Principles of Management chapters 1-4

Management responsibilities:

**Efficiency: getting work done with minimum effort, expense, or waste **Effectiveness: accomplishing tasks that help fulfill organizational objectives

Top Managers:

: executives responsible for the overall direction of the organization. Responsible for creating: context for change, employee buy-in/commitment, positive organizational culture via language and action, and monitor business environment

Discuss the top mistakes that managers make in their jobs

Another way to understand what it takes to be a manager is to look at the mistakes managers make. Five of the top ten mistakes managers make are being insensitive to others; being cold, aloof, and/or arrogant; betraying trust; being overly ambitious; and failing to address specific performance problems with the business.

Describe the process that companies use to make sense of their changing environments.

Because external environments can be dynamic, confusing, and complex, managers use a three-step process to make sense of the changes in their external environments: environmental scanning, interpreting environmental factors, and acting on threats and opportunities. Managers scan the environment to stay up to date on important factors in their industry and to reduce uncertainty. They want to know if demand will increase, prices for key components will rise, and whether competitors' sales are rising or falling. After scanning, managers determine what environmental events and issues mean to the organization. When managers interpret environmental events as threats, they take steps to protect the company from further harm. After scanning for information on environmental events and issues and interpreting them as threats or opportunities, managers have to decide how to respond to these environmental factors. Because it is impossible to comprehend all the factors and changes, managers often rely on simplified models of external environments called cognitive maps. Cognitive maps summarize the perceived relationships between environmental factors and possible organizational actions.

Explain for what organizations are socially responsible.

Companies can best benefit their stakeholders by fulfilling their economic, legal, ethical, and discretionary responsibilities. Economic and legal responsibilities are at the bottom of the pyramid because they play a larger part in a company's social responsibility than do ethical and discretionary responsibilities. Historically, economic responsibility, or making a profit by producing a product or service valued by society, has been a business's most basic social responsibility. Legal responsibility is a company's social responsibility to obey society's laws and regulations as it tries to meet its economic responsibilities. Discretionary responsibilities pertain to the social roles that businesses play in society beyond their economic, legal, and ethical responsibilities.

Punctuated equilibrium Theory

Companies go through long periods of stability during which incremental changes occur

Explain the five components of the specific environment.

Each organization also has a specific environment that is unique to that firm's industry and directly affects the way it conducts day-to-day business. Customer, competitor, supplier, industry regulation, and advocacy group components of the specific environment affect businesses. Companies cannot exist without customer support. Monitoring customers' changing wants and needs is critical to business success. There are two basic strategies for monitoring customers: reactive and proactive. Reactive customer monitoring involves identifying and addressing customer trends and problems after they occur. Proactive monitoring of customers means identifying and addressing customer needs, trends, and issues before they occur. Often the difference between business success and failure comes down to whether one's company is doing a better job of satisfying customer wants and needs than the competition. Consequently, companies need to keep close track of what their competitors are doing. To do this, managers perform a competitive analysis, which involves deciding who their competitors are, anticipating competitors' moves, and determining competitors' strengths and weaknesses. Surprisingly, managers often do a poor job of identifying potential competitors because they tend to focus on only two or three well-known competitors with similar goals and resources. Another mistake managers may make when analyzing the competition is to underestimate potential competitors' capabilities. A key factor influencing the impact and quality of the relationship between companies and their suppliers is how dependent they are on each other. A high degree of buyer or seller dependence can lead to opportunistic behavior, in which one party benefits at the expense of the other. In contrast to opportunistic behavior, relationship behavior focuses on establishing a mutually beneficial, long-term relationship between buyers and suppliers. Regulatory agencies affect businesses by creating and enforcing rules and regulations to protect consumers, workers, or society as a whole. Advocacy groups are groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions. The public communications approach relies on voluntary participation by the news media and the advertising industry to send out an advocacy group's message. A media advocacy approach typically involves framing the group's concerns as public issues (affecting everyone); exposing questionable, exploitative, or unethical practices; and creating controversy that is likely to receive extensive news coverage. A product boycott is a tactic in which an advocacy group actively tries to persuade consumers not to purchase a company's product or service.

Identify common kinds of workplace deviance.

Ethics is the set of moral principles or values that defines right and wrong for a person or group. Ethical behavior follows accepted principles of right and wrong. Workplace deviance is unethical behavior that violates organizational norms about right and wrong. One kind of workplace deviance, called production deviance, hurts the quality and quantity of work produced. Property deviance is unethical behavior aimed at company property or products. Political deviance is using one's influence to harm others in the company. Personal aggression is hostile or aggressive behavior toward others.

