Fundamentals of Management Final Exam Study Guide 2024-1 PDF

Fundamentals of Management Final Exam Preparation Guide for Students & Lecturers Exam Content Topics: The key topics to be covered in the exam include: ○ Chapter 2: Decision Making ○ Chapter 3: External Environment & Organizational Culture ○ Chapter...

Fundamentals of Management Final Exam Preparation Guide for Students & Lecturers Exam Content Topics: The key topics to be covered in the exam include: ○ Chapter 2: Decision Making ○ Chapter 3: External Environment & Organizational Culture ○ Chapter 8: Planning ○ Chapter 11: Organizing ○ Chapter 17: Leading ○ Chapter 18: Controlling Depth: The level of detail for each topic varies from (basic understanding, to in-depth knowledge) questions. Difficulty: This exam is a balanced mix of easy, medium, and challenging questions. ○ Multiple-choice questions use a mix of case-based questions and definition-type questions.  1 CHAPTER 2: MAKING DECISIONS Welcome to Week 2 Let's take a quick look back at week 1 This semester we talked about : What a manager does, who they are, their skills and function, and the importance How to make decisions using the decision-making process, ways in which managers make decisions, and biases Learning Objectives: 2.1 DESCRIBE the eight steps in the decision-making process. Decision-making is a daily activity for any human being. There is no exception to that. When it comes to business organizations, decision-making is a habit and a process as well. What are the 8 Steps in the decision-making process? A decision is a choice. The decision-making process consists of eight steps: Let's Make A Decision together. This is a prefilled example. (1) identify the problem; ○ The computer lab needs to replace the desktop computers with Laptops so they can be rented by students for class and homework purposes. (2) identify decision criteria; ○ Memory, ○ Speed, ○ Accuracy, ○ Automation (3) weight the criteria; ○ All the criteria listed are not equally important so which is most important and which is least important rank using a number system. So we might say Speed (10) Accuracy (8) Memory (5) Automation (4)  2 Criteria Weight (Rank) Speed 10 Accuracy 8 Memory 5 Automation 4 (4) develop alternatives; ○ Now we must create a list of alternatives, which computers may fit the criteria that we are looking for. ○ Asus , ○ Acer , ○ Lenovo, ○ HP (5) analyze alternatives; ○ Once we have created our list of alternatives or in this case computer options we need to analyze by looking at the criteria that we previously identified in step three. ○ I must now assign weights or values to what features the various alternatives (laptops) provide. (these numbers are a matter of personal opinion) ○ These numbers can vary, but since we started with a rank of 10 in step 3 I will stick to that number being my maximum ranking. Memory Speed Accuracy Automation Asus 10 8 9 5 Acer 8 6 8 7  3 Lenovo 6 8 8 6 HP 10 10 8 7 (6) select an alternative; ○ We must choose which computer best meets our computer lab needs ○ We must multiply each alternative by the assigned weight, you get the weighted alternatives ○ Step 3 x Step 5 = Step 6 Criteria Weight (Rank) Speed 10 Accuracy 8 Memory 5 Automation 4 Memory Speed Accuracy Automation Asus 10 8 9 5 Acer 8 6 8 7 Lenovo 6 8 8 6 HP 10 10 8 7  4 Memory Speed Accuracy Automation TOTAL ( Sum) Asus 10 x 5 = 50 80 72 20 222 Acer 64 60 64 28 216 Lenovo 30 80 64 24 198 HP 50 100 64 28 242 ○ Given which alternative scored the best we would state that HP is the best option to meet our need (7) implement alternative; ○ This may require resassuing your steps, making sure everyone is on board and in agreement with your purchase decision, etc. ○ HP is in agreement with what we are looking for. and (8) evaluate decision effectiveness. ○ evaluating the outcome or result of the decision to see whether the problem was resolved. ○ Ask yourself some questions: Did I rank the alternatives incorrectly? Could another laptop be more beneficial for students? Should I have considered cost as a determining factor? 2.2 EXPLAIN the four ways managers make decisions. Can you identify what were the four ways managers make decisions? The assumptions of rationality are as follows: the problem is clear and unambiguous; a single, well-defined goal is to be achieved; all alternatives and consequences are known, and the final choice will maximize the payoff. Bounded rationality says that managers make rational decisions but are bounded (limited) by their ability to process information. Satisficing happens when decision-makers accept solutions that are good enough.  5 ○ Suppose you’re a Marketing major and upon graduation from UB you want a job, preferably as a Digital Marketing Manager with a minimum salary of $30,000 and within Belize City. You accept a job offer as a Communications/Press officer—not exactly your dream position—at National bank in Belmopan 50 miles from home at a starting salary of $29,500. If you had done a more comprehensive job search, you would have discovered a job in Digital Marketing at Digi headquarters in Belize City starting at a salary of $35,000. ○ You weren’t a perfectly rational decision-maker because you didn’t maximize your decision by searching all possible alternatives and then choosing the best. But because the first job offer was satisfactory (or “good enough”), you behaved in a bounded-rationality manner by accepting it. With escalation of commitment, managers increase commitment to a decision even when they have evidence it may have been a wrong decision. Intuitive decision-making means making decisions on the basis of experience, feelings, and accumulated judgment. ○ A classic example of escalation of commitment involves staying in a job we despise. To an outsider, the situation may seem painfully obvious: quit your job and find a more rewarding career. But when we're in this particular situation, we experience a commitment bias. We think that we might enjoy our job better if we do this or do that. We don't want to throw away the years of studying, training, and experience that brought us to this position. And we don't think working for a different company could really provide a better situation. So, we just grit our teeth and bear with it. We're trapped by our perceptions, our desire to manage other people's impressions or judgments, and other irrational thoughts that blind us and send us into a pattern of escalation of commitment. Intuitive decision-making is the way people make decisions naturally, without the use of formal tools and procedures. Some talk about intuition as happening without any thought at all. Like “trusting your gut” or “using the force” in a sixth sense kind of manner. Using evidence-based management, a manager makes decisions based on the best available evidence. ○ is an approach that involves consciously setting aside the accepted