MGMT 300 Final

Income Statement

called a profit-and-loss statement or P&L for short, summarizes the firm's financial performance for a given time interval, usually one year. shows revenues coming into the organization from all sources and subtracts all expenses, including cost of goods sold, interest, taxes, and depreciation. The bottom line indicates the net income—profit or loss—for the given time period.

Emotion

can be thought of as a mental state that arises spontaneously within a person based on interaction with the environment rather than through conscious effort and is often accompanied by physiological changes or sensations

Expense Budget

includes anticipated and actual expenses for each responsibility center and for the total organization. -may show all types of expenses, or it may focus on a particular category, such as materials or research and development expenses. When exceed budgeted amounts, the difference signals the need for managers to identify possible problems and take corrective action if needed

Liquidity Ratio

indicates an organization's ability to meet its current debt obligations. For example, - the current ratio (current assets divided by current liabilities) tells whether the company has sufficient assets to convert into cash to pay off its debts, if needed - quick ratio, which is typically expressed as cash plus accounts receivable divided by current liabilities. The quick ratio is a popular metric to pair with the current ratio to gauge liquidity. "If a business does not have decent liquidity, then one unexpected expense could severely hurt it," said Brad Schaefer, an analyst with Sageworks Inc., a financial information company

Idea Champion

is a person who sees the need for and champions productive change within the organization.

Responsibility Center

is defined as any organizational department or unit under the supervision of a single person who is responsible for its activity. Ex: A three-person appliance sales office in Watertown, New York, as is a quality control department, a marketing department, and an entire refrigerator manufacturing plant

Activity Ratio

measures internal performance with respect to key activities defined by management. For example, inventory turnover is calculated by dividing total sales by average inventory. This ratio tells how many times the inventory is used up to meet the total sales figure. If inventory sits too long, money is wasted. the conversion ratio, is purchase orders divided by customer inquiries. This ratio is an indicator of a company's effectiveness in converting inquiries into sales.

Role Conflict

occurs when an individual perceives incompatible demands from others. Managers often feel role conflict because the demands of their superiors conflict with those of the employees in their department. They may be expected to support employees and provide them with opportunities to experiment and be creative, while at the same time top executives are demanding a consistent level of output that leaves little time for creativity and experimentation.

Line Authority

people in management positions have the formal authority to direct and control immediate subordinates

Capital Budget

planned investments in major assets such as buildings, heavy machinery, or complex information technology systems, often involving expenditures over more than a year. Capital expenditures not only have a large impact on future expenses, but they also are investments designed to enhance profits. Therefore, it is necessary to plan the impact of these expenditures on cash flow and profitability.

Innovation by Acquisition

recognizes that the cutting edge of innovation often happens with young, small, entrepreneurial companies rather than inside the walls of established firms. Google bought Android, Facebook bought Instagram, and Amazon bought Twitch Interactive to cite just a few examples.

Balance Sheet

shows the firm's financial position with respect to assets and liabilities at a specific point in time provides three types of information: assets, liabilities, and owners' equity. Assets are what the company owns, and they include current assets (those that can be converted into cash in a short time period) and fixed assets (such as buildings and equipment that are long term in nature). Liabilities are the firm's debts, including both current debt (obligations that will be paid by the company in the near future) and long-term debt (obligations payable over a long period of time). Owners' equity is the difference between assets and liabilities and is the company's net worth in stock and retained earnings.

Challenge stress

stress that challenges you and increases your focus, alertness, efficiency, and productivity

Division of Labor (Work Specialization)

the degree to which organizational tasks are subdivided into separate jobs. Ex: separation of production tasks into bottling, quality control, and maintenance. Employees within each department perform only the tasks relevant to their specialized function. When organizations face new strategic issues, managers often create new positions or departments to deal with them.

OD Steps

three distinct stages for achieving behavioral and attitudinal change: (1) unfreezing, (2) changing, and (3) refreezing.*

Top-down Budgeting

which means that the budgeted amounts for the coming year are literally imposed on middle- and lower-level managers.* These managers set departmental budget targets in accordance with overall company revenues and expenditures specified by top executives.

Profitability Ratio

which state profits relative to a source of profits, such as sales or assets. Ex: profit margin on sales, which is calculated as net income divided by sales. Similarly, gross margin is the gross (before-tax) profit divided by total sales. Another profitability measure is return on assets (ROA), which is a percentage representing what a company earned from its assets, computed as net income divided by total assets. ROA is a valuable yardstick for comparing a company's ability to generate earnings with other investment opportunities. In basic terms, the company should be able to earn more by using its assets to operate the business than it could by putting the same investment in the bank.

