9781260075113.pdf - McGraw Hill

Angelo KinickiArizona State University

Kent State University

Brian K. Williams

kin75117_fm_i-xxxviii-1.indd 1 10/12/18 7:59 PM

management

N I N T H E D I T I O N

MANAGEMENT: NINTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2016, and 2013. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 21 20 19

ISBN 978-1-260-07511-3MHID 1-260-07511-7

Editorial Director: Michael AblassmeirProduct Developer: Anne EhrenworthExecutive Marketing Manager: Debbie ClareContent Project Managers: Harvey Yep (Core)/Keri Johnson (Assessment)Buyer: Susan K. CulbertsonDesign: Jessica CuevasContent Licensing Specialists: Carrie BurgerCover Image: ©Olivier Renck/Aurora/Getty ImagesCompositor: Aptara®, Inc.

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Kinicki, Angelo, author. | Williams, Brian K., 1938- author.Title: Management : a practical introduction / Angelo Kinicki, Arizona State

University, Brian K. Williams.Description: Ninth edition. | New York, NY : McGraw-Hill Education, [2020]Identifiers: LCCN 2018047636| ISBN 9781260075113 (alk. paper) | ISBN 1260075117 (alk. paper)Subjects: LCSH: Management.Classification: LCC HD31 .K474 2020 | DDC 658—dc23 LC record available athttps://lccn.loc.gov/2018047636

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

mheducation.com/highered


https://lccn.loc.gov/2018047636

https://mheducation.com/highered

iii

Walkthrough Preface of 9e xv

PART 1 Introduction 1 The Exceptional Manager: What You Do, How You

Do It 2

2 Management Theory: Essential Background for the Successful Manager 42

PART 2The Environment of Management 3 The Manager’s Changing Work Environment and

Ethical Responsibilities: Doing the Right Thing 76

4 Global Management: Managing across Borders 116

PART 3Planning 5 Planning: The Foundation of Successful

Management 156

6 Strategic Management: How Exceptional ManagersRealize a Grand Design 188

Learning Module 1: Entrepreneurship 220

7 Individual and Group Decision Making: How Managers Make Things Happen 238

PART 4Organizing8 Organizational Culture, Structure, and Design:

Building Blocks of the Organization 280

PART 6Controlling 16 Control Systems and Quality Management:

Techniques for Enhancing Organizational Effectiveness 630

Learning Module 2: Th

Flowcharts, Gantt Ch

e Project Planner’s Toolkit:

arts, and Break-Even Analysis 681

9 Human Resource Management: Getting the Right People for Managerial Success 322

10 Organizational Change and Innovation: Lifelong Challenges for the Exceptional Manager 374

brief contents

Chapter Notes CN-1Name Index IND-1

Organization Index IND-5Glossary/Subject Index IND-11

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PART 5Leading11 Managing Individual Differences and Behavior:

Supervising People as People 408

12 Motivating Employees: Achieving Superior Performance in the Workplace 456

13 Groups and Teams: Increasing Cooperation, Reducing Conflict 502

14 Power, Influence, and Leadership: From Becoming a Manager to Becoming a Leader 534

15 Interpersonal and Organizational Communication: Mastering the Exchange of Information 580

iv

dedication

To Joyce Kinicki, the love of my life, best friend, and the wind beneath

my wings.

—Angelo

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v


about the author

Angelo Kinicki is an emeritus professor of management and held theWeatherup/Overby Chair in Leadership from 2005 to 2015 at the W.P. Carey School of Business at Arizona State University. He joined the faculty in 1982, the year he received his doctorate in business administration from Kent State University. He was inducted into the W.P. Carey Faculty Hall of Fame in 2016. Angelo currently is the Dean's Scholar in Residence at Kent State University. He is teaching in the MBA program and serves on the Dean's National Advisory Board.

Angelo is the recipient of six teaching awards from Arizona State University, where he taught in its nationally ranked MBA and PhD programs. He also received several research awards and was selected to serve on the editorial review boards for four scholarly journals. His current research interests focus on the dynamic relationships among leadership; organizational culture; organizational change; and individual, group, and organizational performance. Angelo has published over 95 articles in a variety of academic journals and proceedings and is co-author of eight textbooks (32 including revisions) that are used by hundreds of universities around the world. Several of his books have been translated into multiple languages, and two of his books were awarded revisions of the year by McGraw-Hill. Angelo was identified as being among the top 100 most influential (top .6%) Organizational Behavioral authors in 2018 out of a total of 16,289 academics.Courtesy of Angelo Kinicki

Angelo is a busy international consultant and is a principal at Kinicki and Associates, Inc., a management consulting firm that works with top management teams to create organizational change aimed at increasing organizational effectiveness and profitability. He has worked with many Fortune 500 firms as well as numerous entrepreneurial organizations in diverse industries. His expertise includes facilitating strategic/operational planning sessions, diagnosing the causes of organizational and work-unit problems, conducting organizational culture interventions, implementing performance management systems, designing and implementing performance appraisal systems, developing and administering surveys to assess employee attitudes, and leading management/executive education programs. He developed a 360° leadership feedback instrument called the Performance Management Leadership Survey (PMLS) that is used by companies throughout the world.

Angelo and his wife of 37 years, Joyce, have enjoyed living in the beautiful Arizona desert for 36 years. They are both natives of Cleveland, Ohio. They enjoy traveling, hiking, and spending time in the White Mountains with Gracie, their adorable golden retriever. Angelo also has a passion for golfing.

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new to the ninth edition

We are pleased to share these exciting updates and new additions!Two major changes were implemented in the ninth edition. The first involved a new strategic career readiness theme throughout the product to address employers’ concerns about students graduating without being career ready. The second was to extend our emphasis on the practical application of management. Below is a review of these substantive changes.

Career Readiness Theme Promotes Employable Skills Global surveys of CEOs and recruiters reveal that college graduates do not possess the knowl-edge, skills, and attributes desired by employers, resulting in a lack of career readiness. We want to promote the development of your students’ career readiness competencies so that they are more employable. Therefore, we’ve introduced a new strategic theme of career readiness to cre-ate a link between the principles of management and the objective of providing students with the tools they need to flourish on their chosen employment path. This integration takes five forms:

• The career readiness theme is thoroughly introduced in Chapter 1. We introduce a majorsection, 1.7, entitled “Building Your Career Readiness,” and present a model of careerreadiness along with a table of competencies desired by employers.

• Over 40 of the product’s 66 Self-Assessments pertain directly to a career readinesscompetency. Feedback from these self-assessment can be used to assist students increating a development plan focused on being career ready.

• Each chapter concludes with a new section entitled “Career Corner: Managing YourCareer Readiness.” This section serves two purposes. First, it assists students in linkingchapter content with the competencies of career readiness, which provides a powerfulassociation between the principles of management and the skills desired by employers.Second, this material provides students with practical tips for developing targeted careerreadiness competencies. We believe students can become more career ready by followingthe advice in these Career Corner sections.

• We developed a targeted set of exercises in Connect, our online teaching and learningplatform, that give students hands-on experience working with the career readinesscompetencies desired by employers.

• We created a set of experiential exercises for each chapter in our unique TeachingResource Manual that are targeted to develop students’ career readiness competencies.

Extending the Practical Application of Management ConceptsPractical application has always been a major feature of this product. We want students to understand how to use what they are learning in both their personal and professional lives. We extend our emphasis on practicality by: • Every chapter begins with a new feature entitled “Manage U.” It replaces the Manager’s

Toolbox and provides students with actionable tips for applying the material in each chapter.• Each chapter includes two new boxes that provide testimonials from millennials about

their experiences with effective and ineffective management. “I wish I . . .” boxesillustrate real-world examples in which students recall an instance when they or theirboss could have better applied certain management concepts. “I’m glad I . . .” boxesdiscuss positive applications of management concepts.

• To promote mastery of management concepts, we developed a continuing case on Uberfor each chapter. Application learning can be assessed in Connect.

• To promote critical thinking and problem solving, a key career readiness competency,we revamped our Management in Action Cases. They now focus on higher levels of

viiNew to the ninth edition

”

learning by asking students to solve real organizational problems using relevant management concepts.

Fully revised Teaching Resource Manual (TRM) provides complete guidance for instructorsThe TRM was new to the eighth edition and was developed to provide instructors with a turnkey solution to fostering a discussion-based and experiential learning experience. It amounts to a traditional instructor’s manual on steroids by providing suggestions for creatively teaching topics, suggested videos outside of the McGraw Hill arsenal (e.g., YouTube, The Wall Street Journal, etc.), group exercises, lecture enhancers, and supplemental exercises that correspond with cases and Self-Assessments. The TRM has been praised by instructors around the world for its depth, navigation, and experiential-based content. We improved this resource based on feedback from faculty.

Our first change acknowledges that many of us teach online or in larger, in-person classes (sometimes both!). The ninth edition TRM not only includes revised activities for the traditional classroom, but also includes new online and large, in-person class activities for every chapter.

The next set of changes involve providing follow-up activities for the new career readiness–based exercises in Connect because we believe students need these developmental activities to increase their career readiness. We also provide in-depth teaching notes for new Manager’s Hot Seat videos and Application-Based Activities in the form of simulations.

Finally, we provide new web video links for each chapter. These free, short videos allow instructors to illustrate the practical applications of management principles. We also include new current online article links instructors can use to discuss material that supplements the text.

The TRM is top of the line.

—Todd Korol, Monroe Community College

The TRM is by far the most comprehensive and useful on the market. It is very user friendly for both faculty and students.

—Gerald Schoenfeld, Florida Gulf Coast University

““ ”Completely revamped, revised, and updated chaptersIn each chapter, we refreshed examples, research, figures, tables, statistics, and photos, as well as modified the design to accommodate new changes to this ninth edition. We have also largely replaced topics in such popular features as Example boxes, Practical Action boxes, Management in Action cases, and Legal/Ethical Challenges cases.

While the following list does not encompass all the updates and revisions, it does high-light some of the more notable changes.


CHAPTER 1• New Manage U feature: Using Management Skills for College

Success.• Section 1.1—New Example box on efficiency versus

effectiveness discusses how Delta Airlines handled anemergency at Atlanta’s Hartsfield-Jackson Airport. UpdatedCEO pay and labor statistics. New example of museumcurator in discussion of rewards of management.

• Section 1.2—New boxed feature “I wish my manager wasmore of a leader than a manager.”

• Section 1.3—This section was moved to section 1.7 andsection 1.4 was moved here. Introduces new key term“nonmanagerial employees.” Updated salary information forfirst-line managers. New examples for “for-profit” and“nonprofit” organizations. New data in “Managers for ThreeTypes of Organizations.”

• Section 1.4—Section 1.6 became section 1.4, “RolesManagers Must Play Successfully.” New example of MaryBara, CEO of GM, to illustrate managerial work activities. NewPractical Action box on mindfulness. New example of GoogleCEO Sundar Pichai in discussion of informational roles.

viii New to the ninth edition


• Section 1.5—New running example of Mary Bara used toexplain the skills needed to manage. New boxed interviewfeature “I’m glad I have conceptual skills.” New PracticalAction box on developing soft skills.

• Section 1.6—Updated Example box about Airbnb. Introduces new key terms “information technology application skills” and “meaningfulness.” New discussion of the Fourth Industrial Revolution. Updated statistics regarding workforce diversity. New discussion of Volkswagen and ethical standards. Updated Practical Action box on cheating. New reference to sexual harassment in discussion of ethical standards. New suggestions for building meaning into your life.

• Section 1.7—Entire new section on building career readiness.Introduces new key terms “attitude,” “career readiness,”“proactive learning orientation,” and “resilience.” IncludesFigure 1.3 regarding gaps in college graduates andemployers’ assessment of students’ career readiness; Table1.2 description of KSAOs needed for career readiness; Figure1.4, Model of Career Readiness; and discussion ofdeveloping career readiness. New Self-Assessment 1.2, ToWhat Extent Do You Accept Responsibility for Your Actions?

• Section 1.8—New section titled “Career Corner: ManagingYour Career Readiness.” Includes Figure 1.5, Process forManaging Career Readiness, and review of its application.

• New Management in Action case: Did Major League BaseballValue Money over Bob Bowman’s Behavior?

• New continuing case on Uber.

CHAPTER 2• New Manage U feature: What Type of Work Do I Prefer?• Section 2.1—New Example box explores the successes and

failures of Zappos’ management experiment called “holacracy.”• Section 2.2—New coverage of Charles Clinton Spaulding’s

role in administrative management.• Section 2.3—New Example boxes including the new boxed

feature “I’m glad I work in an organization with a Theory Y culture” and an update to the Example box studying open-planoffices as an application of the behavioral science approach.

• Section 2.4—New Example box discussing operationsmanagement at Intel.

• Section 2.5—New Example box applying systems thinking.• Section 2.6—New Example box applying the contingency

viewpoint with manufacturers “pitching” jobs to parents ofcollege students hoping they’ll influence their children toconsider open positions after high school graduation. A newPractical Action box exploring Big Data.

• Section 2.7—New boxed feature “I wish my managerbelieved in a quality-management viewpoint,” as well asexpanded content to include a deeper discussion of SixSigma and ISO 9000, including definitions of both as well aspractical examples of companies using each approach.

• Section 2.8—Expanded and updated in-content examples toshowcase the three parts of a learning organization as wellas expanded content examples on the three roles managersplay in building learning organizations. Updated companyexamples for learning organizations, including a discussion ofGoogle Buzz, American Express, and Apple.

• New Career Corner feature on Managing Your Career Readiness. • New Management in Action case: The Decline of Sears.• New continuing case on Uber.

CHAPTER 3• New Manage U feature: Increase Ethical Behavior by

Fostering an Ethical Climate.• Section 3.1—Updated content regarding Millennials and their

search for meaning.• Section 3.2—Updated content and company applications for

internal stakeholders at SAS and the board of directors atFacebook.

• Section 3.3—New Example box discussing United Airlines and its responsibilities to its stakeholders versus customers. New boxed feature “I wish I kept a closer eye on trends affecting our suppliers.” Updated statistics regarding unions. New Example box discussing Amazon’s new headquarters and whether it will benefit the city chosen. New boxed feature “I’m glad I kept current on my industry’s general environment.” Updated Example discussing the Internet of Things. Introduces new key term “LGBTQ.” New figure showcasing the states in which marijuana is legal. Various content updates, including company examples for the task environment (including an updated list of “America’s Most Hated Companies”) and special interest groups with a discussion of the #MeToo movement andinternational forces such as Brexit. Updated examples for sociocultural forces to include seismic changes. Updated statistics for demographic forces of change.

• Section 3.4—New Example box featuring Volkswagen andethics. Introduces new key term “abusive supervision.”Updated statistics on workplace cheating. New Example boxdiscussing “whistleblowing” photographer Simon Edelman’sphotos of the Trump administration and the fallout. Updatedcontent examples for recent Sarbox cases and the mostcommon ethics violations at work.

• Section 3.5—New content example of Tom’s Shoes as acompany showcasing social responsibility. New example ofthe benefits to Coca-Cola for going green and new tableshowing how being ethical and socially responsible pays off.

• Section 3.6—New Example box discussing HD SupplyHoldings and Fox News and the good and bad of corporategovernance.

• New Career Corner feature on Managing Your Career Readiness.

• New Management in Action case: Who’s to Blame for CollegeBasketball’s Dark Underbelly?

ixNew to the ninth edition


• Updated Legal/Ethical Challenge: Should You Apply to HaveYour Student Loans Forgiven?


CHAPTER 4• New Manage U feature: Working Successfully Abroad:

Developing Cultural Awareness.• Section 4.1—Updated section opener with new statistics

regarding United States imports in 2016. Updated Table 4.1and corresponding content with competitiveness rankings for2016–2017. New Example box featuring internationale-commerce company Alibaba. Updated content on thepositive and negative effects of globalization. New contentexamples featuring recent megamergers including CVS/Dignity Health, Amazon/Wholefoods.

• Section 4.2—New Example box discussing how to get an edge in the global job market. Introduces new key term “cross-cultural awareness.” The career readiness competency of cross-cultural awareness is defined and leads into the corresponding Practical Action box. Features an updated discussion of U.S. brands that are foreign owned. New boxed feature “I wish I considered the impact of ethnocentrism.”

• Section 4.3—Updated discussion on the foreignmanufacturing of Apple products. An updated discussion ofwhy companies expand internationally, including Netflix,Amazon, and Ford Motor Company and expandeddiscussion of foreign subsidiaries. Updated examples forhow companies expand internationally, including UnderArmour. Updated examples of global outsourced jobs,including an updated Table 4.2 with top exporting countriesthrough 2016. Updated list of U.S. companies openingfranchises overseas, including Chick-fil-A and Cold Stone.

• Section 4.4—Updated Table 4.3 with the U.S.’s top tentrading partners. Updated content regarding tariffs with adiscussion of the Trump administration as well as updatedcontent pertaining to import quotas, dumping, andembargoes and sanctions. New table featuring organizationspromoting international trade. Updated discussion on NAFTA,the EU, and other trading blocs complete with a new Examplebox discussing Brexit’s impact on Britain and the EU. UpdatedExample box to showcase the exchange rates on variouscommon products like rent, Starbucks, and designer jeans.Updated statistics for major economies, including China,India and Brazil.

• Section 4.5—Changed the section title to “The Value ofUnderstanding International Differences” and expanded theopening with a discussion on international differences. Anupdated discussion on language and personal space with adiscussion on learning foreign language online and throughapps and a new Example box discussing the differences inpersonal space in various countries. Updated content ondifferences in communication. New Practical Action boxdiscussing how to run an international meeting. New Figure

4.2 discussing current followers of world religions. Current examples of expropriation, corruption, and labor abuses. An updated discussion on expatriates and why U.S. managers often fail. New boxed feature “I’m glad I understood the GLOBE Project’s cultural dimensions.”

• New Career Corner feature: Managing Your CareerReadiness: Working Overseas. New key term “context.”

• New Management in Action case: The Growth and Stall ofDidi Chuxing.

• New Legal/Ethical Challenge: Should Qatar Be Hosting the2022 World Cup?


CHAPTER 5• New Manage U feature: Making an Effective Plan for Starting

Your Career.• Section 5.1—New Example box on how to write a business plan.

The previous discussion of VRIO was moved from this sectionto Chapter 6. New research on the benefits of planning.

• Section 5.2—Opens with a new Table 5.1 discussing andsummarizing mission, vision, and values statements. Newexample box on Coca-Cola includes the company’s mission,vision, and values statements. A new Example box discussesCoca-Cola’s six long-term strategies. New boxed feature “Iwish my manager put more effort into operational planning.”

• Section 5.3—New boxed feature “I’m glad I developed anaction plan.” Updated Example box pertaining to long andshort-term goals at Southwest Airlines.

• Section 5.4—New Example box on setting clear goals atSnapchat. Included new research on goal setting programs.Revised the three types of goals used in MBO: performance-based, behavioral-based, and learning-based. New Self-Assessment determining whether students have a proactivelearning orientation. Added Tornier as an example of anAction Plan. New Practical Action box for small businessesand goal setting.

• Section 5.5—New Example box applying the planning/controlcycle through Tesla’s Model 3.

• New Career Corner feature: Managing Your CareerReadiness.

• New Management in Action case: Fender Rebrands to Stay inTune with the Times.

• New Legal/Ethical Challenge: Is Pfizer Putting Profits aboveAlzheimer’s Patients?


New Learning Module: Entrepreneurship • New Manage U feature: So You Want to Start a Business?• Section LM 1.1—Introduces entrepreneurship and its

foundation, including a discussion of Elon Musk. Introduces

x New to the ninth edition


the concept of intrapreneurship, leading to a new Example box discussing Intel’s Genevieve Bell. Discusses how entrepreneurship is different from self-employment. A new figure LM 1.1 lists the characteristics of entrepreneurs. NewSelf-Assessment to determine if students have an “entrepreneurial spirit.” A discussion of entrepreneurship across the globe. New Table LM 1.1 with facts about small business.

• Section LM 1.2—Begins by discussing how entrepreneurscome up with ideas to start a business. Discusses how towrite a business plan. Reviews the options for creating alegal structure for a business and how to obtain financing.The importance of creating the right organizational cultureand design is explored. New Example box featuring the startand growth of a small business.

CHAPTER 6• New Manage U feature: Building Your Personal Brand.• Section 6.1—New coverage regarding levels of strategy.

New Figure 6.1 shows three levels of strategy. Introducesthe new key term “functional level strategy.” Updatedresearch on strategic planning at small and large firms. NewExample box illustrates strategic planning at Evernote andGroove HQ.

• Section 6.2—The five steps of the strategic managementprocess were changed to reflect current thinking. New boxedfeature “I wish my company would have evaluated its currentreality before opening the doors for business.” New Self-Assessment on strategic thinking.

• Section 6.3—Begins with new key term “sustainablecompetitive advantage.” Updated Example box of SWOTanalysis for Toyota; VRIO discussion from Chapter 5 nowfeatured in this section with updated content and a newFigure 6.3. New Example box on developing competitiveadvantage in the Internet economy. Updated Example boxwith contingency planning in the wake of Hurricane Harveywith a discussion on CVS, Walgreens, and Fed Ex.

• Section 6.4—Renamed “Establishing Corporate LevelStrategy.” Section now opens with Three Overall Types ofCorporate Strategy and includes a new table showcasinghow a company can implement overall corporate levelstrategies. New discussion of the BCG Matrix and differentdiversification strategies. Introduces new key term “unrelateddiversification.” Discussion on Porter’s five competitive forcesand four competitive strategies moved to Section 6.5.

• Section 6.5—Renamed “Establishing Business LevelStrategy.” The discussion on Porter’s competitive forces andstrategies moved to this section. New examples used toillustrate these concepts.

• Section 6.6—Renamed “Executing and Controlling Strategy.”New boxed feature “I’m glad my company adjusts its strategyas we go.”


• New Management in Action case: General Electric’s EvolvingStrategy.

• New Legal/Ethical Challenge: Is Your School Selling Your Bank Accounts?


CHAPTER 7• New Manage U feature: How to Make Good Decisions.• Section 7.1—Updated Example box on Starbucks. Expanded

content on intuition with a new Example box on the power ofintuition and a new Practical Action box on how to improveintuition.

• Section 7.2—Section opens with updated examples onbusiness ethics including medication profiteering, the#MeToo movement, CEOs being punished for unethicalbehavior, and as a contrast to bad behavior, philanthropistsBill and Melinda Gates. New boxed feature “I’m glad I foundan employer who cares about ethics more than just makingmoney.”

• Section 7.3—Begins with an updated discussion of ethics at Google. New examples of companies using evidenced-based decision making. Updated Example box on using analytics in sports. Use of Big Data at companies such as Target, JetBlue, HP Labs, and the Obama administration is discussed. New Example box on data and hacking, featuring the Equifax breech.

• Section 7.4—New examples of various decision-makingstyles of CEOs, including Elon Musk, Jeff Bezos, GinniRometty, and Madeline Bell.

• Section 7.5—Renamed “Decision-Making Biases and the Useof Artificial Intelligence.” Section opens with a discussion onheuristics and leads into updated content and discussionillustrating overconfidence bias with BP oil and thegovernment’s spy plane for the escalation of commitmentbias. Introduces a new section on AI, reviewing its pros andcons. The use of AI at various companies is highlighted,including Google and Microsoft.

• Section 7.6—New boxed feature “I wish my workplacedidn’t have a toxic group decision-making environment.”New discussion on the Delphi technique and devil’s advocacy,along with a figure illustrating their implementation.Section concludes with an introduction to the concept ofproject post-mortems with practical examples from Disneyand Pixar.


• New Management in Action case: New York Subway System.• New Legal/Ethical Challenge: It’s All about a Peacock

(featuring a discussion on emotional support animals).• New continuing case on Uber.

xiNew to the ninth edition


CHAPTER 8• New Manage U feature: How to Get Noticed in a New

Job: Fitting into an Organization’s Culture in the First60 Days.

• Section 8.1—New boxed feature “I wish my company hadintegrated its corporate strategy and organizational culture.”New Table 8.1 reviews the drivers of organizational culture.Updated Example box on how strategy affects culture atCleveland Clinic.

• Section 8.2—New examples illustrate the three levels oforganizational culture. New examples used to explain thefour types of culture within the competing values framework.New examples used to explain how employees learn culture.Updated research on person-organization fit.

• Section 8.3—New boxed feature “I’m glad managementembraced an empowering culture during a merger.” Newexamples used to illustrate the 12 methods organizations useto change culture.

• Section 8.5—New Practical Action box on how to effectivelydelegate.

• Section 8.6—Opens with an updated discussion on Googleand its culture of innovation. An updated Example box onWhole Foods is used to explain horizontal designs.

• Section 8.7—Section is introduced with a new key term:“contingency approach to organizational design.” Newexample of Etsy is used to frame discussion of mechanisticand organic organizations.


• New Management in Action case: Wells Fargo’s Sales CultureFails the Company.

• Updated Legal/Ethical Challenge: Should Socializing OutsideWork Hours Be Mandatory?


CHAPTER 9• New Manage U feature: How to Prepare for a Job

Interview.• Section 9.1—New examples from Fortune’s 10 best work

places for Millennials, including Ultimate Software, SAS,Quicken Loans, Salesforce, and Encompass Home Health andHospice. Updated research on the effectiveness of HRpractices. New information on company rewards. Newexamples to illustrate human and social capital including NewBrunswick Power and Inter-American Development Bank.

• Section 9.2—New statistics on recruiting trends andexamples for internal and external recruiting, including Vistoand Glassdoor. New boxed feature “I’m glad my company isserious about its recruiting and selection processes.”Updated Example box discussing the changing job market,Millennials, and the gig economy. New research regarding

the lies job applicants tell. New boxed feature “I wish my company used a structured interview process.” A new Practical Action box discussing what employers are looking for in a job interview. Updated information on the legality of employment tests. New Example box listing the pros and cons of personality tests and updated information on personality tests including Myers-Briggs. Section closes with a discussion on AI and how it is changing the recruitment and selection process.

• Section 9.3—Updated statistics on benefits, including a newdiscussion regarding gender-based preferences.

• Section 9.4—Renamed “Orientation and Learning andDevelopment.” Opens with a new example of onboardingwith Facebook’s new employee boot camp. New content onlearning and development including Millennials, SAS, andEstee Lauder. Updated research on L&D programs. NewExample box on Keller Williams and its learning anddevelopment program.

• Section 9.5—New Example box on performance managementat Edward Jones. Updated research on performancemanagement and performance appraisal, and newperformance management examples pertaining to Deloitte,Accenture, Cigna, Microsoft, and Adobe. Discussion of howforced ranking is losing favor. New discussion of how to giveeffective performance feedback.

• Section 9.6—Updated Practical Action box on the right way tohandle a dismissal.

• Section 9.7—Updated statistics and information regardingworkplace discrimination and bullying. New Example boxdiscussing sexual harassment at work.

