This Document Contains Chapters 1 to 2 CHAPTER 1 INNOVATIVE MANAGEMENT FOR A CHANGING WORLD CHAPTER OUTLINE Are You Ready to Be a Manager? I. Why Innovative Management Matters II. The Definition of Management III. The Four Management Functions A. Planning B. Organizing C. Leading D. Controlling IV. Organizational Performance V. Management Skills A. Conceptual Skills B. Human Skills C. Technical Skills D. When Skills Fail VI. What Is It Like to Be a Manager? A. Making the Leap: Becoming a New Manager B. Manager Activities New Manager Self-Test: Managing Your Time C. Manager Roles VII. Managing in Small Businesses and Nonprofit Organizations VIII. State-of-the-Art Management Competencies IX. Innovative Management Thinking Are You a New-Style or an Old-Style Manager? X. Management and Organization XI. Classical Perspective A. Scientific Management B. Bureaucratic Organizations C. Administrative Principles XII. Humanistic Perspective A. Early Advocates B. Human Relations Movement C. Human Resources Perspective New Manager Self-Test: What’s Your Mach? D. Behavioral Sciences Approach XIII. Management Science XIV. Recent Historical Trends A. Systems Thinking B. Contingency View C. Total Quality Management XV. Innovative Management Thinking for a Changing World A. Contemporary Management Tools B. Managing the Technology-Driven Workplace ANNOTATED LEARNING OUTCOMES After studying this chapter, students should be able to: 1. Explain the difference between efficiency and effectiveness and their importance for organizational performance. Answer: Organizational effectiveness is the degree to which the organization achieves a stated objective. It means the organization succeeds in accomplishing what it tries to do. Organizational efficiency refers to the amount of resources used to achieve an organizational goal. It is based on the amount of raw material, money, and people that are necessary for producing a given volume of output. 2. Understand the personal challenges involved in becoming a new manager. Answer: Becoming a new manager requires a profound transformation in the way a person thinks of himself or herself, called personal identity. It involves letting go of deeply held attitudes and habits and learning new ways of thinking. Some of the challenges include transitioning from thinking of oneself as a specialist who performs specific tasks to thinking of oneself as a generalist who coordinates diverse tasks, doing things yourself to getting things done through others, being an individual actor to being a network builder, and working independently to working interdependently. 3. Define ten roles that managers perform in organizations. Answer: A role is a set of expectations for a manager’s behavior. The ten roles are divided into three conceptual categories: informational (managing by information), interpersonal (managing through people), and decisional (managing through information). Informational roles include the functions used to maintain and develop an information network. The monitor role involves seeking current information from many sources. The disseminator role the opposite of the monitor role. In the disseminator role, the manager transmits information to others, both inside and outside the organization. The spokesperson role pertains to making official statements to people outside the organization about company policies, actions, or plans. Interpersonal roles refer to relationships with others and are related to human skills. The figurehead role involves the handling of ceremonial and symbolic functions for the organization. The leader role is the relationship with subordinates, including motivation, communication, and influence. The liaison role is the development of information sources both inside and outside the organizations. Decisional roles come into play when managers must make choices. These roles often require both conceptual and human skills. The entrepreneur role involves the initiation of change. Managers seek ways to solve problems or improve operations. The disturbance handler role involves resolving conflict among subordinates, between managers, or between departments. The resource allocator role pertains to allocating resources in order to attain desired outcomes. The negotiator role involves formal negotiations and bargaining to attain outcomes for the manager’s unit of responsibility. 4. Appreciate the manager’s role in small businesses and nonprofit organizations. Answer: Managers in small businesses tend to emphasize different roles from those of managers in large corporations. They see their primary roles as spokesperson and entrepreneur and tend to rate lower on the leader and information-processing roles than do their counterparts on large corporations. Because of the unique challenges that confront managers in nonprofit organizations, those managers emphasize the spokesperson, leader, and resource allocator roles. 5. Discuss the innovative competencies needed to be an effective manager in today’s environment. Answer: In recent years, rapid environmental shifts have caused a fundamental transformation in what is required of effective managers. Technological advances and the rise of virtual work, global market forces, and shifting employee and customer expectations have led to a decline in organizational hierarchies and more empowered workers, which calls for a new approach to management that may be quite different from managing in the past. Instead of being a controller, today’s effective manager is an enabler who helps people do and be their best. Managers help people get what they need, remove obstacles, provide learning opportunities, and offer feedback, coaching and career guidance. Instead of “management by keeping tabs,” they employ an empowering leadership style. Much work is done in teams rather than by individuals, so team leadership skills are crucial. People in many organizations work at scattered locations, so managers can’t monitor behavior continually. In addition, managers sometimes are coordinating the work of people who aren’t under their direct control, such as those in partner organizations, sometimes even working with competitors. Today’s managers are also “future-facing.” That is, they design the organization and culture for creativity, adaptation, and innovation rather than maintaining the status quo. Today’s world is constantly changing, and success depends on innovation and continuous improvement. 6. Know the difference between Old-Style and New-Style management. Answer: This Learning Outcome is achieved through the student’s completion of a self-test. The student adds the total number of Mostly True answers and marks the score on a scale. Theory X tends to be “old-style” management, and Theory Y “new-style,” because the styles are based on different assumptions about people. To learn more about these assumptions, the student can refer to Exhibit 1.12 and review the assumptions related to Theory X and Theory Y. Strong Theory X assumptions are typically considered inappropriate for today’s workplace. The student can then determine where he or she fits on the X-Y scale and whether the score reflects his or her perception regarding being a current or future manager. 7. Understand how historical forces influence the practice of management. Answer: The practice of management has changed in response to historical conditions. The three major historical forces shaping management are social, political, and economic. 8. Describe the major components of the classical and humanistic management perspectives. Answer: The thrust of the classical perspective was to make organizations efficient operating machines. This perspective contains the following subfields, each with a slightly different emphasis: a. Scientific management emphasizes that decisions based on rules of thumb and tradition be replaced with precise procedures developed after careful study of individual situations as the solution to improve efficiency and labor productivity. b. Bureaucratic organizations emphasize management on an impersonal, rational basis through elements such as clearly defined authority and responsibility, record keeping, and separation of management and ownership. c. Administrative principles focus on the productivity of the total organization rather than the productivity of the individual worker. The humanistic perspective emphasizes the importance of understanding human behaviors, needs, and attitudes in the workplace, as well as social interactions and group processes. Major components include the: a. Human relations movement, which recognized and directly responded to social pressures for enlightened treatment of employees, and the notion that human relations was the best approach for increasing productivity – a belief that persists today. b. Human resources perspective, which maintained an interest in worker participation and considerate leadership but shifted the emphasis to consider the daily tasks that people perform, combining prescriptions for design of job tasks with theories of motivation. c. Behavioral sciences approach, which develops theories of human behavior based on scientific methods and draws from sociology, psychology, anthropology, economic and other disciplines to develop theories about human behavior and interaction in an organizational setting. 