essentials of management

Chapter One OBJ ECTIVES Dineh Mohajer is young, sharp, and a millionaire whose business and managerial success started unexpectedly One day while still a premedical student, she painted her nails blue and went shoe shopping Dozens of shoppers approached Mohajer and insisted on knowing where After studying this chapter and doing the exercises, you should be able to: she bought that polish She explained that she had mixed the polish herself in her kitchen A shoe store sales associate told Dineh that the ent types of managers polish perfectly complemented the store’s spring line of shoes At that moment Dineh and her sister, Pooneh, decided to put together a business plan over lunch and start selling the polish under the name Hard Candy Dineh’s boyfriend, Benjamin Einstein, was also brought in as a cofounder Shortly thereafter, while Dineh was pitching the nail polish to an upscale specialty store, a teenager bought the entire stock of samples Later Seventeen and Elle featured the pastel-colored polish Next, Nordstrom, Bloomingdale’s, and Saks Fifth Avenue called in orders By the time Dineh was 25, Hard Candy had $20 million in annual sales Runaway success put heavy pressure on Dineh Establishing reliable suppliers, distribution networks, accounting systems, and a corporate structure was an overwhelming task, while managing high-speed growth at the same time Hard Candy caught on so fast that customers Explain the term manager, and identify differ- Describe the process of management, including the functions of management Describe the various managerial roles, along with the roles currently emphasized Identify the basic managerial skills and understand how they can be developed Identify the major developments in management thought, along with several best management practices were ordering more than the company could possibly make Nine months after officially beginning the business, Dineh was physically and emotionally exhausted The Manager’s Job CuuDuongThanCong.com https://fb.com/tailieudientucntt C H A P T E R T h e M a n a g e r ’ s J o b “I didn’t know anything about the business,” Dineh explains “I didn’t have any computers, except for this Macintosh with Quickbooks on it I was overwhelmed and burned out.” Dineh’s mother then lent a hand and set up a Visa machine to make phone orders possible She helped in finding a reliable manufacturer and in handling invoices Mom and Dad also invested in the business, making it possible to for Hard Candy to move into a commercial office in 1995 Despite the help from her parents, Dineh was still overwhelmed and nearparalyzed with fatigue At that point, she decided it was time to turn to professional management for help Assisted by a consulting firm, Dineh hired William Botts, a former cosmetics-industry executive who understood her vision for Hard Candy Botts whipped Hard Candy into shape by applying a broad range of management skills It was his expertise that has allowed Hard Candy to function like a true multimillion-dollar business Pooneh, who is an attorney, handled contracts, administration, and financial management Dineh and her boyfriend now focus more on the creative end of the business She feels constant pressure to keep coming up with hot new colors like Trailer Trash, a metallic silver Dineh’s market is mostly 12- to 25-year-old women, and because of her age, she fits right in Yet she recently added Candy Man, a nail polish for men, to her line, and the company now sells other cosmetics as well Hard Candy also released a white nail polish, Love, to benefit AIDS research Hard Candy is now a well-managed creative company with exciting plans for the future.1 Whether or not you intend to become a business owner, the case history just presented sets the stage for the serious study of management To effectively manage an enterprise, you need a mix of skills including creative thinking, working with employees and customers, and organizing activities An effective manager combines business skills, such as knowledge about marketing and finances, with people skills to achieve important results Management is the force that makes things happen It pulls together resources to get important objectives accomplished A manager’s job is therefore inherently exciting The alternative to placing effective managers in charge of an operation is chaos Dineh Mohajer was feeling overwhelmed because the success of Hard Candy was spinning the company out of control Poor management (and leadership) is one of the major reasons so many businesses of various sizes fail These firms lack people who can tie together loose ends and get important things accomplished When business firms fail because of competitive pressures or a dwindling economy, it is often the case that astute management could have overcome the problem For example, when Frontier Communication (a national telecommunications company) recently needed to upgrade its telephone-equipment service, the decision was made to double the number of supervisors Adding supervisors gave the large number of new field technicians the technical and emotional support they needed to learn their jobs Customer complaints decreased substantially after more supervisors applied their management skills Explain what the term manager means, and identify different types of managers WHO IS A MANAGER? A manager