Larger Spans of Control

- Work performed by subordinates is stable and routine. - Subordinates perform similar work tasks. - Subordinates are concentrated in a single location. - Subordinates are highly trained and need little direction in performing tasks. - Rules and procedures defining task activities are available. - Support systems and personnel are available for the manager. - Little time is required in nonsupervisory activities, such as coordination with other departments or planning. - Managers' personal preferences and styles favor this

Four Steps of Feedback Control

Establish Standards of Performance - Within the organization's overall strategic plan, managers define goals for organizational departments in specific, operational terms that include a standard of performance against which to compare organizational activities. Measure Actual Performance - Prepare formal reports of quantitative performance measurements that managers review daily, weekly, or monthly. Compare Performance to Standards - Compare actual activities to performance standards Take Corrective Action - Determine what changes, if any, are needed

Fundamental Attribution Error

People often have biases that they apply when making attributions. When evaluating others, we tend to underestimate the influence of external factors and overestimate the influence of internal factors

Reverse Innovation

Rather than innovating in affluent countries and transferring products to emerging markets, companies such as Lenovo, General Electric (GE), John Deere, Nestlé, Procter & Gamble (P&G), and Xerox are creating innovative, low-cost products for emerging markets and then quickly and inexpensively repackaging them for sale in developed countries. GE Healthcare's team in China created a portable ultrasound machine that sold for less than 15 percent of the cost of the company's high-end machines. GE now sells the product around the world, and it grew to a $278 million global product line within six years. John Deere developed a high-quality, low-cost tractor for farmers in India that is increasingly in demand in the United States among farmers recovering from the recession

Collaboration

a joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone

Idea Incubator

a mechanism that provides a safe harbor where ideas from employees throughout the company can be developed without interference from company bureaucracy or politics.

Bottom-up Budgeting

a process in which lower-level managers anticipate their departments' resource needs and pass them up to top management for approval.* Companies of all kinds are increasingly involving line managers in the budgeting process. At the San Diego Zoo, scientists, animal keepers, and other line managers use software and templates to plan their department's budget needs because, as CFO Paula Brock says, "Nobody knows that side of the business better than they do."*

Skunkworks

a separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for a business. The original, which still exists, was created by Lockheed Martin more than 50 years ago. The essence is that highly talented people are given the time and freedom to let creativity reign

Zero-based Budget

an approach to planning and decision making that requires a complete justification for every line item in a budget instead of carrying forward a prior budget and applying a percentage change. begins with a starting point of $0, and every dollar added to the budget is reflected by an actual, documented need.

Self-efficacy

an individual's strong belief that he or she can accomplish a specific task or outcome successfully.

Blind spots

attributes about themselves that they are not aware of or don't recognize as problems—which limit their effectiveness and hinder their career success.

Personality

the set of characteristics that underlie a relatively stable pattern of behavior in response to ideas, objects, or people in the environment.

Organization Structure

(1) the set of formal tasks assigned to individuals and departments; (2) formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels, and span of managers' control; and (3) the design of systems to ensure effective coordination of employees across departments. Ensuring coordination across departments is just as critical as defining the departments to begin with. Without effective coordination systems, no structure is complete.

TQM Techniques

- Quality circle, is a group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems that affect the quality of their work. - The reason for using quality circles is to push decision making to an organization level at which recommendations can be made by the people who do the job and know it better than anyone else. - Benchmarking is defined as "the continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders to identify areas for improvement" - Organization may also use benchmarking for generating new business ideas, assessing market demand, or identifying best practices within the industry. - A benchmarking process includes five steps. - Six Sigma, is a highly ambitious quality standard that specifies a goal of no more 3.4 defects per million parts. - First introduced by Motorola in the 1980s. - It essentially means being defect-free 99.9997 percent of the time. - Six Sigma has become a generic term for a quality-control approach that takes nothing for granted and emphasizes a disciplined and relentless pursuit of higher quality and lower costs. - Quality partnering, involves assigning dedicated personnel within a particular functional area of the business to identify opportunities for improvement throughout the work process. - Make it possible to detect and address defects early in the product life cycle. - Quality partners are viewed as "insiders" and peers who are readily accepted into the work group. - Continuous improvement (or Kaizen), is the implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis. - The basic philosophy is that improving things a little bit at a time, all the time, has the highest probability of success.

OD Activities

- Team-building activities. Team building enhances the cohesiveness and success of organizational groups and teams. For example, a series of OD exercises can be used with members of cross-departmental teams to help them learn to act and function as a team. An OD expert can work with team members to increase their communication skills, facilitate their ability to confront one another, and help them accept common goals. A major team building experience at UnitedHealth is the annual broomball tournament held at headquarters in Minnesota. Inaugurated in 2010, the tournament is now a prized tradition held every winter, with 90 teams representing every area of the company participating.* - Survey-feedback activities. Survey feedback begins with a questionnaire distributed to employees on values, climate, participation, leadership, and group cohesion within their organization. After the survey is completed, an OD consultant meets with groups of employees to provide feedback about their responses and the problems identified. Employees are engaged in problem solving based on the data. - Large-group interventions. In recent years, the need for bringing about fundamental organizational change in today's complex, fast-changing world has prompted a growing interest in applications of OD techniques to large-group settings.* The large-group intervention approach brings together participants from all parts of the organization—often including key stakeholders from outside the organization as well—to discuss problems or opportunities and plan for change. A large-group intervention might involve 50 to 500 people and last several days. The idea is to include everyone who has a stake in the change, gather perspectives from all parts of the system, and enable people to create a collective future through sustained, guided dialogue. At Lenovo, for example, the company that acquired IBM's PC business in 2005, a large-group intervention helped to create a new manufacturing and supply chain culture in which the best ideas of all nationalities and backgrounds are blended. When Gerry P. Smith arrived at Lenovo a year after the acquisition, he found that people were going in different directions. Smith started bringing everyone who would be affected by a tough decision together for discussion and debate until they agreed on a solution. In some cases, the large-group approach led to doubling the productivity of a manufacturing line. Moreover, it created a more cohesive culture, rather than having people competing about the best way to do things. "The beauty of our culture is that we all moved to a new common ground," says Smith.*