9. Identify and explain recent developments in the history of management thought. Answer: The three major perspectives on management that have evolved since the late 1800s are the classical perspective, humanistic perspective, and management science. LECTURE OUTLINE ARE YOU READY TO BE A MANAGER? In a world of rapid change, unexpected events, and uncertainty, organizations need managers who can build networks and pull people together toward common goals. This exercise helps students determine whether their priorities align with the demands placed on today’s managers. I. WHY INNOVATIVE MANAGEMENT MATTERS Innovations in products, services, management systems, productions processes, corporate values, and other aspects of the organization are what keep companies growing, changing, and thriving. Without innovation, no company can survive over the long run. Innovation has become the new imperative, despite the need for companies to control costs in today’s economy. II. THE DEFINITION OF MANAGEMENT Exhibit 1.1 Management is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources. There are two important ideas in this definition: (1) the four functions of planning, organizing, leading, and controlling, and (2) the attainment of organizational goals in an efficient and effective manner. III. THE FOUR MANAGEMENT FUNCTIONS Exhibit 1.2 A. Planning Planning is the management function concerned with identifying goals for future organizational performance and deciding on the tasks and use of resources needed to attain them. It defines where the organization wants to be in the future and how to get there. B. Organizing Organizing is the management function concerned with assigning tasks, grouping tasks into departments, delegating authority, and allocating resources across the organization. Organizing follows planning and reflects how the organization tries to accomplish the plan. C. Leading Leading is the management function that involves the use of influence to motivate employees to achieve the organization’s goals. It involves motivating entire departments and divisions as well as those individuals working immediately with the manager. D. Controlling Controlling is the management function concerned with monitoring employees’ activities, keeping the organization on track toward its goals, and making corrections as needed. Trends toward employment and trust of employees have led many companies to place less emphasis on top-down control and more emphasis on training employees to monitor and correct themselves. However, the ultimate responsibility for control still rests with managers. IV. ORGANIZATIONAL PERFORMANCE An organization is a social entity that is goal directed and deliberately structured. Social entity means two or more people. Goal directed means the organization is designed to achieve some outcome or goal such as make a profit. Deliberately structured means tasks are divided, and responsibility for their performance is assigned to organization members. The manager’s responsibility is to coordinate resources in an effective and efficient manner to accomplish the organization’s goals. Organizational effectiveness is the degree to which the organization achieves a stated goal, or succeeds in accomplishing what it tries to do. Organizational efficiency refers to the amount of resources used to achieve an organizational goal. It is based on the how much raw material, money, and people are necessary for producing a given volume of output. All managers have to pay attention to costs, but severe cost cutting to improve efficiency can sometimes hurt organizational effectiveness. The ultimate responsibility of managers is to achieve high performance, which is the organization’s ability to attain its goals by using resources in an efficient and effective manner. Discussion Question: Think about Toyota’s highly publicized safety problems. One observer said that a goal of efficiency had taken precedent over a goal of quality within Toyota. Do you think managers can improve both efficiency and effectiveness simultaneously? Discuss. How do you think Toyota’s leaders should respond to the safety situation? NOTES_______________________________________________________________________________________________________________________________________________________________________________________________________________________________ V. MANAGEMENT SKILLS Exhibit 1.3 A. Conceptual Skills 1. Conceptual skill is the cognitive ability to see the organization as a whole and the relationships among its parts. It involves knowing where one’s team fits into the total organization and how the organization fits into its environment. It means the ability to think strategically—to take the broad, long-term view—and to identify, evaluate, and solve complex problems. 2. Conceptual skill is especially important for top managers. Many of the responsibilities of top managers, such as decision making, resource allocation, and innovation, require a broad view. B. Human Skills 1. Human skill is the manager’s ability to work with and through other people and to work effectively as a group member. It is demonstrated in the way a manager motivates, facilitates, coordinates, leads, communicates, and resolves conflicts. 2. Human skill is important for managers at all levels, and particularly those who work with employees directly on a daily basis. C. Technical Skills 1. Technical skill is the understanding of and proficiency in the performance of specific tasks. This includes mastery of the methods, techniques, and equipment involved in specific functions such as engineering, manufacturing, or finance. Technical skill also includes specialized knowledge, analytical ability, and competent use of tools and techniques to solve problems in that specific discipline. 2. Technical skills are most important at lower levels and become less important than human and conceptual skills as managers are promoted. Exhibit 1.4 D. When Skills Fail Exhibit 1.5 1. During turbulent times, managers must use all their skills and competencies to benefit the organization and its stakeholders. 2. Many companies falter because managers fail to listen to customers, misinterpret signals from the market, or can’t build a cohesive team. 3. The number one reason for manager failure is ineffective communication skills and practices. Especially in times of uncertainty or crisis, if managers do not communicate effectively, including listening to employees and customers and showing genuine care and concern, organizational performance and reputation suffer. Discussion Question: How do you feel about having management responsibilities in today’s world, characterized by uncertainty, ambiguity, and sudden changes or threats from the environment? Describe some skills and qualities that are important to managers in these conditions. NOTES_______________________________________________________________________________________________________________________________________________________________________________________________________________________________ VI. WHAT IS IT LIKE TO BE A MANAGER? A. Making the Leap: Becoming a New Manager Exhibit 1.6 Becoming a manager involves a profound transformation in the way people think of themselves, called personal identity, that includes letting go of deeply held attitudes and learning new ways of thinking. Specific aspects of this transformation include changing one’s identity: 1. from a specialist who performs specific tasks to a generalist who coordinates diverse tasks; 2. from things done through one’s own efforts to getting things done through other people; 3. from an individual actor to a team and network builder motivator and organizer; and 4. from working relatively independently to working in a highly interdependent manner. Most new managers are unprepared for the variety of activities managers routinely perform. B. Manager Activities 1. Adventures in Multitasking Managerial activity is characterized by variety, fragmentation, and brevity. The average time spent on any one activity is less than nine minutes, and managers must be able to shift gears quickly. NEW MANAGER SELF-TEST: MANAGING YOUR TIME This exercise helps students determine whether they are better suited to work as specialists or individual contributors, or as generalists—managers who get things done through others. 