Ebook Management (6th edition): Part 1

(BQ) Part 1 book Management has contents: Introduction to organisations and management, management yesterday and today, managing in a global environment, social responsibility and managerial ethics, managing change and innovation, foundations of planning, strategic management.

environmental and social responsibilities

management, 6th edition is accompanied by a flexible and completely revised suite

of instructor and student resources designed to encourage critical thinking, make management concepts meaningful and excite students about the possibilities of a career

in management management, 6th edition can be packaged with mymanagementlab, an interactive, personalised and engaging learning solution for instructors and students.

Authorised adaptation from the United States edition, entitled Management, 10th edition, ISBN: 9780132090711 by Robbins, Stephen P.;

Coulter, Mary, published by Pearson Education, Inc, publishing as Prentice Hall, Copyright © 2009

Sixth adaptation edition published by Pearson Australia Group Pty Ltd., Copyright © 2012

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contents in brief

1 Introduction to organisations and management 3

3 Environment and organisational culture: The constraints 79

5 Social responsibility and managerial ethics 165

Preface xiv

Managers who made a difference: Ian McLeod, CEO,

Managing workforce diversity and inclusion: Women are still

underrepresented and underpaid in Australian businesses 11

Summary of multiple perspectives on the manager’s job 18

Managing from a global perspective: Organisations and

Importance of customers to the manager’s job 24Importance of innovation to the manager’s job 24Importance of sustainability to the manager’s job 25

Managing for sustainability: Eco-efficiency and

The universality of management 27

Challenges and rewards of being a manager 29

Thinking critically about ethics: How much is an

How do today’s managers use scientific management? 48

The human relations movement and behavioural science

How do today’s managers use the behavioural

Managers who made a difference: Roger and Lesley Gillespie,

Managing from a global perspective: One Ford… One Team…

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Knowledge management and learning organisations 66

Thinking critically about ethics:WikiLeaks: What to publish or

Managing for sustainability:Yvon Chouinard, CEO, Patagonia

the manager: omnipotent or symbolic? 82

Managers who made a difference:Chip Goodyear, former CEO,

the external environment: constraints and challenges 85

Managing from a global perspective:Held hostage in France 92

organisational culture: constraints and challenges 97

Managing workforce diversity and inclusion:Global stumble 103

Thinking critically about ethics:Should organisations protect

current organisational culture issues facing managers 106

Managing in the Asia-Pacific region:All staff make NetApp a

Creating an organisational culture that embraces

the globalisation of business 126

What is your global perspective? 129

Managing in the Asia-Pacific region:Opportunities and challenges for fast-food companies in India 131

Thinking critically about ethics:IBM’s policy of moving jobs

understanding the global environment 133

Managing workforce diversity and inclusion:Global challenges

doing business globally 138

Different types of international organisations 139

Australian and New Zealand companies going

managing in a global environment 144

Managing from a global perspective:Leading here is not like leading there: The role of national culture in

Managing for sustainability:Green up on aisle two 153

What is social responsibility? 168

Two opposing views of social responsibility 169

social responsibility and economic performance 173

ecologically sustainable management 174

Managing in the Asia-Pacific region:Sustainability in the

How organisations adopt a more ecologically sustainable

Managing for sustainability:Westpac Banking Corporation 179

Managing from a global perspective:Lessons from Lehman

social responsibility and ethics issues in today’s world 192

Managing ethical lapses and social irresponsibility 192

Thinking critically about ethics:Price fixing at Visy and Amcor 194

Managing workforce diversity and inclusion:Indigenous

employment in the northwest of Australia 196

Businesses promoting positive social change 197

two views of the change process 216

Managing from a global perspective:Nokia – faded signal 218

managing organisational change 219

Managing workforce diversity and inclusion:Deutsche

managing resistance to change 223

Managing for sustainability:Community involvement to

contemporary issues in managing change 228

Thinking critically about ethics:Long working hours and stress –

Managers who made a difference:Ratan Tata, Indian

change, innovation and sustainability 241

Sustainability – a profound challenge for change 245

the decision-making process 262

Managing in the Asia-Pacific region:Pacific Laundry reduces

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the manager as decision maker 267

Managers who made a difference:Richard Goyder, CEO,

Managing workforce diversity and inclusion:The value of

Thinking critically about ethics:A mistake by Google? 280

decision making for today’s world 281

Managing from a global perspective:Cultural differences

Managing for sustainability:Sustainable dairy farms in a

Managers who made a difference:Brian Doolan, CEO,

setting goals and developing plans 301

Managing workforce diversity and inclusion:A university’s

contemporary issues in planning 308

Managing from a global perspective:Underwater chaos 309Use of environmental scanning and competitive

Thinking critically about ethics:Suggested techniques for

the importance of strategic management 324

Managers who made a difference:Margot and Alan Spalding,

the strategic management process 327

Step 1: Identifying the organisation’s current mission,

Managing for sustainability:Palm oil and sustainability 329

What are the three main types of corporate strategy? 333

Thinking critically about ethics:Should ethical considerations

Managing in the Asia-Pacific region:John Borghetti changes

current strategic management issues 341

New directions in organisational strategies 342

Managing from a global perspective:Managing in an

Managing in the Asia-Pacific region:Empowerment in Asia 365

organisational design decisions 368

Managing workforce diversity and inclusion:Glass ceiling 368

common organisational designs 372

Managers who made a difference:Ed Whitacre, formerly

CEO of AT&T, now CEO of General Motors 373

today’s organisational design challenges 378

Managing from a global perspective:Boundaryless

Organisational design issues in relation

Thinking critically about ethics:Are organisations exploiting

Managers who made a difference:Steve Jobs, chairman

Interpersonal communication 396

Barriers to effective interpersonal communication 399

Thinking critically about ethics:Is it unethical to filter

Managing in the Asia-Pacific region:Intercultural non-verbal

Managing workforce diversity and inclusion:Political

organisational communication 405

Managing for sustainability:Communication and disaster

Managing from a global perspective:Office design and

understanding information technology 411

How information technology affects managerial

communication issues in today’s organisations 412

Managing communication in an internet world 413Managing the organisation’s knowledge resources 414The role of communication in customer service 414

Why is human resource management important? 426

Managing for sustainability:HR and sustainability 427

Other legislation with particular relevance for HRM 430

Identifying and selecting competent employees 433

Providing employees with needed skills and knowledge 441

retaining competent, high-performing employees 444

Managing in the Asia-Pacific region:New and challenging

contemporary issues in human resource management 449

Managing workforce diversity and inclusion:Workforce

Thinking critically about ethics:The cost of sexual harassment 455

Managing from a global perspective:USP is thinking outside

Why look at individual behaviour in organisations? 474

Important employee behaviours 475

Managing in the Asia-Pacific region:Chew Choon Seng,

Job involvement and organisational commitment 480

Managing for sustainability:Cognitive dissonance and

Managing from a global perspective:Attitude survey in

Personality types in different national cultures 490

Managers who made a difference:John Ilhan, Crazy John’s 491

Shortcuts frequently used in judging others 496

Thinking critically about ethics:Is shaping behaviour a

explaining work-group behaviour 522

Managing workforce diversity and inclusion:The challenge

Thinking critically about ethics:Norms and the pressure

Managers who made a difference:Graham ‘Skroo’ Turner,

founder and managing director, Flight Centre 530

current challenges in managing teams 542

Managing from a global perspective:Global team behind

early theories of motivation 559

contemporary theories of motivation 564

Managing in the Asia-Pacific region:Motivating staff in the

Managing for sustainability:Using goal-setting theory to

Integrating contemporary theories of motivation 576

Thinking critically about ethics:Motivation for whom? 578

current issues in motivation 578

Managing cross-cultural motivational challenges 578

Managing workforce diversity and inclusion:Skill shortages and the need to attract, motivate and develop talents from a

Managers who made a difference:Kevin Panozza, founder

from theory to practice: suggestions for motivating

Managing in the Asia-Pacific region:Karen Matthews,

contingency theories of leadership 610

contemporary views on leadership 615

Managers who made a difference:Sir Richard Branson,

Managing workforce diversity and inclusion:Top managers’

use of positional and personal power bases to influence the

leadership issues in the 21st century 622

Thinking critically about ethics:Dealing with someone

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Sustainability initiatives and ethical transformational

Becoming an effective leader 629

Managing from a global perspective:Growing leaders at 3M 630

What is controlling, and why is it important? 650

controlling for organisational performance 656

Managers who made a difference:Peter Poulos, managing

Why is measuring organisational performance important? 658

tools for measuring organisational performance 661

Managing in the Asia-Pacific region:Islamic finance and

Managing for sustainability:The City of Sydney becomes

contemporary issues in control 670

Adjusting controls for cross-cultural differences 670

Thinking critically about ethics:Software copying 673

Managing from a global perspective:Janine Allis

the role of operations management 692

Managing for sustainability:AGL helps others to a

managing operations by using value chain management 699

Thinking critically about ethics:What about bullying? 701

Managers who made a difference:Kenny Yap, executive

contemporary issues in operations management 705

Managing in the Asia-Pacific region:Hyundai Heavy

inspire with Management, 6e!

