MGMT Exam 3 TAMU Wesner

Recruiting employees

Once an organization has an idea of its future human resource needs, the next phase is usually recruiting new employees. Recruiting : is the process of attracting qualified persons to apply for jobs that are open. Where do recruits come from? 1. Internal Recruiting :Considering current employees as applicants for higher-level jobs in the organization - Promotion from within can help build morale and keep high-quality employees from leaving the firm. - In unionized firms, the procedures for notifying employees of internal job change opportunities are usually spelled out in the union contract. - For higher-level positions, a skills inventory system may be used to identify internal candidates, or managers may be asked to recommend people who should be considered. - Most businesses today routinely post job openings on their internal communication network, or intranet. - One disadvantage of internal recruiting is its ripple effect. When an employee moves to a different job, someone else must be found to take his or her old job. In one organization, 454 job movements were necessary as a result of filling 195 initial openings! 2. External Recruiting : Getting/attracting people from outside the organization to apply for jobs - External recruiting methods include advertising, campus interviews, employment agencies or executive search firms, union hiring halls, referrals by present employees, and hiring "walk-ins" or "gate-hires" (Gate Hires are people who show up without being solicited) - Increasingly, firms are using the Internet to post job openings and to solicit applicants. Of course, a manager must select the most appropriate methods—using the state employment service to find maintenance workers but not a nuclear physicist, for example. - Private employment agencies can be a good source of clerical and technical employees, and executive search firms specialize in locating top-management talent. - Newspaper ads are often used because they reach a wide audience and thus allow minorities equal opportunity to find out about and apply for job openings. The organization must also keep in mind that recruiting decisions often go both ways—the organization is recruiting an employee, but the prospective employee is also selecting a job. - For instance, when unemployment is low (meaning there are fewer people seeking work), businesses may have to work harder to attract new employees. During the late 1990s, when unemployment dropped to a 25-year low, some recruiters at firms such as Sprint, PeopleSoft, and Cognex stressed how much "fun" it was to work for them, reinforcing this message with ice cream socials, karaoke contests, softball leagues, and free movie nights. - But when unemployment is higher (meaning there are more people looking for work), organizations may find it easier to recruit prospective employees without having to resort to expensive hiring incentives. For example, during the economic recession that began in 2008, many firms reduced jobs and/or cut back on labor hours. As a result, firms that needed to hire new workers found it much easier to do so. Avon, for instance, used this period to substantially increase the size and effectiveness of its sales force by hiring talented people who would not otherwise have had much interest in direct sales. Nevertheless, even if a firm can take its pick of the best potential employees, it still should put its best foot forward, treat all applicants with dignity, and strive for a good person-job fit. - Hiring the wrong employee can cost the company about half of a low-skilled worker's annual wages or three to five times upper-level employees' annual wages. Therefore, hiring the "wrong" employee for $40,000 per year could cost the company at least $20,000. These costs stem from training, counseling, low productivity, termination, and recruiting and hiring a replacement. One generally successful method for facilitating a good person-job fit is realistic job preview (RJP) : Provides the applicant with a real picture of what performing the job that the organization is trying to fill would be like - For example, it would not make sense for a firm to tell an applicant that the job is exciting and challenging when in fact it is routine and straightforward, yet some managers do this to hire the best people. The likely outcome will be a dissatisfied employee who will quickly be looking for a better job. If the company is more realistic about a job, though, the person hired will be more likely to remain in the job for a longer period of time.

Social Change and HRM

- Temporary workers many organizations are using more and more temporary workers today. This trend, discussed more fully later, allows them to add workers as neces-sary without the risk that they may have to eliminate their jobs in the future. - Dual-Career Families dual-career families are much more common today than just a few years ago. Organizations are finding that they must make accommodations for employees who are dual-career partners. These accommodations may include delaying transfers, offering employment to the spouses of current employees to retain them, and providing more flexible work schedules and benefits packages. - Employment-at-will A traditional view of the workplace that says organizations can fire their employees for whatever reason they want; recent court judgments are limiting employment-at-will Increasingly, however, people are arguing that organizations : 1. SHOULD be able to fire ONLY people who are poor performers or who violate rules and 2. conversely, SHOULD NOT be able to fire people who report safety violations to OSHA or refuse to perform unethical activities. Several court cases in recent years have upheld this view and have limited many organizations' ability to terminate employees to those cases where there is clear and just cause or there is an organization-wide cutback. Further, in the wake of massive layoffs during the recession that began in 2008, several ex-workers sued their former employers, citing alleged violations of various severance laws.

The Training Process

1. Assessing training needs -who needs to be trained - what do they need to know - what do they already know 2. Set training objectives - specific and measurable 3A. Plan Training Evaluation (• Did trainees like the training?• Can they meet the training objectives?• Do they perform better on the job?) and 3B. Develop Training Program ( • Content• Methods• Duration• Location• Trainers ) 4. After Develop Training Program - conduct training 5. After Plan Training Evaluation - evaluate training 6. Modify training program based on evaluation

approaches to business process change

1. Develop goals and a strategy for reengineering effort - The first step is setting goals and developing a strategy for the changes. The organization must know in advance what new business processes are supposed to accomplish and how those accomplishments will be achieved. 2. emphasize top management's commitment to the reengineering effort - Next, top managers must begin and direct the reengineering effort. If a CEO simply announces that business process change is to occur but does nothing else, the program is unlikely to be successful. But if the CEO is constantly involved in the process, underscoring its importance and taking the lead, business process change stands a much better chance of success. 3. create a sense of urgency among members of the organization - Most experts also agree that successful business process change is usually accompanied by a sense of urgency. People in the organization must see the clear and present need for the changes being implemented and appreciate their importance. 4. start with a clean slate, in effect, re-create the organization - In addition, most successful reengineering efforts start with a new, clean slate. In other words, rather than assuming that the existing organization is a starting point and then trying to modify it, business process change usually starts by asking questions such as how customers are best served and com-petitors best neutralized. New approaches and systems are then created and imposed in place of existing ones. 5. optimize top down and bottom up perspectives - business process change requires a careful blend of top-down and bottom-up involvement. On the one hand, strong leadership is necessary, but too much involvement by top management can make the changes seem autocratic. Similarly, employee participation is also important, but too little involvement by leaders can undermine the program's importance and create a sense that top managers do not care. Thus care must be taken to carefully balance these two countervailing forces. Our next section explores more fully one related but distinct approach called organization development

Reasons for Delegation

1. To enable the manager to get more work done by utilizing skills/talents of subordinates 3. In some instances, a subordinate may have more expertise in address-ing a particular problem than the manager does. 2. To foster development of subordinates by having them participate in decision making and problem solving, subordinates learn about overall operations and improve their managerial skills.

Chain of Command

A clear and distinct line of authority among the positions in an organization The chain of command actually has two components. The first, called unity of command, suggests that each person within an organization must have a clear reporting relationship to one and only one boss (as we see in Chapter 11, newer models of organization design routinely—and suc-cessfully—violate this premise). The second, called the scalar principle, suggests that there must be a clear and unbroken line of authority that extends from the lowest to the highest position in the organization. The popular saying "The buck stops here" is derived from this idea—someone in the organization must ultimately be responsible for every decision.

Career Planning

A final aspect of maintaining human resources is career planning. Few people work in the same jobs their entire careers. Some people change jobs within one organization, others change organizations, and many do both. When these movements are haphazard and poorly conceived, both the individual and the organization suffer. Thus planning career progressions in advance is in everyone's best interests. Of course, planning a 30-year career for a newcomer just joining the organization is difficult. But planning can help map out what areas one is most interested in and help that person see what opportunities are available within the organization.

Contingent and Temporary Workers

A final contemporary HR issue of note involves the use of contingent or temporary workers. Indeed, recent years have seen an explosion in the use of such workers by organizations.

The reward system

A firm's reward system is the means by which it encourages and discourages certain behaviors by employees. Major components of the reward system include salaries, bonuses, and perquisites. Using the reward system to promote innovation is a fairly mechanical but nevertheless effective management technique. The idea is to provide financial and nonfinancial rewards to people and groups who develop innovative ideas. Once the members of an organization understand that they will be rewarded for such activities, they are more likely to work creatively. It is important for organizations to reward creative behavior, but it is vital to avoid punishing creativity when it does not result in highly successful innovations. It is the nature of the creative and innovative processes that many new product ideas will simply not work out in the marketplace. Each process is fraught with too many uncertainties to generate positive results every time. A person may have prepared herself to be creative, but an insight may not be forthcoming. Or managers may try to apply a developed innovation, only to recognize that it does not work. Indeed, some organizations operate according to the assumption that, if all their innovative efforts succeed, then they are probably not taking enough risks in research and development. Managers need to be very careful in responding to innovative failure. If innovative failure is due to incompetence, systematic errors, or managerial sloppiness, then a firm should respond appropriately, for example, by withholding raises or reducing promotion opportunities. People who act in good faith to develop an innovation that simply does not work out, however, should not be punished for failure. If they are, they will probably not be creative in the future. A punitive reward system will discourage people from taking risks and therefore reduce the organization's ability to obtain competitive advantages.

different perceptions

A manager may make a decision and recommend a plan for change on the basis of her own assessment of a situation. Others in the organization may resist the change because they do not agree with the manager's assessment or they perceive the situation differently

The legal environment of HRM

A number of laws regulate various aspects of employee-employer relations, especially in the areas of equal employment opportunity, compensation and benefits, labor relations, and occupational safety and health.

Job analysis

A systematized procedure for collecting and recording information about jobs within an organization A job analysis is made up of two parts: 1. Job description lists the duties of a job, the job's working conditions, and the tools, materials, and equipment used to perform it. 2. Job specification lists the skills, abilities, and other credentials needed to do the job. Job analysis information is used in many human resource activities. For instance, knowing about job content and job requirements is necessary to develop appropriate selection methods and job-relevant performance appraisal systems and to set equitable compensation rates.

changing people, attitudes, and behaviors

A third area of organization change has to do with human resources. - abilities and skills : an organization might decide to change the skill level of its workforce. This change might be prompted by changes in technology or by a general desire to upgrade the quality of the workforce. Thus training programs and new selection criteria might be needed. - performance : the organization might also decide to improve its workers' performance level. In this case, a new incentive system or performance-based training might be in order. Due to intense competition for talent from competitors, Microsoft has increased its employees' compensation by shifting a portion of their stock awards to their base salaries, as well as boosting funding for bonuses and stock awards to reward its top performers. Volvo Construction Equipment laid off roughly 25 percent of its workforce globally, leaving the company with employees who are focused and understand the urgency necessary to facilitate change. - perceptions and expectations : Perceptions and expectations are also a common focus of organization change. Workers in an organization might believe that their wages and benefits are not as high as they should be. Management, however, might have evidence that shows the firm is paying a competitive wage and providing a superior benefit package. The change, then, would be centered on informing and educating the workforce about the comparative value of its compensation package. A common way to do this is to publish a statement that places an actual dollar value on each benefit provided and compares that amount to what other local organizations are providing their workers. - attitudes and values : Change might also be directed at employee attitudes and values. In many organizations today, managers are trying to eliminate adversarial relationships with workers and to adopt a more collaborative relationship. In many ways, changing attitudes and values is perhaps the hardest thing to do.

Promoting Innovation in Organizations

A wide variety of ideas for promoting innovation in organizations have been developed over the years. Three specific ways for promoting innovation are through the reward system, through the organizational culture, and through a process called intrapreneurship.

innovation maturity

After a period of growing demand, an innovative product or service often enters a period of maturity. Innovation maturity is the stage at which most organizations in an industry have access to an innovation and are applying it in approximately the same way. The technological application of an innovation during this stage of the innovation process can be very sophisticated. Because most firms have access to the innovation, however, either as a result of their developing the innovation on their own or copying the innovation of others, it does not provide competitive advantage to any one of them. The time that elapses between innovation development and innovation maturity varies notably depending on the particular product or service. Whenever an innovation involves the use of complex skills (such as a complicated manufacturing process or highly sophisticated teamwork), moving from the growth phase to the maturity phase will take longer. In addition, if the skills needed to implement these innovations are rare and difficult to imitate, then strategic imitation may be delayed, and the organization may enjoy a period of sustained competitive advantage.

Forecasting Human Resource Demand and Supply

After managers fully understand the jobs to be performed within the organization, they can start planning for the organization's future human resource needs. 1. Assess Trends In : External labor markets, current employees, future organizational plans, and general economic trends The manager starts by assessing trends in past human resources usage, future organizational plans, and general economic trends -A good sales forecast is often the foundation, especially for smaller organizations. 2. Predict Demand Historical ratios can then be used to predict demand for such employees as operating employees and sales representatives. Of course, large organizations use much more complicated models to predict their future human resource needs. -About 10 years ago Walmart went through an exhaustive planning process that projected that the firm would need to hire 1 million people over the next decade. Of this projected total, 800,000 would be new positions created as the firm grew, and the other 200,000 would replace current workers who were expected to leave for various reasons. As time passed, of course, Walmart adjusted these figures both up and down. But as the decade drew to its close, Walmart did indeed employ about 800,000 more people than it did when the plan was completed. 3. Forecast Internal and External Supply Forecasting the internal supply - the number and types of employees who will be in the firm at some future date Forecasting the external supply : the number and types of people who will be available for hiring in the labor market at large The simplest approach merely adjusts present staffing levels for anticipated turnover and promotions. Again, though, large organizations use extremely sophisticated models to make these forecasts. -Union Oil Company of California, for example, has a complex forecasting system for keeping track of the present and future distributions of professionals and managers. The Union Oil system can spot areas where there will eventually be too many qualified professionals competing for too few promotions or, conversely, too few good people available to fill important positions. At higher levels of the organization, managers plan for specific people and positions. The technique most commonly used is the replacement chart : Which lists each important managerial position, who occupies it, how long he or she will probably stay in it before moving on, and who (by name) is now qualified or soon will be qualified to move into the position. This technique allows ample time to plan developmental experiences for persons identified as potential successors to critical managerial jobs. Xerox CEO Anne Mulcahy essentially identified her eventual successor when she appointed Ursula Burns as president. And sure enough, when Mulcahy decided to retire, Burns was quickly appointed as the new CEO. This well-managed process made the transition easy and efficient. Similarly, when Morgan Stanley's CEO John Mack announced he would like to step back from the CEO role, the company's board created a succession plan, announcing that Co-President James Gorman would take over as CEO when Mack retired. To facilitate both planning and identifying persons for current transfer or promotion, some organizations also have an employee information system, or skills inventory : Such systems are usually computerized and contain information on each employee's education, skills, work experience, and career aspirations. Such a system can quickly locate all the employees in the organization who are qualified to fill a position requiring, for instance, a degree in chemical engineering, three years of experience in an oil refinery, and fluency in Spanish. Enterprise resource planning (ERP) systems, as described in Chapter 12, generally include capabilities for measuring and managing the internal supply of labor in ways that best fit the needs of the organization. Forecasting the external supply of labor is a different problem altogether. How does a manager, for example, predict how many electrical engineers will be seeking work in Georgia three years from now? To get an idea of the future availability of labor, planners must rely on information from such outside sources as state employment commissions, government reports, and figures supplied by colleges on the number of students in major fields. 4. Compare future demand and internal supply 5. Plan for dealing with predicted shortfalls or overstaffing - After comparing future demand and internal supply, managers can make plans to manage predicted shortfalls or overstaffing. 1. If a shortfall is predicted, new employees can be hired, present employees can be retrained and transferred into the understaffed area, individuals approaching retirement can be convinced to stay on, or labor-saving or productivity-enhancing systems can be installed. If the organization needs to hire, the external labor supply forecast helps managers plan how to recruit, based on whether the type of person needed is readily available or scarce in the labor market. As we noted earlier, the trend in temporary workers also helps managers in staffing by affording them extra flexibility. 2. If overstaffing is expected to be a problem, the main options are transferring the extra employees, choosing not to replace individuals who quit, encouraging early retirement, and laying people off.

Maintaining Human Resources

After organizations have attracted and developed an effective workforce, they must also make every effort to maintain that workforce. To do so requires effective compensation and benefits as well as career planning.

