Ebook Understanding management (6th edition) Part 1

(BQ) Part 1 book Understanding management has contents: Innovation for turbulent times, the environment and corporate culture; the global environment; ethics and social responsibility; planning and goal setting, decision making, designing adaptive organizations, change and innovation, human resources and diversity.

Richard L Daft

Vanderbilt University

Dorothy Marcic

Vanderbilt University

© 2009, 2006 South-Western, a part of Cengage Learning ALL RIGHTS RESERVED No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form

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Library of Congress Control Number: 2007936116 Student Edition 13: 978-0-324-56838-7

Student Edition 10: 0-324-56838-X Instructor’s Edition ISBN 13: 978-0-324-58178-2 Instructor’s Edition ISBN 10: 0-324-58178-5

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Understanding Management,

Sixth Edition

Richard L Daft and Dorothy Marcic

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To our daughters Roxanne, Solange and Elizabeth, who have taught us the importance of good management in every day life.

Managing in Turbulent Times:

Spotlight on Innovative Solutions

In light of the dramatic and far-reaching events of the early twenty-first century, the tral theme being discussed in the field of management is the pervasiveness of turbulent

cen-change and its impact on organizations This edition of Understanding Management was

revised to help current and future managers find innovative solutions to the problems that plague today’s organizations—whether they are everyday challenges or “once-in-a-lifetime”

crises The world in which most students will work as managers is undergoing a dous upheaval The emergence of crisis management, ethical turmoil, e-business, rapidly changing technologies, globalization, outsourcing, global virtual teams, knowledge man-agement, global supply chains, and other changes place demands on managers that go be-yond the techniques and ideas traditionally taught in management courses Managing in today’s turbulent times requires the full breadth of management skills and capabilities This text provides comprehensive coverage of both traditional management skills and the new competencies needed in a turbulent environment characterized by economic turmoil, political confusion, and general uncertainty

tremen-The traditional world of work assumed the purpose of management was to control and limit people, enforce rules and regulations, seek stability and efficiency, design a top-down hierarchy to direct people, and achieve bottom-line results To unlock innovative solutions and achieve high performance, however, managers need different skills to engage workers’

hearts and minds as well as take advantage of their physical labor The new workplace asks that managers focus on leading change, on harnessing people’s creativity and enthusiasm, on finding shared visions and values, and on sharing information and power Teamwork, collaboration, participation, and learning are guiding principles that help managers and employees maneuver the difficult terrain of today’s turbulent business environment Managers focus on developing, not controlling, people to adapt to new technologies and extraordinary environmental shifts, and thus achieve high performance and total corporate effectiveness

My vision for the sixth edition of Understanding Management is to explore the newest

management ideas for turbulent times in a way that is interesting and valuable to students, while retaining the best of traditional management thinking To achieve this vision, we have included the most recent management concepts and research as well as showing the contemporary application of management ideas in organizations We have also added a fea-ture for “new manager” to give students a sense of what will be expected when they become managers The combination of established scholarship, new ideas, and real-life applications gives students a taste of the energy, challenge, and adventure inherent in the dynamic field

of management The South-Western staff and we have worked together to provide a book better than any other at capturing the excitement of organizational management

text-We revised Understanding Management to provide a book of utmost quality that will

create in students both respect for the changing field of management and confidence that they can understand and master it The textual portion of this book has been enhanced through the engaging, easy-to-understand writing style and the many in-text examples, boxed items, and short exercises that make the concepts come alive for students The

Preface

graphic component has been enhanced with several new exhibits and a new set of photo

essays that illustrate specific management concepts The well-chosen photographs provide

vivid illustrations and intimate glimpses of management scenes, events, and people The

photos are combined with brief essays that explain how a specific management concept

looks and feels Both the textual and graphic portions of the textbook help students grasp

the often abstract and distant world of management

Spotlight on Innovation:

New to the Sixth Edition

The sixth edition of Understanding Management is especially focused on the future of

man-agement education by identifying and describing emerging ideas and examples of

innova-tive organizations and by providing enhanced learning opportunities for students

Learning Opportunities

The sixth edition has taken a leap forward in pedagogical features to help students learn

what it is like to manage in an organization today New to this edition is a second New

Manager Self Test in each chapter These short feedback questionnaires give students

insight into how they respond to situations and challenges typically faced by real-life

managers End of chapter questions have been thoroughly and carefully revised to encourage

critical thinking and application of chapter concepts The end-of-chapter cases and ethical

dilemmas that help students sharpen their diagnostic skills for management problem solving

have also been updated This edition contains 11 new cases and 9 new ethical dilemmas

Seven additional cases and dilemmas have been substantially revised Other new features

include an advice column: Dear Dr Dorothy, as well as an Action Learning exercises

Preface

Organization

The chapter sequence in Understanding Management is organized around the management

functions of planning, organizing, leading, and controlling These four functions effectively encompass both management research and characteristics of the manager’s job

Part One introduces the world of management, including the nature of management,

issues related to today’s turbulent environment, the learning organization, historical perspectives on management, and the technology-driven workplace

Part Two examines the environments of management and organizations This section

includes material on the business environment and corporate culture, the global ment, ethics and social responsibility, the natural environment, and the environment of entrepreneurship and small business management

environ-Part Three presents three chapters on planning, including organizational goal setting

and planning, strategy formulation and implementation, and the decision-making process

Part Four focuses on organizing processes These chapters describe dimensions

of structural design, the design alternatives managers can use to achieve strategic tives, structural designs for promoting innovation and change, the design and use of the human resource function, and the ways managing diverse employees are significant to the organizing function

objec-Part Five is devoted to leadership The section begins with a chapter on organizational

behavior, providing grounding in understanding people in organizations This foundation paves the way for subsequent discussion of leadership, motivating employees, communica-tion, and team management

Part Six describes the controlling function of management, including basic principles of

total quality management, the design of control systems, and information technology

Chapter Content

Within each chapter, many topics have been added or expanded to address the current

issues managers face Text content has been sharpened to provide greater focus on the key

topics that count for management today

Chapter 1 includes a new section on making the leap from being an individual

contribu-tor in the organization to becoming a new manager and getting work done primarily

through others The chapter introduces the skills and competencies needed to effectively

manage organizations, including issues such as managing diversity, coping with

globaliza-tion, new management thinking, historical developments, shifting world of e-business,

effective management of the technology-driven workplace, and managing crises In

addition, a new section discusses the emphasis within organizations on innovation as a

response to today’s turbulent environment

Chapter 2 contains an updated look at current issues related to the environment and

corporate culture, including a section illustrating how managers shape a high-performance

culture as an innovative response to a shifting environment

Chapter 3 includes a new discussion of the growing power of China and India in today’s

global business environment, and what this means for managers around the world In

addition, the complex issues surrounding globalization are discussed, including a

consider-ation of the current globalizconsider-ation backlash

Chapter 4 has an expanded discussion of ethical challenges managers face today and the

business case for incorporating ethical values in the organization The chapter also

consid-ers global ethical issues, including a discussion of corruption rankings of various countries

and a consideration of the growing sustainability movement

Chapter 5 provides an overview of planning and goal setting, including a close look at

crisis planning and how to use scenarios The chapter’s section on planning for high

per-formance has been enhanced by a discussion of the use of executive dashboards to help

managers plan in a fast-changing environment and continues its focus on the basics of

for-mulating and implementing strategy and includes a consideration of the challenges of

implementing strategy during turbulent times

Chapter 6’s overview of managerial decision making has an expanded discussion of

in-tuition in decision making and the use of brainstorming for group decision making and has

been thoroughly updated to incorporate recent trends in information technology, including

user-generated content through wikis, blogs, and social networking sites The chapter

explores how these new technologies are being applied within organizations along with

traditional information systems The chapter also discusses e-commerce strategies, the

growing use of business intelligence software, and how new IT affects the manager’s job