is a person responsible for the work performance of group members (Because organizations have become more democratic, the term group member or team member is now frequently used as a substitute for subordinate.) A manager has the formal authority to commit organizational resources, even if the approval of others is required For instance, the manager of an H & R Block in- CuuDuongThanCong.com https://fb.com/tailieudientucntt T h e M a n a g e r ’ s J o b come-tax service outlet has the authority to order the repainting of the reception area The income-tax specialists reporting to that manager, however, not have the authority to have the area repainted The concepts of manager and managing are intertwined From the viewpoint of Peter Drucker, a noted management authority, management is the specific practice that converts a mob into an effective, goal-directed, and productive group.2 The term management in this book refers to the process of using organizational resources to achieve organizational objectives through the functions of planning, organizing and staffing, leading, and controlling These functions represent the broad framework for this book and will be described later In addition to being a process, the term management is also used as a label for a specific discipline, for the people who manage, and for a career choice L e v e l s o f C H A P T E R manager A person responsible for the work performance of group members management The process of using organizational resources to achieve organizational objectives through planning, organizing and staffing, leading, and controlling M a n a g e m e n t Another way of understanding the nature of a manager’s job is to examine the three levels of management shown in Exhibit 1-1 The pyramid in this figure indicates that there are progressively fewer employees at each higher managerial level The largest number of people is at the bottom organizational level (Note that the term organizational level is sometimes more precise than the term managerial level, particularly at the bottom organizational level, which has no managers.) TOP-LEVEL MANAGERS Most people who enter the field of management aspire to become top-level managers—managers at the top one or two levels in an organization Top-level managers are empowered to make major decisions affecting the present and future of the firm Only a top-level manager, for example, would have the authority to purchase another company, initiate a new product line, or hire hundreds of employees Top-level managers are the people who give the organization its general direction; they decide where it is going and how it will get there The terms executive and top-level manager can be used interchangeably TopLevel Managers Chairman of the board, CEO, president, executive vicepresident, vice-president, group team leader, chancellor Middle-Level Managers Director, branch manager, department chairperson, chief of surgery, team leader First-Level Managers Supervisor, office manager, crew chief Individual Contributors (Operatives and Specialists) Tool-and-die maker, cook, word processing technician, assembler top-level managers Managers at the top one or two levels in the organization EXHIBIT1-1 Managerial Levels and Sample Job Titles Many job titles can be found at each level of management Note: some individual contributors, such as financial analysts and administrative assistants, report directly to top-level managers or middle managers CuuDuongThanCong.com https://fb.com/tailieudientucntt C H A P T E R middle-level managers Managers who are neither executives nor first-level supervisors, but who serve as a link between the two groups first-level managers Managers who supervise operatives (also known as first-line managers or supervisors) T h e M a n a g e r ’ s J o b MIDDLE-LEVEL MANAGERS Middle-level managers are managers who are neither executives nor first-level supervisors, but who serve as a link between the two groups Middle-level managers conduct most of the coordination activities within the firm, and they disseminate information to upper and lower levels The jobs of middle-level managers vary substantially in terms of responsibility and income A branch manager in a large firm might be responsible for over 100 workers In contrast, a general supervisor in a small manufacturing firm might have 20 people reporting to him or her Other important tasks for many middle-level managers include helping the company undertake profitable new ventures and finding creative ways to reach goals Quite often the middle-level manager conducts research on the Internet to gather ideas for new ventures FIRST-LEVEL MANAGERS Managers who supervise operatives are referred to as first-level managers, first-line managers, or supervisors Historically, firstlevel managers were promoted from production or clerical positions into supervisory positions Rarely did they have formal education beyond high school A dramatic shift has taken place in recent years, however Many of today’s firstlevel managers are career school graduates who are familiar with modern management techniques The current emphasis on productivity and quality has elevated the status of many supervisors To understand the work performed by first-level managers, reflect back on your first job Like most employees in entry-level positions, you probably reported to a first-level