Chapter 2: The Changing Environment of Organizations

When Yahoo! makes decisions about whether or not to collect personal information about customers when they use its website, this is an example of:

An ethical issue

When a bank decides whether or not to make a loan to a customer it knows will be unlikely to be able to repay the loan, this is an example of:

An ethical issue

Ethics and Corporate Governance: Social responsibility

Businesses living and working together for the common good and valuing human dignity - have lasting effects, social responsibility efforts should be integrated into the culture of the organization - EX: Patagonia engages in a variety of activities to promote fair labor practices and ensure good working conditions in its factories.

The ethnic and cultural mix of the U.S. workforce is:

Changing

Collectivism

Characterized by tight social frameworks in which people tend to base their identities on the group or organization to which they belong

Management of knowledge workers

Knowledge Workers: Those employees who add value in an organization simply because of what they know - Examples: computer scientists, physical scientists, engineers, product designers, video game developers - EX: Ivonne has been a freelance web designer for over a decade. She has made high-quality websites for numerous prominent clients, many of whom are foreign.

Managerial Ethics Figure 2.3

Managers face a variety of ethical situations. In most cases these situations involve how the organization treats its employees, how employees treat the organization, and how employees and organizations treat other economic agents.

Short-term Values

More oriented toward the past and the present and include respect for traditions and social obligations

Surface-level Diversity

Observable differences in people, including race, age, ethnicity, physical abilities, physical characteristics, and gender - EX: The Pittsburgh Steelers football team has some players who are tall, some who are short, and others who are average in height. - EX: Danai is black and was born in Zimbabwe.

Cultural competence

The ability to interact effectively with people of different cultures - EX: Paula is able to effectively persuade and motivate employees and customers in many different cultures.

Ethnocentrism

The belief that one's own language, native country, and cultural rules and norms are superior to all others. - EX: Susan talks down to a new staff member because he is from a country she believes is inferior to hers in the quality of its education. - EX: When Maja was assigned to work in Russia she expected her employees to be less professional and less fluent in English than she was. She was very surprised to learn that her Russian counterparts were just as competent as her.

Power distance

The extent to which people accept as normal an unequal distribution of power - EX: In some countries, supervisors are given great authority and are expected to make all of the decisions on behalf of their employees. This caught Mike by surprise when he started his assignment in Egypt and was never asked for his opinion. - EX: Sam has a hard time holding down a job because he never listens to his bosses. He doesn't respect authority and always does things own way, until inevitably he breaks one rule too many and gets fired. Low degree of power distance

Uncertainty avoidance (also preference for stability)

The extent to which people feel threatened by unknown situations and prefer to be in clear and unambiguous situations - EX: Kirsten works as an office manager in an acupuncture clinic. When given clear instructions on what to do, Kirsten does her job remarkably well. However, when she encounters a scenario that isn't covered by the instructions she was given, Kirsten experiences severe anxiety and cannot troubleshoot or make good judgment calls. Kirsten most likely has a high degree of:

Masculinity (also assertiveness or materialism)

The extent to which the dominant values in a society emphasize aggressiveness and the acquisition of money and other possessions as opposed to concern for people, relationships among people, and overall quality of life - EX: Hank's main goals in life are to get promoted at all costs, make a lot of money, and fill his big house with expensive paintings and artwork. Hank exhibits high masculinity

Globalization

The internationalization of business activities and the shift toward an integrated global economy

Projected Percentage Change in the U.S. Labor Force by Age from 2006 to 2016

The labor force in the United States is getting older. For example, as shown here, between 2006 and 2016 the number of U.S. workers between the ages of 65 and 74 grew by 83.4 percent, and the percentage of workers 75 and older grew by 84.3 percent. In contrast, the number of workers between the ages of 25 and 54 grew only by 2.4 percent. - The U.S. Bureau of Labor Statistics projects a dramatic percent increase in the number of workers 65 and older during the next decade.

Outsourcing

The practice of hiring other firms to do work previously performed by the organization itself; when this work is moved overseas, it is often called offshoring - becoming increasingly popular

Culture

The set of shared values, often taken for granted, that help people in a group, organization, or society understand which actions are considered acceptable and which are deemed unacceptable

Diversity

The variety of observable and unobservable similarities and differences among people - more than demographics - the first diversity characteristics that come to mind are not necessarily the most important. - combinations of traits can produce diversity.