2. Life on Speed Dial a. Managers perform a great deal of work at an unrelenting pace, requiring great energy. Most top executive routinely work at least 12 hours a day and spend 50 percent or more of their time traveling. b. Calendars are often booked months in advance, but unexpected disturbances erupt every day. c. Majority of executives’ meetings and other contacts are ad hoc, and even scheduled meetings are typically surrounded by other events such as quick phone calls, scanning of e-mail, or spontaneous encounters. d. Technology, such as e-mail, text messaging, cell phones, and laptops, intensifies the pace. 3. Where Does a Manager Find the Time? a. Time is a manager’s most valuable resource, and one characteristic that identifies successful managers is that they know how to use time effectively to accomplish the important things first and the less important things later. b. Time management refers to using techniques that enable you to get more done in less time and with better results, be more relaxed, and have more time to enjoy your work and your life. c. Learning to manage their time effectively is one of the greatest challenges that new managers face. C. Manager Roles Exhibit 1.7 1. A role is a set of expectations for a manager’s behavior. Managers’ activities can be organized into ten roles. The ten roles are divided into three categories: informational, interpersonal, and decisional. 2. Informational roles include the functions used to maintain and develop an information network. a. The monitor role involves seeking current information from many sources. b. The disseminator role is the opposite of the monitor role. In the disseminator role, the manager transmits information to others, both inside and outside the organization. 3. Interpersonal roles refer to relationships with others and are related to human skills. a. The figurehead role involves the handling of ceremonial and symbolic functions for the organization. b. The leader role encompasses the relationship with subordinates, including motivation, communication, and influence. c. The liaison role is the development of information sources both inside and outside the organizations. 4. Decisional roles come into play when managers must make choices. These roles often require both conceptual and human skills. a. The entrepreneur role involves the initiation of change. Managers seek ways to solve problems or improve operations. b. The disturbance handler role involves resolving conflicts among subordinates, between managers, or between departments. c. The resource allocator role pertains to allocating resources in order to attain desired outcomes. d. The negotiator role involves representing the team or department’s interests during negotiation of budgets, union contracts and purchases. VII. MANAGING IN SMALL BUSINESSES AND NONPROFIT ORGANIZATIONS Small businesses are growing in importance. Hundreds of small businesses open every month, but the environment for small business today is highly complicated. Small business managers tend to emphasize different roles from those emphasized by managers in large corporations. They see their most important role as that of spokesperson in promoting their business to the outside world. The entrepreneur role is also critical in small businesses because managers have to be innovative and help their organizations develop new ideas to remain competitive. Nonprofit organizations also represent a major application of management talent. The functions of planning, organizing, leading, and controlling apply just as in other organizations. Managers in nonprofit organizations direct their efforts toward generating some kind of social impact. Financial resources for nonprofit organizations typically come from government appropriations, grants, and donations rather than from the sale of products or services to customers. In nonprofits, services are typically provided to nonpaying clients, and a major problem for many nonprofit organizations is securing a steady stream of funds to continue operating. In addition, because nonprofit organizations do not have a conventional bottom line, managers often struggle with the question of what constitutes results and effectiveness. The metrics of success in nonprofits are much more ambiguous. Managers have to measure intangibles, which also makes it more difficult to gauge the performance of employees and managers. An added complication is that managers often depend on volunteers and donors who cannot be supervised and controlled in the same way that a business manager deals with employees. NOTES_______________________________________________________________________________________________________________________________________________________________________________________________________________________________ VIII. STATE-OF-THE-ART MANAGEMENT COMPETENCIES Exhibit 1.8 1. Technological advances and the rise of virtual work, global market forces, and shifting employee and customer expectations have led to a decline in organizational hierarchies and more empowered workers, which calls for a new approach to management that may be quite different from managing in the past. 2. Instead of being a controller, today’s effective manager is an enabler who helps people do and be their best. Managers help people get what they need, remove obstacles, provide learning opportunities, and offer feedback, coaching and career guidance. Instead of “management by keeping tabs,” they employ an empowering leadership style. 3. Much work is done in teams rather than by individuals, so team leadership skills are crucial. 4. People in many organizations work at scattered locations, so managers can’t monitor behavior continually. In addition, managers sometimes are coordinating the work of people who aren’t under their direct control, such as those in partner organizations, sometimes even working with competitors. Managing relationships based on authentic conversation and collaboration is essential for successful outcomes. 5. Today’s managers are also “future-facing.” That is, they design the organization and culture for creativity, adaptation, and innovation rather than maintaining the status quo. 6. Today’s world is constantly changing, and success depends on innovation and continuous improvement. Discussion Question: Discuss some of the ways organizations and jobs changed over the past ten years. What changes do you anticipate over the next ten years? How might these changes affect the manager’s job and the skills that a manager needs to be successful? NOTES_______________________________________________________________________________________________________________________________________________________________________________________________________________________________ IX. INNOVATIVE MANAGEMENT THINKING The rest of this chapter provides a historical overview of the ideas, theories, and management philosophies that have contributed to making the workplace what it is today. The final section of the chapter looks at some recent trends and current approaches that build on this foundation of management understanding. This foundation illustrates that the value of studying management lies not in learning current facts and research, but in developing a perspective that will facilitate the broad, long-term view needed for management success ARE YOU A NEW-STYLE OR AN OLD-STYLE MANAGER? Management philosophies and styles change over time to meet new needs. This exercise helps students determine their primary management styles as either Theory X (old style) or Theory Y (new style). X. MANAGEMENT AND ORGANIZATION Exhibit 1.9 An historical perspective on management provides a context or environment in which to interpret current opportunities and problems. Studying management history is a way to achieve strategic thinking, see the big picture, and improve conceptual skills. The first step is to explain the social, political, and economic forces that have influenced organizations and the practice of management. Social forces refer to those aspects of a culture that guide and influence relationships among people. What do people value? What do people need? What are the standards of behavior among people? These forces shape the social contract, the unwritten, common rules and perceptions about relationships among people and between employees and management. A significant social force today is the changing attitudes, ideas, and values of Generation Y employees—young, educated, technologically adept, and globally conscious. There is a growing focus on work/life balance, reflected in telecommuting and other alternative work arrangements. Political forces refer to the influence of political and legal institutions on people and organizations. One significant political force is the increased role of government in business. Political forces include basic assumptions underlying the political system such as the desirability of self-government, property rights, contract rights, and justice. People are demanding empowerment, participation, and responsibility in all areas of their lives. On a global scale, growing anti-American sentiments in many parts of the world create challenges for United States companies and managers. Economic forces pertain to the availability, production, and distribution of resources in a society. Companies in every industry have been affected by the recent financial crisis. Reduced consumer spending and tighter access to credit have curtailed growth and left companies scrambling