ES27 Notes

TOPIC 0: MANAGEMENT

 Management – attainment of organizational goals in an effective and efficient manner

 4 Functions:
o Planning – defining goals for future performance; deciding on tasks or resources
o Organizing – assigning tasks, grouping tasks and allocating resources into departments
o Leading – use of influence to motivate employees
o Controlling – monitoring employees’ activities; keeping the organization on track

 Organization – social entity that is goal directed and deliberately structured

 Social Entity – made up of two or more people
 Goal Directed – designed to achieve some outcome
 Deliberately structured – tasks are divided and responsibility is assigned to members
 Effectiveness – degree to which the organization achieves a stated goal
 Efficiency – use of minimal resources
 Performance – ability to attain goals

Management Skills:
 Conceptual skills – cognitive ability to see the organization as a whole
 Human skills – ability to work with other people
 Technical skills – understanding of and proficiency in the performance of specific tasks

Management Types:
 Vertical Differences - hierarchical level
o Top managers - top of the hierarchy and are responsible for the entire organization
o Middle managers - work at middle levels of the organization and are responsible for
business units and major departments
o Project manager - responsible for a temporary work; involves participation of people
from various functions of the organization
o First-line managers - directly responsible for the production of goods and services; first
or second level of management

 Horizontal Differences - occurs horizontally across the organization

o Functional managers - responsible for departments that perform a single functional task
o General managers - responsible for several departments that perform different functions

Manager Activities:
 Adventures in Multitasking
 Life on Speed Dial
Manager Roles

 role - set of expectations for a manager’s behavior

 Interim managers - managers who are not affiliated with a specific organization but work on a
project-by- project basis

TOPIC 1: THE ENVIRONMENT AND CORPORATE CULTURE

 The external organizational environment includes all elements existing outside the boundary of
the organization that have the potential to affect the organization.

 The organization’s external environment can be further conceptualized as having two layers:
general and task environments

 general environment - outer layer that is widely dispersed and affects organizations indirectly
 international - represents events originating in foreign countries
 technological - includes scientific and technological advancements in a specific industry
 sociocultural - represents the demographic characteristics as well as the norms, customs,
and values of the general population
 economic - represents the general economic health of the country or region in which the
organization operates
 legal-political - includes government regulations at the local, state, and federal levels
 natural - includes all elements that occur naturally on earth
 task environment - closer to the organization and includes the sectors that conduct day-to-day
transactions with the organization
 Customers - people and organizations in the environment that acquire goods or services
 Competitors - organizations in the same industry that provides to same set of customers
 Suppliers - provide the raw materials the organization uses
 labor market - people in the environment who can be hired to work

 internal environment - includes the elements within the organization’s boundaries

o employees, culture, management

 Uncertainty - managers do not have sufficient information about environmental factors

 Adapting to the environment:

 Boundary-spanning roles - Roles assumed by people or departments that link and
coordinate the organization with key elements
o detect and process information about changes in the environment
o represent the organization’s interests to the environment
o use of business intelligence (using software to search through data); related to
competitive intelligence (activities to get information about one’s rivals)

 Interorganizational partnerships
o reduce boundaries and increase collaboration with other organizations

 merger - two or more organizations combine to become one

 joint venture - strategic alliance or program by two or more organizations

 Corporate Culture
 culture - set of key values, beliefs, understandings, and norms shared in an organization

 fundamental values through visible manifestations of:

o symbols - an object, act, or event that conveys meaning to others
o story - narrative based on true events and is repeated frequently and shared
o heroes - a figure who exemplifies the deeds, character, and attributes of a culture
o slogan - phrase or sentence that succinctly expresses a key corporate value
o ceremony - planned activity at a special event

 Adaptive cultures - managers are concerned about customers and internal people
 Unadaptive cultures - managers are concerned about themselves (discouraging values)
  Types of cultures:
o adaptability culture - ability to interpret and translate signals from the environment
o achievement culture - values competitiveness; willing to work hard to achieve results
o involvement culture - focus on the needs and participation of employees
o consistency culture - values and rewards a methodical, rational way of doing things

