1. What is Management?

1.1 Planning, Controlling, Organizing, and Leading

1.2 The History of Management
1.3 Managerial Ethics

1.1 Planning, Controlling, Organizing, and Leading

Managers are people who do these four things. Some managers do all of these things, but all
managers do at least one of these.

Planning: - Planning is usually the first step in management and it drives the rest of the process.
• Forecast the Future
• Develop Strategy
• Set Goals
• Analyze the environment

Organizing: - Always organize in the best way to execute your plans. Planning tells you what you want
to do and organizing is how you do it.

• Build the Org Chart

• Resources in the right places
• Align authority and responsibility

Leading: - Leading involves getting others to help to execute your plans and work in the organization
you manage

• Motivate
• Communicate
• Build teams

Controlling: - Controlling is using feedback to track your progress and keep your team and organization
headed toward your goals.
• Keep things on track
• Measure progress
• Spot errors and misdirection

Remember: - Use planning to set goals and predict problems. Organize to support your plans. Lead
others to help
reach the goals of your organization. Control what happens by using feedback to track and direct
progress toward those
goals.

1.2 The History of Management

The earliest examples of management come from the organization of tribes and hunting groups. The
first examples of
managing large groups were probably early armies.

1888 - Henri Fayol develops “Administrative Management.”

• Developed 14 points for management - still relevant today

• Described 5 functions of management
Founder of “modern” management Administrative Management

At about the same time as Fayol, American thinkers were developing something called “Scientific
Management.”

• Pioneered by Frederick Taylor

• Tried to improve productivity
• Useful in manufacturing and mining

Scientific Management

• Frank & Lillian Gilbreth conducted time and motion studies

• Measured the time it took for workers to perform an action

After “Scientific Management”, we moved on to “Professional Management.”

• Recognized management as learned skills

• Allowed workers a role in decisions
• Managers were taught, not born

1933 - Elton Mayo decides that employees’ informal relationships affect how they perform.

Human Relations Movement

• Recognized the limitations of Scientific Management
• Explained how social factors affect performance - Behaviorist school
• Famous for the “Hawthorne Studies”

1890 - Management focused on managing manual workers

1990 - Management begins to focus on managing knowledge workers

Management Today
Peter Drucker explores management of knowledge workers.
Michael Porter develops key theories of management as strategy.

The Internet and IT breaks old limitations on organization and communication for modern managers.

1.3 Managerial Ethics

Managerial Ethics
As a manager, you will be responsible for the ethical implications of your decisions.

Corporate Social Responsibility

What do corporations owe and to whom do they owe it?

Corporate Social Responsibility in 1970

Milton Friedman
“There is one and only one social responsibility of business–to use it resources and engage in activities
designed.
to increase its profits so long as it stays within the rules of the game, which is to say, engages in open
and free competition without deception or fraud.”

Business organizations are expected to have responsibilities to more than just shareholders and
customers.

Corporate Social Responsibility

• Recognized in the US and many other countries, but not everywhere
• Easy to confuse with public relations
• How corporations recognize stakeholders beyond shareholders and customers

Legal responsibilities are not the same thing as ethical responsibilities. Be aware of them both!
Ethics and the Law
• FCPA
• Sarbanes-Oxley
• ISO 14000

Foreign Corrupt Practices Act

Holds US businesses accountable for ethical behavior globally. Bans bribery and other acts, even if
they are legal in
another country

Sarbanes-Oxley
Requires US corporations to publish ethical guidelines. Passed in the wake of the Enron scandal.

ISO 14000
Set of standards for international organizations that want to systematize their environmental
management efforts.

How do you recognize the ethical approach in an unfamiliar system?

Ethical Decision Views

 Recognize responsibilities.
  Respect stakeholders.
 Earn trust Be transparent.
 Consider ethical issues in all decisions.

2. Planning and Strategy

2.1 Planning
2.2 Planning Tools
2.3 Competitive Advantage
2.4 Product Planning and Strategy
2.5 Cost Leadership Versus Differentiation
2.6 Managing a Cost Leader
2.7 Managing a Differentiated Business
2.8 Risk and Decision-Making
2.9 Forecasting

2.1 Planning
Planning How managers decide how to reach goals with available resources.

Start with Mission and Vision

These are the most basic statements about your organization, and they shape all plans.

Mission Statement
Describes your organization’s reason for being. Why you exist.

Vision Statement
Describes what the organization wants to become. How you see yourself in the future.

