management and leadership

Decision Making

is choosing among two or more alternatives, which sounds easier than it is. In fact, decision making is the heart of all the management functions. The rational decision-making model is a series of steps managers often follow to make logical, intelligent, and well-founded decisions. Think of the steps as the six Ds of decision making: Define the situation. Describe and collect needed information. Develop alternatives. Decide which alternative is best. Do what is indicated (begin implementation). Determine whether the decision was a good one, and follow up. Managers don't always go through this six-step process. Sometimes they have to make decisions on the spot—with little information available. They still must make good decisions in all such circumstances. Problem solving is less formal than decision making and usually calls for quicker action to resolve everyday issues. Both decision making and problem solving call for a lot of judgment.

Strategic Planning

is done by top management and determines the major goals of the organization and the policies, procedures, strategies, and resources it will need to achieve them. 17 Policies are broad guidelines for action, and strategies determine the best way to use resources. At the strategic planning stage, top managers of the company decide which customers to serve, when to serve them, what products or services to sell, and the geographic areas in which to compete. Take Taco Bell, for example. Recognizing the economic slump, the company introduced a "value menu" of items like cheese roll-ups and bean burritos with low prices. It also went after the "fourth-meal" (late-night) crowd and introduced several low-calorie, low-fat Fresco items. Blockbuster was not as successful in fighting off the introduction of new technology offered by Netflix and Hulu, making its brick-and-mortar stores obsolete. In today's rapidly changing environment, strategic planning is becoming more difficult because changes are occurring so fast that plans—even those set for just months into the future—may soon be obsolete. Think of how the amusement park company Six Flags had to change its plans when the price of gas went from a couple of dollars per gallon to over four dollars and then dropped back to the three-dollar range again.

Vision

is more than a goal; it's a broad explanation of why the organization exists and where it's trying to go.14 It gives the organization a sense of purpose and a set of values that unite workers in a common destiny.15 Managing an organization without first establishing a vision is like getting everyone in a rowboat excited about going somewhere, but not telling them exactly where. The boat will just keep changing directions rather than speeding toward an agreed-on goal.

CEO, CFO, COO, CIO, CKO

CEOs are responsible for introducing change into an organization. The COO is responsible for putting those changes into effect. His or her tasks include structuring work, controlling operations, and rewarding people to ensure that everyone strives to carry out the leader's vision. Many companies today are eliminating the COO function as a cost-cutting measure and assigning that role to the CEO. Often, the CFO participates in the decision to cut the COO position. The CFO is responsible for obtaining funds, planning budgets, collecting funds, and so on. The CIO or CKO is responsible for getting the right information to other managers so they can make correct decisions. Page 194CIOs are more important than ever to the success of their companies given the crucial role that information technology has come to play in every aspect of business.

Leaders must

Communicate a vision and rally others around that vision. The leader should be openly sensitive to the concerns of followers, give them responsibility, and win their trust. A successful leader must influence the actions of others. Ellen Kullman took the reins at DuPont in the middle of a crisis. Nonetheless, she set the tone for growth and prosperity in the future. Establish corporate values. These include concern for employees, for customers, for the environment, and for the quality of the company's products. When companies set their business goals, they're defining the company's values as well. The number one trait that others look for in a leader is honesty. The second requirement is that the leader be forward looking. Promote corporate ethics. Ethical behavior includes an unfailing demand for honesty and an insistence that everyone in the company gets treated fairly (see the Making Ethical Decisions box). That's why we stress ethical decision making throughout this text. Many businesspeople have made the news by giving away huge amounts to charity, thus setting a model of social concern for their employees and others.23 Embrace change. A leader's most important job may be to transform the way the company does business so that it's more effective (does things better) and more efficient (uses fewer resources to accomplish the same objectives).24 Stress accountability and responsibility. If there is anything we have learned from the failures of banking managers and other industry and government managers, it is that leaders need to be held accountable and need to feel responsible for their actions. A key word that has emerged from the recent financial crisis is transparency.

Leaders/Managers

One person might be a good manager but not a good leader. Another might be a good leader without being a good manager. Managers strive to produce order and stability, whereas leaders embrace and manage change. Leadership is creating a vision for others to follow, establishing corporate values and ethics, and transforming the way the organization does business in order to improve its effectiveness and efficiency. Good leaders motivate workers and create the environment for them to motivate themselves. Management is carrying out the leader's vision.2

brainstorming

Problem-solving techniques include brainstorming, that is, coming up with as many solutions as possible in a short period of time with no censoring of ideas. Another technique is called PMI, or listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third. The idea is to make sure the pluses exceed the minuses. You can try using the PMI system on some of your personal decisions to get some practice. For example, should you stay home and study tonight? List all the pluses in one column: better grades, more self-esteem, more responsible behavior, and so on. In the other column, put the minuses: boredom, less fun, and so on. We hope the pluses outweigh the minuses most of the time and that you study often. But sometimes it's best to go out and have some fun, as long as doing so won't hurt your grades or job prospects.