Managing the High-Performance Culture

 high-performance culture
o based on a solid organizational mission or purpose
o embodies adaptive values that guide decisions and business practices
o encourages individual employee ownership and the organization’s backbone

 cultural leader - uses signals and symbols to influence corporate culture

TOPIC 2: THE EVOLUTION OF MANAGEMENT THINKING

 Social forces - aspects of a culture that guide and influence relationships among people
 Political forces - influence of political and legal institutions on people and organizations
 Economic forces - availability, production, and distribution of resources

Classical perspective (rational, scientific approach to the study of management)

 3 Subfields:
 Scientific management - emphasizes scientifically determined jobs and management practices
- focused on the productivity of individual worker
o Frederick Winslow Taylor - rules of thumb; father of scientific management
o Lillian M. Gilbreth – industrial psychology; “first lady of management”
o Frank B. Gilbreth – time and motion study

 bureaucratic organizations - defined authority and responsibility

- Employees were loyal to a single individual
- resources were used to realize individual desires
o Max Weber - introduced most of the concepts on bureaucratic organizations
o Characteristics of Bureaucracy:
 Division of labor
 Positions organized in a hierarchy
 Managers subject to rules and procedures
 Management separate from ownership of organization
 Administered acts and decisions recorded in writing
 Employee selection and promotion based on technical qualifications

 administrative principles - focused on the total organization

o Contributors: Henri Fayol, Mary Parker Follett, & Chester I. Barnard
 o Chester I. Barnard - informal organization & acceptance theory of authority
o Henri Fayol - father of modern management
- discussed 14 general principles of management
- 5 basic functions of management: planning, organizing, commanding,
coordinating, & controlling

14 principles of management
Division of work Centralization
Authority & responsibility Scalar chain
Discipline Order
Unity of command Equity
Unity of direction Stability of tenure
Subordination of individual to general interest Initiative
Remuneration Esprit de corps

Unity of command - Each subordinate receives orders from one and only one superior
Division of work - Managerial work and technical work are amenable to specialization to produce more
and better work
Unity of direction - Similar activities in an organization should be grouped together under one manager
Scalar chain - A chain of authority extends from the top to the bottom of the organization

Humanistic perspective (understanding human behavior/needs)

 3 Subfields:
 human relations movement – emphasizes satisfaction of employees’ needs
o Hawthorne studies

 human resources perspective – jobs should be designed to allow workers to use their potential
o Abraham Maslow - hierarchy of needs: physiological, safety, belongingness, esteem,
self-actualization needs
o Douglas McGregor - Theory X and Theory Y

 behavioral sciences approach - applies social science and other disciplines

o organization development - set of management techniques; improve the organization’s
health and effectiveness through its ability to cope with change

Management science perspective (applied mathematics, statistics, and other quantitative techniques)
 3 Subsets:
 Operations research - mathematical model building and other applications
 Operations management - physical production of goods or services
 Information technology - management information systems; software programs

Recent Historical trends

 systems theory – describes organizations as open systems
o systems theory of organizations: inputs, transformation process, outputs, feedback and
environment
 o system - set of interrelated parts that function as a whole
o Open systems - interacts with the environment
o closed systems - does not interact with the environment
o Synergy - whole is greater than the sum of its parts
o Subsystems - depend on one another as parts of a system
o Systemic thinking - looking both at the distinct elements of a situation

 Contingency view - managers’ identification of key variations in the situation

 total quality management - managing the total organization to deliver quality to customers
o W. Edwards Deming - father of the quality movement
o Employee involvement - companywide participation in quality control
o focus on the customer - find out what customers want
o Benchmarking - companies find out how others do something and try to imitate it
o continuous improvement - implementation of improvements in areas of the organization

The learning organization (everyone is engaged in identifying and solving problems)

Managing the technology-driven workplace

 Supply chain management - managing the sequence of suppliers and purchasers
 Customer relationship management - keep in close touch with customers and to collect data
 Outsourcing - contracting out selected functions or activities to other organizations