manager Such a manager might be supervisor of newspaper carriers, dining room manager, service station manager, maintenance supervisor, or department manager in a retail store Supervisors help shape the attitudes of new employees toward the firm Newcomers who like and respect their firstlevel manager tend to stay with the firm longer Conversely, new workers who dislike and disrespect their first supervisor tend to leave the firm early TYPES OF MANAGERS The functions performed by managers can also be understood by describing different types of management jobs The management jobs discussed here are functional and general managers, administrators, entrepreneurs and small-business owners, and team leaders (The distinction between line and staff managers will be described in Chapter about organization structure.) F u n c t i o n a l a n d G e n e r a l M a n a g e r s Another way of classifying managers is to distinguish between those who manage people who one type of specialized work and those who manage people who engage in different specialties Functional managers supervise the work of employees engaged in specialized activities, such as accounting, engineering, quality control, food preparation, marketing, sales, and telephone installation A functional manager is a manager of specialists and of their support team, such as office assistants General managers are responsible for the work of several different groups that perform a variety of functions The job title “plant general manager” offers insight into the meaning of general management Reporting to the plant general manager are a number of departments engaged in both specialized and general- CuuDuongThanCong.com https://fb.com/tailieudientucntt T h e M a n a g e r ’ s J o b C H A P T E R ized work, such as plant manufacturing, plant engineering, labor relations, quality control, safety, and information systems Company presidents are general managers Branch managers also are general managers if employees from different disciplines report to them Six key tasks form the foundation of every general manager’s job These tasks are:3 Shaping the work environment—setting up performance standards Crafting a strategic vision—describing where the organization is headed Allocating resources—deciding who gets how much money, people, material, and access to the manager Developing managers—helping prepare people for their first and more advanced managerial jobs Building the organization—helping solve important problems so the organization can move forward Overseeing operations—running the business, spotting problems, and helping solve them The six tasks of a general manager highlight many of the topics contained in the study of management These tasks will therefore be reintroduced at various places in this book A d m i n i s t r a t o r s An administrator is typically a manager who works in a public (government) or nonprofit organization rather than in a business firm Among these managerial positions are hospital administrator and housing administrator Managers in all types of educational institutions are referred to as administrators The fact that individual contributors in nonprofit organizations are sometimes referred to as administrators often causes confusion An employee is not an administrator in the managerial sense unless he or she supervises others E n t r e p r e n e u r s a n d S m a l l - B u s i n e s s O w n e r s Millions of students and employees dream of turning an exciting idea into a successful business Many people think, “If Michael Dell started Dell computers from his dormitory room and he is the wealthiest man in Texas today, why can’t I something similar?” Success stories such as Dell’s kindle the entrepreneurial spirit An entrepreneur is a person who founds and operates an innovative business John Clow, a director of business education programs, refers to entrepreneurs as “the creative forces within the economy, offering new ideas and bringing improvement in the human condition.”4 After the entrepreneur develops the business into something bigger than he or she can handle alone or with the help of a few people, that person becomes a general manager Remember how Hard Candy grew too big for Dineh Mohajer, her boyfriend (even though he is an Einstein!), and her sister? Similar to an entrepreneur, the owner and operator of a small business becomes a manager when the firm grows to include several employees Smallbusiness owners typically invest considerable emotional and physical energy into their firms Note that entrepreneurs are (or start as) small-business owners, but that the reverse is not necessarily true You need an innovative idea to be CuuDuongThanCong.com entrepreneur A person who founds and operates an innovative business small-business owner An individual who owns and operates a small business https://fb.com/tailieudientucntt C H A P T E R T h e M a n a g e r ’ s J o b an entrepreneur Simply running a franchise that sells submarine sandwiches does not make a person an entrepreneur T e a m team leader A manager who coordinates the work of a small group of people, while acting as a facilitator and catalyst Describe the process of management, including the functions of management L e a d e r s A major development in types of managerial positions during the last decade is the emergence of the team leader A manager in