Vision and Mission statements are your destination.

Your strategic plan is how you will get there.

Strategy
How you plan to win the game

Strategic Plan
• Long-term
• Driven by mission
• Based on expectations for the future
• Seldom very detailed
Remember
Plans tell us where we want to go and how we plan to get there.

2.2 Planning Tools

There are a number of common tools to help organizations plan.
• Strategic Management
• Project Management

Strategic Management
The development of a strategy and the use of it in planning long-term
Project Management
Getting something done in the short-term, as quickly and effectively as possible

Gantt Chart
Another tool to show scheduling relationships.

Lots of Planning Tools

Choose your tools based on what you need to manage and plan most closely.

2.3 Competitive Advantage

Competitive Advantage
The first step in developing strategy and a strategic plan. The thing that makes your organization
uniquely competitive.

Sources of Competitive Advantage

Strategy always involves using your competitive advantage to beat competition.
• Assess externals
• Recognize internals

Porter’s 5 Forces
• Increased Buyer or Seller power
• Arrival of new competitors
• Development of substitutes
• Intensifying rivalry

Externals
• Markets
• Economies
• Societies
• Technologies
• Competitors
• Governments

In any market…
• Lots of differentiated competitors
• 1 or 2 cost leaders

2.4 Product Planning and Strategy

Most organizations, including all businesses, survive by producing products. These can be goods or
services, but they are all key to strategy.

The Product The thing that delivers your competitive advantage to your customers and stakeholders
All products have a life cycle so all organizations need to pay attention to where they are in that cycle.
Each block has a strategy, except for one…
• Feed the stars
• Milk the cows
• Shoot the dogs
• Question mark?

The future of a product often depends on what you decide at the beginning of its life cycle.

2.5 Cost Leadership Versus Differentiation

In Module 2.2, we looked at Porter’s generic competition model. Now we come back and see how that
shapes strategy and planning.

Differentiated Competitors
Always the same advertising slogan:
“My product is different and different is better.”
Must aim at specific customers in target markets.

Cost Leader Competitors

Always the same advertising slogan:
“All these products are the same so buy mine because it’s the cheapest.”
Must gain as many customers as possible to drive costs down

Focused Strategies
Concentrate on a Single market.
• Geography
• Customers
• Product class

Once you chose whether you are a cost leader or a differentiated competitor, it affects everything else
you
do in management.

2.6 Managing A Cost Leader

Cost leaders have a distinct strategy, so they need distinct management approaches to succeed.
Cost leadership Affects:
• Organization
• Leadership
• Control
• Planning

Cost Leader Organizations

• Seek efficiency and give up flexibility
• Centralized and functional organizations
• Little delegation of authority
• Most important parts of the organization are usually operations and finance/accounting

Leading in Cost Leadership

• Cost leaders need people who can follow orders and procedures efficiently.
• Everyone must be focused on cost-cutting
• Senior managers often come from operations or finance

Cost Leader Controls

• Cost is the most closely controlled function

• Budgets and spending reports are the most important control tools
• Investments in new technology are always aimed at reducing costs

Cost Leader Plans

• Economies of scale are vital so always plan to grow

• Always look for new customers for your current products - new products are expensive
• Hire the best cost managers you can

Cost leadership is a battle for scale where having the lowest cost is your only competitive advantage.

2.7 Managing A Differentiated Competitor

Differentiated competitors have a distinct strategy so they need distinct management approaches to
succeed.

Differentiation Affects:
• Organization
• Leadership
• Control
• Planning

Differentiated Organizations
• Seek flexibility and give up efficiency
• Decentralized and product-centered our customer-centered organizations
• Maximum delegation of authority
• Most important parts of the organization are usually marketing and customer service

Leading in Differentiation
• Differentiated competitors need people who can solve problems and understand customers
• Senior managers often come from marketing, design, or customer service

Differentiated Controls
• Market share and customer satisfaction are the most closely controlled functions
• Market research and customer trends are the most closely controlled functions
• Investments in new technology are usually aimed at improving sales

Differentiated Plans
• Brand strength and customer demand are most important so plan for that
• Always look for new products you can offer your customers
• Hire the best marketers and service people you can

Differentiation is a battle for brand loyalty and recognition where having a strong brand is your only
competitive advantage.

2.8 Risk and Decision-Making

In formal management, “RISK” always means “UNCERTAINTY” and that makes decisions harder.
Taking more risks means more chance to gain the upside - a strong competitive advantage.

