITAL WORLD 437 Media Richness 437

MANAGEMENT IN ACTION PROGRESS REPORT 438 Improving Communication Skills 438

Improving Sender Skills 438

SOCIAL ENTERPRISE 442 Improving Receiver Skills 442

Organizational Communication 444 Downward Communication 445 Upward Communication 447 Horizontal Communication 448 Informal Communication 448 Boundarylessness 449

MANAGEMENT IN ACTION ONWARD 450 Key Terms 450

Retaining What You Learned 450

Discussion Questions 451

Experiential Exercises 452

CONCLUDING CASE 454

PART FOUR SUPPORTING CASE 455

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MULTIPLE GENERATIONS AT WORK 493

SOCIAL ENTERPRISE 494 Technology Leadership and Followership 495

Technology Leadership 495 Technology Followership 497

Assessing Technology Needs 498 Measuring Current Technologies 498 Assessing External Technological Trends 499

Making Technology Decisions 499 Anticipated Market Receptiveness 499 Technological Feasibility 500 Economic Viability 501 Anticipated Capability Development 501 Organizational Suitability 502

MANAGEMENT IN ACTION PROGRESS REPORT 503 Sourcing and Acquiring New Technologies 504

Internal Development 504 Purchase 504 Contracted Development 504 Licensing 504

THE DIGITAL WORLD 505 Technology Trading 505 Research Partnerships and Joint Ventures 505 Acquiring a Technology Owner 505

Technology and Managerial Roles 506 Organizing for Innovation 507

Unleashing Creativity 508 Bureaucracy Busting 509 Design Thinking 509 Implementing Development Projects 510 Technology, Job Design, and Human Resources 511

MANAGEMENT IN ACTION ONWARD 511 Key Terms 512

Retaining What You Learned 512

Discussion Questions 513

Experiential Exercises 514

CONCLUDING CASE 514

CHAPTER 18

Creating and Leading Change 516 MANAGEMENT IN ACTION 517 Becoming World Class 518

Sustainable, Great Futures 518 The Tyranny of the Or 519 The Genius of the And 520 Achieving Sustained Greatness 520 Organization Development 521

Managing Change 522 Motivating People to Change 522

MULTIPLE GENERATIONS AT WORK 524 A General Model for Managing Resistance 524 Enlisting Cooperation 526 Harmonizing Multiple Changes 528

MANAGEMENT IN ACTION PROGRESS REPORT 529 Leading Change 529

Shaping the Future 532 Thinking about the Future 532 Creating the Future 532

THE DIGITAL WORLD 533

SOCIAL ENTERPRISE 534 Shaping Your Own Future 535 Learning and Leading 536

MANAGEMENT IN ACTION ONWARD 538 A Collaborative, Sustainable Future? 539

Key Terms 539

Retaining What You Learned 539

Discussion Questions 540

Experiential Exercises 540

CONCLUDING CASE 542

PART FIVE SUPPORTING CASE 543

CASE INCIDENTS

Notes 547

Glossary/Subject Index 594

Name Index 620

Photo on pages xxiii, xxiv, xxvi, xxvii, and xxix: ©zlikovec/Shutterstock.com RF.

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Foundations of Management

• Managing and Performing • The External and Internal

Environments • Managerial Decision

Making

Planning: Delivering Strategic Value

• Planning and Strategic Management

• Ethics and Corporate Responsibility

• International Management • Entrepreneurship

Strategy Implementation

Organizing: Building a Dynamic Organization

• Organization Structure • Organizational Agility • Human Resources

Management • Managing the Diverse

Workforce

Leading: Mobilizing People

• Leadership • Motivating for Performance • Teamwork • Communicating

Controlling: Learning and Changing

• Managerial Control • Managing Technology and

Innovation • Creating and Leading

Change

The Management Process

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22

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Managing in a Competitive World Globalization Technological Change Knowledge Management Collaboration across Boundaries

Managing for Competitive Advantage Innovation Quality Service Speed Cost Competitiveness Sustainability

Delivering All Types of Performance

The Functions of Management Planning: Delivering Strategic Value Organizing: Building a Dynamic Organization Leading: Mobilizing People Controlling: Learning and Changing Performing All Four Management Functions

Management Levels and Skills Top-Level Managers Middle-Level Managers Frontline Managers Working Leaders with Broad Responsibilities Must-Have Management Skills

You and Your Career Be Both a Specialist and a Generalist Be Self-Reliant Connect with People Actively Manage Your Relationship with Your Organization Survive and Thrive

After studying Chapter 1, you will be able to:

Summarize the major challenges of managing in the new competitive landscape.

Describe the sources of competitive advantage for a company.

Explain how the functions of management are evolving in today’s business environment.

Compare how the nature of management varies at different organizational levels.

Define the skills you need to be an effective manager.

Understand the principles that will help you manage your career.

LO 1

LO 2

LO 3

LO 4

LO 5

LO 6

CHAPTER 1

Managing and Performing

Management means, in the last analysis, the substitution of thought for brawn and muscle, of knowledge for folklore and tradition, and of

cooperation for force.

—PETER DRUCKER

CHAPTER OUTLINELEARNING OBJECTIVES

PART ONE FOUNDATIONS OF MANAGEMENT

©Jirsak/Shutterstock.com RF

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3

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What does a manager do? Dream up a bold new mis- sion for the company? Build a corporate structure that ensures success? Lead and inspire others? Keep the company on track toward its goals?

Most managers perform all these basic functions to some degree, perhaps none more publicly or suc- cessfully than Mark Zuckerberg, founder and CEO of Facebook Inc. Zuckerberg has seen his company grow into a unique worldwide phenomenon with almost 2 billion active users, more than 600 times as many people as the average daily viewership of CNN, Fox, and MSNBC combined. Given that the company reported $8.8 billion in revenue in 2016, it seems Zuckerberg’s passion for connecting people with one another has more than paid off. Facebook’s unparal- leled success does not mean Zuckerberg has no man- agement challenges left, however.

Past hurdles that Zuckerberg had to deal with included the need for cash to fund Facebook’s rapid growth. In 2012 he announced an initial public offering of stock to attract that cash, and then saw the company go through a damaging initial drop in its stock price. Next came the soaring popularity of smartphones, encouraging Facebook users to go mobile in droves. Facebook was forced to quickly develop its capability to carry advertising on its mobile app. Those mobile ads now bring in 80 percent of the company’s reve- nue, up from zero in 2012.

More recent hurdles include charges that Facebook aided the spread of fake news during the 2016 U.S. presidential election campaign. Zuckerberg responded by developing partnerships with outside fact-checking groups to flag stories of questionable reliability. He

directed upgrades of Facebook’s user data tracking to counter problems of misreporting results to adver- tisers, and he wants to focus on artificial intelligence to prevent the sharing of inappropriate content. That story continues to unfold. Meanwhile Facebook teams are working to keep up with newer competitors like Snapchat by adding to the video capabilities of its Instagram platform.

While he is organizing and leading the company and refining its operations, Zuckerberg, ranked #1 in 2017 among the top 50 business people by Fortune magazine, is also still shaping plans for what he hopes Facebook can be. He recently released a bold state- ment of his views on its next big goal: to bring all of humanity together in a safe and informed “global community.”1

Management in Action ONE WELL-KNOWN MANAGER: FACEBOOK’S MARK ZUCKERBERG

Management challenges are ever-changing. What is going on now for Facebook

and Mark Zuckerberg? As you read this chapter, notice the wide variety of skills

that Zuckerberg needs to help Facebook meet its goals. Also, think about how

managing people, money, and other resources enables Facebook and other

organizations to accomplish far more than individuals acting independently could

ever achieve.

M A

N A

G E

R ’S

B R

IE F

P R

O G

R E

S S

R E

P O

R T

O N

W A

R D

©Frederic Legrand - COMEO/Shutterstock.com RF

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Facebook’s CEO, Mark Zuckerberg, is one of the most interesting leaders in business today. He is an innovator who combines technological know-how with a vision for the future and an obsessive drive to please customers. Together, those qualities have helped him build a business idea into a major corporation that continues to transform how people connect with one another.2

Zuckerberg is a standout among other top business leaders. Named 2016 Businessperson of the Year by Fortune magazine, he has successfully navigated the $350 billion media com- pany through challenging times, as when Facebook was slow to respond to the shift to mobile, and the clumsy handling of its initial public offering.3

Consider the department store Macy’s as a contrasting example. Following weaker than expected 2016 holiday sales, Macy’s announced that it would close 63 stores and cut 10,000 jobs.4 Terry Lungren, who stepped down as CEO in February 2017, was replaced by Jeff Gennette, who has the daunting task of turning around seven straight quarters of sales declines.5 Time will tell whether Macy’s can compete effectively against changing shopping habits driven by online retail giants like Amazon.

In business, there is no alternative to managing well. Companies may fly high for a while, but they cannot do well for very long without good management. It’s the same for individu- als: the best performers succeed by focusing on fundamentals, knowing what’s important, and managing well. The aim of this book is to help you succeed in those pursuits.

Management is a challenge requiring

knowledge and skills to adapt to new

circumstances.

When the economy is soaring, business seems easy. Starting an Internet company looked easy in the 1990s, and ventures related to the real estate boom looked like a sure thing just a few years ago. But investors grew wary of dot-com start-ups, and the demand for new homes dropped off the table when the economy crashed in late 2008. At such times, it becomes evident that management is a challenge requiring knowledge and skills to adapt to new circumstances.

What defines the competitive landscape of today’s business? You will be reading about many relevant issues in the coming chapters, but we begin here by highlighting four ongoing challenges that character- ize the business landscape: globalization, technologi- cal change, the importance of knowledge and ideas, and collaboration across organizational boundaries.

Globalization Far more than in the past, today’s enterprises are global, with offices and production facili- ties in countries all over the world. Corporations operate worldwide, transcending national borders. Companies that want to grow often need to tap international markets. The change from a local to a global marketplace is irreversible.6

Fortune magazine annually publishes a list of the world’s most admired companies. Whereas U.S. companies used to dominate, Switzerland-based Nestlé was the most admired maker of consumer food products in 2016, Germany’s BMW was the most admired pro- ducer of motor vehicles, and Singapore Airlines was the most admired airlines company.7 According to Fortune’s 2016 Global 500 list, the five largest firms are Walmart (U.S.), State Grid (China), China National Petroleum (China), Sinopec Group (China), and Royal Dutch Shell (British-Dutch).8

Globalization also means that a company’s talent and competition can come from any- where. As with its sales, more than half (60 percent) of GE’s 333,000 employees live out- side the United States.9 Kentucky-based Yum! Brands (KFC, Pizza Hut, and Taco Bell) has over 43,000 restaurants in more than 135 countries. In 2016, about half of its profits came from outside the United States. On average, Yum! Brands opens six stores per day in inter- national locations.10

LO 1

Managing in a Competitive World

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PepsiCo’s chief executive, Indra Nooyi, brought a much- needed global viewpoint to a company whose international business was growing three times faster than sales in the United States. Nooyi, who was raised in India and educated there and in the United States, steered the company toward more “better for you” and “good for you” snacks such as a Quaker beverage in China, Natural Balance snack bar in Mexico, and KeVita probiotic drinks in the United States.11

Globalization affects small companies as well as large. Many small companies export their goods. Many domestic firms assemble their products in other countries. And com- panies are under pressure to improve their products in the face of intense competition from foreign manufacturers. Firms today must ask themselves, “How can we be the best in the world?”