• Section 9.8—Opens with updated statistics on labor unions.Updated Figure 9.4 showing right-to-work states.

• New Career Corner feature: Managing Your Career Readiness.• New Management in Action case: Difficulties Attracting and

Retaining Human Capital in the Nursing Profession.• New Legal/Ethical Challenge: Should Noncompete

Agreements Be Legal?• New continuing case on Uber.

CHAPTER 10• New Manage U feature: How Can I Be More Creative at Work?• Section 10.1—New Example box discussing the decline of

Toys R Us. New examples of companies experiencing change.Updated Example box on BP and the oil spill in the Gulf ofMexico. New examples to explain the forces for change.Updated Example box on ridesharing and self-driving cars.

• Section 10.2—New examples to illustrate three kinds ofchange. New boxed feature “I’m glad my company unfrozeemployees before implementing organizational change.”Added a new section on applying the systems model ofchange featuring Stora Enso.

xii New to the ninth edition


• Section 10.3—Updated statistics regarding the effectivenessof organizational development.

• Section 10.4—This section was completely rewritten,restructured, and renamed “Organizational Innovation.”Introduces the new key term “innovation.” New Figure 10.5shows the various approaches to innovation. A new figureillustrates the supporting forces for innovation. A new tablelists the most innovative companies. A new Self-Assessmentmeasures organizational climate for innovation. New boxedfeature “I wish my company considered the components ofan innovation system.” Introduces new key term“crowdsourcing.” New Example box discussing IDEO’sapproach to innovation. Recent research is used to supportour discussion of innovation.

• Section 10.5—Updated research regarding resistance to change.• New Career Corner feature: Managing Your Career Readiness.

New key terms “self-affirmations” and “self-compassion.”• New Management in Action case: Chipotle Needs to Change.• New Legal/Ethical Challenge: Did L’Oreal Go Too Far in Firing

Its Patent Lawyer?• New continuing case on Uber.

CHAPTER 11• New Manage U feature: How to Make a Positive First

Impression at Work.• Section 11.1—Opens with updated information and

statistics for employment and personality testing and theBig Five personality dimensions. Updated researchregarding personality and individual behavior and workattitudes. Introduced the new key term “generalizedself-efficacy” with a discussion on the topic and its tie tocareer readiness with a new Self-Assessment measuringlevels of generalized self-efficacy. A new Practical Actionbox discussing how technology can be used to developEmotional Intelligence.

• Section 11.2—New Self-Assessment to measure the careerreadiness competency of having a positive approach to work.New Practical Action box on using cognitive reframing toreduce cognitive dissonance.

• Section 11.3—Updated research regarding stereotypes andimplicit bias. Updated discussion on distortions in perception,including gender stereotypes. New Example box discussingthe halo effect and how body weight affects careers. NewExample box on the Pygmalion effect.

• Section 11.4—Opens with entirely new content on employeeengagement with a new table showing the predictors ofengagement. Updated research on job satisfaction,organizational commitment, and important workplacebehaviors like performance, organizational citizenship, andcounterproductive behavior. Updated the Example box ontoxic workplaces.

• Section 11.5—Updated examples and statistics regarding trends in workplace diversity, including age, gender pay gap, race, and sexual orientation. New example discussing Google’s internal memo regarding women in tech and how it showcases a barrier to diversity. Updated research pertaining to barriers todiversity. New boxed feature “I’m glad my manager embraced diversity and fostered inclusiveness.” New Example box showcasing Ultimate Software.

• Section 11.6—Updated research on stress and itsconsequences. Introduces new key term “work–life conflict.”New Table 11.4 discusses the negative consequences ofconflict, including work, family, and other life demands. Anew boxed feature “I wish my manager alleviated my work-related stress.” Reworked the content regarding workplacestress and its consequences. New coverage of resilience andits role in career readiness. A new Self-Assessment assesseslevels of resilience. Updated content on holistic wellness anda new Example box showcasing Google’s corporate wellnessprogram.

• New Career Corner feature: Managing Your Career Readiness. • New Management in Action case: Does the Financial Services

Industry Lack Diversity?• New Legal/Ethical Challenge: Should Airlines Accommodate

Oversized People?• New continuing case on Uber.

CHAPTER 12• New Manage U feature: Managing for Motivation: Building

your Own Motivation.• Section 12.1—New company examples and statistics on

extrinsic and intrinsic rewards, including Uber, McDonald’s,Outback Steakhouse, and MARS. A new section provides anoverview of all motivation theories discussed in the chapter.

• Section 12.2—Added a quick summation of themotivation theories discussed in the section. UpdatedExample box on hotel company Joie de Vivre. Updatedresearch on need theories. New boxed feature“I’m glad I fostered employees’ sense of competence.”Updated research regarding the application of Herzberg’stwo factor theory.

• Section 12.3—Updated research on process theories ofmotivation. Updated statistics on CEO pay. New examples toillustrate the application of equity theory. New Example boxshowcasing transparency at Buffer. New examples of Teslaand Kronos to demonstrate the application of expectancytheory. New coverage of stretch goals and two types of goalorientations—learning goal orientation and performance goalorientation.

• Section 12.4—Updated research on job design. New Examplebox on how job characteristics matter in the modernworkforce.

xiiiNew to the ninth edition


• Section 12.5—Updated research on rewards. Newexamples to illustrate the four types of reinforcement. Newboxed feature “I wish my manager used positivereinforcement rather than punishment.”

• Section 12.6—Updated research on compensation,nonmonetary incentives, and other rewards. Updatedstatistics on money as a motivator. Updated content onincentive plans. Updated the example box on successfulworkspaces. New Practical Action box on how managers canencourage gratitude.


• New Management in Action case: Motivation Challenges inthe Fast-Food World.

• New Legal/Ethical Challenge: Are Workplace WellnessPrograms Using Proper Motivational Tools?


CHAPTER 13• New Manage U feature: Effectively Managing Team

Conflict.• Section 13.1—Updated research on teams. Updated Example

box on informal groups and informal learning. Updatedcontent regarding self-managed and virtual teams. UpdatedPractical Action box regarding best practices for virtualteams.

• Section 13.2—Updated content on punctuated equilibriumand its tie to Brexit.

• Section 13.3—Updated research regarding building high-performance teams. Updated discussion on collaboration,including new a new study of the relationship betweenlistening to happy music, mood, and collaboration. Newboxed feature “I’m glad my manager fosters collaboration.”New Example box focuses on building trust. New PracticalAction box on building effective team norms. Added newmaterial regarding effective team processes and their role inbuilding high-performance teams. Introduces the new keyterms “team processes,” “team charter,” “team reflexivity,”and “team voice.”

• Section 13.4—Updated research on conflict. New examplesof dysfunctional and functional conflict. New boxed feature “Iwish I was able to manage interpersonal conflict moreeffectively.” Updated the discussions on kinds of conflict.Updated discussion on ways intergroup conflicts areexpressed, including an example for ambiguous jurisdictionswith a racial-profiling incident at Starbucks. New Example boxon playing the devil’s advocate as a way to resolve conflict.Section closes with a new figure on five conflict handlingstyles.


• New Management in Action case: IBM Wants Its EmployeesBack in the Office.

• New Legal/Ethical Challenge: When Employees SmokeMarijuana Socially: A Manager’s Quandary.


CHAPTER 14• New Manage U feature: Improving Your Leadership Skills.• Section 14.1—Introduces key term “leadership coaching”

and the difference between leading and managing, includinga new Table 14.1 showing the characteristics of managersand leaders. Introduces new key term “managerialleadership.” New coverage of managerial leadership andcoping with complexity versus coping with change. UpdatedTable 14.2 on influence tactics with new example ofexchange and legitimizing tactics. Developed a newintegrated model of leadership (Figure 14.1) to foreshadowthe theories covered in the chapter.

• Section 14.2—Opens with an example of Phebe Novakovic,CEO of General Dynamics, as someone who embodies thetrait approach to leadership. Table 14.3 updated to showhow the Big Five personality traits, which were introduced inChapter 11, represent positive, task-oriented traits.Expanded the discussion on narcissism and gender andleadership. Updated the Example box discussing greatworldwide leaders. Renamed “strategic skills” in Table 14.4to “conceptual skills.” New for theories drawn from traittheory, including Martha Stewart as a micromanager. Newcompany examples for organizations using trait assessments,including Citigroup, ExxonMobil, Ford Motor, Procter &Gamble, Hewlett-Packard, and JPMorgan. Replaced thediscussion on “cross-cultural competency” with a “globalmind-set” and illustrated its tie to career readiness. Updatedresearch on leadership traits.

• Section 14.3—New examples of initiating structureleadership, including Meg Whitman and David Miliband. Newexamples for transactional and empowering leadership,including Nick Saban and Sheryl Sandberg. New Example boxshowcasing Lauren Bush Lauren’s values-driven leadership.Introduces key term “passive leadership.” Updated researchon behavioral approaches.

• Section 14.4—Updated research on contingency leadership.• Section 14.5—New Example box discussing Pepsi’s Indra

Nooyi and her transactional and transformational leadership.New examples of John Hennessy, Dr. Donald Hopkins, MegWhitman, and John Mackey used to illustrate the four keybehaviors of transformational leaders. New boxed feature“I’m glad I understood the value of using individualizedconsideration.” Section closes with an updated summary onwhat we know about transformational leadership. Updatedresearch on transformational leadership.

xiv New to the ninth edition


• Section 14.6—Expanded the discussion on the usefulness ofthe LMX model. New boxed feature “I wish I had knownabout the impact of a poor LMX: I do now!” Updated researchon LMX and humility.

• New Career Corner feature: Managing Your CareerReadiness. New key term “Dunning-Kruger effect.”

• New Management in Action case: VA Turnaround: A WaitingGame.

• New Legal/Ethical Challenge: Should Starbucks Have aCorporate Loitering Policy?


CHAPTER 15• New Manage U feature: Improving Your Use of Empathy.• Section 15.1—Kicks off with new research on communication

effectiveness. New boxed feature “I’m glad my manager wasan effective communicator.” New example of noise. Updatedthe Example box on “Secrecy and Silence” to includeVolkswagen and Theranos. Updated research on mediarichness and selecting the best medium.

• Section 15.2—Updated discussion and research on thegrapevine. Updated Practical Action box on how tostreamline meetings.

• Section 15.3—Updated discussion on the physical barriers ofcommunication, including open office plans. Updateddiscussion and statistics for personal barriers tocommunication and nonverbal communication. New Examplebox discussing personal and cross-cultural barriers tocommunication and how they adversely affect organizations.New Practical Action box on improving communicationsbetween men and women.

• Section 15.4—Updated Figure 15.3 showing the use of socialmedia across various age groups. Updated research on socialmedia and managerial and organizational effectiveness. NewPractical Action box on building your own social media brand.New examples for crowdsourcing. New Example box on TDBank and its use of social media. New content pertaining tothe downsides of social media, including new key term“FOMO” and a discussion of microaggressions and recentthreats to cybersecurity, including attacks at Target, Equifax,and Verizon. New boxed feature “I wish I didn’t have FOMO.”Updated Table 15.8 to show elements of an effective socialmedia policy. New Example box illustrating samples of socialmedia policies at IBM, Best Buy, McDonald’s, Walmart,Washington Post, and Intel.

• Section 15.5—New statistics on the cost of poorcommunication. Expanded the discussion of empathy.Updated and expanded Table 15.11, which discusses rulesfor business writing. Updated research on nondefensivecommunication, empathy, and listening.

• New Career Corner feature: Managing Your Career Readiness.

• New Management in Action case: Fyre and Fury.• Updated Legal/Ethical Challenge: Was ESPN Fair in Firing

Curt Schilling for His Social Media Post?• New continuing case on Uber.

CHAPTER 16• New Manage U feature: Using a Mentor to Exercise Control in

Your Career.• Section 16.1—New examples on why control is needed and

new company examples for control, including Takata, FedEx,UPS, The New York Times, and Uber. New boxed feature “I’mglad my company made employees feel valued and engagedby regularly monitoring performance.” Introduces the newkey term “control charts” with a discussion on the topic,including an example and new figure. New example offeedforward control at Southwest Airlines.

• Section 16.2—New Example box regarding fair laborpractices at Adidas. New examples on levels of control andthe supply chain at KFC in the UK.

• Section 16.3—New examples of the balanced scorecard, including an internal business perspective at National Marrow Donor Program and an innovation and learning perspective at Tolko Industries LTD. New example of cascading a strategy map.

• Section 16.4—New examples for internal audits, includingCitigroup.

• Section 16.5—Opens with updates to the winner of theBaldrige Award, Bristol Tennessee Essential Services (BTES).New boxed feature “I wish my company were focused oncontinuously improving work processes.” New examples toillustrate Deming’s PDCA framework. New Example boxdiscussing Hyundai and its challenge to the luxury carmarket. Kia Motors is introduced as a new example ofimprovement orientation. Updated Example box on Kaizenprinciples. New Example box on service excellence with adiscussion including Nordstrom’s and Trader Joes. Updatedstatistics on outsourcing. Updated discussion on ISO 9000standards.

• Section 16.6—New discussion on managing micromanagers.• Section 16.7—Updated Table 16.2 with statistics for GDP

through 2018. Updated statistics on productivity growth.New content on processes used to increase productivity,including new key terms “benchmarking” and “bestpractices.” Updated content on managing individualproductivity.


• New Management in Action case: Is Tesla Out of Control?• New Legal/Ethical Challenge: Should Companies use GPS to

Track Employees?• New continuing case on Uber.

xv

Walkthrough Preface of 9e

Kinicki/Williams, Management: A Practical Introduction, 9e empowers students to develop the management career skills necessary in everyday life through the practical and relevant application of theory. Developed to help students learn management with a purpose, K/W 9e takes a student-centered approach. The revision introduces a new strategic career readiness theme throughout to address employers’ concerns about students graduating without being career ready and extends our emphasis on practicality. The hallmark strengths that have made it the market best-seller have been maintained and include:

• Astudent-centeredapproachtolearning.

• Imaginativewritingforreadabilityandreinforcement.

• Emphasisonpracticality.

• Resourcesthatwork.

Our product covers the principles that most management instructors have come to expect in an

introductory text—planning, organizing, leading, and controlling—plus current issues that students need to

be to be aware of to succeed: customer focus, globalism, diversity, ethics, social media, entrepreneurship,

teams, innovation, artificial intelligence, Big Data, and empowerment.

It (the book) is well written and provides relevant examples in the text with great online support. The TRM (Teaching Resource Manual) is very useful and important in teaching the course. I have found the product to be one of the best I have ever used.

—Jerry D. Stevens,Texas Tech University

“”


Based on a wealth of instructor feedback and blending Angelo’s scholarship, teaching, publishing, and

management-consulting with Brian’s writing and publishing background, we have worked tirelessly to

create a research-based yet highly readable, practical, and motivational product for the introductory

principles of management course. Our goal to make a difference in the lives of you and your students.

Management Theory CHAPTER 2 69

2.9 Career Corner: Managing Your Career Readiness

LO 2-9Describe how to develop the career readiness competency of understanding the business.

Figure 2.5 shows the model of career readiness we discussed in Chapter 1. What does a chapter on management history have to do with your career readiness? How about its application to the Knowledge competency of understanding the business? This compe-tency was defined in Table 1.2 as the extent to which you understand a company’s busi-ness and strategies and the needs of its stakeholders. It comes into play whenever you interview for a job.

Recruiters expect you to do some research, just as you would for a class assign-ment. They want you to act like Sherlock Holmes and do some snooping. That’s good for both you and a potential employer in that it helps identify the likely level of fit between the two of you. Good fit, in turn, is associated with more positive work atti-tudes and task performance, lower intentions to quit, and less job-related stress.65 Moreover, doing your homework on a company makes you a more attractive job can-didate. It shows interest on your part, and recruiters are impressed by the fact that you took the time to learn about the business.66 It also prepares you to ask smart questions, a behavior recruiters want to see. Remember, sometimes it’s the small things like this that land a job.

Careerreadiness

Knowledge(K)

Soft skills(S)

Careeroutcomes

Attitudes(A)

Othercharacteristics

(O)

FIGURE 2.5Model of Career Readiness©2018 Kinicki and Associates, Inc.

So, what does it take to demonstrate that you understand a business? We recom-mend that you learn the following seven things about a company before showing up at a job interview:67

1. The company’s mission and vision statements. These statements tell you whythe company exists and what it wants to become or achieve over time. Thequestion to answer is whether you support these pursuits and would like to be part of the journey. If you do, you will be a better fit for the company. This isimportant because employees are more likely to be productive and stay at acompany when they fit in. For example, if you like outdoor activities, you will most likely be a better fit at Recreational Equipment, Inc. (REI), which sellssporting goods, camping gear, and outdoor clothing, than Whole Foods. Youcan find this information on the company’s website.

2. The company’s core values and culture. The values an organization endorsesrepresent the foundation of its culture. You can find clues about this by study-ing a company’s website. Try to find a list of company values. What do these

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32 PART 1 Introduction

Careerreadiness

Knowledge(K)

Soft skills(S)

Careeroutcomes

Attitudes(A)


(O)

FIGURE 1.4Model of career readiness©2018 Kinicki and Associates, Inc.

TABLE 1.2 Description of KSAO Skills Needed for Career Readiness

KSAO COMPETENCY DESCRIPTION

Knowledge Task-Based/Functional Demonstrated ability to apply academic and practical knowledge in pursuit of organizational and individual goals/assignments.

Information Technology Effective use of IT and learning new applications as needed. Application

Cross-Cultural Competency Awareness of cross-cultural differences; respect for diverse cultures, races, ages, genders, and religions; and demonstrated openness, inclusiveness, and ability to interact with diverse people.

Computational Thinking Ability to use numbers to distill abstract concepts and conduct data-based reasoning. Ability to work with and interpret Big Data.

Understanding the Business Understanding of the company’s business and strategies and the needs of stakeholders, and ability to see how your work fits into the larger organizational puzzle.

New Media Literacy Ability to develop, evaluate, and use new media forms, and to apply these media for persuasive communication. Ability to stay up-to-date with the latest media trends and leverage them in the interest of the organization.

Soft Skills Critical Thinking/Problem Sound reasoning to analyze situations, make decisions, and solve problems. Solving Ability to obtain, interpret, and analyze both qualitative and quantitative

information while creatively solving problems.

Oral/Written Communication Ability to effectively express your thoughts, ideas, and messages to diverse people in oral and written form. Public speaking skills and ability to write/edit emails, letters, and technical reports.

Teamwork/Collaboration Ability to work effectively with and build collaborative relationships with diverse people, work within a team structure, and manage interpersonal conflict.

Leadership Skill at influencing a group of people to achieve common goals. Ability to motivate, coach, and develop others.

Decision Making Ability to collect, process, and analyze information in order to identify and choose from alternative solutions that lead to optimal outcomes.

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About 80,000 undergraduate students from over 350 universities across the United States rated 2017’s most attractive employers. The top 10 were: (1) Google, (2) Walt Disney Company, (3) Apple, (4) Nike, (5) Amazon, (6) J.P. Morgan, (7), Goldman Sachs, (8) Ernst & Young, (9) Deloitte, and (10) FBI.115 Would you like to work at these companies or another like them? If so, you need to be career ready.

Career readiness represents the extent to which you possess the knowledge, skills, and attributes desired by employers. How ready do you believe you are? Recent surveys of college graduates and recruiters reveal a big gap in the degree of readiness each group perceives in students. Figure 1.3 shows the results of a study of 400 employers and 613 college students. The majority of students rated themselves as career-ready on 11 of 17 skills, while the majority of employers did not perceive students to be well-prepared on any of the skills.116 The three largest gaps were in critical/analytical thinking, written communication, and locating, organizing, and evaluating information, skills that are very important to employers.117 Other studies have similarly demonstrated that employ-ers see a major skills gap in college students’ interpersonal skills.118

You’ll want to close these gaps for three reasons:

1. To get a job and earn more money. Today’s jobs require greater interpersonal or soft skills, and employers are willing to pay higher salaries to those possessing them.119

2. To impress employers with your self-awareness. Companies prefer to hire people with realistic perceptions of their own strengths and weaknesses. This under-scores the need to obtain information about your strengths and weaknessesthroughout your career.

3. To create your own motivation to learn. Studies of human behavior reveal thatpeople won’t spend time on personal development unless they feel the need. Overinflated perceptions of career readiness will not motivate you to develop the attributes that enhance that readiness. You need to motivate yourself to learn and develop.

Moreover, these gaps are critical to employers too. Kate Davidson, a reporter for The Wall Street Journal, concluded that a lack of soft skills “is limiting organizationalproductivity,” and “it is becoming increasingly difficult to find applicants who can com-municate clearly, take initiative, problem-solve and get along with co-workers.”120

Knowing this, we want reading our textbook to help you become career-ready. The pro-cess starts with focusing on the ideas and suggestions in this section.

A Model of Career ReadinessBeing career-ready is a lifelong process requiring you to continually learn and developin response to changes in organizational needs and skill requirements. It is not a one-time event that stops after graduation. Consider what René Steiner, President/CEO of Büler North America, had to say about career readiness. “Realize that learning is notcomplete when you graduate. Today, more so than in the past, there is the opportunity to continue to develop, through education, learning company culture, and exploringdifferent areas of business. And, you need to adapt to future needs.”121 Authors of theFuture Work Skills 2020 report similarly concluded that individuals “will increasingly be

1.7 Building Your Career Readiness THE BIG PICTURECompanies want to hire career-ready college graduates. In this section we describe a model of career readi-ness and offer tips for building your readiness.

LO 1-7Define the knowledge, soft skills, attitudes, and other characteristics needed for career readiness and discuss how they can be developed.

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The Manager’s Changing Work Environment and Ethical Responsibilities CHAPTER 3 99

In exposing unethical behavior, then, it’s important to be clear why you’re doing it(trying to help the company or just get someone in trouble), not report something forthe wrong reason (discuss your concerns with someone who has similar values), andfollow proper channels (like addressing the supervisor of the supposed culprit). Don’ttry to report externally (lashing out on Facebook, for instance) without speaking tothose who might resolve the problem.138

Some people view ethics in ideal terms, which means that ethical principles or stan-dards apply universally across situations and time. Others, however, take a relativisticview and believe that what is ethical depends on the situation. These differences cancreate conflict among managers trying to make decisions.

Consider the situation faced by a group of executives working with Angelo to make a decision about opening a new office overseas. Angelo was consulting with a global com-pany that was dealing with the issue of whether or not it should pay local officials forhelping establish a new office overseas. Some executives in the meeting concluded that the company should pay these officials because it was a normal cost of doing business in this country. Others viewed the situation quite differently. They thought the pay-ments amounted to bribes and were totally against the idea. The company ultimatelydecided that it would not make the payments, which resulted in their inability to open the new office.

All told, it is important for you to learn more about your ethical tendencies. This will help you to behave in ways that are consistent with your values and beliefs. ●

expensive camera equipment behind. He was subsequently toldhis contract with the department would not be renewed as prom-ised—essentially he was fired—and he has filed a federal lawsuitseeking whistle-blower protection, reinstatement, and an ethicsinvestigation into Perry and Murray for “public corruption.”134

Retaliation against whistle-blowers is against federal law; the DOEis calling Edelman’s accusations “ridiculous.”135

Whistlebloweraid.org is a nonprofit law firm that assistsgovernment whistle-blowers like Edelman with confidentialfree legal advice, especially if they witness lawbreaking whenthe evidence is classified and don’t know where to turn.136

Though he is working with the group, Edelman insists his

photos are in the public domain. “I’m definitely proud of what I did,” he says. “I know that I did the right thing. I just hope that more people take this as inspiration that they can also speakup and blow the whistle because it’s an important part ofdemocracy.”137

FOR DISCUSSIONWhat are some of the reasons someone might become a whis-tleblower? Why would someone choose not to be? Is that posi-tion defensible given the value of job attitudes like professionaland ethical standards? Why or why not? What would you havedone in Edelman’s position?

Assessing My Perspective on EthicsThis survey is designed to assess your views about ethics. It provides feedback about your status on the Career Readiness “other characteristic” of professionalism/work ethic.

Please be prepared to answer these questions if your instructor has assigned Self-Assessment 3.1 in Connect.

1. Are your views more idealistic or more relativistic?

2. What do you think about students cheating on homework assignments in school? What about cheating on exams?

3. Are your answers consistent with your score? Explain.

4. What can you say during an interview to demonstrate an ethical orientation?

SELF-ASSESSMENT 3.1 CAREER READINESS

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Focus on Career Readiness

Global research shows that employers are finding it hard to find college graduates who possess the skills needed to be successful. These employers also think that colleges and universities need to do a better job making students career ready. Our goal in 9e is to contribute to overcoming this problem with new content and a variety of developmental techniques.

Building Your Career Readiness

Chapter 1 contains a section devoted to explaining the need, value, and process for becoming career ready. It includes a model of career readiness along with a table of competencies desired by employers.

Self-Assessments

Over 66 Self- Assessments allow students to assess the extent to which they possess aspects of the career readiness competencies desired by employers.

Career Corner

Each chapter concludes with a new section entitled “Career Corner: Managing Your Career Readiness.” This material provides students with practical tips for developing targeted career readiness competencies.

Concept Mastery

New exercises in Connect allow students to demonstrate lower levels of learning regarding career readiness. The Teaching Resource Manual provides opportunities for higher levels of learning for career readiness competencies.

”

”

“

“

FORECAST What’s Ahead in This ChapterWe describe planning and its link to strategy. We define planning, strategy,

and strategic management and state why they are important. We deal with the

fundamentals of planning, including the mission, vision, and value statements,

and the three types of planning—strategic, tactical, and operational. We con-

sider goals, operating plans, and action plans; SMART goals, management by

objectives, and cascading goals; and finally the planning/control cycle. We

conclude with a Career Corner that focuses on how you can develop the ca-

reer readiness competency of proactive learning orientation.

PART 3 • PLANNING

5After reading this chapter, you should be able to:

LO 5-1 Discuss the role of strategic management.

LO 5-2 Compare mission, vision, and value statements.

LO 5-3 Discuss the types and purposes of goals and plans.

LO 5-4 Describe SMART goals and their implementation.

LO 5-5 Outline the planning/control cycle.

LO 5-6 Describe how to develop the career readiness competency of proactive learning orientation.

PlanningThe Foundation of Successful Management

©Olivier Renck/Aurora/Getty Im

ages

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“The best way to predict the future is to create it,” Peter Drucker said.The purpose of this book is, to the extent possible, to give you the tools to create your

own future in your career and as a manager.

Creating Modern Management: The Handbook ofPeter DruckerWho is Peter Drucker? “He was the creator and inventor of modern management,” says management guru Tom Peters (author of In Search of Excellence). “In the early 1950s,nobody had a tool kit to manage these incredibly complex organizations that had gone out of control. Drucker was the first person to give us a handbook for that.”5

An Austrian trained in economics and international law, Drucker came to the UnitedStates in 1937, where he worked as a correspondent for British newspapers and laterbecame a college professor. In 1954, he published his famous text The Practice ofManagement, in which he proposed the important idea that management was one of the major social innovations of the 20th century and should be treated as a profession, likemedicine or law.