Decision Types

Programmed = Lower risk and always made in the same way

Non-Programmed = Higher risk and require deep analysis before making
Rational = Tries to Optimize based on all available data and analysis
Bounded Rational = Tries to Satisfice based on the first working solution that comes

Data Tools

Data mining = Discovers relationships in large amounts of data

Regression Modeling = Quantitative tool to predict future events

People and Organizations Take different levels of Risk.

Risk Aversity
Some organizations can take more risks than can others.
• More resources (cash) = survive the downside

• More information = less uncertainty

• Nothing left to lose = Get the downside anyway

Managers can never eliminate risk, so try to manage it instead.

2.9 Forecasting

When planning for the future, you must decide what the future will be like. Even when you can’t know
for sure.

Sales Forecasting Plan B

Simulation - Uses a computer model to test the results of a decision before it hits the real word.
Simulations can be very complex or very simple.

Plan C GUESS
Never Guess Alone
Delphi Technique -
Really just a method of improved guessing. Ask a number of people to guess, then average their
results.

All forecasts are actually guesses about the future. We cannot eliminate the uncertainty.

3. Controlling
3.1 Feedback and Control
3.2 More on Feedback
3.3 Financial and Non- Financial Controls
3.4 Control and Planning

3.1 Feedback and Control

Control - how we manage the execution of our plans and make sure we stay on target.
The Cars Stay In Their Lane Through Visual Feedback
• Blindfold means no visual feedback
• Other children must give you verbal feedback - negative and positive

Plans provide the goals that are your target. Feedback gets you to them.

Budgets help control expenditure of resources - usually money. They tell you what you planned to
spend.
Without control, you are not managing anything and goals are just dreams.

3.2 More on Feedback

Feedback can be complex. How much and what type can affect how we control outcomes.

Positive feedback = Going in the right direction. Keep it up.

Negative feedback = Going in the wrong direction. Change course.

A key choice in feedback is closeness of coupling - how much deviation before you react. Very close
coupling can leave employees feeling distrusted and micromanaged.

Very loose coupling can let things get out of control and lead to disaster.
A 360-degree performance review collects feedback from supervisors, employees, and subordinates.
Feedback is important in every aspect of management. Without it, you are not managing anything.

3.3 Financial and Non-Financial Controls

Businesses control financial activities, but all organizations control non-financial activities.
Financial Controls
Control/manage a firm’s costs and expenses.

Quality control means adhering to a standard for output. Are you building things the way you should
be?
We use ratios to correct for the differences in absolute size. They help compare big things to little
things.

3.4 Control and Planning

All the functions of management are related, but planning and control are the closest in the
relationship. Planning sets the goals and control manages how we reach them.

Strategic Controls
Broad strategic plans need controls that track broad outcomes, like market share or productivity.

Tactical Controls
Short-term plans need flexible controls that track very specific things during short periods of time.

Productivity = Ratio of output to input. A basic measure of efficiency in any organization. Productivity
is a key
goal for any organization.

If planning and control are not closely connected, planning is useless and control is not efficient.

4. Organizing

4.1 Organizational Charts and Designs

4.2 Centralized and Decentralized Organization
4.3 Span of Control
4.4 Authority and Unity of Command
4.5 Incentives and Motivation Tools
4.6 Maslow’s Hierarchy of Needs
4.7 McGregor’s Theory X and Theory Y
4.8 Expectancy Theory
4.9 Equity Theory
4.10 Herzberg’s 2 Factor Theory
4.11 Job Design

4.1 Organizational Charts and Designs

Organization How we bring people, resources, and information together to perform a task.
Organization Chart The best way to show an organizational design.

Organization Charts
• Show connections of positions and lines of authority
• Show general structure
• Do NOT show quality of managers or the nature of the work being done
Organization comes from planning.
Design the way you plan to compete.

4.2 Centralized and Decentralized Organization

Centralization Where in the organization key decisions are made

Centralization Centralized Organizations = Key decisions are made at the top
Decentralized Organizations = Key decisions are made at many levels
You cannot tell the degree of centralization by looking at the org chart
Large, dispersed organizations often use a decentralized structure
Centralized Organizations
• Tend to reduce costs by being efficient and standardized
• Most popular when you make only a few product types
• Not very flexible and may not work in unstable periods

Decentralized Organizations
• More flexible and better able to adapt to changing circumstances
• Popular when you make lots of different products or serve lots of different customer groups
• Typically higher costs than centralized

As the degree of centralization changes, an organization may need different managers.