Discuss how changing environments affect organizations.

External environments are the forces and events outside a company that have the potential to influence or affect it. Environmental change is the rate at which a company's general and specific environments change. In stable environments, the rate of environmental change is slow. In dynamic environments, the rate of environmental change is fast. Although one might think that a company's external environment would be either stable or dynamic, research suggests that companies often experience both. According to punctuated equilibrium theory, companies go through long periods of stability (equilibrium) during which incremental changes occur; followed by short, complex periods of dynamic, fundamental change (revolutionary periods); and finishing with a return to stability (new equilibrium). Environmental complexity refers to the number and the intensity of external factors in the environment that affect organizations. Resource scarcity is the abundance or shortage of critical organizational resources in an organization's external environment.

Describe what management is

Good management is basic to starting a business, growing a business, and maintaining a business after it has achieved some measure of success.

Explain the four functions of management

Henri Fayol, who was a managing director (CEO) of a large steel company in the early 1900s, was one of the founders of the field of management. According to Fayol, managers need to perform five managerial functions in order to be successful: planning, organizing, coordinating, commanding, and controlling. Most management textbooks today have updated this list by dropping the coordinating function and referring to Fayol's commanding function as "leading." Fayol's management functions are thus known today in this updated form as planning, organizing, leading, and controlling. Planning involves determining organizational goals and a means for achieving them. Organizing is deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom in the company. The third management function, leading, involves inspiring and motivating workers to work hard to achieve organizational goals. The last function of management, controlling, is monitoring progress toward goal achievement and taking corrective action when progress isn't being made.

Describe the transition that employees go through when they are promoted to management.

In her book Becoming a Manager: Mastery of a New Identity, Harvard Business School professor Linda Hill followed the development of nineteen people in their first year as managers. Initially, the managers in Hill's study believed that their job was to exercise formal authority and to manage tasks—basically being the boss, telling others what to do, making decisions, and getting things done. In fact, most of the new managers were attracted to management positions because they wanted to be in charge. Surprisingly, the new managers did not believe that their job was to manage people. After six months, most of the new managers had concluded that their initial expectations about managerial work were wrong. The first surprise was the fast pace and heavy workload involved. The other major surprise after six months on the job was that the managers' expectations about what they should do as managers were very different from their subordinates' expectations. After a year on the job, most of the managers thought of themselves as managers and no longer as doers. In making the transition, they finally realized that people management was the most important part of their job.

Management transition:

Manager initial expectation: be the boss, formal authority, manage tasks, job is not about managing people. After six months: fast pace, heavy workload, be the problem solver and trouble shooter of subordinates. After one year: no longer a doer, communication listening and positive reinforcement, adapting and controlling stress, job is people development. (KNOW THE STAGES)

Economy: growing economy provides a favorable environment for business growth, influences basic business decisions

Managers scan the economic environment by suing economic statistic sand business confidence indices

Resource scarcity: abundage or shortage of critical organizational resources in an external environment.

May be the result of: shortage of supply, or demand driving up prices. If there is less of one thing the prices will rise and vice versa.

Explain whether social responsibility hurts or helps an organization's economic performance.

One question that managers often ask is, "Does it pay to be socially responsible?" No, early research indicated that there was not an inherent relationship between social responsibility and economic performance. Recent research, however, leads to different conclusions. There is no trade-off between being socially responsible and economic performance. And there is a small, positive relationship between being socially responsible and economic performance that strengthens with corporate reputation. There is no trade-off between being socially responsible and economic performance. Being socially responsible usually won't make a business less profitable. Simply put, socially responsible companies experience the same ups and downs in economic performance that traditional businesses do.