conventions and hierarchy of opinion, and instead, using critical thinking and the best available evidence to make decisions 2.3 CLASSIFY decisions and decision-making conditions. Conditions or in simplistic terms: situations determine the type of decision were are going to make.  6 Programmed decisions are repetitive decisions that can be handled by a routine approach and are used when the problem being resolved is straightforward, familiar, and easily defined (structured). Examples: Developing weekly work schedules for part-time employees, Decisions regarding personnel arriving late to work and Reordering office supplies Non-programmed decisions are unique decisions that require a custom-made solution and are used when the problems are new or unusual (unstructured) and for which information is ambiguous or incomplete. Examples include deciding whether to acquire another organization, deciding which global markets offer the most potential, or deciding whether to sell off an unprofitable vision. Such decisions are unique and non-recurring. Certainty is a situation in which a manager can make accurate decisions because all outcomes are known. The need to meet customer needs: the outcomes (consequences) are known if companies fail to meet those needs — loss of customers, etc. Risk is a situation in which a manager can estimate the likelihood of certain outcomes. Uncertainty is a situation in which a manager is not certain about the outcomes and can’t even make reasonable probability estimates. When decision-makers face uncertainty, their psychological orientation will determine whether they follow a maximax choice (maximizing the maximum possible payoff); a maximin choice (maximizing the minimum possible payoff); or a minimax choice (minimizing the maximum regret—the amount of money that could have been made if a different decision had been made). 2.4 DESCRIBE how biases affect decision-making. What is a Bias to you?  7 We all have biases based on our experiences and messages we receive in the media, home, and community about other people. Some are consciously held beliefs, associations, and attitudes about a person or social group, while others are unconscious, operating beyond our control and awareness. These include overconfidence, immediate gratification, anchoring, selective perception, confirmation, framing, availability, representation, randomness, sunk costs, self-serving bias, and hindsight. The managerial decision-making model helps explain how the decision-making process is used to choose the best alternative(s), either through maximizing or satisfying and then implementing and evaluating the alternative. It also helps explain what factors affect the decision-making process, including the decision-making approach (rationality, bounded rationality, intuition), the types of problems and decisions (well-structured and programmed or unstructured and nonprogrammed), and the decision-making conditions (certainty, risk, uncertainty). 2.5 IDENTIFY effective decision-making techniques. Managers can make effective decisions by understanding cultural differences in decision-making, creating standards for good decision-making, knowing when it’s time to call it quits, using an effective decision-making process, and developing their ability to think clearly. An effective decision-making process (1) focuses on what’s important; (2) is logical and consistent; (3) acknowledges both subjective and objective thinking and blends both analytical and intuitive approaches; (4) requires only “enough” information as is necessary to resolve a problem; (5) encourages and guides gathering relevant information and informed opinions; and (6) is straightforward, reliable, easy to use, and flexible. Design thinking is “approaching management problems as designers approach design problems.” It can be useful when identifying problems and when identifying and evaluating alternatives. Using big data, decision-makers have power tools to help them make decisions. However, no matter how comprehensive or well-analyzed the big data, it needs to be tempered by good judgment.  8 CHAPTER 3: Managing the External Environment and the Organization's Culture Today we are going to discuss organizational culture: which you should already have some background knowledge on given you were to read. We will also talk about some of the challenges in the external environment (outside the organization) that impacts its organizational culture. Let's start by looking at the Impact of Managers: Question 1 of today: How much impact do you think managers have as it relates to business being successful or failing? 3.1 CONTRAST the actions of managers according to the omnipotent and symbolic views. According to the omnipotent view, managers are directly responsible for an organization’s success or failure. Example: Carla has total control over the organization's mission and operations at Universal Hardware. Thus, she is individually responsible for the performance of the organization. According to the omnipotent view, the manager is the visionary who steers all aspects of the organization. A common concept associated with the omnipotent view is the Halo Effect (we looked at in Chapter 2). The halo effect is a cognitive bias that claims that positive impressions of people, brands, and products in one area positively influence our feelings in another area. An example of the halo effect is when one assumes that a good-looking person in a photograph is also an overall good person. In the hiring process, the person who speaks more eloquently will do the job better than someone else who may have stumbled due to being nervous. The symbolic view argues that much of an organization’s success or failure is due to external forces outside managers’ control. It recognizes that there are many environmental factors (economic, political, legal, competitive, consumer-based, technological, etc.) that affect the performance of the organization that is outside of the control of managers. Thus managers are not individually responsible for the success or failure of the organization.  9 The two constraints on managers’ discretion are the organization’s culture (internal) and the environment (external). Managers aren’t totally constrained by these two factors since they can and do influence their culture and environment. 