Horizontal Linkage Model

The model shows that the research, manufacturing, and sales and marketing departments within an organization simultaneously contribute to new products and technologies. People from these departments meet frequently in teams and task forces to share ideas and solve problems. Research people inform marketing of new technical developments to find out whether they will be useful to customers. Marketing people pass customer complaints to research to use in the design of new products and to manufacturing people to develop new ideas for improving production speed and quality. Manufacturing informs other departments whether a product idea can be manufactured within cost limits.

Product Change

a change in the organization's product or service outputs. Product and service innovation is the primary way in which organizations adapt to changes in markets, technology, and competition. One example of a service innovation is U.S.-based Robinhood, an app-based stock brokerage that offers commission-free trading and has helped open stock trading to young people, who are often put off by the various fees typically associated with trading stocks. Robinhood, founded in 2014, is the fastest growing stock brokerage in history and is the first finance app to have won an Apple Design Award

Technology Change

a change in the organization's production process—how the organization does its work. designed to make the production of a product or service more efficient. Hammond's Candies saves hundreds of thousands of dollars a year by implementing technology changes suggested by employees. One example was tweaking a machine gear that reduced the number of employees needed on an assembly line from five to four.Other examples include the introduction of efficiency-boosting winglets on aircraft at Southwest Airlines, the adoption of automatic mail-sorting machines by the U.S. Postal Service, and the use of biosimulation software to run virtual tests on new drugs at Johnson & Johnson's pharmaceutical research and development department.

Balanced Scorecard

a comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors. contains four major perspectives: - Financial performance. The financial performance perspective reflects a concern that the organization's activities contribute to improving short- and long-term financial performance. It includes traditional measures such as net income and return on investment. - Customer service. Customer service indicators measure information such as how customers view the organization and customer retention and satisfaction. These data may be collected in many forms, including testimonials from customers describing superlative service or from customer surveys. - Internal business processes. Business process indicators focus on production and operating statistics. For an airline, business process indicators may include on-time arrivals and adherence to safety guidelines. - Potential for learning and growth. The final component of the balanced scorecard looks at the organization's potential for learning and growth, focusing on how well resources and human capital are being managed for the company's future. Metrics may include things such as employee retention and the introduction of new products. The components of the scorecard are designed in an integrative manner

Project Manager

a person who is responsible for coordinating the activities of several departments for the completion of a specific project. might also have titles such as product manager, integrator, program manager, or process owner. The distinctive feature is that the person is not a member of one of the departments being coordinated. located outside the departments and are responsible for coordinating several departments to achieve desired project outcomes. At General Mills, for example, a manager is assigned to each product line, such as Cheerios, Yoplait yogurt, and Annie's macaroni and cheese. set budget goals, marketing targets, and strategies and obtain the cooperation from advertising, production, and sales personnel needed for implementing product strategy.

Organization Development (OD)

a planned, systematic process of change that uses behavioral science knowledge and techniques to improve an organization's health and effectiveness through its ability to adapt to the environment, improve internal relationships, and increase learning and problem-solving capabilities. -focuses on the human and social aspects of the organization and works to change attitudes and relationships among employees, helping to strengthen the organization's capacity for adaptation and renewal. -can help managers address at least three types of current problems: - Mergers/acquisitions- The disappointing financial results of many mergers and acquisitions are caused by the failure of executives to determine whether the administrative style and corporate culture of the two companies fit. Executives may concentrate on potential synergies in technology, products, marketing, and control systems but fail to recognize that two firms may have widely different values, beliefs, and practices. These differences create stress and anxiety for employees, and these negative emotions affect future performance. Cultural differences should be evaluated during the acquisition process, and experts can be used to smooth the integration of two firms. - Organizational decline/revitalization -Organizations undergoing a period of decline and revitalization experience a variety of problems, including a low level of trust, lack of innovation, high turnover, and high levels of conflict and stress. The period of transition requires the opposite, including confronting stress, creating open communication, and fostering creative innovation to emerge with high levels of productivity. techniques can contribute greatly to cultural revitalization by managing conflicts, fostering commitment, and facilitating communication. - Conflict management.- Conflict can occur at any time and place within a healthy organization. For example, a product team for the introduction of a new software package was formed at a software company. Made of strong-willed individuals, the team made little progress because members could not agree on project goals. At a manufacturing firm, salespeople promised delivery dates to customers that were in conflict with shop supervisor priorities for assembling customer orders. In a publishing company, two managers disliked each other intensely. They argued at meetings, lobbied politically against each other, and hurt the achievement of both departments. efforts can help resolve these kinds of conflicts, as well as conflicts that are related to growing diversity and the global nature of today's organizations.

