MANAGEMENT

Chapter 1

Organization- A systematic arrangement of people brought together to accomplish some specific

purpose.

Managers manage entrepreneurial businesses, large corporations, government agencies, hospitals,

museums, schools, and not-for-profit enterprises. Some hold top-level management jobs while others
are supervisors or team leaders. However, all managers share one common element: They work in an
organizational setting. An organization is a deliberate arrangement of people brought together to
accomplish some specific purpose.

The first characteristic of an organization is that it has a distinct purpose, which is typically expressed as
a goal or set of goals. The second characteristic is that people in an organization work to achieve those
goals by making decisions and engaging in work activities to make the desired goal(s) a reality. Third
characteristic is that an organization is structured in some way that defines and limits the behavior of its
members. Within that structure, rules, regulations, and policies might guide what people can or cannot
do; some members will supervise other members; work teams might be formed or disbanded; or job
descriptions might be created or changed so organizational members know what they’re supposed to
do. That structure is the setting within which managers manage.

Top managers, middle managers, first-line managers, team leaders

Nonmanagerial employees are people who work directly on a job or task and have no responsibility for
overseeing the work of others. These nonmanagerial employees may be called associates, team
members, contributors, or even employee partners.

Managers, on the other hand, are individuals in an organization who direct and oversee the activities of
other people in the organization so organizational goals can be accomplished. They are coordinating the
work of a departmental group, leading an entire organization, or supervising a single person. It could
involve coordinating the work activities of a team with people from different departments or even
people outside the organization, such as temporary employees or individuals who work for the
organization’s suppliers. This distinction doesn’t mean, however, that managers don’t ever work directly
on tasks. Some managers do have work duties not directly related to overseeing the activities of others.

Top managers are those at or near the top of an organization. They’re usually responsible for making
decisions about the direction of the organization and defining policies and values that affect all
organizational members. Top managers typically have titles such as vice president, president, chancellor,
managing director, chief operating officer, chief executive officer, or chairperson of the board.

Middle managers are those managers found between the lowest and top levels of the organization.
These individuals often manage other managers and maybe some nonmanagerial employees and are
typically responsible for translating the goals set by top managers into specific details that lower-level
managers will see get done. Middle managers may have such titles as department or agency head,
project leader, unit chief, district manager, division manager, or store manager.

First-line managers are those individuals responsible for directing the day-to-day activities of
nonmanagerial employees. First-line managers are often called supervisors, shift managers, office
managers, department managers, or unit coordinators.

Team leaders are special type of manager that has become more common as organizations use
employee work teams. They are responsible for managing and facilitating the activities of a work team.

Management is the process of getting things done, effectively and efficiently, with and through other
people. Scientific management – the use of scientific methods to define the “one best way” for a job to
be done. A process refers to a set of ongoing and interrelated activities. In our definition of
management, it refers to the primary activities or functions that managers perform.

Efficiency means doing a task correctly (“doing things right”) and getting the most output from the least
amount of inputs. Effectiveness means “doing the right things” by doing those work tasks that help the
organization reach its goals. Whereas efficiency is concerned with the means of getting things done,
effectiveness is concerned with the ends, or attainment of organizational goals.

Plan, organize, command, coordinate, and control (POCCC).

What managers do can be described using three approaches: functions, roles, and skills/competencies.

Today, the management functions have been condensed to four: planning, organizing, leading, and
controlling. Planning is defining goals, establishing strategy, and developing plans to coordinate
activities. Organizing is determining what needs to be done, how it will be done, and who is to do it.
Leading is directing, motivating and coordinating the work activities of an organization’s people.
Controlling is monitoring activities to ensure that they are accomplished as planned.

Managerial roles are specific categories of managerial behavior; often grouped around interpersonal
relationships, information transfer, and decision making. Interpersonal roles involve people
(subordinates and persons outside the organization) and other duties that are ceremonial and symbolic
in nature. Decisional roles are entailing making decisions or choices. Informational roles involve
collecting, receiving, and spread information.