such a position coordinates the work of a small group of people, while acting as a facilitator or catalyst Team leaders are found at several organizational levels, and are sometimes referred to as project managers, program managers, process managers, and task-force leaders Note that the term team could also refer to an executive team, yet a top executive almost never carries the title team leader You will be reading about team leaders throughout this text The accompanying Manager in Action describes the activities of an effective executive After reading about him, decide which type of manager described so far best fits his activities THE PROCESS OF MANAGEMENT A helpful approach to understanding what managers is to regard their work as a process A process is a series of actions that achieves something—making a profit or providing a service, for example To achieve an objective, the manager uses resources and carries out four major managerial functions These functions are planning, organizing and staffing, leading, and controlling Exhibit 1-2 illustrates the process of management R e s o u r c e s U s e d b y M a n a g e r s Managers use resources to accomplish their purposes, just as a carpenter uses resources to build a porch A manager’s resources can be divided into four types: human, financial, physical, and informational Human resources are the people needed to get the job done Managers’ goals influence which employees they choose John Blystone has the goal of delivering automotive supplies and tools to auto and truck manufacturers Among the human resources he chooses are manufacturing technicians, sales representatives, information technology specialists, and a network of dealers Financial resources are the money the manager and the organization use to reach organizational goals The financial resources of a business organization are profits and investments from stockholders A business must occasionally borrow cash to meet payroll or to pay for supplies The financial resources of community agencies come from tax revenues, charitable contributions, and government grants Physical resources are a firm’s tangible goods and real estate, including raw materials, office space, production facilities, office equipment, and vehicles Vendors supply many of the physical resources needed to achieve organizational goals Information resources are the data that the manager and the organization use to get the job done For example, to supply leads to the firm’s sales representatives, the sales manager of an office-supply company reads local business newspapers to learn about new firms in town These newspapers are information resources Michael Dell of Dell Computer surfs the Internet regularly to learn about developments in the computer industry, thus using the Net as an information resource CuuDuongThanCong.com https://fb.com/tailieudientucntt T h e M a n a g e r ’ s J o b C H A P T E R John Blystone of SPX General Electric is one of the world’s leading companies for developing management talent One of GE’s many successful graduates is John Blystone, who has played a major role in turning around SPX, based in Muskegon, Michigan The company manufactures auto parts such as filters, tools needed to service engines, and sophisticated diagnostic tools for measuring emissions Blystone joined the company in 1997 as the company’s highest-ranking executive His three job titles are chairman, president, and CEO (chief executive officer) When Blystone joined SPX revenues were flat, the stock price was moving downward, and the company was operating inefficiently Relying on a thorough understanding of effective management practices learned during 14 years at GE, Blystone was intent on overhauling SPX As his initial step, he decided to follow the guiding principle of Jack Welch (the famous GE chairman): “Reality means seeing the way it is, not the way we want it to be.” As Blystone analyzed SPX, he found nothing fundamentally wrong with its products The bulk of the inefficiency, Blystone thought, stemmed from its being run as a loose collection of companies, with the mindset of a holding company (A holding company owns other companies but does not operate them.) Considerable overlap was found among the various divisions in products and distribution In many instances, the divisions competed against each other Blystone smoothed out the organization, combining certain divisions and selling others He also introduced EVA to all operations as a measure of financial performance EVA stands for economic value added; it is derived from subtracting the cost of capital (such as interest) from after-tax operating profit For example, if you can earn percent by investing capital g CuuDuongThanCong.com Tackles Inefficiency in bonds, or you are borrowing capital at percent, a net operating profit of percent is not impressive EVA is useful in assessing how good a company is at creating shareholder wealth The company moved from a negative $51 million the year before Blystone came on board to a negative $20 million one year later During the same time period, the stock quadrupled in value Stock analysts have observed that SPX is the best company in the automotive field for taking care of shareholders’ interests Blystone has been able to recruit talented people to the company by linking compensation to EVA for most of his employees