In this and other books, he introduced several ideas that now underlie the organiza-tion and practice of management—namely:

■ That workers should be treated as assets.■ That the corporation could be considered a human community.■ That there is “no business without a customer.”■ That institutionalized management practices are preferable to charismatic

cult leaders.

Many ideas that you will encounter in this book—decentralization, management byobjectives, knowledge workers—are directly traceable to Drucker’s pen. “Without hisanalysis,” says one writer, “it’s almost impossible to imagine the rise of dispersed, globe-spanning corporations.”6 In our time, Drucker’s rational approach has culminated inevidence-based management, as we describe in Section 2.6 in this chapter.

Six Practical Reasons for Studying This Chapter“Theory,” say business professors Clayton Christensen and Michael Raynor, “often getsa bum rap among managers because it’s associated with the word ‘theoretical,’ whichconnotes ‘impractical.’ But it shouldn’t.”7

After all, what could be more practical than studying different approaches to seewhich work best?

Indeed, there are six good reasons for studying theoretical perspectives:

1. Understanding of the present. “Sound theories help us interpret the present, to understand what is happening and why,” say Christensen and Raynor.8 Or as

2.1 Evolving Viewpoints: How We Got to Today’s Management Outlook

THE BIG PICTUREAfter studying theory, managers may learn the value of bringing rationality to the decision-making process. This chapter describes two principal theoretical perspectives—the historical and the contemporary. Studying management theory provides understanding of the present, a guide to action, a source of new ideas, clues to the meaning of your managers’ decisions, and clues to the meaning of outside events.

LO 2-1Describe the development of current perspectives on management.

True learner. In his 70-year career, Peter Drucker published over 35 books and numerous other publications, received the Presidential Medal of Freedom, and achieved near rockstar status for his management ideas, which influenced organizations from General Electric to the Girl Scouts. A true learner who constantly expanded his knowledge, he understood that new experiences are key to nurturing new ideas and new ventures. Do you have this kind of curiosity? ©Jonathan Alcorn/ZUMAPRESS/Newscom

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xvii

Student-Centered Approach to Learning

Our writing style and product design is based on neuroscience research. Greater learning occurs when information is “chunked” to keep student attention. We break down topics into easily digestible portions with purposeful pedagogy to make theories and concepts easier to learn and apply. This accounts for the use of purposeful color, an extensive photo program, bulleted lists, and headings to appeal to the visual sensibilities, time constraints, and diverse learning styles of today’s students.

Chapter Openers

Each chapter begins with a list of key learning objectives that appeal to students concern about “what’s in it for me?” and to help them read with purpose.

Chapter Sections

Within each chapter, sections are organized according to the major learning objectives. Generous use of headings and bulleted lists provide students with bite-sized chunks of information to facilitate retention. Each section begins with a recap of the Learning Objective and includes The Big Picture, which presents an overview of how the section addresses the stated objective.

Forecast

Shown below the learning objectives, the forecast provides a high-level of summary of what is covered in the chapter.


Many management texts are simply dense and a slog to read. Kinicki is far more approachable in its pedagogy. It is well organized—the topics are arranged very logically in each chapter. The approach speaks directly to the student. This personalized, conversational approach engages my students. It has a new career theme that is critical to help our students demonstrate employable skills. The Teaching Resource Manual is also the best in its class.

—Todd Korol, Monroe Community College

Layout, highlighted captions, use of boxes, bolding, pictures, and color are all great. It’s easier for students to read than other textbooks I have used. The key points summaries at end of chapters are useful and it’s overall very user-friendly and engaging.

—Linsey Willis,Florida Atlantic University

The thought of starting a career (or switching to a new one) can be either intimidating or exciting. What’s the difference? Having goals and a plan.

Setting Goals and Making a PlanHere are some steps in the career-management process for you to consider as you set about building your career.1

1. Identify your options. Use the career readiness skill of self-awareness to write down areas and ideas that interest and are important to you and the functional, cross-cultural, computational, interpersonal, and other skills you can offer an employer. Then make a written list of the opportunities available to you through your networking, earlier work and volunteer experience, and other resources (don’t forget the alumni and placement offices at your school). Now match up the two lists to discover where you should focus your career-building efforts.

2. Explore conditions in your target field. The career readiness skill of understanding the business will guide you to identify important factors like the demand for new hires in your chosen field or fields, the competencies expected of incoming employees, the likely salary range and opportunities for advancement, and any geographic limitations or requirements in the industry to be aware of. If your field or industry is concentrated in one or two parts of the country, for instance, be ready to move.

3. Create your action plan. Using what you learned from steps 1 and 2, write a list of actions you can take to achieve your goal of breaking into a new career. You are more likely to achieve your goals if they are “SMART”—specific, measurable against clear criteria to show progress, attainable with a chance of 50% or higher, relevant to you, and time bound with target dates for completion. We discuss the process of writing SMART goals in Section 5.4. Try to keep your steps or goals to a manageable number; somewhere between three and five is recommended. Prioritize and schedule them to create your plan, and if it helps you to give each one a name, by all means do so.

4. Track your progress. You’ll see as you study thischapter that monitoring or controlling progress toward goals is an inherent part of the planning process. Each

time you get a result from one of your efforts, whether it’s positive or negative, that result constitutes feedback on how well you’ve selected your goals and how effective your plan is. If one step doesn’t work out as planned, don’t give up. Rely on your positive attitude and ability to adapt (more career readiness skills) and realize you have other opportunities to succeed. Try broadening your search, and begin again.

Staying Resilient during the ProcessHere are a few ideas about what else you can do to keep your hopes—and your finances—afloat during the career-building process.

1. Know that it takes time to find a job, especially one that’s a good fit for both you and the company that hires you. College graduates spend about six months, on average, landing their first job after graduation.2 If you are already working, even part-time, stay in the job while you pursue a new one. It’s always easier to find a job if you have one. If you are not working, consider taking a part-time or short-term job to generate some income. since you’ll want to avoid running up credit card debt.

2. Create a budget to be sure your income will cover your day-to-day expenses. This is a lifelong habit that will serve you well.

3. Avoid making any major financial commitments until you’ve actually landed your target job. You won’t know how much you can afford to pay for a car until you know your salary, for instance, and you may not want to be encumbered by a new lease if your dream job requires you to relocate. As long as you have an appropriate interview outfit, even splurging on a professional wardrobe can wait until you know the dress code at your new employer.

For Discussion What fields or industries are interesting or appealing to you as places to work? What news and information about these areas can you start tracking now, and how will you will do that? Is there anyone in your network who can help you increase your understanding of the way this industry works? If not, how could you find someone?

Making an Effective Plan for Starting Your Career

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The Exceptional Manager CHAPTER 1 21

Are you persistent, creative, curious? How do you deal with frustra-tion or anxiety? Do you see yourself as part of a larger whole that gives your work purpose? How do you perceive problems—astemporary and solvable, or as a personal burden you are doomed to bear? Are you a good listener? Your answers will give you an idea about how well developed some of your soft skills are.

More than 90 percent of respondents to a recent Global Human Capital Trends survey by the consulting firm Deloitte identified soft skills like communication, emotional understand-ing, and problem solving as a critical priority.59 Many employers say these skills are hard to find in college graduates, who often value hard skills more highly.60 Companies are eagerly looking for soft skills as well, however; Google, for example, now pri-oritizes persistence and curiosity in its hiring process.61 The good news is that soft skills can be taught. Employers are find-ing it worth investing money to develop these abilities in their employees. A new study shows that training employees in soft skills doesn’t just marginally improve individual performance and employee retention; it actually betters these metrics enough to provide a 250% return on the financial investment a company makes in training programs.62

For firms that can spare their employees for three days, the American Management Association (AMA) offers a soft-skills seminar for managers at all levels including front-line supervi-sors.63 Among the skills they can gain are the ability to give

direction without generating conflict, to lead and motivate groups and teams, to influence others including “difficult” peo-ple, to offer effective feedback, and to get things done in an at-mosphere of trust and respect. The seminar topics are a comprehensive list of essential soft skills employers look for in college graduates and new hires—and say they seldom find: communication proficiency, which includes verbal, nonverbal, and listening skills; self-understanding, lack of defensiveness, and emotional understanding and responsiveness; the ability to productively manage conflict; and an understanding of team de-velopment and the role of a team player in getting work done.

For those who want to learn online and at their own pace, many inexpensive online classes are available.64 These short interactive programs are geared for everyone from CEOs to entry-level employees. They cover everything from self- confidence to emotional intelligence, coaching teams, building healthy work relationships, handling business etiquette, resolving conflicts, decision making, reading body language, negotiating, dealing with angry customers to becoming a successful leader.

YOUR CALLLook back at the first paragraph in this Practical Action box. Which of the soft skills listed there would you like to improve by the time you graduate, in order to make yourself a more attrac-tive candidate to prospective employers?

Developing Your Soft SkillsPRACTICAL ACTION

Often these are thought of as “soft skills.” Soft skills are interpersonal “people” skills needed for success at all levels. As discussed in Section 1.7, developing your soft skills is an ongoing, lifelong effort.

During her more than three decades at GM, Barra has demonstrated exceptionallystrong soft skills. She has “an ability with people,” says her previous boss, that is critical toGM’s team-first approach.56 “She is known inside GM as a consensus builder who calls herstaff together on a moment’s notice to brainstorm on pressing issues,” says another report.57

“She’s fiercely intelligent yet humble and approachable,” says a third account. “She’s col-laborative but is often the person who takes charge. And she’s not afraid to make changes.”58

Among her most significant changes: hiring people with “diverse views, diverse back-grounds, diverse experiences,” she says, to try to reshape the company’s notoriouslyinsular corporate culture and to bring GM into the age of Apple and Google.

The Most Valued Traits in ManagersClearly, Barra embodies the qualities sought in star managers, especially top managers. “The style for running a company is different from what it used to be,” says a top execu-tive recruiter of CEOs. “Companies don’t want dictators, kings, or emperors.”65 Instead of someone who gives orders, they want executives who ask probing questions andinvite people to participate in decision making and power sharing.

Among the chief skills companies seek in top managers are the following:

■ The ability to motivate and engage others.■ The ability to communicate.■ Work experience outside the United States.■ High energy levels to meet the demands of global travel and a 24/7 world.66 ●

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The Manager’s Changing Work Environment and Ethical Responsibilities CHAPTER 3 99

In exposing unethical behavior, then, it’s important to be clear why you’re doing it(trying to help the company or just get someone in trouble), not report something forthe wrong reason (discuss your concerns with someone who has similar values), andfollow proper channels (like addressing the supervisor of the supposed culprit). Don’ttry to report externally (lashing out on Facebook, for instance) without speaking tothose who might resolve the problem.138

Some people view ethics in ideal terms, which means that ethical principles or stan-dards apply universally across situations and time. Others, however, take a relativisticview and believe that what is ethical depends on the situation. These differences cancreate conflict among managers trying to make decisions.

Consider the situation faced by a group of executives working with Angelo to make a decision about opening a new office overseas. Angelo was consulting with a global com-pany that was dealing with the issue of whether or not it should pay local officials forhelping establish a new office overseas. Some executives in the meeting concluded that the company should pay these officials because it was a normal cost of doing business in this country. Others viewed the situation quite differently. They thought the pay-ments amounted to bribes and were totally against the idea. The company ultimatelydecided that it would not make the payments, which resulted in their inability to open the new office.

All told, it is important for you to learn more about your ethical tendencies. This will help you to behave in ways that are consistent with your values and beliefs. ●

expensive camera equipment behind. He was subsequently toldhis contract with the department would not be renewed as prom-ised—essentially he was fired—and he has filed a federal lawsuitseeking whistle-blower protection, reinstatement, and an ethicsinvestigation into Perry and Murray for “public corruption.”134

Retaliation against whistle-blowers is against federal law; the DOEis calling Edelman’s accusations “ridiculous.”135

Whistlebloweraid.org is a nonprofit law firm that assistsgovernment whistle-blowers like Edelman with confidentialfree legal advice, especially if they witness lawbreaking whenthe evidence is classified and don’t know where to turn.136

Though he is working with the group, Edelman insists his

photos are in the public domain. “I’m definitely proud of what I did,” he says. “I know that I did the right thing. I just hope that more people take this as inspiration that they can also speakup and blow the whistle because it’s an important part ofdemocracy.”137

FOR DISCUSSIONWhat are some of the reasons someone might become a whis-tleblower? Why would someone choose not to be? Is that posi-tion defensible given the value of job attitudes like professionaland ethical standards? Why or why not? What would you havedone in Edelman’s position?

Assessing My Perspective on EthicsThis survey is designed to assess your views about ethics. It provides feedback about your status on the Career Readiness “other characteristic” of professionalism/work ethic.

Please be prepared to answer these questions if your instructor has assigned Self-Assessment 3.1 in Connect.

1. Are your views more idealistic or more relativistic?

2. What do you think about students cheating on homework assignments in school? What about cheating on exams?

3. Are your answers consistent with your score? Explain.

4. What can you say during an interview to demonstrate an ethical orientation?


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Extended Emphasis on Practicality

We want this ninth edition to be a cherished resource that students keep as they move into future courses and their future careers. We give students a great deal of practical advice in addition to covering the fundamental concepts of management.

Manage U

This new feature provides a pedagogical device that gives students practical, actionable tips for applying the material in each chapter. Students will find it interesting and valuable to their future careers.

Practical Action boxes

Practical Action boxes offer students practical and interesting advice on issues they will face in the workplace.

Self-Assessments

Self-Assessment evaluations help students relate what they are learning to their own experiences and promote self-reflection, engagement, and development of their career readiness. Of the 66 total Self-Assessments included, nearly 40 of them pertain to a career readiness competency. For each of these, students are asked to consider how they might display the competency in an employment interview.

Testimonials from Millennials

Each chapter includes two new boxed features that provide testimonials from millennials about their experiences with effective and ineffective management. “I wish I . . .” boxes illustrate real-world examples in which students recall an instance when they or their boss could have better applied certain management concepts. “I’m glad I . . .” boxes discuss positive applications of management concepts.

Global Management CHAPTER 4 125

Ethnocentric views also affect our purchasing decisions. Some people believe thatwe should only purchase products made in our home country.42 What are your viewsabout being an ethnocentric consumer? You can find out by taking Self-Assessment 4.1.

Assessing Your Consumer EthnocentrismThis survey is designed to assess your consumer ethnocen-trism. Please be prepared to answer these questions if yourinstructor has assigned Self-Assessment 4.1 in Connect.

1. Are you surprised by the results? What do they suggest about your purchasing decisions? What are the pros and cons of being an ethnocentric consumer?

2. How do American companies, associations, and unions encourage us to be ethnocentric consumers?

SELF-ASSESSMENT 4.1

Polycentric Managers—“They Know Best” Polycentric managers take the viewthat native managers in the foreign offices best understand native personnel and practices,and so the home office should leave them alone. Thus, the attitude of polycentric manag-ers is nearly the opposite of that of ethnocentric managers.

Geocentric Managers—“What’s Best Is What’s Effective, Regardless of Origin”Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are mosteffective. Clearly, being an ethno- or polycentric manager takes less work. But the payofffor being a geocentric manager can be far greater. ●

Jordin Hansen is a senior director of strategic opera-tions for a global information technology company. She experienced a clashing of cul-tures when her company developed nomenclature as part of a global business strategy.

An executive team in the United States was put together to develop a global business strategy for a new

business within a larger company. Part of the strategy involved deciding on company vocabulary. “When you run a global orga-nization, having consistent nomenclature in how you talk about things is extremely important, especially when you have global customers,” said Jordin.

The approach that was used to decide on the company nomenclature was a very top-down approach. The strategy team claimed they were listening to outside opinions but really moved forward with what they thought was the best decision.

What was not taken into consideration was that English was not the main language for a majority of the company’s global stakeholders. One of the terms chosen to be part of the company nomenclature was “solution.” As Jordin explained, this word means very different things to people of different cultures.

“The word ‘solution’ in our industry in the United States can mean a piece of a larger solution; whereas in Europe when you talk about solutions it usually means the full end-to-end supply chain or product,” said Jordin.

There may have been short-term benefits to quickly announc-ing and implementing company vocabulary, but the long-term effects were negative. The team had to rethink the strategy several times, and the buy-in from stakeholders was minimal. “We took two steps forward just to take fourteen steps back,” said Jordin.

Perhaps the most negative impact of presenting company vocabulary that was not culturally sensitive was a loss of cred-ibility and trust among stakeholders. “This overstepped the opinions and the input of the global stakeholders. It ruined credibility for anything later down the road that we wanted to implement,” said Jordin. “In a world where relationships are everything, this is incredibly important.”Courtesy of Jordin Hansen

I Wish I……considered the impact of ethnocentrism.

Jordin Hansen Courtesy Jordin Hansen

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Management Theory CHAPTER 2 53

Douglas McGregor and Theory X versus Theory Y Having been a college pres-ident for a time (at Antioch College in Ohio), Douglas McGregor came to realize that it was not enough for managers to try to be liked; they also needed to be aware of their attitudes toward employees.22 Basically, McGregor suggested in a 1960 book, these atti-tudes could be thought of either “X” or “Y,” which we introduced in the chapter opener about people-focused organizations.

Theory X represents a pessimistic, negative view of workers. In this view, workers are considered to be irresponsible, to be resistant to change, to lack ambition, to hate work, and to want to be led rather than to lead.

Theory Y represents a human relations outlook—an optimistic, positive view of work-ers as capable of accepting responsibility, having self-direction and self-control, andbeing imaginative and creative.

Why Theory X/Theory Y Is Important: The principal contribution offered by the TheoryX/Theory Y perspective is that it helps managers understand how their beliefs affect theirbehavior. For example, Theory X managers are more likely to micromanage, which leadsto employee dissatisfaction, because they believe employees are inherently lazy.

Cameron Monkelien works in the banking industry as a team leader. He believes his com-pany does a great job of making employees at all levels feel included and empowered.

Cameron works for a large company with a popular name and a lot of power, but, as Cameron puts it, “It really has its head on its shoulders. They give a lot of tools and capabili-ties to everybody—not just supervisors and man-agers, but all the way down to the bottom level.”

Cameron feels interconnected with all aspects of his job because of the documenta-tion and networking his company has worked many years to build. “There isn’t a guessing game where you have to figure out who you need to talk to or where you need to go to get information. That’s something that a lot of my other jobs didn’t have: a database and network of people and documents that point you in the right direction in any given situation,” said Cameron.

Another way that the company works to make its employ-ees feel included is to have monthly meetings where employ-ees can interact with people other than their direct supervisors. This helps employees to feel like upper management is listen-ing to their concerns and ideas, and that they can really make a difference within the organization.

Cameron also feels safe to take risks and make mistakes rather than fearing the consequences of doing so. “I have

personally taken several risks because I have enough confidence in my performance and belief in my team that I can go out on a limb for them and for myself,” said Cameron. But ulti-mately, Cameron believes his direct supervisor cultivates an environment where employees feel safe to take risks and make mistakes. “My supervisor does a really good job about not coming down on us when something goes wrong. Instead she asks, ‘How can we improve this going forward?’”

Cameron takes this lesson from his supervi-sor and works to make sure his own employees feel safe taking risks. “The first time one of my employees had a setback was almost two years into his role. He felt like it was such a personal defeat on his part. I had to have a discussion with him where I said, ‘Having a failure does

not mean that you are a failure. It means that there is still room for growth, room for learning, and room for improvement.’”

Cameron’s company has taken additional steps to create an environment of empowerment by changing some of the job titles. “Instead of being a manager or a supervisor, you get the title of ‘leader’ because it instills the idea that instead of being in charge of your employees, you are leading them.”

Courtesy of Cameron Monkelien

I’m glad I……work in an organization with a Theory Y culture.

Cameron Monkelien Courtesy Cameron Monkelien

Underlying both Maslow’s and McGregor’s theories is the notion that more jobsatisfaction leads to greater worker performance—an idea that is somewhat controver-sial, as we’ll discuss in Chapter 11.

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186 PART 3 Planning

Other big drug makers are not letting profit and limited capacity get in their way. A top scientist at Eli Lilly, one of Pfizer’s competitors, told Financial Times that “Taking care of Alzheimer’s patients is a huge economic cost to society and now is not the time to give up.” Eli Lilly’s most advanced Alzheimer’s drug failed in a large trial in 2016, but the company has vowed to continue Alzheimer’s treat-ment R&D.80 Another U.S. competitor, AstraZeneca, also remains committed to fighting the disease.

SOLVING THE CHALLENGEWhat would you do if you were Pfizer’s CEO?

1. Move on to other projects. Pfizer has an obligation to its shareholders not to throw money at projects that prove to be unsuccessful.

2. Continue funding Alzheimer’s R&D. As a global leader in the pharmaceutical industry, Pfizer has an obligation to society to find treatments for diseases affecting millions of people. This would also be in line with its mission statement and values.

3. Contribute to agencies such as the National Institutes of Health so they can continue their studies of Alzheimer’s.

4. Suggest other options.

Learn how Uber’s corporate strategies have changed from those pursued by founder and CEO Travis Kalanick to those identified by current CEO Dara Khosrowshahi. Assess your ability to apply concepts discussed in this chapter to the case by going to Connect.

Uber Continuing Case

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114 PART 2 The Environment of Management

the athletes are students or being paid under the table. They just want to see the games. Thus, the reward far outweighs any risk, and the chances that the NCAA would address and attempt to stop a lucrative black market of player peddling the highest bidder stretches the limits of credibility. It can be hard to bite the hand that feeds you.”211

NOW WHAT?Justice Joon Kim described those indicted as “assis-tant coaches of major Division I schools with top-tier programs” who have “been in and around the game for a long time. All of them had the trust of players they recruited. Young men who looked up to them and be-lieved their coaches had their best interests at heart.”212 Kim described a scenario of coaches “taking cash bribes, managers and advisers circling blue-chip pros-pects like coyotes, and employees of a global sports-wear company funneling cash to families of high school recruits.”213 Kim added, “Month after month, the defendants exploited the hoop dreams of athletes around the country, allegedly treating them as little more than opportunities to enrich themselves through bribery and fraud schemes . . . The defendants’ alleged conduct not only sullied the spirit of amateur athletics, but it showed contempt for the thousands of players and coaches who follow the rules and play the game the right way.”214

As a result of the investigation and subsequent in-dictments, “the NCAA has established a Commission on College basketball” with members including “for-mer Secretary of State Condoleezza Rice, former Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey, and former NBA stars David Robinson and Grant Hill.”215 Further, the federal courts have stated that these indictments are the first in a series of many that will come to light in the coming months. The FBI has set up a tip line where those with knowledge regard-ing these schemes can call and share information.216 Sources believe the ongoing probe will likely implicate additional college programs, sports apparel companies, and agents.217

There is hope that these indictments will send a strong message that these behaviors will not be toler-ated and will be punished to the fullest extent of the law. “With the federal government’s threat of serious punishment, coaches are more likely to operate within NCAA rules. At the very least, they will think twice, knowing that indictments, potential jail time and huge legal fees are on the table.”218

William Sweeney Jr., the Assistant Director-in-Charge of the FBI’s New York office, said the “arrests serve as a warning to others choosing to conduct busi-ness this way in the world of college athletics: We have your playbook.”219

FOR DISCUSSIONProblem Solving Perspective

1. What is the underlying problem in this case from the federal government’s perspective?

2. Why do you think assistant coaches play such a sig-nificant role in these scandals?

3. How do you think the NCAA and the Commission on College basketball should move forward to prevent illegal behavior from occurring in the future?

Application of Chapter Content

1. How do you think the basketball teams’ task environ-ment, particularly competitors, allies, customers, reg-ulators, and media, played into the corruption in the NCAA?

2. Are the high school recruits who accepted bribes from apparel companies and coaches purely victims in this situation, or should their behavior also be con-sidered unethical? Explain your answer using one of the four approaches to deciding ethical dilemmas.

3. What might the NCAA do to promote higher ethi-cal standards among its schools, coaches, players, and allies?

4. How do you think the scandal has and will continue to affect customers, players’ attitudes on the court, and NCAA sales?

Should You Apply to Have Your Student Loans Forgiven?Student loan debt nearly tripled in the last decade, thanks to increased attendance at for-profit colleges along with rising college tuition and living expenses.220 For hundreds of thousands buried in student loan debt, a little known 1994 program called “Borrower

Defense” or “Defense to Repayment” sponsored by the Education Department offers a lifeline.

The program is available for those students who ob-tained loans from the government’s Direct Loan pro-gram. “The law says students are entitled to forgiveness of any existing debt—and, possibly, reimbursement of any repaid loans—if they can show that their school violated state law in getting them to take out the debt.

Legal/Ethical Challenge

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112 PART 2 The Environment of Management

1. How would you explain the difference between internal and external stakeholders?

2. Among external stakeholders, what’s the difference between the task environment and the general environment?

3. Of the 11 groups in the task environment, which five do you consider most important, and why?

4. Of the six groups in the general environment, which one do you think has the least importance, and why?

5. Distinguish among the four approaches to deciding ethical dilemmas.

6. What’s the difference between insider trading and a Ponzi scheme?

7. How would you summarize Kohlberg’s levels of personal moral development?

8. What are four ways that organizations can promote ethics?

9. Describe the levels in Carroll’s corporate social responsibility pyramid. Where does trying to achieve sustainability fit in?

10. How would you explain the concept of corporate governance?

Understanding the Chapter: What Do I Know?

Who’s to Blame for College Basketball’s “Dark Underbelly”?The National Collegiate Athletic Association (NCAA) is “a member-led organization dedicated to the well-being and lifelong success of college athletes.”188 Founded in 1906, the NCAA “functions as a general legislative and administrative authority for men’s and women’s intercollegiate athletics” and “formulates and enforces the rules of play for various sports and the eligibility criteria for athletes.”189

One of the “bedrock principles” of the NCAA is maintaining the spirit of amateur competition. Students are not allowed to be professional athletes, education holds top priority, and all athletes receive a fair chance to compete.190 The NCAA outlines specific rules ath-letes must follow to maintain amateur status and, thus, eligibility to continue playing collegiate sports. Student athletes are, among other things, prohibited from publicly endorsing companies191 and from receiving a salary for athletic participation or benefits from prospective agents.192

Although NCAA guidelines prohibit corporate sponsorships at the individual-athlete level, college teams have benefited from such alliances since 1977, when shoe-company executive Sonny Vaccaro “signed several coaches he knew . . . to contracts with Nike.” According to Vaccaro, “‘the world changed’ in 1987, when Nike signed its first all-school deal” to sponsor all of the University of Miami’s athletic teams. With these deals, said Vaccaro, “you own everything in that school. That shoe company is now your business partner.”193

A BLURRY LINE BETWEEN AMATEURISM AND PROFESSIONALISMBenefits aside, strategic relationships between apparel companies and universities blur the line between

amateurism and professionalism for two reasons. The first is money flowing to universities. Companies such as Nike, Under Armour, and Adidas “pay tens of millions of dollars a year to equip (and, from a marketing standpoint, align themselves) with major university programs.”194 These alliances benefit universities due to increased revenues generated by the sponsorships, and they earn sports apparel companies not only exclusive rights to partner with large academic institutions, but also insider access to the country’s top athletic talent.

