Professional Documents
Culture Documents
Enggmgmt 4 8
Enggmgmt 4 8
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The Nature of Decision Making
• Decision Making
–The act of choosing one (the best) alternative
from among a set of alternatives.
• Decision-Making Process:
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The Nature of Decision Making (cont’d)
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Types of Decisions
• Programmed Decision
–A decision that is relatively structured
or recurs with some frequency (or both).
–Example: Starting your car in the morning.
• Nonprogrammed Decision
–A decision that is relatively unstructured
and occurs much less often than a
programmed decision.
–Example: Choosing a vacation destination.
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Decision-Making Conditions
Conditions Affecting
Decision Making
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FIGURE 4.1 Decision-Making Conditions
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Management Challenge Question
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Distinguishing Between
Decision Making Conditions
Yes No
Yes No
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Decision-Making Conditions
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FIGURE 4.2 The Classical Model of Decision Making
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Table 4.1 Steps in the Rational Decision-Making Process
2. Identifying Both obvious and creative alternatives are The plant manager can increase wages,
alternatives desired. In general, the more important the increase benefits, or change hiring
decision, the more alternatives should be standards.
generated.
3. Evaluating Each alternative is evaluated to determine Increasing benefits may not be feasible.
alternatives its feasibility, its satisfactoriness, and its Increasing wages and changing hiring
consequences. standards may satisfy all conditions.
4. Selecting the best Consider all situational factors, and choose Changing hiring standards will take an
alternative the alternative that best fits the manager’s extended period of time to cut turnover,
situation. so increase wages.
5. Implementing the The chosen alternative is implemented into The plant manager may need
chosen alternative the organizational system. permission from corporate
headquarters. The human resources
department establishes a new wage
structure.
6. Following up and At some time in the future, the manager The plant manager notes that, six
evaluating the should ascertain the extent to which the months later, turnover dropped to its
results alternative chosen in step 4 and previous level.
implemented in step 5 has worked.
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FIGURE 4.3 Evaluating Alternatives in the Decision-Making Process
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FIGURE 4.4 The Administrative Model of Decision Making
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What Influences Decision Making
Political
forces
Bounded
Intuition
rationality
Influences on
Escalation of
Satisficing Decision
commitment
Making
Risk
Coalitions
propensity
Ethics
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Behavioral Aspects
of Decision Making
• Bounded Rationality
–The concept that decision makers are limited by their
values and unconscious reflexes, skills, and habits.
• Satisficing
–The tendency to search for alternatives only until one
is found that meets some minimum standard of
sufficiency to resolve the problem.
• Personal motives and biases
• Expediency (degree of impact alternative choice will have)
• Cost of continuing to search for alternatives
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Behavioral Aspects of
Decision Making (cont’d)
• Coalition
–A positive or negative political force in decision
making which consists of an informal alliance of
individuals or groups formed to achieve a goal.
• Using Coalitions
–When to use them
–Assessing their impact
–Constraining their effects
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Behavioral Aspects of
Decision Making (cont’d)
• Intuition
–An innate belief about something
without conscious consideration.
• Escalation of Commitment
–A decision maker’s staying with
a decision even when it appears
to be wrong.
• Risk Propensity
–The extent to which a decision maker is
willing to gamble when making a decision.
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Management Challenge Question
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Managerial Ethics and Decision Making
Employees
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Ethics and Decision Making
• Managerial Ethics
–Individual ethics (personal beliefs about right and
wrong behavior) combine with the organization’s
ethics to create managerial ethics.
–Components of managerial ethics:
• Relationships of the firm to employees
• Employees to the firm
• The firm to other economic agents
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Group and Team Decision Making
in Organizations
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Group and Team Decision Making
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Table 4.2 Advantages and Disadvantages of Group and Team Decision Making
Advantages Disadvantages
More information and The process takes longer than individual
knowledge are available. decision making, so it is costlier.
More alternatives are likely to be Compromise decisions resulting from
generated. indecisiveness may emerge.