to meet goals with limited resources. Another economic trend that affects managers worldwide is the growing economic power of countries such as China, India, and Brazil. Management practices and perspectives vary in response to these social, political, and economic forces in the larger society. XI. CLASSICAL PERSPECTIVE The classical perspective emerged during the nineteenth and twentieth centuries, and emphasized a rational, scientific approach to the study of management. The factory system of the 1800s faced challenges that earlier organizations had not encountered. Problems arose in tooling plants, organizing managerial structure, training non-English speaking employees, scheduling complex manufacturing operations, and resolving strikes. These new problems and the development of large complex, organizations demanded a new perspective on coordination and control. The classical perspective contains three subfields, each with a slightly different emphasis—scientific management, bureaucratic organizations, and administrative principles. A. Scientific Management Exhibit 1.10 1. Frederick W. Taylor (1856-1915) developed scientific management, a subfield of the classical perspective, that emphasizes scientific changes in management to improve labor productivity. However, because scientific management ignored the social context and workers’ needs, it led to increased conflict and clashes between management and employees. a. Taylor suggested that decisions based on rules of thumb and tradition should be replaced with precise work procedures developed after careful study of individual situations. In 1898, Taylor used the unloading of iron from rail cars and reloading finished steel to calculate the correct movements, and tools needed to increase productivity. Taylor worked out an incentive system that paid each man $1.85 a day instead of $1.15. and productivity shot up overnight. 2. Although Taylor is known as the father of scientific management, Henri Gantt, an associate of Taylor’s, developed the Gantt Chart—a bar graph than measures planned and completed work along each stage of production by time elapsed. 3. Frank B. and Lillian M. Gilbreth pioneered time and motion study, which stressed efficiency and the best way to do work. Although Gilbreth is known for work with bricklayers, his work had great impact on medical surgery by drastically reducing the time that patients spent on the operating table. Lillian M. Gilbreth (1878-1972) was more interested in the human aspect of work, and pioneered in the field of industrial psychology and made substantial contributions to human resource management. 4. Scientific management that began with Taylor dramatically increased productivity across all industries, and they are still important today. To use this approach, managers should develop standard methods for doing each job, select workers with appropriate abilities, train workers in the standard methods, support workers and eliminate interruptions, and provide wage incentives. However, because scientific management ignores the social context and worker’s needs, it can lead to increased conflict and clashes between managers and employees. B. Bureaucratic Organizations Exhibit 1.11 1. The bureaucratic organizations approach is a subfield within the classical perspective that looked at the organization as a whole. Max Weber (1864-1920) introduced management on an impersonal, rational basis through clearly defined authority and responsibility, formal recordkeeping, and separation of management and ownership. a. Weber’s idea of organization was the bureaucracy: a system that incorporated division of labor, hierarchy, rules and procedures, written decisions, promotion based on technical qualifications, and separation of ownership and management. In a bureaucracy, managers do not depend on personality for successfully giving orders, but rather on the legal power invested in their managerial positions. 2. The term bureaucracy has taken a negative meaning in today’s organizations and is associated with endless rules and red tape; however, ideally everyone gets equal treatment, and everyone knows what the rules are. For example, UPS has been successful because of its bureaucracy of rules and regulations, a well-defined division of labor, and technical qualifications as a primary hiring criterion. C. Administrative Principles 1. The administrative principles approach focused on the total organization rather than the individual worker. Henri Fayol (1841-1925) identified 14 principles of that include the following four. a. Unity of Command. Each employee should have only one boss. b. Division of Work. Specialized employees produce more with the same effort. c. Unity of Direction. Similar activities should be grouped under one manager. d. Scalar Chain. A chain of authority extends from the top of an organization . Fayol felt that these principles could be applied in any organizational setting. He also identified five basic functions or elements of management: planning, organizing, commanding, coordinating, and controlling. XII. HUMANISTIC PERSPECTIVE The humanistic perspective on management emphasizes the importance of understanding human behaviors, needs and attitudes in the workplace, and social interactions and group processes. Subfields within the humanistic perspective include the human relations movement, the human resources perspective, and the behavioral sciences approach. A. Early Advocates 1. Mary Parker Follett (1868-1933) stressed the importance of people rather than engineering techniques and addressed ethics, power, and empowerment. Her concepts included facilitating rather than controlling employees, and allowing employees to act according to the situation. 2. Chester I. Barnard (1886-1961) contributed the concept of the informal organization, which occurs in all formal organizations and includes cliques and social groupings. Barnard argued that organizations were not machines and that informal relationships are powerful forces that can help the organization if properly managed. Barnard also contributed the acceptance theory of authority—the notion that employees have free will and can choose whether to follow management orders. Acceptance of authority can be critical to success in important situations. B. Human Relations Movement 1. The human relations movement was based on the idea that truly effective control comes from within the individual worker rather than from strict, authoritarian control. This school of thought recognized and directly responded to social pressures for enlightened treatment of employees. The human relations movement emphasized satisfaction of employees’ basic needs as the key to increased worker productivity. 2. The Hawthorne studies were a series of experiments on worker productivity at the Hawthorne plant of Western Electric Company, Chicago. The tests were originally designed to investigate the effects of illumination on output; however, many of the tests pointed to the importance of factors other than illumination in affecting productivity. The Hawthorne studies were important in shaping ideas concerning how managers should treat workers. 3. Early interpretations agreed that human relations, not money, caused increased output. Workers performed better when managers treated them positively. New data showed that money mattered, but productivity increased because of increased feelings of importance and group pride employees felt when they were selected for the project. 4. One unintended contribution of the experiments was a rethinking of field research practices. Researchers realized that the researcher could influence the outcome of an experiment by being too involved with research subjects—a phenomenon now known as the Hawthorne effect. Discussion Question: Why can an event such as the Hawthorne studies be a major turning point in the history of management, even if the results of the studies are later shown to be in error? Discuss. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ C. Human Resources Perspective Exhibit 1.12 1. The human resources perspective suggests jobs should be designed to meet higher-level needs by allowing workers to use their full potential. This perspective combines prescriptions for design of job tasks with theories of motivation. 2. Abraham Maslow (1906-1970), a psychologist, suggested a hierarchy of needs because he observed that problems usually stemmed from an inability to satisfy needs. This hierarchy started with physiological needs and progressed to safety, belongingness, esteem, and self-actualization needs. 3. Douglas McGregor (1906-1964) formulated his Theory X and Theory Y about workers, believing that the classical perspective was based on Theory X, a set of assumptions about workers that suggest workers: a. dislike work and prefer to be directed; b. must be coerced to work; c. want to avoid responsibility and have little ambition; and d. want security above everything. 