In these dynamic and challenging times, there is a need

to look for inspiration in how managers and organisations

can change the way they operate to meet their economic,

environmental and social responsibilities No successful

organisation, or its managers, can operate without

understanding and dealing with the dynamic environment

that surrounds them One of the biggest mistakes managers

make today is failing to adapt to the changing world With

challenges of dealing with the aftermaths of the Global

Financial Crisis (GFC), natural disasters such as bushfires,

flooding and cyclones in many states, and earthquakes

in New Zealand, as well as the looming future threat of

global warming and climate change, there is a need to find

inspiration in how some of the more successful managers

and organisations are tackling these issues

There is no doubt that management is a dynamic

discipline This means that a textbook on the subject must

constantly undergo significant changes to prepare you to

manage in increasingly dynamic conditions Therefore,

we have written this sixth edition of Management to

provide you with the best possible understanding of what

it means to be a manager confronting change

Our approach to management is simple: management

is about people Managers manage people Managers

are the one thing that all organisations – whatever

their size, kind or location – need This book will intro -

duce you to a wide range of real managers and

organisations, from the stories that open each chapter

to the numerous boxes and case applications, which aim

to provide you with interesting and thought-provoking

examples of management in action No other textbook

has so successfully blended management theory with

management practice We are confident that this sixth

edition will continue both to make management concepts

meaningful to you, and to excite you about the possibilities

of a career in management

overview of the new content in

this edition

We believe that this new edition of Management is truly

a textbook for students in today’s dynamic world In

preparing the sixth edition, we have been mindful of

significant recent research activities and have attempted

to reflect their findings within both the main text material and the illustrative examples We have added new topics and features that better reflect the current field of management as we head deeper into the uncharted waters of the 21st century

We think that one reason for this book’s success is that

it has developed a reputation for continually introducing new content This new edition aims to continue that tradition Underpinning the presentation of the material are six important principles that have guided our approach

to the subject matter These principles are:

• The need for ethical managerial behaviour: Managers

do face ethical issues and dilemmas and it is important for future managers to understand the moral foundations, rules and implications that are vital to rebuilding the trust that has been eroded due to recent scandals in relation to, for example, financial issues, environmental concerns and sexual harassment Acting ethically in those grey areas where right and wrong are not easily defined is of crucial importance Managers must be good ethical role models, both in words and, more importantly,

in actions In today’s world, it is fundamental that organisations operate in a morally sound way In this edition, we have therefore emphasised the role

of ethics as a critical part of good management by including ‘Thinking critically about ethics’ boxes and ethical dilemmas throughout all of the chapters

• The need for more sustainable management practices: In

2008, we were one of the first general management textbooks in the world to integrate the issue of sustainability throughout the text While there has been some progress in this area, it should also be said that the GFC saw many managers and organisations take their eyes off the more long-term environmental challenges in order to deal with the more immediate concerns raised by the global financial instability As the GFC is now receding, we believe it is again time

to refocus on one of the greatest challenges – the risk

of global warming and climate change In this new edition, we have continued to provide inspirational examples of what some managers and organisations are doing in embracing not only economic, but also

preface

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environmental and social, considerations in their

practices

• The need for innovation and change: Innovation is

necessary to solve many of the challenges we are

facing It is clear that organisations all around the

globe will need to change, because business as usual

is no longer an option The GFC, increased extreme

climatic conditions, world population growth,

environmental degradation and resource depletion

highlight the need for radical changes in order to

avert major economic, environmental and social

problems In this edition, we have moved the chapter

about change and innovation to Part 2, ‘Defining

the manager’s terrain’, to emphasise its importance

We have also included many examples of innovative

management practices throughout the book to

provide inspirational ideas about what can be done

to change organisations and how they operate

• The challenges of globalisation: Globalisation has

created both challenges and opportunities for many

organisations It is also clear that much of what is

considered good general management practice in

Australia, New Zealand, North America and Europe

is quite similar While there are some differences

between these management practices in the

Western world and the Asia-Pacific region, these are

growing less with each passing year Just as Western

management practices are increasingly being adopted

in Asian countries, there are also many Asian business

and management practices that are being adopted in

Australia and New Zealand However, managers still

need to be sensitive to cultural differences and local

customs and to take them into account, or even make

adjustments for them, when operating in any foreign

culture We have aimed to highlight some of these

differences in this new edition

• Workforce diversity and inclusion: As the Australian

and New Zealand workforces evolve to reflect the

growing diversity of our communities and the global

marketplace, the need to understand and value

these differences becomes increasingly important If

organisations can tap into the diverse and alternative

pools of talent found in our present-day societies and

thus create a more inclusive organisational culture,

they will play an important role in promoting positive

social change by offering job opportunities for

indigenous people, recent migrants and many other

minorities in our societies The insight, creativity

and diverse perspective that a variety of employees

can bring to an organisation can help it to improve

its performance and the products and services it

produces, as every employee is given an opportunity

to contribute fully to the success of the organisation and reach his or her full potential

• Good management practice is not just applicable in large

corporations: Many textbooks seem to focus mainly

on management practices in large corporations

In our book we have featured many small and medium-sized organisations that may not be well known, but which are very well managed We feel that this focus is important, as these types of enterprises are the predominant business structure

in Australia and New Zealand Although accurate figures may not exist for many of the countries in the Asia-Pacific region, it is obvious to any visitor

to these countries that small firms are clearly in the majority We have presented the material in the book so that it is as relevant to a small retail or manufacturing establishment as it is to management

in a large multinational corporation In addition, we have considered the needs of management in not-for-profit and public sector organisations After all, it is

in these last two categories of organisations that some

of the most inspirational business and management practices are occurring

new to this edition …

You might think that there could not be too much new

to put in a book especially a sixth edition But that is the great thing about a book that discusses managers and management It is always easy to find new material just

by paying attention to what is happening in the news!

(Paying attention to the news is another good habit for you to develop!) There are always new issues and ideas confronting managers

Take a look at some of the new ‘things’ we have included in this book:

Chapter 1 – Introduction to organisations and management:

The great importance of managers, the Global Financial Crisis (GFC), and economic, social and environmental considerations

outsourcing of information-based jobs, ethics in relation to globalisation and the GFC, and Australia’s population growth

of the global recession, and characteristics of a responsive culture

Monetary Fund (IMF), World Bank Group, Organisation for Economic Co-operation and Development (OECD), cultural intelligence, and global mind-set

Chapter 5 – Social responsibility and managerial ethics: Being an

ethical leader, businesses promoting positive social change,

corporate philanthropy and employee volunteering

now been placed in Part 2, ‘Defining the manager’s terrain’,

to emphasise the importance of change and innovation in

today’s organisations

and linear versus non-linear thinking styles

environmental scanning, competitive intelligence and

forecasting

leadership, and strategic flexibility

of decision-making authority, the need for more organic

organisations, and keeping employees connected

ethical communication, and cyber-bullying

effect on human resource management, the Fair Work Act

2009, mentoring, and paid parental leave

and organisational citizenship behaviour, employee

engagement, proactive personality, and resilience

justice and fairness, and skills in team building

theory has now been moved to the discussion of early

theories; high-involvement work practices, and proactive and

relational perspectives of work design

controlling customer interactions

(RFID), and lean organisations

Nearly half of all the endnotes in this sixth edition have

been updated with references from 2009, 2010 and 2011

Every chapter has also been updated with numerous new

examples from a diverse set of organisations We think

you will be fascinated and captivated by the challenges

of managing organisations in today’s dynamic global

environment By giving you numerous examples that

provide insights into the challenges and rewards of

becoming a manager, we hope to inspire you to consider

we expect of our students

To help you in your studies, we have included several learning tools in this edition that are designed to help you

in your learning so that you can do well in your studies

Each chapter starts with a list of ‘Learning outcomes’ Pay

attention to these as you work through the material in the

chapter Use the ‘Review questions’ scattered throughout

the chapter to synthesise information that will help you

to achieve each of the learning outcomes At the end of

each chapter, you will find a ‘Learning summary’, which

provides you with a brief overview of the chapter material organised by the chapter learning outcomes In addition

to this review, you will find options for applying what you have learned – reinforcing the concepts and seeing how they are relevant to you right now The end-of-chapter material is a great way for you to see if you really do understand the chapter material For example, by coming

to class you may be able to discuss the ‘Thinking critically

about management issues’ with other students in small groups and then in the whole class In doing so, you will

be able to further build your understanding of some of the more critical issues that managers have to deal with in

today’s organisations ‘Becoming a manager’ provides some

suggestions for simple, practical action steps you can take

to prepare yourself better for becoming a manager Then

there are the ‘Working together: Team-based exercises’ which

we have designed to make it easy for you to get together with two or three other students to work on a relevant issue and then share this information and your ideas with

the rest of the class There is also an ‘Ethical dilemma’

in the end-of-chapter material, where we use a practical example to give you the opportunity to assess the ethical issues involved and to explain your position in relation to the situation and how it should be dealt with Then finally,

there is the ‘Case application’ at the very end of the chapter

These cases are built around organisations or events that ask you to utilise the theories and concepts that you have studied in the chapter and to apply these in analysing the content in the case Your instructor may even assign some

of these activities as homework or group work All of these learning tools have been designed to help you learn and understand the management concepts covered in this book and in your class, so make the best use of them Try out some of these activities, even if they are not assigned

We know that by engaging with the material in this way, you will also get much more out of your studies