Individual Wage Decisions

After wage-level and wage structure decisions are made, the individual wage decision must be addressed. This decision concerns how much to pay each employee in a particular job. Although the easiest decision is to pay a single rate for each job, more typically a range of pay rates is associated with each job. For example, the hourly pay range for an individual job might be $10.00 to $15.40 per hour, with different employees earning different rates within the range. A system is then needed for setting individual rates. This may be done on : 1. the basis of seniority (enter the job at $10.00, for example, and increase 50 cents per hour every six months on the job) 2. initial qualifications (inexperienced people start at $10.00; more experienced people start at a higher rate), 3. merit (raises above the entering rate are given for good performance). 4. Combinations of these bases may also be used. The Internet is also playing a key role in compensation patterns today because both job seekers and current employees can more easily get a sense of what their true market value is. If they can document the claim that their value is higher than what their current employer now pays or is offering, they are in a position to demand a higher salary. - Consider the case of one compensation executive who met with a subordinate to discuss her raise. He was surprised when she produced data from five different websites backing up her claim for a bigger raise than he had intended to offer

Interviews

Although a popular selection device, interviews are sometimes poor predictors of job success. 1. biases inherent in the way people perceive and judge others at a first meeting affect subsequent evaluations by the interviewer. 2. Interview validity can be improved by training interviewers to be aware of potential biases and by increasing the structure of the interview. In a structured interview, questions are written in advance, and all interviewers follow the same question list with each candidate they interview. This procedure introduces consistency into the interview procedure and allows the organization to validate the content of the questions to be asked. For interviewing managerial or professional candidates, a somewhat less structured approach can be used. Question areas and information-gathering objectives are still planned in advance, but the specific questions vary with the candidates' backgrounds. Trammell Crow Real Estate Investors uses a novel approach in hiring managers. Each applicant is interviewed not only by two or three other managers but also by a secretary or young leasing agent. This provides information about how the prospective manager relates to non-managers

Force Field Analysis

Although force-field analysis may sound like something out of a Star Trek movie, it can help overcome resistance to change. In almost any change situation, forces are acting for and against the change. To facilitate the change, managers start by listing each set of forces and then trying to tip the balance so that the forces facilitating the change out-weigh those hindering the change. It is especially important to try to remove or at least minimize some of the forces acting against the change. Suppose, for example, that General Motors is considering a plant closing as part of a change. As shown in Figure 12.2, three factors are reinforcing the change: GM needs to cut costs, it has excess capacity, and the plant has outmoded production facilities. At the same time, there is resistance from the UAW, concern for workers being put out of their jobs, and a feeling that the plant might be needed again in the future. GM might start by convincing the UAW that the closing is necessary by presenting profit and loss figures. It could then offer relocation and retraining to displaced workers. And it might shut down the plant and put it in "mothballs" so that it can be reno-vated later. The three major factors hindering the change are thus eliminated or reduced in importance.

application launch

Application launch is the stage at which an organization introduces new products or services to the marketplace. The important question is not "Does the innova-tion work?" but "Will customers want to buy the innovative product or service?" History is full of creative ideas that did not generate enough interest among customers to be successful. Some notable innovation failures include a portable seat warmer from Sony, "New" Coke, Polaroid's SX-70 instant camera (which cost $3 billion to develop, but never sold more than 100,000 units in a year), and the flip video recorder. Thus, despite development and application, new products and services can still fail at the launch phase.

resistance to change

As we discuss earlier, many organizations tend to resist change. Innovation means giving up old products and old ways of doing things in favor of new products and new ways of doing things. These kinds of changes can be personally difficult for managers and other members of an organization. Thus resistance to change can slow the innovation process.

New Challenges in the Changing Workplace

As we have seen throughout this chapter, human resource managers face several ongoing challenges in their efforts to keep their organizations staffed with effective workforces. To complicate matters, new challenges arise as the economic and social environments of business change.

Assessment Canters

Assessment centers are a popular method used to select managers and are particularly good for selecting current employees for promotion. The assessment center is a content-valid simulation of major parts of the managerial job. A typical center lasts two to three days, with groups of 6 to 12 persons participating in a variety of managerial exercises. Centers may also include interviews, public speaking, and standardized ability tests. Candidates are assessed by several trained observers, usually managers several levels above the job for which the candidates are being considered. Assessment centers are quite valid if properly designed and are fair to members of minority groups and women. For some firms, the assessment center is a permanent facility created for these activities. For other firms, the assessment activities are performed in a multipurpose location such as a conference room. AT&T pioneered the assessment center concept. For years the firm has used assessment centers to make virtually all of its selection decisions for management positions.

Chapter 10

Basic elements of organizing

failure to recognize opportunities

Because firms cannot pursue all innovations, they need to develop the ability to carefully evaluate innovations and to select the ones that hold the greatest potential. To obtain a competitive advantage, an organization usually must make investment decisions before the innovation process reaches the mature stage. The earlier the investment, however, the greater the risk. If organizations are not skilled at recognizing and evaluating opportunities, they may be overly cautious and fail to invest in innovations that later turn out to be successful for other firms.

structural coordination techniques

Because of the obvious coordination require-ments that characterize most organizations, many techniques for achieving coordination have been developed. Some of the most useful devices for maintaining coordination among interdependent units are the managerial hierarchy, rules and procedures, liaison roles, task forces, and integrating departments.

Determining benefits

Benefits or indirect compensation : Things of value other than compensation that an organization provides to its workers The average company spends an amount equal to more than one-third of its cash payroll on employee benefits. Thus an average employee who is paid, say, $60,000 per year averages a bit over $20,000 more per year in benefits. Benefits come in several forms. 1. Pay for time not worked includes sick leave, vacation, holidays, and unemployment compensation. 2. Insurance benefits often include life and health insurance for employees and their dependents. 3. Workers' compensation is a legally required insurance benefit that provides medical care and disability income for employees injured on the job. 4. Social Security is a government pension plan to which both employers and employees contribute. 5. Many employers also provide a private pension plan to which they and their employees contribute. 6.Employee service benefits include such extras as tuition reimbursement and recreational opportunities. 7. Some organizations have instituted "cafeteria benefit plans," whereby basic coverage is provided for all employees but employees are then allowed to choose which additional benefits they want (up to a cost limit based on salary). An employee with five children might choose enhanced medical and dental coverage for dependents, a single employee might prefer more vacation time, and an older employee might elect increased pension benefits. 8. Flexible systems are expected to encourage people to stay in the organization and even help the company attract new employees. 9. In recent years, companies have also started offering more innovative benefits as a way of accommodating different needs. On-site childcare, mortgage assistance, and paid leave programs are interesting new benefits that some firms offer. A good benefits plan may encourage people to join and stay with an organization, but it seldom stimulates high performance, because benefits are tied more to membership in the organization than to performance. To manage their benefits programs effectively: - companies should shop carefully, avoid redundant coverage, and provide only those benefits that employees want. - Benefits programs should also be explained to employees in clear and straightforward language so that they can use the benefits appropriately and appreciate what the company is providing. Finally, as a result of economic pressures, some firms have started to reduce employee benefits in the last few years. In 2002, for example, 17 percent of employees in the United States with employer healthcare coverage saw their benefits cut; the 2009 recession led to further reductions. Some employers have also reduced their contributions to employee retirement plans, cut the amount of annual leave they offer to employees, or both. For instance, in 2009 16 major companies announced that they would reduce or eliminate employer con-tributions to employee retirement plans. Several others followed suit in 2010. Among these were Wells Fargo, Anheuser-Busch, Boise Cascade, Cooper Tire & Rubber, Kimberly-Clark, and Saks. A Prudential survey published in 2013 found that 60 percent of firms surveyed said their companies had eliminated defined benefits plans or closed their defined benefits plan to new employees. On average, companies have cut up to five employee-oriented benefits to reduce spending—401(k) matching, tuition reimbursement, bonuses, and so on. For instance, while Goodyear Tire & Rubber reinstated 401(k) matching for employees, it froze its pension plan to save millions of dollars.

Improving Communication Effectiveness

Considering how many factors can disrupt communication, it is fortunate that managers can resort to several techniques for improving communication effectiveness. As shown in Table 17.2, these techniques include both individual and organizational skills.

Organizing

Deciding how best to group organizational activities and resources - Just as children select different kinds of building blocks, managers can choose a variety of structural possibilities. And just as the children can assemble the blocks in any number of ways, so, too, can managers put the organization together in many different ways. Understanding the nature of these building blocks and the different ways in which they can be configured can have a powerful impact on a firm's competitiveness.

forms of innovation

Each creative idea that an organization develops poses a different challenge for the innovation process. Innovations can be radical or incremental, technical or managerial, and product or process.

Managing Knowledge Workers

Employees traditionally added value to organizations because of what they did or because of their experience. In the "information age," however, many employees add value because of what they know.

Errors in Performance Appraisal

Errors or biases can occur in any kind of rating or ranking system. 1. recency error—the tendency to base judgments on the subordinate's most recent performance because it is most easily recalled. Often a rating or ranking is intended to evaluate performance over an entire time period, such as six months or a year, so the recency error does introduce error into the judgment. 2. overuse of one part of the scale—being too lenient, being too severe, or giving every-one a rating of "average." 3. Halo error is allowing the assessment of an employee on one dimension to "spread" to ratings of that employee on other dimensions. For instance, if an employee is out-standing on quality of output, a rater might tend to give her or him higher marks than deserved on other dimensions. 4. Errors can also occur because of race, sex, or age discrimination, intentionally or unintentionally. The best way to offset these errors is to ensure that a valid rating system is developed at the outset and then to train managers in how to use it. One interesting innovation in performance appraisal used in some organizations today is - 360-degree feedback : A performance appraisal system in which managers are evaluated by everyone around them—their boss, their peers, and their subordinates. Such a complete and thorough approach provides people with a far richer array of information about their performance than does a conventional appraisal given by just the boss. Of course, such a system also takes considerable time and must be handled so as not to breed fear and mistrust in the workplace

Knowledge Worker Management and Labor Markets

Even though overall demand for labor has slumped in recent years due to the economic downturn, the demand for knowledge workers remains strong. As a result, organizations that need these workers must introduce regular market adjustments (upward) in order to pay them enough to keep them. This is especially critical in areas in which demand is growing, as even entry-level salaries for these employees are high. - Once an employee accepts a job with a firm, the employer faces yet another dilemma. Once hired, workers are more subject to the company's internal labor market, which is not likely to be growing as quickly as the external market for knowledge workers as a whole. - Consequently, the longer an employee remains with a firm, the further behind the market his or her pay falls—unless, of course, it is regularly adjusted (upward). Not surprisingly, strong demand for these workers has inspired some fairly extreme measures for attracting them in the first place. High starting salaries and sign-on bonuses are common. Even with these incentives, HR managers complained that, in the Gulf Coast region, they cannot retain specialists because young engineers soon leave to accept sign-on bonuses with competitors.

inovation decline

Every successful innovation bears the seeds of its own decline. Because an organization does not gain a competitive advantage from an innovation at maturity, it must encourage its creative scientists, engineers, and managers to begin looking for new innovations. This continued search for competitive advantage usually leads new products and services to move from the creative process through innovation maturity, and finally to innovation decline. Innovation decline is the stage during which demand for an innovation decreases and substitute innovations are developed and applied.

Compensation and Benefits

Fair Labor Standards Act : passed in 1938 and amended frequently since then, sets a minimum wage and requires the payment of overtime rates for work in excess of 40 hours per week. Salaried professional, executive, and administrative employees are exempt from the minimum hourly wage and overtime provisions. Equal Pay Act of 1963 : requires that men and women be paid the same amount for doing the same job. Attempts to circum-vent the law by having different job titles and pay rates for men and women who perform the same work are also illegal. Basing an employee's pay on seniority or performance is legal, however, even if it means that a man and woman are paid different amounts for doing the same job. The provision of benefits is also regulated in some ways by state and federal laws. Certain benefits are mandatory—for example, workers' compensation insurance for employees who are injured on the job. Employers who provide a pension plan for their employees are regulated by the Employee Retirement Income Security Act of 1974 (ERISA). The purpose of this act is to help ensure the financial security of pension funds by regulating how they can be invested. Family and Medical Leave Act of 1993 : requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies. In the last few years some large employers, most notably Walmart, have come under fire because they do not provide healthcare for all of their employees. - In response to this, the state of Maryland passed a law, informally called the "Walmart bill," that requires employers with more than 10,000 workers to spend at least 8 percent of their payrolls on healthcare or else pay a comparable amount into a general fund for uninsured workers.

How Employees Form Unions

For employees to form a new local union, several things must occur. First, employees must become interested in having a union. Nonemployees who are professional organizers employed by a national union (such as the Teamsters or United Auto Workers) may generate interest by making speeches and distributing literature outside the workplace. Inside, employees who want a union try to convince other workers of the benefits of a union. The second step is to collect employees' signatures on authorization cards. These cards state that the signer wishes to vote to determine whether the union will represent him or her. To show the National Labor Relations Board (NLRB) that interest is sufficient to justify holding an election, 30 percent of the employees in the potential bargaining unit must sign these cards. Before an election can be held, however, the bargaining unit must be defined. The bargaining unit consists of all employees who will be eligible to vote in the election and to join and be represented by the union if one is formed. The election is supervised by an NLRB representative (or, if both parties agree, the American Arbitration Association—a professional association of arbitrators) and is conducted by secret ballot. If a simple majority of those voting (not of all those eligible to vote) votes for the union, then the union becomes certified as the official representative of the bargaining unit. The new union then organizes itself by officially signing up members and electing officers; it will soon be ready to negotiate the first contract. If workers become disgruntled with their union or if management presents strong evidence that the union is not representing workers appropriately, the NLRB can arrange a decertification election. The results of such an election determine whether the union remains certified. Organizations usually prefer that employees not be unionized because unions limit management's freedom in many areas. Management may thus wage its own campaign to convince employees to vote against the union. "Unfair labor practices" are often committed at this point. - For instance, it is an unfair labor practice for management to promise to give employees a raise (or any other benefit) if the union is defeated. Experts agree that the best way to avoid unionization is to practice good employee relations all the time—not just when threatened by a union election. Providing absolutely fair treatment with clear standards in the areas of pay, promotion, layoffs, and discipline; having a complaint or appeal system for persons who feel unfairly treated; and avoiding any kind of favoritism will help make employees feel that a union is unnecessary. Walmart strives to avoid unionization through these practices.

The effectiveness of OD

Given the diversity of activities encompassed by OD, it is not surprising that managers report mixed results from various OD interventions. Organizations that actively practice some form of OD include American Airlines, Texas Instruments, Procter & Gamble, and BFGoodrich. Goodrich, for example, has trained 60 people in OD processes and techniques. These trained experts have subsequently become internal OD consultants to assist other managers in applying the techniques. Many other managers, in contrast, report that they have tried OD but discarded it. OD will probably remain an important part of management theory and practice. Of course, there are no sure things when dealing with social systems such as organizations, and the effectiveness of many OD techniques is difficult to evaluate. Because all organizations are open systems interacting with their environments, an improvement in an organization after an OD intervention may be attributable to the intervention, but it may also be attributable to changes in economic conditions, luck, or other factors.

Managing Contingent and Temporary Workers

Given the widespread use of contingent and temporary workers, HR managers must understand how to use such employees most effectively. In other words, they need to understand how to manage contingent and temporary workers. One key is careful planning. Even though one of the presumed benefits of using contingent workers is flexibility, it is still important to integrate such workers in a coordinated fashion. Rather than having to call in workers sporadically and with no prior notice, organizations try to bring in specified numbers of workers for well-defined periods of time. The ability to do so comes from careful planning. A second key is understanding contingent workers and acknowledging both their advantages and their disadvantages. In other words, the organization must recognize what it can and cannot achieve from the use of contingent and temporary workers. Expecting too much from such workers, for example, is a mistake that managers should avoid. Third, managers must carefully assess the real cost of using contingent workers. We noted previously, for example, that many firms adopt this course of action to save labor costs. The organization should be able to document precisely its labor-cost savings. How much would it be paying people in wages and benefits if they were on permanent staff? How does this cost compare with the amount spent on contingent workers? This difference, however, could be misleading. We also noted, for instance, that contingent workers might be less effective performers than permanent and full-time employees. Comparing employee for employee on a direct-cost basis, therefore, is not necessarily valid. Organizations must learn to adjust the direct differences in labor costs to account for differences in productivity and performance. Finally, managers must fully understand their own strategies and decide in advance how they intend to manage temporary workers, specifically focusing on how to integrate them into the organization. On a very simplistic level, for example, an organization with a large contingent workforce must make some decisions about the treatment of contingent workers relative to the treatment of permanent, full-time workers. Should contingent workers be invited to the company holiday party? Should they have the same access to such employee benefits as counseling services and childcare? There are no right or wrong answers to such questions. Managers must understand that they need to develop a strategy for integrating contingent workers according to some sound logic and then follow that strategy consistently over time. Indeed, this last point has become part of a legal battleground in recent years as some workers hired under the rubric of contingent workers have subsequently argued that this has been a title in name only, and that their employers use this title to discriminate against them in various ways. For instance, FedEx relies on over 13,000 "contract" drivers. These individuals wear FedEx uniforms, drive FedEx trucks, and must follow FedEx rules and procedures. However, because the firm has hired them under a different employment agreement than its "regular" employees, it does not provide them with benefits. Groups of these individuals across the country sued FedEx on the grounds that, for all practical purposes, they are employees and should enjoy the same benefits as other drivers. A U.S. district judge in Indiana ruled in favor of FedEx, upholding the drivers' status as independent contractors in 20 of 28 class-action cases. However, the court has ruled against FedEx on at least one claim.

The environmental context of human resource management

Human Resource Management (HRM) : The set of organizational activities directed at attracting, developing, and maintaining an effective workforce Human resource management takes place within a complex and ever-changing environmental context. Three par-ticularly vital components of this context are HRM's strategic importance and the legal and social environments of HRM.