Task Force

a temporary team or committee designed to solve a problem involving several departments. members represent their departments and share information that enables coordination. For example, at Irving Medical Center, a unit of Kaiser Permanente in California, made up of operating room nurses, surgeons, technicians, housekeeping staff, and others came together to streamline the procedure for performing total-hip and knee-joint replacements, the hospital's costliest and most time-consuming surgeries.

New-Venture Team

a unit separate from the rest of the organization that is responsible for developing and initiating a major innovation. give free rein to members' creativity because their separate facilities and location unleash people from the restrictions imposed by organizational rules and procedures. These teams typically are small, loosely structured, and flexible, reflecting the characteristics of creative organizations One good example is Niantic, which builds "augmented reality" mobile games such as Ingress. Niantic was founded by John Hanke as an internal start-up at Google in 2010 and was spun off as a separate company so the Niantic team could be more creative and nimble.

Functional Structure (U-form (unitary structure))

activities are grouped together by common function from the bottom to the top of the organization. - groups positions into departments based on similar skills, expertise, work activities, and resource use. - can be thought of as departmentalization by organizational resources because each type of functional activity—accounting, HR, engineering, and manufacturing—represents specific resources for performing the organization's task. **Advantages:** Economies of scale and efficient resource use Development of in-depth skills Centralized decision-making **Disadvantages:** Poor communication and coordination across functional departments Slow response to environmental changes Decisions piled up at the top and may cause delay

Open-book Management

allows employees to see for themselves—through charts, computer printouts, meetings, and so forth—the financial condition of the company. shows the individual employee how his or her job fits into the big picture and affects the financial future of the organization. ties employee rewards to the company's overall success. With training in interpreting the financial data, employees can see the interdependence and importance of each function

The Change Agent

an OD specialist who performs a systematic diagnosis of the organization and identifies work-related problems. He or she gathers and analyzes data through personal interviews, questionnaires, and observations of meetings. The diagnosis helps determine the extent of organizational problems and helps unfreeze managers by making them aware of problems in their behavior.

Internal Innovation Contests

an increasingly popular way to realize product and service innovations. Dow Chemical, for example, holds an annual innovation tournament that focuses on ideas for cutting waste and saving energy. Employees vote on the submissions, and the winners receive monetary rewards. Over a ten-year period, ideas from the innovation tournaments have led to nearly 600 projects that have produced an average return of 204 percent and saved Dow Chemical $100 million a year.

Stress

an individual's physiological and emotional response to external stimuli that place physical or psychological demands on the individual and create uncertainty and lack of personal control when important outcomes are at stake.These stimuli, called stressors, produce some combination of frustration (the inability to achieve a goal, such as the inability to meet a deadline because of inadequate resources) and anxiety (such as the fear of being disciplined for not meeting deadlines).

Crowdsourcing

an open innovation approach used by Quirky, Netflix, Mod Cloth, General Electric, Fiat, and even the U.S. government, taps into ideas from around the world and lets thousands or hundreds of thousands of people participate in the innovation process, usually via the Internet.

Total Quality Management (TQM)

an organization-wide effort to infuse quality into every activity in a company through continuous improvement. Managing quality is a concern for every organization. ocuses on teamwork, increasing customer satisfaction, and lowering costs. Organizations implement by encouraging managers and employees to collaborate across functions and departments, as well as with customers and suppliers, to identify areas for improvement, no matter how small. Each quality improvement is a step toward perfection and meeting a goal of zero defects. Quality control becomes part of the day-to-day business of every employee rather than being assigned to specialized departments.

Chain of Command

an unbroken line of authority that links all employees in an organization and shows who reports to whom. It is associated with two underlying principles. Unity of command means that each employee is held accountable to only one supervisor. The scalar principle refers to a clearly defined line of authority in the organization that includes all employees. Authority and responsibility for different tasks should be distinct. All individuals in the organization should know to whom they report, as well as the successive management levels all the way to the top

Self-awareness

being aware of the internal aspects of one's nature, such as personality traits, beliefs, emotions, and perceptions, and appreciating how your patterns affect other people. Most management experts agree that a primary characteristic of effective leaders is that they know who they are and what they stand for.* When managers deeply understand themselves, they remain grounded and constant. People know what to expect from them. As one employee put it, "it's like they have a stick down through the center of them that's rooted in the ground." Two valuable ways to enhance are soliciting feedback and self-assessment, including introspection.

