Management Exam 1

4 Types of Ethical Issues in business

1. Fundamental Ethical issues: Trust and Integrity A. Why didn't Wells Fargo leadership recognize the importance of trust? 2. Diversity and Respect: equal opportunity A. Google paid former executive $35 million after sexual assault allegation 3. Decision-Making Issues A. Way fair is supplying beds to Texas detention center 4. Compliance and Government issues A. Carnival cruises dumping trash and having to pay fines

Social Responsibility

• Social responsibility: business' obligation to pursue policies, make decisions, and take actions that benefit society • Shareholder model: holds that the only social responsibility that businesses have is to maximize profits • Stakeholder model: management's most important responsibility is the firm's long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders) • Stakeholder: persons/groups with a legitimate interest in the company • Primary Stakeholder: groups on which the organization depends for its long term survival ◦ Includes shareholders, employees, customers, suppliers, governments, and local communities • Secondary Stakeholders: includes media and special interest groups, can influence or be influenced by the company. Do not engage in regular transactions with the company and are not critical to its long-term survival

Moral Development

• preconventional level of moral development: people decided based on selfish reasons • Conventional level: make decisions that conform to societal expectations • Postconventional level: use internalized ethical principles to solve ethical dilemmas

What is management primarily concerned with?

◦ Effectiveness ◦ Efficiency

4 Functions of Management

Planning: • Planning: involves determining organizational goals and a means for achieving them ◦ Strategic planning asks the question: "What business are we in?" Organizing: • Organizing: deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom in the company ◦ Organizing is about determine how things get done Leading: • Leading: involves inspiring and motivating workers to work hard to achieve organizational goals Controlling: • Controlling: monitoring progress toward goal achievement and taking corrective action when progress isn't being made ◦ Involves setting standards to achieve goals, comparing actual performance to those standards, and then making changes to return performance to those standards

Management Skills

Technical Skills, Human Skills, Conceptual Skills, Motivation to Manage

Effectiveness

accomplishing tasks that help fulfill organizational objectives (such as customer service and satisfication)

Motivation to Manage

an assessment of how motivated employees are to interact with superiors, participate in competitive situations, behave assertively towards others, tell others what to do, reward good behavior/ punish bad behavior, perform actions that are highly visible to others, and handle/organize administrative tasks

Human Skills

can be summarized as the ability to work well with others ◦ Work effectively within groups, encourage others to express their thoughts and feelings, are sensitive to others' needs and viewpoints, and are good listeners/communicators

Competitor Component

companies in the same industry that sell similar products or services to customers ◦ Competitive Analysis: involves deciding who your competitors are, anticipating competitors' moves, and determine competitors' strengths and weaknesses

Suppliers

companies that provide material, human, financial, and informational resources to other companies ◦ Supplier Dependence: the degree to which a company relies on that supplier because of the importance of the suppler' s product to the company and the difficulty of finding other sources for that product ◦ Buyer Dependence: the degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier's sales and the difficulty of finding other buyers of its products ◦ Opportunistic Behavior: a high degree of buyer or seller dependence can lead to one party benefiting at the expense of the other ◦ Relationship Behavior: focuses on establishing a mutually beneficial, long-term relationship between buyers and suppliers

Industry Regulation

consists of regulations and rules that govern the practices and procedures of specific industries, businesses, and professions.

General Environment

consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations ◦ Economy: influences basic business decisions (i.e whether to hire more employees, expand production, etc...); managers must scan the economic environment for signs of significant change ‣ Business Confidence Indices (BCI): show how confident actual managers are about future business growth • Managers often prefer BCI to economic statistics because they know that other managers make business decisions that are in line with their expectations concerning the economy's future ◦ Technology: the knowledge, tools, and techniques used to transform inputs (raw materials, information, etc...) into outputs (products and services) ◦ Sociocultural: the demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society ‣ Changes in sociocultural demographics change how managers staff their businesses ‣ Affect the demand for a business' products and services ◦ Political/Legal: includes the legislation, regulations, and court decisions that govern and regulate business behavior

Internal Environment

consists of the trends and events within Ana organization that affect the management, employees, and organizational culture

Organizational Ceremonies

gatherings in which symbolic acts commemorate or celebrate notable achievements or changes

Management

getting work done through others

Efficiency

getting work done with a minimum of effort, expense, or waste

Advocacy Groups

groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions • Public Communications: approach relies on voluntary participation by the news media and the advertising industry to send out an advocacy group's message • Media Advocacy: typically involves framing the group's concerns as public issues (affecting everyone) • Product boycott: tactic in which an advocacy group actively tries to persuade the consumers not to purchase a company's product or service

Environmental Scanning

involves searching the environment for important events or issues that might affect an organization. ◦ Managers scan the environment to stay up to date on important factors in their industry and to reduce uncertainty ◦ Typically, managers view environmental events and issues as either threats or opportunities ◦ Cognitive Maps: summarize the perceived relationships between environmental factors and possible organizational actions

Organizational Heroes

organizational people admired for their qualities and achievements within the organization

Environmental Complexity

refers to the number and the intensity of external factors in the environment that affect organizations ◦ Simple Environments: have few environmental factors ◦ Complex Environments: have many environmental factors