The second reason is money for college athletes. A particular challenge in NCAA basketball is the reality that some athletes don’t intend to graduate from college. Due in large part to the NBA’s “one-and-done” rule prohibiting athletes from playing professionally before their 19th birthday, elite players often attend classes for a year until they age into the NBA draft.195 Apparel sponsors are often overly eager to secure exclu-sive deals with elite athletes who may earn coveted spots in the NBA because these arrangements generate lots of money for the sponsors.

ASSISTANT COACHES AND FEDERAL INDICTMENTSAssistant coaches serve as the primary recruiters of top high-school talent and are expected to act as salesper-sons for their universities and build strong relationships with prize recruits.196 They are expected to follow NCAA guidelines, and they do not always do so.

In November 2017, four assistant college basketball coaches were among 10 individuals indicted by a fed-eral grand jury. Fortune described the lead-up to the indictments as “a detailed and clandestine FBI investi-gation that exposed alleged under-the-table payments to agents, coaches, and parents to influence talented athletes to choose particular colleges to play

Management in Action

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Management in Action cases

Rather than using stories about companies, the new Management in Action cases now focus on higher levels of learning by asking students to solve real organizational problems using relevant management concepts.

Legal/Ethical Challenge cases

Legal/Ethical Challenge cases ask students to resolve real ethical challenges faced by managers and organizations. They help develop students critical thinking and problem-solving skills around ethical issues.

Uber Continuing cases

These new cases ask students to synthesize and apply what they’ve learned across the course to Uber. Based on reviewer feedback, we’ve introduced these at the chapter level.

506 PART 5 Leading

Formal versus Informal GroupsGroups can be either formal or informal.9

■ Formal groups—created to accomplish specific goals. A formal group is a group assigned by organizations or its managers to accomplish specific goals. A formal group may be a division, a department, a work group, or a committee. It may be permanent or temporary. In general, people are assigned to them according to their skills and the organization’s requirements.

■ Informal groups—created for friendship. An informal group is a group formed by people whose overriding purpose is getting together for friendship or a common interest. An informal group may be simply a collection of friends who hang out with one another, such as those who take coffee breaks together, or it may be as organized as a prayer breakfast, a bowling team, a service club, a company “alumni group” (for example, former Apple employees), or a voluntary organization.

What’s important for you as a manager to know is that informal groups can advance or undercut the plans of formal groups. The formal organization may make efforts, say, to speed up the plant assembly line or to institute workplace reforms. But these attempts may be sabotaged through the informal networks of workers who gossip over e-mails and informal gatherings, such as meeting after work for a beer.10

However, interestingly, informal groups can also be highly productive—even more so than formal groups.

EXAMPLEInformal Groups and Informal Learning: Sharing Knowledge in the Lunchroom and on Social Media

As a manager, what would you think if you saw employees making brief conversation near the lunchroom coffeepot? Are they talking about the season finale of their favorite show, or is something more productive taking place? Office kitchens have been hidden out of sight for generations, an unloved necessity kept stark to make sure workers didn’t linger, says the Los Angeles Times. Companies are now seeing office kitchens in a new light. Kitchens are being turned into showplaces intended to boost morale, encourage collaboration, and create a learn-ing environment.11 Why the change of heart?

Workplace Learning: Mostly Informal Research has found that 70 percent of workplace learning is informal.12 Organizations are taking notice of this phenomenon. For example, Siemens managers have placed overhead pro-jectors and empty pads of paper in the lunchroom to facilitate the exchange of information.13 The highest-performing Google employees teach and support those employees looking to improve. Google certainly has the resources to afford fancy training programs. The company instead opts for peer-to-peer training in order to foster a culture of learning that values continuous devel-opment and the sharing of knowledge and expertise.14

Online Peer-to-Peer Networks What about when employ-ees are in far-flung places? “Sales reps are out in the field and they’re kind of on islands,” pointed out an Indianapolis software-firm executive. “It’s a challenge to keep everyone connected.”15 So when the 75 reps started overwhelming the sales-support staff with questions about product details and client information, the company created a website on which the reps could post and answer questions in an infor-mal peer-to-peer learning setting.16 These types of portals can also be used for employees in distant locations to tell each other personal and professional stories to share

experiences. Research has shown that when people talk informally, 65 percent of the time they are tell-ing stories. So providing an online venue for storytelling can be quite effective.17

YOUR CALLCan games (such as the online multi-player game Second Life) or other social media (Facebook, Twitter, Instagram, etc.) be used to foster informal workplace collaboration? How about allowing employees to BYOD—“bring your own device” to work, such as their own smartphone or tablet?18

Talking it out. Ever worked in a job in which you got a lot of informal training through conversations over coffee? Could this be done with social networking? ©Jacobs Stock Photography/Photodisc/Getty Images

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Imaginative Writing for Readability and Reinforcement

Research shows that products written in an imaginative, story-telling style significantly improve students’ ability to retain information. We employ numerous journalistic devices to make the material engaging and relevant to students lives.

Example boxes

We utilize numerous Example boxes to emphasize the practical applications of business. These mini cases use snapshots of real-world companies to explain text concepts. Your Call questions stimulate class discussions and help students develop their critical thinking skills. Suggestions for how to use the Example boxes are found in the Teaching Resource Manual (TRM).

Readability is very good for the undergraduate audience. Updates are frequent and provide current examples.

—Justin Davis,University of West Florida

The order and quality of information within the textbook (is great). Logical for faculty, plenty of examples for students; Kinicki provides better detail and examples, and good supplemental materials.

—Alex Williams, Texas A&M Commerce

”“

Resources That Work


No matter how you teach your course: face-to-face, hybrid, or online—you’re in the driver’s seat. We offer the most robust set of resources to enhance your Principles of Management course. In addition to our unique Teaching Resource Manual, packed with additional activities and supplemental teaching tools; PowerPoint presentations; and Test Bank questions, we have a wealth of assignable resources available in Connect®.

Connect®

The ninth edition continues to build on the power of Connect and furthers our quest to help students move from comprehension to application. McGraw-Hill Connect® is a personalized teaching and learning tool powered by adaptive technologies so your students learn more efficiently, retain more, and achieve better outcomes. We used this platform to create exercises that are auto-graded in order to assist students in developing their career readiness. Here you will find a wide variety of learning resources that develop students’ higher-order thinking skills, including:• SmartBook®—As part of Connect, students have access

to SmartBook®, fueled by LearnSmart, an adaptive learning and reading tool. SmartBook prompts students with questions based on the material they are studying. By assessing individual answers, SmartBook learns what each student knows and identifies which topics they need to practice. This adaptive technology gives each student a personalized learning experience and path to success. SmartBook provides students with a seamless combination of practice, assessment, and remediation.

• Click & Drag exercises—These activities help make the connection between theory and application through matching, ranking, or grouping. Every Career Corner has an exercise to help you assess students understand-ing about how to improve targeted career readiness competencies.

• iSeeIt animated videos—These brief, contemporary videos offer dynamic student-centered introductions, illustrations, and animations to guide students through challenging concepts. Ideal for before class as an introduction, during class to launch or clarify a topic, or after class for formative assessment.

• Self-Assessments—Designed to promote student self-awareness and self-reflection, these research-based activities also provide personal and professional development. For this edition, five new assessments were created to measure different career readiness competencies. In addition, new structured feedback explains how students should interpret their scores.

• Case Analyses and Video Cases—Our assortment of written and video cases challenge students to analyze concepts as they manifest in scenarios related to a real-life product or company, fostering students’ ability to think critically in lecture and beyond. Thought-provoking questions check the students’ application of the course material and develop their workplace readiness skills.

• Manager’s Hot Seat videos—These actor-portrayed videos depict real-life situations where a manager is faced with a dilemma that needs to be analyzed based on management concepts. The videos have been a hit throughout the years because they put students at the center of controversial situations and contribute to their use of critical thinking to solve problems. Eleven new Manager’s Hot Seats have been added to Connect for concepts such as motivation, decision making, organizational structure, and more. Each Hot Seat includes follow-up multiple-choice questions that are assignable and auto-gradable.

• Uber Continuing Case—Students understand the application of and relationship between different concepts by applying them to the same company throughout the semester. We conducted an extensive revision to the case based on current events and the need to offer a more flexible method for using it. Instructors now have a continuing case on Uber that can be used for every chapter or as a summary case for each part. Each chapter case includes multiple-choice questions that are assignable and auto-gradable, as well essay-based questions.

• Application-Based Activities—These activities provide students valuable practice using problem-solving skills to apply their knowledge to realistic scenarios. Students progress from understanding basic concepts to using their knowledge to analyze complex scenarios and solve real-life problems. Along the way, students see the implications of their decisions and are provided with feedback on how management theory should be informing their actions. They also receive detailed feedback at the conclusion of the activity. The simulations are assignable and auto-gradable. Ten new application-based activities have been added to Connect for concepts such as ethics, organizational culture, change management, and more.

It is the best Management textbook on the market. Most importantly, and the key competitive advantage, is the Connect material. LearnSmart/SmartBook is above and beyond anything else out there.

—Gerald Schoenfeld,Florida Gulf Coast University

Students—study more efficiently, retain more and achieve better outcomes. Instructors—focus on what you love—teaching.

SUCCESSFUL SEMESTERS INCLUDE CONNECT

For Instructors


You’re in the driver’s seat.Want to build your own course? No problem. Prefer to use our turnkey, prebuilt course? Easy. Want to make changes throughout the semester? Sure. And you’ll save time with Connect’s auto-grading too.

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65%ess Time

Grading

They’ll thank you for it.Adaptive study resources like SmartBook® help your students be better prepared in less time. You can transform your class time from dull definitions to dynamic debates. Hear from your peers about the benefits of Connect at www.mheducation.com/highered/connect

Make it simple, make it affordable. Connect makes it easy with seamless integration using any of the major Learning Management Systems—Blackboard®, Canvas, and D2L, among others—to let you organize your course in one convenient location. Give your students access to digital materials at a discount with our inclusive access program. Ask your McGraw-Hill representative for more information.

©Hill Street Studios/Tobin Rogers/Blend Images LLC

Solutions for your challenges.A product isn’t a solution. Real solutions are affordable, reliable, and come with training and ongoing support when you need it and how you want it. Our Customer Experience Group can also help you troubleshoot tech problems—although Connect’s 99% uptime means you might not need to call them. See for yourself at status.mheducation.com

https://www.mheducation.com/highered/connect

https://www.mheducation.com/highered/connect

https://status.mheducation.com

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Chapter 12 Quiz Chapter 11 Quiz

Chapter 7 Quiz

Chapter 13 Evidence of Evolution Chapter 11 DNA Technology

Chapter 7 DNA Structure and Gene...

and 7 more...

13 14

©Shutterstock/wavebreakmedia

For Students


Effective, efficient studying.Connect helps you be more productive with your study time and get better grades using tools like SmartBook, which highlights key concepts and creates a personalized study plan. Connect sets you up for success, so you walk into class with confidence and walk out with better grades.

“I really liked this app—it made it easy to study when you don't have your textbook in front of you.

- Jordan Cunningham, Eastern Washington University

Study anytime, anywhere.Download the free ReadAnywhere app and access your online eBook when it’s convenient, even if you’re offline. And since the app automatically syncs with your eBook in Connect, all of your notes are available every time you open it. Find out more at www.mheducation.com/readanywhere

No surprises. The Connect Calendar and Reports tools keep you on track with the work you need to get done and your assignment scores. Life gets busy; Connect tools help you keep learning through it all.

Learning for everyone. McGraw-Hill works directly with Accessibility Services Departments and faculty to meet the learning needs of all students. Please contact your Accessibility Services office and ask them to email [email protected], or visit www.mheducation.com/accessibility for more information.

https://www.mheducation.com/readanywhere

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https://www.mheducation.com/accessibility

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xxiv


acknowledgments

I have the pleasure of working with one of the best teams in the business. Their dedica-tion and effort significantly contribute to the quality of this revision. It all begins with the captain of the team, Michael Ablassmier. As my editorial director he provides the internal support to launch and manage the revision process. He also spends much time traveling in support of my products. Thanks for your continuing support over the last 10 years! To Anne Ehrenworth, product developer, thank you for paying attention to the details, keeping us all focused on the schedule, and coordinating all the moving pieces.

To Debbie Claire, executive marketing manager, you are the energizer bunny who works tirelessly in support of this product. Your creativity, passion, and effort make you the abso-lute best at your job, and you push me more than anyone to raise my “marketing” game. Thank you! To Harvey Yep, your knowledge and experience with the production process keep us on schedule and responsive to all the change requests.

To Patrick Soleymani, your support as my digital faculty consultant is invaluable. Your work on the Teaching Resource Manual and writing cases were instrumental in creating essential teaching materials. To Denise Breaux Soignet, your efforts in writing cases and developing digital activities to assess student learning greatly enhanced the product.

To Sarah Thomas, market development manager, Keri Johnson, content project man-ager; and Jessica Cuevas, designer, thanks for all you do to in support of the product. I would also like to thank Elisa Adams for her editorial assistance; Lindy Archambeau, Barbara Larson, Grace McLaughlin, and Jennifer Muryn for their work on the Teaching Resource Manual; Shelly Arneson for the PowerPoint slides; and to Ken Carson for his work on the Self-Assessments for Connect.

To McGraw-Hill company, it is a world-class publisher and I am grateful to be a member of the family.

Warmest thanks and appreciation go to the individuals who provided valuable input during the developmental stages of this edition, as follows:

Dr. M. Ruhul Amin,Bloomsburg University of Pennsylvania

Joel Andexler,Cuyahoga Community College

Lindy Archambeau,Warrington College of Business, University of Florida

Joseph Aranyosi,University of Phoenix

Shelly Arneson,Colorado State University

Lisa Augustyniak,Lake Michigan College

Tanya Balcom,Macomb Community College

Amy S. Banta,Ohio University

Valerie Barnett,Kansas State University

Lynn Becker,Univeristy of Central Florida

William Belcher,Troy University

Jessie Bellflowers,Fayetteville Technical Community College

Michael Bento,Owens Community College

George Bernard,Seminole State College of Florida

Stephen Betts,William Patterson University

Jim Bishop,New Mexico State University

Alison Bolton,Solano Community College

Anne Brantley,Central Piedmont Community College

Reginald Bruce,University of Louisville

Regina Cannon,Tarrant County College

Tara Carr,University of Wisconsin–Green Bay

Shari Carpenter,Eastern Oregon University

Anastasia Cortes,Virginia Tech

Justin L. Davis,University of West Florida

Carrie L. Devone,Mott Community College

Jennifer Egrie,Keiser University

Bennie Felts,North Carolina Wesleyan College

Charla Fraley,Columbus State Community College

xxvAcknowledgments

Dana Frederick,Missouri State University

Patricia Galitz,Southeast Community College

Barbara Garrell,Delaware County Community College

Terry Girdon,Pennsylvania College of Technology

Lacey Gonzalez-Horan,Lehigh Carbon Community College

Jan Grimes,Georgia Southern University

William Habacivch,Central Penn College

Gordon Haley,Palm Beach State College

R. Hall,Tarleton State University

Lisa M. Harris,Southeast Community College

Joanne Hartsell,East Carolina University

Ahmad Hassan,Morehead State University

Karen H. Hawkins,Miami Dade College–Kendall Campus

Cathy Henderson,Stephen F. Austin State University

Nhung Hendy,Towson University

Lara Hobson,Western Michigan University

Anne Hoel,University of Wisconsin–Stout

Gregory A. Hoffeditz,Southern Illinois University–Carbondale

James Hopkins,University of Georgia

Tammy Hunt,University of North Carolina–Wilmington

Perwaiz Ismaili,Metropolitan State University

Jacquelyn Jacobs,University of Tennessee

Paul D. Johnson,University of Mississippi

Sue Joiner,Tarleton State University

John Kirn,University of Kentucky

Bobbie Knoblauch,Wichita State University

Todd Korol,Monroe Community College

Zahir Latheef,University of Houston Downtown

Dave Lanzilla,College of Central Florida

Barbara Larson,Northeastern University

Zahir Latheef,University of Houston–Downtown

Blaine Lawlor,University of West Florida

Benjamin Lipschutz,Central Penn College

Charles Lyons,University of Georgia

Professor Cheryl Macon,Butler County Community College

Zengie Mangaliso,University of Massachusetts–Amherst

Christine Marchese,Nassau Community College

D. Kim McKinnon,Arizona State University

Ben McLarty,Mississippi State Univerisity

Erin McLaughlin,University of Alabama–Huntsville

Christine Miller,Tennessee Tech University

Lorianne Mitchell,East Tennessee State University

Debra L. Moody,Virginia Commonwealth University

Vivianne Moore,Davenport University

Byron Morgan,Texas State University

Jennifer Muryn,Robert Morris University

Troy Nielson,Brigham Young University

Paul O’Brien,Keiser University

Nathan Oliver,University of Alabama at Birmingham

Rhonda Palladi,Georgia State University

Thomas Philippe,St. Petersburg College

Michael Pirson,Fordham University

Beth Polin,Eastern Kentucky University

Elizabeth Prejean,Northwestern State University

Kenneth Rasheed,Chattahoochee Technical College

Chelsea Hood Reese,Southeast Community College

Martha Robinson,University of Memphis

David Ruderman,University of Colorado–Denver

Jerry Schoenfeld,Florida Gulf Coast University

Marina Sebastijanovic,University of Houston

Sarah Shike,Western Illinois University

Raj K. Singh,University of California–Riverside

Paula Kirch Smith,Cincinnati State

Dustin Smith, PhD.,Webster University

George E. Stevens,Kent State University

Jerry Stevens,Texas Tech University

C. Justice Tillman,Baruch College, City University of New York

Jim Turner,Davenport University

Brandi Ulrich,Anne Arundel Community College

George Valcho,Bossier Parish Community College

Tim Waid,University of Missouri

Wendy Walker,University of North Georgia

Charlene Walters,Strayer University

Rick Webb,Johnson County Community College

Joette Wisnieski,Indiana University of Pennsylvania

kin75117_fm_i-xxxviii-1.indd 25kin75117_fm_i-xxxviii-1.indd 27kin75117_fm_i-xxxviii-1.indd 29kin75117_fm_i-xxxviii-1.indd 31kin75117_fm_i-xxxviii-1.indd 33kin75117_fm_i-xxxviii-1.indd 37 10/12/18 7:59 PM

xxvi Acknowledgments

Anthony Weinberg,Daymar College

David Wernick,Florida International University

Wallace Alexander Williams Jr.,Texas A&M University–Commerce

Dr. Linsey Willis,Florida Atlantic University

M. Susan Wurtz,University of Northern Iowa

Jan Zantinga,University of Georgia


I would also like to thank the following colleagues who served as manuscript reviewers during the development of previous editions:

Steven W. Abram,Kirkwood Community College

G. Stoney Alder,University of Nevada–Las Vegas

Phyllis C. Alderdice,Jefferson Community and Technical College

Laura L. Alderson,University of Memphis

Danielle Beu Ammeter,University of Mississippi

William Scott Anchors,University of Maine at Orono

Jeffrey L. Anderson,Ohio University

Darlene Andert,Florida Gulf Coast University

John Anstey,University of Nebraska at Omaha

Maria Aria,Camden County College

Mona Bahl,Illinois State University

Pamela Ball,Clark State Community College

Valerie Barnet,Kansas State University

James D. Bell,Texas State University–San Marcos

Jessie Bellflowers,Fayetteville Technical Community College

Victor Berardi,Kent State University

Patricia Bernson,County College of Morris

David Bess,University of Hawaii

Stephen Betts,William Paterson University

Randy Blass,Florida State University

Larry Bohleber,University of Southern Indiana

Melanie Bookout,Greenville Technical College

Robert S. Boothe,University of Southern Mississippi

Carol Bormann Young,Metropolitan State University

Susan M. Bosco,Roger Williams University

David Allen Brown,Ferris State University

Roger Brown,Northwestern Oklahoma State University

Marit Brunsell,Madison Area Technical College

Jon Bryan,Bridgewater State University

Becky Bryant,Texas Woman’s University

Paul Buffa,Jefferson College, Missouri Baptist University

Mark David Burdsall,University of Pittsburgh

Neil Burton,Clemson University

Barbara A. Carlin,University of Houston

Pamela Carstens,Coe College

Julie J. Carwile,John Tyler Community College

Daniel A. Cernas Ortiz,University of North Texas

Glen Chapuis,St. Charles Community College

Rod Christian,Mesa Community College

Mike Cicero,Highline College

Jack Cichy,Davenport University

Anthony Cioffi,Lorain County Community College

Deborah Clark,Santa Fe Community College

J. Dana Clark,Appalachian State University

Dean Cleavenger,University of Central Florida

Sharon Clinebell,University of Northern Colorado

Loretta Fergus Cochran,Arkansas Tech University

Glenda Coleman,South University

Ron Cooley,South Suburban College

Melissa M. Cooper,School of Management, Texas Woman’s University

Gary Corona,Florida State College

Keith Credo,University of Louisiana–Lafayette

Derek E. Crews,Texas Woman’s University

Daniel J. Curtin,Lakeland Community College

Ajay Das,Baruch College

Tom Deckelman,Owens Community College

Linda I. DeLong,University of La Verne

Margaret Deck,Virginia Tech

Kate Demarest,University of Baltimore

E. Gordon DeMeritt,Shepherd University

Kathleen DeNisco,Erie Community College

xxviiAcknowledgments


Anant R. Deshpande,SUNY Empire State College

John DeSpagna,Nassau Community College

Pamela A. Dobies,University of Missouri–Kansas City

David Dore,Pima Community College

Lon Doty,San Jose State University

Ron Dougherty,Ivy Tech Community College/Columbus Campus

Scott Droege,Western Kentucky University

Ken Dunegan,Cleveland State University

Steven Dunphy,Indiana University Northwest

Linda Durkin,Delaware County Community College

Subhash Durlabhji,Northwestern State University of Louisiana

Jack Dustman,Northern Arizona University

Ray Eldridge,Lipscomb University

Bob Eliason,James Madison University

Valerie Evans,Kansas State University

W. Randy Evans,University of Tennessee at Chattanooga

Paul A. Fadil,University of North Florida

Crystal Saric Fashant,Metropolitan State University

Jud Faurer,Metropolitan State University of Denver

Judy Fitch,Augusta State University

Carla Flores,Ball State University

Christopher Flynn,University of North Florida

David Foote,Middle Tennessee State University

Lucy R. Ford,Saint Joseph’s University

Charla Fraley,Columbus State Community College

Gail E. Fraser,Kean University

Dana Frederick,Missouri State University

Tony Frontera,Binghamton University

Dane Galden,Columbus State Community College

Michael Garcia,Liberty University

Evgeniy Gentchev,Northwood University

Lydia Gilmore,Columbus State Community College

James Glasgow,Villanova University

Ronnie Godshalk,Penn State University

Connie Golden,Lakeland Community College

Deborah Cain Good,University of Pittsburgh

Kris Gossett,Mercyhurst University

Marie Gould,Horizons University

Tita Gray,Maryland University of Integrative Health

Ryan Greenbaum,Oklahoma State University– Stillwater

Kevin S. Groves,Pepperdine University

Joyce Guillory,Austin Community College

Reggie Hall,Tarleton State University

Stephen F. Hallam,The University of Akron

Marie DK. Halvorsen-Ganepola,University of Notre Dame

Charles T. Harrington,Pasadena City College

Santhi Harvey,Central State University

Karen H. Hawkins,Miami Dade College, Kendall Campus

Samuel Hazen,Tarleton State University

Jack Heinsius,Modesto Junior College

Duane Helleloid,University of North Dakota

Evelyn Hendrix,Lindenwood University

Kim Hester,Arkansas State University

Anne Kelly Hoel,University of Wisconsin–Stout

Mary Hogue,Kent State University

David Hollomon,Victor Valley College

Tammy Hunt,University of North Carolina–Wilmington

Aviad Israeli,Kent State University

Edward Johnson,University of North Florida

Nancy M. Johnson,Madison Area Technical College

Kathleen Jones,University of North Dakota

Rusty Juban,Southeastern Louisiana University

Dmitriy Kalyagin,Chabot College

Heesam Kang,Trident University International

Marvin Karlins,University of South Florida

Marcella Kelly,Santa Monica College

Richard Kimbrough,University of Nebraska–Lincoln

Renee N. King,Eastern Illinois University

Shaun C. Knight,Penn State University

Bobbie Knoblauch,Wichita State University

Todd Korol,Monroe Community College

Leo C. Kotrodimos,NC Wesleyan College

xxviii Acknowledgments


Sal Kukalis,California State University–Long Beach

Chalmer E. Labig Jr.,Oklahoma State University

Wendy Lam,Hawaii Pacific University

Robert L. Laud,William Paterson University

Rebecca Legleiter,Tulsa Community College

David Leonard,Chabot College

Chris Levan,University of Tennessee– Chattanooga

David Levy,United States Air Force Academy

Chi Lo Lim,Northwest Missouri State University

Natasha Lindsey,University of North Alabama

Beverly Little,Western Carolina University

Guy Lochiatto,MassBay Community College

Mary Lou Lockerby,College of DuPage

Michael Dane Loflin,York Technical College

Jessica Lofton,University of Mount Olive

Paul Londrigan,Charles Stewart Mott Community College

Tom Loughman,Columbus State University

Ivan Lowe,York Technical College

Gregory Luce,Bucks County Community College

Margaret Lucero,Texas A & M–Corpus Christi

James Manicki,Northwestern College

Christine I. Mark,University of Southern Mississippi

Marcia A. Marriott,Monroe Community College

Dr. David Matthews,SUNY Adirondack

Brenda McAleer,University of Maine at Augusta

Daniel W. McAllister,University of Nevada–Las Vegas

David McArthur,Utah Valley University

Tom McFarland,Mount San Antonio College

Joe McKenna,Howard Community College

Zack McNeil,Metropolitan Community College

Jeanne McNett,Assumption College

Spencer Mehl,Coastal Carolina Community College

Mary Meredith,University of Louisiana

Lori Merlak,Kirkwood Community College

Douglas Micklich,Illinois State University

Christine Miller,Tennessee Tech University

Val Miskin,Washington State University

Kelly Mollica,University of Memphis

Gregory Moore,Middle Tennessee State University

Rob Moorman,Elon University

Jaideep Motwani,Grand Valley State University

Troy Mumford,Colorado State University

Robert Myers,University of Louisville

Christopher P. Neck,Arizona State University

Patrick J. Nedry,Monroe County Community College

Francine Newth,Providence College

Margie Nicholson,Columbia College, Chicago

Thomas J. Norman,California State University–Dominguez Hills

Joanne Orabone,Community College of Rhode Island

John Orife,Indiana University of Pennsylvania

Eren Ozgen,Florida State University–Panama City

Fernando Pargas,James Madison University

Jack Partlow,Northern Virginia Community College

Don A. Paxton,Pasadena City College

John Paxton,Wayne State College

John Pepper,The University of Kansas

Clifford R. Perry,Florida International University

Sheila Petcavage,Cuyahoga Community College–Western Campus

Barbara Petzall,Maryville University

Shaun Pichler,Mihaylo College of Business, California State University, Fullerton