Machiavellianism

characterized by the acquisition of power and the manipulation of other people for purely personal gain. In loosely structured situations, high Machs actively take control, while low Machs accept the direction given by others. Low Machs thrive in highly structured situations, while high Machs perform in a detached, disinterested way. High Machs are particularly good in jobs that require bargaining skills or that involve substantial rewards for winning

Matrix Approach

combines aspects of both functional and divisional structures simultaneously, in the same part of the organization. - evolved as a way to improve horizontal coordination and information sharing. One unique feature is that it has dual lines of authority. **Advantages:** Highly effective in a complex, rapidly changing environment Efficient use of HR **Disadvantages:** Confusion and frustration caused by the dual chain of command. High level of conflict Time lost due to meetings and discussions devoted to resolving this conflict.

People Change

concerns just a few employees, such as sending a handful of middle managers to a training course to improve their leadership skills

Cross-functional team (Team Approach)

consist of employees from various functional departments who are responsible to meet as a team and resolve mutual problems. can provide needed horizontal coordination to complement an existing divisional or functional structure. A frequent use is for change projects, such as new product or service innovation. Team members typically still report to their functional departments, but they also report to the team, one member of whom may be the leader.

Centralization

decision authority is located near the top of the organization

Decentralization

decision authority is pushed downward to lower organization levels.

Organizational Change

defined as the adoption of a new idea or behavior by an organization.* Sometimes change and innovation are spurred by forces outside the organization, such as when a powerful customer demands annual price cuts, when a key supplier goes out of business, or when new government regulations go into effect. Other times, managers within the company see a need for product or service innovations, for creating greater efficiencies in operations, or for other alterations to keep the organization profitable. Two concepts that address the need for change in today's environment are disruptive innovation and the ambidextrous approach.

Divisional Structure

departments are grouped together based on similar organizational outputs. With a divisional structure, also called an M-form(multidivisional) or a decentralized form, separate divisions can be organized with responsibility for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers.* also sometimes called a product structure, program structure, or self-contained unit structure. Each of these terms means essentially the same thing: Diverse departments are brought together to produce a single organizational output, whether it is a product, a program, or service to a single customer. **Advantages:** Flexible and responsive to changes Foster concern for customer need Better coordination across functional departments **Disadvantages:** Poor coordination across division Duplication of resources Lack of technical specialization, expertise, and training

The Big Five Personality Factors

describe an individual's extroversion, agreeableness, conscientiousness, emotional stability, and openness to experience: - Extroversion. The degree to which a person is outgoing, sociable, assertive, and comfortable with interpersonal relationships - Agreeableness. The degree to which a person is able to get along with others by being good-natured, likable, cooperative, forgiving, understanding, and trusting - Conscientiousness. The degree to which a person is focused on a few goals, thus behaving in ways that are responsible, dependable, persistent, and achievement oriented. - Emotional stability. The degree to which a person is calm, enthusiastic, and self-confident, rather than tense, depressed, moody, or insecure. - Openness to experience. The degree to which a person has a broad range of interests and is imaginative, creative, artistically sensitive, and willing to consider new ideas.

Bottom-up Approach

encouraging the flow of ideas from lower levels and making sure they get heard and acted upon by top executives. When RJMetrics faced a period of rapid customer growth, managers and employees alike felt that innovation was taking a back seat due to the pressure of just keeping pace with serving existing customer needs. To encourage these ideas, managers decided to set aside a 24-hour period each quarter for everyone to work on experimental projects, essentially shutting down the company for two days. Participation in the quarterly "hackathons" is voluntary, but most people like having the time to think creatively. At the end of the period, each team makes a five-minute presentation and everyone votes for the winning ideas

Perceptual Disortions

errors in perceptual judgment that arise from inaccuracies in any part of the perception process.

Cash Budget

estimates receipts and expenditures of money on a daily or weekly basis to ensure that an organization has sufficient cash to meet its obligations. - shows the level of funds flowing through the organization and the nature of cash disbursements. If it shows that the firm has more cash than necessary to meet short-term needs, the company can arrange to invest the excess to earn interest income

Open Innovation

extending the search for and commercialization of new ideas beyond the boundaries of the organization and even beyond the boundaries of the industry, sharing knowledge and resources with other organizations and individuals outside the firm. For example, game maker Rovio extended the commercialization of the Angry Birds brand into books, movies, and toys by letting outsiders license the popular gaming app.

Self-confidence

general assurance in one's own ideas, judgment, and capabilities. Personality traits, emotions, and characteristics such as self-confidence and self-efficacy influence how people behave, including how they handle work situations and relate to others.

Permanent Teams

groups of employees who are organized in a way similar to a formal department. Each team brings together employees from all functional areas focused on a specific task or project, such as parts supply and logistics for an automobile plant. Emphasis is on horizontal communication and information sharing because representatives from all functions are coordinating their work and skills to complete a specific organizational task. Authority is pushed down to lower levels, and frontline employees are often given the freedom to make decisions and take action on their own. Team members may share or rotate team leadership.