3.2 DESCRIBE the constraints and challenges facing managers in today’s external environment. The external environment includes those factors and forces outside the organization that aff­ect its performance. The main components include economic, demographic, political/legal, sociocultural, technological, and global. The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages. The demographic component is concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. The political/legal component looks at federal, state, and local laws as well as global laws and laws of other countries. It also includes a country’s political conditions and stability. The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior. The technological component is concerned with scientific or industrial innovations. The global component encompasses those issues associated with globalization and the world economy. Although all these components pose potential constraints on managers’ decisions and actions, we’re going to take a closer look at two of them—the economic and demographic—by looking at how changes taking place in those components constrain managers and organizations. Inflation creates stress - prices are on the rise which reduces the purchasing power of consumers. Think about the cost of Gas Commodity cost is the leading indicator of inflation. That being said factors affecting commodity price volatility are: ○ Mother Nature: Natural disasters affect the price of materials ○ Supply and Demand ○ Storage levels and Transportation constraints ○ Geopolitics: Russia attacked Ukraine and forced the shutdown of the facilities, cutting the country's oil production and increasing gas prices.  10 Demography is destiny. Have you ever heard this phrase? What it means is that the size and characteristics of a country’s population can have a significant e­ect on what it’s able to achieve and on virtually every aspect of life including politics, economics, and culture. ○ This should make it obvious why it’s important to examine demographics. Age is a particularly important demographic since the workplace often has diff­erent age groups all working together. ○ Baby Boomers. Gen Y. Post-Millennials. Maybe you’ve heard or seen these terms before. Population researchers use these terms to refer to three of the more well-known age groups. Baby boomers are often hardworking and want to be recognized for their skills. They are often a great source of knowledge about their industry and appreciate the chance to share their expertise. Managers should look to leverage their skills and encourage them to mentor younger employees. Gen Y or millennials is an important demographic at Facebook, where most employees are under 40. The company values the passion and pioneering spirit of its young employees who embrace the challenges of building groundbreaking technology and working in a fast-paced environment with considerable change and ambiguity. Then, we have the Post-Millennials—the youngest identified age. This group has also been called the iGeneration, primarily because they’ve grown up with technology that customizes everything to the individual. Managers face constraints and challenges from these components because of the impact they have on jobs and employment, environmental uncertainty, and stakeholder relationships. Critical Thinking Scenario The Scenario: As the Human Resource manager at a Courts, Shawn Jones continues to face staffing challenges. He must recruit and hire the right number of sales staff to be prepared for upcoming store expansion and inventory. The economy seems to be heading in the right direction post-Covid Pandemic, and Court’s client base is growing. Shawn wants to ensure that the company is able to continue to maintain appropriate staffing to meet future business needs. How can Shawn stay informed about the impact the external environment will have on his business?  11 The Possible Answers: Anticipate changes in the external environment: Covid is not yet gone for good and it is still having impacts on the economy and buyer spending power. Connect with customers through brand marketing. Pay attention to competitors: What are Mirab and other small furniture companies doing? Conduct formal research Consider flexible work arrangements: Hire part-time and freelance workers Now let's talk about Culture. 3.3 DISCUSS the characteristics and importance of organizational culture. What is organizational culture? refers to a company's mission, objectives, expectations, and values that guide its employees. By definition, it is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act. In most organizations, these shared values and practices have evolved over time and largely determine how things are done in a given organization. Defining Culture and Its Impact Culture is a perception. Organizational culture isn’t concerned with whether members like it. Employees describe the culture in similar terms despite their diversity. Note that our definition of “culture” implies three things: 1. Culture is a perception that cannot be physically touched or seen, but is perceived based on what employees experience within the organization. 2. Organizational culture is concerned with how members perceive or describe the culture, not with whether they like it.  12 3. Employees tend to describe the organization’s culture in similar terms, regardless of their backgrounds or their work at different organizational levels. Organizational culture is important because of the impact it has on the decisions, behaviors, and actions of organizational employees. Let's look at these two organizational examples: Organization A ○ This organization is a Marketing firm. Managers are expected to fully document all decisions, and “good managers” are those who can provide detailed data to support their recommendations. Creative decisions that incur significant change or risk are not encouraged. Organization B ○ This organization is also a Marketing firm. Here, however, management encourages and rewards risk-taking and change. Decisions based on intuition are valued as much as those that are well-rationalized. Management prides itself on its history of experimenting with new technologies and its success in regularly introducing innovative products. CHART The seven dimensions of culture are attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, stability, and innovation and risk-taking. These dimensions range from low (meaning not typical of the culture) to high (meaning especially typical of the culture). In many organizations, one cultural dimension is emphasized more than the others and essentially shapes both the organization’s personality and the way organizational members work. For instance, Sony Corporation focuses on product innovation, identified in this graphic as “innovation and risk taking.” In contrast, Southwest Airlines has made its employees a central part of its culture, illustrated in this graphic as “people orientation,” which the company shows by how it treats its employees. In organizations with strong cultures, employees are more loyal, and performance tends to be higher. The stronger a culture becomes, the more it affects the way managers plan, organize, lead, and control. The original source of a culture reflects the vision of organizational founders.  