4.3 Span of Control

Span of Control How many people report directly to a manager

You can increase span of control when:

• The manager can easily monitor employees
• The employees have similar jobs
• The employees are well-trained and formally organized into teams

Flattening the Organization

The appropriate span of control depends on how much supervision employees need
Flattening Organizations
Flat Organization = Lower costs and better up/down communications

Tall Organization = Higher costs but managers have more time to plan and analyze

Always make your organization as flat as you can without losing control.

4.4 Authority and Unity of Command

Organizations have both formal and informal authorities. Both affect how things work

You can increase span of control when:

• The manager can easily monitor employees
• The employees have similar jobs
• The employees are well-trained and formally organized into teams

Unity of Command Each person should be responsible to one clear superior who directs them

Formal and Informal Authority

Formal Authority = Based on organizational structure and policy
Informal Authority = Based on technical ability, seniority, reputation, and personal influence

All organizations have some degree of informal authority. Always that person whom everyone turns to

Informal authority and communications are usually considered important in an organization.

4.5 Incentives and Motivation Tools

Once we put people in our organization, we have to motivate them do the work we need done

Motivation = “The intention of achieving a goal, leading to goal directed behavior” Columbia
Encyclopedia
Incentive = “Something that incites or has a tendency to incite to determination or action” Merriam
Webster Dictionary

Theories of Motivation
Needs Based = Motivation is the result of individuals trying to satisfy their own needs

Process Based =
Motivation is a rational process where individuals make choices based on their own situation.

Carrots and Sticks

Rewards and Punishments

Rewards can be either intrinsic or extrinsic - from the inside or the outside

Intrinsic Motivation
We do something because we gain a sense of achievement and accomplishment Fun, challenge, or a
sense of personal satisfaction.

Extrinsic Motivation
We do something because we want to earn an external reward A bonus, a certificate, praise from
peers, or recognition from management.

Human beings are incredibly complex. No single theory of motivation can explain us completely.

4.6 Maslow’s Hierarchy of Needs

Of all the needs-based theorists, Abraham Maslow is the most commonly used

Maslow’s Hierarchy We are motivated by the lowest unmet need

Physiological = Basic needs for food, water, air, and shelter

Safety/security = Need for protection and confidence in survival in the future
Social = Need for friendship, respect, and acceptance
Esteem = Need for recognition of our unique personal worth
Self-Actualization = When someone has meet all their lower-level needs and now seeks only intrinsic
motivators

Maslow is easy to understand and intuitive, but too simple to be really useful

ERG Theory
A more complex interpretation of needs and motivation than Maslow provides Developed by Clayton
Alderfer

Existence = Maslow’s Physiological and Safety needs. May also be known as “Deficiency Needs”
Relatedness = Maslow’s Social needs
Growth = Maslow’s Esteem and Self-Actualization needs
Relatedness and Growth may also be known as “Growth Needs”

ERG Theory
Needs are NOT hierarchal and we can be motivated by different needs at the same time If we cannot
meet one set of needs, we may focus on another set
Maslow is more familiar and easier to understand for most managers, but ERG is better at explaining
real people.

4.7 McGregor’s Theory X and Theory Y

Douglas McGregor describes motivational approaches based on manager’s beliefs about employees

Theory X - Authoritarian Approach

Employees only work for extrinsic rewards and must be watched and pushed

Theory Y - Participative Approach

Employees seek satisfaction in work and should be included in managerial decisions

Theory X Managers Assume that:

• Employees need constant reward and punishment
• Employees cannot be trusted and need constant supervision
• Employees hate their jobs and only work for the money

Theory Y Managers
Assume that:
• Employees view work as fulfilling and satisfying
• Employees can be trusted to work well without supervision

• Employees have the ability to solve problems creatively on their own

Theory X Organizations:
• Small spans of control and lots of managers/levels
• Emphasis on rewards and punishments to motivate
• Lots of micromanagement and high employee turnover

Theory Y Organizations
• Large spans of control and few managers
• Emphasis on teamwork and cooperation to motivate
• Frequent promotion opportunities

Theory X
Scientific management, needs-based motivation theories, and higher costs

Theory Y
Professional management, process-based motivation theories, and lower costs

Theory Y can be a more difficult and scary motivational approach but it is usually worth it.