The strategic importance of HRM

Human resources—the people who comprise an organization—are critical for both effectiveness and competitiveness. HRM (or "personnel," as it is sometimes called) was once relegated to second-class status in many organizations, but its importance has grown dramatically in the last several years. Its growing importance stems from increased legal complexities, the recognition that human resources are a valuable means for improving productivity, and the increased awareness of the costs associated with poor human resource management. For example, Microsoft announced that it was laying off 5,000 people in parts of its business expected to shrink. At the same time, though, the firm also announced plans for hiring highly talented people in parts of its business targeted as important growth areas for the company. This careful and systematic approach, reducing human resources in areas where they are no longer needed and adding new human resources to key growth areas, reflects a strategic approach to human resource management. Indeed, managers now realize that the effectiveness of their HR function has a sub-stantial impact on the bottom-line perfor-mance of the firm. Poor human resource planning can result in spurts of hiring followed by layoffs—costly in terms of unem-ployment compensation payments, training expenses, and morale. Haphazard compensation systems do not attract, keep, and motivate good employees, and outmoded recruitment practices can expose the firm to expensive and embarrassing discrimination lawsuits. Consequently, the chief human resource executive of most large businesses is a vice president directly accountable to the CEO, and many firms are developing strategic HR plans and integrating those plans with other strategic planning activities. Even organizations with as few as 200 employees usually have a human resource manager and a human resource department charged with overseeing these activities. Responsibility for HR activities, however, is shared between the HR department and line managers. The HR department may recruit and initially screen candidates, but the final selection is usually made by managers in the department where the new employee will work. Similarly, although the HR department may establish performance appraisal policies and procedures, the actual evaluation and coaching of employees is done by their immediate superiors. The growing awareness of the strategic significance of human resource management has even led to new terminology to reflect a firm's commitment to people. human capital: Reflects the organization's investment in attracting, retaining, and motivating an effective workforce -Hence, just as the phrase financial capital is an indicator of a firm's financial resources and reserves, so, too, does human capital serve as a tangible indicator of the value of the people who comprise an organization. Talent management is also a term that is growing in popularity

Intrapreneurship in Organizations

In recent years, many large businesses have realized that the entrepreneurial spirit that propelled their growth becomes stagnant after they transform themselves from a small but growing concern into a larger one.60 To help revitalize this spirit, some firms today encourage what they call "intrapreneurship." Intrapreneurs : are similar to entrepreneurs except that they develop a new business in the context of a large organization. There are three intrapreneurial roles in large organizations. To successfully use intrapreneurship to encourage creativity and innovation, the organization must find one or more individuals to perform these roles. 1. The inventor is the person who actually conceives of and develops the new idea, product, or service by means of the creative process. Because the inventor may lack the expertise or motivation to oversee the transformation of the product or service from an idea into a marketable entity, however, a second role comes into play. 2. A product champion is usually a middle manager who learns about the project and becomes committed to it. He or she helps overcome organizational resistance and convinces others to take the innovation seriously. The product champion may have only limited understanding of the technological aspects of the innovation. Nevertheless, product champions are skilled at knowing how the organization works, whose support is needed to push the project forward, and where to go to secure the resources necessary for successful development. 3. A sponsor is a top-level manager who approves of and supports a project. This person may fight for the budget needed to develop an idea, overcome arguments against a project, and use organizational politics to ensure the project's survival. With a sponsor in place, the inventor's idea has a much better chance of being successfully developed.

innovation application

Innovation application is the stage in which an organization takes a developed idea and uses it in the design, manufacturing, or delivery of new products, services, or processes. At this point the innovation emerges from the laboratory and is transformed into tangible goods or services. One example of innovation application is the use of radar-based focusing systems in Polaroid's instant cameras. The idea of using radio waves to discover the location, speed, and direction of moving objects was first applied extensively by Allied forces during World War II. As radar technology developed during the following years, the electrical components needed became smaller and more streamlined. Researchers at Polaroid applied this well-developed technology in a new way

innovation development

Innovation development involves the evaluation, modification, and improvement of creative ideas. Innovation development can transform a product or service with only modest potential into a product or service with significant potential. Parker Brothers, for example, decided during innovation development not to market an indoor vol-leyball game but instead to sell separately the appealing little foam ball designed for the game. The firm will never know how well the volleyball game would have sold, but the Nerf ball and numerous related products generated millions of dollars in revenues for Parker Brothers.

Lack of resources

Innovation is expensive in terms of dollars, time, and energy. If a firm does not have enough money to fund a program of innovation or does not currently employ the kinds of employees it needs in order to be innovative, it may lag behind in innovation. Even highly innovative organizations cannot become involved in every new product or service its employees think up. For example, numerous other commitments in the electronic instruments and computer industry forestalled Hewlett-Packard from investing in Steve Jobs and Steve Wozniak's original idea for a personal computer. With infinite resources of money, time, and technical and managerial expertise, HP might have entered this market early. Because the firm did not have this flexibility, however, it had to make some difficult choices about which innovations to invest in.

Interpersonal Communication

Interpersonal communication generally takes one of two forms: oral and written. As we will see, each has clear strengths and weaknesses.

Judgemental Methods

Judgmental methods, including ranking and rating techniques, are the most common way to measure performance. Ranking compares employees directly with one another and orders them from best to worst. Ranking has a number of drawbacks. 1. Ranking is difficult for large groups, because the individuals in the middle of the distribution may be hard to distinguish from one another accurately. 2. Comparisons of people in different work groups are also difficult. For example, an employee ranked third in a strong group may be more valuable than an employee ranked first in a weak group. 3. Another criticism of ranking is that the manager must rank people on the basis of overall performance, even though each person likely has both strengths and weaknesses. 4. rankings do not provide useful information for feedback. To be told that one is ranked third is not nearly as helpful as to be told that the quality of one's work is outstanding, its quantity is satisfactory, one's punctuality could use improvement, or one's paperwork is seriously deficient. Rating differs from ranking in that it compares each employee with a fixed standard rather than with other employees. A rating scale provides the standard. Figure 13.3 gives examples of three graphic rating scales for a bank teller. Each consists of a performance dimension to be rated (punctuality, congeniality, and accuracy) followed by a scale on which to make the rating. In constructing graphic rating scales, performance dimensions that are relevant to job performance must be selected. In particular, they should focus on job behaviors and results rather than on personality traits or attitudes. The behaviorally anchored rating scale (BARS) : A sophisticated rating method in which supervisors construct a rating scale associated with behavioral anchors. They first identify relevant performance dimensions and then generate anchors—specific, observable behaviors typical of each performance level. Figure 13.4 shows an example of a behaviorally anchored rating scale for the dimension "Inventory control." The other scales in this set, developed for the job of department manager in a chain of specialty stores, include "Handling customer complaints," "Planning special promotions," "Following company procedures," "Supervising sales personnel," and "Diagnosing and solving special problems." BARS can be effective because they require that management take proper care in constructing the scales, and they provide useful anchors for supervisors to use in evaluating people. They are costly, however, because outside expertise is usually needed and because scales must be developed for each job within the organization.

Managing Labor Relations

Labor Relations: The process of dealing with employees who are represented by a union At one time, almost a third of the entire U.S. labor force belonged to a labor union. Unions enjoyed their largest membership between 1940 and 1955. Membership began to decline steadily in the mid-1950s though, for several reasons: (1) increased standards of living made union membership seem less important; (2) traditionally unionized industries in the manufacturing sector began to decline; and (3) the globalization of business operations caused many unionized jobs to be lost to foreign workers. This downward trend continued until 2008, when union membership rose by the largest amount in over a quarter century, a gain of 428,000 members (12.4 percent of all U.S. workers). However, union membership again declined in the following few years, dropping to 11.3 percent in 2013. Much of this fluctuation was attributable to fears of job insecurity due to the recession that hit in 2008, but as the economy bottomed out and started to rebound, membership again declined. Interestingly, while most people associate unions with the manufacturing sector, they are beginning to show up in newer industries as well. - For example, workers at Gawker Media, an online publisher of news and blog sites, recently voted to unionize. Managing labor relations is an important part of HRM. However, most large firms have separate labor relations specialists to handle these activities apart from other human resource functions.

Chapter 13

Managing Human Resources in Organizations This chapter is about how organizations manage the people who comprise them. But as our opening story vividly illustrates, the kinds of jobs people have and how they perform those jobs continues to change rapidly. It is critical, therefore, that managers understand the jobs in their organizations, who is available to perform those jobs, and how both jobs and workers will change in the future. The set of processes by which companies manage their people is called "human resource management," or HRM.

Chapter 17

Managing Interpersonal Relations and Communication

Common Training Methods

Many different training and development methods are available. Selection of methods depends on many considerations, but perhaps the most important is training content. - When the training content is factual material (such as company rules or explanations of how to fill out forms), assigned reading, programmed learning, and lecture methods work well. - When the content is interpersonal relations or group decision making, however, firms must use a method that allows interpersonal contact, such as role-playing or case discussion groups. - When employees must learn a physical skill, methods allowing practice and the actual use of tools and materials are needed, as in on-the-job training or vestibule training. (Vestibule training enables participants to focus on safety, learning, and feedback rather than on productivity.) - Web-based and other electronic media-based training are becoming very popular. 1. Such methods allow a mix of training content, are relatively easy to update and revise, let participants use a variable schedule, and lower travel costs. 2. On the other hand, they are limited in their capacity to simulate real activities and facilitate face-to-face interaction. Xerox, Massachusetts Mutual Life Insurance, and Ford have all reported tremendous success with these methods. - most training programs actually rely on a mix of methods. Boeing, for example, sends managers to an intensive two-week training seminar involving tests, simulations, role-playing exercises, and flight simulation exercises. - Finally, some larger businesses have started creating their own self-contained training facilities, often called corporate universities. - McDonald's was among the first to start this practice with its so-called Hamburger University in Illinois. All management trainees for the firm attend training programs there to learn exactly how long to grill a burger, how to maintain good customer service, and so on. - The cult hamburger chain In-N-Out Burger also has a similar training venue it calls In-N-Out University. Other firms that use this approach include Shell Oil and General Electric.

threatened self interests

Many impending changes threaten the self-interests of some managers within the organization. A change might diminish their power or influence within the company, so they fight it.

changing business processes

Many organizations today have also gone through massive and comprehensive change programs involving all aspects of organization design, technology, and people. Although various descriptions are used, the terms currently in vogue for these changes are business process change or reengineering business process change (reengineering) : The radical redesign of all aspects of a business to achieve major gains in cost, service, or time - ERP, as described previously, is a common platform for changing business processes. However, business process change is a more comprehensive set of changes that goes beyond software and information systems. Corning, for example, has undergone major reengineering over the last several years. Whereas the 150-year-old business once manufactured cookware and other durable consumer goods, it has transformed itself into a high-tech power-house making such products as the ultra-thin screens used in products like smartphones and laptop computers. Similarly, the dramatic over-hauls of Apple to shift away from personal computers to other digital devices, of Yellow Roadway Corporation into a sophisticated freight delivery firm, and of UPS into a major international delivery giant all required business process changes throughout these organizations.

Objective methods

Objective measures of performance include actual output (that is, number of units produced), scrap rate, dollar volume of sales, and number of claims processed. Objective performance measures may be contaminated by "opportunity bias" if some persons have a better chance to perform than others. For example, a sales representative selling snow blowers in Michigan has a greater opportunity than does a colleague selling the same product in Alabama. Fortunately, adjusting raw performance figures for the effect of opportunity bias and thereby arriving at figures that accurately represent each individual's performance is often possible. Another type of objective measure, the special performance test, is a method by which each employee is assessed under standardized conditions. This kind of appraisal also eliminates opportunity bias. For example, Dell Computer call centers record telephone conversations between technical support employees and customers who call with questions or problems. The technical support employees are periodically graded on speed, accuracy, and courtesy in handling the calls. Performance tests measure ability but do not measure the extent to which one is motivated to use that ability on a daily basis. (A high-ability person may be a lazy performer except when being tested.) Special performance tests must therefore be supplemented by other appraisal methods to provide a complete picture of performance.

application growth

Once an innovation has been successfully launched, it then enters the stage of application growth. This is a period of high economic performance for an organization because demand for the product or service is often greater than supply. Organizations that fail to anticipate this stage may unintentionally limit their growth, as Apple did by not anticipating demand for its iMac computer. At the same time, overestimating demand for a new product can be just as detrimental to performance. Unsold products can sit in warehouses for years.

Performance Appraisal

Once employees are trained and settled into their jobs, one of management's next concerns is performance appraisal. Performance appraisal : A formal assessment of how well an employee is doing his or her job Employees' performance should be evaluated regularly for many reasons. 1. A performance appraisal may be necessary for validating selection devices or assessing the impact of training programs. 2. A second reason is administrative—to aid in making decisions about pay raises, promotions, and training. 3. Another reason is to provide feedback to employees to help them improve their present performance and plan their future careers. Because performance evaluations often help determine wages and promotions, they must be fair and nondiscriminatory. In the case of appraisals, content validation is used to show that the appraisal system accurately measures performance on important job elements and does not measure traits or behavior that are irrelevant to job performance.

Selecting Employees

Once the recruiting process has attracted a pool of applicants, the next step is to select whom to hire. The intent of the selection process is to gather from applicants information that will predict their job success and then to hire the candidates likely to be most successful. Of course, the organization can only gather information about factors that are predictive of future performance. Validation is the process of determining the extent to which a selection device is really predictive of future job performance. There are 2 basic approaches : 1. Predictive Validation - Predictive validation involves collecting the scores of employees or applicants on the device to be validated and correlating their scores with actual job performance. A significant correlation means that the selection device is a valid predictor of job performance. 2. Content Validation Content validation uses logic and job analysis data to establish that the selection device measures the exact skills needed for successful job performance. The most critical part of content validation is a careful job analysis showing exactly what duties are to be performed. The test is then developed to measure the applicant's ability to perform those duties.

organization structure and design

Organization change might be focused on any of the basic components of organization structure or on the organization's overall design. Thus the organization might change the way it designs its jobs or its bases of departmentalization. Likewise, it might change reporting relationships or the distribution of authority. Coordination mechanisms and line-and-staff configurations are also subject to change. On a larger scale, the organization might change its overall design. For example, a growing business could decide to drop its functional design and adopt a divisional design. Or it might transform itself into a matrix. Changes in culture usually involve the structure and design of the organization as well (recall that we discussed changing cul-ture back in Chapter 3). Finally, the organization might change any part of its human resource management system, such as its selection criteria, its performance appraisal methods, or its compensation package. - job design - departmentalization - reporting relationships - authority distribution - coordination mechanisms - line staf structure - overall design - culture - Human Resources management

OD assumptions

Organization development is concerned with changing attitudes, perceptions, behaviors, and expectations. The theory and practice of OD are based on several very important assumptions. 1. Employees have a desire to grow and develop. 2. Another is that employees have a strong need to be accepted by others within the organization. 3. Still another critical assumption of OD is that the total organization and the way it is designed will influence the way individuals and groups within the organization behave. Thus some form of collaboration between managers and their employees is necessary to (1) take advantage of the skills and abilities of the employees and (2) eliminate aspects of the organization that retard employee growth, development, and group acceptance. Because of the intensely personal nature of many OD activities, many large organizations rely on one or more OD consultants (either full-time employees assigned to this function or outside experts hired specifically for OD purposes) to implement and manage their OD programs.

Other Techniques

Organizations also use other selection techniques depending on the circumstances. 1. Polygraph tests, once popular, are declining in popularity. 2. More and more organizations are requiring that applicants in whom they are interested take physical exams. 3. Increasingly using drug tests, especially in situations in which drug-related performance problems could create serious safety hazards. - For example, applicants for jobs in a nuclear power plant would likely be tested for drug use. 4. Some organizations today even run credit checks on prospective employees.

uncertainty

Perhaps the biggest cause of employee resistance to change is uncertainty. In the face of impending change, employees may become anxious and nervous. They may worry about their ability to meet new job demands, they may think that their job security is threatened, or they may simply dislike ambiguity

Product versus Process Innovation

Perhaps the two most important types of technical innovations are product innovations and process innovations. Product innovations are changes in the physical characteristics or performance of existing products or services or the creation of brand-new products or services. Process innovations are changes in the way products or services are manufactured, created, or distributed. Whereas managerial innovations generally affect the broader context of development, process innovations directly affect manufacturing. -The implementation of robotics, as we discussed earlier, is a process innovation. As Figure 12.5 shows, the effect of product and process innovations on economic return depends on the stage of the innovation process that a new product or service occupies. At first, during development, application, and launch, the physical attributes and capabilities of an innovation most affect organizational performance. Thus product innovations are particularly important during these beginning phases. Later, as an innovation enters the phases of growth, maturity, and decline, an organization's ability to develop process innovations, such as fine-tuning manufacturing, increasing product quality, and improving product distribution, becomes important to maintaining economic return. Japanese organizations have often excelled at process innovation. The market for 35 mm cameras was dominated by German and other European manufacturers when, in the early 1960s, Japanese camera companies such as Canon and Nikon began an aggressive push to increase their global market shares. Some of the early Japanese products were not very successful, but these companies continued to invest in their process technology and eventually were able to increase quality and decrease manufacturing costs. The Japanese organizations eventually came to dominate the worldwide market for 35 mm cameras, and the German companies, because they were not able to maintain the same pace of process innovation, struggled to maintain market share and profitability. And as film technology gave way to digital photography, the same Japanese firms have effectively transitioned to leadership in this market as well.