13 Employee selection practices maintain a culture, the actions of top managers, and socialization processes. Also, culture is transmitted to employees through stories, rituals, material symbols, and language. These elements help employees “learn” what values and behaviors are important as well as who exemplifies those values. The culture a­ffects how managers plan, organize, lead, and control. 3.4 DESCRIBE current issues in organizational culture. The characteristics of an innovative culture are challenge and involvement, freedom, trust and openness, idea time, playfulness/humor, conflict resolution, debates, and risk-taking. Simply put, customer responsiveness indicates how fast and efficiently a company responds to customers. A customer-responsive culture has five characteristics: outgoing and friendly employees; jobs with few rigid rules, procedures, and regulations; empowerment; clear roles and expectations; and employees who are conscientious in their desire to please the customer. Companies that achieve business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into business strategies may develop sustainability into the organization’s overall culture. Q/A Segment : The halo effect is a common concept associated with which view of management? Omnipotent or Symbolic List one of the main components facing managers in the external environment. Organizational culture isn’t concerned with whether members like it. True or False The degree to which decisions and actions emphasize the status quo? Stability ( 7 dimensions of culture) The degree to which work is organized around teams rather than individuals? Team orientation ( 7 dimensions of culture) Customer responsiveness indicates how fast and efficiently a company responds to customers. True or False  14 CHAPTER 8: PLANNING WORK ACTIVITIES What is planning? How relevant is it to you in your day-to-day lives? When you figure out your class schedule for the next term or when you decide what you need to do to finish a class project on time, you’re planning. And planning is something that all managers need to do. Although what they plan and how they plan may differ, it’s still important that they do plan. In this chapter, we present the basics: what planning is, why managers plan, and how they plan. 8.1 DEFINE the nature and purposes of planning. Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing plans for organizational work activities. It’s concerned with both ends (what) and means (how). When we use the term “planning,” we mean formal planning. In formal planning, specific goals covering a specific time period are defined. These goals are written and shared with organizational members to reduce ambiguity and create a common understanding of what needs to be done. Finally, specific plans exist for achieving these goals. The four purposes of planning include providing direction, reducing uncertainty, minimizing waste and redundancy, and establishing the goals or standards used in controlling. Studies of the planning-performance relationship have concluded that formal planning is associated with positive financial performance, for the most part; it’s more important to do a good job of planning and implementing the plans than doing more extensive planning; the external environment is usually the reason why companies that plan don’t achieve high levels of performance, and the planning-performance relationship seems to be influenced by the planning time frame. 8.2 CLASSIFY the types of goals organizations might have and the plans they use.  15 Planning is often called the primary management function because it establishes the basis for all the other things managers do as they organize, lead, and control. It involves two important aspects: goals and plans. Goals are desired outcomes. Plans are documents that outline how goals are going to be met. Goals might be strategic or financial, and they might be stated or real. The Scenario: Aaliyah Mars recently started a Mexican restaurant in Placencia Village. The restaurant also sells wine and locally made crafts. Although the business does well during the high tourist months, things get pretty lean from May to October when visitor numbers dwindle. Aaliyah felt that the potential opportunities in this location were good. The Scenario: Aaliyah Mars recently started a Mexican restaurant in Placencia Village. The restaurant also sells wine and locally made crafts. Although the business does well during the high tourist months, things get pretty lean from May to October when visitor numbers dwindle. Aaliyah felt that the potential opportunities in this location were good. What types of plans does Aaliyah need to survive the off-season? The slow season is a wonderful time for a business owner. This is the perfect opportunity for brand and business development. If a new website needs to be designed, this is the time to do it. If new recipes need to be tested, this would be the perfect time to run trials. Research and development during these months could make the busy season even more profitable. The “business development” season also presents a great opportunity to deepen ties in the community, and it is the prime time to diversify business offerings.  16 Perhaps the restaurant could focus on hosting events on-site or catering off-site meals, making themselves more valuable to the local community rather than depending so heavily on tourism. Finally, it is a great time for the owners to rest, recover, and rejuvenate themselves from the last season and gear up for the next. Strategic plans apply to the entire organization, while operational plans encompass a particular functional area. Long-term plans are those with a time frame beyond three years. Short-term plans cover one year or less. Specific plans are clearly defined and leave no room for interpretation. Directional plans are flexible and set out general guidelines. A single-use plan is a one-time plan designed to meet the needs of a unique situation. Standing plans are ongoing plans that provide guidance for activities performed repeatedly. 8.3 COMPARE and contrast approaches to goal-setting and planning. In traditional goal-setting, goals are set at the top of the organization and then become subgoals for each organizational area. MBO (management by objectives) is a process of setting mutually agreed-upon goals and using those goals to evaluate employee performance. The Scenario: Jerry Kent is sitting down with his new manager to discuss his recent promotion to a line supervisor at RF&G Insurance. The company is expecting a lot of growth in the next year, and Jerry will have many challenges in his new role. Jerry’s manager starts the meeting by asking Jerry to work on writing some specific goals for the upcoming year. Jerry is hesitant to work on writing goals as he feels he has a lot to learn and a lot of work to do. Writing goals seems like a waste of time. What would you tell Jerry about the value of setting goals for his new role? Setting goals improves focus and is a catalyst for success, which makes it even more valuable for someone who feels overwhelmed in a new role. Knowing that the plant is expecting growth in the next year, Jerry will need to produce results quickly.  