4.8 Expectancy Theory

Expectancy theory is process-based and tells us what kinds of incentives will really motivate people

Expectancy theory is the result of rational analysis where people ask themselves 3 questions about a
possible reward…

The 3 Questions of
Expectancy Theory
1. Will hard work lead to the right outcome? “Do I Expect to be able to reach this goal?”
2. Will reaching the goal deliver the reward? “Do I expect my success to be rewarded?
3. Will the reward be valuable? “Is this worth all the work it will take to get it?”

An answer of “NO” to any question means the incentive offers no motivation at all
Setting goals is the search for the Goldilocks zone, where the difficulty and rewards are “Just Right.”

Management By Objective MBO

Incentive system where managers and employees agree on goals and rewards. Challenge is in finding
agreement and
valence MBO systems align goal setting and planning.

The trick with Expectancy Theory is setting exactly the right goals. Usually takes experience.

4.9 Equity Theory

Equity theory is process-based and tells us how people REALLY judge the value of rewards.
Equity theory says that we don’t judge value in absolute terms. We judge it in comparison to what
others get.

“Joe. Your work has been excellent. I am giving you a $10,000 bonus!”

“$10,000? That’s nice but you do know that everyone else got $15,000?”

Equity Theory is about justice, where things should be fair. When we receive a reward, the next step is
to compare it to the referent. “Is the reward fair?”
Equity theory demands fairness, but life is seldom fair. The best approach is to discourage people from
sharing salaries.

4.10 Herzberg’s 2 Factor Theory

Frederick Herzberg tells us that what motivates us is very different than what satisfies us - or doesn’t
satisfy us

Hygiene Factors -
Environmental factors around the job that can cause dissatisfaction and demotivation
Motivators - Intrinsic factors of the job that cause employees to want to work harder and accomplish
more

Hygiene Factors
Company policies
Supervision and relationships
Working Conditions
Salary
Security

Motivators
Achievement
Recognition
Interesting work
Increased responsibility
Advancement and growth

The key point here:

Both hygiene factors and motivators affect motivation but not in the same ways

Once upon a time, there was a great company with terrible restrooms

Fixing hygiene factors can fix demotivation, but only motivators can really inspire employees to work

Herzberg on the Design of Jobs: Job Enrichment Adding motivators like recognition, responsibility,
achievement, and
personal growth makes employees want to work harder.

Herzberg’s ideas are most valuable when we apply them to the design of jobs.
4.11 Job Design

If organizations really want employees to work hard, managers need to pay attention to how
employee’s jobs are designed

Herzberg tells us that motivators have almost unlimited potential to motivate employees.

Motivators
Achievement
Recognition
Interesting work
Increased responsibility
Advancement and growth

Scientific Management and Job Specialization

Easy to train and manage but seriously boring

As the nature of businesses changed, we needed more motivated employees

When enlarging and enriching jobs, it is critical to think about what kinds of tasks we add, as well as
how many

Once upon a time, I met 3 men cutting stone…

1st - “I am earning 5$ an hour”
2nd - “I am a craftsman, carving the best blocks I can”
“I am building a cathedral.”

The best source of long-term employee motivation is the design of jobs.

5. Leading

5.1 Leadership Versus Management

5.2 Transactional Leadership
5.3 Transformational Leadership
5.4 Situational Leadership
5.5 Personality Types
5.6 Power in Organizations
5.7 Leadership in Teams
5.8 Managing Teams

5.1 Leadership Versus Management

Leadership and management are not the same things, but we need them both to manage successfully.
Leadership is about individual traits and behaviors. Management is about groups and organizations.

Trait Theories - What leaders are like.

“Leaders are born, not made.”

Behavioral Theories -
What leaders do. “Leadership behaviors can be taught.”

Trait theory assumes we are born with the right traits. Behavior theory is much more useful.
Leadership Decision Styles

Democratic -
Followers participate in decision-making.
Autocratic - Leader makes decisions alone with no follower input.

Laissez Faire - Follower decide themselves with little guidance from the leader.

Leaders often lead by example. If the organization has a dress code, the leader always dresses
accordingly.

5.2 Transactional Leadership

Transactional leaders manage by rewards and consequences. Most people think of this as management

Transactional Leaders
• Know the rules and follow them
• Hold everyone else to the same standards
• Use rewards and coercive power to enforce

Personality type is less important than with other leadership types

Transactional Leaders
are…Parents, Police Officers, Teachers

Transactional Leaders May Use Any of These Styles

Democratic - Followers participate in decision-making

Autocratic - Leader makes decisions alone with no follower input
Laissez Faire - Follower decide themselves with little guidance from the leader

Transactional leadership is seldom effective in times of rapid change and uncertainty.