Tiered workforce

When one group of an organization's workforce has a contractual arrangement with the organization objectively different from another group performing the same jobs - Occurs with contracts negotiated at different times - EX: Sarah, a part-time barista at the local coffee shop, is angry when she learns that Dina, a full-time barista who has the same responsibilities as Sarah and has been working at the shop just as long, makes an extra $2 an hour plus benefits. The coffee shop is using a tiered workforce.

Corporate sustainability

When social responsibility issues involve the creation of a "green" strategy intended to protect the natural environment - to have lasting effects, social responsibility efforts should be integrated into the culture of the organization. - socially responsible behavior is more profitable than unethical behavior. - grassroots, bottom-up efforts initiated by employees can be effective. - EX: Happy Jack's Chicken Shack serves organically raised chickens and does everything it can to minimize its impact on landfills and greenhouse gases.

Service Sector

has been responsible for almost 90% of all new jobs created in the United States since 1990. - In the United States, growth in the service sector is projected to increase in the near future. - EX: Ty works as an illegal ghostwriter for college students, completing papers and other assignments for cash. Ty is considered to work in the service industry.

The International Organization for Standardization (ISO)

has created a variety of standards that help organizations gain international acceptance of their practices and outcomes. - Part of social responsibility - In addition to shaping law, international labor standards provide guidance for developing national and local policies, such as employment and work and family policies.

Cycle Time

he time it takes a firm to accomplish some recurring activity or function, e.g., making deliveries, processing credit payments - EX: Pierre runs a video game studio. It used to take Pierre's studio three years to conceive of a game, design it, and bring it to market, but now the same process is completed in two. They improved cycle time

A _____ such as computer chip maker Intel focuses primarily on technical skills when hiring most employees.

manufacturing company

During the decline of the _____ , a tremendous growth in the service sector kept the overall U.S. economy from declining at the same rate.

manufacturing sector

Most ethical dilemmas faced by managers relate to how the _____treats its _____, how employees treat the organization, and how employees and organizations treat other economic agents. Managerial ethics also come into play in the relationship between the firm and its employees with other economic agents.

organization employees

The Changing Environment of Business

presents both opportunities and challenges for managers today. - Five important environmental forces

Privacy Policy

specifies what data a company will collect about its customers, how that data will be used, and how its customers can opt out of having their information collected and/or shared

Understanding and addressing the environment of a business has traditionally been the purview of:

top management but the effects of today's changing environment permeate the entire organization.

Corporate sustainability initiatives types

top-down: with someone in a position of authority dictating to managers and employees what to do grassroots: originating from the employees themselves.

5 Important Central Environmental Forces for Change

1. Globalization 2. Diversity 3. Technology 4. Ethics and Corporate Governance 5. Employment Relationships

Three specific areas of technology worth noting

(1) the shift toward a service-based economy, (2) the growing use of technology for competitive advantage, and (3) mushrooming change in information technology.

Awareness of our worldview and our reactions to people who are different

*Components of Cultural Competence* A security guard who knows that he or she has a tendency to profile teenagers as "troublemakers" is culturally aware of his or her reactions to this group.

Knowledge of different worldviews and cultural practices

*Components of Cultural Competence* Research has found that our values and beliefs about equality may be inconsistent with our behaviors. Many people whose answers on a test indicated that they did not have prejudices did things in cross-cultural situations that did, in fact, reflect prejudice

Cross-cultural skills

*Components of Cultural Competence* This component addresses the importance of practicing cultural competence, including nonverbal communication, to become effective cross-culturally.

Our attitude toward cultural differences

*Components of Cultural Competence* This reflects a willingness to honestly understand our beliefs and values about cultural differences.

Disadvantages of outsourcing

- Disaffected employees: out-of-job workers are used to train the newly hired foreign replacements - Reduction of domestic job opportunities

Conflict of Interest

- EX: Herman, Agnes's husband, runs a medical equipment firm that the hospital might purchase a new MRI machine from.

Manufacturing Sector

- EX: Oleg is a blacksmith specializing in the creation of swords and armor. His job is in the manufacturing sector - EX: The Lego Group creates plastic toys made out of interlocking bricks.