17 Once Jerry writes out his goals, he can begin to detail the steps and milestones to achieve them. He should also make them SMART—specific, measurable, achievable, realistic, and time-bound. For example, one of his goals might be to learn the new payroll system for employee timekeeping in the next 30 days. Well-written goals have six characteristics: They are (1) written in terms of outcomes, (2) measurable and quantifiable, (3) clear as to the time frame, (4) challenging but attainable, (5) written down, and (6) communicated to all organizational members who need to know them. Goal-setting involves these steps: review the organization’s mission; evaluate available resources; determine the goals individually or with input from others; write down the goals and communicate them to all who need to know them, and review results and change goals as needed. The contingency factors that affect planning include the manager’s level in the organization, the degree of environmental uncertainty, and the length of future commitments. The two main approaches to planning include the traditional approach, which has plans developed by top managers that ow down through other organizational levels and which may use a formal planning department. The other approach is to involve more organizational members in the planning process. 8.4 DISCUSS contemporary issues in planning. One contemporary planning issue is planning in dynamic environments, which usually means developing plans that are specific but flexible. Also, it’s important to continue planning, even when the environment is highly uncertain. Finally, because there’s little time in a dynamic environment for goals and plans to flow down from the top, lower organizational levels should be allowed to set goals and develop plans. Another contemporary planning issue involves using environmental scanning to help do a better analysis of the external environment. One form of environmental scanning, competitive intelligence, can be especially helpful in finding out what competitors are doing. Organizations can gather business intelligence using a variety of digital tools to collect and analyze quantitative and qualitative data to support decision-making. In A NUTSHELL, Many who study competitive intelligence suggest that much of the competitor-related information managers need to make crucial strategic decisions is available and accessible to the public.  18 In other words, competitive intelligence isn’t corporate espionage. Advertisements, promotional materials, press releases, reports led with government agencies, annual reports, want ads, newspaper reports, information on the Internet, and industry studies are readily accessible sources of information. Specific information on industry and associated organizations is increasingly available through electronic databases. Lets Reflect on Chapter 8 Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing plans for organizational work activities. It’s concerned with both ends (what) and means (how). The four purposes of planning include providing direction, reducing uncertainty, minimizing waste and redundancy, and establishing the goals or standards used in controlling. Goals are desired outcomes. Plans are documents that outline how goals are going to be met. Strategic plans apply to the entire organization, while operational plans encompass a particular functional area. SMART—specific, measurable, achievable, realistic, and time-bound In closing, competitive intelligence is helpful in finding out what competitors are doing.  19 CHAPTER 11 DESIGNING ORGANIZATIONAL STRUCTURE In this chapter, we present the basics of organizing. We define the key organizing concepts and their components and how managers use these to create a structured environment in which organizational members can do their work efficiently and effectively. Covered in ch 1- 10: Once the organization’s goals, plans, and strategies are in place, managers must develop a structure that will best facilitate attaining those goals. 11.4 DESCRIBE traditional organizational design options. A simple structure has little departmentalization, wide spans of control, authority centralized in a single person, and little formalization. A functional structure groups similar or related occupational specialties together. A divisional structure is made up of separate business units or divisions. 11.5 DISCUSS organizing for flexibility in the twenty-first century. In a team structure, the entire organization comprises work teams. The matrix structure assigns specialists from different functional departments to work on one or more projects being led by project managers. A project structure is one in which employees continuously work on projects. A boundaryless organization’s design is not defined by or limited by, the horizontal, vertical, or external boundaries imposed by a predefined structure. A virtual organization consists of a small core of full-time Chapter 1 defines organizing as arranging and structuring work to accomplish organizational goals. It’s an important process, during which managers design an organization’s structure. Organizational structure is the formal arrangement of jobs within an organization. This structure, which can be shown visually in an organizational chart, also serves many purposes. (See Exhibit 11-1.) When managers create or change the structure, they’re engaged in organizational design, which moves us into the 1st objective for today  20 But before we dive into Organizational Design, lets quickly go through this list of the purpose of organizing. 1. Divides work to be done into a specific job and department 2. Assign tasks and responsibilities associated with individual jobs (creation of job description) 3. Coordinates diverse organizational tasks 4. Clusters jobs into units 5. Establish relationships among individuals, groups, and departments 6. Establish formal lines of authority ( who reports to whom) 7. Allocates and deploys organizational resources 11.1 DESCRIBE six key elements in organizational design. The key elements in the organizational design are work specialization, departmentalization, chain of command, the span of control, centralization–decentralization, and formalization. Work specialization is dividing work activities into separate job tasks. Today’s view is that work specialization can help employees be more efficient. ○ EXAMPLE: Lacing is one of 13 separate tasks involved in hand-crafting a Wilson Sporting Goods football. The company uses work specialization in dividing job activities as an organizing mechanism that helps employees boost their productivity and makes efficient use of workers’ diverse skills. ○ EXAMPLE: It plays an essential role in McDonald's by dividing their employees to do different tasks to ensure the restaurant to be effective and efficient. Departmentalization is how jobs are grouped together. Today most large organizations use combinations of different forms of departmentalization. ○ FUNCTIONAL DEPARTMENTALIZATION—Groups Jobs According to Function ○ GEOGRAPHICAL DEPARTMENTALIZATION—Groups Jobs According to Geographic Region ○ PRODUCT DEPARTMENTALIZATION—Groups Jobs by Product Line ○ PROCESS DEPARTMENTALIZATION—Groups Jobs based on Product or Customer Flow ○ CUSTOMER DEPARTMENTALIZATION—Groups Jobs based on Specific and Unique Customers Who Have Common Needs  21 Most large organizations continue to use combinations of most or all of these types of departmentalization. (For instance, a hotel might have departments such as front desk operations, sales and catering, housekeeping and laundry, and maintenance.) The chain of command is the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom. Managers need to consider it when organizing work because it helps employees with questions such as “Who do I report to?” or “Who do I go to if I have a problem?” and its companion concepts—authority, responsibility, and unity of command—were viewed as important ways of maintaining control in organizations. The contemporary view is that they are less relevant in today’s organizations. ○ Line Authority entitles a manager to direct the work of an employee. It is the employer–employee authority relationship that extends from the top of the organization to the lowest echelon, according to the chain of command. As a link in the chain of command, a manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone. ○ Staff Authority Positions with some authority have been created to support, assist, and advise those holding line authority The traditional view of the span of control was that managers should directly supervise no more than Five to six individuals. The contemporary view is that the span of control depends on the skills and abilities of the manager and the employees and on the characteristics of the situation. Centralization–decentralization is a structural decision about who makes decisions—upper-level managers or lower-level employees. Formalization concerns the organization’s use of standardization and strict rules to provide consistency and control. Today, organizations rely less on strict rules and standardization to guide and regulate employee behavior. 11.2 CONTRAST mechanistic and organic structures. A mechanistic organization is a rigid and tightly controlled structure. It is an organizational structure with centralized authority, divisions between departments, and specialized roles that work independently of each other.  22 Examples of mechanistic structures include healthcare, universities, and governmental organizations. An organic organization is highly adaptive and flexible. An organic organization can adapt to changes in its environment relatively easily. It is characterized by low complexity, low centralization, and low formalization. Google Corporation is a great example of an Organic structure-based business. Their employees are encouraged to use creative problem-solving skills and develop new products. 11.3 DISCUSS the contingency factors that favor either the mechanistic model or the organic model of organizational design. An organization’s structure should support the strategy. If the strategy changes, the structure also should change. An organization’s size can affect its structure up to a certain point. ○ Once an organization reaches a certain size (usually around 2,000 employees), it’s fairly mechanistic. An organization’s technology can also affect its structure. ○ An organic structure is most effective with unit production and process production technology. ○ A mechanistic structure is most effective with mass production technology. The more uncertain an organization’s environment, the more it needs the flexibility of an organic design.  23 CHAPTER 17 BEING AN EFFECTIVE LEADER If someone asked you to name a great leader, who would you name? Many individuals point to the late Steve Jobs of Apple as a great leader. Leadership is needed in all organizations. Why? Because it’s the leaders in organizations who make things happen. What are some qualities you would say leaders need to have? 17.1 DEFINE leader and leadership. A leader is someone who can influence others and who has managerial authority. Leadership is the process of leading a group and influencing that group to achieve its goals. Are all managers leaders? Ideally, Managers should be leaders because leading is one of the four management functions. Leaders and leadership, like motivation, are organizational behavior topics that have been researched a lot. Most of that research has been aimed at answering the question: What is an effective leader? We’ll begin our study of leadership by looking at some early leadership theories that attempted to answer that question. 17.2 COMPARE and contrast early theories of leadership. Early attempts to define leader traits were unsuccessful Why is this ? Researchers recognized that traits alone were not sufficient for identifying effective leaders since explanations based solely on traits ignored the interactions of leaders and their group members as well as situational factors. Later attempts found eight traits associated with leadership. The University of Iowa studies explored three leadership styles. The only conclusion was that group members were more satisfied under a democratic leader than under an autocratic one. ○ The autocratic style is described as a leader who dictated work methods, made unilateral decisions, and limited employee participation.  24 ○ The democratic style described a leader who involved employees in decision making, delegated authority, and used feedback as an opportunity for coaching employees. ○ Finally, the laissez-faire style leader let the group make decisions and complete the work in whatever way it saw fit. The Ohio State studies identified two dimensions of leader behavior—initiating structure and consideration. A leader high in both those dimensions at times achieved high group task performance and high group member satisfaction, but not always. Initiating structure involves “task-oriented” leader behaviors. It is instrumental in the efficient use of resources to attain organizational goals, thereby addressing the group's task needs. ○ Initiating structure behaviors include scheduling work, deciding what is to be done (and how and when to do it), providing direction to organizational members, planning, coordinating, problem-solving, maintaining standards of performance, and encouraging the use of uniform procedures. Consideration is the “relationship-oriented” behavior of a leader. ○ It is instrumental in creating and maintaining good relationships (that is, addressing the group’s maintenance needs) with organizational members. Consideration behaviors include being supportive and friendly, representing people’s interests, communicating openly with group members, recognizing them, respecting their ideas, and sharing concern for their feelings. The University of Michigan studies looked at employee-oriented leaders and production-oriented leaders. Production-oriented behaviors are devoted to supervisory functions, such as planning, scheduling, coordinating work activities, and providing the resources needed for task performance. Employee-oriented behaviors include consideration and support for organizational members. These dimensions of behavior, of course, correspond closely to the dimensions of initiating structure and consideration identified at Ohio State. As the behavioral studies showed, a leader’s behavior has a dual nature: a focus on the task and a focus on the people. 