Chapter 7 discusses basic principles of organizing and describes both traditional and

contemporary organization structures in detail The chapter includes a discussion of organic

versus mechanistic structures and when each is more effective, and also contains a description

of the virtual network organization form

Preface

Chapter 8 has been thoroughly updated and reorganized to reflect the critical role of

managing change and innovation today The chapter includes new or expanded material on exploration and creativity, the importance of internal and external cooperation, and the growing trend toward open innovation

Chapter 9 includes a discussion of changes in the social contract between employers and

employees A new section looks at how organizations apply strategic human resource agement to help the organization become an employer of choice to attract and retain the best human capital The chapter has been revised and updated to reflect the most recent thinking on organizational diversity issues and looks at the challenges women and minori-ties face in organizations, including the current debate about women opting to leave the corporate workforce (the opt-out trend) The chapter also has an expanded discussion of using diversity training to give people the interpersonal and communication skills they need to reap the benefits of diversity

man-Chapter 10 contains updated coverage related to personality traits and the use of

per-sonality and other assemssment tests in organizations Exercises throughout the chapter enhance student understanding of organizational behavior topics and their own personali-ties and attitudes

Chapter 11 has been reorganized to focus on the styles of leadership that are highly

effective today The chapter emphasizes that leadership can make a difference, often through subtle everyday actions The discussion of power has been expanded to discuss how leaders exercise power through various interpersonal influence tactics

Chapter 12 covers the foundations of motivation and also incorporates recent thinking

about motivational tools for today, such as the importance of helping employees achieve work-life balance, incorporating fun and learning into the workplace, giving people a chance to fully participate, and helping people find meaning in their work

Chapter 13 begins with a discussion of how managers facilitate strategic conversations

by using communication to direct everyone’s attention to the vision, values, and goals of the organization The chapter explores the foundations of good communication and includes a new section on effective written communication, in recognition of the growing use of e-mail and the need for managers to write clearly and concisely

Chapter 14 discusses how to lead work teams to effectiveness and includes a new section

on using negotiation to manage conflict, including how to reach a win-win solution The final section of the chapter takes a new look at the positive outcomes of effective teams

Chapter 15 provides an overview of financial and quality control, including Six Sigma,

ISO certification, and a new application of the balanced scorecard, which views employee learning and growth as the foundation of high performance The chapter also addresses current concerns about corporate governance and finding a proper balance of control and autonomy for employees The chapter also looks at productivity, lean manufacturing and reduced cycle time

Appendices

Appendix A is a running discussion of management topics as experienced by one company

as it is relevant to the material discussed in that part Focusing on Costco, the case allows

students to follow the managers’ and the organizations’ problems and solutions in a

long-term way

Appendix B takes a look at entrepreneurial activity on a global basis and examines the

reasons entrepreneurship and small business are booming The chapter continues its focus

on practical information regarding small business formation and development, including a

look at the challenges of entrepreneurial startups In addition, a new section discusses the

growing interest in social entrepreneurship, sometimes called social capitalism.

In addition to the topics listed above, this text integrates coverage of the Internet and new

technology into the various topics covered in each chapter Each chapter also contains a

valuable application in an Spotlight On … boxes Approximately half of these boxes feature

a technologically-savvy company or highlight a manager who is using technology to meet

the challenges of today’s environment The other half of the Spotlight On… boxes describe

various unique, innovative, or interesting approaches to managing people for high

perfor-mance and innovative response, in recognition that human capital is essential for solving

today’s complex organizational problems Each chapter also has a Business Blooper,

descrb-ing mistakes companies have made, as well as a Benchmarkdescrb-ing box, indicatdescrb-ing top

perform-ing managers and organizations

Preface

Innovative Features

A major goal of this book is to offer better ways of using the textbook medium to convey management knowledge to the reader To this end, the book includes several innovative features that draw students in and help them contemplate, absorb, and comprehend man-agement concepts South-Western has brought together a team of experts to create and coordinate color photographs, video cases, beautiful artwork, and supplemental materials for the best management textbook and package on the market

Chapter Outline and Objectives Each chapter begins with a clear statement of its

learning objectives and an outline of its contents These devices provide an overview of what is to come and can also be used by students to guide their study and test their under-standing and retention of important points

New Manager’s Questions The text portion of each chapter begins with three

ques-tions faced by organization managers The quesques-tions pertain to the topics of the chapter and will heighten students’ interest in chapter concepts In the part of the text relevant to that question, the answer will be given, so that students can compare the “correct” answer

to the ones they gave at the beginning of the chapter

Take Action The Take Action feature has expanded throughout the chapter This feature

provides a call to action that helps students apply the concepts discussed in the text and see how they would use the idea as a practicing manager Some of the Take Action features also refer students to the associated New Manager Self Tests, or direct students from the chapter content to relevant end of chapter materials, such as an experiential exercise or an ethical dilemma

New Manager Self Tests Two New Manager Self Tests in each chapter of the text

provides opportunities for self-assessment and a way for students to experience ment issues in a personal way The change from individual performer to new manager is dramatic, and these self tests provide insight into what to expect and how students might perform in the world of the new manager

manage-Concept Connection Photo Essays A key feature of the book is the use of photographs

accompanied by detailed photo essay captions that enhance learning Each caption highlights and illustrates one or more specific concepts from the text to reinforce student understanding

of the concepts While the photos are beautiful to look at, they also convey the vividness, immediacy, and concreteness of management events in today’s business world

Contemporary Examples Every chapter of the text contains a large number of written

examples of management incidents They are placed at strategic points in the chapter and are designed to illustrate the application of concepts to specific companies These in-text examples—indicated by an icon in the margin—include well-known U.S and interna-tional companies such as Sony, UPS, Kraft Foods, Lenova, Wal-Mart, BMW, eBay, and

LG Electronics, as well as less-well-known companies and not-for-profit organizations

such as Remploy Ltd and Strida (United Kingdom), Barbara K! Enterprises and

Man-chester Bidwell (U.S.), Esquel Group (Hong Kong), Unión Fenosa (Spain), Mississippi

Power Company, the Los Angeles Times, and the U.S Federal Bureau of Investigation

(FBI) These examples put students in touch with the real world of organizations so that

they can appreciate the value of management concepts

Spotlight on… Boxes These features address a specific topic straight from the field of

management that is of special interest to students These boxes may describe a

contempo-rary topic or problem that is relevant to chapter content or they may contain a diagnostic

questionnaire or a special example of how managers handle a problem The boxes heighten

student interest in the subject matter and provide an auxiliary view of management issues

not typically available in textbooks

Benchmarking Boxes Each chapter contains a box that highlights some effective and

productive technique or system developed by an outstanding manager or company

Business Blooper While most of the book gives students insights into effective

manage-ment behavior, forgetting common mistakes can be a real loss Therefore, each chapter describes

ineffective decisions or behaviors which have led to disastrous outcomes in companies

Video Cases Each chapter conclude with video cases that illustrate the concepts

pre-sented in that part The videos enhance class discussion because students can see the direct

application of the management theories they have learned Companies discussed in the

video package include Yahoo, Caterpillar, Cold Stone Creamery, Ford, McDonalds and