Flat Structure

has a wide span, is horizontally dispersed, and has fewer hierarchical levels.

Tall Structure

has an overall narrow span and more hierarchical levels

Delegation

he process that managers use to transfer authority and responsibility to positions below them in the hierarchy. Most organizations today encourage managers to delegate authority to the lowest possible level to provide maximum flexibility to meet customer needs and adapt to shifts in the environment. moving decision making to lower-level managers and employees can be highly motivating and improve speed, flexibility, and creativity.

Staff Departments

include all those that provide specialized skills in support of line departments. have an advisory relationship with line departments and typically include marketing, labor relations, research, accounting, and HR.

New-venture Fund

provides resources from which individuals and groups can draw to develop new ideas, products, or businesses. At Pitney Bowes, for example, the New Business Opportunity (NBO) program provides funding for teams to explore potentially lucrative but unproven ideas. The NBO program is intended to generate a pipeline of new businesses for the mail and document management services company.

Hierarchical control

involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms.

Attributions

judgments about what caused a person's behavior—something about the person or something about the situation. People make attributions as an attempt to understand why others behave as they do. - internal that characteristics of the person led to the behavior. ("Sophia missed the deadline because she's careless and lazy.") - external says that something about the situation caused the person's behavior. ("Sophia missed the deadline because she couldn't get the information she needed in a timely manner.") influence how a manager will handle a situation.

Revenue Budget

lists forecasted and actual revenues of the organization. In general, revenues below the budgeted amount signal a need to investigate the problem to see whether the organization can improve revenues. In contrast, revenues above budget would require determining whether the organization can obtain the necessary resources to meet the higher-than-expected demand for its products or services. Managers then formulate action plans to correct the budget variance.

Unfreezing

makes people throughout the organization aware of problems and the need for change. This stage creates the motivation for people to change their attitudes and behaviors. -may begin when managers present information that shows discrepancies between desired behaviors or performance and the current state of affairs. In addition, managers need to establish a sense of urgency to unfreeze people and create an openness and willingness to change. This stage is often associated with diagnosis, which uses an outside expert called a change agent

Emotional Intelligence

managers who are in touch with their own feeling and the feelings of others can enhance employee and organizational performance. - includes four basic components. - Self-awareness: being aware of what you are feeling. - Self-management: the ability to control disruptive or harmful emotions and balance one's moods so that worry, anxiety, fear, and anger do not cloud thinking and get in the way of what needs to be done. - Social awareness: the ability to understand others and practice empathy. - Relationship management: the ability to connect to others, build positive relationships, respond to the emotions of others, and influence others.

Ambidextrous Approach

means incorporating structures and processes that are appropriate for both the creative impulse and for the systematic implementation of innovations. For example, a loose, flexible structure and greater employee freedom are excellent for the creation and initiation of ideas; however, these same conditions often make it difficult to implement a change because employees are less likely to comply. managers encourage flexibility and freedom to innovate and propose new ideas with creative departments and other mechanisms that we will discuss in this chapter, but they use a more rigid, centralized, and standardized approach for implementing innovations.

Staff Authority

narrower and includes the right to advise, recommend, and counsel in the staff specialists' area of expertise. It is a communication relationship; staff specialists advise managers in technical areas. For example, the finance department of a manufacturing firm would have this to coordinate with line departments about which accounting forms to use to facilitate equipment purchases and standardize payroll services.

Refreezing

occurs when individuals acquire new attitudes or values and are rewarded for them by the organization. The impact of new behaviors is evaluated and reinforced. The change agent supplies new data that show positive changes in performance. Managers may provide updated data to employees that demonstrate positive changes in individual and organizational performance. Top executives celebrate successes and reward positive behavioral changes. At this stage, changes are institutionalized in the organizational culture, so that employees begin to view the changes as a normal, integral part of how the organization operates. Employees may also participate in refresher courses to maintain and reinforce the new behaviors.

Changing

occurs when individuals experiment with new behavior and learn new skills to be used in the workplace. This process is sometimes known as intervention, during which the change agent implements a specific plan for training managers and employees. This stage might involve a number of specific steps. For example, managers put together a coalition of people with the will and power to guide change, create a vision for change that everyone can believe in, and widely communicate the vision and plans for change throughout the company. In addition, successful change involves using emotion as well as logic to persuade people and empowering employees to act on the plan and accomplish the desired changes.

Halo Effect

occurs when the perceiver develops an overall impression of a person or situation based on one characteristic, either favorable or unfavorable. In other words, a halo blinds the perceiver to other characteristics that should be used in generating a more complete assessment. - can play a significant role in performance appraisal. For example, a person with an outstanding attendance record may be assessed as responsible, industrious, and highly productive; another person with less-than-average attendance may be assessed as a poor performer. Either assessment may be true, but it is the manager's job to be sure that the assessment is based on complete information about all job-related characteristics, not just the employee's preference for good attendance

Type B Behavior

pattern exhibit fewer of these behaviors. They consequently experience less conflict with other people and a more balanced, relaxed lifestyle. Type A people tend to experience more stress-related illness than Type B people.