More acceptance of the final decision One person may dominate the group.
is likely.
Groupthink may influence a group or
Enhanced communication team’s desire for consensus and
of the decision may result. overwhelm its desire to reach the best
possible decision
Better decisions generally emerge.
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The 1. Group Cohesiveness
Group
2. Leader Promotion of Preferred Solution
Group-think 3. Insulation from Expert Opinion
Characteristics
Process
1. Invulnerability 5. Peer Pressure
2. Rationalization 6. Self-censorship Symptoms of
3. Morality 7. Unanimity Groupthink
4. Stereotyping 8. Mindguards
1. Few Alternatives
2. No Reexamination of Preferred Alternative
3. No Reexamination of Rejected Alternative Decision-Making
4. Rejection of Expert Opinions Defects
5. Selective Bias of New Information
6. No Contingency Plans
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Managing Group and Team
Decision-Making Processes
Promoting the Effectiveness of Group
and Team Decision Making:
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Learning Outcomes
After studying this chapter you should be able to:
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The Basic Elements of Organizing
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Job Specialization
• Benefits of Specialization
–Workers can become proficient at a task.
–Transfer time between tasks is decreased.
–Specialized equipment can be more easily developed.
–Employee replacement becomes easier.
• Limitations of Specialization
–Employee boredom and dissatisfaction
with mundane tasks.
–Anticipated benefits of specialization
do not always occur.
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Alternatives to Job Specialization
Job Specialization
Alternatives
Job
Job
characteristics
enlargement
approach
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Job Characteristics: Core Dimensions
Skill Variety The number of tasks a person does in a job
The degree of control the worker has over how the work
Autonomy
is performed
The extent to which the worker knows how well the job
Feedback
is being performed
Growth Need The desire for people to grow, develop, and expand their
Strength capabilities that is their response to the core dimensions
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FIGURE 6.1 The Job Characteristics Approach
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Grouping Jobs: Departmentalization
• Departmentalization
–The process of grouping jobs according
to some logical arrangement.
• Rationale for Departmentalization
–Organizational growth exceeds the owner-
manager’s capacity to personally supervise
all of the organization.
–Additional managers are employed
and assigned specific employees to
supervise.
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Common Bases of Departmentalization
By Function By Product
CEO CEO
By Customer By Location
CEO CEO
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Functional Departmentalization
The grouping of jobs involving
the same or similar activities
• Advantages • Disadvantages
– Each department can be – Decision making becomes
staffed by functional-area slow and bureaucratic.
experts. – Employees narrow their
– Supervision is facilitated in focus to the department and
that managers only need be lose sight of organizational
familiar with a narrow set of goals/ issues.
skills. – Accountability and
– Coordination inside each performance are difficult to
department is easier. monitor.
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Product Departmentalization
The grouping of activities around
products or product groups
• Advantages • Disadvantages
– All activities associated – Managers may focus
with one product can be on their product to the
integrated and coordinated. exclusion of the rest
of the organization.
– Speed and effectiveness
of decision making are – Administrative costs
enhanced. may increase due to
each department
– Performance of individual
having its own
products or product groups
functional-area experts.
can be assessed.
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Customer Departmentalization
• Advantage
– Skilled specialists can deal with
unique customers or customer
groups.
• Disadvantage
– A large administrative staff is needed
to integrate activities of various
departments.
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Location Departmentalization
The grouping of jobs on the basis of
defined geographic sites or areas.
• Advantage
– Enables the organization to respond
easily to unique customer and
environmental characteristics.
• Disadvantage
– Large administrative staff may be
needed to keep track of units in
scattered locations.
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Establishing Reporting Relationships
Establishing the
Chain of Command
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Establishing Reporting Relationships:
Tall Versus Flat Organizations
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Tall Versus Flat Organizations
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Distributing Authority
• Authority
–Power that has been legitimized by the organization.
• Delegation
–The process by which managers assign a portion of
their total workload to others.