Conceptual skills: A manager’s ability to analyze and diagnose complex situations. Interpersonal skills: A
manager’s ability to work with, understand, mentor, and motivate others, both individually and in
groups. Technical skills: Job-specific knowledge and techniques needed to perform work tasks. Political
skills: A manager’s ability to build a power base and establish the right connections. Other important
managerial competencies: decision making, team building, decisiveness, assertiveness, politeness,
personal responsibility, trustworthiness, loyalty, professionalism, tolerance, adaptability, creative
thinking, resilience, listening, self-development.
PROFIT VS NOT-FOR-PROFIT All managers make decisions, set goals, create workable organization
structures, hire and motivate employees, secure legitimacy for their organization’s existence, and
develop internal political support in order to implement programs. Of course, the most important
difference between the two is how performance is measured. Profit—the “bottom line”—is an
unambiguous measure of a business organization’s effectiveness. Not-for-profit organizations don’t have
such a universal measure, which makes performance measurement more difficult. But don’t think this
means that managers in those organizations can ignore finances.

It is not the same to manage smaller business and larger business.

It is not the same to be a manager in India, China, USA, Russia etc. All managers plan, organize, lead, and
control although how they do these activities and how often they do them may vary according to level in
the organization, whether the organization is profit or not-for-profit, the size of the organization, and
the geographic location of the organization.

Good managers are important because: • Organizations need their skills and abilities, especially in
today’s uncertain, complex, and chaotic environment. • They’re critical to getting things done. • They
play a crucial role in employee satisfaction and engagement.

Four areas of critical importance to managers are delivering high-quality customer service, encouraging
innovative efforts, using social media efficiently and effectively, and recognizing how sustainability
contributes to an organization’s effectiveness.

Managers are recognizing that delivering consistent high-quality customer service is essential for
survival and success in today’s competitive environment and that employees are an important part of
that equation.

Innovation is critical and managers need to understand what, when, where, how, and why innovation
can be fostered and encouraged throughout an organization. Managers not only need to be innovative
personally, but also encourage their employees to be innovative.

From a business perspective, sustainability has been defined as a company’s ability to achieve its
business goals and increase long-term shareholder value by integrating economic, environmental, and
social opportunities into its business strategies.

Employees’ relationship with their manager is the largest factor in employee engagement—which is
when employees are connected to, satisfied with, and enthusiastic about their jobs—accounting for at
least 70 percent of an employee’s level of engagement.

Father of scientific management is Frederic W. Taylor.

Henri Fayol and May Weber-general administrative theory.

Chapter 2

External environment is factors, forces, situations, and events outside the organization that affect its
performance.

It includes several different components. The economic component encompasses factors such as
interest rates, inflation, employment/unemployment rates, disposable income levels, stock market
fluctuations, and business cycle stages. The demographic component is concerned with trends in
population characteristics such as age, race, gender, education level, geographic location, and family
composition. The technological component is concerned with scientific or industrial innovations. The
sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends,
traditions, lifestyles, beliefs, tastes, and patterns of behavior. The political/legal component looks at
federal, state, and local laws, as well as laws of other countries and global laws. It also includes a
country’s political conditions and stability. And the global component encompasses those issues (like a
volcano eruption, political instability, terrorist attack, etc.) associated with globalization and a world
economy.

The bottom line is that business leaders need to recognize how societal attitudes in the economic
context also may create constraints as they make decisions and manage their businesses.

Have you heard of Airbnb, Uber, Zipcar, SnapGoods? These are just a few of the companies—maybe
you’ve used one—that are part of a fastgrowing phenomenon called the “sharing economy.”

Sharing economy is an economic environment in which asset owners share with other individuals
through a peer-to-peer service, for a set fee, their underutilized physical assets or their knowledge,
expertise, skills, or time.

Omnipotent view of management is the view that managers are directly responsible for an
organization’s success or failure.

Symbolic view of management is the view that much of an organization’s success or failure is due to
external forces outside managers’ control.