Type A Behavior

pattern includes extreme competitiveness, impatience, aggressiveness, and devotion to work. For example, David Sacks, founder of Yammer and current CEO of Zenefits, says he is "in a perpetual state of frustration over the product. I want it to be perfect and it's not." He adds, "I think about work constantly, I wish I had an On/Off switch."

Role Ambiguity

people are unclear about what task behaviors are expected of them. In a survey by the American Psychological Association (APA), 35 percent of respondents cited unclear job expectations as a cause of their workplace stress.

Self-serving Bias

people give themselves too much credit when they do well and give external forces too much blame when they fail. Laszlo Bock, the senior vice president of people operations at Google, says humility is an important characteristic the company looks for when hiring because highly intelligent, successful people can tend to have this

Accountability

people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.* For organizations to function well, everyone needs to know what they are accountable for and accept the responsibility and authority for performing it.

Line Departments

perform tasks that reflect the organization's primary goal and mission. In a software company, they make and sell the product. In an Internet-based company, they would be those that develop and manage online offerings and sales

Culture Change

pertains to the organization as a whole, such as when the Internal Revenue Service (IRS) shifted its basic mind-set from an organization focused on collection and compliance to one dedicated to informing, educating, and serving customers (i.e., taxpayers).* Large-scale culture change is not easy. Indeed, managers routinely report that changing people and culture is their most difficult job.

Relation Coordination

refers to "frequent, timely, problem-solving communication carried out through [employee] relationships of shared goals, shared knowledge, and mutual respect."* isn't a structural device or mechanism such as a project manager, but rather is part of the very fabric and culture of the organization. In an organization with a high level of this, people share information freely across departmental boundaries, and people interact on a continuous basis to share knowledge and solve problems. Coordination is carried out through a web of ongoing positive relationships rather than because of formal coordination roles or mechanisms

Organizational Commitment

refers to an employee's loyalty to and engagement with the organization. An employee with a high degree of this is likely to say we when talking about the company. Such a person likes being a part of the organization and tries to contribute to its success. Sadly, the most recent Gallup workforce survey found that 68.5 percent of employees in the United States were disengaged in 2014, with the highest level of disengagement among younger employees. Trust is an important component

Locus of Control

refers to how people perceive the cause of life events—whether they place the primary responsibility within themselves or on outside forces. Some people believe that their own actions strongly influence what happens to them. They feel in control of their own fate. These individuals have a high internal locus of control. Other people believe that events in their lives occur because of chance, luck, or outside people and events. They feel more like pawns of their fate. These individuals have a high externallocus of control.

Disruptive Innovation

refers to innovations in products or services that typically start small and end up completely replacing an existing product or service technology for producers and consumers. Companies that initiate typically win big; companies affected by a disruptive innovation may be put out of business. For example, when Netflix began, few people (including Blockbuster managers) saw it as a threat to Blockbuster (the giant firm renting videos and DVDs) because most of Blockbuster's customers didn't want to order a movie online and wait several days for it to arrive through the mail. However, as technology for streaming evolved, Netflix was able to attract more and more of Blockbuster's customers by offering a wide selection of on-demand content conveniently and at low cost

Creativity

refers to the generation of novel ideas that might meet perceived needs or respond to opportunities for the organization. People noted for their creativity include Edwin Land, who invented the Polaroid camera, and Swiss engineer George de Mestral, who created Velcro after noticing the tiny hooks on some burrs caught on his wool socks. These people saw unique and creative opportunities in familiar situations. people are known for their originality, open-mindedness, curiosity, focused approach to problem solving, persistence, relaxed and playful attitude, and receptiveness to new ideas.* can also be designed into organizations. Most companies want more creative employees and often seek to hire creative individuals. However, the individual is only part of the story, and each of us has some potential for it. Managers are responsible for creating a work environment that allows creativity to flourish.*

Coordination

refers to the managerial task of adjusting and synchronizing the diverse activities among different individuals and departments

Re-engineering

refers to the radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed. Because it is on horizontal workflows rather than functions, re-engineering generally leads to a shift away from a strong vertical structure to one emphasizing stronger horizontal coordination. The vertical hierarchy is flattened, with perhaps only a few senior executives in traditional support functions such as finance and HR.

Organizational Control

refers to the systematic process of regulating organizational activities to make them consistent with the expectations established in plans, targets, and standards of performance. In a classic article on the control function, Douglas S. Sherwin summarizes the concept as follows: "The essence of control is action which adjusts operations to predetermined standards, and its basis is information in the hands of managers."

Job Satisfaction

reflects the degree to which a person finds fulfillment in his or her job. In general, people experience this when their work matches their needs and interests, when working conditions and rewards (such as pay) are satisfactory, when they like their coworkers, and when they have positive relationships with supervisors.