Advantages of outsourcing

- Helps firms to focus on core activities - Lowers labor costs through exportation of work

Advantages of offshoring

- Lower labor costs

Technology and Competition

- Maintaining a leadership position: technology is the basis of competition for some firms - Coping with decreasing cycle times

Governance issues

- Proper management of the business in the best interests of shareholders and other stakeholders - Independence of the board from the business (EX: It is a problem that so many members of the board of directors for Disney are close friends of senior Disney executives or owners of companies that do business with Disney.) - need independence

Disadvantages of offshoring

- Results in loss of jobs in home country (domestic jobs) - Controversial issue

Trends in Diversity

- The population is projected to become older. - By 2050, the total population is forecasted to grow from 282.1 million in 2000 to 419.9 million, a 49 percent increase. - Non-Hispanic Whites are expected to decrease. - Proportion of Blacks, Asians, and Hispanics will increase. - Talent shortages are forecast to rise globally.

Managing diversity

- Top management support for diversity and for diversity initiatives. - Reciprocal mentoring: matches senior employees with diverse junior employees to allow both individuals to learn more about a different group. - Older adults may benefit from self-paced learning environments and confidence-boosting interventions. - It is not realistic to claim or to pursue an "I'm totally unbiased" stance with regard to diversity.

Each of the following is a reason businesses should strive to be good citizens

- customers are increasingly favoring companies that do the right thing. - doing so can help a firm attract the best talent. - ethical behavior is more rational and more profitable than unethical behavior.

Ethical Issues and Information Technology

- individual rights to privacy and the potential abuse of information technology by companies.

Information technology and social media: Advantages

- leaner organizations - increased operational flexibility - increased collaboration - improved management processes/systems

Information technology and social media: Disadvantages

- less personal communication - less "down time," - an increased sense of urgency in communication and decision-making

Contributions from the Individual

1) Effort 2) Ability 3) Loyalty 4) Skills 5) Time 6) Competencies

4 Factors increasing globalization

1. Advances in communication and transportation 2. Businesses have expanded internationally to increase their markets. 3. Control of labor, distribution and distribution costs 4. Increased international competition

4 Components of Cultural Competence

1. Awareness of our worldview and our reactions to people who are different 2. Our attitude toward cultural differences 3. Knowledge of different worldviews and cultural practices 4. Cross-cultural skills

The Psychological contract Parts (2)

1. Contributions from the Individual 2. Inducements from the Organizations

Framing ethical issues (3)

1. How Org Treats employees (hiring, firing, wages, working conditions, respect, privacy) 2. How employees treat the organization (conflicts of interest, secrecy, confidentiality, personal internet use, unacceptable absenteeism) 3. How do employees and the org treat economic agents (customers, competitors, stockholders, suppliers, dealers, unions) - Variations in ethical and legal business practices across countries

Hofstede's Primary Dimensions of Differences in Cultures (7)

1. Individualism 2. Collectivism 3. Power distance 4. Uncertainty avoidance (also preference for stability) 5. Masculinity (also assertiveness or materialism) 6. Long-term Values 7. Short-term Values

Inducements from the Organizations

1. Pay 2. Job Security 3. Benefits 4. Career Opportunities 5. Status 6. Promotion Opportunities

5 Types of Diversity

1. Surface-level Diversity 2. Deep-level Diversity 3. Separation Diversity 4. Variety Diversity 5. Disparity Diversity

Barriers to Inclusion

1. The "like me" bias 2. Stereotypes 3. Prejudice 4. Perceived threat of loss 5. Ethnocentrism 6. Unequal access to organizational networks

Knowledge worker employment issues

1. Unique working arrangements and performance motivation requirements ▪ Autonomous work, strong identification with professional standard, continual updating of skills 2. Specifically (individually) tailored compensation packages ▪ Growth opportunities, profit sharing, less bureaucracy

Stereotypes

A belief about an individual or a group based on the idea that everyone in a particular group will behave the same way or have the same characteristics. - EX: An amusement park manager will not hire employees with tattoos that are visible when the park uniform is worn because he believes that this makes them look dangerous and threatening. - EX: A restaurant manager will only hire men as busboys because she believes that they are able to carry more weight and are therefore more efficient.