Demographics—the characteristics of a population used for purposes of social studies—can and do have
a significant impact on how managers manage. Those population characteristics include things such as
age, income, sex, race, education level, ethnic makeup, employment status, geographic location, and so
forth—pretty much the types of information collected on governmental census surveys.

Baby Boomers are those individuals born between 1946 and 1964.

Gen X is used to describe those individuals born between 1965 and 1977.

Gen Y (or the “Millennials”) is an age group typically considered to encompass those individuals born
between 1978 and 1994.

Gen Z, most group them as being born between 1995 and 2010.
Technology is any equipment, tools, or operating methods that are designed to make work more
efficient.

There are three ways the external environment constrains and challenges managers: (1) through its
impact on jobs and employment, (2) through the environmental uncertainty that is present, and (3)
through the various stakeholder relationships that exist between an organization and its external
constituencies.

Environmental uncertainty is the degree of change and complexity in an organization’s environment.

Environmental complexity is the number of components in an organization’s environment and the

extent of knowledge that the organization has about those components.

If the components in an organization’s environment change frequently, it’s a dynamic environment. If

change is minimal, it’s a stable one. A stable environment might be one in which there are no new
competitors, few technological breakthroughs by current competitors, little activity by pressure groups
to influence the organization, and so forth.

Stakeholders are any constituencies in an organization’s environment that are affected by that
organization’s decisions and actions.

Why should managers even care about managing stakeholder relationships? For one thing, it can lead to
desirable organizational outcomes such as improved predictability of environmental changes, more
successful innovations, greater degree of trust among stakeholders, and greater organizational flexibility
to reduce the impact of change.

An organization’s culture may be shaped by one particular cultural dimension more than the others,
thus influencing the organization’s personality and the way organizational members work

Organizational culture is the shared values, principles, traditions, and ways of doing things that influence
the way organizational members act. It’s important because of the impact it has on decisions, behaviors,
and actions of organizational employees.

Organizational Culture: stability, attention to detail, aggressiveness, team orientation, people

orientation, innovation and risk taking, outcome orientation.

Strong cultures are cultures in which the key values are deeply held and widely shared.

The two main ways that an organization’s culture affects managers are (1) its effect on what employees
do and how they behave, and (2) its effect on what managers do.
Chapter 4

Decision-making process is a set of eight steps that includes identifying a problem, selecting a solution,
and evaluating the effectiveness of the solution.

The decision-making process consists of eight steps: (1) identify a problem, (2) identify decision criteria,
(3) weight the criteria, (4) develop alternatives, (5) analyze alternatives, (6) select alternative, (7)
implement alternative, and (8) evaluate decision effectiveness.

Problem is a discrepancy between an existing and a desired state of affairs.

Identification of a Problem- Identification of Decision Criteria- Allocation of Weights to Criteria-

Development of Alternatives -Analysis of Alternatives- Selection of an Alternative- Implementation of
the Alternative -Evaluation of Decision Effectiveness

Decision implementation, involves putting the decision into action. If others will be affected by the
decision, implementation also includes conveying the decision to those affected and getting their
commitment to it.

Heuristics Judgmental shortcuts or “rules of thumb” used to simplify decision making.

Decision-Making Errors and Biases: Overconfidence, Availability, Representation, Framing, Randomness,

Confirmation, Sunk Costs, Selective Perception, Self-Serving, Anchoring Effect, Hindsight, Immediate
Gratification.