Decentralized Control

relies on cultural values, traditions, shared beliefs, and trust to foster compliance with organizational goals. Managers operate on the assumption that employees are trustworthy and willing to perform effectively without extensive rules and close supervision.

Threat Stress

stress that compromises your job performance, your relationships, and even your health. Another interesting finding is that too much stress inhibits learning and flexibility.*

Self-management

the ability to engage in self-regulating thoughts and behavior to accomplish all your tasks and handle difficult or challenging situations. Yet all of us have patterns of habit and behavior that may make it hard to manage ourselves toward more efficient behavior Three basic principles define how to manage your many big and small commitments effectively so that you can get them accomplished: - Clarity of mind. The first principle is that, if you're carrying too much around in your head, your mind can't be clear. If your mind isn't clear, you can't focus. If you can't focus, you can't get anything done. Thus, anything you consider unfinished needs to be placed in some kind of trusted system outside your head. - Clarity of objectives. Next, you have to be clear about exactly what you need to do and decide the steps to take toward accomplishing it. - An organized system. Finally, once you've decided the actions that you need to take, you need to keep reminders in a well-organized system.

Departmentalization

the basis for grouping positions into departments and departments into the total organization. - Managers make choices about how to use the chain of command to group people together to perform their work. - Five approaches to structural design reflect different uses of the chain of command: The functional, divisional, and matrix are traditional approaches that rely on the chain of command to define departmental groupings and reporting relationships along the hierarchy. Two innovative approaches that have emerged to meet changing organizational needs in a turbulent global environment are the use of teams and virtual networks.

Authoritarianism

the belief that power and status differences should exist within the organization. Individuals high in this tend to be concerned with power and toughness, obey recognized authority above them, stick to conventional values, critically judge others, and oppose the use of subjective feelings. The degree to which managers possess this will influence how they wield and share power. The degree to which employees possess this will influence how they react to their managers

Perception

the cognitive process that people use to make sense out of the environment by selecting, organizing, and interpreting information from the environment. Because of individual differences in personality, values, interests, and so forth, people often "see" the same thing in different ways.

Responsibility

the duty to perform the task or activity as assigned. Typically, managers are assigned authority commensurate with their responsibilities. When managers have responsibility for task outcomes but little authority, the job is possible but difficult. In this situation, managers rely on persuasion and luck. When managers have authority that exceeds responsibility, they may become tyrants and use authority to achieve frivolous outcomes.

Team-based Structure

the entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals. At Zappos, for example, the traditional hierarchy has been replaced with a series of overlapping, self-directed teams, which Zappos calls circles. At Zappos, employees don't have traditional bosses or job titles. They are assigned to several roles and may be a part of several different circles at any one time. **Advantages:** Improved coordination and cooperation Quick response to customer request and environmental changes Morale boost (employees are more enthusiastic) **Disadvantages:** Dual loyalties and conflict. Time devoted to meetings Too much decentralization

Virtual Network Approach

the firm subcontracts most of its major functions to separate companies and coordinates their activities from a small organization at headquarters **Advantages:** Flexibility and competitiveness on a global scale Draw on resources and expertise worldwide Reduced overhead **Disadvantages:** Lack of hands-on control. Higher uncertainty and greater demands on managers Customer service and loyalty can suffer if outsourcing partners fail to perform as expected. Weaker employee loyalty and turnover tends to be high

Authority

the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. distinguished by: it is vested in organizational positions, not people. Managers have authority because of the positions they hold, and other people in the same positions would have the same authority. flows down the vertical hierarchy. Positions at the top of the hierarchy are vested with more formal authority than are positions at the bottom. accepted by subordinates. Although it flows from the top down, subordinates comply because they believe managers have a legitimate right to issue orders. The acceptance theory argues that a manager has this only if subordinates choose to accept his or her commands. If subordinates refuse to obey because the order is outside their zone of acceptance, it disappears.

Span of Management (span of control)

the number of employees reporting to a supervisor. -this characteristic of structure determines how closely a supervisor can monitor subordinates. Traditional views of organization design recommended about 7 to 10 subordinates per manager. However, many lean organizations today have them numbering 30, 40, and even higher. At PepsiCo, Inc.'s Gamesa cookie operation in Mexico, for instance, employees are trained to keep production running smoothly and are rewarded for quality, teamwork, and productivity. Teams are so productive and efficient that Gamesa factories operate with around 56 subordinates per manager.

Emotional Contagion

the tendency of people to absorb and express the emotions, moods, and attitudes of those around them. If we're around someone who is happy and enthusiastic, the positive emotions rub off on us. On the other hand, someone who is sad and angry can bring us down. Managers who express positive emotions such as happiness, enthusiasm, and appreciation trigger positive emotions and behavior in employees

Stereotyping

the tendency to assign an individual to a group or broad category (e.g., female, black, elderly; or male, white, disabled) and then to attribute widely held generalizations about the group to the individual.

Organizational Chart

the visual representation of an organization's structure includes the characteristics of vertical structure