Radical Versus Incremental Innovation

Radical innovations are new products, services, or technologies developed by an organization that completely replace the existing products, services, or technologies in an industry. - Firms that implement radical innovations fundamentally shift the nature of competition and the interaction of firms within their environments. Incremental innovations are new products or processes that modify existing ones. -Firms that implement incremental innovations alter, but do not fundamentally change, competitive interaction in an industry Over the last several years, organizations have introduced many radical innovations. For example, compact disc technology replaced long-playing vinyl records in the recording industry, digital downloading is supplanting CD, and digital downloading is already being replaced by Spotify and SoundCloud; DVDs have replaced videocassettes but are now being supplanted by Blu-ray DVDs and streaming video; and high-definition television is replacing regular television technology. Whereas radical innovations like these tend to be very visible and public, incremental innovations actually are more numerous. For instance, each new generation of the iPhone and the iPod represent relatively minor changes over previous versions.

Developing Human Resources

Regardless of how effective a selection system is, however, most employees need additional training if they are to grow and develop in their jobs. Evaluating their performance and providing feedback are also necessary.

Barriers to communication

Several factors may disrupt the communication process or serve as barriers to effective communication. two classes: individual barriers and organizational barriers

OD Techniques

Several kinds of interventions or activities are generally considered part of organization development.43 Some OD programs may use only one or a few of these; other programs use several of them at once. • Diagnostic activities: Just as a physician examines patients to diagnose their current condition, an OD diagnosis analyzes the current condition of an organization. To carry out this diagnosis, managers use questionnaires, opinion or attitude surveys, interviews, archival data, and meetings to assess various characteristics of the organization. The results of this diagnosis may generate profiles of the organization's activities, which can then be used to identify problem areas in need of correction. • Team building : Team-building activities are intended to enhance the effectiveness and satisfaction of individuals who work in groups or teams and to promote overall group effectiveness. Given the widespread use of teams today, these activities have taken on increased importance. An OD consultant might interview team members to determine how they feel about the group; then an off-site meeting could be held to discuss the issues that surfaced and iron out any problem areas or member concerns. Caterpillar used team building as one method for changing the working relationships between workers and supervisors from confrontational to cooperative. An interesting new approach to team building involves having executive teams participate in group cooking classes to teach them the importance of interdependence and coordination. • Survey feedback : In survey feedback, each employee responds to a questionnaire intended to measure perceptions and attitudes (for example, satisfaction and supervisory style). Everyone involved, including the supervisor, receives the results of the survey. The aim of this approach is usually to change the behavior of supervisors by showing them how their subordinates view them. After the feedback has been provided, workshops may be conducted to evaluate results and suggest constructive changes. • Education : Educational activities focus on classroom training. Although such activities can be used for technical or skill-related purposes, an OD educational activity typically focuses on "sensitivity skills"—that is, it teaches people to be more considerate and understanding of the people they work with. Participants often go through a series of experiential or role-playing exercises to learn better how others in the organization feel. • Intergroup activities : The focus of intergroup activities is on improving the relationships between two or more groups. We noted in Chapter 11 that, as group interdependence increases, so do coordination difficulties. Intergroup OD activities are designed to pro-mote cooperation or resolve conflicts that arose as a result of interdependence. Experien-tial or role-playing activities are often used to bring this about. • Third-party peacemaking : Another approach to OD is through third-party peacemaking, which is most often used when substantial conflict exists within the organization. Third-party peacemaking can be appropriate on the individual, group, or organizational level. The third party, usually an OD consultant, uses a variety of mediation or negotiation techniques to resolve any problems or conflicts among individuals or groups. • Technostructural activities : Technostructural activities are concerned with the design of the organization, the technology of the organization, and the interrelationship of design and technology with people on the job. A structural change such as an increase in decentralization, a job design change such as an increase in the use of automation, and a technological change involving a modification in work flow all qualify as technostructure OD activities if their objective is to improve group and interpersonal relationships within the organization. • Process consultation : In process consultation, an OD consultant observes groups in the organization to develop an understanding of their communication patterns, decision-making and leadership processes, and methods of cooperation and conflict resolution. The consultant then provides feedback to the involved parties about the processes he or she has observed. The goal of this form of intervention is to improve the observed processes. A leader who is presented with feedback outlining deficiencies in his or her leadership style, for example, might be expected to change to overcome them. • Life and career planning : Life and career planning helps employees formulate their personal goals and evaluate strategies for integrating their goals with the goals of the organization. Such activities might include specification of training needs and plotting a career map. General Electric has a reputation for doing an outstanding job in this area. • Coaching and counseling : Coaching and counseling provide non-evaluative feedback to individuals. The purpose is to help people develop a better sense of how others see them and learn behaviors that will assist others in achieving their work-related goals. The focus is not on how the person is performing today; instead, it is on how the person can perform better in the future. • Planning and goal setting : More pragmatic than many other interventions are activities designed to help managers improve their planning and goal setting. Emphasis still falls on the individual, however, because the intent is to help individuals and groups integrate themselves into the overall planning process. The OD consultant might use the same approach as in process consultation, but the focus is more technically oriented on the mechanics of planning and goal setting.

Emerging Legal Issues

Several other areas of legal concern have emerged during the past few years. - sexual harassment. Although sexual harassment is forbidden under Title VII, it has received additional attention in the courts recently, as more and more victims have decided to publicly confront the problem. - alcohol and drug abuse Both alcoholism and drug dependence are major problems today. Recent court rulings have tended to define alcoholics and drug addicts as disabled, protecting them under the same laws that protect other handicapped people. - AIDS AIDS victims, too, are most often protected under various laws protecting the disabled. - employee privacy is also becoming a controversial issue in the HR arena. For instance, can employers refuse to hire an otherwise qualified applicant because of information that person posts on social networking sites?

Technical Versus Managerial Innovations

Technical innovations are changes in the physical appearance or performance of a product or service, or of the physical processes through which a product or service is manufactured. - Many of the most important innova-tions over the last 50 years have been technical. For example, the serial replacement of the vacuum tube with the transistor, the transistor with the integrated circuit, and the integrated circuit with the microchip has greatly enhanced the power, ease of use, and speed of operation of a wide variety of electronic products. Not all innovations developed by organizations are technical, however. Managerial innovations are changes in the management process by which products and services are conceived, built, and delivered to customers. - Managerial innovations do not necessarily affect the physical appearance or performance of products or services directly. In effect, business process change or reengineering, as we discuss earlier, represents a managerial innovation.

changing technology and operations

Technology is the conversion process used by an organization to transform inputs into out-puts. Because of the rapid rate of all technological innovation, technological changes are becoming increasingly important to many organizations. - information technology : One important area of change today revolves around information technology. The adoption and institutionalization of information technology innovations is almost constant in most firms today. Sun Microsystems, for example, adopted a very short-range planning cycle to be best prepared for environmental changes. - equipment : Another important form of technological change involves equipment. To keep pace with competitors, firms periodically find that replacing existing machinery and equipment with newer models is necessary. - work processes : A change in work processes or work activities may be necessary if new equipment is introduced or new products are manufactured. In manufacturing industries, the major reason for changing a work process is to accommodate a change in the materials used to produce a finished product. Consider a firm that manufactures battery-operated flashlights. For many years flashlights were made of metal, but now most are made of plastic. A firm might decide to move from metal to plastic flashlights because of consumer preferences, raw materials costs, or other reasons. Whatever the reason, the technology necessary to make flashlights from plastic differs importantly from that used to make flashlights from metal. Work process changes may occur in service organizations as well as in manufacturing firms. - work sequences : A change in work sequence may or may not accompany a change in equipment or a change in work processes. Making a change in work sequence means altering the order or sequence of the workstations involved in a particular manufacturing process. For example, a manufacturer might have two parallel assembly lines producing two similar sets of machine parts. The lines might converge at one central quality-control unit, where inspectors verify tolerances. The manager, however, might decide to change to periodic rather than final inspection. Under this arrangement, one or more inspections are established farther up the line. Work sequence changes can also be made in service organizations. The processing of insurance claims, for example, could be changed. The sequence of logging and verifying claims, requesting checks, getting countersignatures, and mailing checks could be altered in several ways, such as combining the first two steps or routing the claims through one person while another handles checks. - control systems : Organizational control systems may also be targets of change. For example, a firm trying to improve the quality of its products might develop and implement a set of more rigorous and comprehensive quality-control procedures. - enterprise resource planning (ERP) : ( A large-scale information system for integrating and synchronizing the many activities in the extended enterprise) Finally, many businesses have been working to implement technological and operations change by installing and using complex and integrated software systems. Such systems—called enterprise resource planning—link virtually all facets of the business, making it easier for managers to keep abreast of related developments. In most cases these systems are purchased from external vendors who then tailor their products to the client's unique needs and requirements. Com-panywide processes—such as materials management, production planning, order manage-ment, and financial reporting—can all be managed via ERP. In effect, these are the processes that cut across product lines, departments, and geographic locations.

Tests

Tests of ability, skill, aptitude, or knowledge that is relevant to the particular job are usually the best predictors of job success, although tests of general intelligence or personality are occasionally useful as well. In addition to being validated, tests should be administered and scored consistently. All candidates should be given the same directions, should be allowed the same amount of time, and should experience the same testing environment (temperature, lighting, distractions)

steps in the change process

The Lewin model was one of the first, although a more comprehensive approach is usually more useful in today's complex business environment.

Health and Safety

The Occupational Safety and Health Act of 1970 (OSHA) : directly mandates the provision of safe working conditions. It requires that employers (1) provide a place of employment that is free from hazards that may cause death or serious physical harm (2) obey the safety and health standards established by the Department of Labor. Safety standards are intended to prevent accidents, whereas occupational health standards are concerned with preventing occupational disease. - For example, standards limit the concentration of cotton dust in the air because this contaminant has been associated with lung disease in textile workers. The standards are enforced by OSHA inspections, which are conducted when an employee files a complaint of unsafe conditions or when a serious accident occurs. Spot inspections of plants in especially hazardous industries such as mining and chemicals are also made. Employers who fail to meet OSHA standards may be fined. A Miami-based company, Lead Enterprises Inc., was cited by OSHA as knowingly failing to protect employees from lead exposure despite knowing the potential hazards (brain damage, kidney disease, and reproductive system damage). The company, which produces various lead products, including fish tackles and lead diving weights, was cited for 32 safety and health violations after multiple inspections and fined more than $307,000 in penalties.

The elements of organizing

The children's activities—choosing certain combinations of blocks and then putting them together in unique ways—are in many ways analogous to the manager's job of organizing

Assessing Training Needs

The first step in developing a training plan is to determine what needs exist. For example, if employees do not know how to operate the machinery necessary to do their jobs, a training program on how to operate the machinery is clearly needed. On the other hand, when a group of office workers is performing poorly, training may not be the answer. - The problem could be motivation, aging equipment, poor supervision, inefficient work design, or a deficiency of skills and knowledge. Only the last could be remedied by training. As training programs are being developed, the manager should set specific and measurable goals specifying what participants are to learn. Managers should also plan to evaluate the training program after employees complete it.

Application blanks

The first step in selection is usually asking the candidate to fill out an application blank. Application blanks are an efficient method of gathering information about the applicant's previous work history, educational background, and other job-related demographic data. They should not contain questions about areas not related to the job, such as gender, religion, or national origin. Application blank data are generally used informally to decide whether a candidate merits further evaluation, and interviewers use application blanks to familiarize themselves with candidates before interviewing them. Unfortunately, in recent years there has been a trend toward job applicants either falsifying or inflating their credentials to stand a better chance of getting a job. Indeed, one survey of 2.6 million job applications found that an astounding 44 percent of them contained some false information. Another survey conducted by AccuScreen found that 53 percent of resumes and job applications have false information and 78 percent have misleading information

Performance Feedback

The last step in most performance appraisal systems is giving feedback to subordinates about their performance. - This is usually done in a private meeting between the person being evaluated and his or her boss. - The discussion should generally be focused on the facts— the assessed level of performance, how and why that assessment was made, and how it can be improved in the future. - Feedback interviews are not easy to conduct. Many managers are uncomfortable with the task, especially if feedback is negative and subordinates are disappointed by what they hear. - Properly training managers, however, can help them conduct more effective feedback interviews. Some firms use a very aggressive approach to terminating people who do not meet expectations. For years General Electric used a system whereby each year the bottom 10 percent of its workforce was terminated and replaced with new employees. - Company executives claimed that this approach, although stressful for all employees, helped it to continuously upgrade its workforce. - However, both Ford and Goodyear agreed to abandon this approach in response to age discrimination lawsuits. General Electric still uses a modified version of its original system, although it has been modified to provide more flexibility.

the innovation process

The organizational innovation process consists of developing, applying, launching, growing, and managing the maturity and decline of creative ideas.

The need for coordination

The primary reason for coordination is that departments and work groups are interdependent—they depend on one another for information and resources to perform their respective activities. The greater the interdependence between departments, the more coordination the organization requires if departments are to be able to perform effectively. There are three major forms of interdependence: pooled, sequential, and reciprocal.

Collective Bargaining

The process of agreeing on a satisfactory labor contract between management and a union The contract contains agreements about such issues as wages, work hours, job security, promotion, layoffs, discipline, benefits, methods of allocating overtime, vacations, rest periods, and the grievance procedure. The process of bargaining may go on for several weeks, several months, or longer, with representatives of management and the union meeting to make proposals and counterproposals. The resulting agreement must be ratified by the union membership. If it is not approved, the union may strike to put pressure on management, or it may choose not to strike and simply continue negotiating until a more acceptable agreement is reached. For its part, management can also take certain actions if a new contract is not approved. - One option is called a lockout—employees are not allowed to work nor do they get paid. The NFL used this measure in 2011 when the players' union would not agree to management's contract proposal. When a final agreement was reached in July 2011, training camps were opened and the players returned to work. Occasionally circumstances arise that cause management and labor to bargain over changes in existing contracts even before a new contract is needed. This is most likely to happen when unforeseen problems jeopardize the future of the business, and hence the jobs of union members. The grievance procedure is the means by which the contract is enforced. Most of what is in a contract concerns how management will treat employees. When employees feel that they have not been treated fairly under the contract, they file a grievance to correct the problem. The first step in a grievance procedure is for the aggrieved employee to discuss the alleged contract violation with her immediate superior. Often the grievance is resolved at this stage. If the employee still believes that she is being mistreated, however, the grievance can be appealed to the next level. A union official can help an aggrieved employee present her case. If the manager's decision is also unsatisfactory to the employee, additional appeals to successively higher levels are made until, finally, all in-company steps are exhausted. The final step is to submit the grievance to binding arbitration. An arbitrator is a labor law expert who is paid jointly by the union and management. The arbitrator studies the contract, hears both sides of the case, and renders a decision that both parties must obey. The grievance system for resolving disputes about contract enforcement prevents any need to strike during the term of the contract.

effective communication

The process of sending a message in such a way that the message received is as close in meaning as possible to the message intended. Our definition of effective communication is based on the ideas of meaning and consis-tency of meaning. Meaning is the idea that the individual who initiates the communication exchange wishes to convey. In effective communication, the meaning is transmitted in such a way that the receiving person understands it.

Communication

The process of transmitting information from one person to another

Grouping Jobs: Departmentalization

The second building block of organization structure is the grouping of jobs according to some logical arrangement. departmentalization. : The process of grouping jobs according to some logical arrangement

Human Resource Planning

The starting point in attracting qualified human resources is planning. HR planning, in turn, involves job analysis and forecasting the demand and supply of labor.

Wage-Level Decision

The wage-level decision is a management policy decision about whether the firm wants to pay above, at, or below the going rate for labor in the industry or the geographic area. Most firms choose to pay near the average, although those that can-not afford more pay below average. Large, successful firms may like to cultivate the image of being "wage leaders" by intentionally paying more than average and thus attracting and keeping high-quality employees. Google, IBM, and Microsoft, for example, pay top dollar to get the new employees they want. McDonald's, on the other hand, often pays close to the minimum wage. The level of unemployment in the labor force also affects wage levels. Pay declines when labor is plentiful and increases when labor is scarce. Once managers make the wage-level decision, they need information to help set actual wage rates. Managers need to know what the maximum, minimum, and average wages are for particular jobs in the appropriate labor market. This information is collected by means of a wage survey. Area wage surveys can be conducted by individual firms or by local HR or business associations. Professional and industry associations often conduct surveys and make the results available to employers.

equal employment opportunity

Title VII of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) : Forbids discrimination on the basis of sex, race, color, religion, or national origin in all areas of the employment relationship Forbids discrimination in all areas of the employment relationship. The intent of Title VII is to ensure that employment decisions are made on the basis of a person's qualifications rather than on the basis of personal biases. The law has reduced direct forms of discrimination (refusing to promote African Americans into management, failing to hire men as flight attendants, refusing to hire women as construction workers) as well as indirect forms of discrimination (using employment tests that whites pass at a higher rate than African Americans). Employment requirements such as test scores and other qualifications are legally defined as having an adverse impact on minorities and women when such individuals meet or pass the requirement at a rate less than 80 percent of the rate of majority group members. Criteria that have an adverse impact on protected groups can be used only when there is solid evidence that they effectively identify those who are better able than others to do the job. adverse impact : When minority group members pass a selection standard at a rate less than 80 percent of the pass rate of majority group members The Equal Employment Opportunity Commission - Federal agency charged with enforcing Title VII of the Civil Rights Act of 1964 as well as several other employment-related laws. Age Discrimination in Employment Act : Outlaws discrimination against people older than 40 years; passed in 1967, amended in 1978 and 1986 Both the Age Discrimination in Employment Act and Title VII require passive nondiscrimination, or equal employment opportunity. Employers are not required to seek out and hire minorities, but they must treat all who apply fairly Several executive orders, however, require that employers holding government contracts engage in affirmative action : Intentionally seeking and hiring qualified or qualifiable employees from racial, sexual, and ethnic groups that are underrepresented in the organization -These organizations must have a written affirmative action plan that spells out employment goals for unde-rutilized groups and how those goals will be met. These employers are also required to act affirmatively in hiring Vietnam-era veterans (as a result of the Vietnam Era Veterans Readjust-ment Assistance Act) and qualified handicapped individuals. Finally, the Pregnancy Discrimination Act forbids discrimination against women who are pregnant. Americans with Disabilities Act: Prohibits discrimination against people with disabilities and passed in 1990 by congress Civil Rights Act of 1991 : amended the original Civil Rights Act, as well as other related laws by both making it easier to bring discrimination lawsuits (which partially explains the aforementioned backlog of cases) and simultaneously limiting the amount of punitive damages that can be awarded in those lawsuits.