Swot Analysis

These questions are part of SWOT analysis, which analyzes the organization's strengths and weaknesses, and the opportunities and threats it faces, usually in that order.16 Opportunities and threats are often external to the firm and cannot always be anticipated. eaknesses and strengths are more often internal and therefore more within reach of being measured and fixed. Figure 7.2 lists some of the general issues companies consider when conducting a SWOT analysis: What external success factors affect the industry? How does our firm measure up to other firms? What are our social objectives? What are our personal development objectives? What can we do to survive and prosper during a recession? For more on SWOT analysis, see the Taking It to the Net exercise at the end of this chapter.

Objectives

are specific, short-term statements detailing how to achieve the organization's goals. One of your goals for reading this chapter, for example, may be to learn basic concepts of management. An objective you could use to achieve this goal is to answer the chapter's Test Prep questions.

SKILLS NEEDED AT VARIOUS LEVELS OF MANAGEMENT Technical Skills

are the ability to perform tasks in a specific discipline (such as selling a product or developing software) or department (such as marketing or information systems).

Goals

are the broad, long-term accomplishments an organization wishes to attain. Because workers and management need to agree on them, setting goals is often a team process.

controlling

establishes clear standards to determine whether an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not. Basically, it means measuring whether what actually occurs meets the organization's goals. Planning, organizing, leading, and controlling are the heart of management, so let's explore them in more detail. The process begins with planning;

Human Relations Skills

include communication and motivation; they enable managers to work through and with people. Communication can be especially difficult when managers and employees speak different languages. Skills associated with leadership—coaching, morale building, delegating, training and development, and supportiveness—are also human relations skills.

Planning

includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives. One of the major objectives of organizations is to please customers. The trend today is to have planning teams to help monitor the environment, find business opportunities, and watch for challenges. Planning is a key management function because accomplishing the other functions depends heavily on having a good plan. the first managerial function, is setting the organization's vision, goals, and objectives. Executives find planning to be their most valuable tool. Planning is a continuous process. A plan that worked yesterday may not be successful in today's market. Most planning also follows a pattern. The procedure you'll follow in planning your life and career is basically the same as the one businesses use. It answers several fundamental questions: What is the situation now? What are the success factors affecting the industry participants and how do we compare? What is the state of the economy and other environments? What opportunities exist for meeting people's needs? What products and customers are most profitable? Who are our major competitors? What threats are there to our business? These questions are part of SWOT analysis, which analyzes the organization's strengths and weaknesses, and the opportunities and threats it faces, usually in that order.16 Opportunities and threats are often external to the firm and cannot always be anticipated.

Organizing

includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives. Many of today's organizations are being designed around pleasing the customer at a profit. Thus they must remain flexible and adaptable, because when customer needs change, firms must change with them.10 Whole Foods Market, for example, is known for its high-quality, high-priced food items. But it has introduced many lower-cost items to adjust to the financial losses of its customer base. General Motors lost much of its customer base to manufacturers of more fuel-efficient cars. It hopes to win back market share by offering hydrogen-powered or electric vehicles that cost less to run. GM has had some success in doing that.11

Middle Management

includes general managers, division managers, and branch and plant managers (in colleges, deans and department heads) who are responsible for tactical planning and controlling. Many firms have eliminated some middle managers through downsizing and have given their remaining managers more employees to supervise. Nonetheless, middle managers are still considered very important to most firms.

Supervisory Management

includes those directly responsible for supervising workers and evaluating their daily performance; they're often known as first-line managers (or supervisors) because they're the first level above workers. This is the first management position you are most likely to acquire after college.

Staffing

is recruiting, hiring, motivating, and retaining the best people available to accomplish the company's objectives. Today, staffing is critical, especially in the Internet and high-tech areas. At most high-tech companies, like Google, Sony, and Microsoft, the primary capital equipment is brainpower. A firm with innovative and creative workers can go from start-up to major competitor in just a few years. Many people are not willing to work at companies unless they are treated well and get fair pay. They may leave to find a better balance between work and home.21 Staffing is becoming a greater part of each manager's assignment, and all managers need to cooperate with human resource management to win and keep good workers. Chapter 11 is devoted to human resource issues, including staffing.

Transparency

is the presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders. Clearly it is time to make businesses and the government more transparent so that everyone is more aware of what is happening to the economy and to specific businesses and government agencies.25 All organizations need leaders, and all employees can help lead. You don't have to be a manager to perform a leadership function. That is, any employee can motivate others to work well, add to a company's ethical environment, and report ethical lapses when they occur.