When decision makers tend to think they know more than they do or hold unrealistically positive views
of themselves and their performance, they’re exhibiting the over-confidence bias. The immediate
gratification bias describes decision makers who tend to want immediate rewards and to avoid
immediate costs. For these individuals, decision choices that provide quick payoffs are more appealing
than those in the future. The anchoring effect describes when decision makers fixate on initial
information as a starting point and then, once set, fail to adequately adjust for subsequent information.
First impressions, ideas, prices, and estimates carry unwarranted weight relative to information received
later. When decision makers selectively organize and interpret events based on their biased perceptions,
they’re using the selective perception bias. This influences the information they pay attention to, the
problems they identify, and the alternatives they develop. Decision makers who seek out information
that reaffirms their past choices and discount information that contradicts past judgments exhibit the
confirmation bias. These people tend to accept at face value information that confirms their
preconceived views and are critical and skeptical of information that challenges these views. The
framing bias happens when decision makers select and highlight certain aspects of a situation while
excluding others. By drawing attention to specific aspects of a situation and highlighting them, while at
the same time downplaying or omitting other aspects, they distort what they see and create incorrect
reference points. The availability bias occurs when decision makers tend to remember events that are
the most recent and vivid in their memory. The result? It distorts their ability to recall events in an
objective manner and results in distorted judgments and probability estimates. When decision makers
assess the likelihood of an event based on how closely it resembles other events or sets of events, that’s
the representation bias. Managers exhibiting this bias draw analogies and see identical situations where
they don’t exist. The randomness bias describes when decision makers try to create meaning out of
random events. They do this because most decision makers have difficulty dealing with chance even
though random events happen to everyone and there’s nothing that can be done to predict them. The
sunk costs error takes place when decision makers forget that current choices can’t correct the past.
They incorrectly fixate on past expenditures of time, money, or effort in assessing choices rather than on
future consequences. Instead of ignoring sunk costs, they can’t forget them. Decision makers who are
quick to take credit for their successes and to blame failure on outside factors are exhibiting the self-
serving bias. Finally, the hindsight bias is the tendency for decision makers to falsely believe that they
would have accurately predicted the outcome of an event once that outcome is actually known. How
can managers avoid the negative effects of these decision errors and biases? ❶ Be aware of them and
then don’t use them! ❷ Pay attention to “how” decisions are made, try to identify heuristics being
used, and critically evaluate how appropriate those are. ❸ Ask colleagues to help identify weaknesses
in decision-making style and then work on improving those weaknesses.

Plan: What are the organization’s long-term objectives? What strategies will best achieve those
objectives? What should the organization’s short-term objectives be? How difficult should individual
goals be?

Organize: How many employees should I have report directly to me? How much centralization should
there be in an organization? How should jobs be designed? When should the organization implement a
different structure?

Lead: How do I handle unmotivated employees? What is the most effective leadership style in a given
situation? How will a specific change affect worker productivity? When is the right time to stimulate
conflict?

Control: What activities in the organization need to be controlled? How should those activities be
controlled? When is a performance deviation significant? What type of management information system
should the organization have?

Rational decision making describes choices that are consistent and value maximizing within specified
constraints.

Bounded rationality is making decisions that are rational within the limits of a manager’s ability to
process information.

Satisfice is accepting solutions that are “good enough”.

Most managerial decisions don’t fit the assumptions of perfect rationality, but can still be influenced by
(1) the organization’s culture, (2) internal politics, (3) power considerations, and (4) a phenomenon
called: escalation of commitment which is an increased commitment to a previous decision despite
evidence that it may have been wrong.
Intuitive decision making—making decisions on the basis of experience, feelings, and accumulated
judgment.

Intuition: Experience-Based Decisions, Subconscious Mental Processing, Values or Ethics Based

Decisions, Cognitive-Based Decisions, Affect-Initiated Decisions

Structured problem is a straightforward, familiar, and easily defined problem.

Unstructured problem is a problem that is new or unusual for which information is ambiguous or
incomplete.

Programmed decision is a repetitive decision that can be handled using a routine approach.

Procedure is a series of interrelated, sequential steps used to respond to a structured problem.

Rule is an explicit statement that tells employees what can or cannot be done.

Policy is a guideline for making decisions.

When problems are unstructured, managers must rely on nonprogrammed decisions in order to develop
unique solutions. Examples of nonprogrammed decisions include deciding whether to acquire another
organization, deciding which global markets offer the most potential, or deciding whether to sell off an
unprofitable division.