For students, it’s not too early to think globally. Participating in the Global Business Institute program at Indiana University, one hundred students from North Africa, South Asia, and the Middle East came to the United States to pitch entrepreneurial business ideas to a panel of experts. The panel consisted of officials from Coca-Cola and the U.S. Department of State. The most recent winner was Team Pakistan, who proposed a business model that reduces waste by reselling used clothing.12

Technological Change The Internet of Things, artificial intelligence, mobile applications, Big Data analytics, and cloud computing are only some of the ways that technology is vitally important in the busi- ness world. Technology both complicates things and creates new opportunities. The chal- lenges come from the rapid rate at which communication, transportation, information, and other technologies change.13 For example, after just a couple of decades of widespread desk- top use, customers switched to laptop models, which require different accessories. Then, users turned to mini-laptops, tablets, smartphones, and smartwatches to meet their mobility technology needs.14 Any company that served desktop users had to rethink its customers’ wants and needs.

Later chapters discuss technology further, but here we highlight the rise of the Internet and its effects. How is the Internet so critical to business?15 It is a digital marketplace, a means for manufacturing goods and services, a distribution channel, an information service, an arena for social activism,16 and more. It drives down costs and speeds up globalization. It improves efficiency of decision making. Managers can watch and learn what companies around the world are doing in real time.

Although these advantages create business opportunities, they also create threats, not just from hackers but from competitors as they capitalize sooner on new developments than you do.

Things continue to change at breakneck speed. About 15 years ago, tech guru Tim O’Reilly coined the term “Web 2.0” to describe the exciting new wave of social networking start-ups that allow users to publish and share information. But most failed or stalled; very few, other than Facebook, made a profit.17 Web 2.0 redefined the ways in which customers and sellers, employees and employers shared knowledge.

Next came Web 3.0, described as a “read-write-execute” web where applications, search findings, and online services are more tailored, integrated, and relevant to users.18 Think about the last time you searched for a product on Amazon and a list of related products appeared on the screen as alternatives. Web 3.0 is giving way to the Internet of Things, where smartphones, home thermostats, weight scales, wearable fitness trackers, and so forth sense human activities and communicate this information wirelessly through networks to be used in myriad ways (regulate home temperature, check body weight, and tally miles walked).19

Globalization has changed the face of the workforce. Managers in this competitive environment needs to attract and effectively manage a talent pool from all over the globe.

©geopaul/E+/Getty Images RF

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What’s next for the digital frontier? It’s hard to predict with precision, but as billions of people and businesses worldwide demand more personalized and connected experiences, artificial intelligence will simplify the interfaces between humans and technology. Instead of people adapting to new technologies as in the past, technology will adapt to people’s preferences.20

Knowledge Management Companies and managers need good new ideas. Because companies in advanced economies have become so efficient at producing physical goods, most workers have been freed up to provide services or “abstract goods” such as software, entertainment, data, and advertising. These workers, whose primary contributions are ideas and problem-solving expertise, are often referred to as knowledge workers. Managing these workers poses some particular chal- lenges,21 which we examine throughout this book.

Because the success of modern businesses so often depends on the knowledge used for innovation and the delivery of services, organizations need to manage that knowledge.22 Knowledge management is the set of practices aimed at discovering and harnessing an organization’s intellectual resources—fully using the intellects of the organization’s people. Knowledge management is about finding, unlocking, sharing, and capitalizing on the most precious resources of an organization: people’s expertise, skills, wisdom, and relationships. The nearby “Multiple Generations at Work” box explores how important knowledge trans- fer is to organizational survival.

Knowledge managers find these human assets, help people collaborate and learn, gener- ate new ideas, and harness those ideas into successful innovations.

Collaboration across Boundaries One of the most important processes of knowledge management is to ensure that people in different parts of the organization collaborate effectively with one another. This requires productive communications among different departments, divisions, or other subunits of the organization. For example, “T-shaped” managers break out of the traditional corporate hierarchy to share knowledge freely across the organization (the horizontal part of the T) while remaining committed to the bottom-line performance of their individual business units (the vertical part).23 Consulting firm McKinsey originally developed this T-shaped concept as a way for its employees to view clients’ problems from both broad and deep perspectives.24

Toyota keeps its product development process efficient by bringing together design engineers and manufacturing employees from the very beginning. Often, manufacturing employees can see ways to simplify a design so that it is easier to make without defects or unnecessary costs. Toyota expects its employees to listen to input from all areas of the organization, so this type of collaboration is a natural part of the organization’s culture. Employees use software to share their knowledge—best practices they have developed for design and manufacturing.25 Thus, at Toyota, knowledge management supports collabora- tion and vice versa.

Collaboration across boundaries occurs even beyond the boundaries of the organization itself. Companies today must motivate and capitalize on the ideas of people outside the organization. Customers, for instance, can be collaborators. Companies must realize that the need to serve the customer drives everything else.

In this digitally connected era, customers expect to offer their ideas and be heard. Companies collaborate with their customers by actively and continuously listening and responding. L.L.Bean tracks customer comments and reviews on its website; if any product averages fewer than three stars out of five, the company removes it and directs the product manager to resolve the problem.26 Businesses pay attention to customer comments on Amazon, Zappos, Yelp, TripAdvisor, Facebook, Twitter, and many more sites. Customer feedback management software can search these and other sites and generate statistics and reports. Companies can respond to negative online reviews with the goal of winning over their critics.27

knowledge management

Practices aimed at discovering and harnessing an organization’s intellectual resources.

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Multiple Generations at Work Move over Boomers, Here Comes the Next Generation of Leaders

The workforce is changing rapidly. A large number of Baby Boomers (born 1946–1964) will be exiting the workforce over the next 15 years. According to the Pew Research Center, approximately 10,000 Boomers turn 65 each day in the United States. Though some Boomers work into their later years, others step out of the workforce to enjoy hobbies, travel opportunities, and family time.

The talent exodus of top-level executives, managers, and leaders will translate into career opportunities for younger generations. Gen Xers (born 1965–1979) occupy many middle-level jobs, but there are not enough of them to fill all of the soon-to-be-vacant senior positions. Enter the Millennial generation (born 1980–2000), who make up the largest demographic cohort on record.28 These early 30- and 20-somethings are flooding into the job market and will be needed to move quickly from team leader and frontline managerial positions to even higher responsibility.

Before Gen Xers and Millennials can assume higher- level positions in businesses, schools, government agen- cies, and nonprofits, organizational knowledge must be transferred from senior management to the less experi- enced Gen Xers and Millennial employees. Senior man- agers and leaders possess “know-how” and “know-who”

that are critical to the long-term success of their organiza- tions. Prior to retirement, senior talent will look to trans- fer their knowledge to younger employees.

Complicating this need is the fact that generations, like individuals, sometimes differ in their attitudes, per- sonalities, and behaviors. This can affect everything from communication, customer service, teamwork, job satis- faction, morale, and retention to overall organizational performance.

©Bike_Maverick/Getty Images RF

The Digital World Collaboration across boundaries now includes instant communication with stakeholders around the world. Humanitarian organizations are at the forefront of this col- laboration. You can sign up online as a Red Cross digital advocate (redcross.org/volunteer/volunteer- opportunities /be-a-digital-advocate). Volunteers go online and monitor social media for tweets, Facebook posts, and other social media communication that can provide useful informa- tion to Red Cross workers. Volunteers also provide direct support by responding on social media with information about basic first aid and shelter locations, and for emo- tional support. One example was reminding a young teen who had tweeted she was home alone as a tornado was touching down that she needed to get in the bathtub if she didn’t have a basement.

Online collaboration allows managers to manage many demands in a brief amount of time during crises. The United Nations (OCHA) uses trained volunteers called the Stand By Task Force (SBTF). They collaborate online from all over the world. When one group sleeps, another group in another part of the world is waking up and ready to help. This provides 24-hour support to lead- ership in the crucial hours of a crisis.

Businesses are learning from humanitarian organi- zations and are using online collaboration or crowd- sourcing. GlaxoSmithKline (GSK) is crowdsourcing its malaria research by sharing its data online and allowing the public to collaborate. You will learn details of how GSK and others are using technology to support and accelerate management goals later in the text.

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The early Internet years turned careers (and lives) upside down. Students dropped out of school to join Internet start-ups or start their own. Managers in big corporations quit their jobs to do the same. Investors salivated, and invested heavily. The risks were often ignored or downplayed—sometimes tragically as the boom went bust in 2000.

And consider an earlier industry with similar transforming power: automobiles. There have been at least 2,000 carmakers—how many remain?

What is the lesson to be learned from the failures in these important transformational industries? A key to understanding the success of a company is the competitive advantage it holds and how well it can sustain that advantage.

To survive and win over time, you have to gain and sustain advantages over your competi- tors. You gain competitive advantage by being better than your competitors at doing valu- able things for your customers. But what does this mean, specifically? To succeed, managers must deliver performance. The fundamental success drivers of performance are innovation, quality, service, speed, cost competitiveness, and sustainability.

Innovation Companies must continually innovate. Innovation is the introduction of new goods and ser- vices. Your firm must adapt to changes in consumer demands and to new competitors.

Products don’t sell forever; in fact, they don’t sell for nearly as long as they used to because competitors are continuously introducing new products. Your firm must innovate, or it will die.

In 2000, Blockbuster was the market leader of the video rental industry. It didn’t see the need to offer customers an alternative to driving to their retail stores to rent a movie, nor did the company eliminate late charges because they were a major source of revenue. Reed Hastings, founder of Netflix, displaced Blockbuster by allowing customers to order videos that would be delivered by mail. Customers could watch a video for as long as they wanted, then mail it back to Netflix. In 2010, Blockbuster filed for bankruptcy. Netflix has become a successful $8.8 billion company.29

The need for innovation is driven in part by globalization. One important reason is that facilities in other countries can manufacture appliances or write software code at a lower cost than facilities in the United States; U.S. facilities thus operate at a disadvan- tage. Therefore, they must provide something their foreign competitors can’t—and often that requires delivering something new.

Nevertheless, as labor and other costs rise overseas, and as U.S. companies find ways to improve efficiency at home, the future for North American facilities may brighten. Nissan has expanded production in Smyrna, Tennessee, including assembly of its Infiniti JX luxury car and Leaf electric car. Other companies like BMW have announced plans to expand

manufacturing operations in the United States. In 2016, the German auto maker completed its $1 billion expansion to its Spartanburg, South Carolina, plant, bringing annual pro- duction capacity to 450,000 vehicles.30

Innovation is today’s holy grail (2017’s number-one most-admired company in Fortune’s innovativeness cat- egory was Starbucks).31 Like the other sources of competi- tive advantage, innovation comes from people, it must be a strategic goal, and it must be managed properly. Later chap- ters show you how great companies innovate.

Quality Most companies claim that they are committed to qual- ity. In general, quality is the excellence of your product. Customers expect high-quality goods and services, and often they will accept nothing less.

LO 2

innovation

The introduction of new goods and services; a change in method or technology; a positive, useful departure from previous ways of doing things.

quality

The excellence of your product (goods or services).

Managing for Competitive Advantage

Bottom Line Because it’s easy for managers to be so busy that they lose sight of what really drives performance, you will periodically see icons as bottom-line reminders of the need for innovation, quality, service, speed, cost competitiveness, and sustainability. Which two or more of these advantages do you think would be hardest to deliver at the same time?