• Reasons for Delegation
–To enable the manager to get more work done by
utilizing the skills and talents of subordinates.
–To foster development of subordinates by having them
participate in decision making and problem solving.
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Steps in the Delegation Process
Manager Manager
Manager Manager
Manager
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Problems in Delegation
• Manager • Subordinate
–Reluctant to delegate. –Reluctant to accept
–Disorganization delegation for fear of
prevents planning work failure.
in advance. –Perceives no rewards
–Subordinate’s success for accepting additional
threatens superior’s responsibility.
advancement. –Prefers to avoid any
–Lack of trust in the risk and responsibility.
subordinate to do well.
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Factors in the Choice of Centralization
or Decentralization
Organization’s
Centralization Choice
External Nature
environment’s History of the (cost and risk)
complexity and organization of decisions to
uncertainty be made
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Coordinating Activities
• Coordination
–The process of linking the activities of the various
departments of the organization.
• The Need for Coordination
–The greater the interdependence of departments and
work groups, the greater the need for coordination.
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Major Forms of Interdependence
Sequential Reciprocal
Pooled
Input
Input Output
Input
Input Output
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Structural Coordination
Management
Task Forces
Hierarchy
Structural
Rules and Integrating
Procedures
Coordination Departments
Techniques
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Electronic Coordination Techniques
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The Bureaucratic Model
of Organization Design
• Bureaucratic Model (Max Weber)
–A logical, rational, and efficient organization design
based on a legitimate and formal system of authority.
–Characteristics:
1. A division of labor with each position filled by an expert
2. A consistent set of rules to ensure uniformity in task
performance
3. A hierarchy of positions, which creates a chain of command
4. Impersonal management with appropriate social distance
between superiors and subordinates
5. Employment and advancement based on technical
expertise and employees protected from arbitrary dismissal
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Bureaucratic Model
Advantages Disadvantages
Organizational inflexibility
Efficiency in function
and rigidity
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Situational Influences on Organization Design
Optimal
Organization
Design
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Core Technology and Organization Design
Woodward’s Basic
Forms of Technology
Continuous process
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Woodward’s Findings
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Environment–Organization Design
(Burns and Stalker)
• Research focused on identifying extreme forms
of the organizational environment:
–Stable environments that remain constant over time.
–Unstable environments subject to uncertainty and
rapid change.
• Organization Designs
–Mechanistic organizations occur most frequently in
stable environments.
–Organic organizations are found in unstable and
unpredictable environments.
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Differentiation and Integration
(Lawrence and Lorsch)
• Predicted environmental factors have differential
effects on organization units; affecting the
overall design of the organization.
–Differentiation, the extent an organization is broken
into subunits, is associated with stable environments.
–Integration is the degree to which the various subunits
must work together in a coordinated fashion.
–The degree of differentiation and integration needed
by an organization depends on the stability of the
environments that its subunits face.
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Effects of Size and Life Cycle
• Organizational Size
–Defined as the total number of full-time or full-time
equivalent employees.
–Research findings:
• Small firms tend to focus on their core technology.
• Large firms have more job specialization, standard operating
procedures, more rules and regulations, and are more
decentralized.
• Organizational Life Cycle
–The progression of organizations as they grow and
mature—birth, youth, midlife, and maturity.
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Basic Forms of Organization Design
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FIGURE 6.2 Functional (U form) Design for a Small Manufacturing Company
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Organization Design (cont’d)
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FIGURE 6.3 Conglomerate (H form) Design at Samsung
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Organization Design (cont’d)
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FIGURE 6.4 Multidivisional (M Form) Design at Hilton Hotels
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Organization Design (cont’d)
• Matrix Design
–An organizational arrangement based on two
overlapping bases of departmentalization.
• A set of product groups or temporary departments are
superimposed across the functional departments.
• Employees in the matrix become members of both their
departments and a project team under a project manager.
• The matrix creates a multiple command structure in which an
employee reports to both departmental and project managers.
