Introduction To Management PDF

1. Introduction to Management and Organizations Why Are Managers Important? Organizations need their managerial skills and abilities (which are CRITICAL in getting things done) more than ever in these uncertain and complex times. The quality of the employee/supervisor relationship...

1. Introduction to Management and Organizations Why Are Managers Important? Organizations need their managerial skills and abilities (which are CRITICAL in getting things done) more than ever in these uncertain and complex times. The quality of the employee/supervisor relationship is the most important variable in productivity and loyalty. Who Are Managers? Someone who coordinates and oversees the work of other people so the organization’s goals can be accomplished. Top Managers: Individuals who make huge decisions and establish plans and goals that affect the entire organization. Middle Managers: Manage the work of the FLM. First-Line Managers: Manage the NME. Where Do Managers Work? Organizations: A deliberate arrangement of people who need each other to accomplish some specific purpose. Common Characteristics: Have a distinct goal, are composed of people and have a deliberate structure What Do Managers Do? Management involves coordinating and overseeing the work activities of others so that their activities are completed efficiently and effectively. 1 Effectiveness And Efficiency Efficiency: ‘’Doing things right’’, getting the most output for the least inputs. Effectiveness: ‘’Doing the right things’’, attaining organizational goals. The Four Management Functions In order to achieve the organization’s stated purposes: 1. Planning: Setting goals, establishing strategies, and developing plans to coordinate activities. 2. Organizing: Determining what needs to be done, how it will be done, and who is to do it. 3. Leading: Motivating, leading. Working with and through people to accomplish goals. 4. Controlling: Monitoring activities to ensure that they are accomplished as planned. Management Roles Roles are specific actions or behaviors expected of a manager. MINTZBERG identified 10 roles: Interpersonal Roles: Providing information and ideas. Figurehead: Symbolic head; obliged to perform a number of routine duties of a legal or social nature. Ex: Greeting visitors, signing legal documents. Leader: Responsible for the motivation of subordinates responsible for staffing, training, and associated duties. Ex: Performing virtually all activities that involve subordinates. Liaison: Maintains self-developed network of outside contacts and informers who provide favors and information. Ex: Acknowledging mail; doing external board work; performing other activities that involve outsiders. 2  Informational Roles: Processing information. Monitor: Seeks and receives wide variety of internal and external information to develop thorough understanding of organization and environment. Ex: Reading periodicals and reports; maintaining personal contacts. Disseminator: Transmits information received from outsiders or from subordinates to members of the organization. Ex: Holding informational meetings; making phone calls to relay information. Spokesperson: Transmits information to outsiders on organization's plans, policies, actions, results, etc. Ex: Holding board meetings; giving information to the media. Decisional Roles: Using information. Entrepreneur: Searches organization and its environment for opportunities and initiates "improvement projects" to bring about changes. Ex: Organizing strategy and review sessions to develop new programs. Disturbance handler: Responsible for corrective action when organization faces important, unexpected disturbances. Ex: Organizing strategy and review sessions that involve disturbances and crises. Resource allocator: Responsible for the allocation of organizational resources of all kinds—making or approving all significant organizational decisions. Ex: Scheduling; requesting authorization; performing any activity that involves budgeting and the programming of subordinates' work. Negotiator: Responsible for representing the organization at major negotiations. Ex: Participating in union contract negotiations. Skills Managers Need Technicals Skills: Knowledge and proficiency in a specific field. Human Skills: The ability to work well with other people. Conceptual Skills: The ability to think and conceptualize about abstract and complex situations concerning the organization. Important Managerial Skills Managing human capital. Inspiring commitment. Managing change. 3  Structuring work and getting things done. Facilitating the psychological and social contexts of work. Using purposeful networking. (the cultivation of productive relationships). Managing decision-making processes. Managing strategy and innovation. Managing logistics and technology. Changing Facing Managers The Importance Of Customers Customers are the reason organizations exist. - Managing customer relationships is the responsibility of all managers and employees. - Consistent high quality customer service is essential for survival. The Importance Of Social Media, Innovation And Sustainability Social Media: Forms of electronic communication through which users create online communities to share ideas, information, personal messages, and other content. Innovation: Doing things differently, exploring new territory and taking risks. Managers should encourage employees to be aware of and act on opportunities for innovation. 4 Sustainability: A company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into its business strategies. Universal Need For Management Rewards And Challenges Of Being A Manager Challenges: Can be a thankless job. May entail clerical type duties. Constant interruptions. Dealing with a variety of personalities. Limited resources to accomplish a goal. Motivate workers in uncertain situations. Success depends on others’ work performance. Rewards: Responsible for creating a productive work environment. Recognition and status in your organization and in the community. Attractive compensation in the form of salaries, bonuses and stock options. Support, coach and help other find meaning and fulfillment in work. 5 6  2. Firms and Organizations: Where do we come from? A brief overview on Management History Early Management Ancient Management: Egypt (pyramids) and China (Great Wall). Adam Smith: ‘’The Wealth of Nations’’ in 1776. Division of labor (job specialization) - the breakdown of jobs into narrow and repetitive tasks. Industrial Revolution: Substituted machine power for human labor. Created large organizations in need of management. Major Approaches to Management Classical Approach First studies of management, which emphasized rationality and making organizations and workers as efficient as possible. Scientific Management Frederick Winslow Taylor: The father of scientific management. Scientific Management is an approach that involves using the scientific method to find the ‘’one best way’’ for a job to be done. 7 Taylor’s Scientific Management Principles 1. Develop a science for each element of an individual’s work to replace the old rule-of- thumb method. 2. Scientifically select and then train, teach and develop the worker. 3. Heartily cooperate with the workers to ensure that all work is done in accordance with the principles of the science that has been developed. 4. Divide work and responsibility almost equally between management and workers. Management does all work for which it is better suited than the workers. General Administrative Theory An approach to management that focuses on describing what managers do and what constitutes good management practice. Henri Fayol: 14 Principles of Management Principles of Management: Fundamental rules of management that could be applied in all organizational situations and taught in schools. 1. Division of work: Specialization increases output by making employees more efficient. 2. Authority: Managers must be able to give orders, and authority gives hem this right. 3. Discipline: Employees must obey and respect the rules that govern the organization. 4. Unity of command: Every employee should receive orders from only one superior. 5. Unity of direction: The organization should have a single plan of action to guide managers and workers. 6. Subordination of the individual interest to the general interest: The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole. 7. Remuneration: Workers must be paid a fair wage for their services. 8. Centralization: This terms refers to the degree where subordinates are involved in decision making. 9. Scalar chain: The line of authority from top management to the lowest ranks. 10. Order: People and materials should be in the right place at the right time. 11. Equity: Managers should be kind and fair to their subordinates. 12. Stability of tenure of personnel: Managers should provide orderly personnel planning and ensure that replacements are available to fill vacancies. 13. Initiative: Employees allowed to originate and carry out plans will exert high levels of effort. 