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Producing a textbook is a process that requires the involvement of a number of people who all play different, but

significant, roles in producing the end result First, we would like to thank Stephen Robbins and Mary Coulter, who

co-wrote the US edition of this textbook, for allowing us a free hand to make any changes we have deemed to be

appropriate for our readers in Australia, New Zealand and the Asia-Pacific

Regardless of the quality of the manuscript that we turn in, it is only a few computer disks until our friends at

Pearson Australia swing into action Pearson’s team of editors, production experts, designers, marketing specialists

and sales representatives turn those couple of million digital characters into a bound textbook and see that it gets into

the hands of faculty and students In particular, our thanks go to Dan Tylman, Kathryn Munro, Robyn Flemming and

Annabel Adair, who made important contributions to getting this sixth edition produced We would also like to thank

David Horne and Loretta Inglis at Monash University for their support during the writing process in tracking down

references and providing ideas for the new edition

We also thank the reviewers who gave us their constructive comments and suggestions on how we could improve

the book Included in this reviewer board were:

n Gerard Betros University of Southern Queensland

n Aruna Deo University of Western Sydney

n Marcelle Droulers Charles Sturt University

n Victor Egan Curtin University of Technology

n John Hibberd University of Western Sydney

n Nicola McNeil Latrobe University

n Bishnu Sharma University of the Sunshine Coast

acknowledGeMents

stephen robbins received his PhD from the University of Arizona and has taught at several North American

universities He is professor emeritus of management at San Diego State University and the world’s best-selling

author of textbooks in both management and organisational behaviour His books are used at more than a thousand

US colleges and universities, have been translated into 16 languages, and have adapted editions for Canada,

Australia, South Africa and India

rolf Bergman has worked as a lecturer in the Department of Management at Monash University, where he taught

management, human resource management and managerial communication He is now having a career break before

going back into management consulting and management education, which are areas he has been involved in over

the last 30 years across Australia, South-east Asia, New Zealand and Sweden He also has a background in tourism

management in Sweden

Ian stagg retired recently after 25 years of teaching management, business creation and electronic commerce at

Monash University He continues to teach on a part-time basis in the field of electronic commerce Ian has on a

number of occasions worked on attachment to the Tavistock Institute of Human Relations in London on research

projects for the European Union

mary coulter received her PhD in management from the University of Arkansas in Fayetteville and currently teaches

at Missouri State University Her research interests have focused on competitive strategies for not-for-profit arts

organisations and the use of new media in the educational process

about the authors

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A good textbook should teach as well as present ideas To that end, we have tried to make this book an effective learning

tool Pedagogical features are designed to help readers better assimilate the material presented Further to this, we

believe that one of the strengths of this book is its strong applications orientation It not only describes management

theories, but also includes many practical examples and cases that illustrate the theories in action

Learning framework

Learning outcomes, review questions and learning

summary

While most textbooks have learning objectives and a chapter

summary, there is no clear link between these and the chapter

material Here is a solution The chapter-opening ‘Learning

outcomes’ combines a chapter outline and the learning objectives,

so that students can see what material they will be covering in the

chapter Then, at the end of each major chapter section, students

will find ‘Review questions’ where they can review the material they

have just read Finally, at the end of the chapter, the ‘Learning

summary’ summarises the important chapter material, with critical

thinking questions, a self-reflection ‘becoming a manager’ section,

team-based exercises, and an ethical dilemma This approach

helps students to focus their attention on the main issues within

each chapter, and hone their teamwork, leadership, and

problem-solving management skills

making the most of your text

i n t r o d u c t i o n t o o r g a n i s a t i o n s a n d m a n a g e m e n t c h a p t e r 1 3 1

Do you know this material yet? Let MyManagementLab tell you where you need help and

devise a personal study plan for you Visit www.pearson.com.au/mymanagementlab

Learning outcome 1.1: Describe the characteristics of an organisation.

Managers work in an organisation, which is a deliberate arrangement of people to accomplish some specific purpose

have a deliberate structure Many of today’s organisations are structured to be more open, flexible and responsive to changes, and have undergone some major changes in relation to how they operate, as was explored in Table 1.1.

Learning outcome 1.2: Explain why managers are important to organisations.

Managers are important to organisations for three reasons First, organisations need their managerial skills and abilities in contribute to employee productivity and loyalty; the way employees are managed can affect the organisation’s financial performance; and managerial ability has been shown to be important in creating organisational value

Learning outcome 1.3: Classify managers and non-managerial employees

Managers coordinate and oversee the work of other people so that organisational goals can be accomplished Non-managerial can be first-line, middle or top In other more loosely configured organisations, the managers may not be as readily identifiable, although someone must fulfil that role

Learning outcome 1.4: Define the terms: management, efficiency and effectiveness

Broadly speaking, management is what managers do, and management involves coordinating and overseeing the efficient and doing things right Effectiveness means doing those work activities that help the organisation to reach its goals, or doing the right things

Learning outcome 1.5: Describe the functions, roles and skills of managers

The four functions of management include: (1) planning (defining goals, establishing strategies and developing plans), comparing and correcting work performance)

Mintzberg’s managerial roles include: (1) interpersonal roles, which involve people and other ceremonial/symbolic duties (figurehead, leader and liaison); (2) informational roles, which involve collecting, receiving and disseminating information handler, resource allocator and negotiator) Mintzberg’s newest description of what managers do proposes that managing is take action; and (3) by managing information that impels people to take action.

Katz’s managerial skills include technical (job-specific knowledge and techniques), human or interpersonal (ability to work well with people) and conceptual (ability to think and conceptualise) Technical skills are most important for lower-level Some other managerial skills also identified include managing human capital, inspiring commitment, managing change, using purposeful networking, and so forth

1.1 Describe the characteristics of an organisation

1.2 Explain why managers are important to organisations.

1.3 Classify managers and non-managerial employees.

1.4 Define the terms: management, efficiency and effectiveness.

1.5 Describe the functions, roles and skills of managers.

1.6 Discuss whether the manager’s job is universal.

1.7 Outline the factors that are reshaping and redefining the manager’s job.

1.8 Explain the value of studying management.

3 0 p a r t 1 i n t r o d u c t i o n

1

How much is an executive worth?

Senior executive remuneration, in both the private and the public sector, has increased rapidly

such as shareholders, unions, politicians and lately, also, some of the institutional funds managers who control large numbers of shares in the publicly listed companies

When senior executives are paid salaries in excess of $5 million or even $10 million,

is that too much? Examples of CEOs’ total remuneration in 2009/10 include: Ralph Norris, Commonwealth Wal King, Leighton Holdings, $12.6 million; and Tom Albanese, Rio Tinto, $11.6 million But the organisation operating officer, Chase Carey, $32 million To put these figures in perspective, $10 million is approximately week or $27 400 per day Australia and New Zealand are supposed to be egalitarian societies, so you can

be heard preaching wage restraint for employees so that their companies can remain competitive, while executive salaries continue to rise

So, how much is a CEO worth? How can these high packages be justified? How much is too much?

What do you think?

Sources: D John, ‘CBA boss nets $16m pay packet’, The Age, 18 September 2010, p B3; I McIlwraith, ‘News chief is

highest paid by far’, The Age, 4 September 2010, p B1; and Australian Council of Super Investors, CEO pay in the top

100 companies: 2009, <www.acsi.org.au>.

thinking critically

aBout EtHicS

review questions

the combined efforts of motivated and passionate people working together that organisations

a profit in a commercial business company, but also in examples such as how life-saving and world, as was illustrated in the example of the Children First Foundation at the beginning of abilities are needed

Moira Kelly has been internationally recognised for her work to assist children in developing countries but is still relatively unknown here in Australia While lots of people talk about wanting

a good manager and an inspirational leader these days Are you now becoming interested in

in the future? We hope so, and we believe that this book will help you to lay the foundation for better manager!

16 Explain the universality of management concept.

17 Discuss why an understanding of management is important even if you do not plan to be a manager.

18 Describe the rewards and challenges of being a manager.

Case applications and questions

Each chapter includes a case application featuring a life situation, and questions for analysis By reading and analysing the case and then answering the questions, students can see if they understand and can apply the management concepts discussed in the chapter Some case applications are about global companies, while others are about Australian companies

real-Case studies/applications

Chapter opening stories

Each chapter opens with a real case

example about a manager or organisation

that relates to the particular content in

that chapter The featured managers, or

organisations, come from a broad and

varied spectrum, and each example is

selected specifically to help students link

management concepts to management

practice To see the variety of managers

and companies on which the cases are

based, check out the Case Matrix starting

on page xxiv

Themed boxes

Throughout the book we have aimed to make use of a number of themed

boxes All of these boxes feature interesting examples that help to reinforce

and highlight some of the concepts and theories covered in the chapter

material Themes retained from the previous edition include:

All of these themed boxes consist of examples taken from a variety

of industries, service organisations, major manufacturers, entrepreneurial

ventures, and not-for-profit organisations and include many well-known

companies and managers They have been selected to enrich the students’ understanding of the applied nature of

the management concepts that they study in this book In addition, the ‘Thinking Critically about Ethics’ boxes also

pose some ethical questions for students to consider to enhance their understanding of the problems associated with

managing ethically in today’s challenging business world

1 2 4

board This move has given him more freedom to world He also still helps to run the various world sponsors

Total sales for the Billabong Group have grown from $110 million in 1999 to $1.49 billion in Surf, Honolua Surf, Von Zipper and Nixon Watches watersport accessories have also been added to concentration of staff in California’s Orange County, maintains a strong employee presence in Canada, particular, its North American business contributes

100 countries and are available in 10 000 stores company’s own 558 branded retail stores globally

retailer Swell.com and an interest in Australia’s accommodate the various climates, quota and other considerations Accordingly, the company throughout the world, including Australia, America, Asia and various countries in Europe.