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Organization Design (cont’d)
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FIGURE 6.5 A Matrix Organization
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Organization Design (cont’d)
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Organization Design (cont’d)
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Organization Design (cont’d)
• Hybrid Design
–Is based on two or more organization design
forms such as a mixture of related divisions
and a single unrelated division.
–Most organizations use a modified form of
organization design that permits them to have
the flexibility to make strategic adjustments.
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The Future of Organization Design
Emerging
Organization Design
Issues
Team-based organizations
Virtual organizations
Learning organizations
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Learning Outcomes
After studying this chapter you should be able to:
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The Nature of Organization Change
• Organization Change
–Any substantive modification to some part of the
organization (e.g., work schedules, machinery,
employees).
• Forces for Change
–External forces in the organization’s general and task
environments force the organization to alter the way in
which it competes.
–Internal forces inside the organization cause it to
change its structure and strategy; some internal forces
are responses to external pressures.
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Planned versus Reactive Change
• Planned Change
–Change that is designed and
implemented in an orderly
and timely fashion in
anticipation of future events.
• Reactive Change
–Change that is a piecemeal
response to events and
circumstances as they
develop.
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Managing Change in Organizations
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FIGURE 7.1 Steps in the Change Process
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Understanding Resistance to Change
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Understanding Resistance to Change
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Reasons for Resistance to Change
T Uncertainty
H
E
O
R
Threatened
G self-interests
Planned A
Change N
I Conflicting
Z
A
perceptions
T
I
O Feelings of
N personal loss
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–9
Overcoming Resistance to Change
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Overcoming Resistance to Change
in Organizations
Participation
Education and
communication
Resistance to Change
Facilitation
Force-field
analysis
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FIGURE 7.2 Force-Field Analysis for Plant Closing at General Motors
Plant
Excess capacity Concern about worker welfare
closing
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–12
Management Challenge
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Areas of Organization Change
Organization Structure
People and Design Technology and
Abilities and skills Job design Operations
Performance Departmentalization Information
Perceptions Reporting relationships technologies
Expectations Authority distribution Equipment
Attitudes and values Coordination mechanisms Work processes/
Line-staff structure activities
Overall design Control systems
Culture Enterprise resource
Human resource planning (ERP)
management
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Table 7.1 Areas of Organization Change
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Reengineering in Organizations
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Reengineering in Organizations
Approaches to
Reengineering
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Approaches to Business Process Change
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FIGURE 7.3 The Reengineering Process
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Organization Development (OD)
• Organization Development
–A planned, organization-wide effort managed from the
top, intended to increase organizational effectiveness
and health through interventions in the organization’s
processes, using behavioral science knowledge.
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Organization Development (OD) (cont’d)
• OD Assumptions
–Employees desire to grow and develop.
–Employees have a strong need to be accepted by
others within the organization.
–Individuals will influence the organization and the
organization will influence the attitudes, perceptions,
behaviors, and expectations of individuals.
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Organization Development Techniques
• Diagnostic Activities
• Team Building
• Survey Feedback
• Third-Party Peacemaking
• Process Consultation
• Life and Career Planning
• Coaching and Counseling
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Organizational Innovation
• Innovation
–The managed effort of an organization to develop new
products or services or new uses for existing products
or services.
Radical Incremental
Innovation Innovation
Product Process
Innovation Innovation
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FIGURE 7.4 The Innovation Process
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Organizational Innovation:
Radical versus Incremental Innovations
• Radical Innovation
–A new product, service, or technology developed by
an organization that replaces an existing one.
–Radical innovation fundamentally changes the nature
of competition in an industry.
• Incremental Innovation
–A new product, service, or technology that modifies an
existing one.
–Incremental innovation does not significantly affect
competition in an industry.
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Organizational Innovation:
Technical Versus Managerial Innovations
• Technical Innovation
–A change in the appearance or performance of a
product or service, or the physical processes through
which a product or service is manufactured.
• Managerial Innovation
–A change in the management process by which
products and services are conceived, built, and
delivered to customers.