Allstate Each video case explores the issues covered in the video, allowing students to

syn-thesize the material they’ve just viewed The video cases culminate with several questions

that can be used to launch classroom discussion or as homework

Exhibits Many aspects of management are research based, and some concepts tend to

be abstract and theoretical To enhance students’ awareness and understanding of these

concepts, many exhibits have been included throughout the book These exhibits

consoli-date key points, indicate relationships among concepts, and visually illustrate concepts

They also make effective use of color to enhance their imagery and appeal

Glossaries Learning the management vocabulary is essential to understanding

con-temporary management This process is facilitated in three ways First, key concepts are

boldfaced and completely defined where they first appear in the text Second, brief

defini-tions are set out in the margin for easy review and follow-up Third, a glossary

summariz-ing all key terms and definitions appears at the end of the book for handy reference

Chapter Summary and Discussion Questions Each chapter closes with a summary of

key points that students should retain The discussion questions are a complementary

learning tool that will enable students to check their understanding of key issues, to think

beyond basic concepts, and to determine areas that require further study The summary

and discussion questions help students discriminate between main and supporting points

and provide mechanisms for self-teaching

Preface

End of Chapter Application Opportunities End-of-chapter exercises called Self

Learning, Action Learning, Group Learning and Ethical Dilemma provide opportunities for content application Students can take self-tests, providng an opportunity to experience management issues in a personal way These exercises take the form of questionnaires, sce-narios, and activities, and many also provide an opportunity for students to work in teams

There are seven new ethical dilemmas in this edition The exercises are tied into the ter through the “Take Action” feature that refers students to the end-of-chapter exercises

chap-at the approprichap-ate point in the chapter content

Case for Critical Analysis Also appearing at the end of each chapter is a brief but

sub-stantive case that provides an opportunity for student analysis and class discussion Some

of these cases are about companies whose names students will recognize; others are based

on real management events but the identities of companies and managers have been guised These cases allow students to sharpen their diagnostic skills for management prob-lem solving There are eleven new cases in this edition

dis-Supplementary Materials

Instructor’s Manual Designed to provide support for instructors new to the course,

as well as innovative materials for experienced professors, the Instructor’s Manual cludes Chapter Outlines, annotated learning objectives, Lecture Notes and sample Lecture Outlines Additionally, the Instructor’s Manual includes answers and teaching notes to end of chapter materials, including the continuing case Each chapter also contains a comprehensive guide for incorporating each of the media elements into the classroom

in-Instructor’s CD-ROM Key instructor ancillaries (in-Instructor’s Manual, Test Bank,

ExamView and PowerPoint slides) are provided on CD-ROM, giving instructors the mate tool for customizing lectures and presentations

ulti-Test Bank Scrutinized for accuracy, the ulti-Test Bank includes more than 2,000 true/

false, multiple choice, short answer, and essay questions Page references are indicated for every question, as are designations of either factual or application so that instructors can provide a balanced set of questions for student exams

ExamView Available on the Instructor’s Resource CD-ROM, ExamView contains all

of the questions in the printed Test Bank This program is an easy-to-use test creation software compatible with Microsoft Windows Instructors can add or edit questions, in-structions, and answers, and select questions (randomly or numerically) by previewing them on the screen Instructors can also create and administer quizzes online, whether over the Internet, a local area network (LAN), or a wide area network (WAN)

PowerPoint Lecture Presentation Available on the Instructor’s Resource CD-ROM

and the Web site, the PowerPoint Lecture Presentation enables instructors to customize

their own multimedia classroom presentation Containing approximately 350 slides, the

package includes figures and tables from the text, as well as outside materials to supplement

chapter concepts Material is organized by chapter, and can be modified or expanded for

individual classroom use PowerPoint slides are also easily printed to create customized

Transparency Masters

JoinIn™ on TurningPoint® Create a truly interactive classroom environment with

this audience response system that operates in conjunction with your PowerPoint

presenta-tions Students can respond to questions, short polls, interactive exercises, or peer review

questions Use this unique tool to take attendance, check student understanding, collect

student demographics, and more

Study Guide Packed with real-world examples and additional applications for helping

students master management concepts, this learning supplement is an excellent resource

For each chapter of the text, the Study Guide includes a summary and completion exercise;

a review with multiple choice, true/false, and short answer questions; a mini case with

multiple choice questions; management applications; and an experiential exercise that can

be assigned as homework or used in class

Video Package The video package for Understanding Management, 6th Edition,

con-tains On the Job videos created specificially for the 6th edition Clips are supported by

short cases and discussion questions at the end of each chapter On the Job videos utilize

real-world companies to illustrate management concepts as outlined in the text Focusing

on both small and large business, the videos give students an inside perspective on the

situ-ations and issues that corporsitu-ations face Video cases reinforce what the student has just

seen, and provide an opportunity for critical analysis and discussion Additionally, BizFlix

are film clips taken from popular Hollywood movies and integrated into the Sixth

Edition

CengageNOW ™ for Understanding Management Discover the ultimate flexibility

and control as this fully integrated online teaching and learning system designed by

instructors for instructors NOW saves you valuable time and ensures impressive student

results CengageNOW ™ provides a comprehensive suite of the best in services and resources

to help you: Efficiently plan your course and student assignments; easily manage your

gradebook and compare to the latest from AACSB; teach with the latest built-in

technol-ogy, including new videos; reinforce understanding with personalized study paths and

built-in self-assessments; instantly assess students with a customizable test bank that’s

tagged to AACSB standards to clearly demonstrate how student performance compares to

AACSB requirements; and automatically grade assignments and compare to AACSB

requirements CengageNOW ™ helps you ensure student comprehension with personalized

study paths and built-in self-assessments A variety of multimedia tools address the variety

of learning styles inherent within today’s diversity of students With the proper tools,

stu-dents take responsibility for their own progress

Preface

Web site (academic.cengage.com/management/daft) Discover a rich array of online

teaching and learning management resources that you won’t find anywhere else, including interactive learning tools, links to critical management websites, and password-protected teaching resources available for download

WebTutor is an interactive, web-based, student supplement on WebCT and/or

Black-Board that harnesses the power of the Internet to deliver innovative learning aids that tively engage students The instructor can incorporate WebTutor as an integral part of the course, or the students can use it on their own as a study guide Benefits to students include automatic and immediate feedback from quizzes and exams; interactive, multimedia rich explanation of concepts; online exercises that reinforce what they’ve learned; f lashcards that include audio support; and greater interaction and involvement through online discus-sion forums

Acknowledgments

A gratifying experience for us was working with the team of dedicated professionals at

South-Western who were committed to the vision of producing the best management text

ever I am grateful to Joe Sabatino, Executive Editor, whose enthusiasm, creative ideas,

assis-tance, and vision kept this book’s spirit alive Emma Newsom, Managing Developmental

Editor, provided superb project coordination and offered excellent ideas and suggestions to

help the team meet a demanding and sometimes arduous schedule Clint Kernen,

Market-ing Manager, provided keen market knowledge and innovative ideas for instructional

sup-port Jacquelyn Featherly, Content Project Manager, cheerfully and expertly guided me

through the production process Tippy McIntosh contributed her graphic arts skills to

cre-ate a visually dynamic design Ruth Belanger, Editorial Assistant, and Sarah Rose,