4. Theory Y was proposed as a more realistic view of workers, consisting of assumptions that: a. they do not inherently dislike work; b. they will achieve objectives to which they are committed; c. they will accept and seek responsibility; d. they have intellect that could be applied to organizational goals; and e. the intellectual potential of the average worker is only partially used. NEW MANAGER SELF-TEST: WHAT’S YOUR MACH? Managers differ in how they view human nature and the tactics that they use to get things done through others, This exercise helps students to determine their Mach score. Having a high Mach score means that they see life as a game, and are not personally engaged with other people. D. Behavioral Sciences Approach 1. The behavioral sciences approach applies social science in organizational context, drawing from economics, psychology, sociology, and other disciplines. For example, when Zappos.com conducts research to determine the best set of tests, interviews, and employee profiles to use when selecting new employees, it is using behavioral science techniques. 2. One set of management techniques based in the behavioral sciences approach is organization development (OD). The techniques and concepts of organization development have been broadened and expanded to cope with the increasing complexity of organizations. 3. Other concepts that grew of out the behavioral sciences approach include matrix organizations, self-managed teams, ideas about corporate culture, and management by wandering around. In recent years, behavioral sciences and OD techniques have been applied to help managers build learning organizations. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ XIII. MANAGEMENT SCIENCE The management science, also known as quantitative perspective emerged after World War II. It applied math, statistics, and other quantitative techniques to managerial problems. Operations research consists of mathematical model building and other applications of quantitative techniques to managerial problems. Operations management refers to the field of management that specializes in the physical production of goods and services using management science to solve manufacturing problems. Some of the more commonly used methods are forecasting, inventory modeling, linear and nonlinear programming, queuing theory, scheduling, simulation, and break-even analysis. Information Technology (IT) is the most recent subfield of management science, often reflected in management information systems. IT has evolved to include intranets and extranets, and software programs that help managers estimate costs, plan and track production, manage projects, and allocate resources, or schedule employees. Most organizations have departments of IT specialists to help them apply quantitative techniques to complex organizational problems. XIV. RECENT HISTORICAL TRENDS Elements of each of the three previously discussed management perspectives are still in use today. The most prevalent of these is the human resources perspective. Major contemporary extensions of the human resource perspective include systems thinking, the contingency view, and total quality management. A. Systems Thinking Exhibit 1.13 1. Systems thinking is the ability to see the distinct elements of a system or situation and the complex and changing interaction among those elements. A system is a set of interrelated parts that function as a whole to achieve a common purpose. a. Subsystems are parts of a system that depend on one another to function. Changes in one part of the system (the organization) affect other parts. Synergy means that the whole is greater than the sum of its parts. Individuals, groups, and organizations can accomplish more working together than working alone. 2. It is the relationship among the parts that form a whole system that matters. Systems thinking enables managers to look for patterns of movement over time and focus on the qualities or rhythm, flow, direction, shape, and networks of relationships that accomplish the performance of the whole. 3. An important element of systems thinking is to discern circles of causality. Understanding the circles of casualty enables leaders to allocate resources. B. Contingency View Exhibit 1.14 1. The classical management perspective assumed a universalist view; concepts that would work in one organization would work in another. In business education, an alternative view exists, known as the case view, in which each situation is believed to be unique and there are no universal principles. One learns about management by experiencing a large number of case problem situations. 2. The contingency view states that the successful resolution of organizational problems depends on a manager’s identification of key variations in the situation. Management’s job is to search for important contingencies in their industries, technologies, environments, and international cultures. When managers learn to identify important patterns and characteristics of their organizations, they can fit solutions to those characteristics. C. Total Quality Management (TQM) 1. Total quality management (TQM) focuses on managing the total organization to deliver better quality to customers. The ideas of W. Edwards Deming, "father of the quality movement” were scoffed at in America but embraced in Japan, which then became an industrial world power. 2. Japanese management shifted from an inspection-oriented approach to quality control, emphasizing employee involvement in the prevention of quality problems. The preventive approach to quality control infuses quality values throughout every activity, with front-line workers intimately involved in the process. There are four significant elements: a. Employee involvement. TQM requires companywide participation in quality control. b. Focus on the customer. TQM companies find out what the customer wants. c. Benchmarking. A process whereby companies find out how others do something better and imitate or improve it. d. Continuous improvement. The implementation of small, incremental improvements in all areas of the organization on an ongoing basis. XV. INNOVATIVE MANAGEMENT THINKING FOR A CHANGING WORLD A. Contemporary Management Tools 1. Managers tend to look for fresh ideas to help them cope during difficult times. Recent challenges have left today’s executives searching for any management tool that can help them get the most out of limited resources. a. The 2010-2011 Bain and Company survey identified benchmarking as the most popular tool for the first time in more than a decade, reflecting managers’ concern with efficiency and cost-cutting in a difficult economy. Three tools that ranked high were benchmarking, strategic planning, and mission and vision statements. b. Other popular management tools around the world in recent years include downsizing, outsourcing, supply chain management, total quality management, strategic alliances, collaborative innovation, and decision rights tools. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ B. Managing the Technology-Driven Workplace Many of today’s popular techniques are related to the transition to a technology-driven workplace. Two popular contemporary tools are customer relationship management and supply chain management. A more recent tool is social media, which is growing in use and importance. a. Social Media Programs include company online community pages, social media sites, and company online forums. The use of social media has been to look into the backgrounds of job candidates, generate awareness about the company’s products and services, sharing ideas and seeking customer feedback, strengthening employee relationships, and selling products. b. Customer relationship management (CRM) involves collecting and managing large amounts of data about customers and making them available to employees, enabling better decision making and superior customer service. c. Supply chain management refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers. A supply chain is a network of multiple businesses and individuals that are connected through the flow of products or services. Exhibit 1.15 CHAPTER 2 THE ENVIRONMENT AND CORPORATE CULTURE CHAPTER OUTLINE New Manager Self-Test: Are You Fit for Managerial Uncertainty? I. The External Environment A. General Environment B. Task Environment II. The Organization–Environment Relationship A. Environmental Uncertainty B. Adapting to the Environment III. The Internal Environment: Corporate Culture A. Symbols B. Stories C. Heroes D. Slogans E. Ceremonies IV. Types of Cultures A. Adaptability Culture B. Achievement Culture C. Involvement Culture D. Consistency Culture New Manager Self-Test: Cultural Preference V. Shaping Corporate Culture for Innovative Response A. Managing the High-Performance Culture B. Cultural Leadership ANNOTATED LEARNING OUTCOMES After studying this chapter, students should be able to: 1. Define an organizational ecosystem and how the general and task environments affect an organization’s ability to thrive. Answer: The organizational environment consists of all elements existing outside the boundary of the organization that have the potential to affect and influence the organization. This environment consists of two layers: the task environment and the general environment. The task environment is closer to the organization and includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations and performance such as competitors, suppliers, and customers. The general environment affects the organization indirectly. It includes social, economic, legal-political, international, natural, and technological factors that influence all organizations about equally. 