TOPIC 3: ETHICAL AND SOCIAL RESPONSIBILITY

 Ethics - code of moral principles and values that governs the behaviors of a person with respect
to what is right or wrong
 Three domains of human action:
o domain of codified law - values and standards are written into the legal system
o domain of free choice - the law has no say; organization enjoys complete freedom
o domain of ethics - no specific laws; have standards of conduct

 ethical dilemma - arises in a situation concerning right or wrong when values are in conflict
o moral agent - individual who must make an ethical choice

Criteria for ethical decision making

 4 Approaches:
 utilitarian approach - moral behavior produces the greatest good for the greatest
number; Jeremy Bentham and John Stuart Mill
  individualism approach - acts are moral when they promote the individual’s best long-
term interests

 moral-rights approach - human beings have fundamental rights

o The right of free consent
o The right to privacy
o The right of freedom of conscience
o The right of free speech
o The right to due process
o The right to life and safety

 justice approach - moral decisions must be based on standards of equity/fairness

o Distributive justice - different treatment of people not be based on arbitrary
characteristics
o Procedural justice - requires that rules be administered fairly
o Compensatory justice - individuals be compensated for the cost of their injuries

Three Levels of Personal Moral Development

 corporate social responsibility – obligation to make choices and take actions that will
contribute to the organization
 stakeholder - group that has a stake in the organization’s performance
 bottom of the pyramid concept - corporations can alleviate poverty and make profits by selling
to the world’s poorest people
 Sustainability - economic development that generates wealth and meets the needs of the
current generation while saving the environment

Criteria of Corporate Social Performance

 economic responsibility - corporation should be operated on a profit-oriented basis
o profit-maximizing view - economic responsibility carried to the extreme
 Legal responsibility - what society deems as important; appropriate corporate behavior
 Ethical responsibility - behaviors that are not necessarily codified into law
 Discretionary responsibility - voluntary; guided by company’s desire to make contributions
The Ethical Organization

 Ethical leadership - managers are honest and trustworthy, fair, and behave ethically

 code of ethics - formal statement of the company’s values concerning ethics & social issues
o Principle-based statements - affect corporate culture; define fundamental values
 corporate credos - general statements of principle
o Policy-based statements - outline the procedures to be used in specific ethical situations

 Ethical structures - various systems, positions, and programs a company can undertake
 ethics committee - group of executives appointed to oversee company ethics
 chief ethics officer - company executive who oversees ethics and legal compliance
 ethics hotline - allows employees to report questionable behavior; seek guidance
 Ethics training - programs to help employees deal with ethical questions and values
 whistle-blowing - Employee disclosure of illegal, immoral, or illegitimate practices

TOPIC 4: MANAGERIAL PLANNING AND GOAL SETTING

 goal - desired future state that the organization attempts to realize; specify future ends
 plan - blueprint for goal achievement; specify today’s means
 planning - determining the organization’s goals and defining the means for achieving them

 Levels of Goals and Plans

 Mission Statement
 Strategic Goals/Plans
 Tactical Goals/Plans
 Operational Goals/Plans

 Purposes of Goals and Plans

 Legitimacy
 Source of motivation and commitment
 Resource allocation
 Guides to action
 Rationale for decisions
 Standard of performance

 The Organizational Planning Process

 Develop the Plan
 Translate the Plan
 Plan Operations
 Execute the Plan
 Monitor and Learn
  mission - the organization’s reason for existence
 mission statement - broadly stated definition of purpose that distinguishes the organization

 Strategic goals - official goals; broad statements describing where the organization wants to be
in the future
 Strategic plans - define the action steps by which the company intends to attain strategic goals
 Tactical goals - results that major divisions and departments within the organization intend to
achieve
 Tactical plans - designed to help execute the major strategic plans
 Operational goals - measurable results expected from departments, work groups, and
individuals
 Operational plans - developed at the lower levels of the organization to specify action steps

 strategy map - visual representation of the key drivers of an organization’s success

o 4 key areas: learning and growth, internal processes, customer service, and financial
performance