While the employees who manufacture its products in the global supply chain are not directly

to influence the work practices of third-party

conditions of these third-party contract places are therefore reviewed by Billabong to

work-a chwork-allenging twork-ask for the compwork-any to oversee across the range of countries It was this challenge global standard Billabong has its own internal global supply chain The department is based Billabong group’s supply chain During 2010,

260 factories These factories had a combined

60 million individual product units.

Gordon Merchant, founder of Billabong, which

is now a

$1.5 billion global company.

1 2 5

illabong is an Australian icon that most people

would be familiar with However, fewer people and turned it into a global brand 1

In the late 1950s, Gordon Merchant spent most of his teenage years at Sydney’s Maroubra scene was very small and most local surfers global industry dominated by three companies having their roots in Australia.

Merchant had originally planned to be a designer, but he quickly became disillusioned

he left his job and learned the art of surfboard

‘tucked under’ edges that made the boards faster

to become an old ‘shaper’ Instead, encouraged went into the clothing business himself With his Heads on the Gold Coast in 1973 Again he stitching technique, which made the garments

on the kitchen table and take them down to surf

in Sydney, but they were so slow in paying, we

I could drive to I sold out of the car, cash on delivery,’ Merchant recalls 2

From those humble beginnings in Merchant’s kitchen and car, Billabong was born Soon the the operations into a real factory and set up surfers in order to market his brand Within a manufacturing just boardshorts, adding shirts, pants, jackets and walkshorts to the range

By the 1980s, Billabong had firmly established its place in Australian surf culture and Merchant and, again, the brand enjoyed success Sales Zealand, Japan and South Africa In the late Europe Through the 1990s, the surf industry including skate and snow, where it replicated its proven business model

By the close of the decade, Merchant realised

it was time to restructure the company and take

in August 2000 This gave the company the Merchant also stepped down from the CEO role to

B

1 0 8 p a r t 2 d e f i n i n g t h e m a n a g e r ’ s t e r r a i n

2

All staff make NetApp a different place to work

Each year in Australia, BRW (Business Review Weekly) publishes a list of the 50 best places

companies One part undertaken by human resource employees of the organisation is a other part is called a ‘trust index’ and is based on a survey of all employees The trust index measures the organisation against five benchmarks: credibility, fairness, camaraderie, pride and respect.

In 2010, 160 companies participated in the survey, which covered 16 930 employees The company that came out on top of the list was NetApp, a data storage company According to its website:

NetApp creates innovative products – storage systems and software that help customers around

We are recognised throughout the industry for continually pushing the limits of today’s technology they need to be successful.

NetApp does not depend on luxurious surroundings or perks for its staff to be named Australia’s best employer; rather, its workplace culture is based on a simple equation: ‘Employ good people, give them what manager in Australia, puts it this way: ‘We focus on employing people who fit into our culture; candour, a they get here we let them get on with it.’

In other parts of the world, NetApp usually ranks highly in the top ‘100 best companies to work for’ in similar surveys where rankings are taken, including the US, Switzerland, Canada, France, the are paid a spotter’s fee for each successful new employee they recommend There is also a high- level orientation program for new employees, in which even the most senior executives participate

to help all staff to be successful The company offers flexible working arrangements, allowing staff to programs and encourages staff to take five additional days’ leave each year to volunteer for charities

it ‘does the right thing by both staff and customers’ The culture and environment created by these moment I walked in I was given my laptop and access to all the relevant files and company databases

needed to deliver on an order once I’d made a sale.’ Melissa Spencer, sales operations manager and follows: ‘It’s the nature of the people we attract We’re the ones who make it worth coming to work, why that will change.’

Sources: Information from NetApp’s website, <www.netapp.com.au>, 27 August 2010; and J.V Douglas, ‘Net gains’, BRW, 24 June 2010, pp 28–9.

managing in the

asia-paCifiC regiOn

and Professor Ernst von Weisäcker, the lead author from the Factor Four publication.

The aim of the Australian Natural Edge Project is to show that industries and sectors that are large users of resources and/or producers of greenhouse gases can achieve the same output using only one-fifth of the resources that they have team has presented many examples across many industry sectors to show that this is achievable It is therefore arguable that this is a new approach to business management.

As it is impossible to cover all the industry sectors the project’s researchers have investigated, the following section will look only at what the researchers have identified as doable in terms of bakeries and supermarkets We have selected sector

Bakeries: Baking bread is one of the oldest industries, and yet most bakeries today are still highly inefficient in their

use of energy and water However, as a number of leading bakeries are now finding, there exists a range of cost-effective and thus wasted, due to little or no insulation or heat recovery This not only leads to high electricity or gas bills, but also ability of bakeries to attract and retain staff As Australian energy efficiency expert Alan Pears reflects, ‘Many bakeries are actually paying to overheat their staff as well as baking their bread.’

By involving the Australian bakery chain Bakers Delight in creating a ‘showcase bakery’, the team of researchers was able to develop and trial a number of energy-efficiency solutions, which resulted in an overall 40 per cent reduction in design of ovens, and the design and layout of bakeries, and by using more energy-efficient lighting, glass and insulation have encouraged Stonemill Bakehouse in Canada and Ferguson Plarre Bakehouses in Melbourne to actively work towards from their energy company and to make carbon offsets, and they are looking at reducing emissions from their transportation chain by sourcing organic ingredients that are produced locally wherever possible.

Supermarkets: Many supermarkets are generally likely to operate out of poorly performing buildings if analysed in relation

to energy efficiency From paying little attention to building design to reduce energy consumption, including lighting, to space for customer comfort, supermarkets are significant wasters of energy Hence a large proportion of the overall energy

c a s e a p p l i c a t i o n

x x i

m a k i n g t h e m o s t o f y o u r t e x t

In-text revision tools

At the end of each chapter, you will find these popular and proven study tools:

Thinking critically about management issues

At the end of every chapter you will find questions that are designed to get you to think critically about management

issues These questions require you to demonstrate that you not only know the key facts, but also can apply those facts in

dealing with more complex issues

Becoming a manager

This self-reflective end-of-chapter

feature encourages students to

question and enhance their own

management skills by applying the

chapter’s key content and theories

Working together

The pervasiveness of teamwork in

organisations led us to design a

team-based exercise at the end of every

chapter that explores and builds on

concepts or theories presented in the

chapter

Ethical dilemma exercise

Highly publicised ethics scandals of recent years have re-emphasised the importance of managerial and organisational

ethics In addition to our ‘Thinking Critically about Ethics’ boxes found in most chapters, we have added end-of-chapter

ethics exercises that introduce students to current and real ethical dilemmas faced by managers

1 1 4 p a r t 2 d e f i n i n g t h e m a n a g e r ’ s t e r r a i n e n v i r o n m e n t a n d o r g a n i s a t i o n a l c u l t u r e : t h e c o n t r a i n t s c h a p t e r 3 1 1 5

Although all organisations face environmental constraints, the forces in their specific and general environment differ Form a small the airline industry and Telstra from the telecommunications industry, or your own university as an example from the education organisation How are your descriptions different for the two organisations? How are they similar?

Now, using the same two organisations, see if you can identify the important stakeholders for these organisations Also indicate whether these stakeholders are critical for the organisation, and why they are or are not As a group, be prepared to share your information with the class and to explain your choices.

1 Describe the two perspectives on how much impact managers have on an organisation’s success or failure.

2 Why is it important for managers to understand the external forces acting on them and their organisations?

3 ‘Businesses are built on relationships.’ What do you think this statement means? What are the implications for managing the external environment?

4 What would be the drawbacks to managing stakeholder relationships?

5 Refer to Table 3.2 How would a first-line manager’s job differ in these two organisations? How about a top-level manager’s job?

6 Describe an effective culture for (a) a relatively stable environment, and (b) a dynamic environment Explain your choices.

7 Classrooms have cultures Describe your class culture using the seven dimensions of organisational culture Does the culture constrain your instructor? How?

8 Can culture be a liability to an organisation? Explain.

• Choose two organisations that you interact with frequently (as an employee or as a customer) and assess their culture by looking

at the following aspects:

– Physical design (buildings, furnishings, parking lot, office or store design): Where are they located and why? Where do

customers and employees park? What does the office/store layout look like? What activities are encouraged or discouraged

by the physical layout? What do these things say about what the organisation values?

– Symbols (logos, dress codes, slogans, philosophy statements): What values are highlighted? Where are logos displayed?

Whose needs are emphasised? What concepts are emphasised? What actions are prohibited? Which are encouraged? Are there artefacts that are prominently displayed? What do those artefacts symbolise? What do these things say about what the organisation values?

– Words (stories, language, job titles): What stories are repeated? How are employees addressed? What do job titles say about

the organisation? Are jokes/anecdotes used in conversation? What do these things say about what the organisation values?