14. Esprit de corps: Promoting team spirit will build harmony and unity within the organization. General Administrative Theory Bureaucracy: A form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships. 8 Weber’s Bureaucracy Behavioral Approach Organizational behavior (OB): The study of the actions of people at work. The Hawthorne Studies - A series of studies during the 1920s and 1930s that provided new insights into individual and group behavior. 9 The Quantitative Approach Involves the use of applications of statistics, optimization models, information models, and computer simulations to improve decision making, such as Linear Programming and Critical Path Method. This approach has also be labeled operations research or management science. It evolved out of the development of mathematical and statistical solutions to military problems during WWII. The quantitative approach has contributed directly to management decision making in the areas of planning and control. Total Quality Management (TQM) - A philosophy of management that is driven by continuous improvement and responsiveness to customer needs and expectations. - It was inspired by a small group of quality experts, the most famous being W. Edwards Deming and Joseph M. Juran What Is Quality Management? Intense focus on the customer: The customer includes outsiders who buy the organization’s products or services and internal customers who interact with and serve others in the organization. Concern for continual improvement: Quality management is a commitment to never being satisfied. ‘’Very good’’ is not good enough. Quality can always be improved. Process focused: Quality management focuses on work processes as the quality of goods and services is continually improved. Improvement in the quality of everything the organization does: This relates to the final product, how the organization handles deliveries, how rapidly it responds to complaints, how politely the phones are answered, and the like. Accurate measurement: Quality management uses statistical techniques to measure every critical variable in the organization’s operations. These are compared against standards to identify problems, trace them to their roots, and eliminate their causes. Empowerment of employees: Quality management involves the people on the line in the improvement process. Teams are widely used in quality management programs as empowerment vehicles for finding and solving problems. 10 Contemporary Approaches System: A set of interrelated and independent parts arranged in a manner that produces a unified whole. Closed System: Systems that are not influenced by and do not interact with their environment. Open System: Systems that interact with their environment. The Contingency Approach A management approach that recognizes organizations as different, which means they face different situations (contingencies) and require different ways of managing. Popular Contingency Variables Organization Size: As size increases, so do the problems of coordination. For instance, the type of organization structure appropriate for an organization of 50,000 employees is likely to be inefficient for an organization of 50 employees. Routineness of Task Technology: To achieve its purpose, an organization uses technology. Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or nonroutine technologies. Environmental Uncertainty: The degree of uncertainty caused by environmental changes influences the management process. What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. Individual Differences: Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations. These and other individual differences are particularly important when managers select motivation techniques, leadership styles and job designs. 11 12  3. Strategy, Planning and Control External Environment Part 1 The Manager: Omnipotent or Symbolic? Omnipotent View of Management: The view that managers are directly responsible for an organization’s success or failure. Stereotypical picture of the take-charge business executive who overcomes any obstacle so the organization can achieve its goals. Symbolic View of Management: The organization’s success or failure depends on external forces outside managers’ control. It’s symbolic as it’s based on the belief that managers symbolize control and influence. External Environment External Environment: Factors and forces outside the organization that have the potential significantly affect the performance of the organization. Why the external environment is important to take into account? Opportunities: That the organization can exploit (positive trends in the environment) Threats: That the organization must counteract (negative trends in the environment) General Environment: Includes the environmental forces that are beyond the influence of the organization and over which it has no or little control. Nonspecific elements of the organization’s surroundings that might affect its activities: Economic Component: Interest rates, inflation Global Component: issues stock, market, fluctuation, business, cycle, stages. associated with globalization and world’s economy. Sociocultural Component: Demographic Component: societal and cultural factors trends in population (eg: values, beliefs, tastes, characteristics such as age, l i f e styles, trends…) race, gender, education level, family composition. 13 Technological scientific and industrialinnovation. Political/Legal Component: Component: states, local & global laws, laws from other countries, country’s political conditions and stability. Specific Environment: Includes those constituencies that have a direct and immediate impact on managers' decisions and actions and are directly relevant to the achievement of the organization's goals. Each organization's specific environment is unique and changes with conditions. For instance, Timex and Rolex both make watches, but their specific environments differ because they operate in distinctly different market niches. What constituencies make up the specific environment? The main ones are customers, suppliers, competitors, and pressure groups. Five Forces Model In any industry, five competitive forces dictate the rules of competition. Together, these five forces determine industry attractiveness and profitability, which managers assess using these five factors. 1. Threat of new entrants: How likely is that new competitors will come into the industry? 2. Threat of substitutes: How likely is it that other industries’ products can be substituted for our industry’s products? 3. Bargaining power of buyers: How much bargaining power do customers have? 4. Bargaining power of suppliers: How much bargaining power do suppliers have? 5. Current rivalry: How intense is the rivalry among current industry competitors? How Does External Environment Affect Managers? - The environment affects managers through the degree of environmental uncertainty that is present and through the various stakeholder relationships that exist between the organization and its external constituencies. 14 Jobs And Environment - As external environment conditions one of the most powerful constraints managers face is the impact of such changes on jobs and employment. Environmental Uncertainty And Complexity Environmental Uncertainty: It’s determined by two dimensions: degree of change and degree of complexity in an organization's environment. - The first of these dimensions is the degree of change. If the components in an organization's environment change frequently, we call it a dynamic environment. If change is minimal, we call it a stable one. - The other dimension of uncertainty describes the degree of environmental complexity. The degree of complexity refers to the number of components in an organization's environment and the extent of the knowledge that the organization has about those components. Environmental Complexity: The number of components in an organization’s environment and the extent of the organization’s knowledge about those components. Environmental Uncertainty Matrix 15  Managing Stakeholder Relationships 4 steps in managing external stakeholder relationships: 1. Identifying who the organization's stakeholders are: Which of the various external groups might be impacted by decisions that managers make and which external groups might influence those decisions? Those external groups that are likely to be influenced by and to influence organizational decisions are the organization's stakeholders. 2. Determine what particular interests or concerns these stakeholders might have: Product quality, financial issues, safety of working conditions, environmental protection, and so forth. 3. Decide how critical each stakeholder is to the organization's decisions and actions: How critical is it to consider this stakeholders’ concerns as managers plan, organize, lead, and control? 