Anthony Plunkett,Harrison College

Tracy H. Porter,Cleveland State University

Paula Potter,Western Kentucky University

Cynthia Preston,University of Northwestern Ohio

Ronald E. Purser,San Francisco State University

Gregory R. Quinet,Kennesaw State University

George Redmond,Franklin University

Deborah Reed,Benedictine College

Rosemarie Reynolds,Embry Riddle Aeronautical University

H. Lynn Richards,Johnson County Community College

Leah Ritchie,Salem State College

Gary B. Roberts,Kennesaw State University

Sean E. Rogers,University of Rhode Island

xxixAcknowledgments


Katherine Rosenbusch,George Mason University

Barbara Rosenthal,Miami Dade Community College/Wolfson Campus

Gary Ross,Cardinal Stritch University

Catherine Ruggieri,St. John’s University–Staten Island

Storm Russo,Valencia Community College

Cindy Ruszkowski,Illinois State University

William Salyer,Illinois State University

Diane R. Scott,Wichita State University

Alex J. Scrimpshire,Xavier University

Marianne Sebok,College of Southern Nevada

Thomas J. Shaughnessy,Illinois Central College

Joanna Shaw,Tarleton State University

Randi Sims,Nova Southeastern University

Frederick J. Slack,Indiana University of Pennsylvania

Erika E. Small,Coastal Carolina University

Jim Smas,Kent State University

Gerald F. Smith,University of Northern Iowa

Mark Smith,University of Southwest Louisiana

Shane Spiller,Western Kentucky University

Jeff Stauffer,Ventura College

George E. Stevens,Kent State University

Martin St. John,Westmoreland County Community College

Raymond Stoudt,DeSales University

Barb Stuart,Daniels College of Business

Robert Scott Taylor,Moberly Area Community College

Virginia Anne Taylor,William Patterson University

Wynn Teasley,University of West Florida

Marguerite Teubner,Nassau Community College

Jerry Thomas,Arapahoe Community College

C. Justice Tillman,Baruch College–City University of New York

Jody Tolan,University of Southern California, Marshall School of Business

Joseph Tomkiewicz,East Carolina University

Robert Trumble,Virginia Commonwealth University

Joy Turnheim Smith,Elizabeth City State University

Isaiah Ugboro,North Carolina Agricultural & Technical State University

Brandi Ulrich,Anne Arundel Community College

Anthony Uremovic,Joliet Junior College

Barry Van Hook,Arizona State University

Scot W. Vaver,University of Wisconsin–Stout

Susan Verhulst,Grand View University

Annie Viets,Prince Mohammad Bin Fahd University

Tom Voigt Jr.,Judson University

Carolyn Waits,Cincinnati State

Bruce C. Walker,University of Louisiana at Monroe

Tekle O. Wanorie,Northwest Missouri State University

Charles Warren,Salem State College

Kerry Webb,Texas Woman’s University

Brian D. Webster,Ball State University

Velvet Weems-Landingham,Kent State University–Geauga

Allen Weimer,University of Tampa

David A. Wernick,Florida International University

James Whelan,Manhattan College

John Whitelock,Community College of Baltimore/Catonsville Campus

Eric S. Williams,University of Alabama– Tuscaloosa

Joette Wisnieski,Indiana University of Pennsylvania

Colette Wolfson,Ivy Tech Community College

Wendy V. Wysocki,Monroe County Community College

Carol Bormann Young,Metropolitan State University, Minnesota

Ned D. Young,Sinclair Community College

Jan T. Zantinga,University of Georgia

Mary E. Zellmer-Bruhn,University of Minnesota

Mark Zorn,Butler County Community College

Finally, I would like to thank my wife, Joyce, for being understanding, patient, and encourag-ing throughout the process of writing this edition. Your love and support helped me endure the trials of completing this text.

I hope you enjoy reading and applying the book. Best wishes for success in your career.

Angelo Kinicki

Walkthrough Preface of 9e xv

PART 1Introduction

CHAPTER ONEThe Exceptional Manager: What You Do, How You Do It 2

1.1 Management: What It Is, What Its Benefits Are 4The Rise of the Die Maker’s Daughter 4

Key to Career Growth: “Doing Things I’ve Never Done Before” 4

The Art of Management Defined 5

Why Organizations Value Managers: The Multiplier Effect 6

The Financial Rewards of Being an Exceptional Manager 6

What Are the Rewards of Studying and Practicing Management? 7

1.2 What Managers Do: The Four Principal Functions 9Planning: Discussed in Part 3 of This Book 9

Organizing: Discussed in Part 4 of This Book 9

Leading: Discussed in Part 5 of This Book 10

Controlling: Discussed in Part 6 of This Book 10

1.3 Pyramid Power: Levels and Areas of Management 11The Traditional Management Pyramid: Levels and Areas 11

Three Levels of Management 11

Areas of Management: Functional Managers versus General Managers 13

Managers for Three Types of Organizations: For-Profit, Nonprofit, Mutual-Benefit 14

Different Organizations, Different Management? 14

1.4 Roles Managers Must Play Successfully 15The Manager’s Roles: Mintzberg’s Useful Findings 15

Three Types of Managerial Roles: Interpersonal, Informational, and Decisional 17

1.5 The Skills Exceptional Managers Need 191. Technical Skills—The Ability to Perform a Specific Job 19

2. Conceptual Skills—The Ability to Think Analytically 19

3. Human Skills—“Soft Skills,” the Ability to Interact Well with People 20

The Most Valued Traits in Managers 21

1.6 Seven Challenges to Being an Exceptional Manager 22CHALLENGE #1: Managing for Competitive Advantage—Staying Ahead of Rivals 23

CHALLENGE #2: Managing for Information Technology—Dealing with the “New Normal” 24

CHALLENGE #3: Managing for Diversity—The Future Won’t Resemble the Past 26

CHALLENGE #4: Managing for Globalization—The Expanding Management Universe 26

CHALLENGE #5: Managing for Ethical Standards 27

CHALLENGE #6: Managing for Sustainability—The Business of Green 28

CHALLENGE #7: Managing for Happiness and Meaningfulness 28

How Strong Is Your Motivation to Be a Manager? The First Self-Assessment 29

1.7 Building Your Career Readiness 30A Model of Career Readiness 30

Developing Career Readiness 35

Let Us Help 36

1.8 Career Corner: Managing Your Career Readiness 37

Key Terms Used in This Chapter 38Key Points 38Understanding the Chapter: What Do I Know? 39Management in Action 39Legal/Ethical Challenge 41

CHAPTER TWOManagement Theory: Essential Background for the Successful Manager 422.1 Evolving Viewpoints: How We Got to Today’s

Management Outlook 44Creating Modern Management: The Handbook of Peter Drucker 44

Six Practical Reasons for Studying This Chapter 44

Two Overarching Perspectives about Management: Historical and Contemporary 46

2.2 Classical Viewpoint: Scientific and Administrative Management 47Scientific Management: Pioneered by Taylor and the Gilbreths 47

xxx


contents

Administrative Management: Pioneered by Spaulding, Fayol, and Weber 49

The Problem with the Classical Viewpoint: Too Mechanistic 50

2.3 Behavioral Viewpoint: Behaviorism, Human Relations, and Behavioral Science 51Early Behaviorism: Pioneered by Munsterberg, Follett, and Mayo 51

The Human Relations Movement: Pioneered by Maslow and McGregor 52

The Behavioral Science Approach 54

2.4 Quantitative Viewpoints: Management Science and Operations Management 56Management Science: Using Mathematics to Solve Management Problems 56

Operations Management: Being More Effective 57

2.5 Systems Viewpoint 58The Systems Viewpoint 59

The Four Parts of a System 59

2.6 Contingency Viewpoint 61Gary Hamel: Management Ideas Are Not Fixed, They’re a Process 61

Evidence-Based Management: Facing Hard Facts, Rejecting Nonsense 62

2.7 Quality-Management Viewpoint 63Quality Control and Quality Assurance 63

Total Quality Management: Creating an Organization Dedicated to Continuous Improvement 63

Six Sigma and ISO 9000

2.8 The Learning Organization in an Era of Accelerated Change 66The Learning Organization: Handling Knowledge and Modifying Behavior 66

How to Build a Learning Organization: Three Roles Managers Play 67

2.9 Career Corner: Managing Your Career Readiness 69


PART 2The Environment of Management

CHAPTER THREEThe Manager’s Changing Work Environment and Ethical Responsibilities: Doing the Right Thing 76

3.1 The Triple Bottom Line: People, Planet, and Profit 78The Millennials’ Search for Meaning 78

3.2 The Community of Stakeholders Inside the Organization 79Internal and External Stakeholders 79

Internal Stakeholders 79

3.3 The Community of Stakeholders Outside the Organization 82The Task Environment 82

The General Environment 87

3.4 The Ethical Responsibilities Required of You as a Manager 92Defining Ethics and Values 93

Four Approaches to Resolving Ethical Dilemmas 95

White-Collar Crime, SarbOx, and Ethical Training 95

How Organizations Can Promote Ethics 97

3.5 The Social Responsibilities Required of You as a Manager 100Corporate Social Responsibility: The Top of the Pyramid 100

Is Social Responsibility Worthwhile? Opposing and Supporting Viewpoints 100

One Type of Social Responsibility: Climate Change, Sustainability, and Natural Capital 103

Another Type of Social Responsibility: Undertaking Philanthropy, “Not Dying Rich” 104

Does Being Good Pay Off? 104

3.6 Corporate Governance 106Ethics and Corporate Governance 106

The Need for Trust 106

3.7 Career Corner: Managing Your Career Readiness 108Focus on the Greater Good and on Being More Ethical 108

Become an Ethical Consumer 109


CHAPTER FOURGlobal Management: Managing across Borders 1164.1 Globalization: The Collapse of Time and

Distance 118Competition and Globalization: Who Will Be No. 1 Tomorrow? 118

The Rise of the “Global Village” and Electronic Commerce 119

One Big World Market: The Global Economy 120

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Cross-Border Business: The Rise of Both Megamergers and Minifirms Worldwide 121

4.2 You and International Management 122Why Learn about International Management? 123

The Successful International Manager: Geocentric, Not Ethnocentric or Polycentric 124

4.3 Why and How Companies Expand Internationally 126Why Companies Expand Internationally 126

How Companies Expand Internationally 127

4.4 The World of Free Trade: Regional Economic Cooperation and Competition 131Barriers to International Trade 131

Organizations Promoting International Trade 133

Major Trading Blocs: NAFTA and the EU 134

Most Favored Nation Trading Status 136

Exchange Rates 136

4.5 The Value of Understanding Cultural Differences 139The Importance of National Culture 140

Cultural Dimensions: The Hofstede and GLOBE Project Models 140

Other Cultural Variations: Language, Interpersonal Space, Communication, Time Orientation, Religion, and Law and Political Stability 144

U.S. Managers on Foreign Assignments: Why Do They Fail? 148

4.6 Career Corner: Managing Your Career Readiness 1491. Listen and Observe 149

2. Become Aware of the Context 150

3. Choose Something Basic 150


CHAPTER SIXStrategic Management: How Exceptional Managers Realize a Grand Design 1886.1 Strategic Positioning and Levels of

Strategy 190Strategic Positioning and Its Principles 190

Levels of Strategy 191

Does Strategic Management Work for Small as Well as Large Firms? 192

6.2 The Strategic-Management Process 193The Five Steps of the Strategic-Management Process 193

6.3 Assessing the Current Reality 196SWOT Analysis 196

Using VRIO to Assess Competitive Potential: Value, Rarity, Imitability, and Organization 199

Forecasting: Predicting the Future 200

Benchmarking: Comparing with the Best 202

6.4. Establishing Corporate-Level Strategy 203Three Overall Types of Corporate Strategy 203

The BCG Matrix 204

Diversification Strategy 205

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PART 3Planning

CHAPTER FIVEPlanning: The Foundation of Successful Management 1565.1 Planning and Strategy 158

Planning, Strategy, and Strategic Management 158

Why Planning and Strategic Management Are Important 159

5.2 Fundamentals of Planning 162Mission, Vision, and Values Statements 163

Three Types of Planning for Three Levels of Management: Strategic, Tactical, and Operational 166

5.3 Goals and Plans 169Long-Term and Short-Term Goals 169

The Operating Plan and Action Plan 169

Types of Plans: Standing Plans and Single-Use Plans 171

5.4 Promoting Consistencies in Goals: SMART Goals, Management by Objectives, and Goal Cascading 172SMART Goals 172

Management by Objectives: The Four-Step Process for Motivating Employees 173

Cascading Goals: Making Lower-Level Goals Align with Top Goals 176

The Importance of Deadlines 177

5.5 The Planning/Control Cycle 178

5.6 Career Corner: Managing Your Career Readiness 180Becoming More Proactive 181

Keeping an Open Mind and Suspending Judgment 181


6.5 Establishing Business-Level Strategy 206Porter’s Five Competitive Forces 206

Porter’s Four Competitive Strategies 207

6.6 Executing and Controlling Strategy 209Executing the Strategy 209

Maintaining Strategic Control 209

Execution: Getting Things Done 209

The Three Core Processes of Business: People, Strategy, and Operations 210

How Execution Helps Implement and Control Strategy 211

6.7 Career Corner: Managing Your Career Readiness 213Why Is Strategic Thinking Important to New Graduates? 213


LEARNING MODULE 1: Entrepreneurship 220

LM1.1 Entrepreneurship: Its Foundations and Importance 221Entrepreneurship: It’s Not the Same as Self-Employment 222

Characteristics of Entrepreneurs 224

Entrepreneurship Matters across the Globe 226

LM1.2 Starting a Business 229Businesses Start with an Idea 229

Writing the Business Plan 230

Choosing a Legal Structure 232

Obtaining Financing 233

Creating the “Right” Organizational Culture and Design 234

Key Terms Used in This Learning Module 237Key Points 237

CHAPTER SEVENIndividual and Group Decision Making: How Managers Make Things Happen 2387.1 Two Kinds of Decision Making: Rational and

Nonrational 240Decision Making in the Real World 241

Rational Decision Making: Managers Should Make Logical and Optimal Decisions 242

Stage 1: Identify the Problem or Opportunity— Determining the Actual versus the Desirable 242

Stage 2: Think Up Alternative Solutions—Both the Obvious and the Creative 242

Stage 3: Evaluate Alternatives and Select a Solution—Ethics, Feasibility, and Effectiveness 242

Stage 4: Implement and Evaluate the Solution Chosen 243

What’s Wrong with the Rational Model? 244

Nonrational Decision Making: Managers Find It Difficult to Make Optimal Decisions 244

7.2 Making Ethical Decisions 247The Dismal Record of Business Ethics 247

Road Map to Ethical Decision Making: A Decision Tree 248

7.3 Evidence-Based Decision Making and Analytics 250Evidence-Based Decision Making 251

In Praise of Analytics 252

“Big Data”: What It Is, How It’s Used 254

7.4 Four General Decision-Making Styles 257Value Orientation and Tolerance for Ambiguity 257

1. The Directive Style: Action-Oriented Decision Makers Who Focus on Facts 258

2. The Analytical Style: Careful Decision Makers Who Like Lots of Information and Alternative Choices 258

3. The Conceptual Style: Decision Makers Who Rely on Intuition and Have a Long-Term Perspective 258

4. The Behavioral Style: The Most People-Oriented Decision Makers 258

Which Style Do You Have? 259

7.5 Decision-Making Biases and the Use of Artificial Intelligence 260Nine Common Decision-Making Biases: Rules of Thumb, or “Heuristics” 260

The Decision-Making Potential of Artificial Intelligence 262

Pros and Cons of Artificial Intelligence 263

7.6 Group Decision Making: How to Work with Others 265Advantages and Disadvantages of Group Decision Making 265

Groupthink 266

Characteristics of Group Decision Making 267

Group Problem-Solving Techniques: Reaching for Consensus 269

More Group Problem-Solving Techniques 269

7.7 Career Corner: Managing Your Career Readiness 272Improving Your Critical Thinking and Problem-Solving Skills 272

Reflect on Past Decisions 272


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PART 4Organizing

CHAPTER EIGHTOrganizational Culture, Structure, and Design: Building Blocks of the Organization 2808.1 Aligning Strategy, Culture, and Structure 282

How an Organization’s Culture and Structure Are Used to Implement Strategy 282

8.2 What Kind of Organizational Culture Will You Be Operating In? 286The Three Levels of Organizational Culture 286

Four Types of Organizational Culture: Clan, Adhocracy, Market, and Hierarchy 287

How Employees Learn Culture: Symbols, Stories, Heroes, Rites and Rituals, and Organizational Socialization 290

The Importance of Culture 291

What Does It Mean to “Fit”? Anticipating a Job Interview 292

8.3 The Process of Culture Change 2931. Formal Statements 293

2. Slogans and Sayings 293

3. Rites and Rituals 293

4. Stories, Legends, and Myths 294

5. Leader Reactions to Crises 294

6. Role Modeling, Training, and Coaching 294

7. Physical Design 294

8. Rewards, Titles, Promotions, and Bonuses 295

9. Organizational Goals and Performance Criteria 295

10. Measurable and Controllable Activities 295

11. Organizational Structure 296

12. Organizational Systems and Procedures 296

Don’t Forget about Person–Organization Fit 297

8.4 Organizational Structure 298The Organization: Three Types 298

The Organization Chart 298

8.5 The Major Elements of an Organization 300Common Elements of Organizations: Four Proposed by Edgar Schein 300

Common Elements of Organizations: Three More That Most Authorities Agree On 301

8.6 Basic Types of Organizational Structures 3041. Traditional Designs: Simple, Functional, Divisional, and Matrix Structures 304

2. The Horizontal Design: Eliminating Functional Barriers to Solve Problems 307

3. Designs That Open Boundaries between Organizations: Hollow, Modular, and Virtual Structures 309

8.7 Contingency Design: Factors in Creating the Best Structure 311Three Factors to Be Considered in Designing an Organization’s Structure 311

1. The Environment: Mechanistic versus Organic Organizations—the Burns and Stalker Model 311

2. The Environment: Differentiation versus Integration—the Lawrence and Lorsch Model 313

3. Linking Strategy, Culture, and Structure 313

8.8 Career Corner: Managing Your Career Readiness 314Understanding the Business and Where You “Fit” In 314

Becoming More Adaptable 315


CHAPTER NINEHuman Resource Management: Getting the Right People for Managerial Success 3229.1 Strategic Human Resource Management 324

Human Resource Management: Managing an Organization’s Most Important Resource 324

Planning the Human Resources Needed 326

9.2 Recruitment and Selection: Putting the Right People into the Right Jobs 329Recruitment: How to Attract Qualified Applicants 329

Selection: How to Choose the Best Person for the Job 333

9.3 Managing an Effective Workforce: Compensation and Benefits 339Wages or Salaries 339

Incentives 339

Benefits 339

9.4 Orientation and Learning and Development 340Orientation: Helping Newcomers Learn the Ropes 340

Learning and Development: Helping People Perform Better 341

9.5 Performance Appraisal 344Performance Management in Human Resources 344

Performance Appraisals: Are They Worthwhile? 345

Two Kinds of Performance Appraisal: Objective and Subjective 346

Who Should Make Performance Appraisals? 347

Effective Performance Feedback 348

9.6 Managing Promotions, Transfers, Disciplining, and Dismissals 350Promotion: Moving Upward 350

Transfer: Moving Sideways 351

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Disciplining and Demotion: The Threat of Moving Downward 351

Dismissal: Moving Out of the Organization 351

9.7 The Legal Requirements of Human Resource Management 3541. Labor Relations 354

2. Compensation and Benefits 354

3. Health and Safety 354

4. Equal Employment Opportunity 356

Workplace Discrimination, Affirmative Action, Sexual Harassment, and Bullying 356

9.8 Labor–Management Issues 361How Workers Organize 361

How Unions and Management Negotiate a Contract 362

The Issues Unions and Management Negotiate About 362

Settling Labor–Management Disputes 364

9.10 Career Corner: Managing Your Career Readiness 366Becoming a Better Receiver 366


CHAPTER TENOrganizational Change and Innovation: Lifelong Challenges for the Exceptional Manager 37410.1 The Nature of Change in Organizations 376

Fundamental Change: What Will You Be Called On to Deal With? 376

Two Types of Change: Reactive and Proactive 378

The Forces for Change Outside and Inside the Organization 380

10.2 Types and Models of Change 383Three Kinds of Change: From Least Threatening to Most Threatening 383

Lewin’s Change Model: Unfreezing, Changing, and Refreezing 384

A Systems Approach to Change 385

10.3 Organizational Development: What It Is, What It Can Do 389What Can OD Be Used For? 389

How OD Works 390

The Effectiveness of OD 391

10.4 Organizational Innovation 392Approaches to Innovation 392

An Innovation System: The Supporting Forces for Innovation 394

10.5 The Threat of Change: Managing Employee Fear and Resistance 399The Causes of Resistance to Change 399

Ten Reasons Employees Resist Change 400

10.6 Career Corner: Managing Your Career Readiness 402Applying Self-Affirmation Theory 402

Practicing Self-Compassion 403


PART 5Leading

CHAPTER ELEVENManaging Individual Differences and Behavior: Supervising People as People 40811.1 Personality and Individual Behavior 410

The Big Five Personality Dimensions 410

Core Self-Evaluations 411

Emotional Intelligence: Understanding Your Emotions and the Emotions of Others 414

11.2 Values, Attitudes, and Behavior 416Organizational Behavior: Trying to Explain and Predict Workplace Behavior 416

Values: What Are Your Consistent Beliefs and Feelings about All Things? 416

Attitudes: What Are Your Consistent Beliefs and Feelings about Specific Things? 416

Behavior: How Values and Attitudes Affect People’s Actions and Judgments 419

11.3 Perception and Individual Behavior 420The Four Steps in the Perceptual Process 420

Five Distortions in Perception 420

The Self-Fulfilling Prophecy, or Pygmalion Effect 424

11.4 Work-Related Attitudes and Behaviors Managers Need to Deal With 4261. Employee Engagement: How Connected Are You to Your Work? 426

2. Job Satisfaction: How Much Do You Like or Dislike Your Job? 428

3. Organizational Commitment: How Much Do You Identify with Your Organization? 428

Important Workplace Behaviors 429

11.5 The New Diversified Workforce 431How to Think about Diversity: Which Differences Are Important? 431

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Trends in Workforce Diversity 433

Barriers to Diversity 437

11.6 Understanding Stress and Individual Behavior 441The Toll of Workplace Stress 441

How Does Stress Work? 442

The Sources of Job-Related Stress 442

Reducing Stressors in the Organization 445

11.7 Career Corner: Managing Your Career Readiness 448Fostering a Positive Approach 448

Self-Managing Your Emotions 449


CHAPTER TWELVEMotivating Employees: Achieving Superior Performance in the Workplace 45612.1 Motivating for Performance 458

Motivation: What It Is, Why It’s Important 458

The Four Major Perspectives on Motivation: An Overview 460

12.2 Content Perspectives on Employee Motivation 461Maslow’s Hierarchy of Needs Theory: Five Levels 461

McClelland’s Acquired Needs Theory: Achievement, Affiliation, and Power 463

Deci and Ryan’s Self-Determination Theory: Competence, Autonomy, and Relatedness 464

Herzberg’s Two-Factor Theory: From Dissatisfying Factors to Satisfying Factors 466

12.3 Process Perspectives on Employee Motivation 469Equity/Justice Theory: How Fairly Do You Think You’re Being Treated in Relation to Others? 469

Expectancy Theory: How Much Do You Want and How Likely Are You to Get It? 473

Goal-Setting Theory: Objectives Should Be Specific and Challenging but Achievable 475

12.4 Job Design Perspectives on Motivation 478Fitting People to Jobs 478

Fitting Jobs to People 478

The Job Characteristics Model: Five Job Attributes for Better Work Outcomes 479

12.5 Reinforcement Perspectives on Motivation 483The Four Types of Reinforcement: Positive, Negative, Extinction, and Punishment 483

Using Reinforcement to Motivate Employees 484

12.6 Using Compensation, Nonmonetary Incentives, and Other Rewards to Motivate: In Search of the Positive Work Environment 487Is Money the Best Motivator? 487Motivation and Compensation 487Nonmonetary Ways of Motivating Employees 489

12.7 Career Corner: Managing Your Career Readiness 4941. Identify Your “Wildly Important” Long-Term Goal 4942. Break Your Wildly Important Goal into Short-Term Goals 4953. Create a “To-Do” List for Accomplishing Your Short-Term Goals 4954. Prioritize the Tasks 4955. Create a Time Schedule 4956. Work the Plan, Reward Yourself, and Adjust as Needed 495


CHAPTER THIRTEENGroups and Teams: Increasing Cooperation, Reducing Conflict 50213.1 Groups versus Teams 504

Groups and Teams: How Do They Differ? 505Formal versus Informal Groups 506Types of Teams 507

13.2 Stages of Group and Team Development 510Tuckman’s Five-Stage Model 510Punctuated Equilibrium 512

13.3 Building Effective Teams 5131. Collaboration—the Foundation of Teamwork 5132. Trust: “We Need to Have Reciprocal Faith in Each Other” 5143. Performance Goals and Feedback 5154. Motivation through Mutual Accountability and Interdependence 5165. Team Composition 5166. Roles: How Team Members Are Expected to Behave 5177. Norms: Unwritten Rules for Team Members 5188. Effective Team Processes 520Putting It All Together 520

13.4 Managing Conflict 521The Nature of Conflict: Disagreement Is Normal 521Can Too Little or Too Much Conflict Affect Performance? 522Three Kinds of Conflict: Personality, Intergroup, and Cross-Cultural 523

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How to Stimulate Constructive Conflict 524

Five Basic Behaviors to Help You Better Handle Conflict 526

Dealing with Disagreements: Five Conflict-Handling Styles 526

13.5 Career Corner: Managing Your Career Readiness 528Become a More Effective Team Member 528

Become a More Effective Collaborator 529


CHAPTER FOURTEENPower, Influence, and Leadership: From Becoming a Manager to Becoming a Leader 53414.1 The Nature of Leadership: The Role of Power

and Influence 536What Is the Difference between Leading and Managing? 536

Managerial Leadership: Can You Be Both a Manager and a Leader? 537

Coping with Complexity versus Coping with Change: The Thoughts of John Kotter 538