– Policies and activities (Note: You may be able to assess this one only if you are an employee or know the organisation well)

(rituals, ceremonies, financial rewards, policies for how customers or employees are treated): What activities are rewarded?

Ignored? What kinds of people succeed? Fail? What rituals are important? Why? What events get commemorated? Why?

What do these things say about what the organisation values?

• In your own words, write down three things you have learned in this chapter about being a good manager.

Thinking critically about management issues

Learning outcome 3.7: Explain the sources of an organisation’s culture, and describe how it is transmitted to employees.

The original source of a culture reflects the vision of the organisational founders A culture is maintained by employee selection material symbols and language These elements help employees ‘learn’ what values and behaviours are important, as well as who exemplifies those values

Learning outcome 3.8: Describe some current issues in organisational culture.

The content and strength of an organisation’s culture influence the behaviour of its members An organisational culture most likely

as well as outcomes The characteristics of an innovative culture are challenge and involvement, freedom, trust and openness, outgoing and friendly employees; jobs with few rigid rules, procedures and regulations; empowerment; clear roles and expectations;

management support and the use of metrics to measure the organisation’s performance in relation to sustainability initiatives

pace of life; for involvement and connection that they often do not find in contemporary lifestyles; for something meaningful in their lives (especially among ageing baby boomers); and because of the failure of organised religion to meet the needs of some

Becoming a manager

How can you enhance your understanding of the impact of the external environment and organisational culture on organisations as

a preparation for becoming a manager?

• Find two current examples in any of the popular business periodicals of the omnipotent and symbolic views of management

Write a report describing what you found, and discuss how the two examples you found represent the views of management.

• Select two organisations with which you are familiar Identify factors in each of these two organisations’ general and specific environments that may have an impact on their operations Compare how the factors may be similar or different for the two organisations.

• Choose an organisation with which you are familiar or one that you would like to know more about Create a table identifying potential stakeholders of this organisation Then, indicate what particular interests or concerns these stakeholders might have.

Working together: Team-based exercise

Ethical dilemma

Steve Jobs is the public face of Apple, so when, in the second half of 2008, he suddenly ‘disappeared’ from sight, rumours started further when, in December 2008, Apple announced that Jobs would not deliver his trademark keynote speech at Macworld Expo particularly as some analysts estimate Jobs himself accounts for about US$20 billion of Apple’s market capitalisation

Finally, after months of refusing to comment on the matter, Steve Jobs himself announced in January 2009 that he was suffering from a ‘hormone imbalance’ and would need some treatment This was followed up ten days later with an announcement that he until June 2009 that it was confirmed, through a leak at Apple, that Jobs had undergone a liver transplant in March of that year, which was necessary because his liver was failing as a result of complications following treatment for pancreatic cancer in 2004

Some have suggested that because Steve Jobs is so closely linked with Apple’s creative vision, he and the company should

have been required to release more medical information What do you think? Do the heads of publicly traded firms have a right to

medical privacy? What ethical issues might arise in such a situation? 62

1 4 p a r t 1 i n t r o d u c t i o n

1

Let us briefly define what each of these management functions encompasses.

If you have no particular dest ination in mind, it does not matter what road you take However,

if you have somewhere in particular you want to go, then you have to plan the best way to get there

purpose and the means for its achievement Management is that someone As managers engage integrate and coordinate activities

Managers are also responsible for arranging and structuring work to accomplish the

organisation’s goals We call this function organising When managers organise, they determine

whom and at what level decisions are to be made

As we know, every organisation includes people, and a manager’s job is to work with and

through people to accomplish organisational goals This is the leading function When managers

they work, select the most effective communication channels, or deal in any way with employee behaviour issues, they are leading.

The final management function that managers perform is controlling After the goals

are set and the plans formulated (planning function), the structural arrangements deter- there has to be some evaluation of whether things are going as planned To ensure that goals are performance Actual performance must be compared with the previously set goals If there are process of monitoring, comparing and correcting is what we mean by the controlling function.

Just how well does the functions approach describe what managers do? Do managers always plan, organise, lead and then control? In reality, what a manager does may not always happen in that managers perform Regardless of the ‘order’ in which the functions are performed, the fact

at the chapter-opening case How is Moira Kelly involved in planning, organising, leading and coordinate the Children First Foundation’s work An example of organising can be seen in how many operations Being able to communicate effectively both within the organisation and with can be seen as Moira Kelly focuses on results, and looks for ways to be more efficient and effective

in how donations are being used to assist children in need.

The continued popularity of the functional and process approaches to describe what managers do is a tribute to their clarity and simplicity – managers plan, organise, lead and control But some have argued that this approach is not appropriate or relevant 15 So, let us look

planning

Management function that involves defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities.

organising

Management function that involves arranging and structuring work

to accomplish the organisation’s goals.

leading

Management function that involves working with and through people to accomplish organisational goals

controlling

Management function that involves monitoring, comparing and correcting work performance.

management roles

Specific categories of managerial behaviour expected of and exhibited

by a manager.

Key terms

Every chapter highlights a number of key terms you will need to know These terms are highlighted in bold print where they are first explained, and are also outlined in the margin of the text They are also listed at the end of each chapter, to make finding and studying these terms easier

learning and teaching tools

The sixth edition’s support materials and technology are a powerful and innovative enhancement to learning and

teaching

www.pearson.com.au/mymanagementlab

MyManagementLab is an online learning system designed to give students a personalised experience through a

customised study plan, integrated learning resources and a full eText Teachers can use MyManagementLab to set

homework, quizzes or tests, using the built-in Gradebook to efficiently monitor results

For students

Students have the opportunity to take a test for each learning outcome in each chapter The results of this

pre-test generate a study plan that provides students with customised learning resources to help improve their areas of

weakness Students can take the post-test to ascertain how they have gone

Students today expect a personalised learning experience MyManagementLab gives it to them By using the study

plan for each chapter, students can take control of what, when and how they learn

MyManagementLab is organised by textbook chapter, with each chapter providing:

Chapter pre-test – Using questions related to each learning outcome, this quiz measures each student’s

understanding of the chapter material

Customised study plan – Based on the results of the chapter pre-test, students receive a plan to help them remediate

important concepts and applications where they need improvement The chapter study plans correlate to the learning

outcomes from the textbook and build remediation through layering levels of knowledge, comprehension, application

and analysis tools to help students understand and apply the concepts Some of the tools include:

• eText pages from the textbook

• flashcards containing key terms from the text

• videos and questions from associated Fusion DVD material

Chapter post-test – The post-tests contain different, but similar, questions to those in the pre-test, also linked to the

chapter learning outcomes They provide students with the opportunity to retest their knowledge after studying the areas

that required improvement The post-tests reinforce what the student has learned and can be taken as many times as the

student needs in order to obtain a pass mark

For teachers

A full suite of lecturer support material is provided with this text The material has been revised and created to

address the specific educational requirements of the modern Introductory Management course while ensuring a close

integration with the contents and themes of the text This includes:

• Instructor’s Manual

• PowerPoint Presentations

• MyManagementLab, incorporating:

– MyTest (revised and reviewed to ensure accuracy)

– ability to set homework and quizzes using the Gradebook to monitor results

x x i i i

• Fusion Documentary Series for Management DVD – Australian videos created specifically for this text! Four new

segments have been created on the following topics:

– Corporate Social Responsibility

1 introduction 2 defining the manager’s terrain

Ford Motor Corporation and Ford Australia – p 42 Telstra’s culture and environment – p 80 Billabong’s global expansion – p 124

How much is an executive worth? – p 30 WikiLeaks: What to publish or not to publish?

– p 67

Should organisations protect whistleblowers?

– p 106

IBM’s policy of moving jobs overseas – p 132

Eco–efficiency and eco–effectiveness – p 26 yvon Chouinard, CEO, Patagonia and an

environmentalist – p 69

Green up on aisle two –

p 153

Samsung’s ‘New Management’ initiative – p 64

All staff make NetApp a different place to work –

p 108

Opportunities and challenges for fast-food companies in India –

p 131 Women are still

underrepresented and underpaid in Australian businesses – p 11

Global stumble – p 103 Global challenges in

Chip Goodyear, former CEO, BHP Billiton – p 84

Organisations and managers in today’s world – p 22

One Ford One Team One Plan One Goal – p 57

Held hostage in France – p 92 Leading here is not like leading there: The role of

national culture in effective leadership –

p 151 Lying about efficiency

information – p 33 Question from shareholders – how to

answer? – p 72

Steven Jobs liver transplant – should Apple have explained? – p 115

Who should make the greatest sacrifices in relation to global warming?