In one year, several SPX managers earned as much as 200 percent of their base pay as an EVA bonus Blystone has been able to upgrade the company culture by adopting a series of leadership principles “At GE it wasn’t simply a matter of getting the job done,” he says “It was just as important how you got the job done.” Company values are spelled out carefully for employees in many places, including the annual report, e-mail, and the factory walls The core values include comfort with change, obsession with winning, and commitment to cultural diversity Blystone also has his management team thinking big SPX is part of an alliance of companies seeking to develop a radical departure for the automobile industry—an open standard for auto maintenance This means that repair shops will be able to purchase compatible equipment that links the service process together, from work order to diagnosis to parts inventory billing According to Blystone, “We’re trying to get out ahead of what’s happening.” Source: Adapted from Justin Martin, “Another GE Veteran Rides to the Rescue,” Fortune, December 29, 1997, p 282; www.SBX.com https://fb.com/tailieudientucntt C H A P T E R T h e M a n a g e r ’ s EXHIBIT1-2 J o b Planning Organizing and Staffing Leading Controlling Human Resources The Process of Management The manager uses resources and carries out functions to achieve goals Financial Resources Goals Manager Physical Resources Information Resources Managerial Functions Source: Ricky W Griffin, Management, 4e, Copyright © 1993 by Houghton Mifflin Co., p Used with permission T h e F o u r M a n a g e r i a l F u n c t i o n s Exhibit 1-2 showed the four major resources in the context of the management process To accomplish goals, the manager performs four managerial functions These functions are planning, organizing and staffing, leading, and controlling P L A N N I N G Planning involves setting goals and figuring out ways of reaching them Planning is considered the central function of management, and it pervades everything a manager does In planning, a manager looks to the future, saying, “Here is what we want to achieve, and here is how we are going to it.” Decision making is usually a component of planning, because choices have to be made in the process of finalizing plans Planning multiples in importance because it contributes heavily to performing the other management functions For example, managers must make plans to an effective job of staffing the organization Planning is also part of marketing Dineh Mohajer made plans to expand her product line beyond nail polish The next time you visit a cosmetics department, check to see how well her plans are progressing ORGANIZING AND STAFFING Organizing is the process of making sure the necessary human and physical resources are available to carry out a plan and achieve organizational goals Organizing also involves assigning activities, dividing work into specific jobs and tasks, and specifying who has the authority to accomplish certain tasks Another major aspect of organizing is grouping activities into departments or some other logical subdivision Staffing involves making sure there are the necessary human resources to achieve organizational goals Hiring people for jobs is a typical staffing activity Staffing is such a major activity that it is sometimes classified as a function separate from organizing LEADING Leading is influencing others to achieve organizational objectives As a consequence, it involves energizing, directing, activating, and persuading others Leadership involves dozens of interpersonal processes: motivating, communicating, coaching, and showing group members how they can reach their goals Leadership is such a key component of managerial work that management is sometimes seen as accomplishing results through people The leadership aspect of management focuses on inspiring people and bringing about change, whereas CuuDuongThanCong.com https://fb.com/tailieudientucntt T h e M a n a g e r ’ s J o b C H A P T E R the other three functions focus more on maintaining a stable system John Blystone brought about major changes at SPX in order to improve the company’s efficiency CONTROLLING Controlling is ensuring that performance conforms to plans It is comparing actual performance to a predetermined standard If there is a significant difference between actual and desired performance, the manager must take corrective action He or she might, for example, increase advertising to boost lower-than-anticipated sales A secondary aspect of controlling is determining whether the original plan needs revision, given the realities of the day The controlling function sometimes causes a manager to return to the planning function temporarily to fine-tune the original plan In the early 1990s, for example, paper mills decreased their capacity based on predictions of the paperless office The paperless office has not yet materialized, despite the explosion of information technology By the mid-1990s, paper mills could not meet the demand for paper Company executives then had to plan how to upgrade paper-making capacity quickly By the end of the decade, demand and supply for paper had achieved a balance T h e F u n c t i o n s E m p h a s i z e d a t D i f f e r e n t L e v e l s o f M a n a g e m e n t One important way in which the jobs of managers differ is in the