Mar-keting Coordinator, skillfully pitched in to help keep the project on track Lynn Lustberg

and the team at ICC Macmillan, Inc deserve a special thank you for their layout expertise

and commitment to producing an attractive, high-quality textbook Jane Woodside

skill-fully researched and wrote the superb Part Opening features

Here at Vanderbilt I want to extend special appreciation to my assistant, Barbara Haselton Barbara provided excellent support and assistance on a variety of projects that

gave me time to write I also want to acknowledge an intellectual debt to my colleagues,

Bruce Barry, Ray Friedman, Neta Moye, Rich Oliver, David Owens, Bart Victor, and

Tim Vogus Thanks also to Deans Jim Bradfordand Joe Blackburn who have supported

my writing projects and maintained a positive scholarly atmosphere in the school

Special thanks also go to Pat Lane for her continued commitment to the success of

these projects Finally, I want to acknowledge the love and contributions of my wife,

Dorothy Marcic Dorothy has been very supportive during this revision as we share our

lives together I also want to acknowledge my love and support for my five daughters,

Danielle, Amy, Roxanne, Solange, and Elizabeth, who make my life special during our

precious time together Thanks also to B J and Kaitlyn, and Kaci and Matthew for

their warmth and smiles that brighten my life, especially during our days together skiing

and on the beach

R.L.D.

There have been numerous people who have given time and support on this project, cluding my assistants, Adrienne Ewing-Roush, Karl Cronin and Allison Greer Friends

in-who gave invaluable support include Peter Neamann, Victoria Marsick, Bob and Debby

Rosenfeld, Karen Streets-Anderson, Kathy Diaz, Andi Seals, Adrienne Corn, Mark and

Maxine Rossman, Mehr Mansuri, Annie Deardorff, Michael Heitzler, and Shidan Majidi

How can one do such a project without family love and support My sister, Janet

Mittel-steadt is a true friend; my cousins: Marilyn Nowak is a bright light, Michael Shoemaker is

the genealogist who has helped me find my own roots, and Katherine Runde is so precious;

my Aunt Babe is forever a link to the past There is no way to imagine my life without my

three beautiful daughters: Roxanne, Solange, and Elizabeth, who have taught me more

than all my degrees combined And finally, my husband and partner, Dick Daft, whose

collaboration on this book indicates one aspect of our unity and connection

D M.

Preface

Another group of people who made a major contribution to this textbook are the agement experts who provided advice, reviews, answers to questions, and suggestions for changes, insertions, and clarifications I want to thank each of these colleagues for their valuable feedback and suggestions:

Central Washington University

Linn Van Dyne

Michigan State University

Janice Edwards

College of the Rockies

John C Edwards

East Carolina University

Mary Ann Edwards

College of Mount St Joseph

Western Michigan University

Mary Beth Klinger

College of Southern Maryland

Ferris State University

Susan Smith Nash

Alla L Wilson

University of Wisconsin–Green Bay

Ignatius Yacomb

Loma Linda University

Imad Jim Zbib

Ramapo College of New Jersey

Vic Zimmerman

Pima Community College

Richard L DaftNashville, TennesseeDecember 2006

Preface

About the Authors

Richard L Daft, Ph.D., is the Brownlee O Currey, Jr., Professor of Management

in the Owen Graduate School of Management at Vanderbilt University Professor Daft specializes in the study of organization theory and leadership Dr Daft is a Fellow of the

Academy of Management and has served on the editorial boards of Academy of Management

Journal, Administrative Science Quarterly, and Journal of Management Education He was the Associate Editor-in-Chief of Organization Science and served for three years as associate editor of Administrative Science Quarterly.

Professor Daft has authored or co-authored 12 books, including Organization Theory

and Design (South-Western, 2007), The Leadership Experience (South-Western, 2008) and

What to Study: Generating and Developing Research Questions (Sage, 1982) He recently

published Fusion Leadership: Unlocking the Subtle Forces That Change People and Organizations

(Berrett-Koehler, 2000, with Robert Lengel) He has also authored dozens of scholarly

articles, papers, and chapters His work has been published in Administrative Science

Quarterly, Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Accounting Organizations and Society, Management Science, MIS Quarterly, California Management Review, and Organizational

Behavior Teaching Review Professor Daft has been awarded several government research grants to pursue studies of organization design, organizational innovation and change, strategy implementation, and organizational information processing

Dr Daft is an active teacher and consultant and has direct management experience He has taught management, leadership, organizational change, organizational theory, and organizational behavior He served as associate dean, has been a theatrical producer, and helped manage a start up enterprise He has been involved in management development and consulting for many companies and government organizations including the American Banking Association, Bell Canada, the National Transportation Research Board, NL Baroid, Nortel, TVA, Pratt & Whitney, State Farm Insurance, Tenneco, the United States Air Force, the U.S Army, J C Bradford & Co., Central Parking System, Entergy Sales and Service, Bristol-Myers Squibb, First American National Bank, and the Vanderbilt University Medical Center

Dorothy Marcic, Ed.D and M.P.H, is a former faculty member at Vanderbilt University Dr Marcic is also a former Fulbright Scholar at the University of Economics

in Prague and the Czech Management Center, where she taught courses and did research

in leadership, organizational behavior, and cross-cultural management She teaches courses

at the Monterrey Institute of International Studies and the University of Economics, in Prague, and has taught courses or given presentations at the Helsinki School of Economics, Slovenia Management Center, College of Trade in Bulgaria, City University of Slovakia, Landegg Institute in Switzerland, the Swedish Management Association, Technion University in Israel, and the London School of Economics Other international work includes projects at the Autonomous University in Guadalajara, Mexico, and a training program for the World Health Organization in Guatemala She has served on the boards

of the Organizational Teaching Society, the Health Administration Section of the American Public Health Association, and the Journal of Applied Business Research

Dr Marcic has authored 12 books, including Organizational Behavior: Experiences and

Cases (South-Western Publishing, 6th Edition, 2001), Management International (West

Publishing, 1984), Women and Men in Organizations (George Washington University,

1984), and Managing with the Wisdom of Love: Uncovering Virtue in People and Organizations

(Jossey-Bass, 1997), which was rated one of the top ten business books of 1997 by

Management General In addition, she has had dozens of articles printed in such publications

as Journal of Management Development, International Quarterly of Community Health

Education, Psychological Reports, and Executive Development She has recently been exploring

how to use the arts in the teaching of leadership and has a new book, RESPECT: Women

and Popular Music (Texere, 2002), the basis for the musical theater production, Respect:

A Musical Journey of Women

Professor Marcic has conducted hundreds of seminars on various business topics and

consulted for executives at AT&T Bell Labs; the Governor and Cabinet of North Dakota;

the US Air Force; Slovak Management Association; Eurotel; Czech Ministry of Finance;

the Cattaraugus Center; USAA Insurance; State Farm Insurance; and the Salt River-Pima

Indian Tribe in Arizona

About the Authors

Brief Contents

Part 1 Introduction 2

1 Innovation for Turbulent Times 4

Part 2 The Environment 44

2 The Environment and Corporate Culture 46

3 The Global Environment 80

4 Ethics and Social Responsibility 116

5 Planning and Goal Setting 152

6 Decision Making 196

7 Designing Adaptive Organizations 246

8 Change and Innovation 286

9 Human Resources and Diversity 318

PART 1 Introduction 2

chapter 1 Innovation for Turbulent Times 4

The Definition of Management 8 Organizational Performance 9 Management Skills 10

Management Functions 11 Making the Leap: Becoming a New Manager 12

Manager Activities 13 • Manager Roles 15

Managing in Small Businesses and Nonprofit Organizations 17 Management and the New Workplace 18