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Management Challenge Question
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Organizational Innovation:
Product Versus Process Innovations
• Product Innovation
–A change in the physical characteristics or
performance of an existing product or service or the
creation of a new product or service.
• Process Innovation
–A change in the way a product or service is
manufactured, created, or distributed.
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Effects of Product and Process Innovation
on Economic Return
High Return
Product Process
Innovations Innovations
Low Return
Phases of the Innovation Process
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The Failure to Innovate
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Learning Outcomes
After studying this chapter you should be able to:
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Learning Outcomes (cont’d)
After studying this chapter you should be able to:
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The Environmental Context of
Human Resource Management
• Human Resource Management (HRM)
–The set of organizational activities directed at
attracting, developing, and maintaining an effective
work force.
• The Strategic Importance of HRM
–Human capital reflects the organization’s investment
in attracting, retaining, and motivating an effective
workforce critical for effective organizational
functioning.
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The Legal Environment of HRM
Equal Employment Compensation Labor Health
Opportunity and Benefits Relations and Safety
Executive Orders
(Order 11246)
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Equal Employment Opportunity
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Equal Employment Opportunity
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Equal Employment Opportunity (cont’d)
• Affirmative Action
–The commitment of employers to intentionally seek out
and to hire qualified or qualifiable employees from
racial, sexual, and ethnic groups, the disabled, and
military veterans that are underrepresented in the
organization.
–Various executive orders, especially Executive Order
11246, require federal contractors to develop
affirmative action plans and engage in affirmative
action in hiring veterans and the disabled.
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Equal Employment Opportunity (cont’d)
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Compensation
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Benefits
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Labor Relations
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Health and Safety
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The Legal Environment of HRM (cont’d)
Alcohol
Sexual AIDS in
and drug
harassment the workplace
dependencies
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Attracting Human Resources
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FIGURE 8.1 Human Resource Planning
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Forecasting the Supply of Labor
Sources of Information
about the Available
Labor Supply
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Recruiting Human Resources
• Recruiting
–The process of attracting qualified persons to apply
for jobs that are open.
• Internal Recruiting (Promotion from Within)
–Involves considering present employees as
candidates for openings.
–Can help build morale and reduce turnover of high-
quality employees.
–Can create a “ripple effect”—the disadvantage of
having to successively fill vacated positions.
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Recruiting Human Resources (cont’d)
Sources of
Campus interviews Union halls
External Recruits
Walk-ins
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The Selection Process
Initial screening
Test scoring
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Selecting Human Resources
• Validation
–The process of determining the predictive value of
information gained from a selection device.
• Application Blanks
–Gather information about work history, educational
background, and other job-related demographic data.
–Must not ask for information unrelated to the job.
–Are used to decide if a candidate merits further
evaluation.
–Provide interviewers with candidate information.
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Selecting Human Resources (cont’d)
• Tests
–Ability, skill, aptitude, or knowledge tests are
usually the best predictors of job success.
–Must be validated, administered, and scored
consistently.
–The testing process must be the same
for all candidates.
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Selecting Human Resources (cont’d)
• Interviews
–Interviewer biases can be overcome and interview
consistency and validity can be improved by training
interviewers and using structured interviews.
• Assessment Centers
–Are used to select managers from current employees
for promotion.
• Other Techniques
–Polygraph testing, physical exams, drug tests, and
credit checks are used to screen prospective
employees.
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Developing Human Resources
• Training
–Teaching operational or technical employees
how to do the job for which they were hired.
• Development
–Teaching managers and
professionals the skills needed
for both present and future jobs.
• Assessing Training Needs
–Determining training needs is
the first step in developing a
training plan.
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Developing Human Resources (cont’d)
On-the-job Web-based
Role play and
Lectures and vestibule and electronic
case studies
training training
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Training and Development Evaluation
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Performance Appraisal
• Performance Appraisal
–A formal assessment of how well individual employees
are doing their jobs.
• Reasons for Performance Appraisal
–Appraisal validates the selection process and
the effects of training.
