Chap 7
Participative (democratic) leadership
involves managers and employees working together to make decisions. Employee participation in decisions may not always increase effectiveness, but it usually does increase job satisfaction. Many large organizations like Google, Apple, IBM, Cisco, and AT&T, and most smaller firms have been highly successful using a democratic style of leadership that values traits such as flexibility, good listening skills, and empathy. Employees meet to discuss and resolve management issues by giving everyone some opportunity to contribute to decisions.
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. 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
Problem solving
is less formal than decision making and usually calls for quicker action to resolve everyday issues.
Managing Knowledge
"Knowledge is power." Empowering employees means giving them knowledge—that is, the information they need to do the best job they can. Finding the right information, keeping it in a readily accessible place, and making it known to everyone in the firm together constitute the tasks of knowledge management.
LEADING: PROVIDING CONTINUOUS VISION AND VALUES cont
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.
Leadership Styles
Autocratic leadership Participative (democratic) leadership Free-rein leadership
Top management 2
CEOs are responsible for introducing change into an organization.7 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.
CONTROLLING: MAKING SURE IT WORKS 2 (List)
Controlling consists of five steps: Establishing clear performance standards. This ties the planning function to the control function. Without clear standards, control is impossible. Monitoring and recording actual performance or results. Comparing results against plans and standards. Communicating results and deviations to the appropriate employees. Taking corrective action when needed and providing positive feedback for work well done.
Decision Making: Finding the Best Alternative 1
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.
Leader 1
Establish corporate values. Promote corporate ethics.
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.
PLANNING AND DECISION MAKING
Executives find planning to be their most valuable tool. A vision is more than a goal; it's a broad explanation of why the organization exists and where it's trying to go. It gives Page 173the organization a sense of purpose and a set of values that unite workers in a common destiny. Note: 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.
A Key Criterion for Measurement: Customer Satisfaction
External customers include dealers, who buy products to sell to others, and ultimate customers (also known as end users) such as you and me, who buy products for their own personal use. Internal customers are individuals and units within the firm that receive services from other individuals or units. For example, the field salespeople are the internal customers of the marketing research people who prepare market reports for them.
CONTROLLING: MAKING SURE IT WORKS 3
For managers to measure results, the standards must be specific, attainable, and measurable. Setting such clear standards is part of the planning function. Vague goals and Page 184standards such as "better quality," "more efficiency," and "improved performance" aren't sufficient because they don't describe in enough detail what you're trying to achieve. For example, let's say you're a runner and you have made the following statement: "My goal is to improve my distance." When you started your improvement plan last year, you ran 2.0 miles a day; now you run 2.1 miles a day. Did you meet your goal? Well, you did increase your distance, but certainly not by very much.
MANAGERS' ROLES ARE EVOLVING 2
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.2
LEADING: PROVIDING CONTINUOUS VISION AND VALUES
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.10 Management is carrying out the leader's vision.
Top management 3
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. CIOs 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.
Manager gets called BOSS
Perhaps you've witnessed such behavior; some coaches use this style.
A 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.
brainstorming and PMI
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.
Empowering Workers
Progressive leaders, such as those in some high-tech firms and Internet companies, empower employees to make decisions on their own. Empowerment means giving employees the authority to make a decision without consulting the manager and the responsibility to respond quickly to customer requests. Managers are often reluctant to give up their decision-making power and often resist empowerment. In firms that implement the concept, however, the manager's role is less that of a boss and director and more that of a coach, assistant, counselor, or team member.
Tasks and Skills at Different Levels of Management w Image
SKILLS NEEDED AT VARIOUS LEVELS OF MANAGEMENT
CONTROLLING: MAKING SURE IT WORKS 1
The control function measures performance relative to the planned objectives and standards, rewards people for work well done, and takes corrective action when necessary. Thus the control process (see Figure 7.7) provides the feedback that lets managers and workers adjust to deviations from plans and to changes in the environment that have affected performance.
THE FOUR FUNCTIONS OF MANAGEMENT with Image
The following definition of management provides the outline of this chapter: Management is the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources (see Figure 7.1).
Decision Making: Finding the Best Alternative 2
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.
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.
Leading extended def
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. Nonetheless, leadership is still necessary to keep employees focused on the right tasks at the right time.
MANAGERS' ROLES ARE EVOLVING 1
Today, however, most managers tend to be more collaborative. 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. Thus most modern managers emphasize teamwork and cooperation rather than discipline and order giving.1 They may also open their books to employees to share the company's financials.
ORGANIZING: CREATING A UNIFIED SYSTEM (With Image)
Top management, Middle management, Supervisory management
What is the situation now? with Image
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.5
MANAGERS' ROLES ARE EVOLVING 3
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.3 Future managers will need to be more globally prepared; that is, they need skills Page 171such as adaptability, foreign language skills, and ease in other cultures. 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 following sections, we shall discuss management in general and the functions managers perform.
Organizing Example
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. In 2016, Whole Foods launched its first lower-cost store, called 365, to appeal to cash-strapped Millennials. The Page 172365 stores will offer only a quarter of the products carried by the traditional stores and will have no butchers, wine experts, or fishmongers, which will help reduce costs.4
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.
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.
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.
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.
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.
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.
Transparency
is the presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders.
Tactical planning
is 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.
Contingency 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 Page 176environment. 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.
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.
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 making, coordinating, and delegating.
In free-rein leadership
managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives. Free-rein leadership is often the most successful leadership style in certain organizations, such as those in which managers supervise doctors, professors, engineers, or other professionals. The traits managers need in such organizations include warmth, friendliness, and understanding. More and more firms are adopting this style of leadership with at least some of their employees.
Leading
means creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner.
Enabling
means giving workers the education and tools they need to make decisions. Clearly, it's the key to the success of empowerment. Without the right education, training, coaching, and tools, workers cannot assume the responsibilities and decision-making roles that make empowerment work.
Autocratic leadership
means making managerial decisions without consulting others. This style is effective in emergencies and when absolute followership is needed—for Page 182example, when fighting fires. Autocratic leadership is also effective sometimes with new, relatively unskilled workers who need clear direction and guidance.
Top management 1
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 (UPS), John Deere, and General Electric.