Forces on Organizations 20 • New Management Competencies 21 • Turbulent Times:

Managing Crises and Unexpected Events 22

The Learning Organization 25

Definition of a Learning Organization 26 • Characteristics of a Learning Organization 26

Managing the Technology-Driven Workplace 27

The Shifting World of E-Business 27 • Innovative Technology in the Workplace 28

Management and Organization 29

Influential Forces 29 • Classical Perspective 30 • Human Resources Perspective 33

• Behavioral Sciences Approach 33 • Total Quality Management 36

Summary 36 Discussion Questions 37 Dear Dr Dorothy 38 Self Learning 38 Group Learning 39 Action Learning 40 Ethical Dilemma 40 Case for Critical Analysis 41 BIZ FLIX 42

VIDEO CASE 42

PART 2 The Environment 44

chapter 2 The Environment and Corporate Culture 46

The External Environment 48

General Environment 50 • Task Environment 55

The Organization–Environment Relationship 59

Environmental Uncertainty 59 • Adapting to the Environment 60

The Internal Environment: Corporate Culture 62

Symbols 64 • Stories 64 • Heroes 64 • Slogans 66 • Ceremonies 66

Environment and Culture 66

Adaptive Cultures 66 • Types of Cultures 67

Shaping Corporate Culture for Innovative Response 68

Managing the High-Performance Culture 69 • Cultural Leadership 72

Summary 73 Discussion Questions 73 Dear Dr Dorothy 74

Spotlight on Skills

Asleep at the Wheel 7

• Do You Really Want to Be

a Manager? 14

NEW MANAGER SELF TEST

Manager’s Role and Reality 16 • Evolution

Manager Mind and the Environment 61

• Organization Culture 65

Business Blooper

Hewlett–Packard 70

Self Learning 74 Group Learning 75 Action Learning 75 Ethical Dilemma 76 Case for Critical Analysis 77 BIZ FLIX 78

VIDEO CASE 78

chapter 3 The Global Environment 80

A Borderless World 83 Getting Started Internationally 86

Outsourcing 87 • Exporting 87 • Franchising 87 • China Inc 89

The International Business Environment 89 The Economic Environment 90

Economic Development 91 • Infrastructure 91 • Resource and Product Markets 91

• Exchange Rates 92

The Legal-Political Environment 92

Political Risk and Instability 92 • Laws and Regulations 93

The Sociocultural Environment 93

Social Values 94 • Other Cultural Characteristics 97

International Trade Alliances 100

GATT and the World Trade Organization 100 • European Union 101 • North American Free Trade Agreement (NAFTA) 102 • The Globalization Backlash 102

Managing in a Global Environment 103

Developing Cultural Intelligence 103 • Managing Cross-Culturally 105

Summary 108 Discussion Questions 108 Dear Dr Dorothy 108 Self Learning 109 Group Learning 110 Action Learning 111 Ethical Dilemma 112 Case for Critical Analysis 113 BIZ FLIX 114

VIDEO CASE 114

chapter 4 Ethics and Social Responsibility 116

What Is Managerial Ethics? 118 Criteria for Ethical Decision Making 120

Utilitarian Approach 121 • Individualism Approach 122 • Moral-Rights Approach 122 • Justice Approach 123

Factors Affecting Ethical Choices 123

The Manager 124 • The Organization 128

What Is Social Responsibility? 130 Organizational Stakeholders 131 The Ethic of Sustainability and the Natural Environment 133

• How Well Do You Play

the Culture Game? 98

Evaluating Corporate Social Responsibility 135

Economic Responsibilities 136 • Legal Responsibilities 136

• Ethical Responsibilities 136 • Discretionary Responsibilities 136

Managing Company Ethics and Social Responsibility 137

Ethical Individuals 137 • Ethical Leadership 138 • Organizational Structures and Systems 139 • Ethical Structures 141 • Whistle-Blowing 141

Ethical Challenges in Turbulent Times 142

The Business Case for Ethics and Social Responsibility 143

Summary 144 Discussion Questions 145 Dear Dr Dorothy 145 Self Learning 146 Group Learning 146 Action Learning 146 Ethical Dilemma 147 Case for Critical Analysis 147 BIZ FLIX 148

VIDEO CASE 149

chapter 5 Planning and Goal Setting 152

Overview of Goals and Plans 154 Purposes of Goals and Plans 155 Goals in Organizations 157

Organizational Mission 157 • Goals and Plans 158

Planning in a Turbulent Environment 166

Building Scenarios 166 • Crisis Planning 168

Planning for High Performance 170 Thinking Strategically 172

What Is Strategic Management? 172 • Purpose of Strategy 172

The Strategic Management Process 175

Strategy Formulation Versus Implementation 175 • Situation Analysis 175

Formulating Business-Level Strategy 178

Competitive Strategies 180 • Partnership Strategies 183

Strategy Implementation and Control 184

Information and Control Systems 185 • Leadership 185

• Human Resources 187

Implementation during Turbulent Times 187

Global Mind-Set 187 • Corporate Culture 188

• Information Technology 188

NEW MANAGER SELF TEST

Does Goal Setting Fit Your Management Style? 156

• What Is Your Strategy Strength? 186

Facebook 174

Spotlight on Skills

White Stripes 181

NEW MANAGER SELF TEST

Summary 189 Discussion Questions 189 Dear Dr Dorothy 190 Self Learning 190 Group Learning 191 Action Learning 192 Ethical Dilemma 192 Case for Critical Analysis 193 BIZ FLIX 194

VIDEO CASE 194

chapter 6 Decision Making 196

Types of Decisions and Problems 198

Programmed and Nonprogrammed Decisions 199 • Certainty, Risk, Uncertainty, and Ambiguity 199

Decision-Making Models 201

Classical Model 201 • Administrative Model 203 • Political Model 205

Decision-Making Steps 207

Recognition of Decision Requirement 207 • Diagnosis and Analysis of Causes 208

• Development of Alternatives 209 • Selection of Desired Alternative 210 • Implementation

of Chosen Alternative 211 • Evaluation and Feedback 211

Personal Decision Framework 212 Increasing Participation in Decision Making 214

The Vroom-Jago Model 214 • New Decision Approaches for Turbulent Times 218

Information Technology Has Changed Everything 220

Boundaries Dissolve; Collaboration Reigns 221 • People Do Better Work 222 • Things Are More Efficient 223 • Employees Are Engaged 223 • People Can Suffer from Information Overload 224

The Evolving World of IT 225

A New Generation of IT 225 • Data Versus Information 226

Types of Information Systems 226

Operations Information Systems 227 • Management Information Systems 227

The Internet and E-Business 228

E-Business Strategies 231 • Implementing E-Business Strategies 232 • Going International 233 • E-Marketplaces 233 • Customer Relationship Management 235

• Turning Data and Information into Knowledge 235

Summary 236 Discussion Questions 237 Dear Dr Dorothy 238 Self Learning 238 Group Learning 239 Case Study 239 Action Learning 240 Ethical Dilemma 241 Case for Critical Analysis 241 BIZ FLIX 242

PART 4 Organizing 244

Organizing the Vertical Structure 249

Work Specialization 250 • Chain of Command 250 • Authority, Responsibility, and Delegation 250 • Span of Management 253 • Centralization and Decentralization 254

Departmentalization 256

Vertical Functional Approach 258 • Divisional Approach 258 • Geographic- or Based Divisions 259 • Matrix Approach 260 • Team Approach 261 • The Virtual Network Approach 263 • Advantages and Disadvantages of Each Structure 264