17.3 DESCRIBE the three major contingency theories of leadership. “The corporate world is lled with stories of leaders who failed to achieve greatness because they failed to understand the context they  25 were working in.”In this section, we examine three contingency theories—Fiedler, Hersey-Blanchard, and path-goal. Each looks at defining leadership style and the situation and attempts to answer the if-then contingencies (that is, if this is the context or situation, then this is the best leadership style to use). Fiedler’s model attempted to define the best style to use in particular situations. He measured leader style—relationship-oriented or task oriented—using the least-preferred coworker questionnaire. Fiedler also assumed a leader’s style was fixed. He measured three contingency dimensions: leader–member relations, task structure, and position power. The model suggests that task-oriented leaders performed best in very favorable and very unfavorable situations, and relationship-oriented leaders performed best in moderately favorable situations. Hersey and Blanchard’s situational leadership theory focused on followers’ readiness. They identified four leadership styles: ○ telling (high task–low relationship), ○ selling (high task–high relationship), ○ participating (low task–high relationship), ○ and delegating (low task–low relationship). They also identified four stages of readiness: unable and unwilling (use telling style), unable but willing (use selling style), able but unwilling (use participative style), and able and willing (use delegating style). The path-goal model developed by Robert House identified four leadership behaviors: directive, supportive, participative, and achievement-oriented. He assumed that a leader can and should be able to use any of these styles. The two situational contingency variables were found in the environment and in the follower. Essentially, the path-goal model says that a leader should provide direction and support as needed; meaning, structure the path so the followers can achieve goals. 17.4 DESCRIBE contemporary views of leadership. What are the latest views of leadership? We want to look at four of these views:  26 leader-member exchange theory, transformational-transactional leadership, charismatic-visionary leadership, and team leadership. Leader-member exchange theory (LMX) says that leaders create in-groups and out-groups and those in the in-group will have higher performance ratings, less turnover, and greater job satisfaction. A transactional leader exchanges rewards for productivity whereas a transformational leader stimulates and inspires followers to achieve goals. A charismatic leader is an enthusiastic and self-confident leader whose personality and actions influence people to behave in certain ways. People can learn to be charismatic. A visionary leader is able to create and articulate a realistic, credible, and attractive vision of the future. Authentic leadership focuses on the moral aspects of being a leader. Ethical leaders create a culture in which employees feel that they can and should do a better job. A team leader has two priorities: manage the team’s external boundaries and facilitate the team process. Four leader roles are involved: liaison with external constituencies, troubleshooter, conflict manager, and coach. 17.5 DISCUSS twenty-first-century issues affecting leadership. We must start with this question: Where do leaders get their power—that is, their right and capacity to influence work actions or decisions? The five sources of a leader’s power are : legitimate, and authority are the same. ○ Legitimate power represents the power a leader has as a result of his or her position in the organization. coercive, is the power a leader has to punish or control. ○ Followers react to this power out of fear of the negative results that might occur if they don’t comply.  27 ○ Managers typically have some coercive power, such as being able to suspend or demote employees or to assign them work they find unpleasant or undesirable. reward (give positive rewards) ○ A reward can be anything a person values, such as money, favorable performance appraisals, promotions, interesting work assignments, friendly colleagues, and preferred work shifts or sales territories. expert is power based on expertise, special skills, or knowledge. ○ If an employee has skills, knowledge, or expertise that’s critical to a workgroup, that person’s expert power is enhanced. referent. is the power that arises because of a person’s desirable resources or personal traits. ○ If I admire you and want to be associated with you, you can exercise power over me because I want to please you. ○ Referent power develops out of admiration of another and a desire to be like that person. Today’s leaders face the issues of managing power, developing trust, empowering employees, leading across cultures, and becoming effective leaders.  28 CHAPTER 18 Monitoring and Controlling Things don’t always go as planned. That’s why controlling is so important! 18.1 EXPLAIN the nature and importance of control. Controlling is the process of monitoring, comparing, and correcting work performance. As the final step in the management process, controlling provides the link back to planning. If managers didn’t control, they’d have no way of knowing whether goals were being met. Control is important because (1) it’s the only way to know if goals are being met, and if not, why; In Chapter 8, we described goals, which provide specific direction to employees and managers, as the foundation of planning. However, just stating goals or having employees accept goals doesn’t guarantee that the necessary actions to accomplish those goals have been taken. (2) it provides information and feedback so managers feel comfortable empowering employees; Many managers are reluctant to empower their employees because they fear something will go wrong for which they would be held responsible. But an eective control system can provide information and feedback on employee performance and minimize the chance of potential problems. (3) it helps protect an organization and its assets. Today’s environment brings heightened threats from natural disasters, financial scandals, workplace violence, global supply chain disruptions, security breaches, and even possible terrorist attacks. Managers must protect organizational assets in the event that any of these things should happen. Comprehensive controls and back-up plans will help assure minimal work disruptions.  