Certainty is a situation in which a decision maker can make accurate decisions because all outcomes are
known.

Risk is a situation in which a decision maker is able to estimate the likelihood of certain outcomes.

Uncertainty is a situation in which a decision maker has neither certainty nor reasonable probability
estimates available.

Advantages of Group Decisions • More complete information. • Diversity of experiences and

perspectives brought to the decision process. • More alternatives generated due to greater quantity and
diversity of information, especially when group members represent different specialties. • Increased
acceptance of a solution by having people who will be affected by a certain solution and who will help
implement it participate in the decision. • Increased legitimacy because the group decision-making
process is consistent with democratic ideals, and decisions made by groups may be perceived as more
legitimate than those made by a single person, which can appear autocratic and arbitrary

Disadvantages of Group Decisions • Time-consuming—assembling the group, getting decisions made. •

Minority domination can unduly influence final decision because group members are never perfectly
equal—they differ in rank, experience, knowledge about the problem, influence on other members,
verbal skills, assertiveness, etc. • Ambiguous responsibility. Group members share responsibility, BUT
who is actually responsible for final outcome? Individual decision—it’s clear. Group decision—it’s not. •
Pressures to conform. Have you ever been in a group where your views didn’t match the group’s
consensus views and you remained silent? Maybe others felt the same way and also remained silent.
This is what Irving Janis called groupthink, a form of conformity in which group members withhold
deviant, minority, or unpopular views in order to give the appearance of agreement.

Brainstorming is an idea-generating process that encourages alternatives while withholding criticism.

Nominal group technique is a decision-making technique in which group members are physically present
but operate independently.

Three important issues—❶ national culture, ❷ creativity and design thinking, and ❸ big data—that
managers face in today’s fast-moving and global world.

Ringisei is Japanese consensus-forming group decisions.

Creativity is the ability to produce novel and useful ideas.

This model proposes that individual creativity essentially requires ❶ expertise, ❷ creative-thinking
skills, and ❸ intrinsic task motivation.

Five organizational factors have been found that can impede your creativity: • expected evaluation—
focusing on how your work is going to be evaluated • surveillance—being watched while you’re working
• external motivators—emphasizing external, tangible rewards • competition—facing win–lose
situations with your peers • constrained choices—being given limits on how you can do your work.

Design thinking is approaching management problems as designers approach design problems.

Big data is the vast amount of quantifiable information that can be analyzed by highly sophisticated data
processing.
Chapter 5

Planning is often called the primary management function because it establishes the basis for all the
other things managers do as they organize, lead, and control.

Planning involves defining the organization’s objectives or goals, establishing an overall strategy for
achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate
activities. It’s concerned with ends (what is to be done) as well as with means (how it’s to be done).

Planning can be further defined in terms of whether it’s formal or informal. All managers plan, even if
it’s only informally. In informal planning, very little, if anything, is written down. Formal planning means
(1) defining specific goals covering a specific time period, (2) writing down these goals and making them
available to organization members, and (3) using these goals to develop specific plans that clearly define
the path the organization will take to get from where it is to where it wants to be.

Why Should Managers Formally Plan?

Planning establishes coordinated effort. It gives direction to managers and nonmanagerial employees.
When all organizational members understand where the organization is going and what they must
contribute to reach the goals, they can begin to coordinate their activities, thus fostering teamwork and
cooperation. On the other hand, not planning can cause organizational members or work units to work
against one another and keep the organization from moving efficiently toward its goals. Second,
planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact
of change, and develop appropriate responses. It also clarifies the consequences of the actions
managers might take in response to change. Planning, then, is precisely what managers need in a
changing environment. Third, planning reduces overlapping and wasteful activities. Coordinating efforts
and responsibilities before the fact is likely to uncover waste and redundancy. Furthermore, when
means and ends are clear, inefficiencies become obvious. Finally, planning establishes the goals or
standards that facilitate control. If organizational members aren’t sure what they’re working towards,
how can they assess whether they’ve achieved it? When managers plan, they develop goals and plans.
When they control, they see whether the plans have been carried out and the goals met.