Customer-Organizing for Horizontal Coordination 267

The Need for Coordination 267 • Task Forces, Teams, and Project Management 269

• Reengineering 270

Factors Shaping Structure 273

Structure Follows Strategy 273 • Structure Reflects the Environment 274 • Structure Fits the Technology 276

Summary 279 Discussion Questions 279 Dear Dr Dorothy 280 Self Learning 280 Group Learning 281 Action Learning 282 Ethical Dilemma 282 Case for Critical Analysis 283 BIZ FLIX 284

VIDEO CASE 284

Turbulent Times and the Changing Workplace 288 Changing Things: New Products and Technologies 289

Exploration 290 • Cooperation 292 • Internal Coordination 292 • External Coordination 293 • Entrepreneurship 295

Changing People and Culture 298

Training and Development 299 • Organization Development 299 • OD Activities 300 • OD Steps 302

Model of Planned Organizational Change 303

Forces for Change 303 • Need for Change 306

Implementing Change 307

Resistance to Change 307 • Force-Field Analysis 308 • Implementation Tactics 309

Summary 311 Discussion Questions 312 Dear Dr Dorothy 312 Self Learning 313 Group Learning 314 Action Learning 314 Ethical Dilemma 314 Case for Critical Analysis 315 BIZ FLIX 316

Taking Charge of Change 297 • Is Your Company Creative? 305

Spotlight on Collaboration

The Spies Who Came in from the Cold 301

Spotlight on Technology

Sundance Channel’s Second Life 304

Spotlight on Skills

Kate Spade 251

NEW MANAGER SELF TEST

How Decentralized are You? 255 • Authority Role Models 272

Benchmarking

Wikipedia 256

Spotlight on Collaboration

Teams Work at Imagination Ltd 262

Business Blooper

Starbucks 268

Contents

chapter 9 Human Resources and Diversity 318

The Strategic Role of Human Resource Management 321 Environmental Influences on HRM 322

Competitive Strategy 322

The Changing Nature of Careers 325

The Changing Social Contract 325 • HR Issues in the New Workplace 327 • Becoming an Employer of Choice 327

Attracting an Effective Workforce 329

Human Resource Planning 330 • Recruiting 331 • Selecting 334 • Application Form 334

• Interview 334

Developing an Effective Workforce 337

Training and Development 338 • Performance Appraisal 340

Maintaining an Effective Workforce 342

Compensation 342 • Benefits 344 • Termination 344

Diversity In Organizations 345 Valuing Diversity 345

Attitudes Toward Diversity 347

The Changing Workplace 348

Challenges Minorities Face 349 • Management Challenges 350

Current Debates About Affirmative Action 351

The Glass Ceiling 352 • The Opt-Out Trend 353 • The Female Advantage 354

Current Responses to Diversity 355 Defining New Relationships in Organizations 355

Emotional Intimacy 357 • Sexual Harassment 358

Global Diversity 358 Summary 360 Discussion Questions 360 Dear Dr Dorothy 361 Self Learning 362 Group Learning 363 Action Learning 363 Ethical Dilemma 364 Case for Critical Analysis 365 BIZ FLIX 366

Perceptual Selectivity 378 • Perceptual Distortions 379 • Attributions 381

Personality and Behavior 382

Personality Traits 382 • Emotional Intelligence 384 • Attitudes and Behaviors Influenced

by Personality 387 • Person–Job Fit 391

Learning 392

The Learning Process 393 • Learning Styles 394 • Continuous Learning 395

Stress and Stress Management 395

Type A and Type B Behavior 396 • Causes of Work Stress 396 • Innovative Responses

to Stress Management 398

Summary 398 Discussion Questions 399 Dear Dr Dorothy 400 Self Learning 400 Group Learning 404 Action Learning 405 Ethical Dilemma 405 Case for Critical Analysis 406 BIZ FLIX 407

VIDEO CASE 407

chapter 11 Leadership 408

The Nature of Leadership 410 Leadership for Contemporary Times 411

Level 5 Leadership 412 • Women’s Ways of Leading 413

Leadership Versus Management 413 Leadership Traits 414

Behavioral Approaches 415

Ohio State Studies 416 • Michigan Studies 417

• The Leadership Grid 417

Contingency Approaches 418

Hersey and Blanchard’s Situational Theory 418 • Fiedler’s Contingency Theory 420

• Matching Leader Style to the Situation 421 • Path–Goal Theory 423

• Substitutes for Leadership 426

Leading Change 427

Charismatic and Visionary Leadership 427

• Transformational Leaders 429

Power and Influence 430

Position Power 430 • Personal Power 431

• Interpersonal Influence Tactics 431

Enduring Leadership Approaches 433

Servant Leadership 433 • Moral Leadership 433

Summary 434 Discussion Questions 435 Dear Dr Dorothy 435 Self Learning 436 Group Learning 438 Action Learning 438 Ethical Dilemma 438 Case for Critical Analysis 439 BIZ FLIX 440

VIDEO CASE 441

Spotlight on Skills

Seven—or Five—Leadership Habits of Spongebob Squarepants 411 • Are You a Charismatic Leader? 428

NEW MANAGER SELF TEST

NEW MANAGER SELF TEST

chapter 12 Motivation 442

The Concept of Motivation 444 Foundations of Motivation 445

Traditional Approach 445 • Human Relations Approach 445

• Human Resource Approach 446 • Contemporary Approach 447

Content Perspectives on Motivation 447

Hierarchy of Needs Theory 448 • ERG Theory 449 • Two-Factor Theory 451

• Acquired Needs Theory 452

Process Perspectives on Motivation 455

Equity Theory 455 • Expectancy Theory 456 • Goal-Setting Theory 458

Reinforcement Perspective on Motivation 460

Reinforcement Tools 460 • Schedules of Reinforcement 462

Job Design for Motivation 463

Job Simplification 464 • Job Rotation 465 • Job Enlargement 465 • Job Enrichment 465

• Job Characteristics Model 466

Innovative Ideas for Motivating 467

Empowering People to Meet Higher Needs 468 • Giving Meaning to Work 471

Summary 473 Discussion Questions 473 Dear Dr Dorothy 474 Self Learning 474 Group Learning 475 Action Learning 476 Ethical Dilemma 476 Case for Critical Analysis 477 BIZ FLIX 478

VIDEO CASE 478

chapter 13 Communication 480

Communication and the Manager’s Job 482

What Is Communication? 483 • The Communication Process 484

Communicating Among People 485

Communication Channels 486 • Communicating to Persuade and Influence Others 490

• Nonverbal Communication 492 • Listening 492

Organizational Communication 495

Formal Communication Channels 495 • Team Communication Channels 499

• Personal Communication Channels 500

Communicating During Turbulent Times 503

Open Communication 503 • Dialogue 504 • Crisis Communication 504

• Feedback and Learning 505

Managing Organizational Communication 506

Barriers to Communication 506 • Overcoming Communication Barriers 508

Summary 510 Discussion Questions 510 Dear Dr Dorothy 511 Self Learning 511 Group Learning 513 Action Learning 513

Ethical Dilemma 514 Case for Critical Analysis 515 BIZ FLIX 516

Stages of Team Development 532 • Team Cohesiveness 535 • Team Norms 538

Managing Team Conflict 540

Balancing Conflict and Cooperation 540 • Causes of Conflict 540 • Styles to Handle Conflict 543 • Negotiation 544