Manufacturing

A form of business that combines and transforms resources into tangible outcomes that are then sold to others - Manufacturing was once the dominant technology in the United States. During the 1970s, manufacturing entered a long period of decline, primarily because of foreign competition. U.S. firms had grown lax and sluggish, and new foreign competitors came onto the scene with better equipment and much higher levels of efficiency. - During the decline of the manufacturing sector, a tremendous growth in the service sector kept the overall U.S. economy from declining at the same rate.

Ethics and Corporate Governance: Ethics

A person's beliefs regarding what is right or wrong in a given situation - EX: Bullying may not be illegal, but many companies have enacted policies prohibiting such incivility and abusive behavior in the workplace.

Psychological contract

A person's set of expectations regarding what he or she will contribute to an organization and what the organization, in return, will provide to the individual - terms of contract are not explicitly stated - EX: Bill Walters was hired by Amazon.com five years ago. He has received three promotions and five consecutive pay raises. He expects another promotion and raise this year due to his continued effort and performance.

Global Perspective

A willingness to be open to and learn from the alternative systems and meanings of other people and cultures, and a capacity to avoid assuming that people from everywhere are the same. - A high degree of uncertainty tolerance may help a person to have a global perspective. - EX: Jordan struggles in his diverse workplace because he isn't willing to learn from people who are different from him and has a hard time coming to grips with the fact that people everywhere aren't the same. Jordan lacks a global perspective

Variety Diversity

Differences in a certain type or category, including group members' expertise, knowledge, or functional background EX: After working with his team for a while, Patrick realizes that his team is more diverse than he initially thought. The members come from a variety of functional backgrounds and have a wide variety of work experiences. - EX: The top management team at Pepsi is made up of several Vice Presidents with a variety of functional backgrounds and experience in different geographic areas. - EX: Alee and Kieron work as teaching assistants at a university. Whereas Alee has two years of experience and knows everything about the job, Kieron just started and still has a lot to learn.

Separation Diversity

Differences in position or opinion among group members reflecting disagreement or opposition—dissimilarity in an attitude or value, for example, especially with regard to group goals or processes - EX: After listening to your office mate describe her frustrations with a team that can't agree on how to approach the task the client wants them to perform you realize that her team likely has high separation diversity - EX: Shoshana and Jessa take turns leading their group's Dungeons and Dragons game. Together they are in charge of designing the game world and determining the path of the story. However, Shoshana tends to go easy on the players and allow them to get away with a lot of things, whereas Jessa is strict and nearly kills the party every time it's her turn to run the game.

Disparity Diversity

Differences in the concentration of valuable social assets or resources—dissimilarity in rank, pay, decisionmaking authority, or status, for example - EX: The new product development team at Nestle is made up of people at three different hierarchical levels, and the team leader has the authority to veto any idea introduced by the team that she or he feels does not have potential. - EX: The finance team has five members, but only Alex is able to make binding decisions for the team. - EX: Kana and Abbey are twin sisters. Kana is their parents' favored child, receiving more love, attention, and permissions, as well as a bigger allowance.

Individualism

Exists to the extent that people in a culture define themselves primarily as individuals rather than as part of one or more groups or organizations - EX: Nick lives by himself in a cabin in the woods. He sees himself as being "his own man" rather than as part of any organization or group. Nick exhibits high individualism

Perceived threat of loss

If some employees perceive a direct threat to their own career opportunities, they may feel that they need to protect their own prospects by impeding diversity efforts. - EX: An organization previously dominated by white males begins a diversity recruiting effort by asking employees to refer diverse people whom they know for jobs in the company. Because the current employees believe that these new hires would likely get promoted before them due to the diversity initiative, no referrals are made. - EX: A large beverage company launches an initiative to pair non-minority employees with new hires who are minorities to help get them up to speed and promote inclusion. No employees sign up for the program because they believe that the organization intends to promote the new hires faster than them and doing so would hurt their chances for advancement.

Long-term Values

Include focusing on the future, working on projects that have a distant payoff, persistence, and thrift - Frugal (sparing with food and money) people are likely to have this orientation

Deep-level Diversity

Individual differences that cannot be seen directly, including goals, values, personalities decision-making styles, knowledge, skills, abilities, and attitudes - EX: Bob wants to get a lot more information before deciding which new machine to buy for the business. His partner Ken is frustrated because he is willing to make a decision now. - EX: The New York Yankees baseball team is made up of players with a variety of values and personalities. - EX: Albert is smart, good at basketball, and loves cheesy romance movies.