Explain how and why companies can create competitive advantage through people

One thing that hasn't changed is the importance of good people and good management: companies can't succeed for long without them. In his books Competitive Advantage through People: Unleashing the Power of the Work Force and The Human Equation: Building Profits by Putting People First, Stanford University business professor Jeffrey Pfeffer contends that what separates top-performing companies from their competitors is the way they treat their workforces—in other words, their management style. Pfeffer found that managers in top-performing companies used ideas such as employment security, selective hiring, self-managed teams and decentralization, high pay contingent on company performance, extensive training, reduced status distinctions (between managers and employees), and extensive sharing of financial information to achieve financial performance that, on average, was 40 percent higher than that of other companies. These ideas helped organizations develop workforces that are smarter, better trained, more motivated, and more committed than their competitors' workforces. According to Pfeffer, companies that invest in their people will create long-lasting competitive advantages that are difficult for other companies to duplicate. Other studies also clearly demonstrate that sound management practices can produce substantial advantages in four critical areas of organizational performance: sales revenues, profits, stock market returns, and customer satisfaction. Finally, research also indicates that managers have an important effect on customer satisfaction

Explain what practical steps managers can take to improve ethical decision making.

Overt integrity tests estimate job applicants' honesty by asking them directly what they think or feel about theft or about punishment of unethical behaviors. Personality-based integrity tests indirectly estimate job applicants' honesty by measuring psychological traits such as dependability and conscientiousness. Today, almost all large corporations have an ethics code in place. Even if a company has a code of ethics, two things must still happen if those codes are to encourage ethical decision making and behavior. First, a company must communicate its code to others both inside and outside the company. Second, in addition to having an ethics code with general guidelines such as "do unto others as you would have others do unto you," management must also develop practical ethical standards and procedures specific to the company's line of business. The first objective of ethics training is to develop employees' awareness of ethics. The second objective for ethics training programs is to achieve credibility with employees. The third objective of ethics training is to teach employees a practical model of ethical decision making. The first step in establishing an ethical climate is for managers, especially top managers, to act ethically themselves. A second step in establishing an ethical climate is for top management to be active in and committed to the company ethics program. A third step is to put in place a reporting system that encourages managers and employees to report potential ethics violations. Whistle-blowing, that is, reporting others' ethics violations, is a difficult step for most people to take.

Functions of management:

Planning: determining organizational goals and a means of achieving them One of the best ways to improve performance Work harder for longer periods of time More directly in pursuit of goals Think of better ways to do the job Why do some plans fail? Partial commitment Not having the right people involved Not enough follow through Unwillingness or inability to change Unrealistic goals or lack of focus and resources Organizing: deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom How things get done Who does what Who will work with whom Leading: inspiring and motivating workers to work hard to achieve.... Controlling: Monitor progress and take corrective action and "check your goals".

Explain the major roles and subroles that managers perform in their jobs

Professor Henry Mintzberg followed five American CEOs, shadowing each for a week and analyzing their mail, their conversations, and their actions. He concluded that managers fulfill three major roles while performing their jobs—interpersonal, informational, and decisional. In fulfilling the interpersonal role of management, managers perform three subroles: figurehead, leader, and liaison. In the figurehead role, managers perform ceremonial duties such as greeting company visitors, speaking at the opening of a new facility, or representing the company at a community luncheon to support local charities. In the leader role, managers motivate and encourage workers to accomplish organizational objectives. In the liaison role, managers deal with people outside their units. Mintzberg described three informational subroles: monitor, disseminator, and spokesperson. In the monitor role, managers scan their environment for information, actively contact others for information, and, because of their personal contacts, receive a great deal of unsolicited information. In the disseminator role, managers share the information they have collected with their subordinates and others in the company. In contrast to the disseminator role, in which managers distribute information to employees inside the company, managers in the spokesperson role share information with people outside their departments or companies. According to Mintzberg, managers engage in four decisional subroles: entrepreneur, disturbance handler, resource allocator, and negotiator. In the entrepreneur role, managers adapt themselves, their subordinates, and their units to change. In the disturbance handler role, managers respond to pressures and problems so severe that they demand immediate attention and action. In the resource allocator role, managers decide who will get what resources and how many resources they will get. In the negotiator role, managers negotiate schedules, projects, goals, outcomes, resources, and employee raises.

Describe the U.S. Sentencing Commission Guidelines for Organizations, and explain how they both encourage ethical behavior and punish unethical behavior by businesses.

Since 1991, when the U.S. Sentencing Commission Guidelines for Organizations were established, companies can be prosecuted and punished even if management didn't know about the unethical behavior. Penalties can be substantial, with maximum fines approaching a whopping $300 million. Nearly all businesses are covered by the U.S. Sentencing Commission's guidelines. The guidelines cover offenses defined by federal laws such as invasion of privacy, price fixing, fraud, customs violations, antitrust violations, civil rights violations, theft, money laundering, conflicts of interest, embezzlement, dealing in stolen goods, copyright infringements, extortion, and more. The guidelines impose smaller fines on companies that take proactive steps to encourage ethical behavior or voluntarily disclose illegal activities to federal authorities. The culpability score is critical because the total fine is computed by multiplying the base fine by the culpability score. Fortunately for companies that want to avoid paying these stiff fines, the U.S. Sentencing Guidelines clearly spell out the seven necessary components of an effective compliance program.