Q

©Trevor Lush/Purestock/Superstock RF

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Historically, quality pertained primarily to the physical goods that customers bought; it referred to attractiveness, lack of defects, and dependability. The traditional approach to quality was to check work after it was completed and then eliminate defects, using inspec- tion and statistical data to determine whether products were up to standards. But then W. Edwards Deming, J. M. Juran, and other quality gurus convinced managers to take a more complete approach to achieving total quality. This includes preventing defects before they occur, achieving zero defects in manufacturing, and designing products for quality. The goal is to solve and eradicate from the beginning all quality-related problems and to live a philoso- phy of continuous improvement in the way the company operates.32

Quality is further provided when companies customize goods and services to the wishes of the individual consumer. Choices at Starbucks give consumers thousands of variations on the drinks they can order. NikeID allows customers to customize their athletic shoes, Coca-Cola’s Freestyle vending machines empower thirsty consumers to create over 100 soft- drink mixes, and Panera Breads permits visitors to its restaurants to enter custom orders via self-service kiosks.33

Providing world-class quality requires a thorough understanding of what quality really is.34 Quality can be measured in terms of product performance, customer service, reliability (avoidance of failure or breakdowns), conformance to standards, durability, and aesthetics. Only when you move beyond broad, generic concepts such as “quality” and identify specific quality requirements can you identify problems, target needs, set precise performance stan- dards, and deliver world-class value.

By the way, Fortune magazine’s 2017 number-one company for quality of products and services was also Starbucks.

Service Important quality measures often pertain to the ser- vice customers receive. This dimension of quality is particularly important because the ser- vice sector has come to dominate the U.S. economy. In recent years, the fastest-growing job categories have been almost entirely health care services, and the jobs with the greatest declines are primarily in mining, logging, and manufacturing (although some manufactur- ing returns to the United States).35 Services include intangible products such as insurance, hotel accommodations, medical care, and haircuts.

Service means giving customers what they want or need, when they want it. So, service is focused on continually meeting the needs of customers to establish mutually beneficial long-term relationships. Thus cloud computing companies, in addition to providing online access to software, applications, and other computer services, also help their customers store and analyze large amounts of customer and employee data.

An important dimension of service quality is making it easy and enjoyable for custom- ers to experience a service or to buy and use products. The Detroit Institute of Arts hired a manager formerly with the Ritz-Carlton hotel chain, noted for its exceptional level of ser- vice, to be vice president of museum operations. As the art museum prepared for a grand reopening following a major renovation, the manager analyzed the types of customer inter- actions that occur in a museum, identifying ways to make the experience more pleasant. He also worked with his staff to identify ways to customize services, such as offering tours tailored to the interests of particular groups.36

Speed Google constantly improves its search product at a rapid rate. In fact, its entire culture is based on rapid innovation. Sheryl Sandberg, chief operating officer of Facebook, made a mistake early in her previous position as vice president of Google because she was moving too fast to plan carefully. Although the mistake cost the company a few million dollars, Google cofounder Larry Page responded to her explanation and apology by saying he was actually glad she had made the mistake. It showed that she appreciated the company’s val- ues. Page told Sandberg, “I want to run a company where we are moving too quickly and

service

The speed and dependability with which an organization delivers what customers want.

The result of long-term relationships is better

and better quality, and lower and lower costs.

—W. Edwards Deming

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doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risks.”37

Although it’s unlikely that Google actually favors mistakes over moneymaking ideas, Page’s statement expressed an appreciation that in the modern business environment, speed—rapid execution, response, and delivery—often separates the winners from the losers. How fast can you develop and get a new product to market? How quickly can you respond to customer requests? You are far better off if you are faster than the competition—and if you can respond quickly to your competitors’ actions.

Speed isn’t everything—you can’t get sloppy in your quest to be first. But other things being equal, faster compa- nies are more likely to be the winners, slow ones the losers. Even pre-Internet, companies were getting products to mar- ket and in the hands of customers faster than ever. Now the speed requirement has increased exponentially. Everything, it seems, is on fast-forward.

Speed is no longer just a goal of some companies; it is a strategic imperative. Quicken Loans (owned by Intuit) is currently the second-largest provider of mortgage loans in the United States, with Wells Fargo being the top issuer.38 In an ad during the 2016 Superbowl, Quicken announced its new mortgage service, Rocket Mortgage.39 The online, self-service mortgage application is mar- keted as cutting the approval time from days to minutes.40

Cost Competitiveness Walmart keeps driving hard to find new ways to cut billions of dollars from its already very low distribution costs. It leads the industry in efficient distribution, but competitors are copying Walmart’s methods, so the efficiency no longer gives it as much of an advantage.41

Walmart’s efforts are aimed at cost competitiveness, which means keeping costs low enough so that the company can realize profits and price its products (goods or services) at levels that are attractive to consumers. Needless to say, if you can offer a desirable product at a lower price, it is more likely to sell.

Singapore Airlines, one of the world’s most admired companies, kept profiting during the economic recession while the global airline industry lost money. It did so by cutting costs more strategically than the competition. SA slashed flights, parked planes, and reduced salaries, including the CEO’s.42

In contrast to the high-quality, even luxurious flying experience offered by Singapore Airlines, Ryanair is a European low-cost airline. CEO Michael O’Leary launched the “no frills” airline with the sole goal of flying people to their destination cheaply and with their luggage intact.43 His vision is for profits to come from in-flight sales, high luggage fees, low-cost secondary airports, and commissions on travel products sold through the airline’s website.44 O’Leary’s no-frills business model appears to be working. In 2016, Ryanair reported a 43 percent increase in net profit to $1.4 billion by carrying over 106 million passengers.45

One reason every company must worry about cost is that consumers can use the Internet to easily compare prices from thousands of competitors. Consumers looking to buy popular items, such as cameras, printers, and plane fares, can go online to research the best models and the best deals. If you can’t cut costs and offer attractive prices, you can’t compete.

speed

Fast and timely execution, response, and delivery of products.

cost competitiveness

Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers.

Quicken Loans became quicker than before and quicker than many others when it introduced Rocket Mortgage.

©dpa picture alliance/Alamy Stock Photo

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Sustainability Avoiding wasteful use of energy can bolster a company’s financial performance while being kind to the environment. Efforts to cut energy waste are just one way to achieve an important form of competitive advantage: sustainability, which at its most basic is the effort to mini- mize the use and loss of resources, especially those that are polluting and nonrenewable.

Although sustainability means different things to different people,46 in this text we emphasize a long-term perspective on sustaining the natural environment and building tomorrow’s business opportunities while effectively managing today’s business.47

In the United States, corporate efforts aimed at sustainability have fluctuated as environ- mental laws are strengthened or loosened; overall, the worldwide trend has been in the direc- tion of greater concern for sustainability. Many companies have discovered that addressing sustainability issues often produces bottom-line benefits. Companies with strong sustain- ability performance that have also become financial winners include athletic-shoe maker Adidas, Spanish fashion group Inditex, French luxury-goods maker Hermès International, and Eaton, a power management company.48

Patagonia Sur is a for-profit company that has created the first private land trust in Patagonia to protect the company’s land permanently; it plans to create up to 10 profitable, environmentally sustained businesses on that land.49 The goals are to apply free-market forces to develop the land for profit, do no harm, and spread this radically different land management model to developing nations around the world.

Sustainability is about protecting our options.50 Done properly, sustainability allows people to live and work in ways that can be maintained over the long term (generations) without depleting or harming our environmental, social, and economic resources.

Delivering All Types of Performance Don’t assume that you can settle for delivering just one of the six competitive advantages: low cost alone, or quality alone, for example. As illustrated in Exhibit 1.1, the best managers and companies deliver on all of these performance dimensions.

Some trade-offs will occur among the six sources of competitive advantage, but this doesn’t need to be a zero-sum game in which improving one requires weakening another. The best managers try to optimize among multiple performance dimensions over time.

sustainability

Minimizing the use of resources, especially those that are polluting and nonrenewable.

EXHIBIT 1.1 Staying Ahead of the Competition

Innovation

Quality

Service

Speed

Cost e�ectiveness

Managers develop

performance

Sustainability

Bottom Line Don’t focus on one aspect

of performance and neglect the others. You might be

better at or more interested in one than the others, but you should strive for all six. Imagine you’re in your first

management job, supervising a team. What would be your

natural tendency? Which performance measures

would you focus on, and why? How can you be sure

to pay attention to all of them?

Q

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The Functions of Management Management is the process of working with people and resources to accomplish organiza- tional goals. Good managers do those things both effectively and efficiently. To be effective is to achieve organizational goals. To be efficient is to achieve goals with minimal waste of resources—that is, to make the best possible use of money, time, materials, and people. Some managers fail on both criteria, or focus on one at the expense of another. The best managers achieve high performance by focusing on both effectiveness and efficiency.

These definitions have been around for a long time. But as you know, business is chang- ing radically. The real issue is how to do these things.51

Although the context of business and the specifics of doing business are changing, there are still plenty of timeless principles that make great managers, and great companies, great. While fresh thinking and new approaches are required now more than ever, much of what has already been learned about successful management practices remains relevant, useful, and adaptable, with fresh thinking, to the 21st-century business environment.

In the business world today, great executives not only adapt to changing conditions but also apply—fanatically, rigorously, consistently, and with discipline—the fundamental man- agement principles.

These fundamentals include the four traditional functions of management: planning, organizing, leading, and controlling. These are used in organizations of every type (see the nearby “Social Enterprise” feature). They remain as relevant as ever, and they are needed in start-ups as much as in established corporations. But their form has evolved.

Planning: Delivering Strategic Value Planning is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals. Planning activities include analyzing current situa- tions, anticipating futures, determining objectives, deciding the types of activities in which the company will engage, choosing corporate and business strategies, and determining the resources needed to achieve the organization’s goals. Plans set the stage for action and for major achievements.

The planning function for the new business environment, as discussed in Part 2 of this book, is more dynamically described as delivering strategic value. Value is an important con- cept.52 Fundamentally, it describes the monetary amount associated with how well a job, task, good, or service meets users’ needs. Those users might be business owners, customers, employees, society, and even nations.53 The better you meet those needs (in terms of quality, speed, efficiency, and so on), the more value you deliver.

That value is strategic when it contributes to meeting the organization’s goals. On a more personal level, you will do well to periodically ask yourself and your boss, “How can I add

value?” Answering that question will enhance your contributions, your job performance, and your career.

Delivering strategic value is a continual process of identifying opportunities to create, seize, strengthen, and sustain competitive advantage. Effectively creat- ing value requires fully considering a new and chang-

ing set of stakeholders and issues, including the government, the natural environment, globalization, and the dynamic economy in which ideas are king and entrepreneurs are both formidable competitors and potential collaborators. You learn about these and related topics in Chapter 4 (planning and strategic management), Chapter 5 (ethics, corporate responsibility, and sustainability), Chapter 6 (international management), and Chapter 7 (entrepreneurship).

Organizing: Building a Dynamic Organization Organizing is assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. Organizing activities include attracting people

management

The process of working with people and resources to accomplish organizational goals.

LO 3

planning

The management function of systematically making decisions about the goals and activities that an individual, a group, a work unit, or the overall organization will pursue; see also strategic planning.

value

The monetary amount associated with how well a job, task, good, or service meets users’ needs.

organizing

The management function of assembling and coordinating human, financial, physical, informational, and other resources needed to achieve goals.

You will do well to periodically ask yourself and

your boss, “How can I add value?”

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to the organization, specifying job responsibilities, grouping jobs into work units, marshaling and allocating resources, and creating conditions so that people and things work together to achieve maximum success.

Part 3 of the book describes the organizing function as building a dynamic organization. Historically, organizing involved creating an organization chart by identifying busi- ness functions, establishing reporting relationships, and having a human resources department that administered plans, programs, and paperwork. Now and in the future, effective managers will be using new forms of organizing and viewing their people as their most valuable resources. They will build organizations that are flexible and adaptive, particularly in response to competitive threats and customer needs. Progressive human resource practices that attract and retain the very best of a highly diverse population will be essential aspects of the successful company. You will learn about these topics in Chapter 8 (organization structure), Chapter 9 (organizational agility), Chapter 10 (human resources management), and Chapter 11 (managing the diverse workforce).