Alternatives to Specialization

To counter the problems associated with specialization, managers have sought other approaches to job design that achieve a better balance between organizational demands for efficiency and productivity and individual needs for creativity and autonomy 1. job rotation 2. job enlargement 3. job enrichment 4. job characteristics approach 5. work teams

Failure to innovate

To remain competitive in today's economy, organizations must be innovative. And yet many organizations that should be innovative are not successful at bringing out new products or ser-vices or do so only after innovations created by others are very mature. Organizations may fail to innovate for at least three reasons. lack of resources, failure to recognize opportunities, resistance to change

Training and Development

Training : Teaching operational or technical employees how to do the job for which they were hired Development. : Teaching managers and professionals the skills needed for both present and future jobs Most organizations provide regular training and development programs for managers and employees. - IBM spends more than $750 million annually on programs and has a vice president in charge of employee education. - The FBI recently conducted a large-scale training program to help 30,000 agents better prepare themselves for confronting active shooters in schools, businesses, and public places. - U.S. businesses spend more than $70 billion annually on training and development programs away from the workplace. This figure does not include wages and benefits paid to employees while they are participating in such programs.

Evaluation of Training

Training and development programs should always be evaluated. Typical evaluation approaches include measuring one or more relevant criteria (such as attitudes or performance) before and after the training, and determining whether the criteria changed. Evaluation measures collected at the end of training are easy to get, but actual performance measures collected when the trainee is on the job are more important. Trainees may say that they enjoyed the training and learned a lot, but the true test is whether their job performance improves after their training.

common appraisal methods

Two basic categories of appraisal methods commonly used in organizations are objective methods and judgmental methods.

Labor Relations

Union activities and management's behavior toward unions constitute another heavily regulated area. National Labor Relations Act (also known as the Wagner Act) : passed in 1935, sets up a procedure for employees to vote on whether to have a union. If they vote for a union, management is required to bargain collectively with the union. The National Labor Relations Board (NLRB) : was established by the Wagner Act to enforce its provisions. The Labor-Management Relations Act (also known as the Taft-Hartley Act) : following a series of severe strikes in 1946, this act was passed in 1947 to limit union power. - The law increases management's rights during an organizing campaign. The Taft-Hartley Act also contains the National Emergency Strike provision, which allows the president of the United States to prevent or end a strike that endangers national security. Taken together, these laws balance union and manage-ment power. Employees can be represented by a legally created and managed union, but the busi-ness can make nonemployee-related business decisions without interference.

Wage-Structure Decision

Wage structures are usually set up through a procedure called job evaluation— An attempt to assess the worth of each job relative to other jobs At Ben & Jerry's Homemade, company policy once dictated that the highest-paid employee in the firm could not make more than seven times what the lowest-paid employee earned. But this policy had to be modified when the company found that it was simply unable to hire a new CEO without paying more than this amount. The simplest method for creating a wage structure is to rank jobs from those that should be paid the most (for example, the president) to those that should be paid the least (for example, a mail clerk or a janitor) In a firm with relatively few jobs (like Netflix, for example), this method is quick and practical, but larger firms with thousands of job titles require more sophisticated methods. The next step is setting actual wage rates on the basis of a combination of survey data and the wage structure that results from job evaluation. Jobs of equal value are often grouped into wage grades for ease of administration.

Organization Development (OD)

We have noted in several places the importance of people and change. Beyond those change interests discussed previously, a special area of interest that focuses almost exclusively on people is organization development (OD). Organizational development: An effort that is planned, organization-wide, and managed from the top, intended to increase organizational effectiveness and health through planned interventions in the organization's process, using behavioral science knowledge

areas of organization change

We noted earlier that change can involve virtually any part of an organization. In general, however, most change interventions involve organization structure and design, technology and operations, or people. The most common areas of change within each of these broad categories is listed in table 12.1 In addition, many organizations have gone through massive and comprehensive business process change programs. organization structure and design, technology and operations, people

the need for business process change

Why are so many organizations finding it necessary to undergo business process change? We note in chapter 2, that all systems, including organizations, are subject to entropy—a normal process leading to system decline. An organization is behaving most typically when it maintains the status quo, does not change in sync with its environment, and starts consuming its own resources to survive. In a sense, that is what happened to Kmart. In the early and mid-1970s, Kmart was in such a high-flying growth mode that it passed first JCPenney and then Sears to become the world's largest retailer. But then the firm's managers grew complacent and assumed that the discount retailer's prosperity would continue and that they need not worry about environmental shifts, the growth of Walmart, and so forth—and entropy set in. The key is to recognize the beginning of the decline and immediately move toward changing relevant business processes. For instance, Netflix required business process changes throughout the organization as it shifted its focus to delivering movies and TV over the Internet rather than through the mail. But these changes were approached in a planned and strategic fashion. Major problems occur when managers either do not recognize the onset of entropy until it is well advanced or are complacent about taking steps to correct it

Forces for Change

Why do organizations find change necessary? The basic reason is that something relevant to the organization either has changed or is likely to change in the foreseeable future. The organization therefore may have little choice but to change as well. Indeed, a primary reason for the problems that organizations often face is failure to anticipate or respond properly to changing circumstances. The forces that compel change may be external or internal to the organization.

Attracting Human Resources

With an understanding of the environmental context of human resource management as a foundation, we are now ready to address its first substantive concern—attracting qualified people who are interested in employment with the organization.

organization culture

an organization's culture is the set of values, beliefs, and symbols that help guide behavior. A strong, appropriately focused organizational culture can be used to support innovative activity. A well-managed culture can com-municate a sense that innovation is valued and will be rewarded and that occasional failure in the pursuit of new ideas is not only acceptable but even expected. In addition to reward systems and intrapreneurial activities, firms such as Apple, Google, Nintendo, Nokia, Sony, Walt Disney, Vodafone, and Hewlett-Packard are all known to have strong, innovation-oriented cultures that value individual creativity, risk taking, and inventiveness.

Distributing authority

authority: Power that has been legitimized by the organization Distributing authority is another normal outgrowth of increasing organizational size For example, when an owner-manager hires a sales representative to market his products, he needs to give the new employee appropriate authority to make decisions about delivery dates, discounts, and so forth. If every decision requires the approval of the owner-manager, he is no better off than he was before he hired the sales representative. The power given to the sales representative to make certain kinds of decisions, then, represents the establish-ment of a pattern of authority—the sales repre-sentative can make some decisions alone and others in consultation with coworkers, and the sales representative must defer some decisions to the boss. Two specific issues that managers must address when distributing authority are delegation and decentralization.

Determining Compensation

compensation : The financial remuneration given by the organization to its employees in exchange for their work 1. Wages - Wages are the hourly compensation paid to operating employees. The minimum hourly wage paid in the United States today is $7.25 (though several states have minimum wage levels that exceed this federal minimum). 2. Salary - Salary refers to compensation paid for total contributions, as opposed to pay based on hours worked. For example, managers earn an annual salary, usually paid monthly. They receive the salary regardless of the number of hours they work. Some firms have started paying all their employees a salary instead of hourly wages. For example, all employees at Chaparral Steel earn a salary, starting at $40,000 a year for entry-level operating employees. 3. Incentives - incentives represent special compensation opportunities that are usually tied to performance. Sales commissions and bonuses are among the most common incentives. Compensation is an important and complex part of the organization-employee relationship. Basic compensation is necessary to provide employees with the means to maintain a reasonable standard of living. Beyond this, however, compensation also provides a tangible measure of the value of the individual to the organization. If employees do not earn enough to meet their basic economic goals, they will seek employment elsewhere. Likewise, if they believe that their contributions are undervalued by the organization, they may leave or exhibit poor work habits, low morale, and little commitment to the organization. Thus, designing an effective compensation system is clearly in the organization's best interests. A good compensation system can help attract qualified applicants, retain present employees, and stimulate high performance at a cost reasonable for one's industry and geographic area. To set up a successful system, management must make decisions about wage levels, the wage structure, and the individual wage determination system. Some firms used the 2009 recession as an opportunity to refine their compensation systems. While many firms reduced their workforces through layoffs, others used targeted salary cuts to avoid lay-offs. For instance, at Hewlett-Packard the CEO first cut his own salary by 20 percent. The firm's very top performers kept their same pay levels. But others were given tiered salary cuts ranging from as little as 2.5 percent to as much as 20 percent. A few firms went even further. CareerBuilder.com, for instance, instituted pay cuts for all employees but also told everyone they only had to work half a day on Fridays.

The delegation process

delegation: The process by which managers assign work to subordinates

Digital Communication

digital communication has become pervasive in organizations today. formal information systems personal information technology

Common bases for departmentalization

four most common bases for departmentalization: function, product, customer, and location

organizational innovation

innovation : The managed effort of an organization to develop new products or services or new uses for existing products or services Innovation is clearly important because, without new products or services, any organization will fall behind its competition.

Enterprise Resource Planning (ERP)

is a large-scale information system for integrating and synchronizing the many activities in the extended enterprise. Developing the ERP system starts by identifying the key processes that need critical attention, such as supplier relationships, materials flows, or customer order fulfillment. The system could result, for instance, in sales processes being integrated with production plan-ning and then integrating both of these into the firm's financial accounting system. For example, a customer in Rome can place an order that is to be produced in Ireland, schedule it to be shipped via air cargo to Rome, and then have it picked up by a truck at the airport and delivered to the customer's warehouse by a specified date. All of these activities are synchronized by activities linkages in one massive database. The ERP integrates all activities and information flows that relate to the firm's critical processes. It also keeps updated real-time information on their current status, reports recent past transactions and upcoming planned transactions, and provides electronic notices that action is required on some items if planned schedules are to be met. It coordinates internal operations with activities by outside suppliers and notifies business partners and customers of current status and upcoming deliveries and billings. It can integrate financial flows among the firm, its suppliers, its customers, and commercial bank deposits for up-to-the-minute status reports that can be used to create real-time financial reports at a moment's notice, rather than in the traditional one-month (or longer) time span for producing a financial statement. ERP's multi-language capabilities also allow real-time correspondence in various languages to facilitate international transactions.

Coordinating activities

job specialization and departmentalization involve breaking jobs down into small units and then combining those jobs into departments. Once this has been accomplished, the activities of the departments must be linked—systems must be put into place to keep the activities of each department focused on the attainment of organizational goals. This is accomplished by coordination—the process of linking the activities of the various departments of the organization.

The nature of knowledge work

knowledge workers : Workers whose contributions to an organization are based on what they know. The skill with which they are managed is a major factor in determining which firms will be successful in the future. Knowledge workers, including computer scientists, engineers, and physical scientists, provide special challenges for the HR manager. They tend to work in high-technology firms and are usually experts in some abstract knowledge base. They often like to work independently and tend to identify more strongly with their profession than with any organization—even to the extent of defining performance in terms recognized by other members of their profession. As the importance of information-driven jobs grows, the need for knowledge workers continues to grow as well. But these employees require extensive and highly specialized training, and not every organization is willing to make the human capital investments necessary to take advantage of these jobs. In fact, even after knowledge workers are on the job, retraining and training updates are critical to prevent their skills from becoming obsolete. It has been suggested, for example, that the "half-life" of a technical education in engineering is about three years. The failure to update such skills will not only result in the loss of competitive advantage but also increase the likelihood that the knowledge worker will go to another firm that is more committed to updating them.

Chapter 12

managing organization change and innovation

trends in contingent and temp employment

number of these workers have increased dramatically. - A contingent worker is a person who works for an organization on something other than a permanent or full-time basis. - Categories of contingent workers include independent contractors, on-call workers, temporary employees (usually hired through outside agencies), and contract and leased employees. -Another category is part-time workers. The financial services giant Citigroup, for example, makes extensive use of part-time sales agents to pursue new clients. A Staffing Industry Analysts survey estimated that 13 percent of the workforce was classified as contingent workers. However, this is predicted to rise to as much as 40 percent by 2020.

Personal Electronic Technology

the nature of organizational commu-nication has changed dramatically, mainly because of breakthroughs in personal elec-tronic communication technology, and the future promises even more change. Elec-tronic typewriters and then photocopying machines were early breakthroughs. The photocopier, for example, made it possible for a manager to have a typed report distributed to large numbers of other people in an extremely short time. Personal computers have accelerated the process even more. E-mail networks, the Internet, corporate intranets, social networking sites, wireless communication systems, social media plat-forms, and other breakthroughs are carrying communication technology even further. It is common to have teleconferences in which managers stay at their own locations (such as offices in different cities) but "meet" via Skype, FaceTime, and similar methods. Managers can create messages and deliver them to thousands of colleagues around the world in seconds. Highly detailed information can be retrieved with ease from large electronic databanks. These new technologies are behind the rise of a new version of an old work arrangement—cottage industry. - In cottage industry, people work at home (in their "cottage") and periodically bring the products of their labors in to the company. - Tele-commuting is the label given to a new electronic cottage industry. In telecommuting, people work at home on their computers and transmit their work to their companies digitally Many now use cellphones to make calls while commuting to and from work, and carry them in their pockets, bags, and briefcases so that they can receive calls regardless of where they are. And other personal computing devices, such as Apple iPhones and iPads, Samsung Android devices, and Microsoft Surface tablets, are further revolutionizing how people com-municate with one another. Smartwatches and virtual keyboards are primed to take things to yet the next level. Psychologists, however, are beginning to associate some problems with these communication advances. 1. managers who are seldom in their "real" offices are likely to fall behind in their fields and to be victimized by organizational politics because they are not present to keep in touch with what is going on and to protect themselves. They drop out of the organizational grapevine and miss out on much of the informal communication that takes place. 2. the use of digital communication at the expense of face-to-face meetings and conversations makes it hard to build a strong culture, develop solid working relationships, and create a mutually supportive atmosphere of trust and cooperativeness 3. digital communication is also opening up new avenues for dysfunctional employee behavior, such as the passing of lewd or offensive materials to others. (inappropriate emails being sent)

Decentralization and centralization

Just as authority can be delegated from one person to another, organizations also develop patterns of authority across a wide variety of positions and departments. decentralization: The process of systematically delegating power and authority throughout the organization to middle and lower-level managers decentralization is actually one end of a continuum anchored at the other end by centralization centralization: The process of systematically retaining power and authority in the hands of higher-level managers Hence, a decentralized organization is one in which decision-making power and authority are delegated as far down the chain of command as possible. Conversely, in a centralized organization, decision-making power and authority are retained at the higher levels of management. No organization is ever completely decentralized or completely cen-tralized; some firms position themselves toward one end of the continuum, and some lean the other way

the Lewin model

Kurt Lewin, a noted organizational theorist, suggested that every change requires three steps. The first step is unfreezing—individuals who will be affected by the impending change must be led to recognize why the change is necessary. Next, the change itself is implemented. Finally, refreezing involves reinforcing and supporting the change so that it becomes a part of the system. For example, one of the changes Caterpillar faced in response to the recession noted earlier involved a massive workforce reduction. The first step (unfreezing) was convincing the United Auto Workers to support the reduction because of its importance to long-term effectiveness. After this unfreezing was accomplished, 30,000 jobs were eliminated (implementation). Then Caterpillar worked to improve its damaged rela-tionship with its workers (refreezing) by guaranteeing future pay hikes and promising no more cutbacks. As interesting as Lewin's model is, however, it unfortunately lacks operational specificity. Thus a more comprehensive perspective is often needed.

Forms of communication in organizations

Managers need to understand several kinds of communication that are common in organizations today. interpersonal communication communication in networks and teams organizational communication electronic communication

feelings of loss

Many changes involve altering work arrangements in ways that disrupt existing social networks. Because social relationships are important, most people resist any change that might adversely affect those relationships. Other intangibles threatened by change include power, status, security, familiarity with existing procedures, and self-confidence.