4. Determining what specific approach they should use to manage the external stakeholder relationships: The more critical the stakeholder and the more uncertain the environment, the more that managers need to rely on establishing explicit stakeholder partnerships. DECISION MAKING PROCESS Decision Making Decision: Making a choice from two or more alternatives. Problem: An obstacle that makes it difficult to achieve a desired goal or purpose. 16 The Decision Making Process 1. Identifying a problem and decision criteria and allocating weights to the criteria. 2. Developing, analyzing, and selecting an alternative that can resolve the problem. 3. Implementing the selected alternative. 4. Evaluating the decision effectiveness. Step 1: Identifying A Problem - A problem becomes a problem when a manager becomes aware of it. - There is pressure to solve the problem. - The manager must have the authority, information or resources needed to solve the problem. Step 2: Identifying Decision Criteria Decision criteria are factors that are important to resolving the problem, such as: - Costs that will be incurred (investments required). - Risks likely to be encountered (chance of failure). - Outcomes that are desired (growth of the firm). Step 3: Allocating Weights To The Criteria - Assigning a weight to each item places the item in the correct priority order of their importance in the decision-making progress. Step 4: Developing Alternatives - Alternatives (without evaluation) that can resolve the problem. Step 5: Analyzing Alternatives Appraising each alternative’s strength and weaknesses. - An alternative’s appraisal is based on its ability to resolve the issues related to the criteria and the criteria weight. 17 Step 6: Selecting An Alternative Choosing the best alternative. - The alternative with the highest total weight is chosen. Step 7: Implementing An Alternative Putting the chosen alternative into action. - Conveying the decision to and gaining commitment from those who will carry out the alternative. Step 8: Evaluating Decision Effectiveness The soundness of the decision is judged by its outcomes. - How effectively was the problem resolved by outcomes resulting from the chosen alternatives? - If the problem was not resolved, what went wrong? Managers Are Decision Makers 18 Type Of Decisions Programmed Decision A repetitive that can be handled by a routine approach. In situations where (Structured Problems): Involve goals that are clear. Are familiar (have occurred before). Are easily and completely defined. Information about the problem is available and complete. Three Types Of Programmed Decisions Solution relies on: Procedure: A series of interrelated steps that a manager can use to respond (applying a policy) to a structured problem. Rule: An explicit statement that limits what a manager or employee can or can’t do. Policy: A general guideline for making a decision about a structured problem. Type Of Decisions TYPE 2: Nonprogrammed Decisions - Decisions that are unique and nonrecurring. - Decisions that generate unique responses. In situations where (Unstructured Problems): Problems that are new or unusual and for which information is ambiguous or incomplete. Problems that will require custom-made solutions. Decision-Making Conditions Certainty: A situation in which a manager can make an accurate decision because the outcome of every alternative choice is known. Risk: A situation in which a manager is able to estimate the likelihood (probability) of outcomes that result from the choice of particular alternatives. 19 Design Thinking Approaching managing problems as a designer would approach design problems. Big Data And Decision Making - Big data is the amount of quantifiable information that can be analyzed by highly sophisticated data processing. - With big data, decision makers have very powerful tools to help them take decisions. Strategy: What Is Strategy? Strategies: The plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals. Business Goals: How a company is going to make money. Business Model It focus on two things: - Whether customers will value what the company is providing. - Whether the company can make any money by doing that. 20 Components Of The Strategy Resources: An organization’s assets that are used to develop, manufacture, and deliver a product to its customers. Capabilities: An organization’s skills and abilities in doing the work activities needed in its business. Core competencies: The organization’s major value-creating capabilities that determine its competitive weapons. Competitive advantage: What sets an organization apart; its distinctive edge. Corporate Strategy: An organizational strategy that determines what businesses company is in or wants to do with those businesses. - Top level managers - Based on a mission and goals of the organization IN WHAT BUSINESS SHOULD WE COMPETE? - Mission: A statement of the purpose of an organization. It is the core purpose of the company. - Goals: Desired outcomes or targets. Example: ‘’PepsiCo’’ Mission: To be the world’s premier consumer products company focused on convenient foods and beverages. Corporate Strategy: 1) Establishing different business. 2) Being global. Business Level Strategy: Involves developing a marketplace strategy for each of an organization’s business. 21  HOW SHOULD WE COMPETE IN EACH OF OUR BUSINESSES? Those units without an organization competing in distinct market are often referred as Strategic Business Units (SBUs) Strategic Business Unit: The single independent businesses of an organization that formulate their own competitive strategies. - Different business divisions which have unique competitors, product line and market when compared to other SBU. Functional Strategy: It concerns on how each function of the business will contribute towards the corporate and business strategies that have been set. It is concerned with functional areas of the firm (such as marketing, accounting…) HOW DO WE SUPPORT OUR SBUs? Types Of Corporate Strategy Growth Strategy: A corporate strategy in which an organization want to expand the number of markets served or products offered, either through its current business(es) or through new (business). Stability: A corporate strategy in which an organization continues to do what it’s currently doing. Renewal Strategy: A corporate strategy designed to address declining performance. Types Of Competitive Strategy A firm can achieve a higher rate of profit (or potential profit) over a rival in one of two ways. - Cost Advantage - Differentiation Advantage Component Of The Strategy Cost Advantage: It can supply an identical product or a service at a lower cost. - In pursuing cost advantage, the goal of the firm is to become a cost leader in its industry. Differentiation Advantage: It can supply a product or a service that is differentiated in such a way that the customer is willing to pay a price premium that exceeds that additional cost of differentiation. - Here the firm provides something unique that is valuable to buyers beyond simply offering a low price. 22  Planning: What Is Planning? Planning: Involves defining the organization's goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. It's concerned with both ends (what's to be done) and means (how it's to be done). Formal Planning: - Specific goals covering a specific time period. - Written and shared with organizational members. Informal Planning: - In informal planning, nothing is written down, and there is little or no sharing of goals with others in the organization. This type of planning often is done in many small businesses where the owner-manager has a vision of where he or she wants the business to go and how to get there. Although it's more common in smaller organizations, informal planning exists in some large organizations as well. And some small businesses have very sophisticated planning processes and formal plans. Why Do Managers Plan? Four reasons for planning: Provides direction (managers and non managers). - Employees know what their organization is trying to accomplish and what they must contribute to reach goals. Reduces uncertainty. - By forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses. Minimizes waste and redundancy. - When work activities are coordinated around plans, inefficiencies become obvious and can be corrected or eliminated. Sets the standards for controlling. - See whether the plans have been carried out and the goals met. Goals And Plans Goals (objectives) - desired outcomes or targets. Plans - documents that outline how goals are going to be met. 23  Types Of Goals Financial Goals: Related to the expected internal financial performance of the organization (Ex: ‘’To exceed $10 million in the next 10 years’’). Strategic Goals: Related to the performance of the firm relative to factors in its external environment (Ex: competitors). Stated Goals: Official statements of what an organization says, and what it wants its various stakeholders to believe its goals are. - Can be found in an organization’s charter, annual report, public relations announcements, or in public statements made by managers. Real Goals: Goals that an organization actually pursues, as defined by the actions of its members. - Actions define priorities. Types Of Plans Strategic Plans: Plans that apply to the entire organization and establish the organization’s overall goals. Operational Plans: Plans that encompass a particular operational area of the organization. Long-term Plans: Plans with a time frame beyond three years. Short-term Plans: Plans covering one year or less. S p e c i f i c Plans Plans that are clearly defined and leave no room for interpretation. - A specific plan states its objectives in a way that eliminates ambiguity. Directional Plans: Plans that are flexible and set out general guideline. - They provide focus but don’t lock managers into specific goals or courses of actions. Single-use Plans: A one-time plan specifically designed to meet the needs of an unique situation. Standing Plans: Ongoing plans that provide guidance for activities performed repeatedly (policies, rules and procedures). 