Leading: Mobilizing People Leading is stimulating people to be high performers. It includes motivating and communi- cating with employees, individually and in groups. Leading involves connecting directly with people, helping to guide and inspire them toward achieving team and organizational goals.

leading

The management function that involves the manager’s efforts to stimulate high performance by employees.

Social Enterprise Ashoka’s Bill Drayton, Pioneer of Social Entrepreneurship

Can a company do well and do good at the same time? The idea that business success and positive social change can and indeed should happen together is the driving force behind social enterprise, or social entrepreneurship. Think of social entrepreneurs as change agents, manag- ers who commit themselves and their organizations to creating not only private value in the form of profit, but also social value in various forms including innovation, sustainability, and accountability. In fact, social entre- preneurs use the same management functions to achieve business excellence and to advance positive social goals.

A leading force behind the growing strength of social enterprise is Ashoka, founded by Bill Drayton in 1980 as a group of Fellows, or social entrepreneurs, then mostly in developing countries. Since its founding, the group has grown to include more than 3,000 social entrepreneurs around the world. Thanks to its efforts, by the late 1990s social enterprise programs were available in business schools and public policy schools around the world.

Ashoka works worldwide to enable everyone to be a “changemaker” by identifying and supporting Fellows, creating communities for them, and helping build busi- ness, social, and financial systems to encourage even

more social innovation. (Ashoka was an Indian emperor of the third century BC who renounced violence. His name means “the absence of sorrow.”)

Fellows in the United States work on problems in edu- cation, women’s health, the environment, justice, obesity, mental health, and human trafficking, among many oth- ers. In addition, there are almost 30 designated “change- maker campuses” in the United States, where “social innovation [is] an embedded core value.” You can check https://www.ashoka.org/en/our-network to see whether your college or university is among them.

In Drayton’s view, anyone can be a social entrepre- neur. All it takes, he says, is the ability to see a problem, put others’ skepticism aside, and allow yourself the time to inch your way first toward a vision and then to a solu- tion that works. You’ll read about social entrepreneurs in every chapter of this book.54

Questions:

• Do you think every manager should have the respon- sibility to do good and do well? Why or why not?

• What other means to create social innovation besides efforts like Ashoka’s do you think can be effective?

Rosalind Brewer, former president and CEO of Sam’s Club, focused on building a dynamic organization. She was recently appointed COO and group president of Starbucks.

©Sarah Bentham/AP Images

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Leading takes place in teams, departments, and divisions as well as at the tops of large organizations.

In earlier textbooks, the leading function described how managers motivate workers to come to work and execute top management’s plans by doing their jobs. Today and in the future, managers must be good at mobilizing people to contribute their ideas—to use their brains in ways never needed or dreamed of in the past.

As described in Part 4, managers must rely on a very different kind of leadership (Chapter 12) that empowers and motivates people (Chapter 13). More now than ever, great work must be done via great teamwork (Chapter 14), both within work groups and across group boundaries. Ideally, underlying these processes will be effective interpersonal and organizational communication (Chapter 15).

Controlling: Learning and Changing Planning, organizing, and leading do not guarantee success. The fourth function, controlling, monitors performance and implements necessary changes. By controlling, managers make sure the organization’s resources are being used properly and that the organization is meet- ing its goals such as quality and worker safety.

When managers implement their plans, they often find that things are not working out as planned. The controlling function makes sure that goals are met. It asks and answers the question, “Are our actual outcomes consistent with our goals?” It then makes adjustments as needed.

Successful organizations, large and small, pay close attention to the controlling function. But Part 5 of the book makes it clear that today and for the future, the key managerial chal- lenges are far more dynamic than in the past; they involve continually learning and changing. Controls must still be in place, as described in Chapter 16. But new technologies and other innovations (Chapter 17) make it possible to control more effectively and to help people use their brains, learn, make a variety of new contributions, and help the organization change in ways that forge a successful future (Chapter 18).

The four management functions apply to you personally as well. You must find ways to create value; organize for your own personal effectiveness; mobilize your own talents and skills as well as those of others; monitor performance; and constantly learn, develop, and change for the future. As you proceed through this book and this course, we encourage you not merely to read as if management were an impersonal course subject but to reflect on it from a personal perspective as well, using the ideas for your own personal and professional development.

Performing All Four Management Functions As a manager, your typical day will not be neatly divided into the four functions. You will be doing many things more or less simultaneously.55 Your days will be busy and fractionated, spent dealing with interruptions, meetings, and firefighting. There will be plenty to do that you wish you could be doing but can’t seem to get to. These activities will include all four management functions.

Some managers are particularly interested in, devoted to, or skilled in one or two of the four functions but not in the others. But you should devote adequate attention and resources to all four functions. You can be a skilled planner and controller, but if you organize your people improperly or fail to inspire them to perform at high levels, you will not be realizing your potential as a manager. Likewise, it does no good to be the kind of manager who loves to organize and lead, but who doesn’t really understand where to go or how to determine whether you are on the right track. Good managers don’t neglect any of the four manage- ment functions. Knowing what they are, you can periodically ask yourself whether you are devoting adequate attention to all of them.

controlling

The management function of monitoring performance and making needed changes.

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Controlling performance at Facebook takes many forms. One is Mark Zuckerberg’s creation of new partnerships with third-party companies like Nielsen and comScore to ensure that his company reports accurate data about users’ responses to advertising, such as the average time they spend looking at videos. These data help advertisers decide where and how to spend their ad dollars, based on the ads’ measured effectiveness. Some data reported in the fall of 2016 were inaccurate, and advertisers have asked Facebook to be more accountable.

Another means of control is Facebook’s new partner- ships with outside fact checkers, who are empowered to flag questionable stories as “disputed” to alert read- ers to possible hoaxes and false reports. This move is in response to charges that Facebook’s hands-off editorial policy allowed fake news stories to go viral during the 2016 presidential campaign. The company also promotes greater media literacy with its new Journalism Project,

which, among other goals, offers both practical and ethi- cal advice for eyewitnesses uploading breaking news and videos.

Zuckerberg also is betting on artificial intelligence (AI) to help Facebook filter content users don’t want to see. “I’m really focused on making sure that our company gets faster at taking the bad stuff down,” Zuckerberg said. “The best thing we can do is create AI systems that watch a video and understand that it’s problematic and not show it to people.”56

• Mark Zuckerberg’s original vision of Facebook was an interactive message board to help his Harvard class- mates keep in touch with each other. Do you think he had to consider many control mechanisms at that time? Why does the site need them now?

• What other aspects of Facebook’s performance prob- ably have control mechanisms in place?

Management in Action CONTROL SYSTEMS AT FACEBOOK

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Organizations—particularly large organizations—have many levels. In this section, you learn about the types of managers found at three broad organizational levels: top level, middle level, and frontline.

Top-Level Managers Top-level managers are the senior executives of an organization and are responsible for its overall management. Top-level managers, often referred to as strategic managers, are sup- posed to focus on long-term issues and emphasize the survival, growth, and overall effective- ness of the organization.

Top managers are concerned not only with the organization as a whole but also with the interaction between the organization and its external environment. This interaction often requires managers to work extensively with outside individuals and organizations.

The chief executive officer (CEO) is the key top-level manager found in large corpora- tions. This individual is the primary strategic manager of the firm and has authority over everyone else. Others include the chief operating officer (COO), company presidents, and other members of the top management team (TMT).

In the 1970s, finance was by far the most common single function represented in the TMT. The top team now typically includes the chief executive officer (CEO), Chief Operating Officer (COO), chief information (or technology, or knowledge) officer, and other chiefs in the C-suite, including ethics, strategy (or corporate development), human resources, and marketing (or branding). Functional chiefs sometimes have the title of senior vice president (SVP).57 A likely role for the modern C-suite could well be chief sustainability officer or even climate change officer.58

LO 4

top-level managers

Senior executives responsible for the overall management and effectiveness of the organization.

Management Levels and Skills

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Traditionally, the role of top-level managers has been to set overall direction by formulating strategy and controlling resources. But now top managers are increasingly called upon to be not only strategic architects but also true organizational leaders. As

leaders, they must create and articulate a broader corporate purpose with which people can identify—and one to which people will enthusiastically commit.

Middle-Level Managers Middle-level managers are located in the organization’s hierarchy below top-level man- agement and above the frontline managers. Sometimes called tactical managers, they are responsible for translating the general goals and plans developed by strategic managers into more specific objectives and activities.

Traditionally, the role of the middle manager is to be an administrator who bridges the gap between higher and lower levels. Middle-level managers break down corporate objec- tives into business unit targets; put together separate business unit plans from the units below them for higher-level corporate review; and serve as translators of internal communi- cation, interpreting and broadcasting top management’s priorities downward and channel- ing and translating information from the front lines upward.

Not long ago the stereotype of the middle manager connoted mediocrity: unimagina- tive people behaving like bureaucrats and defending the status quo. But middle managers are closer than top managers to day-to-day operations, customers, frontline managers, and employees—so they know the problems and opportunities. They also have many creative ideas—often better than their bosses’. Middle managers can play crucial roles in determin- ing which entrepreneurial ideas are blocked and which are supported,59 and how well they integrate with top management is crucial to formulating and implementing strategy.60 Good middle managers provide the operating skills and practical problem solving that keep the company working.61

Frontline Managers Frontline managers, or operational managers, are lower-level managers who supervise the operations of the organization. These managers often have titles such as supervisor, team leader, or assistant manager. They are directly involved with nonmanagement employees, implementing the specific plans developed with middle managers. This role is critical in the organization because operational managers are the link between management and non- management personnel. Your first management position probably will fit into this category.

Traditionally, frontline managers have been directed and controlled from above to make sure that they successfully implement operations in support of company strategy. But in leading companies, their roles have expanded. Whereas the operational execution aspect of the role remains vital, in leading companies frontline managers are increasingly called on to be innovative and entrepreneurial, managing for growth and new business development.

Managers on the front line are crucial to creating and sustaining quality, innovation, and other drivers of financial performance.62 In outstanding organizations, talented frontline managers are not only allowed to initiate new activities but are expected to by their top- and middle-level managers. And they are given freedom, incentives, and support to find ways to do so.63

Working Leaders with Broad Responsibilities In small firms—and in those large companies that have adapted to the times—managers have strategic, tactical, and operational responsibilities. They are complete business people; they have knowledge of all business functions, are accountable for results, and focus on serving customers both inside and outside their firms. All of this requires the ability to think strate- gically, translate strategies into specific objectives, coordinate resources, and do real work with lower-level people.

middle-level managers

Managers located in the middle layers of the organizational hierarchy, reporting to top-level executives.

frontline managers

Lower-level managers who supervise the operational activities of the organization.

Top managers are increasingly called upon to

be not only strategic architects but also true

organizational leaders.

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In short, today’s best managers can do it all; they are working leaders.64 They focus on relationships with other people and on achieving results. They don’t just make decisions, give orders, wait for others to produce, and then evaluate results. They get dirty, do hard work themselves, solve problems, and produce value.

What does all of this mean in practice? How do managers spend their time—what do they actually do? A classic study of top executives found that they spend their time engaging in 10 key activities or roles, falling into three categories: interpersonal, informational, and deci- sional.65 Exhibit 1.2 summarizes these roles. Even though the study was done decades ago, it remains highly relevant as a description of what executives do. And even though the study focused on top executives, managers at all levels engage in all these activities. As you study the table, you might ask yourself, “Which of these activities do I enjoy most (and least)? Where do I excel (and not excel)? Which would I like to improve?” Whatever your answers, you will be learning more about these activities throughout this course.