Five Sources of Power 538

Common Influence Tactics 540

Match Tactics to Influence Outcomes 542

An Integrated Model of Leadership 542

14.2 Trait Approaches: Do Leaders Have Distinctive Traits and Personal Characteristics? 544Positive Task-Oriented Traits and Positive/Negative Interpersonal Attributes 544

What Do We Know about Gender and Leadership? 545

Are Knowledge and Skills Important? 548

So What Do We Know about Leadership Traits? 548

14.3 Behavioral Approaches: Do Leaders Show Distinctive Patterns of Behavior? 550Task-Oriented Leader Behaviors: Initiating-Structure Leadership and Transactional Leadership 550

Relationship-Oriented Leader Behavior: Consideration, Empowerment, Ethical Leadership, and Servant Leadership 551

Passive Leadership: The Lack of Leadership Skills 555

So What Do We Know about the Behavioral Approaches? 556

14.4 Situational Approaches: Does Leadership Vary with the Situation? 5571. The Contingency Leadership Model: Fiedler’s Approach 557

2. The Path–Goal Leadership Model: House’s Approach 559

So What Do We Know about the Situational Approaches? 561

14.5 The Uses of Transformational Leadership 563Transformational Leaders 563

The Best Leaders Are Both Transactional and Transformational 563

Four Key Behaviors of Transformational Leaders 564

So What Do We Know about Transformational Leadership? 567

14.6 Three Additional Perspectives 568Leader–Member Exchange Leadership: Having Different Relationships with Different Subordinates 568

The Power of Humility 569

Followers: What Do They Want, How Can They Help? 570

14.7 Career Corner: Managing Your Career Readiness 572Becoming More Self-Aware 572


CHAPTER FIFTEENInterpersonal and Organizational Communication: Mastering the Exchange of Information 58015.1 The Communication Process: What It Is, How It

Works 582Communication Defined: The Transfer of Information and Understanding 582

How the Communication Process Works 583

Selecting the Right Medium for Effective Communication 586

15.2 How Managers Fit into the Communication Process 588Formal Communication Channels: Up, Down, Sideways, and Outward 588

Informal Communication Channels 589

15.3 Barriers to Communication 5921. Physical Barriers: Sound, Time, Space 592

2. Personal Barriers: Individual Attributes That Hinder Communication 593

3. Cross-Cultural Barriers 595

4. Nonverbal Communication: How Unwritten and Unspoken Messages May Mislead 596

5. Gender Differences 598

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15.4 Social Media and Management 600Social Media Has Changed the Fabric of Our Lives 600

Social Media and Managerial and Organizational Effectiveness 601

Downsides of Social Media 608

Managerial Implications of Texting 611

Managerial Considerations in Creating Social Media Policies 612

15.5 Improving Communication Effectiveness 615Nondefensive Communication 615

Using Empathy 617

Being an Effective Listener 618

Being an Effective Writer 619

Being an Effective Speaker 620

15.6 Career Corner: Managing Your Career Readiness 623Improve Your Face-to-Face Networking Skills 623


PART 6Controlling

CHAPTER SIXTEEN

Control Systems and Quality Management: Techniques for Enhancing Organizational Effectiveness 63016.1 Control: When Managers Monitor

Performance 632Why Is Control Needed? 632

Steps in the Control Process 635

Types of Controls 639

16.2 Levels and Areas of Control 641Levels of Control: Strategic, Tactical, and Operational 641

Six Areas of Control 641

Controlling the Supply Chain 643

Control in Service Firms 644

16.3 The Balanced Scorecard and Strategy Maps 645The Balanced Scorecard: A Dashboard-like View of the Organization 645

Strategy Mapping: Visual Representation of the Path to Organizational Effectiveness 648

16.4 Some Financial Tools for Control 650Budgets: Formal Financial Projections 650

Financial Statements: Summarizing the Organization’s Financial Status 651

Audits: External versus Internal 652

16.5 Total Quality Management 654Deming Management: The Contributions of W. Edwards Deming to Improved Quality 655

Core TQM Principles: Deliver Customer Value and Strive for Continuous Improvement 655

Applying TQM to Services 659

Some TQM Tools, Techniques, and Standards 661

Takeaways from TQM Research 663

16.6 Managing Control Effectively 664The Keys to Successful Control Systems 664

Barriers to Control Success 665

16.7 Managing for Productivity 667What Is Productivity? 667

Why Is Increasing Productivity Important? 668

What Processes Can I Use to Increase Productivity? 669

Managing Individual Productivity 670

16.8 Career Corner: Managing Your Career Readiness 6711. Make Every Day Count 672

2. Stay Informed and Network 672

3. Promote Yourself 672

4. Roll with Change and Disruption 673

5. Small Things Matter during Interviews 673

Epilogue: The Keys to Your Managerial Success 674


LEARNING MODULE 2: The Project Planner’s Toolkit: Flowcharts, Gantt Charts, and Break-Even Analysis 681

Tool #1: Flowcharts—for Showing Event Sequences and Alternate Decision Scenarios 681

Tool #2: Gantt Charts—Visual Time Schedules for Work Tasks 683

Tool #3: Break-Even Analysis—How Many Items Must You Sell to Turn a Profit? 684

CHAPTER NOTES CN-1

NAME INDEX IND-1

ORGANIZATION INDEX IND-5

GLOSSARY/SUBJECT INDEX IND-11

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management

N I N T H E D I T I O N


5 PlanningThe Foundation of Successful Management

•

©Olivier Renck/Aurora/Getty Im

ages

PART 3 PLANNING

After reading this chapter, you should be able to:

LO 5-1 Discuss the role of strategic management.

LO 5-2 Compare mission, vision, and value statements.

LO 5-3 Discuss the types and purposes of goals and plans.

LO 5-4 Describe SMART goals and their implementation.

LO 5-5 Outline the planning/control cycle.

LO 5-6 Describe how to develop the career readiness competency of proactive learning orientation.

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FORECAST What’s Ahead in This ChapterWe describe planning and its link to strategy. We define planning, strategy,

and strategic management and state why they are important. We deal with the

fundamentals of planning, including the mission, vision, and value statements,

and the three types of planning—strategic, tactical, and operational. We con-

sider goals, operating plans, and action plans; SMART goals, management by

objectives, and cascading goals; and finally the planning/control cycle. We

conclude with a Career Corner that focuses on how you can develop the ca -

reer readiness competency of proactive learning orientation.

Making an Effective Plan for Starting Your CareerThe thought of starting a career (or switching to a new one) can be either intimidating or exciting. What’s the difference? Having goals and a plan.

Setting Goals and Making a PlanHere are some steps in the career-management process for you to consider as you set about building your career.1

1. Identify your options. Use the career readiness skill of self-awareness to write down areas and ideas that interest and are important to you and the functional, cross-cultural, computational, interpersonal, and other skills you can offer an employer. Then make a written list of the opportunities available to you through your networking, earlier work and volunteer experience, and other resources (don’t forget the alumni and placement offices at your school). Now match up the two lists to discover where you should focus your career-building efforts.

2. Explore conditions in your target field. The career readiness skill of understanding the business will guide you to identify important factors like the demand for new hires in your chosen field or fields, the competencies expected of incoming employees, the likely salary range and opportunities for advancement, and any geographic limitations or requirements in the industry to be aware of. If your field or industry is concentrated in one or two parts of the country, for instance, be ready to move.

3. Create your action plan. Using what you learned from steps 1 and 2, write a list of actions you can take to achieve your goal of breaking into a new career. You are more likely to achieve your goals if they are “SMART”—specific, measurable against clear criteria to show progress, attainable with a chance of 50% or higher, relevant to you, and time bound with target dates for completion. We discuss the process of writing SMART goals in Section 5.4. Try to keep your steps or goals to a manageable number; somewhere between three and five is recommended. Prioritize and schedule them to create your plan, and if it helps you to give each one a name, by all means do so.

4. Track your progress. You’ll see as you study this chapter that monitoring or controlling progress toward goals is an inherent part of the planning process. Each

time you get a result from one of your efforts, whether it’s positive or negative, that result constitutes feedback on how well you’ve selected your goals and how effective your plan is. If one step doesn’t work out as planned, don’t give up. Rely on your positive attitude and ability to adapt (more career readiness skills) and realize you have other opportunities to succeed. Try broadening your search, and begin again.

Staying Resilient during the ProcessHere are a few ideas about what else you can do to keep your hopes—and your finances—afloat during the career-building process.

1. Know that it takes time to find a job, especially one that’s a good fit for both you and the company that hires you. College graduates spend about six months, on average, landing their first job after graduation.2 If you are already working, even part-time, stay in the job while you pursue a new one. It’s always easier to find a job if you have one. If you are not working, consider taking a part-time or short-term job to generate some income. since you’ll want to avoid running up credit card debt.

2. Create a budget to be sure your income will cover your day-to-day expenses. This is a lifelong habit that will serve you well.

3. Avoid making any major financial commitments until you’ve actually landed your target job. You won’t know how much you can afford to pay for a car until you know your salary, for instance, and you may not want to be encumbered by a new lease if your dream job requires you to relocate. As long as you have an appropriate interview outfit, even splurging on a professional wardrobe can wait until you know the dress code at your new employer.

For Discussion What fields or industries are interesting or appealing to you as places to work? What news andinformation about these areas can you start tracking now, and how will you will do that? Is there anyone in yournetwork who can help you increase your understanding of the way this industry works? If not, how could you findsomeone?

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158 PART 3 Planning

5.1 Planning and Strategy?THE BIG PICTUREThe first of four functions in the management process is planning, which involves setting goals and deciding how to achieve them and which is linked to strategy. We define planning, strategy, and strategic manage-ment. We then describe three reasons strategic management and strategic planning are important.

LO 5-1Discuss the role of strategic management.

The management process, as you’ll recall (from Chapter 1), involves the four management functions of planning, organizing, leading, and controlling, which form four of the part divi-sions of this book. In this and the next two chapters, we discuss planning and strategy.

Planning, Strategy, and Strategic Management“Move fast and break things.”

Is that a plan or strategy? No, it’s a slogan. In fact, it used to be Facebook’s mantra to its software developers, suggesting that “moving quickly is so important that we were even willing to tolerate a few bugs in order to do it,” as Facebook CEO Mark Zuckerberg explained.3 (Then, he says, the company realized “that it wasn’t helping us to move faster because we had to slow down to fix these bugs.”)

Planning, which we discuss in this chapter, is used in conjunction with strategy and strategic management, as we describe in Chapter 6. Let’s consider some definitions.

Planning: Coping with Uncertainty As we’ve said (Chapter 1), planning is defined as setting goals and deciding how to achieve them. Another definition: planning is coping with uncertainty by formulating future courses of action to achieve specified results.4 A plan is a document that outlines how goals are going to be met. When you make a plan, you make a blueprint for action that describes what you need to do to realize your goals.

Example: One important type of plan is a business plan, a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring suc-cess. Here you would describe the basic idea behind your business—the business model, which outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses. It also describes the industry you’re entering, how your product will be different, how you’ll market to customers, how you’re qualified to run the business, and how you will finance your business.

EXAMPLE Why Write a Business Plan?

More than 5 in 10 Millennials say that if they had the resources they need, they’d start their own business in the next year. Most are attracted to the idea of being their own boss and making a lot of money by opening a business of their own if they could.5 But planning and management control are critical to the success of small businesses as only 33 percent of them survive 10 years or more according to the Bureau of Labor Statistics.6

It was by planning, not by accident, that popular singer Rihanna recently launched a cosmetics business that got off to a spectacular start and was immediately named one of the “best inventions of 2017” by Time magazine. Her com-pany, Fenty Beauty (a brand of the luxury label LVMH), boasts a jaw-dropping 40 different shades of foundation in order to cater to women of every color and every skin type. In its first month in business alone, Fenty far outsold a rival

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Planning CHAPTER 5 159

celebrity line, Kylie Cosmetics, which has earned hundreds of millions of dollars in its first two years. In its second month, Fenty sales were already up 34% and showing no signs of slowing.

Rihanna experimented with beauty products for years before finally deciding the void in the market—for products designed for hard-to-match skin tones—was hers to fill. Among the many business factors for which she had to plan in starting her company were the target market, women who are underserved by existing beauty lines but who spend gener-ously on makeup (averaging almost $500 a year); her promo-tional plan, which included outreach to her 60 million Instagram followers; and her financial plan, which relies on the backing of LVMH. To her knowledge of existing makeup lines,

Rihanna added close scrutiny of her chosen competitors, Kylie and KKW Beauty (Kim Kardashian West’s brand). And she explored her distribution options, choosing online sales and in-store distribution by Sephora. As Time reported, Fenty has become the brand to beat, as even established companies like L’Oreal begin launching marketing campaigns aimed at its long-neglected market.7

YOUR CALLGot an idea for a business? Think about your pre-launch plan-ning process. What questions about your product or service, your target market, your promotional plans, and your distribu-tion method would you need to answer before you made the leap?

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Strategy: Setting Long-Term Direction A strategy, or strategic plan, sets the long-term goals and direction for an organization. It represents an “educated guess” about what long-term goals or direction to pursue for the survival or prosperity of the organi-zation. We hear the word expressed in terms like “Apple’s ultimate strategy . . .” or “Visa’s overseas strategy . . .” or financial strategy, marketing strategy, and human resource strategy.

An example of a strategy is “Grow the business organically,” which means “Increase revenue from existing and new customers rather than from acquiring other companies.” However, strategy is not something that can be decided on just once. It generally is reconsidered every year because of ever-changing business conditions.

Strategic Management: Involving All Managers in Strategy In the late 1940s, most large U.S. companies were organized around a single idea or product line. By the 1970s, Fortune 500 companies were operating in more than one industry and had expanded overseas. It became apparent that to stay focused and efficient, companies had to begin taking a strategic-management approach.

Strategic management is a process that involves managers from all parts of the organi-zation in the formulation and the implementation of strategies and strategic goals. This definition doesn’t mean that managers at the top dictate ideas to be followed by people lower down. Indeed, precisely because middle managers in particular are the ones who will be asked to understand and implement the strategies, they should also help to for-mulate them.

As we will see, strategic management is a process that involves managers from all parts of the organization—top managers, middle managers, and first-line managers—in the formulation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization. Thus, planning covers not only strategic plan-ning (done by top managers), but also tactical planning (done by middle managers) and operational planning (done by first-line managers).

Planning and strategic management derive from an organization’s mission and vision about itself, as we describe in the next section. (See Figure 5.1.)

Why Planning and Strategic Management Are ImportantAn organization should adopt planning and strategic management for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.8 Let’s consider these three matters.

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FIGURE 5.1Planning and strategic managementThe details of planning and strategic management are explained in Chapters 5 and 6.

5. Maintainstrategiccontrol

4. Implementthe strategy

3. Formulatethe grand strategy& strategic,tactical, &operational plans

2. Assess the current reality

1. Establishthe missionand visionand values

1. Providing Direction and Momentum Some executives are unable even to artic-ulate what their strategy is.9 Others are so preoccupied with day-to-day pressures that their organizations can lose momentum. But planning and strategic management can help people focus on the most critical problems, choices, and opportunities.

If a broad group of employees is involved in the process, that can foster teamwork, promote learning, and build commitment across the organization. Indeed, as we describe in Chapter 8, strategy can determine the very structure of the organization—for example, a top-down hierarchy with lots of management levels, as might be appropriate for an electricity-and-gas power utility, versus a flat organization with few management levels and flexible roles, as might suit a fast-moving social media start-up.

Unless a plan is in place, managers may well focus on just whatever is in front of them, putting out fires—until they get an unpleasant jolt when a competitor moves out in front because it has been able to take a long-range view of things and act more quickly. In recent times, this surprise has been happening over and over as companies have been confronted by some digital or Internet trend that emerged as a threat—as Amazon.com was to Borders bookstores; as Uber has been to taxi cabs; as Google News, blogs, and citizen media were to newspapers.

Of course, a poor plan can send an organization in the wrong direction. Bad plan-ning usually results from faulty assumptions about the future, poor assessment of an

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New Barbies. Mattel, maker of the famous Barbie doll, whose sales have been cut by rival brands, is adding tall, petite, and curvy dolls to its product line, trying to better connect with young girls. Parents and interested grassroots organizations have long been campaigning to make children’s toys less stereotypical, but social media have amplified their voices and forced companies to listen. Mattel and other companies are also bringing out inexpensive (under $400) 3-D printers that allow children to create their own plastic toys, including doll-like ones (monsters). Do you think Mattel should plan for the gradual elimination of Barbie? ©Mattel/Splash News/Newscom

https://Amazon.com


organization’s capabilities, ineffective group dynamics, and failure to use management control as a feedback mechanism.10 And it needs to be said that while a detailed plan may be comforting, it’s not necessarily a strategy.11

2. Encouraging New Ideas Some people object that planning can foster rigidity, that it creates blinders that block out peripheral vision and reduces creative thinking and action. “Setting oneself on a predetermined course in unknown waters,” says one critic, “is the perfect way to sail straight into an iceberg.”12

Actually, far from being a straitjacket for new ideas, strategic planning can help encourage them by stressing the importance of innovation in achieving long-range suc-cess. Management scholar Gary Hamel says that companies such as Apple have been successful because they have been able to unleash the spirit of “strategy innovation.” Strategy innovation, he says, is the ability to reinvent the basis of competition within existing industries—“bold new business models that put incumbents on the defensive.”13

Some successful innovators are companies creating new wealth in the food and restaurant industries, where Starbucks Coffee, Trader Joe’s, ConAgra, and Walmart, for example, developed entirely new grocery product categories and retailing con-cepts. Starbucks, when entering the Chinese market, decided not to threaten China’s tea-drinking culture and, instead, introduced drinks with green tea along with a chic restaurant interior that made young Chinese feel “cool and trendy.”14 GrubHub Seamless, an online takeout and delivery company, serves customers armed with cell phones and delivery apps, delivering pizzas and other foods anywhere they want—at the gym, in the park, on the playground.15 Vending machines are now serving every-thing from salads to smoothies to caviar, and supermarkets are experimenting with personalized pricing, using complex shopping data to ascertain the unique needs of individual customers.16

3. Developing a Sustainable Competitive Advantage Strategic management can provide a sustainable competitive advantage, which, you’ll recall (from Chapter 1), is the ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them. We discuss the manner in which compa-nies create competitive advantage more thoroughly in Chapter 6. You will learn that companies must have products or services that are valuable, rare, and non-imitable, and an organization poised to exploit its strengths. In today’s global marketplace, competi-tive advantage can vary across countries. Uber is a good example.

Uber definitely had, and still has, competitive advantage when it comes to ride shar-ing in the U.S. It’s a different story when it comes to Africa. A start-up called Taxify created its own competitive advantage by being the first company to offer motorbike-hailing. Motorbikes, which are called boda bodas, were a hit because they were more nimble when traveling through congested streets and communities. Taxify’s success is clearly linked to its ability to localize it product offerings more quickly than larger firms like Uber. It also gained competitive advantage by paying drivers with mobile money, “a technology popular in Uganda and other emerging economies because it allows people to receive and immediately store funds using a mobile phone.”17 ●

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5.2 Fundamentals of PlanningTHE BIG PICTUREPlanning consists of translating an organization’s mission and vision into objectives. The organization’s purpose is expressed as a mission statement, and what it becomes is expressed as a vision statement; both should represent the organization’s values, expressed in a values statement. From these are derived strategic planning, then tactical planning, then operational planning.

Missionstatement:“What is ourreason forbeing?”

Visionstatement:“What dowe want tobecome?”

Valuesstatement:“What values dowe want toemphasize?”

Action plans

Strategicplanning:Done by topmanagers forthe next1–5 years

Goals

Action plans

Tacticalplanning:Done bymiddlemanagersfor the next6–24 months

Goals

Operationalplanning:Done by first-line managersfor the next1–52 weeks

Goals

Action plans

LO 5-2Compare mission, vision, and value statements.

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Are you hopeful? That’s a good thing. Students who have more hope reportedly have higher grades and are more apt to finish college.

“Hope is the belief that the future will be better than the present,” says columnist Elizabeth Bernstein, “and that you have some power to make it so.” People who are hopeful “don’t just have a goal or a wish, they have a strategy to achieve it and the moti-vation to implement their plan.”18

First, however, you must determine your “goal or wish”—that is, your purpose. An organization must determine its purpose, too—what’s known as its mission. And manag-ers must have an idea of where they want the organization to go—the vision. Both mis-sion and vision should express the organization’s values. The approach to planning can be summarized in the diagram below, which shows how an organization’s mission becomes translated into action plans. (See Figure 5.2.)

FIGURE 5.2Making plansAn organization’s reason for being is expressed in a mission statement. What the organization wishes to become is expressed in a vision statement. The values the organization wishes to emphasize are expressed in a values statement. From these are derived strategic planning, then tactical planning, and finally operational planning. The purpose of each kind of planning is to specify goals and action plans that ultimately pave the way toward achieving an organization’s vision.


Mission, Vision, and Values StatementsThe planning process begins with three attributes: a mission statement (which answers the question “What is our reason for being?”), a vision statement (which answers the question “What do we want to become?”), and a values statement (which answers the question “What values do we want to emphasize?”). (See Table 5.1.)

TABLE 5.1 Mission, Vision, and Values Statements

MISSION STATEMENTS: DOES YOUR COMPANY’S MISSION STATEMENT ANSWER THESE QUESTIONS?

1. Who are our customers?2. What are our major products or services?3. In what geographical areas do we compete?4. What is our basic technology?5. What is our commitment to economic objectives?6. What are our basic beliefs, values, aspirations, and philosophical priorities?7. What are our major strengths and competitive advantages?8. What are our public responsibilities, and what image do we wish to project?9. What is our attitude toward our employees?

VISION STATEMENTS: DOES YOUR COMPANY’S VISION STATEMENT ANSWER “YES” TO THESE QUESTIONS?

1. Is it appropriate for the organization and for the times?2. Does it set standards of excellence and reflect high ideals?3. Does it clarify purpose and direction?4. Does it inspire enthusiasm and encourage commitment?5. Is it well articulated and easily understood?6. Does it reflect the uniqueness of the organization, its distinctive competence, what it stands for,

what it’s able to achieve?7. Is it ambitious?

VALUES STATEMENTS: DOES YOUR COMPANY’S VALUES STATEMENT ANSWER“YES” TO THESE QUESTIONS?

1. Does it express the company’s distinctiveness, its view of the world?2. Is it intended to guide all the organization’s actions, including how you treat employees,

customers, etc.?3. Is it tough, serving as the foundation on which difficult company decisions can be made?4. Will it be unchanging, as valid 100 years from now as it is today?5. Does it reflect the beliefs of those who truly care about the organization—the founders, CEO, and

top executives—rather than represent a consensus of all employees?6. Are the values expressed in the statement limited (five or so) and easy to remember, so that

employees will have them top-of-mind when making decisions?7. Would you want the organization to continue to hold these values, even if at some point they

become a competitive disadvantage?

Sources: B. Nanus, Visionary Leadership: Creating a Compelling Sense of Direction for Your Organization (San Francisco: Jossey-Bass, 1992), pp. 28–29; “How to Write a Vision Statement,” Cleverism, March 2, 2017, https://www.cleverism.com/write-vision-statement; P. M. Lencioni, “Make Your Values Mean Something,” Harvard Business Review, July 2002, pp. 113–117; and A Loehr, “6 Steps to Defining Your Organizational Values,” Rework, March 7, 2016, https://www.cornerstoneondemand.com/rework/6-steps-defining-your-organizational-values.

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©heromen30/Shutterstock

The Mission Statement—“What Is Our Reason for Being?” An organization’s mission is its purpose or reason for being. Determining the mission is the responsibility of top manage-ment and the board of directors. It is up to them to formulate a mission statement, which expresses the purpose of the organization.

“Only a clear definition of the mission and purpose of the organization makes possible clear and realistic . . . objectives,” said Peter Drucker.19 Whether the organization is for-profit or nonprofit, the mission statement identifies the goods or ser-vices the organization provides and will provide. Sometimes it also gives the reasons for providing them (to make a profit or to achieve humanitarian goals, for example).

The Vision Statement—“What Do We Want to Become?” A vision is a long-term goal describing “what” an organization wants to become. It is a clear sense of the future and the actions needed to get there. “[A] vision should describe what’s hap-pening to the world you compete in and what you want to do about it,” says one Fortune article. “It should guide decisions.”20

After formulating a mission statement, top managers need to develop a vision statement, which expresses what the organization should become, where it wants to go strategically.

EXAMPLE Mission, Vision, and Values at Coca-Cola

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With 500 brands, 21 of which are worth more than $1 billion dollars each, Coca-Cola is the world’s largest beverage com-pany. Consumers in nearly every country in the world con-sume a Coca-Cola–branded beverage every day, for a total of almost 2 billion servings. Headquartered in Atlanta, the company is more than 130 years old. It employs about 700,000 people worldwide and has received a 100% rating on the Human Rights Campaign’s corporate equality index for 11 years in a row. Some of its best-known brands are Coke, Coke Zero, Powerade, Schweppes, Dasani, Minute Maid, Fanta, Sprite, Vitamin Water, and Smart Water. Many of its beverages are available in low-calorie or no-calorie versions.21

The company’s website lists its mission, vision, and values, which comprise its “Roadmap for winning,” as follows.

Our Mission22

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.• To refresh the world . . .• To inspire moments of optimism and happiness . . .• To create value and make a difference.

Our VisionOur vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.• People: Be a great place to work where people are

inspired to be the best they can be.• Portfolio: Bring to the world a portfolio of quality beverage

brands that anticipate and satisfy people’s desires and needs.

• Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.

• Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.

• Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.

• Productivity: Be a highly effective, lean and fast-moving organization.

Live Our ValuesOur values serve as a compass for our actions and describe how we behave in the world.


• Leadership: The courage to shape a better future• Collaboration: Leverage collective genius• Integrity: Be real• Accountability: If it is to be, it’s up to me• Passion: Committed in heart and mind• Diversity: As inclusive as our brands• Quality: What we do, we do well

YOUR CALLWhat do you think of Coca-Cola’s mission, vision, and values? Are they explicit enough to guide employee behavior and com-pany actions? Why or why not? Could any of them apply equally well to other businesses? Why or why not?

The concept of a vision statement also is important for individuals. Harvard pro-fessor Clayton Christensen believes that creating a personal life vision statement is akin to developing a strategy for your life. He finds that people are happier and lead more meaningful lives when they are directed by personal vision statements.23 Do you have a vision for your future career? Is it vague or specific? The following self-assessment was created to help you evaluate the quality of your career vision and plan.