Operational Planning
 Criteria for Effective Goals

+ choice and clarity

 Management by objectives (MBO) - managers and employees define goals for every
department, project, and person and use them to monitor subsequent performance
o Four major activities:
 Set goals
 Develop action plans
 Review progress
 Appraise overall performance

 Single-use plans - achieve a set of goals that are not likely to be repeated in the future
 Standing plans - ongoing plans that provide guidance for tasks that occur repeatedly

Planning for a Turbulent Environment

 Contingency plans - company responses to be taken in the case of emergencies, setbacks, or
unexpected conditions
 Scenario building - looking at current trends and discontinuities and visualizing future
possibilities
 Crisis Planning:
o crisis prevention - activities managers undertake to try to prevent crises from occurring
o crisis preparation - includes all the detailed planning to handle a crisis when it occurs
 crisis management plan (CMP) - written plan that specifies the steps to be taken
Traditional Approaches to Planning
 Central planning departments - groups of planning specialists who report directly to the CEO

High-Performance Approaches to Planning

 decentralized planning - planning experts work with managers to develop their own goals and
plans

Guidelines for planning in the new workplace

 Set Stretch Goals for Excellence
o stretch goal - reasonable yet highly ambitious, compelling goal that energizes people
and inspires excellence; extension of stretch goal is the big hairy audacious goal (BHAG)
 Use Performance Dashboards
 Deploy Intelligence Teams
o intelligence team - cross-functional group of managers and employees who work
together to gain a deep understanding of a specific business issue

Forecasting
 Qualitative Forecasting - based on intuitive/judgmental evaluation; used when data are scarce
o Jury of Executive Opinion
o Delphi Method
o Sales Force Composite
o Users’ Expectation
o Choice of Method

 Quantitative Forecasting - statistical technique for making projections; uses numerical facts
o Simple Moving Average
o Weighted Moving Average
o Exponential Smoothing

Technological Forecasting - planning be done according to the best estimate of the technology
o Robert E. Shannon – author of “Engineering Management”
o Marvin Cetron – founder and president of Forecasting International

 normative technological forecasting - one works backward from the future to the present; a
process designed to achieve the goal is developed
 exploratory technological forecast - uses Delphi method; begins with present state and
extrapolates into the future

 technology S-curve - used to determine performance in regards to time and effort

Strategies for Managing Technology

 Collaboration -the action of working with someone to produce or create something
 Process -a series of actions or steps taken in order to achieve a particular end
 Analysis -detailed examination of the elements or structure of something
 Invention - creation of a product or introduction of a process for the first time
 Innovation- someone improves on or makes a significant contribution to an existing product
TOPIC 5: DECISION MAKING

 decision - choice made from available alternatives

 Decision making - process of identifying problems and opportunities and then resolving them

Occasion for Decision

 Chester Barnard: occasions for decision originate in three distinct fields:
o from authoritative communications from superiors
o from cases referred for decision by subordinates
o from cases originating in the initiative of the executive concerned

Types of Decision
 Programmed decisions - situations that have occurred often enough to enable decision rules
 Nonprogrammed decisions - situations that are unique, poorly defined and largely unstructured

Facing Certainty and Uncertainty

 Certainty - all the information the decision maker needs is fully available
 Risk - has clear-cut goals and information is available, but future outcomes are subject to chance
 Uncertainty - managers know which goals they wish to achieve, but information is incomplete
 Ambiguity - problem to be solved is unclear; information is unavailable
o wicked decision problem - conflicts over goals, changing circumstances

Decision Making Models

The Ideal, Rational Model
 classical model - managers should make decisions that will be in the organization’s best
economic interests; useful when applied to programmed decisions
o normative - defines how a decision maker should make decisions

How Managers Actually Make Decisions

 administrative model - describes how managers actually make decisions in complex situations
o descriptive - describes how managers actually make decisions rather than how they
should make decisions

o Bounded rationality - people have limits or boundaries; process limited information

o Satisficing - to choose the first solution alternative that satisfies minimal decision criteria
o Intuition - quick apprehension of a decision situation based on past experience