Whistle Blowing

reporting others' ethics violations to management or legal authorities

Conceptual Sills

the ability to see the organization as a whole, to understand how the different parts of the company affect each other, and to recognize how the company fits into or is affected by its external environment such as the local community, social and economic forces, customers, and the competition

Resource Scarcity

the abundance or shortage of critical organizational resources in an organization's external environment • Uncertainty: how well managers can understand or predict the external changes and trends affecting their businesses

Company mission

the business' purpose or reason for existing

Consistent Organizational Cultures

the company actively defines and teaches organizational values, beliefs, and attitudes

External Environments

the forces and events outside a company that have the potential to influence or affect it

Environmental Change

the rate at which a company's general and specific environments change ◦ Stable Environments: the rate of environmental change is slow. ‣ Example: The funeral business changes little from year to year ◦ Dynamic Environments: the rate of environmental change is fast ‣ Example: Radio businesses are having to rapidly change with the advent of streaming music services ◦ Punctuated Equillibrium Theory: companies go through long periods of stability (equilibrium) during which incremental changes occur; followed by short, complex periods of dynamic, fundamental change (revolutionary periods); and finishing with a return to stability (new equilibrium)

Technical Skills

the specialized procedures, techniques, and knowledge required to get the job done

Organizational Stories

told to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions

Specific Environment

unique to that firm's industry and directly affects the way it conducts day-to-day business

Changing Organizational Culture

• Behavioral Addition: the process of having managers and employees perform a new behavior • Behavioral Subsitution: having managers and employees perform a new behavior in place of another's behavior • Visible artifacts: visible signs of an organization's culture, such as the office design/layout, dress code, benefits/perks (stock options, private parking, private dining room, etc...)

Customer Component

• Customers purchase products and services— companies cannot exist without customer support ◦ Monitoring customers' changing wants/needs is critical to success ◦ Reactive Customer Monitoring: involves identifying and addressing customer trends and problems after they occur ◦ Proactive Customer Monitoring: identifying and addressing customer needs, trends, and issues before they occur

Organization Social Responsibility

• Economic Responsibility: making a profit by producing a product or service valued by society, has been a business' most basic social responsibility • Legal Responsibility: a company's social responsibility to obey society's laws and regulations as it tries to meet its economic responsibilities • Ethical Responsibility: is a company's social responsibility to not violate accepted principles of right and wrong when conducting its business • Discretionary Responsibilities: pertain to the social roles that businesses play in society beyond their economic, legal, and ethical responsibilities. ◦ Example: Local wildfire destroys community, so local companies step in to help rebuild with donations and equipment to help rebuild

Decisions Roles

• Entrepreneur Role: managers adapt themselves, their subordinates, and their units to change • Disturbance Handler Role: managers respond to pressures and problems so severe that they demand immediate attention and action • Resource Allocator Role: managers decide who will get what and how many resources they will get • Negotiator Role: managers negotiate schedules, projects, goals, outcomes, resources, and employee raises

Workplace Diversity

• Ethics: the set of moral principles or values that defines right and wrong for a person or group • Ethical Behavior: follows accepted principles of right and wrong • • Workplace Deviance: unethical behavior that violates organized norms about right and wrong • Production Deviance: hurts the quality and quantity of work being produced ◦ Example: leaving early, taking long breaks, working slower, wasting resources • Property Deviance: unethical behavior aimed at company property or products ◦ Employee Shrinkage: when employees steal company merchandise • Political Deviance: using one's influence to harm others in the company • Personal Aggresion: hostile or aggressive behaviors towards others ◦ Example: sexual harassment, stealing from coworkers, or personally threatening coworkers

Changing Environment

• External Environments: all events outside a company that can influence or affect it • General Environment (4 Factors): ◦ PEST ‣ Political Trends ‣ Economy trends ‣ Sociocultural trends ‣ Technology Trends

Interpersonal Roles

• Figurehead Role: managers perform ceremonial duties such as greeting company visitors, speaking at the opening of a new facility, or representing the company at a community luncheon to support local charities • Leader Role: managers motivate and encourage workers to accomplish organizational objectives ◦ Establish challenging goals • Liaison Role: the interpersonal role managers play when they deal with people outside their units

First-Line Manager

• First-Line Managers: hold positions such as office manager, shift supervisor, or department manager ◦ Primary responsibility is to manage the performance of the entry level employees who are directly responsible for producing a company's goods and services ◦ Encourage, monitor, and reward the performance of their workers ◦ Teach entry level employees how to do their jobs

Manager ensure ethical workplace

• Hire ethical people ◦ Personality tests ◦ Personality based/overt integrity tests • Train employees • Code of ethics ◦ Establish a specific code of ethics in a company

Ethical Intensity

• Magnitude of Consequences: total harm or benefit derived from an ethical decision • Social consensus: agreement on whether behavior is bad or good • Probability of effect: chance that something will happen that results in harm to others • Temporal immediacy: time between an act and the consequences of the act • proximity of effect: social, psychological, cultural, or physical distance between a decision maker and those affected by his or her decisions • Concentration of effect: total harm or benefit that an act produces on the average person