Formal planning generally means higher profits, higher return on assets, and other positive financial
results. • The quality of the planning process and the appropriate implementation of the plan probably
contribute more to high performance than does the extent of planning. • In those organizations where
formal planning did not lead to higher performance, the environment—for instance, governmental
regulations, unforeseen economic challenges, and so forth—was often to blame. Why? Because
managers have fewer viable alternatives.

Strategic management is what managers do to develop an organization’s strategies.

Strategies Plans for how the organization will do what it’s in business to do, how it will compete
successfully, and how it will attract its customers in order to achieve its goals.
The strategic management process is a six-step process that encompasses strategy planning,
implementation, and evaluation.

Step 1: Identifying the organization’s current mission, goals, and strategies. Every organization needs a
mission—a statement of its purpose.

Step 2: Doing an external analysis. Analyzing that environment is a critical step in the strategic
management process. Opportunities are positive trends in the external environment; threats are
negative trends.

Step 3: Doing an internal analysis. Now we move to the internal analysis, which provides important
information about an organization’s specific resources and capabilities. An organization’s resources are
its assets—financial, physical, human, and intangible—that it uses to develop, manufacture, and deliver
products to its customers. They’re “what” the organization has. On the other hand, its capabilities are
the skills and abilities needed to do the work activities in its business—“how” it does its work. The major
value-creating capabilities of the organization are known as its core competencies. Both resources and
core competencies determine the organization’s competitive weapons. After completing an internal
analysis, managers should be able to identify organizational strengths and weaknesses. Any activities the
organization does well or any unique resources that it has are called strengths. Weaknesses are activities
the organization doesn’t do well or resources it needs but doesn’t possess. The combined external and
internal analyses are called the SWOT analysis because it’s an analysis of the organization’s strengths,
weaknesses, opportunities, and threats. After completing the SWOT analysis, managers are ready to
formulate appropriate strategies—that is, strategies that (1) exploit an organization’s strengths and
external opportunities, (2) buffer or protect the organization from external threats, or (3) correct critical
weaknesses.

Step 4: Formulating strategies. As managers formulate strategies, they should consider the realities of
the external environment and their available resources and capabilities and design strategies that will
help an organization achieve its goals. Managers typically formulate three main types of strategies:
corporate, business, and functional.

Step 5: Implementing strategies. Once strategies are formulated, they must be implemented. No matter
how effectively an organization has planned its strategies, performance will suffer if the strategies aren’t
implemented properly.

Step 6: evaluating results. The final step in the strategic management process is evaluating results. How
effective have the strategies been at helping the organization reach its goals? What adjustments are
necessary: Do assets need to be acquired or sold? Does the organization need to be reorganized?

There are six strategic “weapons” are important in today’s environment: ❶ customer service, ❷
employee skills and loyalty, ❸ innovation, ❹ quality, ❺ social media, and ❻ big data.
Managers in such diverse industries as health care, education, and financial services are discovering
what manufacturers have long recognized—the benefits of benchmarking, which is the search for the
best practices among competitors or noncompetitors that lead to their superior performance.

Corporate, Competitive and Functional Strategy

Three main corporate strategies:

Growth strategy. Organization expands the number of markets served or products offered, either
through its current business(es) or through new business(es).

Ways to grow: • Concentration: Growing by focusing on primary line of business and increasing the
number of products offered or markets served in this primary business. • Vertical integration: Growing
by gaining control of inputs or outputs or both. ▪▪ Backward vertical integration—organization gains
control of inputs by becoming its own supplier. ▪▪ Forward vertical integration—organization gains
control of outputs by becoming its own distributor. • Horizontal integration: Growing by combining with
competitors. • Diversification: Growing by moving into a different industry. ▪▪ Related diversification—
different, but related, industries. “Strategic fit.” ▪▪ Unrelated diversification—different and unrelated
industries. “No strategic fit.”