Political Model - useful for making nonprogrammed decisions

 coalition - informal alliance among managers who support a specific goal
o Coalition building - process of forming alliances among managers

Tools for Decision Making

 Linear Programming - a desired benefit can be expressed as a mathematical function of several
variables; set of values for the independent variables that serves to maximize the benefit
  Expected Value
o Decision Trees - begin with a single decision node from which a number of decision
alternatives radiate; radiate several possible futures
o Queuing Theory - The times between arrivals and the time required for serving each
arrival are not constant; probability distribution

 Game Theory - where the future states of nature and their probabilities are replaced by the
decisions of a competitor

Decision Making Steps

 Recognition of Decision Requirement
o problem - organizational accomplishment is less than established goals
o opportunity - managers see potential accomplishment that exceeds current goals
 Diagnosis and Analysis of Causes
o Diagnosis - managers analyze underlying causal factors associated with the decision
situation
 Development of Alternatives
 Selection of Desired Alternative
o Risk propensity - willingness to undertake risk with the opportunity of gaining an
increased payoff
 Implementation of Chosen Alternative
o implementation – translate the chosen alternative into action
 Evaluation and Feedback

Personal Decision Framework

 Decision styles - how people evaluate problems, generate alternatives, and make choices
o directive style - simple, clear-cut solutions to problems
o analytical style - consider complex solutions based on as much data as they can gather
o conceptual style - consider a broad amount of information
o behavioral style - having a deep concern for others as individuals

WHY DO MANAGERS MAKE BAD DECISIONS?

 Being influenced by initial impressions
 Justifying past decisions
 Seeing what you want to see
 Perpetuating the status quo
 Being influenced by problem framing
 Overconfidence

Innovative Group Decision Making

 Start with Brainstorming
o Brainstorming - face-to-face interactive group to spontaneously suggest a wide range of
alternatives for decision making
o Electronic brainstorming - brainwriting; interactive group over a computer network
 Engage in Rigorous Debate
o devil’s advocate - role of challenging the assumptions and assertions made by the
group
o point-counterpoint - people are assigned to express competing points of view
  Avoid Groupthink
o Groupthink - tendency of people in groups to suppress contrary opinions
 Know When to Bail
o escalating commitment - continuing to invest time and resources in a failing decision

TOPIC 6: ORGANIZING

 Organizing - deployment of organizational resources to achieve strategic goals

Organizing the Vertical Structure

 Organization structure – how tasks are divided, resources are deployed, and departments are
coordinated; visual representation: organization chart

 Work Specialization - degree to which organizational tasks are subdivided into separate jobs

 Chain of Command - unbroken line of authority that links all persons in an organization
o scalar principle - defined line of authority in the organization that includes all employees

o Authority - formal and legitimate right of a manager to make decisions, issue orders
 Authority is vested in organizational positions, not people
 Authority is accepted by subordinates
 Authority flows down the vertical hierarchy

o Responsibility - duty to perform the task or activity as assigned

o Accountability - people with authority and responsibility are subject to reporting and
justifying task outcomes to those above them
o Delegation - transfer authority and responsibility to positions below them

o Line authority - people have formal authority to direct and control immediate subordinates
o Staff authority – form of authority granted to staff specialists in their area of expertise

 Span of Management - number of employees reporting to a supervisor; span of control

o tall structure - overall narrow span and more hierarchical levels
o flat structure - wide span, horizontally dispersed, and has fewer hierarchical levels

 Centralization - decision authority is located near the top of the organization

 Decentralization - decision authority is pushed downward to lower organization levels