Must-Have Management Skills Performing management functions and roles, and achieving competitive advantage, are the cornerstones of a manager’s job. However, understanding this does not ensure success. Managers need a variety of skills to do these things well. Skills are specific abilities that result from knowledge, information, practice, and aptitude. Although managers need many individual skills, which you will learn about throughout this textbook, there are three broad, essential categories: technical skills, conceptual and decision skills, and interpersonal and communication skills.66

First-timers can underestimate the challenges of management and the many skills required.67 But when managers apply these three critical management skills to the four man- agement functions, the result is high performance.

Technical A technical skill is the ability to perform a specialized task that involves a certain method or process. The technical skills you learn in school will provide you with the opportunity to get an entry-level position; they will also help you as a manager. For

LO 5

technical skill

The ability to perform a specialized task involving a particular method or process.

Decisional Roles Informational Roles Interpersonal Roles

Entrepreneur: Searching for new business opportunities and initiating new projects to create change.

Monitor: Seeking information to understand the organization and its environment; serving as the center of communication.

Leader: Staffing, developing, and motivating people.

Disturbance handler: Taking corrective action during crises and other conflicts.

Disseminator: Transmitting information from source to source, sometimes interpreting and integrating diverse perspectives.

Liaison: Maintaining a network of outside contacts that provide information and favors.

Resource allocator: Providing funding and other resources to units or people; includes making significant organizational decisions.

Spokesperson: Speaking on behalf of the organization about plans, policies, actions, and results.

Figurehead: Performing symbolic duties (for example, ceremonies) and serving other social and legal demands.

Negotiator: Engaging in negotiations with parties outside the organization as well as inside (for example, resource exchanges).

n/a n/a

EXHIBIT 1.2 Managerial Roles: What Managers Do

SOURCE: Adapted from Mintzberg, H., The Nature of Managerial Work. New York: Harper & Row, 1973, pp. 92–93.

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example, your accounting and finance courses will develop the technical skills you need to understand and manage the financial resources of an organization.

Conceptual and Decision Conceptual and decision skills involve the ability to identify and resolve problems for the benefit of the organization and everyone concerned. Managers use these skills when they consider the overall strategy of the firm, the interactions among different parts of the organization, and the role of the business in its external environment. As you acquire greater responsibility, you must exercise your conceptual and decision skills with increasing frequency. Much of this book is devoted to enhancing your conceptual and decision skills, but experience also plays an important part in their development.

Interpersonal and Communication Interpersonal and communication skills influ- ence the manager’s ability to work well with people. These skills are often called people skills. Managers spend the great majority of their time interacting with people,68 and they must develop their abilities to lead, motivate, and communicate effectively with those around them.

The importance of these skills varies by managerial level. Technical skills are most important early in your career. Conceptual and decision skills become more important than technical skills as you rise higher in the company. But interpersonal skills such as commu- nicating effectively with customers and being a good team player are important throughout your career, at every level of management.

An example of a manager with these skills is Mark Bertolini, chief executive of Aetna, which provides health insurance and related services. As a young man doing assembly work for Ford Motor Company, Bertolini acquired an interest in union management, so he decided to study business and earned a degree in accounting and then a master’s degree in finance. Those two specialties involve valuable technical skills, but Bertolini rose through the management ranks at a series of insurance companies because he also has a passion for people. He is constantly engaged in learning about people and forging networks with them. He sees tapping into networks and learning about how to lead people as the key skills that allow managers to get results. At Aetna, Bertolini is not only an expert at insurance matters, but also a promoter of employee health, yoga, and meditation. Furthermore, challenges in his personal life—he survived a spinal cord injury and donated a kidney to his son—help him to empathize with others, including clients.69

conceptual and decision skills

Skills pertaining to abilities that help to identify and resolve problems for the benefit of the organization and its members.

interpersonal and communication skills

People skills; the ability to lead, motivate, and communicate effectively with others.

You and Your Career At the beginning of your career, your contribution to your employer depends on your own performance; often that’s all you’re responsible for. But on becoming a manager, you are responsible for a group. To use an orchestra analogy, instead of playing an instrument, you’re

a conductor, coordinating others’ efforts.70 The challenge is much greater than most first-time managers expect it to be.

Throughout your career, you’ll need to lead teams effec- tively as well as influence people over whom you have no authority; thus the human skills are especially important. Business people often talk about emotional intelligence,71 or EQ—the skills of understanding yourself (including strengths and limitations), managing yourself (dealing with emotions, making good decisions, seeking and using feedback, exercis- ing self-control), and dealing effectively with others (listen- ing, showing empathy, motivating, leading, and so on).

Executives who score low on EQ are less likely to be rated as excellent on their performance reviews, and their divisions tend not to perform as well.72 But please take note: the common phrase “emotional intelligence” is con- troversial.73 You should not consider EQ to be a type of

LO 6

©Dmytro Sidelnikov/Alamy Stock Photo RF

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intelligence but as a set of skills that you can learn and develop. The issue is not lack of abil- ity to change (you can), but the lack of motivation to learn and apply such skills.74

A common complaint about leaders, especially newly promoted ones who had been out- standing individual performers, is that they lack what is perhaps the most fundamental of EQ skills: empathy with other people. William George, former chair and CEO of Medtronic, says some people can go a long way in their careers based on sheer determination and aggressiveness, but personal development—including EQ—ultimately becomes essential.75

What should you do to forge a successful, gratifying career? You are well advised to be both a specialist and a generalist, to be self-reliant and connected, to actively manage your relationship with your organization, and to know what is required not only to survive but also to thrive in today’s world.

Be Both a Specialist and a Generalist If you think your career will be as a specialist, think again. Chances are, you will not want to stay forever in strictly technical jobs with no managerial responsibilities. Accountants are promoted to team leaders and accounting department heads, sales representatives become sales managers, writers become editors, and nurses become nursing directors. As your responsibilities increase, you must deal with more people, understand more about other aspects of the organization, and make bigger and more complex decisions. Beginning to learn now about these managerial challenges will yield benefits sooner than you think.

So, it will help if you can become both a specialist and a generalist.76 Seek to become a specialist: you should be an expert in something useful. This will give you specific skills that help you provide concrete, identifiable value to your organization and to customers. And over time, you should learn to be a generalist, knowing enough about a variety of subject matters so that you can think strategically and work with different perspectives. Exhibit 1.3 gives you more career advice from experts.

Putting this another way, exploit (use, apply, take advantage of) what you know, and explore (search) for new experiences, ideas, knowledge, and perspectives. To both exploit and explore is to be ambidextrous;77 organizations should do this, and so should we all.78

Be Self-Reliant To be self-reliant means to take full responsibility for yourself and your actions. You cannot count on your boss or your company to take care of you. A useful metaphor is to think of yourself as a business, with you as president and sole employee.

emotional intelligence

Skills of understanding yourself, managing yourself, and dealing effectively with others.

Escape the industry-specific silo. Develop a skill set that transcends a single function, industry, or career path.

Know what you know. And find ways to apply it.

Keep learning throughout your life. No one can rest on what they already know.

Manage your online presence. Expand your network, and post about your industry and functional expertise.

Never compromise your integrity. Succumbing to temptations can destroy a career.

Take a long view. Look at your career as a whole, and stay true to yourself.

Prevent obsolescence. Job security comes from transportable skills.

Zig-zag strategically. Job changing can be high-risk but not if you have measurable accomplishments.

Be willing to take on tough jobs. Continually challenge yourself.

EXHIBIT 1.3 Career Advice from the Experts

SOURCES: “Need a New Year’s Resolution? 10 Ideas for a Stronger Career in 2017,” American Recruiters, January 2, 2017, www.americanrecruiters.com; Kennedy, Joyce Lain, “Best Career Advice for 2013,” Chicago Tribune, December 23, 2012, http://www.chicagotribune.com; Sanders, Lorraine, “Hilary Novelle Hahn’s Zig-Zag Career Guide,” Fast Company, November 13, 2012, http://www.fastcompany.com; Kadlec, Dan, “Graduation Day Advice: 5 Steps to a Great Career,” Time, May 9, 2012, http://business.time.com.

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To be self-reliant, find new ways to make your overall performance better. Take responsibil- ity for change; be an innovator.79 Don’t just do your work and wait for orders; look for oppor- tunities to contribute in new ways, to develop new products and processes, and to generate constructive change that strengthens the company and benefits customers and colleagues.

Success requires more than talent; you also have to be willing to work hard. The elite, world-class performers in many fields (including managers and leaders) reach the top tier only after 10 years or more of hard work and skillful coaching.80 The key is to engage in consistent practice, looking at the results and identifying where to improve.

It’s easy to see how this works for violinists or basketball players, but what about business managers? The answer is to focus on getting better results each time you try any business task, whether it’s writing a report, chairing a meeting, or interpreting a financial statement. To know whether you’re getting better, make a point of asking for feedback from customers, colleagues, and bosses.

To develop your full potential, assess yourself, includ- ing your interests, aptitudes, and personal character strengths. Think about it, ask others who know you well, conduct a formal exercise in which you learn what others consider to be your “best self,”81 and use recent advances

in psychology to identify your signature strengths.82 Consider the professional image and reputa- tion you would like to develop,83 and continue building your capabilities. Consider the suggestions found throughout this book, and your other coursework, as you pursue these objectives.

Connect with People Being connected means having many good working relationships and interpersonal contacts. For example, those who want to become partners in professional service organizations, such as social media marketing, accounting, advertising, and consulting firms, strive constantly to build a network of contacts. Their connectedness goal is to work not only with multiple cli- ents but also with a half dozen or more senior partners, including several from outside their home offices and some from outside their country. Social relationships improve newcomers’ knowledge of the organization and their jobs, their social integration into the firm, and their commitment to the organization.84 Networks of diverse individuals can make huge contribu- tions to your professional development no matter what your career—even if you hope to be inducted into the Major League Baseball Hall of Fame on the first ballot.85

Social capital is the goodwill stemming from your social relationships, and you can mobi- lize it on your behalf. It aids career success, compensation, employment, team effectiveness, the success of new ventures, entrepreneurship, and relationships with suppliers and other outsiders.86 Today much of that social capital can be tapped online at social networking websites. Besides the social sites such as Facebook, some of these sites are aimed at helping people tap business networks. For example, LinkedIn has more than 467 million registered members worldwide, with total revenue from premium subscriptions, and marketing and talent solutions of $960 million.87

LinkedIn is not the only large player in the online job market space. In early 2017, Facebook announced that it would be providing a free service to enable companies to post job openings on their pages and applicants (FB members) to apply for those positions. The social media giant is hoping that companies and applicants will use Messenger to communi- cate during the recruitment process.88

All business is a function of human relationships.89 Building competitive advantage depends not only on you but on other people. Management is personal. Commercial deal- ings are personal. Purchase decisions, repurchase decisions, and contracts all hinge on rela- tionships. Even the biggest business deals—takeovers—are intensely personal and emotional. Without good work relationships, you will not achieve your potential as a manager and leader.

Actively Manage Your Relationship with Your Organization We have noted the importance of taking responsibility for your own actions and your own career. Unless you are self-employed and your own boss, one way to do this is to think about

social capital

Goodwill stemming from your social relationships; a competitive advantage in the form of relationships with other people and the image other people have of you.

Don’t just do your work and wait for

instructions; look for opportunities to

contribute in new ways.

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the nature of the relationship between you and your employer. Exhibit 1.4 shows two possible relationships—and you have some control over which relationship develops.

Relationship #1 is one in which you view yourself as an employee and passively expect your employer to tell you what to do and give you pay and benefits. Your employer is in charge, and you are a passive recipient of its actions. Your contributions are likely to be adequate but minimal—you won’t make the added contributions that strengthen your orga- nization, and if all organizational members take this perspective, the organization is not likely to be strong for the long run. Personally, you may lose your job, or keep your job in a declining organization, or receive few positive benefits from working there and either quit or become cynical and unhappy in your work.