Work Team Effectiveness 546

Productive Output 546 • Satisfaction of Members 546 • Capacity to Adapt and Learn 548

Summary 548 Discussion Questions 548 Dear Dr Dorothy 549 Self Learning 549 Group Learning 551 Action Learning 551 Ethical Dilemma 552 Case for Critical Analysis 552 BIZ FLIX 554

VIDEO CASE 554PART 6 Controlling 556

Systems 558

The Meaning of Control 560 Organizational Control Focus 561

Feedforward Control 562 • Concurrent Control 563 • Feedback Control 564

Feedback Control Model 564

Steps of Feedback Control 564 • Application to Budgeting 569

Financial Control 569

Financial Statements 569

The Changing Philosophy of Control 571 Managing Productivity 573

Lean Manufacturing 573 • Measuring Productivity 574

Total Quality Management (TQM) 575

TQM Techniques 575 • TQM Success Factors 578

Trends in Quality Control 579

International Quality Standards 579

Business Blooper

Burger King 522 • Student Loan Xpress 534

Spotlight on Technology

MySQL: Creating a First–Century Global Team 528

Twenty-NEW MANAGER SELF TEST

Is Your Group a Cohesive Team? 536

The Boss is Watching 565

• Controlling with Love, Not Fear 573

NEW MANAGER SELF TEST

Is Your Budget in Control? 568 • Freedom Versus Regulation 576

Benchmarking

Universal Studios 577

Contents

Innovative Control Systems for Turbulent Times 580

Open-Book Management 580 • The Balanced Scorecard 582 • New Workplace Concerns 583

Summary 585 Discussion Questions 585 Dear Dr Dorothy 586 Self Learning 586 Group Learning 587 Action Learning 588 Ethical Dilemma 588 Case for Critical Analysis 589 BIZ FLIX 590

VIDEO CASE 590

Appendices

Appendix A: Continuing Case 592 Appendix B: Small Business Start Ups 602 Appendix C: Solutions to Chapter Three’s Manager’s

Workbook 622

PA R T 1

Introduction

Entertainment industry managers

have always faced special

challenges Today the digital

revolution is profoundly affecting the

entire industry, making an already

challenging environment even more

uncertain That’s because virtually

anyone with a computer and Internet

access can send high-quality copies

of video and audio around the world

quickly and cheaply

The entertainment industry has

long made its profits by turning out

blockbusters designed to draw

huge audiences However, it’s

impossible to predict which specific

projects will appeal to the often

fickle masses So entertainment

industry managers have long spent

much of their time overseeing (and surviving) failure.

Journalist Chris Anderson argues

in The Long Tail that digital age businesses will make their money by offering lots and lots of products, knowing that nearly each and every one will appeal to at least one person The big money will be in small sales So the Long Tail theory stands the entertainment industry’s current blockbuster-driven business model on its head.

High-performance entertainment industry managers will need to draw

on all of their skills as they solve and attempt to seize

problem-opportunities in their particularly turbulent, ever-shifting industry.

L e a r n i n g O b j e c t i v e s

After studying this chapter, you should be able to:

1 Define management and organization.

2 Describe the skills needed by an effective manager, and the functions

of planning, organizing, leading, and controlling

3 Understand the personal challenges involved in becoming a new manager in an organization in today’s world

4 Define the roles that managers perform in organizations

5 Discuss the management competencies needed to deal with today’s turbulent environment, including issues such as diversity, globalization, and rapid change

6 Describe the unique considerations of management in small business and nonprofit organizations

7 Point out the technological forces affecting organizations

8 Delineate the new management competencies and how leadership is viewed today

9 Describe how to management crises and unexpected events

10 Define e-business and e-commerce.

11 Understand and explain the ERP and CRM styles

12 In the context of history, describe the social, political, and economic forces shaping today’s management practice

Innovation for

Turbulent Times

c h a p t e r 1

Assess Your Answer

New Manager’s Questions

Please circle your opinion below each of the following statements

rock band with an average ager than a band with above-average talent but outstanding management

important part of my job would

be to make sure that the company was profitable

try to “spin” the truth to make the company look good to customers and investors

c h a p t e r o u t l i n e

The Definition of Management Organizational Performance Management Skills

Management Functions Making the Leap: Becoming a New Manager

Manager Activities Manager Roles

Managing in Small Businesses and Nonprofit Organizations

Management and the New Workplace

Forces on Organizations New Management Competencies Turbulent Times: Managing Crises and Unexpected Events

The Learning Organization

Definition of Learning Organization Characteristics of the Learning Organization

Managing the Technology-Driven Workplace

The Shifting World of E-business Innovative Technology in the Workplace

Management and Organization

Influential Forces Classical Perspective Human Resources Perspective Behavior Sciences Approach Total Quality Management

Assess Your Answer

In today’s turbulent world, managing in times of crisis and confusion is becoming a critical skill for managers in all kinds of organizations, not just companies that have to restore power after a hurricane Many managers deal with uncertainty and crisis to a lesser extent almost daily Consider the strife and confusion in the music industry, where traditional recording labels and music stores are battling with the iPod and with online file sharing services that let people download music for free The once-hot Tower Records declared bankruptcy because of the steep decline in music sales through traditional stores.1

Managers in all organizations deal with uncertainty and unexpected events, whether it

is something as minor as the loss of a key employee or something as dramatic as a plant plosion Moreover, the frequency and intensity of crises have increased over the past couple

ex-of decades, with a sharp rise in the rate ex-of intentional acts such as product tampering, workplace violence, and terrorism.2 Solid management skills and actions are keys to helping any organization weather a crisis and remain healthy, inspired, and productive

The nature of management is to cope with diverse and far-reaching challenges Managers have to keep pace with ever-advancing technology, find ways to incorporate the Internet and e-business into their strategies and business models, and strive to remain competitive

in the face of increasingly tough global competition, uncertain environments, cutbacks in personnel and resources, and massive worldwide economic, political, and social shifts The growing clout, expertise, and efficiency of China and India, in particular, have many U.S

companies worried To gain or keep a competitive edge, companies have renewed their emphasis on innovation, shifting from a relentless focus on controlling costs toward investing in the future In a survey of nearly 1,000 executives in North America, Europe, South America, and Asia, 86 percent agreed that “innovation is more important than cost reduction for long-term success.”3

The shift toward new ways of working, enabled by technology, places additional demands on today’s managers Many employees are perpetually on the move, juggling laptops, mobile phones, and BlackBerries to keep in electronic touch with customers, teammates, and managers with limited face-to-face contact In the new world of work, managers need a new approach that relies less on command and control and more on coor-dination and communication The field of management is undergoing a revolution that asks managers to do more with less, to engage whole employees, to see change rather than stability as the nature of things, and to inspire vision and cultural values that allow people

to create a truly collaborative and productive workplace This approach differs significantly from a traditional mind-set that emphasizes tight top-down control, employee separation and specialization, and management by impersonal measurement and analysis

Making a difference as a manager today and tomorrow requires the integration of solid, tried-and-true management skills with innovative approaches that empha size the human touch, enhance flexibility, and engage employees’ hearts and minds as well as their bodies

Successful departments and organizations don’t just happen They are managed to be that way Managers in every organization have the opportunity to make a difference For exam-ple, Heather Coin made a difference in the Sherman Oaks, California, branch of The Cheesecake Factory when she implemented management changes that reduced turnover from 25 percent to below 10 percent and dramatically increased customer traffic to serve as many as 16,000 customers a week.4

And the success of rock groups from the Rolling Stones to U2 to Green Day relies not just on good songs, musical talent, and performance skills but also on solid business manage-ment “We always said it would be pathetic to be good at the music and bad at the business,”

said Paul McGuinness, U2’s band manager After nearly three decades the Irish rock band

is still selling out concerts and moving millions of albums a year by paying attention to some business basics, such as forming a partnership with Apple for a special-edition iPod and col-laborating with iTunes to produce the industry’s first downloadable version of a box sets.5

Ray Benson, leader of the Asleep at the Wheel band, learned that he had to balance the

band’s creativity with some down-to-earth business sense, as shown in the Spotlight on

Skills

Assess Your Assess Your Answer

1I would rather be in a wildly talented rock band with an average manager than a band with above-average talent but outstanding management.