–Appraisal aids in making decisions about pay raises,
promotions, and training.
–Appraisal provides feedback to employees to improve
their performance and plan future careers.
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Categories of Appraisal Methods
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Judgmental Appraisal Methods
• Ranking Method
–Compares employees directly with each other.
–Difficult to do with large numbers of employees.
–Difficult to make comparisons across work groups.
–Employees are ranked only on overall performance.
–Do not provide useful information for employee
feedback.
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Judgmental Appraisal Methods (cont’d)
• Rating Method
–Compares each employee with a fixed standard.
–Uses graphic rating scales of job performance
dimensions to be rated on a standard scale.
• Behaviorally-Anchored Rating Scale (BARS)
–Is a rating scale where each point on the scale is
associated with behavioral anchors.
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FIGURE 8.2 Graphic Rating Scales for a Bank Teller
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FIGURE 8.3 Behaviorally Anchored Rating Scale
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Bias Errors in Performance Appraisal
• Recency Error
–The tendency of the evaluator to base judgments on
the subordinate’s most recent performance because it
is the most easily recalled.
• Errors of Leniency and Strictness
–Being too lenient, too strict, or tending to rate all
employees as “average.”
• Halo Error
–Allowing the assessment of the employee on one
dimension to spread to that employee’s ratings
on other dimensions.
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“360-Degree” Performance Appraisal
• “360-degree” Feedback
–A process in which managers are evaluated by
everyone around them.
–Provides a richer array of performance information
on which to base an appraisal.
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Performance Appraisal Feedback
• Performance Feedback
–Is best given in a private meeting between the
employee and immediate supervisor.
–Is more effective if managers are properly trained to
conduct feedback interviews.
• Focus of Appraisal Discussion:
–Assessed level of performance
–How and why the assessment was made
–How the employee’s performance can be improved in
the future.
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Direct Compensation
• Forms of Compensation
–Wages are hourly compensation paid to operating
employees.
–Salary is paid for the total contribution of an employee
and is not based on total hours worked.
–Incentives are special compensation opportunities that
are usually tied to performance.
• Purposes of compensation
–Provide a reasonable standard of living.
–Provide a tangible measure of an individual’s value to
the organization.
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Steps in Determining Compensation
Wage-level decisions:
• Organization strategy
• Availability of resources
• Wage survey data
• Unemployment rates
Wage-structure decisions:
• Internal equity
• Job rankings
• Job evaluations
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Indirect Compensation:
Determining Benefits
Types of Employee
Benefits
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Managing Workforce Diversity
• Diversity Defined
–When members of a group differ from one another
along dimensions such as age, gender, or ethnicity.
• Diversity as a Competitive Advantage
–Higher productivity; lower turnover and absenteeism
–Increased reputation as “good place to work”
–Better understanding of different market segments
–Increased creativity and innovation
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Reasons for Increasing Diversity
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Managing Workforce Diversity (cont’d)
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Managing Diversity in Organizations
• Individual Strategies
–Understanding the nature and meaning
of diversity and multiculturalism.
–Developing empathy in understanding
the perspective of others.
–Developing tolerance of fundamental
cultural differences.
–Having a willingness to communicate
and discuss diversity and
multiculturalism issues.
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Organizational Approaches
to Managing Diversity
Managing Diversity
in Organizations
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Managing Labor Relations
• Labor Relations
–The process of dealing with employees who are
represented by a union.
–Organizations prefer that employees remain nonunion
because unions limit management’s freedom.
–The best way to avoid unionization is to practice good
employee relations by:
• Providing fair treatment with clear standards in pay,
promotions, layoffs, and discipline.
• Providing a complaint and appeal system and
avoiding favoritism.
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FIGURE 8.9 The Union-Organizing Process
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New Challenges in
the Changing Workplace
• Managing Knowledge Workers
–Knowledge workers’ contributions to an organization
are based on what they know (as experts).
• Computer scientists, engineers, and physical scientists
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Managing the Changing Workplace
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