In contrast, relationship #2 is a two-way relationship in which you and your organization both benefit from one another. The mind-set is different: Instead of doing what you are told, you think about how you can contribute—and you act accordingly. To the extent that your orga- nization values your contributions, you are likely to benefit in return by receiving full and fair rewards, support for further personal development, and a more gratifying work environment. If you think in broad terms about how you can help your company, and if others think like this as well, there is likely to be continuous improvement in the company’s ability to innovate, cut costs, and deliver quality products quickly to an expanding customer base. As the company’s bottom line strengthens, benefits accrue to shareholders as well as to you and other employees.

What contributions can you make? You can do your basic work. But you can, and should, go further. You can figure out new ways to add value—by thinking of and implementing new ideas that improve processes and results. You can do this by using your technical knowl- edge and skills, as in developing a better information system, accounting technique, or sales strategy.

You also can contribute with your conceptual and human skills and your managerial actions (see Exhibit 1.5). You can execute the essential management functions and deliver competitive advantage. You can deliver strategic value (Part 2 of this book). You can take actions that help build a more dynamic organization (Part 3). You can mobilize people to contribute to their fullest potential (Part 4). And you can learn and change—and help your colleagues and company learn and change—to adapt to changing realities and forge a suc- cessful future (Part 5).

Survive and Thrive You will be accountable for your actions and for results. In the past, people at many com- panies could show up, do an OK job, get a decent evaluation, and get a raise equal to the cost of living and maybe higher. Today, managers must do more, better. Eminent manage- ment scholar Peter Drucker, in considering what makes managers effective, noted that some are charismatic whereas some are not, and some are visionary whereas others are more numbers-oriented.90 But successful executives do share some common practices:

• They ask “What needs to be done?” not just “What do I want to do?” • They write an action plan. They don’t just think, they do, based on a sound, ethical

plan. • They take responsibility for decisions. This requires checking up, revisiting, and

changing if necessary.

Bottom Line If you want people who see

your LinkedIn profile to think of you as a future manager,

what should you include in the profile?

EXHIBIT 1.4 Two Relationships: Which Will You Choose?

Employer

You

#1 You as a passive

employee

#2 You as an active contributor in a productive relationship

You Your

organization

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• They focus on opportunities, not just problems. Problems have to be solved, and problem solving prevents more damage. But capturing opportunities is what creates great results.

Career success is most likely if you are flexible, creative, and motivated. You need to learn how to think strategically, make decisions, and work in teams. You will learn more about these and other topics, essential to your successful career, in the upcoming chapters.

P R

O G

R E

S S

R E

P O

R T

M A

N A

G E

R ’S

B R

IE F

O N

W A

R D

Said to be forward-looking, disciplined, inquisitive, consis- tent, and good at communicating, Mark Zuckerberg recently earned a 99.3 approval rating from Facebook employees. That’s a little less surprising when you consider that he says he is most strongly influenced by the colleagues with whom he has day-to-day contact, rather than by any outside men- tors. His office has glass walls, and he’s been known to invite new employees to present their own ideas at meetings.

Zuckerberg believes “[employees] need the ability to fully exercise all their creativity and all their capacity, or else they’re not going to be having the biggest impact that they can have on the world, and they’re going to want to go do something else.” He’s also famous for saying, “I will only hire someone to work directly for me if I would work for that person.”

Zuckerberg has delegated the commercial side of Facebook’s operations to chief operating officer Sheryl Sandberg. This leaves him free to stay focused on the technical aspects that led him to start the social media giant as a simple site he once ran from his Harvard dorm

room. Matt Cohler, an early employee and now a venture capitalist, describes Zuckerberg as “a learn-it-all person, to a level that is sometimes maddening. . . . He maintains a relentless focus on innovation, but at the same time he’s an applied-science and engineering guy.”

Mike Vernal, a former engineering employee, says of Zuckerberg, “Most people think day to day or week to week. Mark thinks century to century.”

In his spare time, Zuckerberg is learning Mandarin and programming an AI personal assistant for his home. With his wife, he recently began a tour with the goal of visiting all 50 of the United States.91

• As an early career employee at Facebook, what steps could you take to get noticed and position yourself for promotion to frontline manager?

• Most of Facebook’s core top employees have been with the company for much of its 13-year life. What do you think accounts for their commitment?

Management in Action WORKING FOR FACEBOOK’S MARK ZUCKERBERG

EXHIBIT 1.5 Managerial Action Is Your Opportunity to Contribute You

Your organization

Managerial actions

1. Delivering strategic value 2. Building a dynamic organization 3. Mobilizing people 4. Learning and changing

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Managing and Performing  Chapter 1 23

conceptual and decision skills, p. 18

controlling, p. 14

cost competitiveness, p. 10

emotional intelligence, p. 19

frontline managers, p. 16

innovation, p. 8

interpersonal and communication skills, p. 18

knowledge management, p. 6

leading, p. 13

management, p. 12

middle-level managers, p. 16

organizing, p. 12

planning, p. 12

quality, p. 8

service, p. 9

social capital, p. 20

speed, p. 10

sustainability, p. 11

technical skill, p. 17

top-level managers, p. 15

value, p. 12

KEY TERMS

You learned that change is the only constant for manag- ers in today’s business world. You also learned that high- performance managers seek to deliver superior value to customers by providing high-quality, innovative services or products in a timely, cost-effective, and sustainable man- ner. The fundamental functions and activities of manage- ment are just as important as they were “back in the day.” However, their forms have evolved greatly and their strat- egies and tactics continue to change. Depending on your organizational level, you’ll be expected to engage in certain roles and master a variety of managerial skills. Your career, and your professional and personal development along the way, are primarily in your hands.

Summarize the major challenges of managing in the new competitive landscape.

• In business, there is no alternative to managing well. The best managers succeed by focusing on the fun- damentals and knowing what’s important.

• The goal of this book is to help you become an effec- tive, high-performance manager.

• Managers today must deal with dynamic forces that create greater change than ever before, including globalization, technological change (including the continuing development and new applications of the Internet), knowledge management, and collaboration across organizational boundaries.

Describe the sources of competitive advantage for a company.

• Because business is a competitive arena, you need to deliver value to customers in ways that are supe- rior to what your competitors do.

• Competitive advantages result from innovation, quality, service, speed, cost competitiveness, and sustainability.

Explain how the functions of management are evolving in today’s business environment.

• Despite massive change, management retains cer- tain functions that will not disappear.

LO 1

LO 2

LO 3

• The primary functions of management are planning, organizing, leading, and controlling.

• Planning is analyzing a situation, determining the goals that will be pursued, and deciding in advance the actions needed to pursue these goals.

• Organizing is assembling the resources needed to complete the job and coordinating employees and tasks for maximum success.

• Leading is motivating people and stimulating high performance.

• Controlling is monitoring the progress of the organi- zation or the work unit toward goals and then taking corrective action as needed.

• In the modern business environment, these functions require creating strategic value, building a dynamic organization, mobilizing people, and learning and changing.

Compare how the nature of management varies at different organizational levels.

• Top-level, strategic managers are the senior execu- tives responsible for the organization’s overall management.

• Middle-level, tactical managers translate general goals and plans into more specific objectives and activities.

• Frontline, operational managers are lower-level man- agers who supervise operations.

• Managers at all levels must perform a variety of inter- personal, informational, and decisional roles.

• Even at the operational level, the best managers think strategically and operate like complete busi- ness people.

Define the skills you need to be an effective manager.

• To execute management functions successfully, managers need technical skills, conceptual and decision skills, and interpersonal and communica- tion skills.

LO 4

LO 5

RETAINING WHAT YOU LEARNED

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24 Part One  Foundations of Management

• A technical skill is the ability to perform a specialized task involving certain methods or processes.

• Conceptual and decision skills help the manager recognize complex and dynamic issues, analyze the factors that influence those issues or problems, and make appropriate decisions.

• Interpersonal and communication skills enable the manager to interact and work well with people.

• As you rise to higher organizational levels, technical skills tend to become less important and conceptual skills become more important, whereas interpersonal and communication skills remain extremely important at every level.

Understand the principles that will help you manage your career.

• You are more likely to succeed in your career if you become both a specialist and a generalist. You should be self-reliant but also connected.

• You should actively manage your relationship with your organization and continuously improve your skills so you can perform as needed in the changing work environment.

LO 6

The Management Process

Foundations of management

Planning: Delivering strategic value

Leading: Mobilizing people

Controlling: Learning and changing

Organizing: Building a dynamic

organization

DISCUSSION QUESTIONS 1. Identify and describe a great manager. What makes him

or her stand out from the crowd? 2. Have you ever seen or worked for an ineffective man-

ager? Describe the causes and the consequences of the ineffectiveness.

3. Describe in as much detail as possible how the Internet and globalization affect your daily life.

4. Identify some examples of how different organizations collaborate across boundaries.

5. Name a great organization. How do you think manage- ment contributes to making it great?

6. Name an ineffective organization. What can manage- ment do to improve it?

7. Give examples you have seen of firms that are out- standing and weak on each of the six pillars of competi- tive advantage. Why do you choose the firms you do?

8. Describe your use of the four management functions in the management of your daily life.

9. Discuss the importance of technical, conceptual, and interpersonal skills at school and in jobs you have held.

10. What are your strengths and weaknesses as you con- template your career? How do they relate with the skills and behaviors identified in the chapter?

11. Devise a plan for developing yourself and making your- self attractive to potential employers. How would you go about improving your managerial skills?

12. Consider the managers and companies discussed in the chapter. Have they been in the news lately, and what is the latest? If their image, performance, or for- tunes have gone up or down, what has changed to affect how they have fared?

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Managing and Performing  Chapter 1 25

EXPERIENTIAL EXERCISES 1.1 YOUR PERSONAL NETWORK

1. See the nearby figure showing primary and secondary connections. Working on your own, write down all of your primary contacts—individuals you know person- ally who can support you in attaining your professional goals. Then begin to explore their secondary connec- tions. Make assumptions about possible secondary con- nections that can be made for you by contacting your primary connections. For example, through one of your teachers (primary), you might be able to obtain some names of potential employers (secondary). (10–15 min.)

2. Then meet with your partner or small group to exchange information about your primary and second- ary networks and to exchange advice and information on how best to use these connections as well as how you could be helpful to them. (about 5 min. per person; 10–30 min. total, depending on group size)

3. Add names or types of names to your list based on ideas you get by talking with others in your group. (2–5 min.)

4. Discuss with your large group or class, using the follow- ing discussion questions. (10 min.)

QUESTIONS

1. What were some of the best primary sources identified by your group?

2. What were some of the best sources for secondary contacts identified by your group?

3. What are some suggestions for approaching primary contacts?

4. What are some suggestions for approaching secondary contacts, and how is contacting secondary sources dif- ferent from contacting primary contacts?

5. What did you learn about yourself and others from this exercise?

SOURCE: de Janasz, Suzanne C., Dowd, Karen O. and Schneider, Beth Z., Interpersonal Skills in Organizations. New York: McGraw-Hill, 2002, p. 211.

Primary and Secondary Connections

Secondary connections

Primary connections

Self

SOURCE: Excerpted from Jauch, Lawrence R., Bedeian, Arthur G., Coltrin, Sally A. and Glueck, William F., The Managerial Experience: Cases, Exercises, and Readings, 5th ed. Chicago: South-Western, 1989.

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26 Part One  Foundations of Management

OBJECTIVES

1. To recognize what behaviors contribute to being a suc- cessful manager.

2. To develop a ranking of critical behaviors that you per- sonally believe are important for becoming an effective manager.