relative amounts of time spent on planning, organizing and staffing, leading, and controlling Executives ordinarily spend much more time on strategic (high-level and longrange) planning than middle- or first-level managers.5 Lower-level managers are more involved with day-by-day and other short-range planning One notable difference in time allocation is that, compared to middle managers and executives, first-level managers and team leaders spend more time in face-to-face leadership of employees, as Exhibit 1-3 shows Exhibit 1-4 reveals that executives spend most of their time monitoring the business environment Such monitoring is a form of controlling By analyzing what is going on in the outside world, the manager can help the firm compete effectively 70 63 56 Managing Individual Performance 45 40 Percentage 36 27 Instructing Subordinates First-Line Supervisor Middle Manager EXHIBIT1-3 Time Spent on Supervising Individuals at the Three Levels of Management* First-level supervisors place the most importance on dealing directly with group members Executive *Numbers refer to the percentage of managers who said the task was of “the utmosnce appraisal or consideration for promotion Value conflicts between work requirements and one’s personal code of ethics (person-role conflict)19 Low Job Demands High Job Demands Low Control Passive Job High-strain Job High Control Low-strain Job Active Job https://fb.com/tailieudientucntt E n h a n c i n g P e r s o n a l P r o d u c t i v i t y a n d M a n a g i n g S t r e s s C H A P T E R Such adverse conditions not exist in all organizations However, enough of these problems are present to make long-term stress and burnout a serious problem Many employers recognize that workers often suffer from stressful conditions and therefore are taking constructive action to lessen the problem At Merck & Co., employees were assigned to teams devoted to solving problems such as complaints about overwork, inadequate training, and poor new-hire screening Work was analyzed and reorganized so that workers perceived they had more control over their workloads and schedules In one area of the company, payroll employees were dissatisfied with heavy amounts of overtime Based on problem-solving discussions, team leaders discovered that most of the payroll work was more critical earlier in the week than toward the end Among the solutions proposed were reducing commuting time by allowing employees to work at home more often, and implementing compressed work weeks Merck provided the hardware and software needed to input data from home After implementing the solutions to problems, turnover slowed from 45 percent to 32 percent, and overtime costs and absenteeism have decreased Workload pressures were decreased by slashing overtime and commute time.20 STRESS MANAGEMENT TECHNIQUES As the Merck example illustrates, organizations can play a major role in preventing and remedying stress by correcting the kinds of conditions we have discussed and by offering wellness programs and work/life programs This chapter, however, emphasizes what individuals can to deal with stress and burnout Techniques for managing job stress can be divided into three categories: control, symptom management, and escape.21 M e t h o d s f o r C o n t r o l R e d u c t i o n o f S t r e s s Explain how stress can be managed effectively a n d The five control techniques described next consist of both actions and mental evaluations that help people take charge in stressful situations Get social support Few people can go it alone when experiencing prolonged stress Receiving social support—encouragement, understanding, and friendship—from other people is an important strategy for coping successfully with job stress Improve your work habits You can use the techniques described for improving your personal productivity to reduce stress People typically experience stress when they feel they are losing or have lost control of their work assignments Conscientious employees are especially prone to negative stress when they cannot get their work under control Develop positive self-talk Stress-resistant people are basically optimistic and cheerful This kind of positivism can be learned by switching to positive selftalk instead of thinking many negative thoughts (Refer back to the discussion of SuperLeadership in Chapter 11.) Hug the right people Hugging is now being seriously regarded as vital for physical and mental well-being People who not receive enough quality touching may suffer from low self-esteem, ill health, depression, and loneliness Conversely, quality touching may help people cope better with job stress The hugging, however, has to represent loving and caring CuuDuongThanCong.com https://fb.com/tailieudientucntt 445 ... more time on strategic (high-level and longrange) planning than middle- or first-level managers.5 Lower-level managers are more involved with day-by-day and other short-range planning One notable... middle managers and executives, first-level managers and team leaders spend more time in face-to-face leadership of employees, as Exhibit 1-3 shows Exhibit 1-4 reveals that executives spend most... leader First-Level Managers Supervisor, office manager, crew chief Individual Contributors (Operatives and Specialists) Tool-and-die maker, cook, word processing technician, assembler top-level managers