24  Approaches To Setting Goals Traditional goal-setting: An approach to setting goals in which top managers set goals that then flow down through the organization and become subgoals for each organizational area. Management by objectives (MBO): a process of setting mutually agreed upon goals and using those goals to evaluate employee performance. The Downside Of Traditional Goal-Setting - - Steps In MBO 1. The organization’s overall objectives and strategies are formulated. 2. Major objectives are allocated among divisional and departmental units. 3. Unit managers collaboratively set specific objectives for their units with their managers. 4. Specific objectives are collaboratively set with all department members. 5. Acting plans, defining how objectives are going to be achieved, are specified and agreed upon by managers and employees. 6. The action plans are implemented. 7. Progress towards objectives is periodically reviewed, and feedback is provided. 8. Successful achievement of objectives is reinforced by performance-based rewards. Planning And Organizational Level - Approaches To Planning In the traditional approach, planning is done entirely by top-level managers that often are assisted by a formal planning department. Formal planning department: A group of planning specialist whose sole responsibility is helping to write organizational plans. 25  CONTROLLING: What Is Controlling? Controlling is the process of monitoring, comparing, and correcting work performance. - The purpose of Control is to ensure that activities are completed in ways that lead to the accomplishment of organizational goals. Why Is Controlling Important? As the final link in management functions: - Planning: Controls let managers know whether their goals and plans are on target and what future actions to take. - Empowering employees: Control systems provide managers with information and feedback on employee performance. - Protecting the workplace: Controls enhance physical security and help minimize workplace disruptions. Planning-Controlling Link 26  The Control Process A three-steps process of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards. STEP 1: MEASURING ACTUAL PERFORMANCE - How We Measure: Personal observations, statistical reports, oral and written reports. - What We Measure: What is measured is probably more critical to the control process than how it’s measured. STEP 2: COMPARING ACTUAL PERFORMANCE AGAINST THE STANDARD - Determining the degree of variation between actual performance and the standard. - Range of variation: The acceptable parameters of variance between actual performance and the standard. 27 STEP 3: TAKING MANAGERIAL ACTION - Immediate corrective action: Corrective action that corrects problems at once in order to get performance back on track. - Basic corrective action: Corrective action that looks at how and why performance deviated before correcting the source of deviation. - Revise the standard - if performance consistently exceeds the goal, then a manager should look at whether the goal is too easy and needs to be raised. - Managers must be cautious about revising a standard downward (con bajas expectativas). Managerial Decisions In The Control Process What Is Organizational Performance? Performance: The end result of an activity. Organizational Performance: The accumulated results of all the organization’s work activities. 28 Measures Of Organizational Performance - Productivity: The amount of goods or services produced divided by the inputs needed to generate that output. - Organizational effectiveness: A measure of how appropriate organizational goals are and how well those goals are being met. Controlling For Employee Performance Disciplinary actions: Actions taken by a manager to enforce the organization’s work standards and regulations. Delivering Effective Performance Feedback - managers need to provide their employees with feedback so that the employees know where they stand in terms of their work. Tools For Measuring Organizational Performance Feed forward control: Control that takes place before a work activity is done. Concurrent control: Control that takes place while a work activity is in progress. Management by walking around: A term used to describe when a manager is out in the work area interacting directly with employees. Feedback control: Control that takes place after a work activity is done. 29 Types Of Control Financial Controls Traditional Controls - Ratio Analysis - Liquidity - Leverage - Activity - Profitability Budget Analysis - Quantitative standards - Deviations Popular Financial Ratios 30 Information Controls Management Information System (MIS): A system used to provide management with needed information on a regular basis. - Data: An unorganized collection of raw, unanalyzed facts (e.g. a list of customer names) - Information: Data has been analyzed and organized such that it has value and relevance to managers. The Balanced Scorecard Balanced scorecard: A performance measurement tool that examines more than just the financial perspective. - Measures a company’s performance in four areas: 1. Financial 2. Customer 3. Internal Processes 4. People/innovation/growth assets Benchmarking Of Best Practices Benchmarking: The search for the best practices among competitors or non- competitors that lead to their superior performance. Benchmark: The standard of excellence to measure and compare against. Contemporary Issues In Control Adjusting Controls for Cross-Cultural Differences and Global Turmoil (confusión) - Control techniques can be quite different for different countries. - Differences are primarily in the measurement and corrective action steps of the control process. - Managers in foreign countries also need to be aware of constraints (restricciones) on corrective actions they can take. 31  Workplace privacy Employers can (and do): - Read your email. - Tap your telephone. - Monitor your work by computer. - Store and review computer files. - Monitor you in an employee bathroom or dressing room. - Track your whereabouts in a company vehicle. Employee Theft - any unauthorized taking of company property by employees for their personal use. Workplace Violence - the U.S. National Institute of Occupational Safety and Health still says that each year, 2 million american workers are victims of some form of workplace violence. Controlling Customer Interactions - Service Profit Chain: The service sequence from employees to customers to profit. Corporate governance: The system used to govern a corporation so that the interests of corporate owners are protected. The Role of Boards of Directors - a group, independent from management, looking out for the interests of shareholders who were not involved in the day-to-day management of the organization. 32  Unit 4 Organizational Culture: What Is Organization Culture? Organizational Culture: The shared values, principles, traditions, and ways of doing things that influence the way organizational members act. These shared values determine to a large degree what employees see and how they respond to their world. When confronted with problems or work issues, the organizational culture the "way we do things around here" influences what employees can do and how they conceptualize, define, analyze, and resolve issues. HOW THINGS ARE DONE AROUND HERE The definition of culture implies 3 things. - Culture is a perception. - Culture is a descriptive term. - Culture is shared. Dimensions Of Organizational Culture 33 Contrasting Organizational Culture How Do Employees Learn Culture? Stories: Narratives of significant events or people (e.g. organization founders, rule breaking, reaction to past mistakes, etc). Whenever possible, corporate "storytellers" (senior executives) explain the company's heritage and tell stories that celebrate people getting things done. These stories provide prime examples that people can learn from. Rituals: Sequences of activities that express and reinforce the important values and goals of the organization. (e.g. One of the best-known corporate rituals is Mary Kay Cosmetics' annual meeting for its sales representatives). 