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Assessing Career Behaviors and Future Career IdentityThis self-assessment is designed to help you reflect on the vision of your career identity. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 5.1 in Connect.

1. What did you learn about your future career identity? Areyou surprised by the results?

2. Write a personal mission and vision statement using ideas discussed in this section. Share it with a friend for feedback.

3. Based on your results, what might you do to enhanceyour future career identity? Explain.

4. What things can you say during an interview to demonstrate that you possess the career-readiness competency of Career Management.

The Values Statement—“What Values Do We Want to Emphasize?” Values, we said in Chapter 3, are the relatively permanent and deeply held underly-ing beliefs and attitudes that help determine a person’s behavior: integrity, dedica-tion, teamwork, excellence, compassion, or whatever. Values reflect the qualities that represent an organization’s deeply held beliefs, highest priorities, and core guiding principles.

After formulating a vision statement, then, top managers need to develop a values statement, also called a core values statement, which expresses what the company stands for, its core priorities, the values its employees embody, and what its products contribute to the world.24 Values statements “become the deeply ingrained principle and fabric that guide employee behavior and company decisions and actions—the behaviors the com-pany and employees expect of themselves,” says former executive Eric Jacobsen. “Without a statement, the company will lack soul.”25

Are you a gamer? Have you played “World of Warcraft”? If yes, then you will appre-ciate the values that guide Blizzard Entertainment’s operations. Headquartered in Irvine, California, the company is a top developer and publisher of wildly popular

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entertainment software, including the Warcraft, StarCraft, and Diablo series and the online-gaming service Battle.net. Its eight core values, described on the company web-site, are: Gameplay first, commit to quality, be nice—play fair, embrace your inner geek, every voice matters, think globally, lead responsibly, and learn and grow. These are unique values and they define what matters most to the company. Would you like to work at Blizzard?

Three Types of Planning for Three Levels of Management: Strategic, Tactical, and OperationalInspiring, clearly stated mission statements and vision statements provide the focal point of the entire planning process. Then three things happen:

■ Strategic planning by top management. Using their mission and vision state-ments, top managers do strategic planning—they determine what the organiza-tion’s long-term goals should be for the next one to five years with the resources they expect to have available. “Strategic planning requires visionary and direc-tional thinking,” says one authority.26 It should communicate not only general goals about growth and profits, but also ways to achieve them. Today, because of the frequency with which world competition and information technology alter marketplace conditions, a company’s strategic planning may have to be done closer to every one or two years than every five. Still, at a big company like Boeing or Ford or Amazon, top executives cannot lose sight of long-range, multiyear planning.

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A lighthouse is a great metaphor for strategic planning. A lighthouse provides a navigational aid and it warns boats about dangerous or hazardous areas. A strategic plan similarly provide direction to both employees and shareholders. It defines what an organization is trying to achieve and signifies what markets or opportunities are not going to be pursued. ©George Diebold/Blend Images LLC


EXAMPLE Coca-Cola’s Five-Plus Strategies

Coca-Cola recently announced progress made on five strategic actions it has taken to revamp its business:27

1. Focused on driving revenue and profit growth. In emerging markets, the focus was on increasing volume with affordable products, and in developed markets that meant improving profitability with more small and pre-mium packages.

2. Invested in our brands and business. More and better marketing was the goal of this strategy, which meant a boost of more than $250 million in the company’s media ad budget.

3. Became more efficient. “Zero-based work” assumes that organizational budgets begin at zero and must be justified every year. One result of adopting this budgeting strategy was realizing “more than $600 million in productivity improvements in 2015,” some of which was reinvested in the company and some of which went to shareholders.

4. Simplified our company. Coca-Cola eliminated one layer of management, streamlined some internal business pro-cesses, and connected its regional operations more closely to headquarters.

5. Refocused on our core business model. Among the company’s more than 500 brands are 20 that generate more than a billion dollars a year. To retain focus on these core products, the company has begun franchising out the 18% of its bottling operations that it still handled itself, aiming to reduce that amount to 3%.

A year later, in 2017, the company added a sixth strategy for “our way forward”:28

6. Keep people at the heart of our company. This means rethinking package sizes in all the company’s markets and more heavily promoting low- and no-sugar drinks in order to reduce sugar intake and help the global fight against obesity.

YOUR CALLDoes it surprise you that a large company like Coca-Cola would frequently revisit and revise its strategic plans? Why or why not? Which of the first five goals listed here do you think best support(s) goal 6?

■ Tactical planning by middle management. The strategic priorities and policies are then passed down to middle managers, who must do tactical planning—that is, they determine what contributions their departments or similar work units can make with their given resources during the next 6–24 months.

■ Operational planning by first-line management. Middle managers then pass these plans along to first-line managers to do operational planning—that is, they determine how to accomplish specific tasks with available resources within the next 1–52 weeks.

I Wish My Manager……and I put more effort into operational planning.

Courtesy Josephine Schulte

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Josephine Schulte works as a procurement manager for a telecommunications company. The company had to change its process for onboarding vendors after acquiring another company. The company hit a lot of road bumps because of poor oper-ational planning while rolling out the new process.

“There has been a lot of change management around what the process is to get vendors on board and bring them onsite,”

said Josephine, “I wish we would have planned better up front in terms of the process of getting the correct information in front of the people who needed it so they could understand what needed to happen and the timeline involved with getting a vendor on board.”

The new process for onboarding vendors involves making sure the vendors have contracts in place if they need one and routing those contracts for signatures and internal approval. What the company did to implement the training of this new process was to schedule a few training sessions with managers from each business unit.

“We rolled the process out to a group of people with the intent that they would push it down through their business

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units, but it is hard to get that to happen,” said Josephine. Each business unit had its own unique questions as to how the pro-cess would work for its specific groups. This made it difficult to present the same training to one group of representatives to relay back to each business unit.

“We are very decentralized, so it was hard to figure out who to talk to about rolling the process out. We originally spoke to the facilities directors, but there wasn’t a good way for them to send the information out to the business units in their regions. Essentially, we presented this to about 12 people in a company of 100,000 employees—and of course, not every per-son needs to know about this process, but there are quite a few that do, and they are all in different business units in differ-ent locations throughout the country,” said Josephine.

One of the biggest hurdles the company had was making sure that all necessary employees were caught in the initial training so

they did not have to go back later and train some employees on an individual basis. This would save time and money.

In hindsight, Josephine had several suggestions for what the company could have done better when rolling this process out to the employees. “I would have sent a step-by-step slide deck out to the employees right away,” said Josephine. “I would have gotten as many people as possible across the business units and company to attend those virtual trainings. A recorded webi-nar would have been the best move up front because we were saying the same thing in every training session and it would have saved a lot of time to record one session.”

Josephine admits that the process could have been much smoother if only more planning had gone into the training and implementation of the new system before rolling it out.

Courtesy of Josephine Schulte

The three kinds of managers are described further in the following figure. (See Figure 5.3.) ●

FIGURE 5.3Three levels of management, three types of planningEach type of planning has different time horizons, although the times overlap because the plans are somewhat elastic.

Top management

president, vice president,general managers,division heads

Middle managementfunctional managers,product-line managers,department managers

First-line managementunit managers, team leaders,first-line supervisors

Strategic planning:1–5 years

Tactical planning:6–24 months

Operational planning:1–52 weeks

Make long-term decisions about overall direction oforganization. Managers needto pay attention toenvironment outside theorganization, be future oriented,deal with uncertainand highly competitiveconditions.

Implement policies and plansof top management, superviseand coordinate activities offirst-line managers below,make decisions often withoutbase of clearly definedinformation procedures.

Direct daily tasks ofnonmanagerial personnel;decisions often predictable,following well-defined set ofroutine procedures.

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5.3 Goals and PlansTHE BIG PICTUREThe purpose of planning is to set a goal and then an action plan. There are two types of goals, short-term and long-term, and they are connected by a means-end chain. Types of plans include standing and single-use plans.

Whatever its type—long term or short term—the purpose of planning is to set a goal and then to formulate an action plan.

LO 5-3Discuss the types and purposes of goals and plans.Long-Term and Short-Term Goals

A goal, also known as an objective, is a specific commitment to achieve a measurable result within a stated period of time. Goals may be long-term or short-term.

Long-term goals are generally referred to as strategic goals. They tend to span one to five years and focus on achieving the strategies identified in a company’s strategic plan. An example is to increase revenue from new customers by 10% over the next 12 months.

Short-term goals are sometimes referred to as tactical or operational goals, or just plain goals. They generally span 12 months and are connected to strategic goals in a hier-archy known as a means-end chain.

A means-end chain shows how goals are connected or linked across an organization. For example, a low-level goal such as responding to customer inquiries in less than 24 hours is the means to accomplishing a higher-level goal of achieving 90% customer satisfaction.

As we will see later in Section 5.4, goals should be SMART—specific, measurable, attainable, results-oriented, and with target dates.

The Operating Plan and Action PlanLarry Bossidy, former CEO of both Honeywell International and Allied Signal, and global consultant Ram Charan define an operating plan as a plan that “breaks long-term output into short-term targets” or goals.29 In other words, operating plans turn strategic plans into actionable short-term goals and action plans.

An action plan defines the course of action needed to achieve a stated goal. Whether the goal is long-term or short-term, action plans outline the tactics that will be used to achieve a goal. Each tactic also contains a projected date for completing the desired activities (read about Amanda Lawrence’s experience in the I’m Glad . . . feature).

I’m Glad I……developed an action plan.

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Amanda Lawrence served as the president of a nonprofit orga-nization for women in business. She was in charge of planning a first annual fundraising event for her organization, and the action plan that she developed resulted in a successful event that has been running for almost 10 years.

Amanda began by looking at the big picture to get a better idea of the long-term goal of the project. Once she had

long-term goals in place, she was able to develop action plans and begin delegating tasks to others based on their skillsets.

“Planning was integral for an event that had never been done before. I had to start with the big picture of what the goals and objectives of the event were, and then figure out how to reach those goals and determine who was going to take care of each area of the event,” said Amanda.

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Courtesy Amanda Lawrence

There were several things that Amanda had to think about when organizing the event, from venue and keynote speakers to alternate weather plans.

“We had to find a venue based on how many people we expected would attend an event like this. We had to determine how much we wanted to charge for the tick-ets—did we want this to be a $20 per ticket event with a cash bar, or did we want this to be a $200 per chair black tie event? We deter-

mined we wanted to be somewhere in the middle of the road, about $50 per ticket with a good meal and a keynote speaker who would provide value to the event,” said Amanda.

“We also had a rainy day plan. We were in Phoenix, Arizona, so we planned to host the event in April so it would be warm but not too warm, but we still had to consider the possibility of rain. We planned an outdoor, covered dinner with an outdoor,

uncovered cocktail hour. We planned for people to have umbrellas to walk the guests from their cars to the venue if it rained,” said Amanda. “We talked through all of our contin-gency plans ahead of time.”

Once plans were in place, Amanda began to delegate a per-son to each area of the event. “I took on the venue and the catering, and then we discussed what each board member’s individual strengths were and what they felt they could help the most with,” said Amanda. “One of our board members had some experience with selling tickets for another event, so she took on the research to determine what the best way for us to sell tickets would be. We had someone else who felt comfort-able approaching some corporate females in the area to build our guest list. We had another person who was a marketer by day, so she handled the marketing calendar.”

The event sold out and raised $5,000 for Amanda’s organi-zation in the first year alone, and it has been running strong for almost 10 years. The event’s success can be attributed to Amanda’s strong planning skills.

Courtesy of Amanda Lawrence

EXAMPLE Long-Term and Short-Term Goals at Southwest Airlines

Ranking No. 8 among Fortune’s 2018 Most Admired Companies, a list on which it has appeared for 24 years in a row, Dallas-based Southwest Airlines has continually achieved its strategic goals and as of 2018 had been profitable for 45 consecutive years.30

Long-Term Strategic Goals. Employee engagement, cus-tomer satisfaction, and profit-ability have been key strategic goals for Southwest since its inception. Employee engage-ment is created through the company’s corporate culture, which focuses on employee satisfaction and well-being. The page of the company website announcing its vision and mission includes this cen-tral statement about its employees: “We are commit-ted to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the orga-nization that they are expected to share externally with every Southwest Customer.”31 Employees were awarded a total of

$543 million in profit sharing in 2017, amounting to more than 5 weeks’ pay per person.32

The goal of Southwest’s top managers is to ensure that the airline is highly profitable, and for years it has followed the general strategy of (a) keeping costs and fares down, to appeal

to budget rather than business travelers, (b) offering a supe-rior on-time arrival record and squeezing more flights per day from every plane, and (c) keeping passengers happy with its cheerful cabin crew and staff. One of the most important strategic decisions Southwest made was to fly just one type of airplane—Boeing 737s, 692 of them—to hold down training, mainte-nance, and operat ing expenses.33 Competing head to head with legacy carriers,

Southwest now flies to key airports of major cities—and even on international routes, principally to Latin America and the Caribbean.

Lookalikes. One key to the success of Southwest Airlines is that all the planes in its fleet have been the same type, Boeing 737s, which saves on maintenance and training costs. ©Charles Rex Arbogast/AP Images

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Short-Term Goals. Cutting costs and keeping fares low have traditionally been key operational goals for Southwest. To achieve its second operational goal, a superior on-time arrival


record, the company did away with guaranteed seat reserva-tions before ticketing so that no-shows wouldn’t complicate (and therefore delay) the boarding process. To attract busi-ness travelers, Southwest changed the reservations policy slightly to ensure that passengers paying extra for “business select” fares would be placed at the front of the line. It also rewards “high-level” business travelers with what is called the “A-List” designation. These individuals get automatic check-in and are guaranteed to board with the A-group or immediately before the B-group starts boarding. In addition, the airline tries to turn planes around in exactly 20 minutes so that on-time departures are more apt to produce on-time arrivals.

The company plans to improve pre-tax revenue by about $200 million thanks to a new reservation system and to continue reduc-ing operating costs. It recently announced plans to add Hawaii to its many destinations.34 Said CEO Gary C. Kelly, “Overall, our strong financial performance, solid outlook, healthy balance sheet, and significantly lower federal income taxes, provide the cash flow to continue to reward our Employees, keep our costs and fares low for our Customers, reinvest in our business, return value to our Shareholders, and support our communities.”35

YOUR CALLDo you think the company will continue to achieve its strategic goals? Why or why not?

Types of Plans: Standing Plans and Single-Use PlansPlans are of two types—standing plans and single-use plans. (See Table 5.2.) Standing plans cover activities that are repeated or occur frequently over time. A standing plan, for example, might direct the way employees in a retail store should handle returns. L.L.Bean recently changed its standing plan on returned items and will now accept them for only one year from purchase rather than indefinitely as it once did. Forever 21, which used to accept returns only for exchange or credit, now has a standing plan that offers refunds36 for returned items.

A single-use plan directs activity, such as a project, that is unlikely to be repeated. The successful 2018 launch of the Falcon Heavy, the rocket built by entrepreneur Elon Musk’s space exploration company SpaceX, was a program consisting of a number of activities37 and directed by a single-use plan. ●

TABLE 5.2 Standing Plans and Single-Use Plans

There are three types of standing plans and two types of single-use plans.

PLAN DESCRIPTION

• Standing plan For activities that occur repeatedly over a period of time

• Policy Outlines general response to a designated problem or situation

• Procedure Outlines response to particular problems or circumstances

• Rule Designates specific required action

• Single-use plan For activities not likely to be repeated in the future

• Program Encompasses a range of projects or activities

• Project Has less scope and complexity than a program

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172 PART 3 Planning

5.4 Promoting Consistencies in Goals: SMAR T Goals, Management by Objectives, and Goal Cascading

THE BIG PICTUREThis section discusses SMART goals—goals that are specific, measurable, attainable, results-oriented, and have target dates. It also briefly discusses a technique for setting goals, management by objectives (MBO), a four-step process for motivating employees. Finally, it introduces the concept of goal cascading, which attempts to ensure that higher-level goals are communicated and aligned with the goals at the next levels down in the organizational hierarchy.

LO 5-4Describe SMART goals and their implementation.

Anyone can define goals. But as we mentioned earlier, the five characteristics of a good goal are represented by the acronym SMART.

SMART GoalsA SMART goal is one that is specific, measurable, attainable, results-oriented, and has target dates.

Specific Goals should be stated in specific rather than vague terms. The goal “As many planes as possible should arrive on time” is too general. The goal that “Ninety percent of planes should arrive within 15 minutes of the scheduled arrival time” is specific.

Measurable Whenever possible, goals should be measurable, or quantifiable (as in “90% of planes should arrive within 15 minutes”). That is, there should be some way to measure the degree to which a goal has been reached.

Of course, some goals—such as those concerned with improving quality—are not pre-cisely quantifiable. In that case, something on the order of “Improve the quality of cus-

tomer relations by instituting 10 follow-up telephone calls every week” will do. You can certainly quantify how many follow-up phone calls were made.

Attainable Goals should be challenging, of course, but above all, they should be realistic and attainable. It may be best to set goals that are quite ambitious so as to challenge people to meet high standards. Always, however, the goals should be achievable within the scope of the time, equipment, and financial support available. (See Figure 5.4.)

If too easy (as in “half the flights should arrive on time”), goals won’t impel people to make much effort. If impossible (“all flights must arrive on time, regardless of weather”), employees won’t even bother trying. Or they will try and continually fail, which will end up hurting morale. Or they will cheat. (An example was the unrealistic goal of cutting wait times for appointments by more than half at Veterans Affairs hospitals, as revealed in ongoing scandals in which VA administrators were found to have falsi-fied figures.)38

Results-Oriented Only a few goals should be chosen—say, five for any work unit. And they should be results-oriented—they should support the orga-nization’s vision.

FIGURE 5.4Relationship between goal difficulty and performanceSource: Adapted from E. A. Locke and G. P. Latham, A Theory of Goal Setting and Task Performance (Englewood Cliffs, NJ: Prentice Hall, 1990).

High

Low

Perf

orm

ance

Low

Challenging

Impossible

A

B

C

Moderate

PerformanceA Committed individuals with

adequate ability B Committed individuals who

are working at capacity C Individuals who lack commitment

to high goals

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In writing out the goals, start with the word “To” and follow it with action-oriented verbs—“complete,” “acquire,” “increase” (“to decrease by 10% the time to get passengers settled in their seats before departure”).

Some verbs should not be used in your goal statement because they imply activities—the ways used to accomplish goals (such as having baggage handlers waiting). For exam-ple, you should not use “to develop,” “to conduct,” “to implement.”

Target Dates Goals should specify the target dates or deadline dates when they are to be attained. For example, it’s unrealistic to expect an airline to improve its on-time arrivals by 10% overnight. However, you could set a target date—three to six months away, say—by which this goal is to be achieved. That allows enough time for lower-level managers and employees to revamp their systems and work habits and gives them a clear time frame in which they know what they are expected to do.

EXAMPLE Setting Goals: Are Snapchat’s Goals Clear?39

Snapchat’s user base grew slowly following its first public offer-ing of stock in early 2017, and investors became concerned that profits might dip. In response, Snapchat’s parent company, Snap Inc., announced that the app would be redesigned in order to make it easier for a wider audience to use, with the stated goal of increasing its user base in 2018. The announce-ment represented a change in the company’s main goal, which had been to provide an inviting home for chat and video for people looking for real connections, not to build a platform for billions of users such as Facebook and YouTube have become.

Some observers were doubtful that Snapchat could achieve its new goal with the specific design changes it announced. The plan to essentially lump messages and videos from friends together in a single hub, separate from content produced by publishers, didn’t convince everyone that the app would now be easier for new users. CEO Evan Spiegel’s explanation seemed off-target to some commentators, too. Spiegel spoke of the dangers of getting news and information from online sources that select from a narrow set of sources. Separating

“the social from the media,” as the company described it, isn’t necessary a bad idea, given the proliferation of fake news in social media, but how would it enlarge the app’s user base? Snapchat didn’t say.

By the fall of 2017, the company’s revenues were still run-ning below expectations, and costs and losses were higher than expected. Snap’s stock price seemed stuck at a point below its initial offering price of $17 a share. Five million new users had been added, but analysts had expected 8 million. Investors were thus still unclear what the company’s goal was—and how and even whether it would achieve it. When the updated Snapchat was rolled out in February 2018, initial reac-tions from users were largely negative, especially among younger fans who called the new version “twisted” and “super confusing.”40

YOUR CALLDo you think Snapchat’s goal was attainable? Was it communi-cated clearly? What could the company have done better?

Management by Objectives: The Four-Step Process for Motivating EmployeesFirst suggested by Peter Drucker in 1954, management by objectives has spread largely because of the appeal of its emphasis on converting general objectives into specific ones for all members of an organization.41

Management by objectives (MBO) is a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. The purpose of MBO is to motivate rather than to control subordinates.

Before we begin discussing these four steps, you may want to consider the quality of the goal-setting process in a current or former employer. Management by objectives and goal cascading will not work without an effective goal setting process. The following self-assessment was developed to provide insight into the quality of goal setting within an organization.

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174 PART 3 Planning

SELF-ASSESSMENT 5.2

What Is the Quality of Goal Setting within a Current or Past Employer?This self-assessment is designed to assess the quality of goal setting in a company. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 5.2 in Connect.

1. What are the strengths and weaknesses of goal setting in the company you selected?

2. Based on your results, what recommendations would you provide to senior management about improving the goal-setting process in this company? Explain.

3. What actions could you take to improve the goal-setting process in this company? Be specific.

1. Jointly Set Objectives You sit down with your manager and the two of you jointly set objectives for you to attain. Research shows that an assigned goal from your boss is just as effective as setting goals participatively. Moreover, people tend to set their own personal goals in response to receiving an assigned goal. A team of goal-setting experts noted that “the assignment of a goal encourages individuals to also set a personal performance goal, which in turn contributes to their performance.”42 It is important to remember what we learned about SMART goals. Managers garner greater acceptance to goal setting when employees believe the goal is attainable and they possess the skills and resources to achieve it.43 Managers tend to set three types of objectives, shown in the following table. (See Table 5.3.)

Jointly setting objectives. An important part of MBO is joint manager/subordinate participation in setting objectives. Have you ever held a job that featured this kind of process? ©Chris Ryan/age fotostock

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TABLE 5.3 Three Types of Objectives Used in MBO: Performance, Behavioral, and Learning

PERFORMANCE OBJECTIVES

Focus Express the objective as an outcome or end-result. Examples “Increase sport utility sales by 10%.” “Reduce food spoilage by 15%.”

BEHAVIORAL OBJECTIVES

Focus Express the objective as the behaviors needed to achieve an outcome. Examples “Greet all potential automobile customers with a smile and offer to assist.” “Ensure food is stored in seal-proof containers.” “Attend five days of leadership training.” “Learn basics of Microsoft Office software by June 1.”

LEARNING OBJECTIVES

Focus Express the objective in terms of acquiring knowledge or competencies. Examples “Attend sales training class.” “Learn how the features in our sports utility vehicles compare to competitors.”

Source: These descriptions were based on G. Latham, G. Seijts, and J. Slocum, “The Goal Setting and Goal Orientation Labyrinth: Effective Ways for Increasing Employee Performance,” Organizational Dynamics, October–December 2016, pp. 271–277.

We want to briefly focus on the career readiness competency of proactive learning orienta-tion because it fuels the achievement of learning objectives. Proactive learning orientation represents a desire to learn and improve one’s knowledge, soft skills, and other character-istics in pursuit of personal development. Employers value this attitude because it helps drive the creativity and innovation needed in today’s global economy. They also desire this competency because the “fast-paced business environment requires employees to refine and enhance their skills sets throughout their careers.”44 So where do you stand on this competency? Find out by taking the proactive learning orientation self-assessment.


Do I Have a Proactive Learning Orientation?This self-assessment is designed to assess the extent to which you possess a proactive learning orientation. Please be pre-pared to answer these questions if your instructor has assigned Self-Assessment 5.3 in Connect.

1. What is your level of learning orientation? How might it affect a recruiter’s perception of your employability?

2. Based on your results, what might you do to increase the career readiness competency of proactive learning orientation? Explain.

3. What things might you say during an interview to demonstrate that you possess this career readiness competency?

2. Develop Action Plan Once objectives are set, employees are encouraged to pre-pare an action plan for attaining them. Action plans may be prepared for both individu-als and work units, such as departments. For example, teams of employees at Tornier, a medical device manufacturer in Amsterdam, meet every 45, 60, and 90 days to create action plans for completing their goals. Implementation of the plans can take between six and 18 months depending on the complexity of the goal.45 Setting and using action plans also reduces procrastination. If this is sometimes a problem for you, break your goals into smaller and more specific subgoals.46 This will get you going.

3. Periodically Review Performance You and your manager should meet reason-ably often—either informally as needed or formally every three months—to review prog-ress, as should you and your subordinates. Indeed, frequent communication is necessary so that everyone will know how well he or she is doing in meeting the objectives.

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176 PART 3 Planning

During each meeting, managers should give employees feedback, and objectives should be updated or revised as necessary to ref lect new realities. Feedback is essential for improving performance.47 If you were managing a painting or landscap-ing business, for example, changes in the weather, loss of key employees, or a finan-cial downturn affecting customer spending could force you to reconsider your objectives.

4. Give Performance Appraisal and Rewards, If Any At the end of 6 or 12 months, you and your subordinate should meet to discuss results, comparing performance

with initial objectives. Deal with results, not personalities, emotional issues, or excuses.

Because the purpose of MBO is to motivate employ-ees, performance that meets the objectives should be rewarded—with compliments, raises, bonuses, promo-tions, or other suitable benefits. Failure can be addressed by redefining the objectives for the next 6- or 12-month period, or even by taking stronger measures, such as demotion. Basically, however, MBO is viewed as being a learning process. After step 4, the MBO cycle begins anew.

A good performance appraisal is like kicking a field goal. It feels good, is rewarding, and fosters continued motivation. Have you had good and bad reviews? What makes a performance review effective versus ineffective? ©Steven Puetzer/Getty Images

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Cascading Goals: Making Lower-Level Goals Align with Top GoalsFor goal setting to be successful, the following three things have to happen.

1. Top Management and Middle Management Must Be Committed “When top-management

commitment [to MBO] was high,” said one review, “the average gain in productivity was 56%. When commitment was low, the average gain in productivity was only 6%.”48

2. The Goals Must Be Applied Organizationwide The goal-setting program has to be put in place throughout the entire organization. That is, it cannot be applied in just some divisions and departments; it has to be done in all of them.

3. Goals Must “Cascade”—Be Linked Consistently Down through the Orga-nization Cascading goals is the process of ensuring that the strategic goals set at the top level align, or “cascade,” downward with more specific short-term goals at lower levels within an organization, including employees’ objectives and activities. Top managers set strategic goals, which are translated into divisional goals, which are translated into departmental goals, which are translated into individual goals. The cascading process ends when all individuals have a set of goals that support the overall strategic goals. This process helps employees understand how their work contributes to overall corpo-rate success.