Departmentalization - basis for grouping positions into departments and departments into the total
organization
 Five approaches to structural design:
o Vertical Functional Approach - grouping of positions into departments based on similar
skills, expertise, and resource use

o Divisional Approach - departments are grouped together based on similar

organizational outputs
 Geographic- or Customer-Based Divisions - group company activities by
geographic region or customer group
 o Matrix Approach - combines aspects of both functional and divisional structures
simultaneously in the same part of the organization
 Two-boss employees - report to two supervisors simultaneously
 matrix boss - product or functional boss; responsible for one side of the matrix
 top leader - oversees both the product and functional chains of command

o Team Approach
 cross-functional teams - group of employees from various functional
departments that meet as a team and resolve mutual problems
 permanent teams - group of employees who are permanently assigned to solve
problems
 team-based structure - the entire organization is made up of horizontal teams
that coordinate their work and work directly with customers

o Virtual Network Approach - the firm subcontracts most of its major functions to separate
companies and coordinates their activities from a small headquarters organization
 modular approach - a manufacturing company uses outside suppliers to provide
entire chunks of a product which are then assembled into a final product

Organizing for Horizontal Coordination

 The Need for Coordination
o Coordination - quality of collaboration across departments

 Task Forces, Teams, and Project Management

o task force - temporary team or committee designed to solve a short-term problem
o project manager - responsible for coordinating the activities of several departments for
the completion of a specific project

 Reengineering - radical redesign of business processes to achieve dramatic improvements

o process - organized group of related tasks and activities that work together to transform
inputs into outputs and create value
Changing People and Culture
 People change - a change in the attitudes and behaviors of employees in the organization
 Culture change - a shift in the norms, values, attitudes, and mind-set of the entire organization

 Training and Development

 Organization Development - uses behavioral science knowledge and techniques to improve an

organization’s health and effectiveness through its ability to adapt to the environment
o OD can help managers address at least three types of current problems:
 Mergers/acquisitions
 Organizational decline/revitalization
 Conflict management
o OD Activities:
 Team-building activities
- Team building - enhances the cohesiveness of departments by helping
members learn to function as a team
 Survey-feedback activities
- Survey feedback - questionnaires are distributed among employees and
their results reported back to them
 Large-group interventions
- Brings together participants from all parts of the organization
o OD Steps:
 Unfreezing - people are made aware of problems and the need for change
- change agent - OD specialist who contracts with an organization to
facilitate change
 Changing - individuals experiment with new behavior and skills in the workplace
 Refreezing - individuals acquire new attitudes and rewarded by the organization

Implementing Change
 Need for Change
o performance gap - disparity between existing and desired performance levels

 Resistance to Change
o Self-Interest
o Lack of Understanding and Trust
o Uncertainty
o Different Assessments and Goals

 Force-Field Analysis - process of determining which forces drive and which resist change
o Driving forces - problems or opportunities that provide motivation for change
o Restraining forces - various barriers to change

 Implementation Tactics
o Communication and Education - used when information about the change is needed
o Participation - involves users and potential resisters in designing the change
o Negotiation - uses formal bargaining to win acceptance and approval
o Coercion - managers use formal power to force employees to change
o Top Management Support - symbolizes to all employees that change is important
Managing Diversity
 Diversity - all the ways in which people differ
 Managing diversity - creating a climate in which the potential advantages of diversity are
maximized while the potential disadvantages are minimized

 Dividends of Workplace Diversity

o Better use of employee talent
o Increased understanding of the marketplace
o Enhanced breadth of understanding in leadership positions
o Increased quality of team problem solving
o Reduced costs associated with high turnover, absenteeism, and lawsuits

Factors Shaping Personal Bias

 Prejudice, Discrimination, and Stereotypes
o Prejudice - tendency to view people who are different as being deficient
o Discrimination - someone acts out their prejudicial attitudes toward people
 Title VII of the Civil Rights Act of 1964
 The Equal Pay Act of 1963
 The Americans with Disabilities Act
 The Age Discrimination in Employment Act
o Stereotyping - exaggerated, irrational belief associated with a particular group of people
 Stereotype threat - psychological experience of a person who is aware of a
stereotype about his or her identity group

 Ethnocentrism - belief that one’s own group and subculture are inherently superior to others
o Monoculture - culture that accepts only one way of doing things
o Ethnorelativism - belief that groups and subcultures are inherently equal
o Pluralism - an organization accommodates several subcultures

Factors Affecting Women’s Careers

 Glass Ceiling - invisible barrier that separates women from top management positions
 Opt-Out Trend
TOPIC 7: LEADING