Stability strategy. Organization continues—often during periods of uncertainty—to do what it is

currently doing; to maintain things as they are.

Renewal strategy. Organization is in trouble and needs to address declining performance. •

Retrenchment strategy: Minor performance problems—need to stabilize operations, revitalize
organizational resources and capabilities, and prepare organization to compete once again. •
Turnaround strategy: More serious performance problems requiring more drastic action. In both
renewal strategies, managers can (1) cut costs and (2) restructure organizational operations, but actions
are more extensive in turnaround strategy.

Important Role of Competitive Advantage: Developing an effective competitive strategy requires

understanding competitive advantage, which is what sets an organization apart; that is, its distinctive
edge, which comes from: • The organization’s core competencies—doing something that others cannot
do or doing it better than others can do it. • The company’s resources—having something that its
competitors do not.

Those strategies (functional) used by an organization’s various functional departments (marketing,

operations, finance/accounting, human resources, and so forth) to support the competitive strategy.
Planning involves two important aspects: goals and plans. Goals (objectives) are desired outcomes or
targets. They guide managers’ decisions and form the criteria against which work results are measured.
Plans are documents that outline how goals are going to be met. They usually include resource
allocations, budgets, schedules, and other necessary actions to accomplish the goals.

Focus strategy is when an organization competes in a narrow segment or niche with either a cost focus
or a differentiation focus.

Functional strategy is strategy used in an organization’s various functional departments to support the
competitive strategy.

Stated goals are official statements of what an organization says, and wants its stakeholders to believe,
its goals are.

Real goals are those goals an organization actually pursues as shown by what the organization’s
members are doing.

Traditional goal settings are goals set by top managers flow down through the organization and become
subgoals for each organizational area.

Means-ends chain is an integrated network of goals in which higher level goals are linked to lower-level
goals, which serve as the means for their accomplishment.

Management by objectives (MBO) is a process of setting mutually agreed-upon goals and using those
goals to evaluate employee performance, MBO programs have four elements: ❶ goal specificity, ❷
participative decision making, ❸ an explicit time period, and ❹ performance feedback.

Steps in Setting Goals: Managers should follow six steps when setting goals. 1. Review the organization’s
mission and employees’ key job tasks. 2. Evaluate available resources. Don’t set goals that are
impossible to achieve given your available resources. Goals should be challenging, but realistic. 3.
Determine the goals individually or with input from others. Goals reflect desired outcomes and should
be congruent with the organizational mission and goals in other organizational areas. 4. Make sure goals
are well-written and then communicate them to all who need to know. Writing down and
communicating goals forces people to think them through. Written goals become visible evidence of the
importance of working toward something. 5. Build in feedback mechanisms to assess goal progress. If
goals aren’t being met, change them as needed. 6. Link rewards to goal attainment. Employees want to
know “What’s in it for me?” Linking rewards to goal achievement will help answer that question.

The most popular ways to describe plans are in terms of their breadth (strategic versus tactical), time
frame (long term versus short), specificity (directional versus specific), and frequency of use (single-use
versus standing).

Strategic plans are plans that apply to the entire organization and encompass the organization’s overall
goals.
Tactical plans are plans that specify the details of how the overall goals are to be achieved.

Standing plans are plans that are ongoing and provide guidance for activities performed repeatedly.

Single-use plan is a one-time plan specifically designed to meet the needs of a unique situation.

Directional plans are plans that are flexible and set general guidelines.

Specific plans are plans that are clearly defined and leave no room for interpretation.

Short-term plans are plans with a time frame of one year or less.

Long-term plans are plans with a time frame beyond three years.

The commitment concept says that plans should extend far enough to meet those commitments made
when the plans were developed.

Formal planning department is a group of planning specialists whose sole responsibility is to help write
the various organizational plans.

Environmental scanning is an analysis of the external environment, which involves screening large
amounts of information to detect emerging trends.