ANSWER : It is better to have a stellar management team, as both U2 and Asleep at the Wheel found out.

Managers like these are not unusual Every day, managers solve difficult problems, turn organizations around, and achieve astonishing performances To be successful, every orga-

nization needs skilled managers

This textbook introduces and explains the process of management and the changing ways of thinking about the world that are becoming vital for managers of today and tomor-

row By reviewing the actions of some successful and not-so-successful managers, you will

learn the fundamentals of management By the end of this chapter, you will recognize some

of the skills that managers use to keep organizations on track, and you will begin to see how

managers can achieve astonishing results By the end of the book, you will understand

fun-damental management skills for planning, organizing, leading, and controlling a

depart-ment or an entire organization

TAKE ACTION

Become a better manager

of yourself: Meet deadlines, balance the needs of different courses, and manage a positive relationship with your professors.

TAKE ACTION

Become a better manager

of yourself: Meet deadlines, balance the needs of different courses, and manage a positive relationship with your professors.

Ray Benson’s nine Grammy awards didn’t help him keep his

band, Asleep at the Wheel, in good financial condition His creativity and musical abilities weren’t enough, he realized

His insight and motivation allowed him to upgrade and

trans-form the band 37 years after it trans-formed.

The Wheel (as its fans call the band) had its first hit in 1975 with a country song, and it opened for big acts such as Tammy

Wynette Famous people heard the band, and Rolling Stone

Magazine featured an article with the expectation that it would

continue So, like other music stars, Benson spent a lot of

money—not on himself, but on the band, which grew to 12

members “I grossed $1 million and was in debt,” he said

“Some-thing wasn’t right.” Still, Benson bought a recording studio—and

attracted big names like Willie Nelson to record there.

Then disco came and the band went It was a dismal time The band hit bottom in 2001 when Benson’s practice of co-mingling

his money with the band’s money resulted in big problems when

he divorced his wife, who also was the band’s business manager

The search for a new manager led to his hiring Peter Schwartz,

who had decade-long experience in a Cajun band While still a band member, Schwartz’s wife went for an MBA “It shocked me that a traditional business education would address issues impor- tant to me in running a band,” Peter Schwartz noted That’s when

he pursued his own MBA at Harvard.

Schwartz’s first tasks were to return the band to an ble band—its core mission—and to exploit its niche appeal He now uses “straight MBS stuff” combined with Benson’s creativ- ity “My job is to guide him in what ideas are going to stick,” said Schwartz “How big is the audience? Is there money in it? In the music business, there really isn’t that rigor.”

ensem-Owning the studio has helped cut production costs and lowed The Wheel to create its own label, with the band finally earning well-deserved royalties, even though sales are less than before “There are 150,000 people who are passionate enough

al-to spend $100 a year on The Wheel The Internet allows us al-to capture that.”

Schwartz and Benson teamed to mount a theatrical version

of the band and got sponsors to underwrite grants of $700,000 All ticket sales go to the band Benson finally started making decent money And it took only 37 years and MBA skills.

SOURCE: Roy Furchgott, “The Band Struts Again, Under an MBA Baton,” The New York Times

(May 16, 2007): H6.

Asleep at the Wheel

C H A P T E R 1 Innovation for Turbulent Times

In the remainder of this chapter, we will define management and look at the ways in which roles and activities are changing for today’s managers Finally,

we will talk about a new kind of workplace that has evolved as a result of changes in technology, global-ization, and other forces, and examine how managers can meet the challenges of this new environment

The Definition of ManagementWhat do managers such as Heather Coin and Paul McGuinness have in common? They get things done through their organizations Managers create the sys-tems, conditions, and environments that enable orga-nizations to survive and thrive beyond the tenure of any specific supervisor or manager Jack Welch was CEO of General Electric through 20 amazingly suc-cessful years, and some observers worried that GE would falter without him after he left Yet, the leader-ship transition to Jeff Immelt in 2001 was as smooth

as silk, and in 2005–06 GE once again topped Fortune

magazine’s list of “Most Admired Companies,” as

well as ranking number one on the Financial Times’

“Most Respected” survey and Barron’s ranking of most admired companies

People who have studied GE aren’t surprised The company has thrived for more than a century because managers throughout the years created the ideal environment and condi-tions: a shared sense of purpose and pride, a passion for change and willingness to take risks, and, most important, an obsession with people and making them the best they can be

The commitment to developing leaders at all levels began in the late 1800s with CEO Charles Coffin, who emphasized that GE’s most important product was not lightbulbs or transformers but, rather, managerial talent Every manager at GE is required to spend a huge amount of time on human resources issues—recruiting, training, appraising, mentor-ing, and developing leadership talent for the future.6

A key aspect of managing is to recognize the role and importance of other people Early twentieth-century management scholar Mary Parker Follett defined management as “the art of getting things done through people.”7

More recently, noted management theorist Peter Drucker stated that the job of ers is to give direction to their organizations, provide leadership, and decide how to use or-ganizational resources to accomplish goals.8 Getting things done through people and other resources and providing leadership and direction are what managers do These activities apply to top executives such as Bill Gates of Microsoft and Steve Jobs of Apple but also to the leader of an airport security team, a supervisor of an accounting department, or a direc-tor of sales and marketing Moreover, management often is considered universal because it uses organizational resources to accomplish goals and attain high performance in all types

manag-of prmanag-ofit and nonprmanag-ofit organizations

Thus, our definition of management is: the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources This definition holds two important ideas: (1) the four functions of

planning, organizing, leading, and controlling, and (2) the attainment of organizational goals in an effective and efficient manner Managers use a multitude of skills to perform these

If ever a business emerged out of crisis, it is New York City’s Colors, a

project of the Restaurant Opportunities Center Many of the restaurant’s

employee-owners, immigrants hailing from about 25 different nations,

worked in the World Trade Center’s North Tower restaurant, Windows on

the World, before its destruction on September 11, 2001 They share a

strong commitment to a mission of honoring the 73 Windows employees

who died, and improving the restaurant industry’s working conditions

Yet, good management is necessary to keep people motivated, focused,

and productive General managerStefan Mailvaganam, shown here with

head chef Raymond Mohan, says the goal of Colors is to be “a restaurant

with a conscience.”

management

the attainment of organizational

goals in an effective and efficient

manner through planning,

organizing, leading, and controlling

organizational resources.

planning

the management function

concerned with defining goals for

future organizational performance

and deciding on the tasks and

resources needed to attain them.

organizing

the management function

concerned with assigning tasks,

grouping tasks into departments,

and allocating resources to

departments.

leading

the management function that

involves the use of influence to

motivate employees to achieve the

organization’s goals.

controlling

the management function concerned

with monitoring employees’

activities, keeping the organization

on track toward its goals, and

making corrections as needed.