29 18.2 DESCRIBE the three steps in the control process. The three steps in the control process are measuring, comparing, and taking action. Measuring involves deciding how to measure actual performance and what to measure. Comparing involves looking at the variation between actual performance and the standard (goal). ○ Deviations outside an acceptable range of variation need attention. Taking action can involve doing nothing, correcting the actual performance, or revising the standards. Doing nothing is self-explanatory. Correcting the actual performance can involve different corrective actions, which can either be immediate or basic. Standards can be revised by either raising or lowering them. 18.3 EXPLAIN how organizational and employee performance are measured. What is organizational performance? When you hear the word performance, what do you think? Performance is all of these things. It’s the end result of an activity. Organizational performance is the accumulated results of all the organization’s work activities. Three frequently used organizational performance measures include: (1) Productivity, the output of goods or services produced divided by the inputs needed to generate that output (2) Effectiveness, a measure of how appropriate organizational goals are and how well those goals are being met; and (3) Industry and company rankings are a popular way for managers to measure their organization’s performance. Compiled by various business publications. Example: Fortune 500 lists, 100 fastest growing companies, etc. Since managers manage employees, they also have to be concerned about controlling for employee performance; Employee performance is controlled through effective performance feedback and through disciplinary actions when needed. ○ disciplinary actions—actions taken by a manager to enforce the organization’s work standards and regulations.  30 DELIVERING EFFECTIVE PERFORMANCE FEEDBACK Throughout the semester, do you keep track of all your scores on homework, exams, and papers? If you do, why do you like to know that information? For most of us, it’s because we like to know where we stand in terms of where we’d like to be and what we’d like to accomplish in our work. We like to know how we’re doing. Similarly, Managers need to provide their employees with feedback so that the employees know where they stand in terms of their work. When giving performance feedback, both parties need to feel heard, understood, and respected. And if done that way, positive outcomes can result. USING DISCIPLINARY ACTIONS, Fortunately, most employees do their jobs well and never need formal correction. Yet, sometimes it is needed. In these circumstances, it’s important for a manager to know what the organization’s policies are on discipline. Is there a process for dealing with unsatisfactory job performance? Do warnings need to be given when performance is inadequate? What happens if, after the warnings, performance or the troublesome behavior doesn’t improve?  31 Progressive disciplinary action policies help managers to answer these questions. Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The typical progression begins with a verbal warning and proceeds through a written warning, suspension, and, only in the most serious cases, dismissal. 18.4 DESCRIBE tools used to measure organizational performance. Feedforward controls take place before a work activity is done. Concurrent controls take place while a work activity is being done. Feedback controls take place after a work activity is done. Financial controls that managers can use include financial ratios (liquidity, leverage, activity, and portability) and budgets. One information control managers can use is an MIS, which provides managers with needed information on a regular basis. ○ Others include comprehensive and secure controls such as data encryption, system firewalls, data back-ups, and so forth that protect the organization’s information. ○ Managers approach information controls in two ways. Information control can be used as a tool to help them control other organizational activities and as an organizational area they need to control.  32 Balanced scorecards provide a way to evaluate an organization’s performance in four different areas rather than just from the financial perspective. ○ Benchmarking provides control by finding the best practices among competitors or noncompetitors and from inside the organization itself. 18.5 DISCUSS contemporary issues in control. Six management control issues are cross-cultural differences, workplace privacy, employee theft, workplace violence, customer interactions, and corporate governance. For each of these issues, managers need to have policies in place to control inappropriate actions and ensure that work is getting done efficiently and effectively. Adjusting controls for cross-cultural differences may be needed primarily in the areas of measuring and taking corrective actions. Organizations should clearly communicate to managers and employees how to approach and respond to routine and nonroutine situations within and outside the home country. Employees who use the Internet and social media for personal use are not entitled to privacy. Organizations need to establish clear policies that outline the differences between proper and improper use and the consequences for using technology inappropriately. Employee theft is costly to organizations. Procedures for monitoring theft and the consequences for committing a theft should be clearly explained to employees. Workplace violence is a prevalent problem. Organizations need to develop emergency plans for responding to incidents of violence that include protecting the safety of employees and customers.  33 Control is important to customer interactions because employee service productivity and service quality influence customer perceptions of service value. Organizations want long-term and mutually beneficial relationships among their employees and customers. Corporate governance is the system used to govern a corporation so that the interests of corporate owners are protected. A board of directors looks out for the interests of shareholders. The Sarbanes-Oxley Act called for more disclosure and transparency of corporate financial information.