 Organizational behavior - study of human attitudes, behavior, and performance in organizations

 Organizational citizenship - tendency of people to help one another and put in extra effort that
goes beyond job requirements

ATTITUDES
 attitude - evaluation that predisposes a person to act in a certain way

 Components of Attitudes
o cognitive component - beliefs, opinions, and information the person has
o affective component - person’s emotions or feelings about the object
o behavioral component - person’s intention to behave toward the object

 High-Performance Work Attitudes

o Job Satisfaction - positive attitude toward one’s job
o Organizational Commitment - loyalty to and engagement with the organization

 Conflicts Among Attitudes

o cognitive dissonance – two attitudes or a behavior and an attitude conflict

PERCEPTION
 Perception - cognitive process people use to make sense out of the environment by selecting,
organizing, and interpreting information
 The Perception Process:
o observing information (sensory data)
o screening the information and selecting what to process
o organizing the selected data into patterns for interpretation

 Perceptual Selectivity - individuals screen and select the various stimuli that vie for their attention
o primacy and recency

 Perceptual Distortions - errors in perceptual judgment that arise from inaccuracies in any part of
the perceptual process
o stereotyping - tendency to assign an individual to a group or broad category
o halo effect overall impression of a person or situation based on one characteristic
o Projection - tendency of perceivers to see their own personal traits in other people
o Perceptual defense - tendency of perceivers to protect themselves against ideas, objects,
or people that are threatening

 Attributions - judgments about what caused a person’s behavior

o internal attribution - characteristics of the person led to the behavior
o external attribution - something about the situation caused the person’s behavior
o Factors that influence whether an attribution will be external or internal:
 Distinctiveness - whether the behavior is unusual for that person
 Consistency - whether the person has a history of behaving in the same way
 Consensus - whether others tend to respond to similar situations the same way

 fundamental attribution error - underestimate the influence of external factors and overestimate
the influence of internal factors
 self-serving bias - overestimate the contribution of internal factors to one’s successes and
overestimate the contribution of external factors to one’s failures
PERSONALITY AND BEHAVIOR
 personality - set of characteristics that underlie a relatively stable pattern of behavior in response
to ideas, objects, or people in the environment

 Personality Traits
o Big Five personality factors
 Extroversion
 Agreeableness
 Conscientiousness
 Emotional stability
 Openness to experience

 Emotional Intelligence
o Self-awareness - being aware of what you are feeling
o Self-management - control disruptive or harmful emotions and balance one’s moods
o Social awareness - understand others and practice empathy
o Relationship management - connect to others, build positive relationships

 Attitudes and Behaviors Influenced by Personality

o Locus of Control - tendency to place the primary responsibility within themselves or on
outside forces
o Authoritarianism - power and status differences should exist within the organization
o Machiavellianism - acquisition of power and manipulation of people for personal gain
o Problem-Solving Styles
 sensation or intuition (gather information)
 thinking or feeling (evaluate information)
 introversion–extroversion
 judging–perceiving

 Myers–Briggs Type Indicator (MBTI) - measures a person’s preferences

STRESS AND STRESS MANAGEMENT

 stress - physiological and emotional response to external stimuli that place physical or
psychological demands on the individual
o presenteeism - people who go to work but are too stressed and distracted to be productive

 Type A and Type B Behavior

o Type A behavior - extreme competitiveness, impatience, aggressiveness, and devotion to
work
o Type B behavior - more balanced, relaxed lifestyle

 Causes of Work Stress

o Task demands - stressors arising from the tasks required of a person
 role ambiguity - people are unclear about what task behaviors are expected of
them
o Interpersonal demands - stressors associated with relationships in the organization
 Role conflict - incompatible demands of different roles

POWER AND INFLUENCE

 Power - potential ability to influence the behavior of others
 influence - effect a person’s actions have on the attitudes, values, beliefs, or behavior of others
  Position Power
o Legitimate Power - power coming from a formal management position in an organization
and the authority granted to it
o Reward Power - stems from the authority to bestow rewards on other people
o Coercive Power - authority to punish or recommend punishment