It stops working when the rules stop working.

5.3 Transformational Leadership

Transformational leaders lead by offering a vision for the future and convincing followers to believe in it
Transformational Leaders
• Have a vision for the future
• Have confidence in themselves to get there
• Persuade others to follow them

Personality type is vital here. Not everyone is good at transformational leadership.

Transformational Leaders’ 4 Tools

Inspirational Motivation - A compelling vision of the future

Intellectual Stimulation- Thinking past the norms and conventions of the organization.

Individualized Consideration- Showing care and consideration for the individuals they lead.

Charisma- Inspire confidence, commitment, and admiration by followers.

Transformational Leaders need the ability to understand and influence their followers, but they also
need another
magic power…

Charisma!
• A magnetic personality that attracts followers
• A powerful sense of self-confidence
• The clear impression that they will be successful
Transformational Leaders are…Heros, Entrepreneurs, Revolutionaries
Transformational Leaders May Use Either of These Styles
Democratic - Followers participate in decision-making.
Autocratic - Leader makes decisions alone with no follower input

5.4 Situational Leadership

Situational leaders modify their leadership style based on circumstances. This is a contingent
leadership style.

Contingency Theory - Leaders must adjust their leadership style based on circumstances.
Situational Theory - Leaders must adjust their leadership styles based on the needs and readiness of
their followers.
Arguably, not a lot of difference here

Fiedler’s Contingency Theory

In a Poorly Structured Environment Leaders with good interpersonal skills and relations with followers
will perform
the best

In a Clearly Structured Environment

Leaders who are impersonal and have no special relations with followers will perform the best.

Path-Goal Theory
Directive Leadership - Give employees clear directions. For boring jobs - doesn’t help
Supportive leadership- Support employees through challenging periods. When employees know their
jobs and like
them - doesn’t help.

Participative leadership Includes employees in key decisions. Most effective when employees have
high levels of ability and internal locus of control.

Achievement oriented Leadership

Set goals for employees and encourage them to meet those goals. Most effective when employees
have high levels of ability and motivation - Have experience and are professionally oriented.

The important part about contingency theories - they work better in some cases than others.

Situational Leaders are…

Anyone who can adapt to different circumstances and lead in different ways

Contingent/Situational leadership requires mastery of many approaches and choices.

5.5 Personality Types

The trait theory of leadership says our personalities determine how we lead. So let’s look at
personalities

There are other theories of personality, but the Big 5 is the most common and well-understood

Big 5 Traits
Openness - People high in openness thrive in new situations that require flexibility
Conscientiousness- Uniformly predicts a person’s likely success in many situations and jobs. Especially
important for
transactional leaders

Extraversion - People high in extraversion tend to be effective managers. Especially important for
transformational leaders
Agreeableness - People high in agreeableness Tend to be more forgiving and fair. Especially important
in dealing with
equity theory

Neuroticism- People high in neuroticism tend to have trouble forming relationships and are not sought
for advice and
assistance at work - Only Big 5 trait where a low score is desirable
Although the Big 5 are the most important, leaders need to be aware of other personality traits as well

Other Personality Traits

Self-Monitoring - Capable of monitoring themselves in diverse social situations. High self-monitors can
adapt behavior to external situations

Proactive Personality - Capable of fixing problems and addressing challenges. Tend to be more
successful over time at most things.

Self-Esteem - Self-confidence. Capable of holding opinions and taking actions without self-doubt

Self-Efficacy - Believes one can be successful in a specific task. Tends to improve performance in those
tasks. The only
personality trait that is job-specific

Leaders With the Right personality are…Anyone who has confidence and interpersonal skills
can be a trait-driven leader…

Personality traits suggest who will be an effective leader, but behaviors are the final answer

5.6 Power in Organizations

We have looked at leadership and management. Now we want to look at power itself.
Power is how we assert our will and convince others to do our bidding.

Sources of Organizational Power

Coercive - The power to punish non-compliance.
Reward - The power to reward - the opposite of coercive power.
Referent - This is the power that comes from having people like me and want to please me.

Expert - I have more knowledge in a certain area than do others.

Information - I know a secret that affects an outcome so others can’t safely disobey me.
Connection - I have a connection with someone in real power and can exercises their power on my
behalf.