Service organization

One that transforms resources into an intangible output and creates time or place utility for its customers - EX: If Black Diamond were to begin focusing its business strategy on offering mountaineering tours with guides and support teams to promote outdoor tourism then this would be an example of

Prejudice

Outright bigotry or intolerance for other groups. - EX: Carl does not believe that women should work outside of the home and refuses to hire them. - EX: Bernie believes that the best salespeople are men with families to support and therefore he only hires men for his sales openings.

Offshoring

Outsourcing to workers in another country - EX: Ilana, an American computer programmer, is being replaced by a programmer in India. Her last assignment before being laid off is to teach the programmer replacing her how to do the job she's being laid off from.

The "like me" bias

People prefer to associate with others they perceive to be like themselves. - EX: Paul chose Billie for his team because she went to the same school as he had. He also felt that she reminded him of himself when he first joined the company. - EX: When reflecting on the job interviews he just finished for his assistant manager opening, John decided that he wanted to hire Amy because she reminded him a lot of himself at the same career stage.

The Psychological Contract Figure 2.4

Psychological contracts govern the basic relationship between people and organizations. Individuals contribute such things as effort and loyalty. In turn, organizations offer such inducements as pay and job security - The essential nature of a psychological contract is that the individual makes a variety of contributions to the organization (including effort, skills, ability, time, and loyalty) and in return for these contributions the organization provides inducements to the individual. Some inducements, such as pay and career opportunities, are tangible rewards. Others, such as job security and status, are more intangible.

Technology

Refers to the methods used to create products, including both physical goods and intangible services - Technology is a major driver of organizational change.

Ethics and Corporate Governance: Corporate governance

Refers to the oversight of a public corporation by its board of directors - white people hold more than 80% of total seats on corporate boards of directors. - EX: When the Board of Directors for a large company meets, it often discuss topics including diversity, executive compensation, and leadership succession planning for the company.

Unequal access to organizational networks

Women and minorities are often excluded from organizational networks, which can be important to job performance, mentoring opportunities, and being seen as a candidate for promotion

Temp and contingency workers

Work for an organization on something other than a permanent or fulltime basis as independent contractors, on-call workers, temporary employees (usually hired through outside agencies), and contract and leased employees - contingent worker: A person who works for an organization on something other than a permanent or full-time basis - EX: Sarah works part-time as a barista.

Increasing conscientiousness and knowledge counteract some of the negative effects of ____ that result from reductions in information processing speed and motivation to learn.

aging

Environmental Changes

all industries have been effected by major environmental changes over the last decade

Managing a team with high_____ can be a challenge because team members can have conflicting personalities and decision-making styles.

deep-level diversity

Cross-Cultural Differences and Similarities - General observations

▪ Cultural and national boundaries may not coincide ▪ Behavior in organizational settings varies across cultures ▪ Culture is one major cause of this variation ▪ Organizations and the way they are structured appear to be growing increasingly similar. ▪ The same individual behaves differently in different cultural settings. ▪ Cultural diversity can be an important source of synergy in enhancing organizational effectiveness.

The business case for diversity

▪ Diversity also fosters greater creativity and innovation. ▪ Organizational performance increases when employees have a positive attitude toward diversity. ▪ Culturally diverse teams make better decisions over time than homogeneous ones. ▪ Women in top management results in more innovation. ▪ Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin.

Generational diversity - Age diversity

▪ May result in younger managers supervising older workers ▪ Reverse mentoring: pairing a junior employee with a senior employee to transfer technical/computer skills from the junior employee to the senior one

Generations (by birth year)

▪ Seniors: 1922-1943 ▪ Baby boomers: 1943-1963 ▪ Generation X: 1964-1980 ▪ Generation Y/Millennials: 1980-2000 - Generation Y members are more technologically savvy, the most diverse of any generation, and are considered to be the biggest workplace influence since the baby boomers. ▪ Generation Z: After 2000 - Older workers may have better job performance but need mentoring to adopt new technology.