INSTRUCTIONS

1. Following is a partial list of behaviors in which man- agers may engage. Rank these items in terms of their importance for effective performance as a manager. Put a 1 next to the item that you think is most important, 2 for the next most important, down to 10 for the least important.

2. Bring your rankings to class. Be prepared to justify your results and rationale. If you can add any behaviors to this list that might lead to success or greater manage- ment effectiveness, write them in.

Managerial Behaviors Worksheet _____ Collaborates with people from different parts of the

organization.

_____ Looks for ways to incorporate technology into the operation.

_____ Ensures that services/products are of a high quality and delivered on time.

_____ Keeps costs down and looks for ways to be more efficient.

_____ Makes decisions to help achieve the goals of the organization.

_____ Is organized and effectively allocates resources.

_____ Motivates others to perform at a high level.

_____ Makes sure goals are met and implements changes when necessary.

_____ Exhibits good interpersonal and communication skills.

_____ Is skilled at identifying and resolving problems.

SOURCE: Adapted from Jauch, Lawrence R., Bedeian, Arthur G., Coltrin, Sally A. and Glueck, William F., The Managerial Experience: Cases, Exercises, and Readings, 5th ed. Chicago: South-Western, 1989.

1.2 ARE YOU AN EFFECTIVE MANAGER?

1.3 CAREER SKILLS DEVELOPMENT

OBJECTIVES

1. To develop an understanding of your career-related strengths.

2. To identify career-related skills and behaviors requiring development.

3. To increase confidence in your marketability.

INSTRUCTIONS Read the instructions for each activity, think about them, and then provide your response.

Career Development Worksheet Think about a part- or full-time job, or a volunteer role that you’ve held.

1. Describe activities and skills at which you excelled and which helped you succeed:

a. ________________________________________

b. ________________________________________

c. ________________________________________

d. ________________________________________

e. ________________________________________

2. Identify activities and skills that you wanted to master but were unable to do so due to lack of training or time:

a. ________________________________________

b. ________________________________________

c. ________________________________________

d. ________________________________________

e. ________________________________________

3. Referring to your list in #2, what steps could you take now to develop these important activities and skills:

a. ________________________________________

b. ________________________________________

c. ________________________________________

d. ________________________________________

e. ________________________________________

SOURCE: Adapted from Gordon, Judith R., Diagnostic Approach to Organizational Behavior. Upper Saddle River, NJ: Pearson Education, 1983.

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Managing and Performing  Chapter 1 27

As Charlie Greer drove to work, he smiled, recalling the meeting at the end of the previous day. Inez Rodriguez, the owner of the company where he worked, USA Hospital Supply, had summoned him to her office, where she warmly shook his hand and exclaimed, “Congratulations!” As they settled into chairs, Inez reviewed the conversa- tion she’d had with the company’s board of directors that morning: USA Hospital had been growing steadily for the past 10 years despite the economy’s ups and downs. As the company’s founder, Inez had always been an insightful and enthusiastic leader of the five-person sales team, but the level of activity was becoming too much of a distrac- tion. Inez needed to think about the long-range vision of the company, so she needed a leader who could focus on sales. She had interviewed several candidates outside the firm as well as Charlie and two of the other sales representatives. In the end, Inez told Charlie, the choice was obvious: Charlie was far and away the best sales rep on the team, he had extensive knowledge of the company’s product mix, and if anyone could help the sales team achieve its goals, it was Charlie. She offered him the job as the company’s first sales manager. He eagerly accepted. When he left work that eve- ning, his head was full of ideas, and his heart was full of confidence.

Now Charlie pulled into the office park where USA Hospital Supply was located and easily found a parking space in the lot outside the one-story office and ware- house facility. As usual, he was one of the first employees to arrive. By habit, he strode toward his cubicle, but after a second, he recalled that Inez had arranged for the small firm’s accountant and computer systems manager to share an office so he could have an office of his own. Charlie entered his new domain and settled into the swivel chair behind his desk.

At that instant, the eagerness to enjoy his new status and responsibility began to give way to nervousness. Charlie realized that although he knew a lot about selling supplies to hospitals and doctor’s offices, he had never given much thought to managing. Obviously, he mused, his job was to see that his department met or exceeded its sales targets. But how?

Charlie started his computer and then opened his e-mail and his word-processing software, intending to

get some ideas into writing. He typed out a list of the four sales reps: Cindy, Paula, John, and Doreen. Cindy handled the large corporate accounts, Paula covered the East Coast, John called on accounts in the South, and Doreen handled the Midwest. Until today, Charlie had been build- ing a fast-growing territory west of the Mississippi. Now who was going to do that? Charlie was tempted to keep that work for himself; he knew he could build a base of loyal clients better than anyone else. Still, he wondered whether he could excel as a manager and as a sales rep at the same time.

While he was pondering that challenge, Cindy walked past the office door and, without stopping, politely called, “Congratulations!” through the doorway. Charlie’s heart sank as he realized that Cindy had also wanted this job. They had always enjoyed a friendly rivalry as talented sales- people; now what would happen to the fun of being team members? It was easier to think about the other representa- tives at the moment. Charlie scanned his e-mail inbox and saw status reports from John and Doreen, both of them out of the office to call on clients. What about Paula? Charlie wasn’t quite sure he remembered her plans for this week. Obviously he needed to catch up on what everyone was doing, and that gave him a new idea. He could build on his strengths by traveling with each of the sales reps and coaching them. That way, he could show them all his proven methods for closing a sale, and they could learn to sell as well as he did. Charlie thought, “That’s what a good man- ager does: shows employees how to do the job right.” He was starting to feel less nervous as he began to compose an e-mail to Paula.

DISCUSSION QUESTIONS

1. How will Charlie’s approach to quality and service affect his company’s performance?

2. Which of the basic functions of management has Charlie considered? How well is he preparing to carry out these functions?

3. Which management skills does Charlie have? In what areas do you think he has the greatest need to develop skills? How can he actively manage his development as a manager?

Concluding Case A NEW MANAGER AT USA HOSPITAL SUPPLY

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APPENDIX A

The Evolution of Management For thousands of years, managers have wrestled with the same issues and problems confronting executives today. Around 1100 BC, the Chinese practiced the four man- agement functions—planning, organizing, leading, and controlling—discussed in Chapter 1. Between 400 BC and 350 BC, the Greeks recognized management as a separate art and advocated a scientific approach to work. The Romans decentralized the management of their vast empire before the birth of Christ. During medieval times, the Venetians standardized production through the use of an assembly line, building warehouses and using an inventory system to monitor the contents.1

But throughout history, most managers operated strictly on a trial-and-error basis. The challenges of the Industrial Revolution changed that. Management emerged as a for- mal discipline at the turn of the century. The first university programs to offer management and business education, the Wharton School at the University of Pennsylvania and the Amos Tuck School at Dartmouth, were founded in the late 19th century. By 1914, 25 business schools existed.2

Thus, the management profession as we know it today is relatively new. This appendix explores the roots of modern management theory. Understanding the origins of manage- ment thought will help you grasp the underlying contexts of the ideas and concepts presented in the chapters ahead.

Although this appendix is titled “The Evolution of Management,” it might be more appropriately called “The Revolutions of Management” because it documents the wide swings in management approaches over the past 100+ years. Out of the great variety of ideas about how to improve management, parts of each approach have survived and been incorporated into modern perspectives on manage- ment. Thus, the legacy of past efforts, triumphs, and failures has become our guide to future management practice.3

EARLY MANAGEMENT CONCEPTS AND INFLUENCES Communication and transportation constraints hindered the growth of earlier businesses. Therefore, improvements in management techniques did not substantially improve performance. However, the Industrial Revolution changed that. As companies grew and became more complex, minor improvements in management tactics produced impressive increases in production quantity and quality.4

The emergence of economies of scale—reductions in the average cost of a unit of production as the total volume produced increases—drove managers to strive for further growth. The opportunities for mass production created by the Industrial Revolution spawned intense and system- atic thought about management problems and issues— particularly efficiency, production processes, and cost savings.5

Exhibit A.1 provides a time line depicting the evolution of management thought through the decades. This histori- cal perspective is divided into two major sections: classical approaches and contemporary approaches. Many of these approaches overlapped as they developed, and they often had a significant impact on one another. Some approaches were a direct reaction to the perceived deficiencies of pre- vious approaches. Others developed as the needs and issues confronting managers changed over the years. All the approaches attempted to explain the real issues fac- ing managers and provide them with tools to solve future problems.

Exhibit A.1 will reinforce your understanding of the key relationships among the approaches and place each per- spective in its historical context.

CLASSICAL APPROACHES The classical period extended from the mid-19th cen- tury through the early 1950s. The major approaches that

EXHIBIT A.1 The Evolution of Management Thought

Systematic management

Contingency theory

Current and future revolutions

Classical approaches Contemporary approaches

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2015 2025

Scientific management

Bureaucracy

Administrative management

Human relations

Quantitative management

Organizational behavior

Systems theory

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emerged during this period were systematic management, scientific management, administrative management, human relations, and bureaucracy.

Systematic Management During the 19th century, growth in U.S. business centered on manufacturing.6 Early writers such as Adam Smith believed the management of these firms was chaotic, and their ideas helped to systematize it. Most organizational tasks were subdivided and performed by specialized labor. However, poor coordination caused frequent problems and breakdowns of the manufacturing process.

The systematic management approach attempted to build specific procedures and processes into operations to ensure coordination of effort. Systematic management emphasized economical operations, adequate staffing, maintenance of inventories to meet consumer demand, and organizational control. These goals were achieved through

• Careful definition of duties and responsibilities.

• Standardized techniques for performing these duties.

• Specific means of gathering, handling, transmitting, and analyzing information.

• Cost accounting, wage, and production control systems to facilitate internal coordination and communications.

Systematic management emphasized internal operations because managers were concerned primarily with meet- ing the explosive growth in demand brought about by the Industrial Revolution. In addition, managers were free to focus on internal issues of efficiency, in part because the government did not constrain business practices signifi- cantly. Finally, labor was poorly organized. As a result, many managers were oriented more toward things than toward people.

Systematic management did not address all the issues 19th-century managers faced, but it tried to raise managers’ awareness about the most pressing concerns of their job.

Scientific Management Systematic management failed to lead to widespread pro- duction efficiency. This shortcoming became apparent to a young engineer named Frederick Taylor, who was hired by Midvale Steel Company in 1878. Taylor discovered that production and pay were poor, inefficiency and waste were prevalent, and most companies had tremendous unused potential. He concluded that management decisions were unsystematic and that no research to determine the best means of production existed.

In response, Taylor introduced a second approach to management, known as scientific management.7 This approach advocated the application of scientific methods to analyze work and to determine how to complete production tasks efficiently. For example, U.S. Steel’s contract with the United Steel Workers of America specified that sand shov- elers should move 12.5 shovelfuls per minute; shovelfuls should average 15 pounds of river sand composed of 5.5 percent moisture.8

Taylor identified four principles of scientific management:

1. Management should develop a precise, scientific approach for each element of one’s work to replace general guidelines.

2. Management should scientifically select, train, teach, and develop each worker so that the right person has the right job

3. Management should cooperate with workers to ensure that jobs match plans and principles.

4. Management should ensure an appropriate division of work and responsibility between managers and workers.

To implement this approach, Taylor used techniques such as time-and-motion studies. With this technique, a task was divided into its basic movements, and different motions were timed to determine the most efficient way to complete the task.

After the “one best way” to perform the job was iden- tified, Taylor stressed the importance of hiring and train- ing the proper worker to do that job. Taylor advocated the standardization of tools, the use of instruction cards to help workers, and breaks to eliminate fatigue.