Contigency Planning

is the process of preparing alternative courses of action the firm can use if its primary plans don't work out. The economic and competitive environments change so rapidly that it's wise to have alternative plans of action ready in anticipation of such changes. For example, if an organization doesn't meet its sales goals by a certain date, the contingency plan may call for more advertising or a cut in prices at that time. Crisis planning is a part of contingency planning that anticipates sudden changes in the environment.19 For example, many cities and businesses have developed plans to respond to terrorist attacks. You can imagine how important such plans would be to hospitals, airlines, the police, and public transportation authorities. Instead of creating detailed strategic plans, the leaders of market-based companies (companies that respond quickly to changes in competition or to other environmental changes) often simply set direction. They want to stay flexible, listen to Page 192customers, and seize opportunities—expected or not. Think of how stores selling to teenagers must adapt to lifestyles and change

Operational Planning

is the process of setting work standards and schedules necessary to implement the company's tactical objectives. Whereas strategic planning looks at the organization as a whole, operational planning focuses on specific supervisors, department managers, and individual employees. The operational plan is the department manager's tool for daily and weekly operations. An operational plan may include, for example, the specific dates for certain truck parts to be completed and the quality specifications they must meet.

Managers

is the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources Managers must practice the art of getting things done through organizational resources, which include workers, financial resources, information, and equipment. At one time, managers were called "bosses" and their job consisted of telling people what to do, watching over them to be sure they did it, and reprimanding those who didn't. Many managers still behave that way. Perhaps you've witnessed such behavior; some coaches use this style. Today, however, most managers tend to be more progressive. For example, they emphasize teams and team building; they create drop-in centers, team spaces, and open work areas. They may change the definition of work from a task you do for a specified period in a specific place to something you do anywhere, anytime. They tend to guide, train, support, motivate, and coach employees rather than tell them what to do.1 Thus most modern managers emphasize teamwork and cooperation rather than discipline and order giving.2 They may also open their books to employees to share the company's financials. Managers of high-tech firms, like Google and Apple, realize that many workers often know more about technology than they do. At first, Google tried to get by with no managers. Soon, however, it found that managers were necessary for communicating strategy, helping employees prioritize projects, facilitating cooperation, and ensuring that processes and systems aligned with company goals.3 The recent financial crisis forced many leading firms to fire managers and lower-level workers. Managers tended to be cautious in starting new ventures as they waited to see what the economy would do. That hesitancy contributed to high unemployment in the United States.4 The people entering management today are different from those who entered in the past. Leaders of Fortune 100 companies tend to be younger, more of them are female, and fewer of them were educated at elite universities.5 Managers in the future are more likely to be working in teams and assuming completely new roles in the firm. For one thing, they'll be doing more expansion overseas.6 Further, they may be taking a leadership role in adapting to climate change.7 What these changes mean for you is that management will demand a new kind of person: a skilled communicator and team player as well as a planner, organizer, motivator, and leader.8 Future managers will need to be more globally prepared; that is, they need skills such as adaptability, foreign language skills, and ease in other cultures.9 We'll address these trends in the next few chapters to help you decide whether management is the kind of career you would like. In the fo

Conceptual Skills

let the manager picture the organization as a whole and see the relationships among its various parts. They are needed in planning, organizing, controlling, systems development, problem analysis, decision Page 195making, coordinating, and delegating (see the Reaching Beyond Our Borders box).

Leadership

means creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner. The trend is to empower employees, giving them as much freedom as possible to become self-directed and self-motivated. This function was once known as directing; that is, telling employees exactly what to do. In many smaller firms, that is still the manager's role. In most large firms, however, managers no longer tell people exactly what to do because knowledge workers and others often know how to do their jobs better than the manager does.12 Nonetheless, leadership is still necessary to keep employees focused on the right tasks at the right time.13

PMI

or listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third. The idea is to make sure the pluses exceed the minuses. You can try using the PMI system on some of your personal decisions to get some practice. For example, should you stay home and study tonight? List all the pluses in one column: better grades, more self-esteem, more responsible behavior, and so on. In the other column, put the minuses: boredom, less fun, and so on. We hope the pluses outweigh the minuses most of the time and that you study often. But sometimes it's best to go out and have some fun, as long as doing so won't hurt your grades or job prospects.

Mission Statement

outlines the organization's fundamental purposes. It should address: The organization's self-concept. Its philosophy. Long-term survival needs. Customer needs. Social responsibility. Nature of the product or service. The mission statement becomes the foundation for setting specific goals and objectives

Tactical Planning

s the process of developing detailed, short-term statements about what is to be done, who is to do it, and how. Managers or teams of managers at lower levels of the organization normally make tactical plans. Such plans can include setting annual budgets and deciding on other activities necessary to meet strategic objectives. If the strategic plan of a truck manufacturer, for example, is to sell more trucks in the South, the tactical plan might be to fund more research of southern truck drivers' wants and needs, and to plan advertising to reach them.

Top Management

the highest level, consists of the president and other key company executives who develop strategic plans. Job titles and abbreviations you're likely to see often are chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), and chief information officer (CIO) or in some companies chief knowledge officer (CKO). The CEO is often also the president of the firm and is responsible for all top-level decisions. The CEO and president are the same person in over half of the S&P 500 companies, including big companies such as United Parcel Service, John Deere, and General Electric.