The role of communication in management

Meetings, telephone calls, and various kinds of correspondence are all a necessary part of every manager's job—and all clearly involve communication. -Each of the 10 basic managerial roles discussed in Chapter 1 would be impossible to fill without communication. Interpersonal roles involve interacting with supervisors, subordinates, peers, and others outside the organization. Decisional roles require managers to seek out information to use in making decisions and then communicate those decisions to others. Informational roles focus specifically on acquiring and disseminating information. -Communication also relates directly to the basic management functions of planning, orga-nizing, leading, and controlling. Environmental scanning, integrating planning-time horizons, and decision making, for example, all necessitate communication. Delegation, coordination, and organization change and development also entail communication. Developing reward sys-tems and interacting with subordinates as a part of the leading function would be impossible without some form of communication. And communication is essential to establishing standards, monitoring performance, and taking corrective actions as a part of control.

Written communication

Memos, letters, reports, notes, and other circumstances in which the written word is used to transmit meaning "Putting it in writing" in a letter, report, memorandum, handwritten note, or e-mail or text message can solve many of the problems inherent in oral communication. is not as common as one might imagine, nor is it a mode of communication much respected by managers. The biggest single drawback of traditional forms of written communication is that they inhibit feedback and interchange. When one manager sends another manager a letter, it must be written or dictated, printed, mailed, received, routed, opened, and read. If there is a misunderstanding, it may take several days for it to be recognized, let alone rectified. Although the use of e-mail or texts is, of course, much faster, both sender and receiver must still have access to a computer or other device, and the receiver must open and read the mes-sage for it to actually be received. A phone call could settle the whole matter in just a few minutes. Thus written communication often inhibits feedback and interchange and is usu-ally more difficult and time consuming than oral communication. written communication offers some advantages. It is often very accurate and provides a permanent record of the exchange. The sender can take the time to collect and assimilate the information and can draft and revise it before it is transmitted. The receiver can take the time to read it carefully and can refer to it repeatedly, as needed. For these rea-sons, written communication is generally preferable when important details are involved. At times it is important to one or both parties to have a written record available as evidence of exactly what took place.

Formal information systems

Most larger businesses manage at least a portion of their organizational communication through information systems. Some firms go so far as to create a position for a chief information officer, or CIO. CIO is responsible for determining the information- processing needs and requirements of the organization and then putting in place systems that facilitate smooth and efficient organizational communication. part of the CIO's efforts is the creation of one or more formal information systems linking all relevant managers, departments, and facilities in the organization. Most enterprise resource planning systems play this role very effectively. In the absence of such a system, a marketing manager, for example, may need to call a warehouse manager to find out how much of a particular product is in stock before promising shipping dates to a cus-tomer. An effective formal information system allows the marketing manager to get the infor-mation more quickly, and probably more accu-rately, by plugging directly into a computerized information system.

overcoming resistance to change

Of course, a manager should not give up in the face of resistance to change. Although there are no sure-fire cures, there are several techniques that at least have the potential to over-come resistance. participation, education and communication, facilitation, force-field analysis

The managerial hierarchy

Organizations that use the hierarchy to achieve coordination place one manager in charge of interdependent departments or units. In Walmart distribution centers, major activities include receiving and unloading bulk shipments from railroad cars and loading other shipments onto trucks for distribution to retail outlets. The two groups (receiving and shipping) are interdependent in that they share the loading docks and some equipment. To ensure coordination and minimize conflict, one manager is in charge of the whole operation.

Organizational barriers

Other barriers to effective communication involve the organiza-tional context in which the communication occurs. 1. semantics - problems arise when words have different meanings for different people. Words and phrases such as profit, increased output, and return on investment may have positive meanings for managers but less positive meanings for labor. 2. status or power differences - The company president may discount a suggestion from an operating employee, thinking, "How can someone at that level help me run my business?" Or, when the president goes out to inspect a new plant, workers may be reluctant to offer suggestions because of their lower status. The marketing vice president may have more power than the human resource vice president and consequently may not pay much atten-tion to a staffing report submitted by the human resource department. 3. different perceptions - When two managers observe that a third manager has not spent much time in her office lately, one may believe that she has been to several important meetings, and the other may think she is "hiding out." If they need to talk about her in some official capacity, problems may arise because one has a positive impression and the other a negative impression. 4. noise - Environmental factors may also disrupt effective communication. As mentioned earlier, noise may affect communication in many ways. If a manager's smartphone loses power or connectivity, communication may be disrupted. 5. overload - when the receiver is being sent more information than he or she can effectively handle. Many managers report getting so many e-mail and text messages each day that they sometimes feel overwhelmed. And when the manager gives a subordinate many jobs on which to work and at the same time the subordinate is being told by family and friends to do other things, overload may result, and communication effectiveness diminishes. 6. language differences - global, different languages can create problems. To counter this problem, some firms are adopting an "official language." Indeed, English is increas-ingly becoming the standard business language around the world.

planned versus reactive change

Planned change: Change that is designed and implemented in an orderly and timely fashion in anticipation of future events. Planned change is almost always preferable to reactive change. Reactive change: A piecemeal response to circumstances as they develop. Because reactive change may be hurried, the potential for poorly conceived and executed change is increased. better anticipation might have forestalled those job cuts. The importance of approaching change from a planned perspective is reinforced by the frequency of organization change. Most companies or divisions of large companies implement some form of moderate change at least every year and one or more major changes every four to five years. Managers who sit back and respond only when they have to are likely to spend a lot of time hastily changing and rechanging things. A more effective approach is to anticipate forces urging change and plan ahead to deal with them.

electronic coordination

Recent advances in electronic information technology are also providing useful mechanisms for coordination. E-mail, for example, makes it easier for people to communicate with one another. This communication, in turn, enhances coordination. Similarly, many people in organizations today use electronic scheduling, at least some of which is accessible to oth-ers. Hence, if someone needs to set up a meeting with two colleagues, he can often check their electronic schedules to determine their availability, making it easier to coordinate their activities. Local networks, increasingly managed by handheld electronic devices, are also mak-ing it easier to coordinate activities.

rules and procedures

Routine coordination activities can be handled via rules and stan-dard procedures. In the Walmart distribution center, an outgoing truck shipment has priority over an incoming rail shipment. Thus, when trucks are to be loaded, the shipping unit is given access to all of the center's auxiliary forklifts. This priority is specifically stated in a rule. But, as useful as rules and procedures often are in routine situations, they are not particularly effective when coordination problems are complex or unusual.

facilitation

Several facilitation procedures are also advisable. For instance, making only necessary changes, announcing those changes well in advance, and allowing time for people to adjust to new ways of doing things can help reduce resistance to change. One manager at a Prudential regional office spent several months systematically planning a change in work procedures and job design. He then became too impatient, coming in over the weekend with a work crew and rearranging the office layout. When employees walked in on Monday morning and saw what he had done, they were hostile, anxious, and resentful. What was a promising change became a disaster, and the manager had to scrap the entire plan.

A comprehensive approach to change

The comprehensive approach to change takes a systems view and delineates a series of specific steps that often lead to successful change. 1. recognition of the need for change The first step is recognizing the need for change. Reactive change might be triggered by employee complaints, declines in productivity or turnover, court injunctions, sales slumps, or labor strikes. Recognition may simply be managers' awareness that change in a certain area is inevitable. For example, managers may be aware of the general frequency of organizational change undertaken by most organizations and recognize that their organization should probably follow the same pattern. The immediate stimulus might be the result of a forecast indicating new market potential, the accumulation of a cash surplus for possible investment, or an opportunity to achieve and capitalize on a major technological breakthrough. Managers might also initiate change today because indicators suggest that it will be necessary in the near future. 2. establishment of goals for the change To increase market share, to enter new markets, to restore employee morale, to settle a strike, and to identify investment opportu-nities all might be goals for change. 3. diagnosis of relevant variables managers must diagnose what brought on the need for change. Turnover, for example, might be caused by low pay, poor working conditions, poor supervisors, or employee dissatisfaction. Thus, although turnover may be the immediate stimulus for change, managers must understand its causes to make the right changes. 4. selection of appropriate change technique select a change technique that will accomplish the intended goals. If turnover is caused by low pay, a new reward system may be needed. If the cause is poor supervision, interpersonal skills training may be called for. 5. planning for implementation of the change Issues to consider include the costs of the change, its effects on other areas of the organization, and the degree of employee participation appropri-ate for the situation. 6. actual implementation 7. evaluation and follow up If the change is implemented as planned, the results should then be evaluated. If the change was intended to reduce turnover, managers must check turnover after the change has been in effect for a while. If turnover is still too high, other changes may be necessary

administrative intensity

The degree to which managerial positions are concentrated in staff positions Organizations sometimes try to balance their emphasis on line versus staff positions in terms of administrative intensity An organization with high administrative intensity is one with many staff positions relative to the number of line positions; low administrative intensity reflects relatively more line positions. Although staff positions are important in many different areas, they tend to proliferate unnecessarily. All else being equal, orga-nizations would like to devote most of their human resource investment to line managers because, by definition, they contribute to the organization's basic goals. A surplus of staff positions represents a drain on an organization's cash and an inefficient use of resources. Many organizations have taken steps over the past few years to reduce their administra-tive intensity by eliminating staff positions.

Job Specialization

The degree to which the overall task of the organization is broken down and divided into smaller component parts Job specialization evolved from the concept of division of labor Adam Smith, an eighteenth-century economist, first discussed division of labor in his case study about how a pin factory used it to improve productivity 10 men working in this fashion were able to produce 48,000 pins in a day, whereas each man working alone could have produced only about 20 pins per day. The first examples of the impact of special-ization came from the automobile assembly line pioneered by Henry Ford and his contemporaries. Mass-production capabilities stem-ming from job specialization techniques have had a profound impact throughout the world. During the twentieth century, high levels of low-cost production transformed U.S. society into one of the strongest economies in the history of the world. Job specialization in its purest form is simply a normal extension of organizational growth. As growth continued, so, too, did specialization.

Informal Communication in Organizations

The forms of organizational communication discussed in the previous section all represent planned and relatively formal communication mechanisms. However, in many cases some of the communication that takes place in an organization transcends these formal channels and instead follows any of several informal methods. grapevine management by wandering around nonverbal communication

Interpersonal Dynamics

The nature of interpersonal relations in an organization is as varied as the individual members themselves. -At one extreme, interpersonal relations can be personal and positive. This occurs when the parties know each other, have mutual respect and affection, and enjoy interacting. - two mangers golfing on the weekends together interact positively at work - At the other extreme, interpersonal dynamics can be personal but negative. - This is most likely when the parties dislike each other, do not have mutual respect, and do not enjoy interacting. -Most interactions fall between these extremes, as members of the organization inter-act in a professional way focused primarily on goal accomplishment. The interaction deals with the job at hand, is relatively formal and struc-tured, and is task directed. Two managers may respect each other's work and recognize the pro-fessional competence that each brings to the job. However, they may also have few common inter-ests and little to talk about besides the job they are doing.

Narrow Versus Wide Spans

The number of people who report to a particular manager (sometimes called the span of control). For years, managers and researchers sought to determine the optimal span of management. For example, should it be relatively narrow (with few subordinates per manager) or relatively wide (with many subordinates)? One early writer, A. V. Graicunas, went so far as to quantify span of management issues.22 Graicunas noted that a manager must deal with three kinds of interactions with and among subordinates: direct (the manager's one-to-one relationship with each subordinate), cross (among the subordinates themselves), and group (between groups of subordinates). The number of possible interactions of all types between a manager and subordinates can be determined by the following formula: I=N (2^N/2 + N-1) where I is the total number of interactions with and among subordinates and N is the number of subordinates. If a manager has only two subordinates, six potential interactions exist. If the number of subordinates increases to three, the possible interactions total 18. Although Graicunas offers no prescription for what N should be, his ideas demonstrate how complex the relationships become when more subordinates are added The important point is that each additional subordinate adds more com-plexity than the previous one did. Going from nine to ten subordinates is very different from going from three to four. Another early writer, Ralph C. Davis, described two kinds of spans: an operative span for lower-level managers and an executive span for middle and top managers. He argued that operative spans could approach 30 subordinates, whereas execu-tive spans should be limited to between three and nine (depending on the nature of the managers' jobs, the growth rate of the company, and simi-lar factors). Lyndall F. Urwick suggested that an executive span should never exceed six subordinates, and General Ian Hamilton reached the same conclusion.23 Today we recognize that the span of management is a crucial factor in structuring organizations but that there are no universal, cut-and-dried prescriptions for an ideal or optimal span.2

The communication process

The process of communication begins when one person (the sender) wants to transmit a fact, idea, opinion, or other information to someone else (the receiver). This fact, idea, or opinion has meaning to the sender, whether it be simple and concrete or complex and abstract. The next step is to encode the meaning into a form appropriate to the situation. The encoding might take the form of words, facial expressions, gestures, or even artistic expres-sions and physical actions. the encoding process is influenced by the content of the mes-sage, the familiarity of sender and receiver, and other situational factors. After the message has been encoded, it is transmitted through the appropriate channel or medium. The channel by which this encoded message is being transmitted to you is the printed page. Common channels in organizations include meetings, e-mail or text messages, memos, letters, reports, and telephone calls. After the message is received, it is decoded back into a form that has meaning for the receiver. As noted earlier, the consistency of this meaning can vary dramatically. In many cases, the meaning prompts a response, and the cycle is continued when a new message is sent by the same steps back to the original sender. called the sales representative to offer congratulations, written her a personal note of praise, offered praise in an e-mail or text, or sent a formal letter of acknowledgment. "Noise" may disrupt communication any-where along the way. Noise can be the sound of someone coughing, a truck driving by, or two people talking close at hand. It can also include disruptions such as a letter lost in the mail, a dead telephone line, an interrupted cellphone call, an e-mail misrouted or infected with a virus, a text not being received because of poor service, or one of the participants in a conversation being called away before the com-munication process is completed. Another form of noise might be dif-ficulties in understanding messages due to lan-guage barriers.

organization structure

The set of elements that can be used to configure an organization -the building blocks themselves 1. designing jobs 2. grouping jobs 3. establishing reporting relationships between jobs 4. distributing authority among jobs 5. coordinating activities among jobs 6. differentiating among positions

Establishing Reporting Relationships

The third basic element of organizing is the establishment of reporting relationships among positions. Suppose, for example, that the owner-manager of a small business has just hired two new employees, one to handle marketing and one to handle production. Will the mar-keting manager report to the production manager, will the production manager report to the marketing manager, or will each report directly to the owner-manager? These questions reflect the basic issues involved in establishing reporting relationships: clarifying the chain of command and the span of management. in addition to formal departmental arrangements (as described earlier) and prescribed reporting relationships (as discussed below), there is also considerable informal interaction that takes place among people in any organization.

Other Forms of Departmentalization

-By specific units of time operates on three shifts. Each shift has a superintendent who reports to the plant manager, and each shift has its own functional departments. Time is thus the framework for many organizational activities. -By sequence Many college students, for instance, must register in sequence: seniors on Monday, juniors on Tuesday, and so on. -By customer characteristics, products, or services

problems in delegation

-Manager ~Reluctant to delegate. ~Disorganization prevents planning work in advance. ~Subordinate's success threatens superior's advancement. -Subordinate ~Reluctant to accept delegation for fear of failure. ~Perceives no rewards for accepting additional responsibility. ~Prefers to avoid any risk and responsibility. There are no quick fixes for these problems. The basic issue is communication. Subordinates must understand their own responsibility, authority, and accountability, and the manager must come to recognize the value of effective delegation. With the passage of time, subordinates should develop to the point at which they can make substantial contribu-tions to the organization. At the same time, managers should recognize that a subordinate's satisfactory performance is not a threat to their own career, but an accomplishment by both the subordinate who did the job and the manager who trained the subordinate and was astute enough to entrust the subordinate with the project. Ultimate responsibility for the outcome, however, continues to reside with the manager

Rationale for Departmentalization

-Organizational growth exceeds the owner-manager's capacity to personally supervise all of the organization -Additional managers are employed and assigned specific employees to supervise -Employees are not assigned to particular managers randomly. Rather, jobs are grouped according to some plan. The logic embodied in such a plan is the basis for all departmentalization.