1a. Explain the strategies that managers use to help organizations adapt to an uncertain or turbulent environment. Answer: The environment creates uncertainty for organization managers. Uncertainty means that managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes. Two basic factors that influence uncertainty are the number of factors that affect the organization and the extent to which those factors change. Strategies to adapt to these changes in the environment include boundary-spanning roles, interorganizational partnerships, and mergers and joint ventures. Boundary-spanning roles are assumed by people and/or departments that link and coordinate the organization with key elements in the external environment. Interorganizational partnerships are a popular strategy for adapting to the environment by reducing boundaries and increasing collaboration with other organizations. A merger is the combining of two or more organizations into one. A joint venture involves a strategic alliance or program by two or more organizations. 2. Define corporate culture and give organizational examples. Answer: Culture can be defined as the set of key values, beliefs, understandings, and norms shared by members of an organization. It can be analyzed at two levels. At the surface level are visible artifacts, which include things such as manner of dress, patterns of behavior, physical symbols, organizational ceremonies, and office layout. At a deeper, less obvious level are the expressed values and beliefs, which can be discerned from how people explain and justify what they do. These are values that members of the organization hold at a conscious level. They can be interpreted from the stories, language, and symbols that organization members use to represent them. Some values become so deeply embedded in a culture that members are no longer consciously aware of them. These basic, underlying assumptions and beliefs are the essence of culture and subconsciously guide behavior and decisions. 3. Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture. Answer: Fundamental values and corporate culture cannot be observed directly, but they can be understood through the visible manifestations of symbols, stories, heroes, slogans, and ceremonies. A symbol is an object, act, or event that conveys meaning to others. Symbols associated with corporate culture convey the organization’s important values. A story is a narrative based on true events that is repeated frequently and shared among organizational employees. Stories are told to new employees to keep the organization’s primary values alive. A hero is a figure who exemplifies the deeds, character, and attributes of a strong culture. Heroes are role models for employees to follow. A slogan is a phrase or sentence that succinctly expresses a key corporate value. Many companies use a slogan or saying to convey special meaning to employees. A ceremony is a planned activity that marks up a special event and is conducted for the benefit of an audience. Managers hold ceremonies to provide dramatic examples of company values. Organizational culture represents the values, understandings, and basic assumptions that employees share, and these values are signified by the above events. Managers help define important symbols, stories, heroes, slogans, and ceremonies to shape the future. 4. Describe four types of cultures and how corporate culture relates to the environment. Answer: The adaptability culture is characterized by values that support the company’s ability to rapidly detect, interpret, and translate signals from the environment into new behavior responses. This culture emerges in an environment that requires fast response and high-risk decision-making. The achievement culture is a results-oriented culture that values competitiveness, aggressiveness, personal initiative, and willingness to work long and hard to achieve results. It is suited to organizations concerned with serving specific customers in the external environment, but without the intense need for flexibility and rapid change. An emphasis on winning and achieving specific ambitious goals is the glue that holds the organization together. The involvement culture places high value on meeting the needs of employees and values cooperation and equality. This culture has an internal focus on the involvement and participation of employees to adapt rapidly to changing needs from the environment. Managers emphasize values such as cooperation, consideration of both employees and customers, and avoiding status differences. The consistency culture values and rewards a methodical, rational, orderly way of doing things. This culture uses an internal focus and a consistency orientation for a stable environment. The external environment exerts a big influence on internal corporate culture. The internal culture should embody what it takes to succeed in the environment. If the external environment requires extraordinary customer service, the culture should encourage good service; if it calls for careful technical decision-making, cultural values should reinforce effective managerial decision-making. 5. Define a cultural leader and explain the tools a cultural leader uses to create a high-performance culture. Answer: A cultural leader is a manager who uses signals and symbols to influence corporate culture. Cultural leaders influence culture by articulating a vision for the organizational culture that employees can believe in, and heeding the day-to-day activities that reinforce the cultural vision. To create a high-performance culture, a cultural leader would tie the central values that employees believe in to the need for high performance, and then make sure that work procedures and reward systems match and reinforce those values. Finally, the cultural leader must be sure to exemplify high-performance in his or her own work activities. LECTURE OUTLINE NEW MANAGER SELF-TEST: ARE YOU FIT FOR MANAGERIAL UNCERTAINTY? Organizations in uncertain environments find that everything seems to be constantly changing. Such an environment requires that new managers possess the quality of “mindfulness”—being open-minded and thinking independently. This exercise helps students determine their levels of mindfulness, indicating whether they would likely perform better in stable or unstable environments. I. THE EXTERNAL ENVIRONMENT Exhibits 2.1 and 2.2 The organizational environment includes all elements existing outside the boundary of the organization that have the potential to affect the organization. The environment includes competitors, resources, technology, and economic conditions that influence the organization. It does not include those events so far removed from the organization that their impact is not perceived. The organizational environment can be conceptualized as having two layers surrounding the organization: the general environment and the task environment. The organization also has an organizational ecosystem formed by interaction among a community of organizations in the environment and an internal environment that includes the elements within the organization’s boundaries such as current employees, management, and corporate culture. A. General Environment 1. The dimensions of the general environment include international, technological, sociocultural, economic, natural, and legal-political. a. The international dimension represents events originating in foreign countries and opportunities for American companies in other countries. This dimension influences all other aspects of the external environment. This provides new competitors, customers, and suppliers and shapes social, technical, and economic trends. b. The technological dimension includes scientific and technological advancements in a specific industry as well as in society at large. Technology has created massive changes for organizations and industries. Today, computer networks, Internet access, hand-held devices, videoconferencing capabilities, cell phones, and laptops are the minimum tools for doing business. Advances in technology drive competition and help innovative companies gain market share, and they have the potential to transform consumer expectations of an entire industry. c. The sociocultural dimension represents the demographic characteristics, norms, customs, and values of the general population. Important sociocultural characteristics are geographical distribution, population density, age, and education levels. Today’s demographic profiles are the foundation of tomorrow’s work