34  Material Symbols: When you walk into different businesses, do you get a "feel" for the place (formal, casual, fun, serious, and so forth)? These feelings you get demonstrate the power of material symbols in creating an organization's personality. The layout of an organization's facilities, how employees dress, the types of automobiles top executives are provided, and the availability of corporate aircraft are examples of material symbols. These material symbols convey to employees who is important, the degree of equality desired by top management, and the kinds of behavior that are expected and appropriate. Language: Many organizations and units within organizations use language as a way to identify members of a culture. By learning this language, members attest to their acceptance of the culture and their willingness to help to preserve it. Strong/Weak Culture Strong Cultures: Organizational cultures in which key values are intensely held and widely shared. - Those cultures that have influence on employees’ behavior and actions. Weak Cultures: A culture is weak when the core values are not clearly defined, communicated or widely accepted by those working for the organization. What Is Having Strong Organizational Culture Important For? Strong Cultures - Employees are more loyal. - Employees know what they are supposed to do and what’s expected of them, so they can act quickly to take care of problems. 35 Where Does Culture Come From? Mission: It has to do with the purpose of the company - Mission is the ‘’Why’’: the organization’s answer to why we exist (purpose). Vision: For present purposes, a vision articulates a desired future for a company. It is where the company is going. - Vision is the ‘’What’’: the picture of the future we seek to create. Socialization: The process that helps new employees adapt to the organization’s culture. - Benefits: - Employees understand the culture and are enthusiastic and knowledgeable with customers. - It minimizes the chance that new employees who are unfamiliar with the organization’s culture might disrupt current beliefs and customs. Establishing And Maintaining Culture: How Does Culture Affect Managers? Cultural Constraints on Managers - Whatever managerial actions the organization recognizes as proper or - improper on its behalf. Whatever organizational activities the organization values and encourages. The overall strength or weakness of the organizational culture. 36 Managerial Decisions Affected By Culture Creating And Innovative Culture How Do You Create A Customer Responsive Culture? - Hire the right type of employees (those with a strong interest in serving customers). - Have a few rigid rules, procedures, and regulations. - Use widespread empowerment of employees. - Have good listening skills in relating to customers’ messages. Spirituality And Organizational Culture Workplace Spirituality - a culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of community. Characteristics of a Spiritual Organization: - Strong sense of purpose. - Focus on individual development. - Trust and openness. - Employee empowerment. - Toleration of employees’ expression. 37 38  Unit 5 Managing Social Responsibility and Ethics From Obligation To Responsiveness To Responsibility Classical view of social responsibility: The classical view holds that management’s only social responsibility is to maximize profits. Social obligation: the obligation of a business to meet its economic and legal - responsibilities and nothing more (the organization does what is obligated). The Socioeconomic view: The socioeconomic view is the view that management's social responsibility goes beyond making profits to include protecting and improving society's welfare. - Social responsiveness: When a firm engages in social actions in response to some popular social need. Social Responsibility: Organization take actions to help improve society because it is the right thing to do. Should Organizations Be Socially Involved? A way to view social involvement and economic performance: Social screening Applying social criteria (screens) to investment decisions. SRI-(Social Responsible Investing) - Provide a way for individual investors to support socially responsible companies. SRI funds usually will not invest in companies involved in liquor, gambling, tobacco, nuclear power, weapons, price fixing, fraud, or in companies that have poor product safety, employee relations, and environmental track records. 39 Green Management and Sustainability Green Management: Managers consider the impact of their organization on the natural environment. How Organizations Go Green Legal (or Light Green) Approach: firms simply do what is legally required by obeying laws, rules and regulations willingly and without legal challenge. Market Approach: firms respond to the preferences of their customers for environmentally friendly products. Stakeholder Approach: firms work to meet the environmental approach demands of multiple stakeholders (employees [work operations], suppliers [supply chain] and the community [product design]). Activist Approach: firms look for ways to respect and preserve the environment and be actively socially responsible. Managers And Ethical Behaviour Ethics: principles, values, and beliefs that define right and wrong behaviour. Many decisions managers make require them to consider both the process and who’s affected by the result. ‘’The ends does not justify the means’’ Ethics in an international context Are ethical standards universal? It is important in foreign cultures to recognize the socio, cultural, and political-legal influences on what is appropriate and acceptable behavior. Guide for being ethical international business is the United Nations Global compact: It is an initiative by the United Nations outlining principles for doing business globally in the areas of human rights, labor, the environment and anti-corruption. 40 Encouraging Ethical Behavior Employee Selection: an opportunity to learn about an individual’s level of moral development, personal values, ego strength, and locus of control. Code of Ethics: a formal statement of an organization’s primary values and the ethical rules it expects its employees to follow. Leadership: doing business ethically requires a commitment from top managers. Why? Because it's the top managers who set the cultural tone. They are role models in terms of both words and actions, though what they do is far more important than what they say. 41  Job Goals and Performance Appraisal: - Unrealistic goals provide stress which may pressure ethical employees to do whatever is necessary to meet those goals. - If performance appraisals focus only on economic goals, ends will begin to justify means. - To encourage ethical behavior, both ends and means should be evaluated. Ethics Training - seminars, workshops, and similar ethics training programs to encourage ethical behavior. Independent Social Audits: An important element of unethical behavior is fear of being caught. Independent social audits, which evaluate decisions and management practices in terms of the organization's code of ethics, increase the likelihood of detection. These audits can be routine evaluations or they can occur randomly with no prior announcement. An effective ethical program should probably have both. Social Responsibility and Ethics Issues in Today’s World Ethical Leadership Protection of Employees Who Raise Ethical Issues - it’s important for managers to assure employees who raise ethical concerns or issues that they will face no personal or career risks. - Whistle-Blower: individuals who raise ethical concerns or issues to others. Social Entrepreneur - an individual or organizations who seeks out opportunities to improve society by using practical, innovative and sustainable approaches. Corporate Philanthropy - can be an effective way for companies to address social problems. Employees Volunteering Efforts - encouraging employees to volunteer in various ways. - Employee is given paid days off from work to volunteer his/her local community or volunteer programs organized by the company. These actions not only benefit communities, but enhance employees ‘work effort and motivation. 42  Unit 6 Organizational Design Purposes Of Organizing Designing Organizational Structure Organizing: Arranging and structuring work to accomplish the organization’s goals. Organizational Structure: The formal framework by which job tasks are divided, grouped, and coordinated. When managers develop or change an organization's structure, they are engaged in organizational design, a process that involves decisions about six key elements: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. Work Specialization: Dividing work activities into separate job tasks. - Early proponents of work specialization believed it could lead to great increases in productivity. Overspecialization can result in human diseconomies such as boredom, - fatigue, stress, poor quality, increased absenteeism, and higher turnover. Organizational chart: The visual representation of an organization’s structure. Departmentalization The basis by which jobs are grouped together. There are five common forms of departmentalization: 1. Functional: Grouping jobs by functions performed. 