Competitive intelligence is a type of environmental scanning that gives managers accurate information
about competitors.
Chapter 8

Organizational change is any alteration of an organization’s people, structure, or technology.

1. Changing structure: Includes any change in authority relationships, coordination mechanisms, degree
of centralization, job design, or similar organization structure variables. Examples might be restructuring
work units, empowering employees, decentralizing, widening spans of control, reducing work
specialization, or creating work teams. All of these may involve some type of structural change.

2. Changing technology: Encompasses modifications in the way work is done or the methods and
equipment used. Examples might be computerizing work processes and procedures, adding robotics to
work areas, installing energy usage monitors, equipping employees with mobile communication tools,
implementing social media tools, or installing a new computer operating system.

3. Changing people: Refers to changes in employee attitudes, expectations, perceptions, or behaviors.

Examples might be changing employee attitudes and behaviors to better support a new customer
service strategy, using team building efforts to make a team more innovative, or training employees to
adopt a “safety-first” focus.

External forces: marketplace, technology, economy.

Internal forces: strategy, composition of an organization’s workforce, employee attitudes.

People who act as catalysts and assume the responsibility for managing the change process are called
change agents; any manager, an internal staff specialist, outside consultant.

“Calm waters” metaphor is a description of organizational change that likens that change to a large ship
making a predictable trip across a calm sea and experiencing an occasional storm.

“White-water rapids” metaphor is a description of organizational change that likens that change to a
small raft navigating a raging river.

 organization development (OD) Efforts that assist organizational members with a planned
change by focusing on their attitudes and values:

Survey feedback is a method of assessing employees’ attitudes toward and perceptions of a change;

Process consultation is using outside consultants to assess organizational processes such as workflow,
informal intra-unit relationships, and formal communication channels;

Team-building is using activities to help work groups set goals, develop positive interpersonal
relationships, and clarify the roles and responsibilities of each team member;

Intergroup development are activities that attempt to make several work groups more cohesive.
  Why do people resist organizational change? The main reasons include: uncertainty, habit,
concern over personal loss, change is not in organization’s best interest.
 Managers should view these techniques as tools and use the most appropriate one depending
on the type and source of the resistance: education and communication, participation,
facilitation and support, negotiation, manipulation and co-optation.

Stress—response to anxiety over intense demands, constraints, or opportunities.

Functional stress—allows a person to perform at his or her highest level at crucial times.

Often associated with constraints (an obstacle that prevents you from doing what you desire), demands
(the loss of something desired), and opportunities (the possibility of something new, something never
done).

Symptoms of stress: physical, psychological, behavioral.

Karoshi is a japanese term that refers to a sudden death caused by overworking.

 stressors Factors that cause stress:

task demands; role demands: role conflicts Work expectations that are hard to satisfy, role overload
Having more work to accomplish than time permits, role ambiguity When role expectations are not
clearly understood; interpersonal demands, organization structure, organizational leadership

Employee assistance programs (EAPs) are programs offered by organizations to help employees
overcome personal and health-related problems.

Wellness programs are programs offered by organizations to help employees prevent health problems.

Creativity refers to the ability to combine ideas in a unique way or to make unusual associations
between ideas.

The outcomes of the creative process need to be turned into useful products or work methods, which is
defined as innovation.

 The latter group views creativity as a fourfold process.

Perception, incubation, inspiration, innovation

The systems model (inputs - transformation process - outputs) can help us understand how
organizations become more innovative.

 Stimulate innovation:

Cultural Variables: • Acceptance of ambiguity • Tolerance of the impractical • Low external controls •
Tolerance of risks • Tolerance of conflict • Focus on ends • Open-system focus • Positive feedback
Structural Variables: • Organic structures • Abundant resources • High interunit communication •
Minimal time pressure • Work and nonwork support

Human Resource Variables • High commitment to training and development • High job security •
Creative people

Idea champions : Individuals who actively and enthusiastically support new ideas, build support for,
overcome resistance to, and ensure that innovations are implemented.