– p 158 Managing McDonald’s

Australia – p 34 Factor Five – p 73 Out of control – p 116 Learning to love globalisation at ‘German’

SAP – p 158

case Matrix

Qantas/Jetstar vs virgin – strategic management – p 322

Price fixing at visy and

Amcor – p 194 Long working hours and stress – what are the

of strategy decisions? –

p 334 Westpac Banking

Corporation – p 179 Community involvement to overcome resistance –

p 227

Universities act on sustainability – p 274 Sustainable dairy farms in a changing climate –

p 295

Palm oil and sustainability – p 329

Sustainability in the Asia–

Pacific region – p 175 Pacific Laundry reduces water and power usage

Deutsche Telekom – p 223 The value of diversity in

decision making – p 279 A university’s standing plan on diversity – p 303

Ratan Tata, Indian business guru – p 240 Richard Goyder, CEO, Wesfarmers – p 268 Brian Doolan, CEO, The Fred Hollows Foundation

– p 298

Margot and Alan Spalding, Jimmy Possum Furniture – p 326

Lessons from Lehman

Brothers: Will we ever

learn? – p 184

Nokia – faded signal –

p 218 Cultural differences in leaders’ decision–making

styles – p 282

Underwater chaos – p 309 Managing in an e-business

world – p 343

Do banks have social

responsibilities? – p 201 Technology and the unfair advantage in sports? –

p 249

Giving credit to people who cannot afford to pay back? – p 286

Planning for global flu? –

p 316 What to do with a killer whale who killed a trainer?

Kodak Australasia – p 249 Designing for dollars –

p 286 Icelandic volcano, 1; global commerce, 0 –

p 316

Starbucks and McCafe –

a David versus Goliath battle? – p 350

Are organisations exploiting ‘non–

employees’? – p 380

Is it unethical to filter or distort information on purpose? – p 400

The cost of sexual harassment – p 455 Is shaping behaviour a form of manipulative

control? – p 501

Communication and disaster management –

Glass ceiling – p 368 Political correctness –

good or bad? – p 405 Workforce diversity – room for everyone! – p 453 The dangers of stereotyping – p 498

Ed Whitacre, formerly CEO of AT&T, now CEO of General Motors – p 373

Steve Jobs, chairman and CEO, Apple – p 395 John Ilhan, Crazy John’s – p 491

Boundaryless organisations – p 379 Office design and communication – p 410 USP is thinking outside the box to improve safety

– p 458

Attitude survey in the Australian Defence Force – p 485

Expense account – what about ethics? – p 386 Was it ethical for BP to attempt to buy web search

term ‘oil spill’? – p 419

Lying on your job résumé – what are the ethical issues? – p 462

What to do with employees who websurf?

– p 507

The virus hunters – p.386 Delivery disaster at

Domino’s Pizza – p 419 Social connections – p 462 Understanding HCLites – p 508

x x v i i

Team work at Lonely

Planet – p 518 Motivation at SEEK Limited – p 556 Gail Kelly’s leadership at Westpac – p 602 Control and BP’s Deepwater Horizon oil–spill

– p 648

Managing operations at London’s Olympic Park –

p 690

Norms and the pressure to

conform – p 528 Motivation for whom? – p 578 Dealing with someone with power – p 624 Software copying – p 673 What about bullying? – p 701

Teams as change agents

– p 534 Using goal–setting theory to improve sustainability

– p 569

The City of Sydney becomes carbon neutral – p 669

AGL helps others to a sustainable business –

The challenge of managing

diverse teams – p 524 Skill shortages and the need to attract, motivate

and develop talents from a diverse field – p 583

Top managers’ use of positional and personal power bases to influence the creation of an inclusive culture – p 621

Graham ‘Skroo’ Turner,

founder and managing

director, Flight Centre

– p 530

Kevin Panozza, founder and CEO, SalesForce, 1994–2008 – p 586

Sir Richard Branson, founder and CEO, The virgin Group – p 618

Peter Poulos, managing director, Poulos Bros Seafood – p 657

Kenny yap, executive chairman, Qian Hu ornamental fish farm –

p 704 Global team behind

Speedo’s success – p 544 Growing leaders at 3M – p 630 Janine Allis and Boost Juice – p 678 Stirring up things at Starbucks – p 711

Too much personal

‘It’s a jungle out there’ –

p 548 Google … searching for? – p 593 Radical leadership – p 636 Baggage blunders – p 683 Putting RFID to work – p 715

c a s e m a t r i x

part 1

Introduction

1 Introduction to organisations and management

2 Management yesterday and today

1

Welcome to the world of management One thing is for certain:

organisations need managers But, not just managers; they need good

managers They need people who can set goals and plan what needs

to be done to achieve those goals Organisations need people who can

organise and arrange things so that those goals can be met They need

people who can lead and motivate others in working towards meeting

those goals – who can pull up their sleeves and pitch in if needed

And they need people who can evaluate whether the goals were

accomplished efficiently and effectively and who can change things when

needed Those ‘people’ are managers And good managers are essential

in relation to organisations being able to function well We want to start

you on your journey to being a good manager

In Part 1, we introduce you to what managers do and what has

influenced what managers do today Chapter 1 provides an introduction

to management and organisations Any time you face something new,

you need to get a feel for it, and that is what we do in this chapter – give

you a feel for management and what managers do In Chapter 2, we look

at the practice of management yesterday and today It is important to

understand what has influenced the way management was practised in

the past and the trends and issues that are influencing today’s managers

and organisations.

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2012 – 9781442538603 - Robbins/Management 6th edition

www.downloadslide.com

Chapter 1 Introduction to organisations and management

Learning outcomes

In this chapter, we will consider how organisations have been changing in recent years We will also look at who managers are and what they do One thing you will discover is that the work managers do is vitally important to organisations But you will also see that being a manager – a good manager – is not easy Focus on the following learning outcomes as you read and study this chapter:

lobal responsibility’ is a term used by many, but

it is less often used in relation to assisting children, who are often overlooked on the humanitarian ladder

The Children First Foundation aims to redress this situation by giving children in developing countries access to the sorts of medical interventions that are readily available to those of us who live in the developed world As Moira Kelly, the founder and executive director of the Foundation comments:

‘It is a funny world we live in really, where what passport you own determines whether you live or die, so someone really has to change that we really are not born equal.’1

While you may not have heard of the Children First Foundation or Moira Kelly, you are very likely

to be familiar with the names Trishna and Krishna

In 2008, the Children First Foundation made it possible for these conjoined Bangladeshi twins

to come to Australia to undergo a 31-hour changing operation to separate them

life-Moira Kelly has been involved in humanitarian work since a very young age Much of her early work as a teenager was in her local community, but then at the age of 20 she left home to work with Aboriginal children in Western Australia

Her work soon extended beyond Australia, first

in Kolkata (Calcutta), India, where she worked alongside Mother Teresa, then in Botswana, where she worked with the Kalahari bushmen before moving to Johannesburg, South Africa and then to the Bronx, New York She was involved in setting

up soup kitchens, refugee camps, dental clinics, schools, and managed an AIDS hospital and adult education programs She was also involved in

humanitarian relief work in Romania, Bosnia and Albania during the Balkan conflict in the 1990s

It was during her time in Bosnia that the seed for a foundation to help children was sown While working in a Bosnian refugee camp, Kelly was asked a question by a mother with a seriously ill child who could not be assisted due to the lack of basic medicines: ‘Wouldn’t the doctors and people

in your country, Australia, help my child if someone told them what was happening in this country?’

This encounter was a turning point for Kelly in her quest to help children in the developing world She had become increasingly aware that there were many children in third world countries who had life-threatening physical conditions that would be operable in the developed world Resolving to do anything she could to help these children, Kelly set about creating a network of hospitals and doctors

in Australia, Ireland, New York, London, Boston and Toronto Having cultivated this network, she then travelled across war-torn countries such as Albania, Bosnia and Somalia where she identified children in urgent need of medical treatment, many

of whom were having to fend for themselves

During the late 1990s, Kelly was able to provide 60 children with access to life-saving medical treatment For some, this meant open-heart surgery; others needed prosthetic arms or legs, or plastic surgery to address terrible facial deformities or severe scarring from burn injuries

To assist her in this work, Kelly set up the Children First Foundation in 1999 as an Australian not-for-profit organisation The purpose of the organisation

is to ‘provide a safe haven in Australia for children,

‘G

irrespective of race or creed, who are in need of

medical or emotional support’ The children are

referred to the Foundation by aid workers, medical

staff, and church ministries and missions Based

on their medical assessment, the children are then

brought to Melbourne’s Royal Children’s Hospital

or Epworth Hospital, or to another hospital in

Australia, where specialist medical and nursing

staff donate their expertise and time to provide a

variety of medical procedures

For many children, the often-extensive medical

procedures can mean months of recuperation

at the Children First Rotary Farm, a

purpose-built accommodation and treatment facility that

can house up to 12 children at a time The

farm was set up at Kilmore, on the outskirts of

Melbourne, in 2001 and is operated by committed

volunteers When the children are well enough to

travel, they return to their own countries, which

include places like Albania, China, East Timor,

Ethiopia, Iraq, Palestine, Papua New Guinea, the

Philippines, Tibet, the Solomon Islands, Somalia

and Sri Lanka

To date, the Foundation has helped more

than 200 children come to Australia for medical

treatment The operation to separate Trishna and

Krishna took place at Melbourne’s Royal Children’s

Hospital on 19 November 2009 A team of 27

surgeons and medical staff worked in rotation

to perform the lengthy and difficult procedure to

separate the twins’ fused skulls It was a risky

procedure, with the chances of the girls surviving

their ordeal relatively unscathed estimated at just

25 per cent However, there was no real alternative

to performing the surgery

The decision to perform the surgery came after

aid workers in Bangladesh turned to the Children

First Foundation in a last-ditch effort to save the

twins If they had been left in the orphanage, they

would have had no more than a 1–2 per cent

chance of surviving, and most likely would have

died within months Instead, the twins have now

been given every chance of living healthy – and

separate – lives

Although the Children First Foundation is a

relatively small organisation, it is a challenging

task to run a not-for-profit organisation such as

this where the need for its services is huge but the resources are limited The organisation relies entirely on donations and fundraising activities

to do its work Every dollar raised or donated

is used directly in funding surgical procedures, post-medical care, travel for sick children, accommodation and associated expenses for food and medical supplies, and so on, with only a small percentage used to cover crucial administration and management costs It takes an enormous amount of management and coordination to bring

a child to Australia for surgery There are doctors, surgeons and hospitals to be liaised with, visas and passports to be issued, medical tests to be organised in the child’s home country, contact to

be made with the community here and translators arranged As one of the Foundation’s partners, the Dubai-based airline Emirates plays an integral role

in assisting with travel arrangements for many

of the children; however, organising flights and making other travel arrangements in remote areas

is difficult and time-consuming

Despite the difficulties and challenges, the staff and volunteers at the Children First Foundation are motivated by the thought of seeing smiles

on the faces of Trishna, Krishna and others who have regained their chances of living healthy and normal lives