Sources of Power
Coercive - This represents the consequences transactional leaders warn us about if we don’t follow the
rules

Reward- This represents the rewards transactional leaders promise us if we follow the rules

Referent - I am popular with other people who have power. This is where the personality trait of
agreeableness comes
into play

Expert - Because I have been right before and everyone has confidence in my decisions in this area, no
one wants to
question my advice

Information- I have access to specific information that others do not. Similar to Expert power but VERY
situational

Connection - Very political in nature. I have powerful friends so I am powerful

Powerful People are…Those with unique knowledge, skills, connections, information, or the ability to
control outcomes

We all have some degree of power. Inside organizations, it can be important to develop and manage
power

5.7 Leadership in Teams

Leading and managing is hard with individuals. Do it in a group setting and it becomes much harder
still

The leadership needed can be different in each stage of team development.

Cohesion
• Similarity
• Stability
• Size
• Support
• Satisfaction

Cohesion is “social glue”, helping teams stick together and cooperate

Too Much Cohesion? If the group sticks too closely together, they can have a problem called
“Groupthink”
Social Loafing Does it really matter how hard I pull? I won’t be recognized as an individual if we win or
lose

How we form a team is important, but there are several types we can form

Cross-Functional –
Team members from many different functions/backgrounds
Functional - Team members all from the same function/background

Types of Teams

Self-Managed - Teams that are empowered, with responsibility and authority to lead themselves.

Leading any team requires us to understand the structure of the team, the task it faces, and how long
it has been.
in place

5.8 Managing Teams

We have looked at the leadership aspects of teams. Now let’s reduce those decisions to management
practice

Forming a new team always has its costs. If you can keep successful teams together for new
problems, you may avoid that

Building Cohesion
• Similarity
• Stability
• Size
• Support
• Satisfaction

When team members identify with the team, they have more cohesion

Got Groupthink?
Happens with very cohesive teams. Invite outsiders to play “Devil’s Advocate” and question the
team’s
assumptions

Got Social Loafing? Develop assessments of individual performance within the group I WILL be
recognized as
an individual if we win or lose.
When forming a team for a specific task, keep it as small and simple as possible.
Keep it Simple

Large teams are harder to lead than small ones. Your team should be only as large as necessary.
Cross-functional teams
can solve more diverse problems but they take longer to form. Only add as much diversity as you
need

Self-Managed Teams
Give them oversight into planning, scheduling, monitoring, and staffing. If you want them to manage
themselves, they need the tools. Self-managed teams are often very cohesive and effective, but
sometimes they take too long to arrive at a
Solution

6.1 International Management and Culture

The global economy is a fact and modern managers must understand how to manage globally.
International businesses face many challenges but the most significant for managers is often Culture.
The US has 5% of the world’s population. But produces and consumes 20% of its economic activity.

Cultural Differences
• Language
• History
• Religion
• Family Relations
• Ethnicity

Cultural differences can affect how we perceive leaders and how we respond to incentives.

Hofstede Matrix Dimensions Power Distance - How we believe leaders should be treated

Individualism - How important we consider our own interests over the interests of our group
Masculinity - How much we live to work, rather than work to live

Uncertainty Avoidance -
How comfortable we are with uncertainty and risk
Long Term Orientation - How far into the future we think is important.
What to Expect from Global Cultures
High Power Distance - Expect managers to be treated with great respect and be distant from workers.

Low Individualism -
Expect everyone to be on a team. Individual incentives will not work Low Masculinity - Expect people to
only work as hard as they must, and to value time away from work more than additional salary.

Low Uncertainty Avoidance –

Expect managers and workers to be uncomfortable with risk and prefer a certain outcome to a possible
better.
outcome What to Expect from Global Cultures

High Long term

Orientation - Expect managers to value long term relationships over short term profits.

Managing inside a single national culture is hard enough.

Managing across many different global cultures is far more challenging.

6.2 Conflict Resolution

Sooner or later, all managers face a conflict between some groups of people. How can this be
resolved?

A conflict is more than just a difference of opinion. One group or both feel threatened by the conflict

2 Approaches to Conflict Resolution:

• Competition
• Cooperation
(Collaboration)

Competition
• Based on “Win-Lose”
• May not understand both sets of interests well
• Often the first approach we choose

Cooperation/Collaboration
• Based on “Win-Win”
• Usually requires both sides to understand each other’s interests well

• Can be more effective than competition but often more difficult to achieve

Both the collaborative and competitive positions involve negotiation - learning about each other and
proposing alternatives

If two disputants cannot resolve a conflict on their own, they may turn to a disinterested 3rd party
3rd Party Approaches Arbitration:
When the 3rd party leads both groups through a resolution process, and has the power to bind both
groups to a
resolution

Mediation:
When the 3rd party leads both groups through a resolution process, but has no power to decide the
outcome

• Try to understand the other side’s position.