2. Product: Grouping jobs by product line. 3. Geographical: Grouping jobs on the basis of territory or geography. 4. Process: Grouping jobs on the basis of product or customer flow. 5. Customer: Grouping jobs by type of customer and needs. 43 44 Departmentalization Trends Increasing use of customer departmentalization. Cross-functional team - a work team composed of individuals from various functional specialties. Chain Of Command The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization - clarifies who reports to whom. Who do I report to? Who do I go to if I have a problem? To understand the chain of command we need to understand three concepts: 1. Authority 2. Responsibility 3. Unity of command Authority Authority: The rights inherent in a managerial position to tell people what to do and to expect them to do it. Acceptance theory of authority: The view that authority comes from the willingness of subordinates to accept it. Line authority: It’s the power given to someone in a supervisory position to mandate actions by subordinates. This authority is given so that an organization can attain its stated goals and objectives. Examples of managers within a business who have line authority are the controller, engineering manager, production manager, and sales manager. Staff authority: Staff authority is the provision of advice and other services to line managers. Examples of staff positions are accounting, finance, purchasing, management information systems, and taxation. People in these staff positions are empowered to assist the line functions (such as production and sales), but do not have any authority over them. As an example of staff authority, the cost accountant advises the sales manager on which products have the highest margins, and so are the most valuable products to sell. 45 Responsibility And Unity Of Command Responsibility: The obligation or expectation to perform. Unity of Command: The management principle that each person should report to only one manager. Contrasting Spans Of Control Span of Control: The number of employees who can be effectively and efficiently supervised by a manager. Centralization And Decentralization Centralization: The degree to which decision making is concentrated at upper levels of the organization Decentralization: The degree to which lower-level employees provide input or actually make decisions. Employee Empowerment: Giving employees more authority to make decisions. 46 Formalization Formalization: The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. - Highly formalized jobs offer little discretion over what is to be done. - Low formalization means fewer constraints on how employees do their work. Mechanistic And Organic Structures Mechanistic Organization: An organizational design that’s rigid and tightly controlled. Organic Organization: An organizational design that’s highly adaptive and flexible. 47 Contingency Factors Affecting Structural Choice Strategy and Structure: - Changes in corporate strategy should lead to changes in an organization’s structure that support the strategy. - Certain structural designs work best with different organizational strategies. The organic structure works well for organizations pursuing meaningful and unique innovations. The mechanistic organization works best for companies wanting to tightly control costs. Contingency Factors Size & Structure - as an organization grows larger, its structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization, and rules/regulations. Technology & Structure - organizations adapt their structures to their technology. - Woodward’s classification of firms based on the complexity of the technology employed: 1) Unit Production: - Low complexity with little line and staff differentiation and widely defined role responsibilities. - Low formalization. - Low centralization. Type of product - custom made, non routine nature of the work. 2) Mass Production: - High complexity with clear line and staff differentiation and narrowly define role responsibilities. - High formalization. - High centralization. 48  3) Process Production: - High vertical differentiation with little line and staff differentiation and widely defined role responsibilities. Low centralization. - Low formalization. - High centralization and formalization control is not needed because of the heavily automated, inherently tightly controlled nature of process technology. Environmental Uncertainty and Structure - Mechanistic organizational structures tend to be most effective in stable and simple environments. The flexibility of organic organizational structures is better suited for dynamic - and complex environments. Traditional Organizational Designs Simple Structure: An organizational design with low departmentalization, wide spans of control, centralized authority, and little formalization. Functional Structure: An organizational design that groups together similar or related occupational specialities. Divisional Structure: An organizational structure made up of separate, semiautonomous units or divisions. 49 Organizing for Flexibility in the Twentieth Century Many organizations are finding that traditional organizational designs often aren’t appropriate for today’s increasingly dynamic and complex environment. Instead, organizations need to be lean, flexible and innovative (they need to be more organic). Creative ways to structure and organize work: TEAM STRUCTURES: Organizational structure in which the entire organization is made up of work teams. In this structure, employee empowerment is crucial because no line of managerial authority flows from top to bottom. Rather, employee teams design and do work in the way they think is best, but the teams are also held responsible for all work performance results in their respective areas. 50 MATRIX STRUCTURE: An organizational structure that assigns specialists from different functional departments to work on one or more projects. A unique aspect of this design is that it creates a dual chain of command, because employees in a matrix organization have two managers, their functional area manager and their product or project manager, who share authority. The project manager has authority over the functional members who are part of his/ her project team in areas related to the project’s goals. However any decisions about promotions, salary recommendations, and annual reviews typically remain the functional manager’s responsibility. The matrix design explicitly violates the classical organizing principle of unity of command. PROJECT STRUCTURE: An organizational structure in which employees continuously work on projects. Unlike the matrix structure, a project structure has no formal departments where employees return at the completion of a project. Instead, employees take their specific skills, abilities, and experiences to other projects. Also all work in project structures is performed by teams of employees. Project structures tend to be more flexible organizational designs, without the departmentalization or rigid organizational hierarchy that can slow down making decisions or taking action. In this structure managers serve as facilitators, mentors or coaches. They eliminate or minimize organizational obstacles and ensure that teams have the resources they need to effectively and efficiently complete their work. THE BOUNDARYLESS ORGANIZATION: An organization whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure. Examples: Virtual Organization: An organization that consists of a small core of full-time employees and outside specialists temporarily hired as needed to work on projects. Task Forces: A temporary committee or team formed to tackle a specific short- term problem affecting several departments. - Temporary nature of a task force is what differentiates it from cross functional team. Task force usually perform many of their normal work tasks while serving on the task force. However, the members of the task force must collaborate to resolve the issue that’s been assigned to them. 51  Open Innovation: Opening up the search for new ideas beyond the organization’s boundaries and allowing innovations to easily transfer inward and outward. Today’s successful companies are collaborating directly with customers in the product development process. Others are partnering with suppliers, others outsiders and even competitors. TELECOMMUTING: Work arrangement in which employees work at home and are linked to the workforce by computer. COMPRESSED WORKWEEKS, FLEXTIME AND JOB SHARING: Organizations sometimes find they need to restructure work using forms of flexible work arrangements. Compressed Workweek: A workweek where employees work longer hours per day but fewer days per week. Flextime (also known as flexible work): A scheduling system in which employees are required to work a specific number of hours a week but free to vary those hours within certain limits. Job Sharing: The practice of having two or more people split a full time job. THE CONTINGENT WORKFORCE: Temporary, freelance or contract workers whose employment is contingent on demand for their services. 