Middle Managers

• Middle Managers: hold positions such as plant manager, regional manager, or divisional manager ◦ Responsible for setting objectives consistent with top management's goals and for planning/implementing subunit strategies for achieving those objectives ◦ Responsible to coordinate and link groups, departments, and divisions within a company ◦ Responsible to monitor and manage the performance of the subunits and individual managers who report to them ◦ Responsible for implementing the changes generated by the top management

Informational Roles

• Monitor Role: the informational role managers play when they scan their environment for information • Dissemination Role: managers share the information they have collected with their subordinates and others in their company • Spokesperson Role: share information with people outside their departments or companies

Selecting and Hiring Ethical Employees

• Overt integrity tests: estimate job applicants' honesty by asking them directly what they think or feel about theft or about punishment of unethical behaviors • Personality-based integrity tests: indirectly estimate job applicants' honesty by measuring psychological traits such as dependability and conscientiousness

Unethical Workplace

• Production Deviance: ◦ Leaving early ◦ Taking excess breaks ◦ Intentionally working slow ◦ Wasting resources • Property Deviance: ◦ Taking kickbacks ◦ Lying about hours worked ◦ Stealing from the company • Production + Property Deviance ◦ What happens when you waste resources AND damage property? ‣ American Airlines mechanic accused of attempted sabotoge of flight with 150 people on board • Political deviance: ◦ Playing office politics ◦ Showing favoritism ◦ Gossiping ◦ Blaming co-worker • Personal aggression ◦ Stealing from coworkers ◦ Verbal abuse ◦ Endangering co-workers ◦ Sexual harassment

Responses to demand for Social Responsibility

• Social Responsiveness: a company's strategy to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility • Reactive Strategy: a social responsiveness strategy in which a company does less than society expects • Defensive Strategy: a social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations • Accommodative strategy: a social responsiveness strategy in which a company accepts responsibility for a problem and does all that society expects to solve that problem • Proactive Strategy: a social responsiveness strategy in which a company anticipates a problem before it occurs and does more than society expects to retake responsibility for and addressing the problem

Team Leaders

• Team Leaders: primarily responsible for facilitating team activities towards accomplishing a goal ◦ Not responsible for team performance, the team is responsible for their own performance ◦ Relationships among team members and between different teams are crucial to good team performance, and must be well manager by team leaders ◦ Responsible for fostering good relationships and addressing problematic ones within their teams ◦ Responsible for managing external relationships

Alternate views of Corporate Social Responsibility (CSR)

• The social responsibility of business is to increase its profits ◦ VS. • A tremendous social responsibility comes with being a successful public performer • Since 1997, the Business Round Table concluded that the purpose of a corporation is: "The paramount duty of management and boards of directors is to the corporation's stockholders" • This has been changed to: "While each of our individual companies serves its own corporate purpose, we share fundamental commitment to all of our stakeholders. We commit to: ◦ Delivering value to our customers ◦ Investing in our employees ◦ Dealing fairly and ethically with our suppliers

Top Managers

• Top Managers: hold positions such as CEO, COO, CFO, and CIO and are responsible for the overall direction of the organization ◦ Have 3 major responsibilities: ‣ Responsible for creating a context for change ‣ Responsible to develop employees' commitment to and ownership of the company's performance ‣ Responsible for monitoring their business environments • Closely monitor customer needs, competitors' moves, long-term business, economic/social trends

Ethical Intensity of the Decision

• ethical intensity: the degree of concern people have about an ethical issue • Magnitude of consequences: the total harm or benefit derived from an ethical decision • Social consensus: is agreement on whether behavior is bad or good • Probability of effect: the chance that something will happen that results in harm to others • Temporal immediacy: the time between an act and the consequences the act produces • Proximity of effect: social, psychological, cultural, or physical distance of a decision maker from those affected by his decisions • Concentration of effect: how much an act affects the average person

Principles of Ethical Decision Making

• principle of long-term self-interest: you should never take any action that is not in your/your organization's longterm self-interest • Principle of religious injunctions: never take an action that is unkind or that harms a sense of community • Principle of Government Requirements: the law represents the minimal moral standards of society, so you should never take any action that violates the law • Principle of Individual rights: holds that you should never take an action that infringes on others' agree-upon rights • Principle of personal virtue: holds that you should never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the news/tv • Principle of distributive justice: never take any action that harms the least fortunate among us • Principle of utilitarian beliefs: you should never take any action that does not result in greater good for society

Effectiveness vs. Efficiency

◦ Efficiency: getting work done with minimum effort, expense, or waste ‣ "do things right" ◦ Effectiveness: accomplishing tasks that help fulfill organizational objectives ‣ "Do the right things"

What does the CEO of a company

◦ Executives are responsible for overall direction of the organization ◦ Responsible for creating: ‣ Context for change ‣ Employee buy-in for the mission of company (inspire them) ‣ Positive organizational culture

Management issues in organizations:

◦ How do we plan to get things done ◦ How we organize the company to be effective/efficient ◦ How do we lead and motivate employees ◦ How do we put controls in place to ensure our plans are followed and our goals are met?