force and customers. d. The economic dimension represents the general economic health of the country or region in which the organization operates. Components of the economic dimension include consumer purchasing power, the unemployment rate, and interest rates. In the last few years, the weakened U.S. economy has had a devastating effect on small businesses. Nevertheless, there is still tremendous vitality in the small business sector of the economy. e. The legal political dimension includes federal, state, and local government regulations and political activities designed to influence company behavior. Government regulations influence organizations through a variety of legislation such as Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), fair trade practices, and others. Pressure groups are interest groups that work within the legal-political framework to influence companies to behave in socially responsible ways. For example, Wal-Mart has been pushed to improve workers’ wages and health care benefits. f. The natural dimension is different from other sectors of the general environment because it has no voice of its own. It includes all elements that occur naturally on earth, including plants, animals, rocks, and natural resources such as air, water, and climate. Influence on managers to meet needs in the natural environment may come from other sectors, such as government regulation, consumer concerns, the media, competitors’ actions, or even employees. Discussion Question #5: Why do you think many managers are surprised by environmental changes and hence are less able to help their organizations adapt? NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ B. Task Environment 1. The task environment is the layer closest to the organization and includes those sectors that have a direct working relationship with it. The task environment includes customers, competitors, suppliers, and the labor market. a. Customers are those people and organizations in the environment that acquire goods or services from the organization. Customers are important because they determine the organization’s success. Customers today have even greater power because of the Internet, which poses threats as well as opportunities for managers. Discussion Question #2: Contemporary best-selling management books often argue that customers are the most important element in the external environment. Do you agree? In what company situations might this statement be untrue? NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ b. Competitors are organizations in the same industry or type of business that provide goods or services to the same set of customers. Specific competitive issues characterize each industry. The recording industry differs from the steel industry and the pharmaceutical industry. c. Suppliers are people and organizations that provide the raw materials that the organization uses to produce its output. A supply chain is a network of multiple businesses and individuals that are connected through the flow of products or services. Many companies are using fewer suppliers and building good relationships with them so that they will receive high-quality goods at lower prices. These companies are also finding that being cooperative, rather than adversarial, is the key to saving money, maintaining quality, and speeding products to market. d. The labor market represents people in the environment who can be hired to work for the organization. Labor market factors that impact organizations include: • the growing need for computer-literate knowledge workers; • the necessity for continuous investment in human resources through recruitment, education, and training to meet competitive demands of the borderless world; and • the effects of international trading blocs, automation, outsourcing, and shifting facility locations on labor dislocations, creating unused labor pools in some areas and labor shortages in others. Exhibit 2.3 Discussion Question #2: Would the task environment for a cellular phone company contain the same elements as that for a government welfare agency? Discuss. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ II. THE ORGANIZATION ENVIRONMENT RELATIONSHIP A. Environmental Uncertainty Exhibit 2.4 1. Environmental uncertainty must be managed to make the organization more effective. Uncertainty means that managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes. Environmental characteristics that influence uncertainty are the number of factors that affect the organization and the extent to which those factors change. 2. When external factors change rapidly, the organization experiences very high uncertainty (e.g., telecommunications firms, computer firms, and electronics firms). When an organization deals with a few external factors that are stable, managers experience low uncertainty (e.g., soft-drink bottlers or food processors). Discussion Question #4: What strategic issues have the potential to create environmental uncertainty in the following four industries: (a) automobile; (b) social media; (c) newspaper; and (d) medical services? NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ B. Adapting to the Environment 1. Boundary spanning roles link to and coordinate the organization with key elements in the external environment. Boundary spanners serve two purposes for the organization: they detect and process information about changes in the environment, and they represent the organization’s interests to the environment. a. People in departments such as marketing and purchasing span the boundary to work with customers and suppliers through face-to-face and market research. Business intelligence results from using sophisticated software to search through large amounts of internal and external data to spot patterns, trends, and relationships that might be significant is a recent approach to boundary spanning. For example, Verizon uses business intelligence to actively monitor customer interactions and fix problems almost immediately. b. Competitive intelligence refers to activities designed to get as much information as possible about one’s rivals. For example, Harley-Davidson hires an outside research firm to search through massive amounts of data and reveal patterns that help decipher and predict competitors’ actions. Exhibit 2.5 2. A popular strategy for adapting to the environment is by reducing boundaries and increasing collaboration with other organizations through interorganizational partnerships. Companies are joining together to become more effective and share scarce resources. Many companies are engaged in e-business relationships with suppliers and partners, aided by digital network connections and the Internet. The new model is characterized by information sharing, including e-business linkages for automatic ordering, payments, and other transactions. 3. Mergers and joint ventures also reduce environmental uncertainty. A merger occurs when two or more organizations combine to become one. A joint venture is a strategic alliance by two or more organizations that occurs when the project is too complex, expensive, or uncertain for one firm to handle alone. Discussion Question #6: Why are interorganizational partnerships so important for today’s companies? What elements in the current environment might contribute to either an increase or decrease in interorganizational collaboration? Discuss. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ III. THE INTERNAL ENVIRONMENT: CORPORATE CULTURE Exhibit 2.6 The internal environment includes: corporate culture, production technology, organization structure, and physical facilities. Corporate culture is extremely important in an organization attempting to achieve a competitive advantage. The internal culture must fit the needs of the external environment and company strategy. Culture is defined as the set of key values, beliefs, understandings, and norms shared by members of an organization. Culture is a pattern of shared values and assumptions about how things are done within the organization. It can be analyzed at two levels, with each level becoming less obvious. At the surface level are visible artifacts, which include all the things one can see, hear, and observe by watching members of the organization. At a deeper, less obvious level are the expressed values and beliefs, which are not observable but can be discerned from how people explain and justify what they do. Some values become so deeply embedded in a culture that members are no longer consciously aware of them. These basic, underlying assumptions and beliefs are the essence of culture and subconsciously guide behavior and decisions. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ A. Symbols 1. A symbol is an object, act, or event that conveys meaning to others. Symbols associated with corporate culture convey the organization’s important values. B. Stories 1. A story is a narrative based on true events that is repeated and shared among organizational employees. Stories are told to new employees to keep the organization’s primary values alive. C. Heroes 1. A hero is a figure who exemplifies the deeds, character, and attributes of a strong corporate culture. Heroes are role models for employees to follow. D. Slogans 1. A slogan is a phrase or sentence that succinctly expresses a key corporate value. E. Ceremonies 1. A ceremony is a planned activity that marks up a special event and is conducted for the benefit of an audience. Discussion Question #8: Cultural symbols are usually noticed through sight, sound, touch, and smell. For example, Costco displays a limited amount of low-priced merchandise in a no-frills, self-service warehouse with concrete floors. What do these elements communicate as symbols about its corporate culture? NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ IV. TYPES OF CULTURE Exhibit 2.7 In considering what cultural values are important for the organization, managers consider the external environment, as well as the company’s strategy and goals. Studies suggest that the right fit between culture, strategy, and the environment is associated with four categories or types of culture, based on two dimensions: 1) the extent to which the external environment requires flexibility or stability; and 2) the extent to which a company’s strategic focus is internal or external. A strong corporate culture alone does not ensure business success unless the culture encourages healthy adaptation to the external environment. Healthy cultures help companies adapt to the environment. A strong, but unhealthy, culture may encourage the organization to march resolutely in the wrong direction. A. Adaptability Culture 1. The adaptability culture is characterized by values that support the company’s ability to rapidly detect, interpret, and translate signals from the environment into new behavior responses. This culture emerges in an environment that requires fast response and high-risk decision-making. B. Achievement Culture 1. The achievement culture is a results-oriented culture that values competitiveness, aggressiveness, personal initiative, cost cutting, and willingness to work long and hard to achieve results. It is suited to organizations concerned with serving specific customers in the external environment, but without the intense need for flexibility and rapid change. An emphasis on winning and achieving specific ambitious goals is the glue that holds the organization together. C. Involvement Culture 1. The involvement culture places high value on meeting the needs of employees and values cooperation and equality. This culture has an internal focus on the involvement and participation of employees to adapt rapidly to changing needs from the environment. Managers emphasize values such as cooperation, consideration of both employees and customers, and avoiding status differences. D. Consistency Culture 1. The consistency culture values and rewards a methodical, rational, orderly way of doing things. This culture uses an internal focus and a consistency orientation for a stable environment. Discussion Question #10: As described in this chapter, Zynga CEO Mark Pincus is obsessed with high performance, and demanding deadlines define the corporate culture. Describe how this culture may be good for the short term but ultimately could hurt the organization’s long-term sustainability. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ NEW MANAGER SELF-TEST: Cultural Preference The fit between a new manager and organizational culture can determine success and satisfaction. This exercise helps students determine their preferences with regard to organization culture. Scores indicate the degree to which students will be comfortable and effective in four types of culture: involvement, adaptability, achievement, and consistency. Instructions: The fit between new manager and organizational culture can determine success and satisfaction. To understand your culture preference, rank the items below from 1 to 8 based on the strength of your preference (1 = strongest preference). 1. The organization is very personal, much like an extended family. Score-1 2. The organization is dynamic and changing, where people take risks. Score-3 3. The organization is achievement oriented, with the focus on competition and getting jobs done. Score-4 4. The organization is stable and structured, with clarity and established procedures. Score-3 5. Management style is characterized by teamwork and participation. Score-1 6. Management style is characterized by innovation and risk taking. Score-2 7. Management style is characterized by high performance demands and achievement. Score-4 8. Management style is characterized by security and predictability. Score-3 Scoring and interpretation: Each question pertains to one of the four types of culture in Exhibit 2.7. To compute your preference for each type of culture, add together the scores for each set of two questions as follows: Involvement culture — total for questions 1, 5: _2_ Adaptability culture — total for questions 2, 6: _5_ Achievement culture — total for questions 3, 7: _8_ Consistency culture — total for questions 4, 8: _6_ A lower score means a stronger culture preference. You will likely to be more comfortable and more effective as a new manager in a corporate culture that is compatible with your personal preferences. A higher score means the culture would not fit your expectations, and you would have to change your style and preference to be comfortable. Review the text discussion of the four culture types. Do your cultural preference seems correct to you? Can you think of companies that fit your culture preference? The cultural preference indicated by the scores above is the involvement culture. Adobe Systems Inc., Google, Chevron Corporation, and Facebook are some companies with high involvement culture that would fit the above culture preference. V. SHAPING CORPORATE CULTURE FOR INNOVATIVE RESPONSE Research shows that one factor that increases a company’s value the most is people and how they are treated. Corporate culture has become increasingly important to managers as they recognize its importance in attracting, motivating, and keeping good employees. Culture plays a key role in creating an organizational climate that enables learning and innovative responses to threats from the external environment, challenging new opportunities, or organizational crises. A. Managing the High-Performance Culture Exhibit 2.8 1. Companies that succeed in a turbulent world are those that pay careful attention to both cultural values and business performance. Cultural values can energize and motivate employees by appealing to higher ideals and unifying people around shared goals. Values boost performance by shaping and guiding employee behavior, so that everyone’s actions are aligned with strategic priorities. Four organizational outcomes are possible based on the relative attention managers pay to cultural values and business performance. a. Companies that pay little attention to either values or business results are unlikely to survive for long. b. Companies that focus on values but pay little attention to business results are likely to miss important environmental changes, eventually resulting in loss of market share. c. Companies that focus primarily on bottom-line results but pay little attention to organizational values will find it difficult to survive in times of crisis. d. Companies that emphasize both culture and business performance will develop a strong organizational culture that gives employees a sense of identity, holds the company together during tough times, and helps it adapt quickly to a changing environment. These companies represent the high-performance culture that: • is based on a solid organizational mission or purpose; • embodies shared adaptive values that guide decisions and business practices; and • encourages individual employee ownership of both bottom-line results and the organization’s cultural backbone. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ B. Cultural Leadership 1. One-way managers change norms and values to build a high-performance culture is through cultural leadership. A cultural leader defines and uses signals and symbols to influence corporate culture by: a. articulating a vision for the organizational culture that employees can believe in; and b. heeding the day to day activities that reinforce the cultural vision. 2. Managers widely communicate the cultural values through words and actions. Value statements that aren’t reinforced by management behavior are meaningless. Cultural leaders also uphold their commitment to values during difficult times or crises. Maintaining consistency with the cultural values helps organizations weather the storm and come out stronger on the other side. Cultural leaders let everyone in the organization know what really counts. NOTES____________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Instructor Manual for Understanding Management Dorothy Marcic, Richard L. Daft 9781285421230, 9781305313347
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