Explain to whom organizations are socially responsible.

Social responsibility is a business's obligation to pursue policies, make decisions, and take actions that benefit society. There are two perspectives regarding to whom organizations are socially responsible: the shareholder model and the stakeholder model. According to the late Nobel Prize-winning economist Milton Friedman, the only social responsibility that organizations have is to satisfy their owners, that is, company shareholders. This view—called the shareholder model—holds that the only social responsibility that businesses have is to maximize profits. By maximizing profit, the firm maximizes shareholder wealth and satisfaction. By contrast, under the stakeholder model, management's most important responsibility is the firm's long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders). Primary stakeholders are groups on which the organization depends for its long-term survival; they include shareholders, employees, customers, suppliers, governments, and local communities. When managers are struggling to balance the needs of different stakeholders, the stakeholder model suggests that the needs of primary stakeholders take precedence over the needs of secondary stakeholders. Secondary stakeholders, such as the media and special interest groups, can influence or be influenced by the company. Unlike the primary stakeholders, however, they do not engage in regular transactions with the company and are not critical to its long-term survival.

Explain how organizations can respond to societal demands for social responsibility.

Social responsiveness refers to a company's strategy to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility. One model of social responsiveness identifies four strategies for responding to social responsibility problems: reactive, defensive, accommodative, and proactive. A company using a reactive strategy will do less than society expects. By contrast, a company using a defensive strategy would admit responsibility for a problem but would do the least required to meet societal expectations. A company using an accommodative strategy will accept responsibility for a problem and take a progressive approach by doing all that could be expected to solve the problem. Finally, a company using a proactive strategy will anticipate responsibility for a problem before it occurs, do more than expected to address the problem, and lead the industry in its approach.

Describe what influences ethical decision making.

The ethical answers that managers choose depend on the ethical intensity of the decision, the moral development of the manager, and the ethical principles used to solve the problem. When addressing an issue of high ethical intensity, managers are more aware of the impact their decision will have on others. They are more likely to view the decision as an ethical or moral decision than as an economic decision. They are also more likely to worry about doing the right thing. Six factors must be taken into account when determining the ethical intensity of an action. Magnitude of consequences is the total harm or benefit derived from an ethical decision. Social consensus is agreement on whether behavior is bad or good. Probability of effect is the chance that something will happen that results in harm to others. Temporal immediacy is the time between an act and the consequences the act produces. Proximity of effect is the social, psychological, cultural, or physical distance of a decision maker from those affected by his or her decisions. Finally, whereas the magnitude of consequences is the total effect across all people, concentration of effect is how much an act affects the average person. Kohlberg identified three phases of moral development, with two stages in each phase. At the preconventional level of moral development, people decide based on selfish reasons. People at the conventional level of moral development make decisions that conform to societal expectations. People at the postconventional level of moral development use internalized ethical principles to solve ethical dilemmas. According to Professor LaRue Hosmer, a number of different ethical principles can be used to make business decisions: long-term self-interest, religious injunctions, government requirements, individual rights, personal virtue, distributive justice, and utilitarian benefits. According to the principle of long-term self-interest, people should never take any action that is not in their or their organization's long-term self-interest.

Describe the four components of the general environment.

The general environment consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations. Because the economy influences basic business decisions, such as whether to hire more employees, expand production, or take out loans to purchase equipment, managers scan their economic environments for signs of significant change. Unfortunately, the economic statistics that managers rely on when making these decisions are notoriously poor predictors of future economic activity. Changes in technology can help companies provide better products or produce their products more efficiently. Although technological changes can benefit a business, they can also threaten it. The sociocultural component of the general environment refers to the demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society. New laws and regulations continue to impose additional responsibilities on companies. As a manager, it is one's responsibility to educate oneself about the laws, regulations, and potential lawsuits that could affect one's business.

Explain how organizational cultures are created and how they can help companies be successful.