Trishna and Krishna with Moira Kelly and Sister Fran at a service at

St Patrick’s Cathedral in Melbourne in November 2010 celebrating the first anniversary

of the marathon operation to separate the previously conjoined twins.

this where the need for its services is huge but Trishna and

5

I n our complex society, managers have come to play an important role in managing the

organisations – both profit-oriented and non-profit-oriented – that make our society function well Some of these managers, particularly in large, successful and highly profitable companies such as Telstra, BHP Billiton and National Australia Bank, feature prominently in the media when their organisations announce their annual financial statements or other reports that influence the share market However, in this introduction to what organisations and managers do, we have used the non-profit Children First Foundation and its executive director, Moira Kelly, to illustrate an organisation and a manager that, while perhaps not always getting the same amount of media attention as the large, for-profit corporations, is providing an equally valuable, and in many cases life-changing, service to many people around the world

This book is about the important managerial work that Moira Kelly and the millions of other managers like her do It recognises the reality facing today’s managers – that the world has changed, and thus is redefining how work is done in organisations and the relationships between workers and managers In workplaces of all types – offices, restaurants, retail stores, factories, and even in charitable organisations – managers must deal with changing expectations and new ways of organising work and managing employees In this chapter, we introduce you to managers and management by looking at what an organisation is and how organisations are changing, why managers are important, who managers are, what management is and what managers do The chapter concludes by discussing how the manager’s job is changing and why you should spend your time studying management

What is an organisation?

Managers work in organisations If there were no organisations, there would be no need for managers

What is an organisation? An organisation is a deliberate arrangement of people to accomplish some

specific purpose Your university or TAFE college is an organisation So are government agencies, Woolworths, the ANZ Banking Group, your neighbourhood video store, the New South Wales Rural Fire Service, the local football team and the Children First Foundation These are all organisations because they share three common characteristics, as shown in Figure 1.1

First, each organisation has a distinct purpose This purpose is typically expressed in terms

of a goal or a set of goals that the organisation hopes to accomplish For example, one of the goals of the Children First Foundation is to provide seriously injured or unwell children from developing countries with the opportunity to have life-saving/life-changing surgery

Second, each organisation is composed of people One person working alone is not an

organisation, and it takes people to perform the work that is necessary for the organisation

to achieve its goals Third, all organisations develop some deliberate structure so that their

members can do their work That structure may be open and flexible, with no clear and

precise job duties or strict adherence to explicit job arrangements – in other words, it may be a simple network of loose work relationships; or the structure may be more traditional, with clearly defined rules, regulations and job descriptions, and some members identified as ‘bosses’ who have authority over other members But no matter what type of structural arrangement an organisation uses, it does require some deliberate structure so that members’ work relationships

are clarified In summary, the term organisation

refers to an entity that has a distinct purpose, includes people and has some type of deliberate structure

A deliberate arrangement

of people to accomplish

some specific purpose.

FIgure 1.1 Characteristics of organisations

Deliberate structure

Distinct purpose

i n t r o d u c t i o n t o o r g a n i s a t i o n s a n d m a n a g e m e n t c h a p t e r 1 7

1

Although these three characteristics are important to our definition of what an organisation

is, the nature of an organisation is changing It is no longer appropriate to assume that all

organisations are going to be structured like BHP Billiton, Westpac Banking Corporation or

the Children’s Hospital at Westmead, Sydney, with clearly identifiable divisions, departments

and work units Instead, today’s organisations may be structured more like Google or IKEA,

both of which have chosen a flatter, networked structure over a hierarchical structure with

layers of management and decisions made in narrow business functional areas At Google,

most big projects, of which there are hundreds going on simultaneously, are tackled by

small, tightly focused employee teams that set up in an instant and complete their work just

as quickly.2 Similarly, a flatter, more decentralised network structure has enabled IKEA to

improve its product design, manufacture and distribution, with its 1300 direct suppliers, 10 000

sub-suppliers and a few hundred logistic partners spread over 60 countries responsible for the

development and production of 12 000 IKEA products.3 Like Google and IKEA, contemporary

organisations tend to rely more on flexible work arrangements, employee work teams, open

communication systems and supplier alliances

Just how is the concept of an organisation changing? Table 1.1 lists some differences between

a traditional view and a contemporary view of organisations As these comparisons show, today’s

organisations are becoming more open, flexible and responsive to changes.4

Why are organisations changing? Because the world around them has changed and is continuing

to change Societal, economic, global and technological changes have created an environment in

which successful organisations (those that consistently attain their goals) must embrace new ways

of getting their work done Examples of how the world is changing include the quest for more

sustainable organisational practices, global economic, social and environmental challenges, the

continuing spread of information technology and its impact on workplaces, increasing globalisation

and changing employee expectations But even though the concept of organisations is changing,

managers and management continue to be important to organisations

TABLe 1.1 The changing organisation

TrADITIOnAL OrgAnIsATIOn neW COnTeMPOrAry OrgAnIsATIOn

review questions

review question

1 Describe the three common characteristics of all organisations

2 Explain how and why the concept of an organisation is changing

Why are managers important?

‘ A great boss can change your life, inspiring you to new heights both professionally and personally and energising you and your team to together overcome new challenges bigger than any one of you could tackle alone.’5 If you have had the opportunity to work with a manager like this, count yourself lucky Such a manager can make a job a lot more enjoyable and productive

However, even managers who do not live up to such lofty ideals and expectations are important

to organisations Let us look at three reasons why

The first reason managers are important is that organisations need their managerial skills and abilities more than ever in these uncertain, complex and chaotic times As organisations deal with today’s challenges – the worldwide economic climate, the risks of global warming, changing technology, ever-increasing globalisation and so forth – managers play an important role in identifying critical issues and crafting responses For example, Gerry Harvey, executive chairman of Harvey Norman, worked hard to maintain his retail chain’s sales and profitability

in the difficult economic environment during the Global Financial Crisis (GFC) in 2007–10, which had a strong impact on many retailers in Australia and New Zealand who struggled to keep their businesses afloat and profitable.6 However, after five decades in the retail business, Harvey understood that he was the one who had to show leadership and his ‘call’ was to increase sales and discounting efforts to take advantage of the government’s stimulus packages, which were intended to lessen the impact of the gloomy economy and boost consumer confidence

By keeping inventory moving and his salespeople engaged and motivated, Harvey was able to maintain the company’s sales goals His skills and abilities as a manager have been crucial in guiding his organisation through these challenging times

Another reason managers are important to organisations is that they are critical to getting things done For instance, in our chapter-opening story, Moira Kelly is not the person who

is performing the actual surgery or medical treatment of the children, but she is responsible for creating and coordinating the plans, systems and conditions so that others can provide these medical interventions Her job, as the leader of the organisation, is to ensure that all the employees are doing their jobs, so that the organisation can achieve its purpose If work is not being done, or is not being done as it should be, she is the one who must find out why and get things back on track

Finally, managers do matter to organisations! How do we know that? The Gallup Organization,

which has polled millions of employees and tens of thousands of managers, has found that the single most important variable in employee productivity and loyalty is not pay or benefits or workplace environment; it is the quality of the relationship between employees and their direct supervisors.7 Global consulting firm Towers Watson has also found that the way a company manages and engages its people can significantly affect its financial performance.8 Also, a recent study of organisational performance found that managerial ability was important in creating organisational value.9 What can we conclude from such reports? That managers are important

and they do matter! You can clearly see this in Moira Kelly, who is the visionary leader and the

woman whose passion and dedication underpins the Children First Foundation and the work it

is trying to do in the world

3 Provide three reasons for why managers are important

explain why managers

are important to

organisations.