Individual barriers

1. conflicting or inconsistent signals - A manager is sending conflicting signals when she says on Monday that things should be done one way, but then prescribes an entirely different procedure on Wednesday. Inconsistent signals are being sent by a manager who says that he has an "open door" policy and wants his subordinates to drop by, but keeps his door closed and becomes irritated whenever someone stops in. 2. lack of credibility - Credibility problems arise when the sender is not considered a reliable source of information. He may not be trusted or may not be perceived as knowledgeable about the subject at hand. When a politician is caught withholding information or when a manager makes a series of bad decisions, the extent to which he or she will be listened to and believed thereafter diminishes. In extreme cases, people may talk about something they obviously know little or nothing about. 3. reluctant to initiate a communication exchange - A manager may be reluctant to tell subordinates about an impending budget cut because he knows they will be unhappy about it. Likewise, a subordinate may be reluctant to transmit information upward for fear of reprisal or because it is felt that such an effort would be futile. 4. poor listening skills - Some people are simply poor listeners. When someone is talking to them, they may be daydreaming, look-ing around, reading, or listening to another conversation. Because they are not concentrat-ing on what is being said, they may not comprehend part or all of the message. They may even think that they really are paying attention, only to realize later that they cannot remem-ber parts of the conversation. 5. recovering bringing predispositions to the communication process - They may already have their minds made up, firmly set in a certain way. For example, a manager may have heard that his new boss is unpleasant and hard to work with. When she calls him in for an intro-ductory meeting, he may go into that meeting predisposed to dislike her and discount what she has to say

Improving communication effectiveness with individual skills

1. develop good listening skills - The single most important individual skill for improving communication effectiveness is being a good listener. Being a good listener requires that the person be prepared to listen, not interrupt the speaker, concentrate on both the words and the meaning being conveyed, be patient, and ask questions as appropriate 2. encourage two-way communication -Feedback, one of the most important, is facilitated by two-way communica-tion. Two-way communication allows the receiver to ask questions, request clarification, and express opinions that let the sender know whether he or she has been understood. In general, the more complicated the message, the more useful two-way communication is. 3. be more aware of language and meaning -In addition, the sender should be aware of the meanings that different receivers might attach to various words. For exam-ple, when addressing stockholders, a manager might use the word profits often. When addressing labor leaders, however, she may choose to use profits less often. 4. maintain credibility - This can be accomplished by not pretending to be an expert when one is not, by "doing one's homework" and checking facts, and by otherwise being as accurate and honest as possible. 5. be sensitive to receivers perspective -A manager who must tell a subordinate that she has not been recommended for a promotion should recognize that the subordinate will be frustrated and unhappy. The content of the message and its method of delivery should be chosen accordingly. The manager should be primed to accept a reasonable degree of hostil-ity and bitterness without getting angry in return. 6. be sensitive to senders perspective - Suppose that a manager has just received some bad news—for example, that his position is being eliminated next year. Others should understand that he may be disappointed, angry, or even depressed for a while. Thus they might make a special effort not to take too much offense if he snaps at them, and they might look for signals that he needs someone to talk to.

differences between line and staff

1. purpose—line managers work directly toward organizational goals, whereas staff managers advise and assist. 2. Authority -- Line authority is generally thought of as the formal or legitimate authority created by the organizational hierarchy. Staff authority is less concrete and may take a variety of forms. One form is advise authority. In this instance, the line manager can choose whether to seek or to avoid input from staff; and even when advice is sought, the line manager might still choose to ignore it. Another form of staff authority is called compulsory advice. In this case, the line manager must consider the advice but can choose to heed it or ignore it. For example, the pope is expected to listen to the advice of the Sacred College of Cardinals when dealing with church doctrine, but he may follow his own beliefs when making decisions. Perhaps the most important form of staff authority is called functional authority—formal or legitimate authority over activities related to the staff member's specialty. For example, a human resource staff manager may have functional authority when there is a question of discrimination in hiring. Conferring functional authority is probably the most effective way to use staff positions because the organization can take advantage of specialized expertise while also maintaining a chain of command.

What factors determine an organization's position on the decentralization-centralization continuum?

1. the organization's external environment. Usually, the greater the complexity and uncertainty of the environment, the greater is the tendency to decentralize. 2. the history of the organization. Firms have a tendency to do what they have done in the past, so there is likely to be some relationship between what an organization did in its early history and what it chooses to do today in terms of centralization or decentralization. 3. The nature of the decisions being made is also considered. The costlier and riskier the decisions, the more pressure there is to centralize. 4. the abilities of lower-level managers. If lower-level managers do not have the ability to make high-quality deci-sions, there is likely to be a high level of centralization. If lower-level managers are well qualified, top management can take advantage of their talents by decentralizing; in fact, if top management does not, talented lower-level man-agers may leave the organization.

differentiating between positions

A line position is a position in the direct chain of com-mand that is responsible for the achievement of an organization's goals. A staff position is intended to provide expertise, advice, and support for line positions. In many modern organizations these differences are beginning to disappear, and in a few the difference has been eliminated altogether. However, there are still sufficient meaningful differences to warrant discussion.

task forces

A task force may be created when the need for coordination is acute. When interdependence is complex and several units are involved, a single liaison person may not be sufficient. Instead, a task force might be assembled by drawing one representative from each group. The coordination function is thus spread across several individuals, each of whom has special information about one of the groups involved. When the project is completed, task force members return to their original positions. For example, a college overhauling its degree requirements might establish a task force made up of representatives from each department affected by the change. Each person retains her or his regular departmental affiliation and duties but also serves on the special task force. After the new requirements are agreed on, the task force is dissolved.

Work Teams

An alternative to job specialization that allows an entire group to design the work system it will use to perform an interrelated set of tasks In the typical assembly-line system, the work flows from one worker to the next, and each worker has a specified job to perform. In a work team, however, the group itself decides how jobs will be allocated. For example, the work team assigns specific tasks to members, monitors and controls its own performance, and has autonomy over work scheduling.

job enlargement

An alternative to job specialization that involves giving the employee more tasks to perform all workers perform a wide variety of tasks, which presumably reduces the level of job dissatisfaction. Unfortunately, although job enlargement does have some positive consequenc-es, these are often offset by some disadvantages: (1) Training costs usually increase, (2) unions have ar-gued that pay should increase because the worker is doing more tasks, and (3) in many cases the work re-mains boring and routine even after job enlargement.

job enrichment

An alternative to job specialization that involves increasing both the number of tasks the worker does and the control the worker has over the job job enrichment is an attempt to increase both the number of tasks a worker does and the control the worker has over the job. To implement job enrichment, managers remove some controls from the job, delegate more authority to employees, and structure the work in complete, natural units. These changes increase subordinates' sense of responsibility. Another part of job enrichment is to continually assign new and challenging tasks, thereby increasing employees' opportunity for growth and advancement. Faced with low output and high turnover, management determined that the data entry clerks felt little responsibility to clients and received little feedback. The unit was changed to cre-ate a data entry team. Data entry specialists were matched with designated service rep-resentatives, the task was changed from 10 specific steps to three more general steps, and job titles were upgraded. As a result, the frequency of order processing increased from 27 percent to 90 percent, the need for messenger service was eliminated, accuracy improved, and turnover became practically nil. Job enrichment is also being used in some banks today, with employees in branches being trained to work as tellers, open new accounts, and accept loan applications. This approach, however, also has disadvantages. For example, work systems need to be analyzed before enrichment, but this seldom happens, and managers rarely ask for employee preferences when enriching jobs. And note that while Anderen Bank employees get to do more tasks and have greater responsibility, the firm's goal was to lower labor cost by employing fewer people. The impact of the changes on employee morale, performance, and turn-over have also not been assessed.

job rotation

An alternative to job specialization that involves systematically moving employees from one job to another the jobs do not change; instead, workers move from job to job. job rotation has not been very successful in enhancing employee motivation or satisfaction. Jobs that are amenable to rotation tend to be relatively standard and routine. it is most often used today as a training device to improve worker skills and flexibility. Job rotation is also being used more to increase flexibility and lower costs. That is, because workers who can perform multiple jobs can be moved around to different jobs when demand shifts, the business can often get by with fewer workers.

job characteristics approach

An alternative to job specialization that suggests that jobs should be diagnosed and improved along five core dimensions, taking into account both the work system and employee preferences suggests that jobs should be diag-nosed and improved along five core dimensions: 1. Skill variety, the number of things a person does in a job 2. Task identity, the extent to which the worker does a complete or identifiable portion of the total job 3. Task significance, the perceived importance of the task 4. Autonomy, the degree of control the worker has over how the work is performed 5. Feedback, the extent to which the worker knows how well the job is being performed The higher a job rates on those dimensions, the more employees will experience various psychological states. Experiencing these states, in turn, presumably leads to high motivation, high-quality performance, high satisfaction, and low absenteeism and turnover. a concept called growth-need strength is presumed to affect how the model works for different people. People with a strong desire to grow, develop, and expand their capabilities (indicative of high growth-need strength) are expected to respond strongly to the presence or absence of the basic job characteristics; those with low growth-need strength are expected not to respond as strongly or consistently Many studies have been conducted to test the usefulness of the job characteristics ap-proach. The Southwestern Division of Prudential Insurance, for example, used this ap-proach in its claims division. Results included moderate declines in turnover and a small but measurable improvement in work quality. Other research findings have not supported this approach as strongly. Thus, although the job characteristics approach is one of the most promising alternatives to job specialization, it is probably not the final answer

management by wandering around

An approach to communication that involves the manager's literally wandering around and having spontaneous conversations with others The basic idea is that some managers keep in touch with what is going on by wandering around and talking with people—immediate subordi-nates, subordinates far down the organizational hierarchy, delivery people, customers, or any-one else who is involved with the company in some way. by talking with employees throughout the hotel, he gets new ideas and has a better feel for the entire com-pany. he makes a point of talking to flight attendants and other passengers to gain continuous insights into how the business can be run more effectively A related form of organizational communication that really has no specific term is the informal interchange that takes place outside the normal work setting. Employees attend-ing the company picnic, playing on the company softball team, or taking fishing trips together will almost always spend part of their time talking about work. the social gatherings serve an important role. They promote a strong culture and enhance understanding of how the organization works.

The Grapevine

An informal communication network among people in an organization can permeate an entire organiza-tion. Grapevines are found in all organizations except the very smallest, but they do not always follow the same patterns as, nor do they necessarily coincide with, formal channels of authority and communication. - the cluster chain : one person passes the information to a selected few individuals. Some of the receivers pass the information to a few other individuals; the rest keep it to themselves. the gossip chain : occurs when one person spreads the message to many other people. Each one, in turn, may either keep the information confidential or pass it on to others. The gossip chain is likely to carry personal information. - There is some disagreement about how accurate the information carried by the grapevine is, but research is increasingly finding it to be fairly accurate, especially when the information is based on fact rather than speculation. One study found that the grapevine may be between 75 percent and 95 percent accurate. informal communication is increasing in many organizations because: 1. the recent increase in merger, acquisition, and takeover activity. Because such activity can greatly affect the people within an organization, it follows that they may spend more time talking about it. 2. as more and more corporations move facilities from inner cities to suburbs, employees tend to talk less and less to others outside the organization and more and more to one another. 3. the widespread availability of information technology that makes it easier than ever before for people to communicate quickly and easily another study looked at the effects of the recent recession and large-scale job losses on informal communication. Over half of the survey participants reported a sharp increase in gossip and rumors in their organizations. The same survey also reported an increase in the amount of eavesdropping in most busi-nesses. Further, in another survey, 32 percent of people claimed to use their work e-mail inappropriately and 48 percent admitted gossiping with other employees through their e-mail.29 Finally, in another survey con-ducted in 2015 over half of the participants reported that they had overheard confidential conversations at work. Attempts to eliminate the grapevine are not likely to succeed, but fortunately the manager does have some con-trol over it. By maintaining open channels of communication and responding vigorously to inaccurate information, the manager can minimize the damage the grapevine can do. The grapevine can actually be an asset. By learning who the key people in the grapevine are, for example, the manager can partially control the information they receive and use the grape-vine to sound out employee reactions to new ideas, such as a change in human resource policies or benefit packages. The manager can also get valuable information from the grape-vine and use it to improve decision making.

understanding resistance to change

Another element in the effective management of change is understanding the resistance that often accompanies change. Managers need to know why people resist change and what can be done about their resistance. Resistance is common for a variety of reasons. 1. uncertainty 2. threatened self interests 3. different perceptions 4. feelings of loss

nonverbal communication

Any communication exchange that does not use words or uses words to carry more meaning than the strict definition of the words themselves Nonverbal communication is a powerful but little understood form of communication in organizations. It often relies on facial expressions, body movements, physical contact, and gestures. Research has identified three kinds of non-verbal communication practiced by managers— images, settings, and body language. Images are the kinds of words people elect to use. "Damn the torpedoes, full speed ahead" and "Even though there are some potential hazards, we should proceed with this course of action" may convey the same meaning. Yet the person who uses the first expression may be perceived as a maverick, a courageous hero, an individualist, or a reckless and foolhardy adventurer. The person who uses the second might be described as aggressive, forceful, diligent, or narrow minded and resistant to change. our choice of words conveys much more than just the strict meaning of the words themselves. The setting for communication also plays a major role in nonverbal communication. Boundaries, familiarity, the home turf, and other elements of the setting are all important. Much has been written about the symbols of power in organizations. The size and location of an office, the kinds of furniture in the office, and the accessibility of the person in the office all communicate useful information. - desk between you and visitor to be in charge vs coming out to the front = informal -desk to the side facing a window = never anything in-between them -A third form of nonverbal communication is body language. The distance we stand from someone as we speak has meaning. In the United States, standing very close to some-one you are talking to generally signals either familiarity or aggression. The English and Germans stand farther apart than Americans when talking, whereas the Arabs, Japanese, and Mexicans stand closer together. Eye contact is another effective means of nonverbal communication. For example, prolonged eye contact might suggest either hostility or romantic interest. Other kinds of body language include body and hand movement, pauses in speech, and mode of dress. The manager should be aware of the importance of nonverbal communication and recognize its potential impact. Giving an employee good news about a reward with the wrong nonverbal cues can destroy the reinforcement value of the reward. Likewise, reprimanding an employee but providing inconsistent nonverbal cues can limit the effectiveness of the sanctions. The tone of the message, where and how the message is delivered, facial expressions, and gestures can all amplify or weaken the message or change the message altogether Emoticons also play a growing role in nonverbal communication. For instance, in a face-to-face conversation we can use a facial expression to indicate that we are kidding or being sarcastic with our words. In an e-mail or text, though, the context clues provided by facial expressions are lost. But now people can attach emoticons—smiling faces, frowning faces, winks, and so forth—to e-mails, texts, or other digital messages to convey additional information.

benefits and limitations of specialization

Benefits: 1. workers performing small, simple tasks will become very proficient at each task. 2. transfer time between tasks decreases. If employees perform several different tasks, some time is lost as they stop doing the first task and start doing the next. 3. the more narrowly defined a job is, the easier it is to develop specialized equipment to assist with that job. 4. when an employee who performs a highly specialized job is absent or resigns, the manager can train someone new at relatively low cost. Although specialization is generally thought of in terms of operating jobs, many organizations have extended the basic elements of specialization to managerial and professional levels. Limitations: 1. workers who perform highly specialized jobs may become bored and dissatisfied. The job may be so specialized that it offers no challenge or stimulation. Boredom and monotony set in, absenteeism rises, and the quality of the work may suffer 2. the anticipated benefits of specialization do not always occur. a classic study conducted at Maytag found that the time spent moving work in pro-cess from one worker to another was greater than the time needed for the same person to change from job to job. although some degree of specialization is necessary, it should not be carried to extremes, because of the possible negative consequences

Communication in Networks and Teams

Communication Network: The pattern through which the members of a group communicate Although communication among team members in an organization is clearly interpersonal in nature, substantial research also focuses specifically on how people in networks and work teams communicate with one another. Researchers studying group dynamics have identified several typical networks in groups and teams consisting of three, four, and five members. Wheel - all communication flows through one central person, who is prob-ably the group's leader. In a sense, the wheel is the most centralized network because one person receives and disseminates all information. Y - is slightly less centralized—two people are close to the center. Chain - The chain offers a more even flow of information among members, although two people (the ones at each end) interact with only one other person. Circle - This path is closed in the circle pattern. All Channel - the most decentralized, allows a free flow of information among all group members. Everyone partici-pates equally, and the group's leader, if there is one, is not likely to have excessive power. Most social media platforms such as Facebook and LinkedIn allow individual users to form groups; these groups, in turn, then communicate like an all-channel network. Research conducted on networks suggests some interesting connections between the type of network and group performance. For example, when the group's task is relatively simple and routine, centralized networks tend to perform with greatest efficiency and accu-racy. The dominant leader facilitates performance by coordinating the flow of information. When a group of accounting clerks is logging incoming invoices and distributing them for payment, for example, one centralized leader can coordinate things efficiently. When the task is complex and nonroutine, such as making a major decision about organizational strategy, decentralized networks tend to be most effective because open channels of communica-tion permit more interaction and a more efficient sharing of relevant information.

Horizontal Communication

Communication that flows laterally within the organization; involves colleagues and peers at the same level of the organization and may involve individuals from several different organizational units operations manager might communicate to a marketing manager that inventory levels are running low and that projected delivery dates should be extended by two weeks. Horizontal communication probably occurs more among managers than among nonmanagers. Purposes: 1. It facilitates coordination among interdependent units (uncovered some additional information that was potentially important to another department, so he passed it along to a colleague in that department) 2. be used for joint problem solving (two plant managers at Northrop Grumman got together to work out a new method to improve productivity) 3.plays a major role in work teams with members drawn from several departments.