Another key element of Taylor’s approach was the use of the differential piecerate system. Taylor assumed workers were motivated by receiving money. Therefore, he imple- mented a pay system in which workers were paid additional

An Early Labor Contract

The following rules, taken from the records of Cocheco Company, were typical of labor contract provisions in the 1850s.

1. The hours of work shall be from sunrise to sunset, from the 21st of March to the 20th of September inclusively; and from sunrise until eight o’clock, p.m., during the remainder of the year. One hour shall be allowed for dinner, and half an hour for breakfast during the first mentioned six months; and one hour for dinner during the other half of the year; on Saturdays, the mill shall be stopped one hour before sunset, for the purpose of cleaning the machinery.

2. Every hand coming to work a quarter of an hour after the mill has been started shall be docked a quarter of a day; and every hand absenting him or herself, without absolute necessity, shall be docked in a sum double the amount of the wages such hand shall have earned during the time of such absence. No more than one hand is allowed to leave any one of the rooms at the same time—a quarter of a day shall be deducted for every breach of this rule.

3. No smoking or spiritous liquors shall be allowed in the factory under any pretense whatsoever. It is also forbidden to carry into the factory, nuts, fruits, etc. books, or papers during the hours of work.

SOURCE: Sullivan, W., “The Industrial Revolution and the Factory Operative in Pennsylvania,” The Pennsylvania Magazine of History and Biography 78 (1954), pp. 478–79.

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Frederick Taylor (left) and Dr. Lillian Gilbreth (right) were early experts in management efficiency.

©George Rinhart/Getty Images ©Bettmann/Getty Images

wages when they exceeded a standard level of output for each job. Taylor concluded that both workers and manage- ment would benefit from such an approach.

Scientific management principles were widely embraced. Other proponents, including Henry Gantt and Frank and Lillian Gilbreth, introduced many refinements and tech- niques for applying scientific management on the factory floor. One of the most famous examples of the application of scientific management is the factory Henry Ford built to produce the Model T.9 The legacy of Taylor’s scientific man- agement approach is broad and pervasive. Most important, productivity and efficiency in manufacturing improved dra- matically. The concepts of scientific methods and research were introduced to manufacturing. The piecerate system gained wide acceptance because it more closely aligned effort and reward. Taylor also emphasized the need for cooperation between management and workers. And the concept of a management specialist gained prominence.

Despite these gains, not everyone was convinced that scientific management was the best solution to all business problems. First, critics claimed that Taylor ignored many job-related social and psychological factors by emphasizing only money as a worker incentive. Second, production tasks were reduced to a set of routine, machinelike procedures that led to boredom, apathy, and quality control problems. Third, unions strongly opposed scientific management techniques because they believed management might abuse its power to set the standards and the piecerates, thus exploiting workers and diminishing their importance. Finally, although scientific management resulted in intense scrutiny of the internal efficiency of organizations, it did not help managers deal with broader external issues such as competitors and government regulations, especially at the senior management level.

Scientific Management and the Model T

At the turn of the century, automobiles were a luxury that only the wealthy could afford. They were assembled by craftspeople who put an entire car together at one spot on the factory floor. These workers were not specialized, and Henry Ford believed they wasted time and energy bringing the needed parts to the car. Ford took a revolutionary approach to automobile manufacturing by using scientific management principles.

After much study, machines and workers in Ford’s new factory were placed in sequence so that an automobile could be assembled without interruption along a moving production line. Mechanical energy and a conveyor belt were used to take the work to the workers.

The manufacture of parts likewise was revolutionized. For example, formerly it had taken one worker 20 minutes to assemble a flywheel magneto. By splitting the job into 29 operations, putting the product on a mechanical conveyor, and changing the height of the conveyor, Ford cut production time to 5 minutes.

By 1914, chassis assembly time had been trimmed from almost 13 hours to 1½ hours. The new methods of production required complete standardization, new machines, and an adaptable labor force. Costs dropped significantly, the Model T became the first car accessible to the majority of Americans, and Ford dominated the industry for many years.

SOURCE: Kroos, H. and Gilbert, C., The Principles of Scientific Management. New York: Harper & Row, 1911.

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Administrative Management The administrative management approach emphasized the perspective of senior managers within the organization and argued that management was a profession and could be taught.

An explicit and broad framework for administrative man- agement emerged in 1916, when Henri Fayol, a French min- ing engineer and executive, published a book summarizing his management experiences. Fayol identified five functions and 14 principles of management. The five functions, which are very similar to the four functions discussed in Chapter 1, are planning, organizing, commanding, coordinating, and controlling. Exhibit A.2 lists and defines the 14 principles. Although some critics claim Fayol treated the principles as universal truths for management, he actually wanted them applied flexibly.10

A host of other executives contributed to the admin- istrative management literature. These writers discussed a broad spectrum of management topics, including the social responsibilities of management, the philosophy of management, clarification of business terms and concepts,

and organizational principles. Chester Barnard’s and Mary Parker Follet’s contributions have become classic works in this area.11

Barnard, former president of New Jersey Bell Telephone Company, published his landmark book The Functions of the Executive in 1938. He outlined the role of the senior executive: formulating the purpose of the organization, hir- ing key individuals, and maintaining organizational com- munications.12 Mary Parker Follet’s 1942 book Dynamic Organization extended Barnard’s work by emphasizing the continually changing situations that managers face.13 Two of her key contributions—the notion that managers desire flexibility and the differences between motivating groups and individuals—laid the groundwork for the modern contin- gency approach discussed later in this appendix.

All the writings in the administrative management area emphasize management as a profession along with fields such as law and medicine. In addition, these authors offered many recommendations based on their personal experi- ences, which often included managing large corporations. Although these perspectives and recommendations were considered sound, critics noted that they might not work in all settings. Different types of personnel, industry condi- tions, and technologies may affect the appropriateness of these principles.

Human Relations A fourth approach to management, human relations, devel- oped during the 1930s. This approach aimed at under- standing how psychological and social processes interact with the work situation to influence performance. Human relations was the first major approach to emphasize informal work relationships and worker satisfaction.

This approach owes much to other major schools of thought. For example, many of the ideas of the Gilbreths (scientific management) and Barnard and Follet (administra- tive management) influenced the development of human relations from 1930 to 1955. In fact, human relations emerged from a research project that began as a scientific management study.

Western Electric Company, a manufacturer of commu- nications equipment, hired a team of Harvard researchers led by Elton Mayo and Fritz Roethlisberger. They were to investigate the influence of physical working conditions on workers’ productivity and efficiency in one of the com- pany’s factories outside Chicago. This research project, known as the Hawthorne Studies, provided some of the most interesting and controversial results in the history of management.14

The Hawthorne Studies were a series of experiments conducted from 1924 to 1932. During the first stage of the project (the illumination experiments), various working con- ditions, particularly the lighting in the factory, were altered to determine the effects of those changes on productivity. The researchers found no systematic relationship between the factory lighting and production levels. In some cases, productivity continued to increase even when the illumina- tion was reduced to the level of moonlight. The research- ers concluded that the workers performed and reacted

1. Division of work—divide work into specialized tasks and assign responsibilities to specific individuals.

2. Authority—delegate authority along with responsibility.

3. Discipline—make expectations clear and punish violations.

4. Unity of command—each employee should be assigned to only one supervisor.

5. Unity of direction—employees’ efforts should be focused on achieving organizational objectives.

6. Subordination of individual interest to the general interest—the general interest must predominate.

7. Remuneration—systematically reward efforts that support the organization’s direction.

8. Centralization—determine the relative importance of superior and subordinate roles.

9. Scalar chain—keep communications within the chain of command.

10. Order—order jobs and material so they support the organization’s direction.

11. Equity—fair discipline and order enhance employee commitment.

12. Stability and tenure of personnel—promote employee loyalty and longevity.

13. Initiative—encourage employees to act on their own in support of the organization’s direction.

14. Esprit de corps—promote a unity of interests between employees and management.

EXHIBIT A.2 Fayol’s 14 Principles of Management

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differently because the researchers were observing them. This reaction is known as the Hawthorne Effect.

This conclusion led the researchers to believe productiv- ity may be affected more by psychological and social factors than by physical or objective influences. With this thought in mind, they initiated the other four stages of the project. During these stages, the researchers performed various work group experiments and had extensive interviews with employees. Mayo and his team eventually concluded that productivity and employee behavior were influenced by the informal work group.

Human relations proponents argued that managers should stress primarily employee welfare, motivation, and communication. They believed social needs had precedence over economic needs. Therefore, management must gain the cooperation of the group and promote job satisfaction and group norms consistent with the goals of the organization.

Another noted contributor to the field of human relations was Abraham Maslow.15 In 1943, Maslow suggested that humans have five levels of needs. The most basic needs are the physical needs for food, water, and shelter; the most advanced need is for self-actualization, or personal fulfill- ment. Maslow argued that people try to satisfy their lower- level needs and then progress upward to the higher-level needs. Managers can facilitate this process and achieve organizational goals by removing obstacles and encourag- ing behaviors that satisfy people’s needs and organizational goals simultaneously.

Although the human relations approach generated research into leadership, job attitudes, and group dynamics, it drew heavy criticism.16 Critics believed that one result of human relations—a belief that a happy worker was a produc- tive worker—was too simplistic. Whereas scientific manage- ment overemphasized the economic and formal aspects of the workplace, human relations ignored the more rational side of the worker and the important characteristics of the for- mal organization. However, human relations was a significant step in the development of management thought because it prompted managers and researchers to consider the psy- chological and social factors that influence performance.

Bureaucracy Max Weber, a German sociologist, lawyer, and social his- torian, showed how management itself could be more effi- cient and consistent in his book The Theory of Social and Economic Organizations.17 The ideal model for manage- ment, according to Weber, is the bureaucracy approach.

Weber believed bureaucratic structures can eliminate the variability that results when managers in the same orga- nization have different skills, experiences, and goals. Weber advocated that the jobs themselves be standardized so that personnel changes would not disrupt the organization. He emphasized a structured, formal network of relationships among specialized positions in an organization. Rules and regulations standardize behavior, and authority resides in positions rather than in individuals. As a result, the organiza- tion need not rely on a particular individual but will realize efficiency and success by following the rules in a routine and unbiased manner.

A Human Relations Pioneer

In 1837, William Procter, a ruined English retailer, and James Gamble, son of a Methodist minister, formed a partnership in Cincinnati to make soap and candles. Both were known for their integrity, and soon their business was thriving.

By 1883, the business had grown substantially. When William Cooper Procter, grandson of the founder, left Princeton University to work for the firm, he wanted to learn the business from the ground up. He started working on the factory floor. “He did every menial job from shoveling rosin and soap to pouring fatty mixtures into crutchers. He brought his lunch in a paper bag . . . and sat on the floor [with the other workers] and ate with them, learning their feelings about work.”

By 1884, Cooper Procter believed, from his own experience, that increasing workers’ psychological commitment to the company would lead to higher productivity. His passion to increase employee commitment to the firm led him to propose a scandalous plan: share profits with workers to increase their sense of responsibility and job satisfaction. The surprise was audible on the first dividend day, when workers held checks equivalent to seven weeks’ pay.

Still, the plan was not complete. Workers saw the profit sharing as extra pay rather than as an incentive to improve. In addition, Cooper Procter recognized that a fundamental issue for the workers, some of whom continued to be his good friends, was the insecurity of old age. Public incorporation in 1890 gave Procter a new idea. After trying several versions, by 1903 he had discovered a way to meet all his goals for labor: a stock purchase plan. For every dollar a worker invested in P&G stock, the company would contribute four dollars’ worth of stock.

Finally, Cooper Procter had resolved some key issues for labor that paid off in worker loyalty, improved productivity, and an increasing corporate reputation for caring and integrity. He went on to become CEO of the firm, and P&G today remains one of the most admired corporations in the United States.