Learning outcome

1.2

Ian McLeod, Managing Director, Coles group

within the Coles Group When the old Coles-Myer was split up in 2007, Wesfarmers bought the Coles Group believing it had the requisite retail knowledge and skills gained from successfully running the hardware retail chain Bunnings to bring back the Coles chain of supermarkets and liquor, fuel and convenience stores to its former glory

To lead this transformation, Wesfarmers’ chief executive officer (CEO), Richard Goyder, looked around the world for a person who would be capable of doing the job After interviewing ten possible candidates, he settled on Ian McLeod, a Scotsman who had vast experience gained from managing retail operations such as Halsfords (a British car accessories, camping and bicycle retailer), British super- market chain Asda and Wal-Mart’s German operations McLeod had also been CEO of the famous Celtic football club

By the time Ian McLeod started his job as Managing Director for the Coles Group in May 2008, Wesfarmers had effectively removed the entire top management group who had reported to the previous CEO, John Fletcher, allowing the new Managing Director to form an entirely new leadership team From Wesfarmers’ point of view, such a drastic clean-sweep was necessary to dismantle the bureaucratic structure and culture that had existed at the ‘old’ Coles and which had discouraged staff from taking pride in their work Wesfarmers wanted to ensure that the new Coles Group would have a Bunnings-like operational structure that revolved around delegating more responsibilities to store levels and where staff could take more pride in their work

McLeod and his team of new managers at Coles have been busy over the last couple of years in leading the massive logistical and managerial challenge of revitalising the giant retail chain This has been done through the refurbishing of old stores, building new ones, and resuscitating Coles from its near-death under its previous owners and management team ‘When I arrived, the trolleys had wonky wheels, were probably a bit rusty, the deli scales didn’t work, there were huge ugly barricades at the front door preventing customers from getting in and getting out, we didn’t trust the customers and it was all very heavy-handed right down to the fixtures,’ McLeod says ‘It is very easy to forget just what we inherited This business was in decay, it lacked any investment for the best part of a decade and really what we had to do was just get the nose of the airplane up, and that was the first task and then we can start to build on a more solid platform of improvement.’

In their planned five-year turnaround strategy, McLeod and his management team have set their focus

on servicing customers better This approach is vastly different from that taken in the past, which could perhaps best be illustrated by John Fletcher’s comment, when he took on the job of CEO in 2001, that he had not been in a supermarket for 25 years In stark contrast, Ian McLeod has commented that he hasn’t

been out of a supermarket for 20–30 years; he sees it as essential that he stays in touch with the business

and with what is happening on the supermarket floor Early in his job, he visited Coles stores incognito and photographed wilting vegetables and empty shelves He then used the photos to expose some of the failings

of the company and to get across his message about what needed to be done

McLeod recognises that there is still much to be done, but he is confident that he and his management team are on the right track Coles has now become a much more competent and aggressive competitor in relation to Woolworths and is increasing its sales faster than its rival There is definitely a new buzz within Coles today compared with a few years ago And it is all due to the new management under Ian McLeod’s leadership

Sources: A O’Brien, ‘Jumbo-sized job to revive Coles’, The Australian, 17 September 2010, p 23; E Greenblat, ‘Coles return to life’, The Age, 31 July 2010, p B5; B Speedy, ‘Coles boss sets great store by teamwork’, The Australian,

5 December 2009, pp 25, 33; V Carson, ‘Goyder clears out old Coles bosses’, The Sydney Morning Herald, 7 March

2008, p 25; B Speedy, ‘Retread: Scotsman takes the wheel at Coles’, The Australian, 8 February 2008, p 23.

Who are managers?

Managers differ widely They can be under the age of 18 to over age 80 They run large corporations as well as small entrepreneurial start-ups They are found in government departments, hospitals, small businesses, not-for-profit organisations, museums, schools, and even non-traditional organisations such as political campaigns and music tours Managers can also be found doing managerial work in every country in the world In addition, some managers are top-level managers, while others are first-line managers And today, managers are nearly

as likely to be women as they are men However, the number of women in top-level manager positions remains low – there were only six female CEOs and five female chairs in the top 200 Australian companies in 2010.10 But no matter where managers are found or what gender they are, the fact is managers have exciting and challenging jobs!

It used to be fairly simple to define who managers were: they were the organisational

members who told others what to do and how to do it It was easy to differentiate managers from non-managerial employees; the latter term described those organisational members who worked

directly on a job or task and had no one reporting to them But it is not quite that simple anymore! The changing nature of organisations (as was described in the beginning of this chapter) and work has, in many organisations, blurred the clear lines of distinction between managers and non-managerial employees Many non-managerial jobs now include managerial activities, especially on teams, where managerial responsibilities are shared by managers and team members.11 For example, at Britax Rainsfords’ car components manufacturing facility

in Lonsdale, South Australia, managerial responsibilities are shared by managers and team members.12 Most of the employees at Britax Rainsfords are cross-trained and multiskilled Within

a single shift, an employee can be a team leader, equipment operator, maintenance technician, quality inspector or improvement planner And as these so-called operative employees assume responsibilities that were traditionally deemed to belong to management, the definitions we used

in the past no longer work

So, how do we define who managers are? A manager is someone who coordinates and oversees

the work of other people so that organisational goals can be accomplished A manager’s job is

not about personal achievement; it is about helping others to do their work and achieve That may

mean coordinating the work of a departmental group, or it might mean supervising a single person It could also involve coordinating the work activities of a team composed of people from several different departments or even people from outside the organisation, such as temporary employees or employees who work for the organisation’s suppliers Keep in mind, however, that managers may also have other work duties not related to coordinating the work of others For example, an insurance claims supervisor may also process claims in addition to coordinating the work activities of other claims clerks

Is there some way to classify managers in organisations? There is, particularly for traditionally structured organisations – that is, those with deliberate work arrangements or structures shaped like a pyramid, reflecting the fact that the number of employees is greater

at the bottom than at the top As shown in Figure 1.2, we typically describe managers as either first line, middle or top in this type of organisation These managers may have a variety of

titles First-line managers are the lowest level of management

and manage the work of non-managerial employees who are directly involved with producing the organisation’s products or servicing the organisation’s customers They are often called supervisors, but they may also be called shift managers, office

managers, team leaders or even forepersons Middle managers

include all levels of management between the first-line level and the top level of the organisation These managers manage the work of first-line managers and may have titles such as regional manager, department head, project leader, store manager,

manager

Someone who coordinates

and oversees the work

of other people so that

organisational goals can be

accomplished.

first-line managers

Managers at the lowest

level of the organisation

who manage the work of

non-managerial employees

who are directly involved

with the production

or creation of the

organisation’s products.

middle managers

Managers between the

first-line level and the top

level of the organisation

who manage the work of

first-line managers.

Top managers Middle managers First-line managers Non-managerial employees

FIgure 1.2 Organisational levels

i n t r o d u c t i o n t o o r g a n i s a t i o n s a n d m a n a g e m e n t c h a p t e r 1 1 1

1

review questions

dean or division manager At or near the top of the organisation are the top managers, who

are responsible for making organisation-wide decisions and establishing the goals and plans

that affect the entire organisation These individuals typically have titles such as managing

director, chief executive officer, chief operating officer or chairman of the board As

illustrated in the chapter-opening vignette, Moira Kelly is a top manager She is the executive

director of the Children First Foundation Gerry Harvey, the executive chairman of Harvey

Norman, is also a top-level manager Individuals in such positions are involved in creating

and implementing broad and comprehensive changes that affect the entire organisation

Not all organisations get work done using this traditional pyramidal form, however

Some organisations, for example, are more flexible and loosely configured, with work being

done by ever-changing teams of employees who move from one project to another as work

demands arise Although it is not as easy to tell who the managers are in these organisations,

we do know that someone must fulfil that role – that is, there must be someone who

coordinates and oversees the work of others, even if that ‘someone’ changes as work tasks

or projects change

4 Explain how managers differ from non-managerial employees

5 Describe how to classify managers in organisations

top managers

Managers at or near the top level of the organisation who are responsible for making organisation-wide decisions and establishing the goals and plans that affect the entire organisation.

A lthough some would argue that Australian businesses have come a long way in the

last few decades when it comes to valuing and encouraging diversity in many of our workplaces, data suggests there is still a lot more work needed to develop fairer and more equitable workplaces that are focused on merit, rather than on gender, race, age and other less relevant factors, when it comes to providing equal opportunity For example, the Equal Employment of Women in the Workplace Agency’s (EOWA’s) 2010 Australian Census

of Women in Leadership, released in 2010, identified that only 8.4 per cent of board directorships and

8 per cent of executive management positions were held by women in the ASX 200 companies Some

54 per cent of those companies had no women on their board, and 62 per cent had no woman in an executive management position An easy way to demonstrate this imbalance is to ask you to name some Australian CEOs How many of these CEOs would be men? How many would be women?

Compared with New Zealand, the United Kingdom, Canada, the United States and South Africa, Australia has the lowest percentages of women in the most senior positions EOWA acting director Mairi Steele’s view is that ‘with women making up 55 per cent of university graduates and nearly 50 per cent of the workforce, it is just not acceptable that women are being denied the opportunity to participate in the decisions that affect the organisations in which they work and the communities in which they live’

It is not only a question of imbalance when it comes to representation of women in senior management positions Another report released by EOWA in January 2008 revealed that women in senior jobs in Australia’s largest companies earn up to 50 per cent less than men in similar positions The survey identified that women CEOs earned 32.3 per cent less than men in the top job, while the gap for chief operating officer (COO) and chief financial officer (CFO) positions was about 50 per cent The largest median pay gap was in the finance sector, where women top earners made 48 per cent less than men, followed by the IT and industrials sectors

What this demonstrates is that discrimination is systematic throughout the workforce Women still battle obstacles such as the undervaluation of women’s skills; women’s lower share of payments such as overtime