Example: The Vice President of the Claims Division of an automobile insurance company, which pays off requests (or claims) by customers seeking insurance payments to repair damage to their cars, may set the major goal (and SMART goal) of “increase customer satisfaction in Claims Division by 10%.” In the cascading goals process, the same goal would be embraced by the Assistant Vice President of Claims and the Recovery Director beneath him or her. Further down the hierarchy, the Recovery Unit Manager would reword the goal to be more specific: “Decrease the number of customer complaints about claims by 10% over last year’s average.” For the individual Recovery Analyst at the lowest level, the goal could become: “Return all customer phone calls


about claims within 24 hours.”49 Thus, all the subgoals in the organization are in align-ment with the major goal of top management.

The Importance of DeadlinesThere’s no question that college is a pressure cooker for many students. The reason, of course, is the seemingly never-ending deadlines. But consider: Would you do all the course work you’re doing—and realize the education you’re getting—if you didn’t have deadlines?

As we saw under the “T” (for “has target dates”) in SMART goals, deadlines are as essential to goal setting in business as they are to your college career. Because the whole purpose of planning and goals is to deliver to a client specified results within a specified period of time, deadlines become a great motivator, both for you and for the people working for you.

It’s possible, of course, to let deadlines mislead you into focusing too much on imme-diate results and thereby ignoring overall planning—just as students will focus too much on preparing for a test in one course while neglecting others. In general, however, dead-lines can help you keep your eye on the “big picture” while simultaneously paying atten-tion to the details that will help you realize the big picture. Deadlines can help concentrate the mind, so that you make quick decisions rather than put them off. Deadlines help you ignore extraneous matters (such as cleaning up a messy desk) in favor of focusing on what’s important—realizing the goals on time and on budget. Deadlines provide a mechanism for giving ourselves feedback. ●

PRACTICAL ACTION Setting Goals for a Small Business

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Goal setting can seem like an intimidating process, but it’s both a necessary and a helpful one for the millions of small businesses in the United States. These firms, officially defined as having 500 or fewer employees, produce almost half of U.S. non-farm GDP and two-thirds of the nation’s new private-sector jobs.50 What are some typical goal-setting steps for a small business?51

1. Break large goals down into smaller ones.Anita-Maria Quillen is the owner and manager of Diversi-fied Engineering & Plastics (DER), a profitable auto parts manufacturer with 78 employees in Jackson, MI. She hopes to keep her small business profitable despite a recent drop in U.S. auto sales that will eventually affect sales of her company’s mirror brackets, pistons, and win-dow frames as car makers seek to cut their costs. Quillen is firmly focused on her bottom line; one of her business practices is to break her annual profit goal into monthly sales goals.

2. Track progress toward goals.DER tracks sales monthly sales and recently posted its most profitable month in several years.

3. Keep the goal in sight.One of Quillen’s goals is to increase her personal con-tacts in the industry in order to drive orders to the firm. “I need to be out meeting people, establishing those

relationships, getting those potential work opportunities in the door,” she said. She recently attended a business fair in Dearborn in order to meet buyers from potential customer firms like Fiat Chrysler and Toyota.

4. Accept that setbacks will come.Quillen sometimes meets with potential customers over the phone to pitch her company’s products. One recent phone meeting was a disappointment; DER had pre-sented a prototype of a new product, but the customer said her company would have to bid the order out to other suppliers before making a purchase. Because DER had invested money in developing its product, Quillen feared her price would be undercut in the bidding process.

5. Celebrate success.On learning her company had posted its most profitable month in several years, Quillen celebrated with a toast shared with company executives. Then it was back to work.

YOUR CALLWhat major goal of your own have you broken into smaller parts? If you have never done this, for what future goal do you think it would be an effective strategy for you?

178 PART 3 Planning

5.5 The Planning/Control CycleTHE BIG PICTUREThe four-step planning/control cycle helps you keep in control, to make sure you’re headed in the right direction.

LO 5-5Outline the planning/control cycle.

The TwoPlanning Steps

The TwoControl Steps

Once you’ve made plans, how do you stay in control to make sure you’re headed in the right direction? Actually, there is a continuous feedback loop known as the planning/control cycle. (The “organizing” and “leading” steps within the Planning—Organizing—Leading—Controlling sequence are implied here.) The planning/control cycle has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely, by (a) correcting deviations in the plan being carried out or (b) improving future plans. (See Figure 5.5.) (We will see this model echoed later in Chapter 16 in the discussion of the Plan-Do-Check- Act cycle.)

The planning/control cycle loop exists for each level of planning—strategic, tacti-cal, and operational. The corrective action in step 4 of the cycle (a) can get a project back on track before it’s too late or (b) if it’s too late, can provide data for improving future plans. ●

FIGURE 5.5The planning/control cycleThis describes a constant feedback loop designed to ensure plans stay headed in the right direction.Source: Robert Kreitner, Management, 8th edition.

Control the directionin two ways:(a) by correcting deviations in the plan being carried out (return to step 2), or(b) by improving future plans (go to step 1 to start over)

Make the plan Carry out the plan1 2

4 Control thedirection bycomparing theresults with the plan

3

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EXAMPLE The Planning/Control Cycle: Tesla’s Long-Awaited Model 3

By early 2018, Tesla’s Model 3, the electric-car company’s long anticipated, more affordable new vehicle (whose price begins at $35,000) had missed its announced production goals at least twice. In the summer of 2017, the company had promised to make 20,000 Model 3 vehicles by December, but it actually made fewer than 300 during that year’s third quarter, and orders placed at that time were not expected to be filled until the middle of 2018, a projection that was later pushed back to “late 2018 or early 2019.” The date by which the company would achieve its fore-casted production run of 5,000 cars a week was also moved, from the end of 2017 to the end of the second quarter of 2018, with the expectation that in the first quarter only 2,500 cars a week would come off the assembly line. According to Tesla, the change to a slower ramp-up was meant “to focus on quality and effi-ciency rather than simply pushing for the highest possible volume in the shortest period of time.”52

“Production bottle-necks” were blamed for these disappointing results, along with the fact that some production systems were not running as quickly as the company had planned. The assembly line was less fully auto-mated than Tesla had wanted, for example, with human workers filling the gaps. The company plans to make production as fully automated as possible but hasn’t yet achieved that goal. Battery production has also been slower than hoped, after Tesla was forced to bring it back in house when outside suppliers failed to deliver. The company addressed that problem by creating auto-matic assembly lines for its batteries. But these lines were built in Germany, so they needed to be disassembled and shipped to the

United States to be put back together again, which apparently had still not happened by early 2018. “We view the 2,500 target in March, in particular, as extremely aggressive due to manage-ment’s acknowledgment of needing to get the robotic equip-ment in Germany disassembled, shipped to the US, and then reassembled and programmed in order to hit roughly 2,000 to 2,500 units per week,”53 said one market analyst.

Tesla’s CEO Elon Musk said he was confident that the differ-ence between projections and reality was “getting smaller with

each passing week.” But in the fourth quarter of 2017, only 2,425 units were made, and only 1,550 were delivered to customers ( leav ing almost 300,000 people still waiting for their cars).54 But almost 800 of those fourth-quarter cars had rolled off the line in a mere seven days, leading some to hope that Tesla had begun producing faster than its newly con-servative projections sug-gested. One possible reason was the compa-ny’s decision to pull workers off the produc-tion of two of the compa-ny’s other cars and assign

them to the Model 3. “The whole team is on it, we’ve got it covered, it’s just going to take us a few months longer than expected,” Musk said.55

The Tesla model 3 has experienced tremendous production and logistics problems. One cause is that the company does not have the ability to custom-build the cars in a timely fashion to meet customer demand. This demand is partly driven by the car’s features and a competitive price of roughly $49,000. CEO Elon Musk has totally immersed himself in the production process in order to improve the planning/control process. ©Salwan Georges/The Washington Post/Getty Images

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YOUR CALLSome analysts believe Tesla would have been better off announcing less ambitious production plans for the Model 3 in the first place. Are they right? Do you think the company is doing a good job of making and controlling its paces for the Model 3? Why or why not?

180 PART 3 Planning

5.6 Career Corner: Managing Y our Career Readiness

LO 5-6Describe how to develop the career readiness competency of proactive learning orientation.

Planning is not one of the career readiness competencies associated with the model shown below. (See Figure 5.6.) The reason is not that employers don’t value planning skills. Rather, it’s the fact that other Career Readiness competencies are foundational to good planning. The soft skill of critical thinking/problem solving is a prime example.

The competency of critical thinking/problem solving is defined as sound reasoning to analyze situations, make decisions, and solve problems. These are all critical activities associated with planning and require the ability to obtain, interpret, and analyze both qualitative and quantitative information. In turn, this competency is driven by another career readiness competency: proactive learning orientation. Let’s consider the link between planning, critical thinking, and proactive learning in more detail.

Critical thinkers don’t make quick or rash decisions during the planning process. Instead, they consider alternative solutions to problems and remain open-minded. They remain open-minded by obtaining and considering a wide range of information before making a judgment. This is precisely what happens when someone has a proactive learning orientation. Proactive learners seek information and knowledge so that they expand their knowledge base, which makes them more effective planners. The point is that good planning requires critical thinking, which in turn requires a proactive learning orientation. This process ultimately results in expanding the career readiness compe-tency of task-based/functional knowledge.

Effective planning requires you to be a proactive learner in areas beyond the techni-calities of your profession. It also applies to two additional career readiness competen-cies: understanding the business and networking. Organizations want all of us to stay abreast of what is happening in the industries and markets in which we work. Doing so enables us to consider a wider bandwidth of information when planning. For example, staying current about trends in higher education enables us as authors to do a better job in planning the revisions of this product. We also find that many people fail to keep their social and professional networks up to date over time. This is a mistake! Failing to proactively maintain such networks means that we are losing contacts and valuable information that can aid the planning process and our career progression. As authors, for instance, we rely on our social networks to get feedback about what students and educational institutions are looking for in a textbook. As you can see, effective planning is grounded in information that comes from staying current about events within the industry in which we work and with people in our social networks.

FIGURE 5.6Model of Career Readiness©2018 Kinicki and Associates, Inc.

Careerreadiness

Knowledge(K)

Soft skills(S)

Careeroutcomes

Attitudes(A)


(O)

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Becoming More ProactiveBeing “intentionally proactive” is the first step to becoming a proactive learner. “Being proactive means relying on your own choices instead of luck and circumstances. It’s about controlling the situation rather than simply waiting for the outcomes,” said one business writer.56 Lina Tinsley, a brand manager at MARS, put this recommendation into practice. “I give my 100 percent every day and I’m committed to be intentional in all I do. For me, work is an opportunity to live my purpose and bring my best, to deliver consistent results, and to positively influence the people around me,” she said.57 You can put Lina’s beliefs into practice by following four key recommendations:58

1. Focus on solutions rather than problems.

2. Take initiative and rely on yourself.

3. Set realistic goals and don’t overpromise.

4. Participate and contribute to personal and professional conversations.

Keeping an Open Mind and Suspending JudgmentKeeping an open mind and suspending judgment are essential for developing a proac-tive learning orientation. This exercise was designed to assist you in this pursuit. Focus on your school work or a current job to practice the technique. You can repeat this process in the future whenever you desire to be open-minded.59

■ Step 1 Make a list of your current tasks, projects, or commitments at school or work.

■ Step 2 For each task listed in step one, identify the key moments it would be important to be open-minded and suspend judgment.

■ Step 3 For each of these moments, think of how you might apply the four key skills of being open minded:60

1. Question your beliefs. Many of us make decisions based on false beliefs and assumptions. You can check yourself by asking: What specific evidence supports my view? Is my knowledge based on facts or my experience? Why am I arguing with others who have more experience and knowledge? Am I offering an opinion or being opinionated? Based on answers to these ques-tions, you can either proceed in the discussion or take a step back and allow your mind to take in new information.

2. Pause and seek feedback. Observe how others respond to your opinions and recommendations. Don’t be married to a perspective. If the goal of a discussion is to conduct better planning and make better decisions, then it does not matter whether people agree or disagree with your views. Your goal is to arrive at better decisions and help people to grow.

3. Watch for communication blocks. Be aware of words, concepts, or com-munication styles that elicit emotional responses from you and others. Emotionality leads to defensiveness and the blocking of listening. Be aware of your emotions when talking with others.

4. Check the accuracy of your past judgments and predictions. If your judg-ments and predictions have been wrong, consider the reasons and adjust in the future. ●

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182 PART 3 Planning

Key Terms Used in This Chapter

action plan 169business model 158business plan 158cascading goals 176goal 169long-term goals 169management by objectives

(MBO) 173means-end chain 169mission 164mission statement 164objective 169

operating plan 169operational goals 169operational planning 167plan 158planning 158planning/control cycle 178policy 171procedure 171program 171project 171rule 171short-term goals 169

single-use plans 171SMART goal 172standing plans 171strategic goals 169strategic management 159strategic planning 166strategy 159tactical goals 169tactical planning 167values statement 165vision 164vision statement 164

Key Points

5.1 Planning and Strategy• Planning is defined as setting goals and deciding

how to achieve them. It is also defined as coping with uncertainty by formulating future courses of action to achieve specified results.

• A plan is a document that outlines how goals are going to be met. One important type of plan is a business plan, a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success. The business plan describes the business model, which outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.

• A strategy, or strategic plan, sets the long-term goals and direction for an organization.

• Strategic management is a process that involves managers from all parts of the organization in the formulation and implementation of strategies and strategic goals.

• An organization should adopt planning and strategic management for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.

5.2 Fundamentals of Planning• An organization’s reason for being is expressed in a

mission statement.• A vision is a long-term goal describing “what” an

organization wants to become. It is a clear sense of the future and the actions needed to get there. A vision statement expresses what the organization should become, where it wants to go strategically.

• Both mission and vision should express the organization’s values. A values statement, or core values statement, expresses what the company

stands for, its core priorities, the values its employees embody, and what its products contribute to the world.

• From these are derived strategic planning, then tactical planning, then operational planning. In strategic planning, managers determine what the organization’s long-term goals should be for the next 1–5 years with the resources they expect to have available. In tactical planning, managers determine what contributions their work units can make with their given resources during the next 6–24 months. In operational planning, they determine how to accomplish specific tasks with available resources within the next 1–52 weeks.

5.3 Goals and Plans• Whatever its type, the purpose of planning is to set a

goal and then formulate an action plan.• Goals are of two types: long-term and short-term.• Long-term goals are generally referred to as strategic

goals. They tend to span one to five years and focus on achieving the strategies identified in a company’s strategic plan.

• Short-term goals are sometimes referred to as tactical goals, operational goals, or just plain goals. They generally span 12 months and are connected to strategic goals in a hierarchy known as a means-end chain.

• A means-end chain shows how goals are connected or linked across an organization. The accomplishment of low-level goals is the means leading to the accomplishment of high-level goals or ends.

• Strategic goals are set by and for top management and focus on objectives for the organization as a whole. Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals. Operational goals are

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set by first-line managers and are concerned with short-term matters associated with realizing tactical goals.

• An operating plan is a plan that breaks long-term output into short-term targets or goals. Operational plans turn strategic plans into actionable short-term goals and action plans.

• An action plan defines the course of action needed to achieve the stated goal. Whether the goal is long-term or short-term, action plans outline the tactics that will be used to achieve the goal. Each tactic also contains a projected date for completing the desired activities.

• The goal should be followed by an action plan, which defines the course of action needed to achieve the stated goal. The operating plan, which is typically designed for a one-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share.

• Plans may be either standing plans, developed for activities that occur repeatedly over a period of time, or single-use plans, developed for activities that are not likely to be repeated in the future.

• There are three types of standing plans: (1) A policy is a standing plan that outlines the general response to a designated problem or situation. (2) A procedure outlines the response to particular problems or circumstances. (3) A rule designates specific required action.

• There are two types of single-use plans: (1) A program encompasses a range of projects or activities. (2) A project is a single-use plan of less scope and complexity.

5.4 Promoting Consistencies in Goals: SMART Goals, Management by Objectives, and Goal Cascading

• The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is one that is specific, measurable, attainable, results-oriented, and has target dates.

• Management by objectives (MBO) is a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. The purpose of MBO is to motivate rather than to control subordinates.

• For MBO to be successful three things have to happen. (1) The commitment of top management is essential. (2) The goals must be applied organizationwide. (3) Goals must cascade—be linked consistently down through the organization. Cascading goals is the process of ensuring that the strategic goals set at the top level align, or “cascade,” downward with more specific short-term goals at lower levels within an organization, including employees’ objectives and activities.

• Deadlines are essential to planning because they become great motivators both for the manager and for subordinates.

5.5 The Planning/Control Cycle• Once plans are made, managers must stay in control

using the planning/control cycle, which has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely, by (a) correcting deviations in the plan being carried out or (b) improving future plans.

5.6 Career Corner: Managing Your Career Readiness

• Planning requires the use of multiple career readiness competencies, including critical thinking/problem solving, proactive learning orientation, task-based/functional knowledge, understanding the business, and networking.

• You can increase the competency of proactive learning orientation by becoming more proactive and keeping an open mind and suspending judgement.

Understanding the Chapter: What Do I Know?

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1. What are planning, strategy, and strategic management?

2. Why are they important?3. What is the difference between a mission and a

vision, a mission statement and a vision statement?4. What are three types of planning?5. What are two types of goals?

6. What are different kinds of plans?7. What are SMART goals?8. What is management by objectives?9. What three things have to happen for MBO to be

successful?10. Explain the planning/control cycle.

184 PART 3 Planning

Management in Action

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Fender Rebrands to Stay in Tune with the TimesFender Musical Instruments Corporation produces some of the most recognized electric and bass guitars in the world. The organization was one of the first to mass produce guitars and has an illustrious history dat-ing back to the late 1940s. Fender’s guitars revolution-ized popular music by allowing smaller groups of musicians to play together.61

Today, these small groups include megastar custom-ers like Eric Clapton, Sheryl Crow, and U2. With stars of this caliber using Fender guitars on stage, you might imagine business is booming. Sadly, it is not. Fortune reports that Fender “spent the better part of the past decade struggling with debt and a lack of growth, and in 2012 abandoned an IPO, citing unfavorable market conditions.”62 Andy Mooney was hired as CEO in 2015 to turn around the company. Let’s consider his plan.

A NEW PLAN FOR AN UNRELIABLE CONSUMERFender began its transformation by coming to terms with the high quit-rate of beginning guitar players. According to Mooney, “Almost everyone who picks up a guitar, about 90 percent, abandons it within the first year.”63 There are two main contributors to this dire statistic—the method of learning the instrument and the cost associated with doing so.

Fender’s plan focused on how amateur players pre-ferred to learn. Ethan Kaplan, Fender’s general man-ager of digital, noted that “The way that I learned piano when I was a kid is no longer the way most people learn. They sit at a computer. They sit on an iPhone. They do things in little bites versus sitting through hour-long lessons.”64 Mooney and Kaplan’s assessment of Fender’s current reality provided crucial insight into the cost of lessons. According to Fortune, “ . . . new players spend four times as much on lessons as they do on the instrument.”65

The company’s plan to overcome these challenges was based on experimenting with different apps. The plan strives to ensure that beginning guitar players can easily use digitized materials to quickly learn how to play guitar at a reasonable cost.

Fender’s first app was Fender Play. This subscrip-tion-based app can be used on a mobile device as a way to assist a “do-it-yourself” society learn how to quickly play the guitar. The app uses bite-sized, multi-angle video lessons focused on helping new players learn popular songs. A professional guitarist provides step-by-step lessons in the videos, and players can track their progress in the app. Beginners quickly learn how to play a familiar song from bands such as the Rolling Stones, Foo Fighters, Tim McGraw, and Coldplay.

They will be less likely to quit once they achieve this milestone and more likely to buy more Fender guitars in the future.66 Players will also be spending much less than they would have with private lessons, since the subscription costs only $20 a month.

The software may not be for everybody, though. As Business Insider reports, “No program of instruction will be perfect, and Fender Play isn’t going to work for everyone . . . And for those who don’t like it, there are many free options on the web, and you can always hire a real, live teacher!”67 Obviously, Fender cannot rely on a one-product-fits-all plan.

The company has developed additional apps to speed up the learning process. For example, Fender developed Fender Tune to teach players how to tune a guitar without having any level of proficiency. “When the kid plugs [the guitar] in for the first time, it doesn’t sound like a screaming cat when it comes out of an amp,” according to Mooney.68

Fender is also looking to release a practice-room app that can assist someone in playing any song in its music library. This provides an opportunity for amateur play-ers to practice and develop their skills.

Another app lets an amp emulate the sounds of famous guitarists. The company’s newest amp model will be able to connect to this app wirelessly, through Bluetooth, so players can alter and share sound effects.69

IMPACT ON THE BOTTOM LINEAlthough Fender has built guitars for Eric Clapton, Stevie Ray Vaughn, and Jimi Hendrix, its growth plan is based on the needs of amateur musicians. According to Kaplan, “We never really concentrated on those 45% of players who buy a guitar for the first time every year.” Even a slight improvement in that 90% abandon-ment statistic would be significant for the company. If Fender can get a 10% increase in the number of begin-ners who stick with their guitar, it could double the size of its instrument business.70

Fender also plans on tapping into an important evo-lution process with its digital products. If it can get play-ers hooked on cheap starter guitars, then have them upgrade to fancier guitars as they become more commit-ted to playing, it may be able to turn players into collec-tors. The company would be able to realize more revenue by following the lifecycle of its customers.71

Fender’s sales strategy goes beyond digital. The com-pany does almost all its business through traditional retailers, with online sales from its website making up less than 2% of North American sales. However, the National Retail Federation says that online sales hit a record $108.2 billion during the 2017 holiday season (a 14.7% increase from the year before).72 These statistics suggest that Fender’s strategy of using traditional retailers may be


outdated. Mooney doesn’t seem to be worried. “Players need to touch, feel, and play a guitar before they buy one,” he says. Fender, he says, prefers to use the Internet as a learning tool, rather than a sales mechanism.73

Some factors seem to be out of the company’s control. As Bloomberg reports, “Detractors have predicted the death of the electric guitar for years, pointing to the rise of rap and electronic music on pop charts.” Fender doesn’t seem overly concerned about this either. “More women are playing guitar these days,” says Mooney, a trend he credits to singer Taylor Swift. The company is also quick to point to rising guitar sales over the past decade. “The pendulum swings back and forth,” Mooney says.

Can Fender’s new digital strategy swing the pendu-lum in its direction?

FOR DISCUSSIONProblem-Solving Perspective

1. What is the underlying problem in this case from Fender CEO Andy Mooney’s perspective?

2. What are some of the causes of this problem?

3. Do you believe Fender’s strategy and plans will turn around the company? Explain.

Application of Chapter Content

1. Using the steps in Figure 5.1, describe how Fender is transforming into a digital company.

2. Define one specific strategic, tactical, and operational plan that Fender can utilize for its transformation.

3. Develop a simple strategic goal, operational goal, and action plan for Fender Play: The goals need to be SMART. Then utilize a means-end chain to illustrate the relationship among the three.

4. Assume 8% of Fender’s current customers are women. Would it be wise for the company to set a strategic goal of increasing this number to 40% in the next 12 months? Why or why not? Explain your response using Figure 5.4.

5. Based on CEO Mooney’s standard for success in making sure beginners stick with their guitars, develop a planning/control cycle to make sure Fender is headed in the right direction.

Legal/Ethical Challenge

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Is Pfizer Putting Profits above Alzheimer’s Patients?Planning and strategy go together, and they flow from a company’s mission and vision. Decisions made in the pursuit of corporate strategy are challenging because they ultimately involve choices about how to spend valuable resources. U.S. pharmaceutical giant Pfizer is a good illustration.

Pfizer decided in January 2018 to no longer pursue new research and development (R&D) in treatments for Alzheimer’s disease, resulting in the loss of hun-dreds of jobs. Worse yet, the approximately 5.5 million U.S. adults with this neurological disease no longer have one of the biggest pharmaceutical companies in their corner.74 Pfizer made this challenging decision because of either low profitability or limited capacity.

With respect to profitability, Alzheimer’s research has proven to be costlier than most other R&D pur-suits. A neuroscientist at Edinburgh University told BBC Radio that “More than 99% of trials for Alzheim-er’s drugs have failed in past 15 years.”75 Investors thus are pressuring pharmaceutical companies to spend less on this research when they can pursue more prof-itable projects, such as treatments for anxiety disorders and erectile dysfunction.

Capacity becomes an issue in pharmaceutical research and development because it’s difficult to run

multiple large-scale R&D programs at the same time. This has led pharmaceutical companies to focus only on specific drugs. A former head of research and development at Pfizer told the Financial Times that “You can’t run several programmes of that size, even with a budget like Pfizer’s. . . . How many times can these companies take another shot when other parts of science like gene therapy are exploding, and when there’s a desperate need for new drugs to replace opi-oids? There are many more areas where you can see the goal lines.”76 Pfizer’s management team apparently agrees with this conclusion. The organization said in a statement that not pursuing Alzheimer’s research “was an exercise to reallocate [spending] across our portfo-lio, to focus on those areas where our pipeline, and our scientific expertise, is strongest.”77

Though Pfizer may be changing its strategy and its resource allocations, the company has kept its mis-sion statement the same: “To be the premier, innova-tive biopharmaceutical company.” Its values include “customer focus” and “integrity.”78 However, its latest decision is seen by some as contradictory to its mis-sion and values. Alzheimer’s Research UK says that companies should be encouraged to invest in research into neuroscience. For its part, the Alzheimer’s Soci-ety called Pfizer’s decision “disappointing” and a “heavy blow” to those living with dementia.79

186 PART 3 Planning

Other big drug makers are not letting profit and limited capacity get in their way. A top scientist at Eli Lilly, one of Pfizer’s competitors, told Financial Times that “Taking care of Alzheimer’s patients is a huge economic cost to society and now is not the time to give up.” Eli Lilly’s most advanced Alzheimer’s drug failed in a large trial in 2016, but the company has vowed to continue Alzheimer’s treat-ment R&D.80 Another U.S. competitor, AstraZeneca, also remains committed to fighting the disease.

SOLVING THE CHALLENGEWhat would you do if you were Pfizer’s CEO?

1. Move on to other projects. Pfizer has an obligation to its shareholders not to throw money at projects that prove to be unsuccessful.

2. Continue funding Alzheimer’s R&D. As a global leader in the pharmaceutical industry, Pfizer has an obligation to society to find treatments for diseases affecting millions of people. This would also be in line with its mission statement and values.

3. Contribute to agencies such as the National Institutes of Health so they can continue their studies of Alzheimer’s.

4. Suggest other options.

Uber Continuing Case

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Learn how Uber’s corporate strategies have changed from those pursued by founder and CEO Travis Kalanick to those identified by current CEO Dara Khosrowshahi. Assess your ability to apply concepts discussed in this chapter to the case by going to Connect.

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