 Personal Power
o Expert Power - power resulting from a person’s special knowledge or skill regarding the
tasks being performed
o Referent Power - comes from an individual’s personal characteristics that command
others’ identification, respect, and admiration

 Other Sources of Power

o Personal Effort
o Network of Relationships
o Information

 Interpersonal Influence Tactics

o Seven Interpersonal Influence Tactics for Leaders:
 Use rational persuasion
 Make people like you
 Rely on the rule of reciprocity
 Develop allies
 Ask for what you want
 Make use of higher authority
 Reward the behaviors you want

LEADERSHIP AS SERVICE
 Servant Leadership
o Servant leaders - fulfillment of their subordinates’ goals and needs and for the
realization of the larger purpose or mission of their organization

 Moral Leadership - distinguishing right from wrong and choosing to do right

o Courage - ability to step forward through fear and act on one’s values and conscience

TOPIC 8: CONTROLLING

THE MEANING OF CONTROL

 Organizational control - systematic process of regulating organizational activities to make them
consistent with the expectations established in plans

 Choosing Standards and Measures

 The Balanced Scorecard - comprehensive management control system that balances traditional
financial measures with operational measures relating to a company’s critical success factors
o Financial performance
o Customer service
o Business process
o Potential for learning and growth
FINANCIAL CONTROL
 Financial Statements - provide the basic information used for financial control
o balance sheet - shows the firm’s financial position with respect to assets and liabilities at
a specific point in time
 Assets - what the company owns; current assets and fixed assets
 Liabilities - the firm’s debts; current debt and long-term debt
 Owners’ equity - difference between assets and liabilities
o income statement - summarizes the firm’s financial performance for a given time
interval; sometimes called a profit-and-loss statement

 Financial Analysis
o Liquidity Ratios - indicates an organization’s ability to meet its current debt obligations
o Activity Ratios - measures internal performance with respect to key activities defined by
management
o Profitability Ratios - state profits relative to a source of profits, such as sales or assets
o Leverage Ratios
 Leverage - funding activities with borrowed money

Common Financial Ratios

 Application to Budgeting
o responsibility center - organizational unit under the supervision of a single person who
is responsible for its activity

o Expense Budget - anticipated and actual expenses for a responsibility center

o Revenue Budget - lists forecasted and actual revenues of the organization
o Cash Budget - estimates receipts and expenditures of money on a daily or weekly basis
to ensure that an organization has sufficient cash to meet its obligations
o Capital Budget - lists planned investments in major assets to be depreciated over
several years
 top-down budgeting - the budgeted amounts for the coming year are literally
imposed on middle- and lower-level managers
 bottom-up budgeting - lower-level managers anticipate their departments’
resource needs and pass them up to top management for approval

TOTAL QUALITY MANAGEMENT - an organization-wide effort to infuse quality into every activity
through continuous improvement

 TQM Techniques
o Quality Circles - group of 6 to 12 volunteer employees who meet regularly to discuss
and solve problems affecting the quality of their work

o Benchmarking - continuous process of measuring products, services, and practices

against the toughest competitors
 o Six Sigma - quality-control approach that emphasizes a disciplined and relentless pursuit
of higher quality and lower costs

o Reduced Cycle Time

 Cycle time - steps taken to complete a company process

o Continuous Improvement - implementation of a large number of small, incremental

improvements in all areas of the organization on an ongoing basis

THE ORGANIZATION AS A VALUE CHAIN

 technical core - heart of the organization’s production of its product or service
 Operations management - the field of management that specializes in the production of goods
and services and uses special tools and techniques for solving production problems

 Manufacturing and Service Operations

o Manufacturing organizations - organization that produces physical goods
o service organizations - produce nonphysical outputs that require customer involvement

 Supply Chain Management - managing the sequence of suppliers and purchasers covering all
stages of processing
o arm’s-length approach - organization spreads purchases among many suppliers and
encourages them to compete with one another
o partnership approach - cultivating intimate relationships with selected suppliers and
collaborating closely to coordinate tasks that benefit both parties