Vertical Communication

Communication that flows up and down the organization, usually along formal reporting lines; takes place between managers and their superiors and subordinates and may involve several different levels of the organization Upward communication consists of messages from subordinates to superiors. This flow is usually from subordinates to their direct superior, then to that person's direct superior, and so on up the hierarchy. - Research has shown that upward communication is more subject to dis-tortion than is downward communication. For example, subordinates may tend to withhold or distort information that makes them look bad. The greater the degree of difference in status between superior and subordinate and the greater the degree of distrust, the more likely the subordinate is to suppress or distort information. For instance, subordinates might choose to withhold information about prob-lems from their boss if they think the news will make him angry and if they think they can solve the problem themselves without his ever knowing about it. Downward communication occurs when information flows down the hierarchy from superiors to subordinates. The typical content of these messages is directives on how some-thing is to be done, the assignment of new responsibilities, performance feedback, and general information that the higher-level manager thinks will be of value to the lower-level manager. Vertical communication can and usually should be two-way in nature. In other words, give-and-take communication with active feedback is generally likely to be more effective than one-way communication.

Organizational Communication

Each of these involves oral or written communication, but each also extends to broad patterns of communication across the organization. two of these forms of communication follow vertical and horizontal linkages in the organization.

education and communication

Educating employees about the need for and the expected results of an impending change should reduce their resistance. If open communica-tion is established and maintained during the change process, uncertainty can be minimized. Caterpillar used these methods to reduce resistance during many of its cutbacks. First, it educated UAW representatives about the need for and potential value of the planned changes. Then management told all employees what was happening, when it would happen, and how it would affect them individually.

External forces

External forces for change derive from the organization's general and task environments. Automobile industry changed by: two energy crises, an aggressive Japanese automobile industry, floating currency exchange rates, and floating international interest rates—all manifestations of the international dimension of the general environment. New rules of production and competition forced them to dramatically alter the way they do business. Political Arena: new laws, court decisions, and regulations affect orga-nizations. Technological dimensions: may yield new production techniques that the organization needs to explore. economic dimension: affected by inflation, the cost of living, and money supplies. Sociocultural dimension: reflecting societal values, determines what kinds of products or services will be accepted in the market. Task environment: powerful force for change. Competitors influence an organization through their price structures and product lines. When Hewlett-Packard lowers computer prices, Dell may have little choice but to follow suit. Because customers determine what products can be sold at what prices, organizations must be concerned with consumer tastes and preferences. Suppliers affect organizations by raising or lowering prices or changing product lines. Regulators can have dra-matic effects on an organization. For example, if OSHA rules that a particular production process is dangerous to workers, it can force a firm to close a plant that uses that process until it meets stricter safety standards. Unions can force change when they have the clout to negotiate for higher wages or if they go on strike.

Oral Communication

Face-to-face conversation, group discussions, telephone calls, and other circumstances in which the spoken word is used to transmit meaning Skype and FaceTime, and other situations in which the spoken word is used to express meaning. The pri-mary advantage of oral communication is that it promotes prompt feedback and interchange in the form of verbal questions or agreement, facial expressions, and gestures. Oral commu-nication is also easy (all the sender needs to do is talk), and it can be done with little prepara-tion (though careful preparation is advisable in certain situations). The sender does not need pencil and paper, a printer, or other equipment. oral communication also has drawbacks. It may suffer from problems of inac-curacy if the speaker chooses the wrong words to convey meaning or leaves out pertinent details, if noise disrupts the process, or if the receiver forgets part of the message.12 In a two-way discussion, there is seldom time for a thoughtful, considered response or for introducing many new facts, and there is no permanent record of what has been said. In addition, although most managers are comfortable talking to people individually or in small groups, fewer enjoy speaking to larger audiences.

other considerations

First, de-partments are often called something entirely different—divisions, units, sections, and bureaus are all common synonyms. The higher we look in an organization, the more likely we are to find departments referred to as divisions. They represent groups of jobs that have been yoked together according to some unifying principle.\ Second, almost any organization is likely to employ multiple bases of departmentalization, depending on level. Although Apex Computer is a hypothetical firm that we created to explain departmentalization, it is quite similar to many real organizations in that it uses a variety of bases of departmentalization for different levels and different sets of activities. Finally, as illustrated in our Tech Watch feature, the role of social me-dia in departmentalization is just now beginning to have an impact.

Product Departmentalization

Grouping activities around products or product groups a second common approach, Most larger businesses adopt this form of departmen-talization for grouping activities at the business or corporate level. advantages: 1. all activities associ-ated with one product or product group can be easily integrated and coordinated. 2. the speed and effectiveness of decision making are enhanced. 3. the performance of individual products or product groups can be assessed more easily and objectively, thereby improving the accountability of departments for the results of their activities. Disadvantages: 1. managers in each department may focus on their own product or product group to the exclusion of the rest of the organization. For example, a marketing manager may see her or his primary duty as helping the group rather than helping the overall organization. 2. administra-tive costs rise because each department must have its own functional specialists for areas such as market research and financial analysis.

Customer Departmentalization

Grouping activities to respond to and interact with specific customers or customer groups The lending activities in most banks, for example, are usually tailored to meet the needs of different kinds of customers (business, consumer, mortgage, and agricultural loans). advantages: 1. the organization can use skilled specialists to deal with unique customers or customer groups. It takes one set of skills to evaluate a balance sheet and lend a business $500,000 for operating capital, and a different set of skills to evaluate a person's creditworthiness and lend $20,000 for a new car. However, a fairly large administrative staff is required to integrate the activities of the various departments. In banks, for example, coordination is necessary to make sure that the organization does not over-commit itself in any one area and to handle collections on delinquent accounts from a diverse set of customers.

Functional Departmentalization

Grouping jobs involving the same or similar activities The most common base for departmentalization, especially among smaller organizations, is by function. (The word function is used here to mean organizational functions such as finance and production, rather than the basic mana-gerial functions, such as planning or controlling.) This approach, which is most common in smaller organizations, has three primary advantages. 1. each department can be staffed by experts in that functional area. Marketing experts can be hired to run the marketing function, for example. 2. supervision is facilitated because an individual manager needs to be familiar with only a relatively narrow set of skills. 3. coordinating activities inside each department is easier. On the other hand, as an organization begins to grow in size, several disadvantages of this approach may emerge: 1. decision making tends to become slower and more bureaucratic. 2. Employees may also begin to concentrate too narrowly on their own unit and lose sight of the total organizational system. 3. accountability and performance be-come increasingly difficult to monitor. For example, determining whether a new product fails because of production deficiencies or a poor marketing campaign may not be possible.

Location Departmentalization

Grouping jobs on the basis of defined geographic sites or areas The defined sites or areas may range in size from a hemisphere to only a few blocks of a large city The primary advantage of location departmentalization is that it enables the organiza-tion to respond easily to unique customer and environmental characteristics in the various regions. On the negative side, a larger administrative staff may be required if the organiza-tion must keep track of units in scattered locations.

determining the appropriate span

How do managers determine the appropriate span for their unique situation? 1. Competence of supervisor and subordinates (the greater the competence, the wider the potential span) 2. Physical dispersion of subordinates (the greater the dispersion, the narrower the potential span) On the other hand, if all the subordinates are in one location, the span can be somewhat wider. 3. Extent of nonsupervisory work in manager's job (the more nonsupervisory work, the narrower the potential span) 4. Degree of required interaction (the less required interaction, the wider the potential span) 5. Extent of standardized procedures (the more procedures, the wider the potential span) 6. Similarity of tasks being supervised (the more similar the tasks, the wider the potential span) 7. Frequency of new problems (the higher the frequency, the narrower the potential span) 8. Preferences of supervisors and subordinates

Tall versus Flat Organizations

Imagine an organization with 31 managers and a narrow span of management. As shown in Figure 10.3, the result is a relatively tall organization with five layers of management. With a somewhat wider span of management, however, the flat organization shown in Figure 10.3 emerges. This configuration has only three layers of management. a flat structure led to higher levels of employee morale and productivity.25 Researchers have also argued that a tall structure is more expensive (because of the larger number of managers involved) and that it fosters more communication problems (because of the increased number of people through whom information must pass). On the other hand, a wide span of management in a flat organization may result in a manager's having more administrative responsibility (because there are fewer managers) and more supervi-sory responsibility (because there are more subordinates reporting to each manager). If these additional responsibilities become excessive, the flat organization may suffer Many experts agree that businesses can function effectively with fewer layers of orga-nization than they currently have. The specific reasons for the change were to improve communication between the CEO and the operating unit heads and to speed up decision making.28 One additional reason for this trend is that improved commu-nication technologies such as e-mail and text messaging allow managers to stay in touch with a larger number of subordi-nates than was possible even just a few years ago.

Managing Organizational Communication

In view of the importance and pervasiveness of communication in organizations, it is vital for managers to understand how to manage the communication process. Managers should understand how to maximize the potential benefits of communication and minimize the potential problems.

integrating departments

Integrating departments are occasionally used for coordina-tion. These are somewhat similar to task forces but are more permanent. An integrating department generally has some permanent members as well as members who are assigned temporarily from units that are particularly in need of coordination. One study found that successful firms in the plastics industry, which is characterized by complex and dynamic environments, used integrating departments to maintain internal integration and coordina-tion.47 An integrating department usually has more authority than a task force and may even be given some budgetary control by the organization. In general, the greater the degree of interdependence, the more attention the organization must devote to coordination. When interdependence is pooled or simple sequential, the managerial hierarchy or rules and procedures are often sufficient. When more complex forms of sequential or simpler forms of reciprocal interdependence exist, liaisons or task forces may be more useful. When reciprocal interdependence is com-plex, task forces or integrating departments are needed. Of course, the manager must also rely on her or his own experience and insights when choosing coordination tech-niques for the organization. Moreover, informal interactions among people throughout the organization can also serve to effectively coordinate activities.

Outcomes of Interpersonal Behaviors

Interpersonal relations in organizations can be a primary source of need satisfaction for many people. -For a person with a strong need for affiliation, high-quality interpersonal relations can be an important positive element in the workplace. However, when this same person is confronted with poor-quality working relationships, the effect can be just as great in the other direction. -Good interpersonal relations throughout an organization can also be a source of synergy. People who support one another and who work well together can accomplish much more than people who do not support one another and who do not work well together. Another outcome, implied earlier, is conflict—people may leave an interpersonal exchange feeling angry or hostile. But a common thread is woven through all of these out-comes—communication between people in the organization.

Improving communication effectiveness with organizational skills

Three useful organizational skills can also enhance communication effectiveness for both the sender and the receiver—following up, regulating information flow, and understanding the richness of different media. 1. follow up - simply involves checking at a later time to be sure that a message has been received and understood. After a manager sends a report to a colleague, she might send a follow-up message a few days later to make sure the report was received. If it was, the manager might ask whether the colleague has any questions about it. 2. regulate information flows - means that the sender or receiver takes steps to ensure that overload does not occur. For the sender, this could mean not passing too much information through the system at one time. For the receiver, it might mean calling attention to the fact that he is being asked to do too many things at once. Many managers limit the influx of information by periodically weeding out the list of journals and routine reports they receive, or they train their assistant to screen phone calls and visitors. Indeed, some executives now get so much e-mail that they have it routed to an assistant. That person reviews the e-mail, discards those that are not useful (such as "spam"), responds to those that are routine, and passes on to the executive only those that require her or his personal attention. 3. understand the richness of media - When a manager is going to lay off a subordinate temporarily, the message should be delivered in per-son. A face-to-face channel of communication gives the manager an opportunity to explain the situation and answer questions. When the purpose of the message is to grant a pay increase, written communication may be appropriate because it can be more objective and precise. The manager could then follow up the written notice with personal congratulations.

liaison roles

We introduced the liaison role of management in Chapter 1. As a device for coordination, a manager in a liaison role coordinates interdependent units by acting as a common point of contact. This person may not have any formal authority over the groups but instead simply facilitates the flow of information between units. Two engi-neering groups working on component systems for a large project might interact through a liaison. The liaison maintains familiarity with each group as well as with the overall project. She can answer questions and otherwise serve to integrate the activities of all the groups.

reciprocal interdependence

When activities flow both ways between units This form is clearly the most complex. Within a Marriott hotel, for example, the reservations depart-ment, front-desk check-in, and housekeeping are all reciprocally interdependent. Reservations has to provide front-desk employees with informa-tion about how many guests to expect each day, and housekeeping needs to know which rooms require priority cleaning. If any of the three units does not do its job properly, all the others will be affected.

sequential interdependence

When the output of one unit becomes the input for another in sequential fashion This creates a moderate level of interdependence. At Nissan, for example, one plant assembles engines and then ships them to a final assembly site at another plant, where the cars are completed. The plants are interdependent in that the final assembly plant must have the engines from engine assembly before it can perform its primary function of producing finished automobiles. But the level of interdependence is generally one way—the engine plant is not necessarily dependent on the final assembly plant.

pooled interdependence

When units operate with little interaction; their output is simply pooled represents the lowest level of interdependence. Units with pooled interdependence operate with little interaction—the output of the units is pooled at the organizational level. Old Navy clothing stores operate with pooled interdependence. Each store is considered a "department" by the parent corporation. Each has its own operat-ing budget, staff, and so forth. The profits or losses from each store are "added together" at the organizational level. The stores are interdependent to the extent that the final success or failure of one store affects the others, but they do not generally interact on a day-to-day basis.

Choosing the Right Form

Which form of interpersonal communication should the man-ager use? The best medium will be determined by the situation. Oral communication, e-mail, or text messaging is often preferred when the message is personal, nonroutine, and brief. More formal written communication is usually best when the message is more impersonal, routine, and longer. And, given the prominent role that e-mails have played in several recent court cases, managers should always use discretion when sending messages electronically. -The manager can also combine media to capitalize on the advantages of each. For example, a quick phone call to set up a meeting is easy and gets an immediate response. Fol-lowing up the call with a reminder e-mail, digital meeting invitation, or handwritten note helps ensure that the recipient will remember the meeting, and it provides a record of the meeting's having been called. Digital communication, dis-cussed more fully later, blurs the differences between oral and written communication and can help each be more effective. In some instances, digital communication itself is also the most appropriate way to send a message.

The Interpersonal Nature of Organizations

a great deal of what all man-agers do involves interacting with other people, both directly and indirectly and both inside and outside of the organization -He spent most of it working, communicating, and interacting with other people. And this compressed daily schedule does not include several other brief telephone calls, brief conversations with his assistant, and brief conversations with other managers. Clearly, interpersonal relations, communication, and group processes are a pervasive part of all organizations and a vital part of all managerial activities.

Communication and the managers job

a typical day for a manager includes doing desk work, attending scheduled meetings, placing and receiving telephone calls, reading and answering correspondence (both print and digital), attending unscheduled meetings, and making tours. Most of these activities involve communication. In fact, managers usually spend over half their time on some form of communication. Communication always involves two or more people, so other behavioral processes, such as motivation, leadership, and group and team interactions, all come into play. Top executives must handle communication effectively if they are to be true leaders.

managing change in organizations

any change must be systematic and logical to have a realistic opportunity to succeed.14 To carry this off, the manager needs to understand the steps of effective change and how to counter employee resistance to change.

Parts of the delegation process

involves 3 steps: 1. the manager assigns responsibility or gives the sub-ordinate a job to do. The assignment of responsibility might range from telling a subordinate to prepare a report to placing the person in charge of a task force. 2. the person is also given the authority to do the job. The manager may give the subordinate the power to requisition needed information from confidential files or to direct a group of other workers. 3. the manager establishes the subordinate's accountability—that is, the subordinate accepts an obligation to carry out the task assigned by the manager These three steps do not occur mechanically, however. Indeed, when a manager and a subordinate have developed a good working relationship, the major parts of the process may be implied and understood rather than stated. The manager may simply mention that a particular job must be done. A perceptive subordinate may realize that the manager is actu-ally assigning the job to her. From past experience with the boss, she may also know, without being told, that she has the necessary authority to do the job and that she is accountable to the boss for finishing the job as "agreed.

designing jobs

job design: The determination of a person's work-related responsibilities -For a machinist at Caterpillar, job design might specify what machines are to be operated during the construction of a new piece of equipment, how those machines are to be operated, and what performance standards are expected. For a manager at Caterpillar, job design might involve defining areas of decision-making responsibility, identifying goals and expectations, and establishing appropriate indicators of success. The natural starting point for designing jobs is determining the level of desired spec

participation

often the most effective technique for overcoming resistance to change. Employees who participate in planning and implementing a change are better able to understand the reasons for the change. Uncertainty is reduced, and self-interests and social relationships are less threatened. Having had an opportunity to express their ideas and assume the perspectives of others, employees are more likely to accept the change gracefully. A classic study of participation monitored the introduction of a change in production methods among four groups in a Virginia pajama factory. The two groups that were allowed to fully participate in planning and implementing the change improved significantly in their productivity and satisfaction relative to the two groups that did not participate.

The nature of organization change

organization change: Any substantive modification to some part of the organization -Thus change can involve virtually any aspect of an organization: work schedules, bases for departmentalization, span of management, machinery, organization design, people them-selves, and so on. It is important to keep in mind that any change in an organization may have effects extending beyond the actual area where the change is implemented.

internal forces

top management: revises the organization's strategy, organization change is likely to result. A decision by an electronics company to enter the home computer market or a decision to increase a 10-year product sales goal by 3 percent would occasion many organization changes. Other internal forces for change may be reflections of external forces : As sociocultural values shift, for example, workers' attitudes toward their jobs may also shift—and workers may demand a change in working hours or working conditions. In such a case, even though the force is rooted in the external environment, the organization must respond directly to the internal pressure it generates.