The key component in internal environments is organizational culture, or the set of key values, beliefs, and attitudes shared by members of the organization. A primary source of organizational culture is the company founder. People tell organizational stories to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions. A second way in which organizational culture is sustained is by recognizing and celebrating heroes. By definition, organizational heroes are organizational people admired for their qualities and achievements within the organization. Cultures based on adaptability, involvement, a clear mission, and consistency can help companies achieve higher sales growth, return on assets, profits, quality, and employee satisfaction. Adaptability is the ability to notice and respond to changes in the organization's environment. In organizational cultures with a clear company mission, the organization's strategic purpose and direction are apparent to everyone in the company. Finally, in consistent organizational cultures, the company actively defines and teaches organizational values, beliefs, and attitudes. Organizational cultures exist on three levels. On the first, or surface, level are the reflections of an organization's culture that can be seen and observed, such as symbolic artifacts and workers' and managers' behaviors. Next, just below the surface, are the values and beliefs are expressed by people in the company. Finally, unconsciously held assumptions and beliefs about the company are buried deep below the surface. One way of changing a corporate culture is to use behavioral addition or behavioral substitution to establish new patterns of behavior among managers and employees. Behavioral addition is the process of having managers and employees perform a new behavior, while behavioral substitution is having managers and employees perform a new behavior in place of another behavior. The key in both instances is to choose behaviors that are central to and symbolic of the old culture one is changing and the new culture that one wants to create. Another way in which managers can begin to change corporate culture is to change the visible artifacts of their old culture, such as the office design and layout, company dress code, and recipients (or nonrecipients) of company benefits and perks such as stock options, personal parking spaces, or the private company dining room. Cultures can also be changed by hiring and selecting people with values and beliefs consistent with the company's desired culture. Selection is the process of gathering information about job applicants to decide who should be offered a job.

Describe different kinds of managers

There are four kinds of managers, each with different jobs and responsibilities: top managers, middle managers, first-line managers, and team leaders. Top managers have three major responsibilities. First, they are responsible for creating a context for change. After that vision or mission is set, the second responsibility of top managers is to develop employees' commitment to and ownership of the company's performance. Third, top managers must create a positive organizational culture through language and action. Finally, top managers are responsible for monitoring their business environments. Middle managers hold positions such as plant manager, regional manager, or divisional manager. They are responsible for setting objectives consistent with top management's goals and for planning and implementing subunit strategies for achieving those objectives. A third responsibility of middle management is to monitor and manage the performance of the subunits and individual managers who report to them. Finally, middle managers are also responsible for implementing the changes or strategies generated by top managers. The primary responsibility of first-line managers is to manage the performance of entry-level employees who are directly responsible for producing a company's goods and services. They also make detailed schedules and operating plans based on middle management's intermediate-range plans. Team leaders are primarily responsible for facilitating team activities toward accomplishing a goal.

Explain what companies look for in managers.

When companies look for employees who would be good managers, they look for individuals who have technical skills, human skills, conceptual skills, and the motivation to manage. Technical skills are the specialized procedures, techniques, and knowledge required to get the job done. Human skills can be summarized as the ability to work well with others. Conceptual skills are the ability to see the organization as a whole, to understand how the different parts of the company affect each other, and to recognize how the company fits into or is affected by its external environment such as the local community, social and economic forces, customers, and the competition. Motivation to manage is an assessment of how motivated employees are to interact with superiors, participate in competitive situations, behave assertively toward others, tell others what to do, reward good behavior and punish poor behavior, perform actions that are highly visible to others, and handle and organize administrative tasks.

Effectiveness

accomplishing tasks that help fulfill organizational objectives

External environment: composed of all the outside factors or influences that impact the operation of business.

changing environments

Uncertainty:

extent to which managers can predict which external changes and trends will affect their businesses. Instability, complexity, and resource scarcity all lead to uncertainty. Refers to how predictable environmental conditions are. Difficult for managers to predict where change will occur so they make assumptions. Environmental change, resource scarcity, uncertainty!!!

Efficiency

getting work done with minimum effort, expense, or waste

Creating an ethical climate by:

managers act ethically, ensuring top management is active and committed to the ethics program, encourage whistleblowers, fairly and consistently punish the violators of the code of ethics.

What are the four functions of management?

planning, organizing, leading, controlling

Team leaders:

responsible for facilitating team activities toward goal accomplishment, help team members (plan and schedule work, learn problem solving methods, work effectively with each other)

Middle managers:

setting objective, planning and allocating, coordinating, monitoring, and implementing.

First-line managers:

tasked with managing performance...