52 7. Operations, Quality Management and Innovation OPERATIONS The Role of Operations Management Operations Management - the transformation process that converts resources into finished goods and services. It is important for three reasons: 1. It encompasses both services and manufacturing. 2. It’s important in effectively and efficiently managing productivity. 3. It plays a strategic role in an organization’s competitive success. Services and Manufacturing Manufacturing Organizations: Organizations that produce physical goods. Service Organizations: Organizations that produce nonphysical products in the form of services. Managing Productivity Organizations that hope to succeed globally are looking for ways to improve productivity. Productivity is a composite of people and operations variables. To improve productivity, managers must focus on both. Strategic Role Operation Management More organizations move toward managing their operations from a value chain perspective. Value - the performance characteristics, features, attributes, and any other aspects of goods and services for which customers are willing to give up resources (usually money). 53 Value Chain Management Value Chain - the entire series of organizational work activities that add value at each step from raw materials to finished products. Value Chain Management (externally oriented): It focuses on both incoming materials and outgoing products and services. Value chain management is effectiveness oriented and aims to create the highest value for customers. Supply Chain Management (internally oriented): It focuses on efficient flow of incoming material (resources) to the organization. - Coordination and Collaboration: Each partner must identify things he or she may not value but that customer do. Sharing information and being flexible as far as who in the value chain does what are important steps in building coordination and collaboration (OPEN COMMUNICATION). - Technology Investment Information technology can be used to restructure the value chain to better serve end users - Organizational Processes (the ways that organizational work is done): All organizational processes must be critically evaluated from beginning to end to see where value is being added (Non-value-adding activities should be eliminated). 54  - Leadership: Managers must support, facilitate, and promote the implementation and ongoing practice of value chain management. How? Vision / mission statement (importance of providing superb customer value). Communicate expectations regarding both external partners (suppliers) and internal partners (employees) role in value chain. - Employees/human resources: Employees play an important role in value chain management. The three main human resource requirements for value chain management are flexible approaches to job design, an effective hiring process, and ongoing training. - Organizational culture and attitude: Cultural attitudes: Sharing, collaborating, openness, flexibility, mutual respect, and trust. These attitudes encompass not only the internal partners in the value chain, but extend to external partners as well. Obstacles to Value Chain Management Organizational barriers: Refusal or reluctance to share information. Reluctance to shake up the status quo. Security issues. - Cultural attitudes: Lack of trust and too much trust. Intellectual property - proprietary information that’s critical to an organization’s efficient and effective functioning and competitiveness. Fear of loss of decision-making power. 55  - Required capabilities: Lacking or failing to develop the requisite value chain management skills (coordination and collaboration, the ability to configure products to satisfy customers and suppliers, and the ability to educate internal and external partners). - People: Lacking commitment to do whatever it takes. Refusing to be flexible in meeting the demands of a changing situation. Not being motivated to perform at a high level. Lack of trained managers to lead value chain initiatives. QUALITY MANAGEMENT Quality Management Quality - the ability of a product or service to reliably do what it’s supposed to do and to satisfy customer expectations. Quality Management How is quality achieved? That’s an issue managers must address. - Planning for quality - Organizing and leading for quality. - Controlling for quality. Planning Managers must have quality improvement goals and strategies and plans to achieve those goals. Goals can help focus everyone’s attention towards some objective quality standard. Organizing Organizations with extensive and successful quality improvement programs tend to rely on two important people approaches: cross-functional work teams, and self-directed or empowered work teams. Controlling Quality improvement initiatives aren’t possible without having some way to monitor and evaluate their progress. Standards for inventory control, defect rate, raw materials procurement, or other operations management areas. 56 Quality Goals The goal of quality certification should be having work processes and an operations system in place that enable organizations to meet customers’ needs and employees to perform their jobs in a consistently high-quality way. The two best-known quality certifications: ISO 9000 / Six Sigma Quality Certification ISO 9000 - a series of international quality management standards that set uniform guideline for processes to ensure that products conform to customer requirements. It can be a prerequisite for doing business globally. - It provides proof that a quality operations system is in place. Six Sigma - a quality program designed to reduce defects, help lower costs, save time, and improve customer satisfaction. - It helps companies discover whether the processes they use are redundant, to reduce administrative expenses, among others. Mass Customization and Lean Organization Mass customization - providing customers with a product when, where, and how they want it. - It requires flexible manufacturing techniques and continual customer dialogue. - Technology also is important in the continual dialogue with customers. Lean organization - an organization that understands what customers want, identifies customer value by analyzing all activities required to produce products, and then optimizes the entire process from the customer’s perspective. CHANGE AND INNOVATION 57 Two Views of the Change Process The Calm Waters Metaphor - Lewin’s description of the change process as a break in the organization’s equilibrium state. Unfreezing the status quo. Changing to a new state. Refreezing to make the change permanent. White-Water Rapids Metaphor - The lack of environmental stability and predictability requires that managers and organizations continually adapt (manage change actively) to survive. THE THREE-STEP CHANGE PROCESS What Is Organizational Change? Organization Change - any alterations in the people, structure, or technology of an organization. Charge Agents - persons who act as catalysts and assume the responsibility for managing the change process. 58 Types of Change Structure - Changing an organization’s structural components, its structural design. Technology - Adopting new equipment, tools, or operating methods that displace old skills and require new ones. Automation - replacing certain tasks done by people with machines. Computerization. People - Changing attitudes, expectations, perceptions, and behaviors of the workforce. Three Types of Change Changing People Organizational Development (OD) - techniques or programs to change people and the nature and quality of interpersonal work relationships. Global OD - OD techniques that work for U.S. organizations may be inappropriate in other countries and cultures. 59 Why Do People Resist Change? The ambiguity and uncertainty that change introduces. The comfort of old habits. A concern over personal loss of status, money, authority, friendships, and personal convenience. The perception that change is incompatible with the goals and interest of the organization. Techniques for Reducing Resistance to Change Education and communication. Participation. Facilitation and support. Negotiation. Manipulation and co-optation. Coercion. 