Why do they want what they want?
• Think about your position in detail. Why do you want what you want? resolution style Getting to an
Agreement
• Set priorities. What can you give up and what must you keep?
• Control your emotions and try to be rational
• Consider your conflict resolution style

Conflict Resolution Styles

1. Competitive - High assertion/low cooperation
2. Accommodating - Low assertion/high cooperation
3. Avoiding - Low on assertion and cooperation
4. Collaborating - High on assertion and cooperation
5. Compromising - Moderate on everything

Resolving conflicts requires skill and understanding. Think “Win-Win” whenever you can

6.3 Organizational Communications

We all communicate every day. As a manager inside an organization, however, we need a different
understanding of
communication

Barriers to Communication
• Filtering
• Selective Perception
• Info Overload
• Emotional Disconnects
• Lack of Source Credibility
• Semantics

Barriers to organizational communication are often a function of the people in the organization.

• Filtering - Distortion or withholding of information by the sender to manage a reaction

Barriers to Communication

• Selective Perception - Distortion or misinterpretation of information by the receiver

• Information Overload - Too much information coming at us. Can’t pay attention to it all
• Emotional Disconnect - The sender or receiver is emotionally upset and misinterprets information
• Lack of Source Credibility (Or familiarity) - The receiver does not believe the sender knows what they
are
talking about, or may not know the sender at all and be unable to decide if they are credible.
• Semantics - Words can mean different things to different people
When the verbal and non-verbal messages say different things, most people believe the non-verbal
only.
Audience is everything. Think about who you are talking with
Communications failures are inevitable in organizations. Try be an effective communicator, but expect
the worst

6.4 Operations Management

Operations management is the specific approaches we use to manage the production of an

organization’s products

Operations Management
“Overseeing the transformation process that converts inputs such as labor and raw materials into
outputs such as goods and services.”

Most of the time, we think of manufacturing when we say “operations” but it is more than that

• Usually thought of as manufacturing

• For a bank, this is the moving of money in and out of customer accounts

Operations
• For a law firm this is handling cases for clients
• For a construction company, this is designing and constructing buildings

Operations
Operations management is about efficiency and lower costs, and we gain that through good control
systems

Lean Operations/Lean Control Reducing Waste

Eliminate:
Wasted materials
Wasted labor
Wasted time
Wasted energy
Wasted space
Wasted information

Quality Control. Make sure things meet quality standards through inspections and process control

Inventory Control Audience is everything. Think about who you are talking with

Only buy what you need and only produce what your customers need.

Operations management is how we manage the daily work of the organization. Control intensive.

6.5 Human Resource Management

Human resource management is the specific approaches we use to manage the people who work in an
organization

HR Management
Manages how people are hired, trained, promoted, motivated, and let go. Hopefully according to the
organization’s plans

Recruiting The War for Talent

• Identify what kinds of skills and talents are needed
• Attract employees with those skills and talents
• Assess skills and suitability
• Develop processes so managers can do this systematically

Recruitment involves advertising for applicants and then may include detailed tests and interviews to
select the best

Situational Interviews -
Ask questions about past experience or future plans

Interviews and Skills Common Selection Tools

Work Sampling - Ask a candidate to actually demonstrate the ability to perform a specific task
Aptitude Testing - Ask a candidate to perform a task that uses the same talents or skills as the job
itself.

Training and Development Investing in Your Human Capital

• Teach employees about organizational operations and culture - Onboarding

• Invest in skills, balanced against the costs

• Track skills and provide that information to other managers

• Design jobs for maximum motivation. Motivation Getting the Most From Your People

• Develop competitive but affordable compensation plans

• Recommend bonus structures and other incentives that provide additional motivation for employees
and
managers

Employees leave an organization for many reasons, but HR managers deal with them all Off boarding

Most Americans are under “Employment at Will” Employee and employer can cancel the arrangement
at
any time

Diversity
Modern HR managers deal with organizational diversity issues.

HR management is a staff function in most organizations. It sets policies rather than making individual
decisions