60 Changing Organizational Culture Cultures are naturally resistant to change. Conditions that facilitate cultural change: - The occurrence of a dramatic crisis. - Leadership changing hands. - A young, flexible, and small organization. - A weak organizational culture. Understanding the Situational Factors Dramatic crisis - an unexpected financial setback, the loss of a major customer, or a dramatic technological innovation by a competitor. Leadership changes hands - new top leadership can provide an alternative set of key values. Changing Culture 61  Employee Stress Stress - the adverse reaction people have to excessive pressure placed on them from extraordinary demands, constraints, or opportunities. Stressors - factors that cause stress. What Causes Stress? Role Demands Role Conflicts - work expectations that are hard to satisfy. Role Overload - having more work to accomplish than time permits. Role Ambiguity - when role expectations are not clearly understood. Interpersonal Demands - pressures created by other employees. Organizational Structure - excessive rules and an employee’s lack of opportunity to participate in decisions. Organizational Leadership - the supervisory style of the organization’s managers. Personal Factors that can Create Stress Type A personality - people who have a chronic sense of urgency and an excessive competitive drive. Type B personality - people who are relaxed and easygoing and accept change easily. How Can Stress Be Reduced? Job-related factors begin with employee selection. A realistic job preview during the selection process can minimize stress by reducing ambiguity over job expectations. Performance planning program such as MBO (management by objectives) will clarify job responsibilities, provide clear performance goals, and reduce ambiguity. 62 Change-Capable Organizations Stimulating Innovation Creativity - the ability to combine ideas in an unique way or to make an unusual association. Innovation - turning the outcomes of the creative process into useful products, services, or work methods. Innovation Variables 63 Structural Variables An organic-type structure positively influences innovations. The availability of plentiful resources provides a key building block for innovation. Frequent communication between organizational units helps break down barriers. Innovative organizations try to minimize extreme time pressures on creative activities. Studies show that an employee’s creative performance was enhanced when an organization’s structure explicitly supported creativity. Cultural Variables Accept Ambiguity - too much emphasis on objectivity and specificity constraints creativity. Tolerate the Impractical - what at first seems impractical might lead to innovative solutions. Keep External Controls Minimal - rules, regulations, policies, and similar organizational controls are kept to a minimum. Tolerate Risk - employees are encouraged to experiment Tolerate Conflict - diversity of opinions is encouraged. Focus on Ends rather than Means - individuals are encouraged to consider alternative routes towards meeting the goals. Human Resource Variables Idea Champion - individuals who actively and enthusiastically support new ideas, build support, overcome resistance, and ensure that innovations are implemented. Innovation and Design Thinking A strong connection exists between design thinking and innovation. With a design thinking mentality, the emphasis is on getting a deeper understanding of what customers need and want. Disruptive Innovation Innovations in products, services or processes that radically change an industry’s rules of the game. 64  Unit 8: Managing Human Resources Why Is Human Resource Management Important? As a significant source of competitive advantage: - People-oriented HR creates superior shareholder value. As an important strategic tool: - Achieve competitive success through people by treating employees as partners. To improve organizational performance: - High performance work practices lead to both high individual and high organizational performance. High-Performance Work Practices Self-managed teams. Decentralized decision making. Training programs to develop knowledge, skills and abilities. Flexible job assignments. Open communication. Performance-based compensation. Staffing based on person-job and person-organization fit. Extensive employee involvement. Giving employees more control over decision making. Increasing employee access to information. Whether an organization chooses to implement high-performance work practices or not, there are certain HRM activities that must be completed in order to ensure that the organization has qualified people to perform the work that needs to be done. HRM Process 65 External Factors That Affect the HRM Process The Economy’s Effect on HRM Employee Labor Unions - Labor Union: an organization that represents workers and seeks to protect their interests through collective bargaining. Legal Environment of HRM Demographic Trends Human Resource Planning Human Resource Planning - ensuring that the organization has the right number and kinds of capable people in the right places and at the right times Through planning, organizations avoid shortages and surpluses. HRP entails two steps: - Assessing current human resources. - Meeting future needs. Job Analysis - an assessment that defines jobs and the behaviors necessary to perform them. 66  Job description or job position Job specification BOTH the job description and job specification are very important documents for managers when they begin recruiting and selecting. Job Description Job Description - a written statement that describes a job. Typically job content, environment and conditions of employment. (Example: Manufacturing Manager - The Manufacturing Manager oversees the day - to - day operations of the organization’s manufacturing facilities, planning, coordinating, and directing the activities (processes) that result in products (goods). Reports directly to the organization’s President (CEO). Assists and works in conjunction with Sales, Marketing, Logistics (Warehousing), and Procurement management, as well as vendors and shippers. The job is primarily performed indoors in a traditional office setting, though much time will be spent in the manufacturing facility. Extended periods of sitting while using a computer or other productivity devices are common). Job Specification Job specification - a written statement of the minimum qualifications a person must possess to perform a given job successfully. It identifies the knowledge, skills and attitudes needed to do the job. (Example: Manufacturing Manager - A bachelor’s degree [e.g., business administration, industrial engineering] and ten years of experience in a manufacturing environment, three as a plant manager, are required. Must have demonstrated ability to lead a diverse team of manufacturing workers. Good communication skills and the ability to work well with people at all levels, educational background, etc., are essential. Strong organizational and managerial skills required. Project management experience is a must; candidates with project management certification will be given preference. Also some training experience (e.g., manufacturing tools & techniques, standards, regulations). Recruitment And Decruitment Recruitment: Locating, identifying, and attracting capable applicants. Decruitment: Reducing an organization’s workforce. 67 Recruiting Sources Decruitment Options 68 Selection Selection - screening job applications to ensure that the most appropriate candidates are hired. A decision is successful when the applicant was predicted to be successful and proved to be successful in the job. Problems arise when errors are made in rejecting candidates who would have performed successfully on the job (reject errors) or accepting those who ultimately perform poorly (accept errors). The mayor emphasis of any selection activity should be reducing probability of reject errors or accept errors, while increasing the probability of correct decisions. Managers do this by using procedures both valid and reliable: A valid selection device is characterized by a proven relationship between the selection device and some relevant criterion. A reliable selection device indicates that it measures the same thing consistently. Selection Tools 69 Selection Realistic Job Preview (RJP) - a preview of a job that provides both positive and negative information about the job and the company. Orientation Introducing a new employee to his/her job and the organization. - Work Unit Orientation: Familiarizes the employee with the goals of the work unit. -- Organizational Orientation: Informs new employees about company’s goals, history philosophy, procedures and rules. Could be formal orientation programs/or informal. Employee Training Traditional Training Methods 70 Technological Training Methods Performance Management Performance Management System - establishes standards used to evaluate employee performance. Performance Appraisal Methods 71 Compensation and Benefits Skill-based pay - a pay system that rewards employees for the job skills they can demonstrate. Variable pay - a pay system in which an individual’s compensation is contingent on performance. 72 Contemporary Issues in Managing Human Resources Downsizing - the planned elimination of jobs in an organizations. Sexual harassment - any unwanted action or activity of a sexual nature that explicitly or implicitly affects an individual’s employment, performance, or work environment. 73