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© 2016 Cengage Learning

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Exhibit 1.6
The First Year Management Transition

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In the book Becoming a Manager: Mastery of a New Identity, Harvard Business School professor Linda Hill followed the development of 19 people in their first year as managers. Becoming a manager produced a profound psychological transition that changed the way these managers viewed themselves and others.

Exhibit 1.6 describes the transition to management.

Netflix Headquarters, Los Gatos, California

CEO Reed Hastings started Netflix in 1997 after becoming angry about paying Blockbuster Video $40 for a late return of Apollo 13. Hastings and Netflix struck back with flat monthly fees for unlimited DVD rentals, easy home delivery and returns via prepaid postage envelopes, and no late fees, which let customers keep DVDs as long as they wanted. Blockbuster, which earned up to $800 million annually from late returns, was slow to respond and lost customers in droves.

When Blockbuster, Amazon, and Walmart started their own mail-delivery video rentals, Hastings recognized that Netflix was in competition with “the biggest rental company, the biggest e-commerce company, and the biggest company, period.” But with an average subscriber cost of just $4 a month compared to an average subscriber fee of $15, Netflix, unlike its competitors, made money from each customer. Three years later, Walmart abandoned the business, asking Netflix to handle DVD rentals on Walmart.com. Amazon entered the DVD rental business in Great Britain, expecting that experience to prepare it to beat Netflix in the United States. But, like Walmart, Amazon quit after four years of losses. Finally, 13 years after Netflix’s founding, Blockbuster declared bankruptcy. With DVDs mailed to 17 million monthly subscribers from 50 distribution centers nationwide, Netflix is now the industry leader in DVD rentals.

However, its expertise in shipping and distributing DVDs won’t provide a competitive advantage when streaming files over the Internet. Indeed, Netflix’s streaming video service is in competition with Amazon’s Video on Demand, Apple’s iTunes, Hulu Plus, and others. Moreover, unlike DVDs, which can be rented without studio approval, U.S. copyright laws require streaming rights to be purchased from TV and movie studios before downloading content into people’s homes. And that creates two new issues. First, does Netflix have deep enough pockets to outbid its rivals for broad access to the studios’ TV and movie content? Second, can it convince the studios that it is not a direct competitor so they will agree to license their content?

Netflix must also address the significant organizational challenges accompanying accelerated growth. Hastings experienced the same problem in his first company, Pure Software, where he admitted, “Management was my biggest challenge; every year there were twice as many people and it was trial by fire. I was underprepared for the complexities and personalities.” With blazing growth on one hand and the strategic challenge of obtaining studio content on the other, how much time should he and his executive team devote directly to hiring? Deciding where decisions will be made is a key part of the management function of organizing. So, should he and his executive team be directly involved, or is this something that he should delegate? Finally, what can Netflix, which is located near Silicon Valley, home to some of the most attractive employers in the world, provide in the way of pay, perks, and company culture that will attract, inspire, and motivate top talent to achieve organizational goals?

If you were in charge of Netflix, what would you do?

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Management is getting work done through others.

Managers have to be concerned with efficiency and effectiveness in the workplace. Efficiency is getting work done with a minimum of effort, expense, or waste. Effectiveness is accomplishing tasks that help fulfill organizational objectives, such as customer service and satisfaction.

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Functions of management include planning, organizing, leading, and controlling.

Planning is determining organizational goals and a means for achieving them. Organizing is deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom in the company. Leading is inspiring and motivating workers to work hard to achieve organizational goals. Controlling is monitoring progress toward goal achievement and taking corrective action when progress isn’t being made.

The textbook is organized based on the four management functions, as shown on this slide.

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Meta-analysis, which is a study of studies, is helping management scholars understand how well their research supports management theories.

Each meta-analysis reported in the What Really Works sections of this textbook is accompanied by an easy-to-understand statistic called the probability of success. The probability of success shows how often a management technique will work.

Meta-analyses suggest that it’s wise to have job applicants take a general mental-ability test. In fact, the probability of success is 76 percent. This means that an employee hired on the basis of a good score on a general mental-ability test stands a 76 percent chance of being a better performer than someone picked at random from the pool of all job applicants. So chances are you’re going to be right much more often than wrong if you use a general mental-ability test to make hiring decisions.

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There are four kinds of managers, each with different jobs and responsibilities.
A discussion of managers follows on the following slides.

The jobs and responsibilities of the four kinds of managers are summarized in Exhibit 1.2.

As shown in Exhibit 1.2, there are four kinds of managers, each with different jobs and responsibilities.

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This is a relatively new kind of management job that developed as companies shifted to self-managing teams, which, by definition, have no formal supervisor.

Instead of directing individuals’ work, team leaders facilitate team activities toward goal accomplishment. They have less formal authority, so they lead more through relationships and respect.

As shown in Exhibit 1.3, the three major roles can be subdivided into 10 subroles.

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In the figurehead role, managers perform ceremonial duties like greeting company visitors, speaking at the opening of a new facility, or representing the company at a community luncheon to support local charities. In the leader role, managers motivate and encourage workers to accomplish organizational objectives. In the liaison role, managers deal with people outside their units. Studies consistently indicate that managers spend as much time with outsiders as they do with their own subordinates and their own bosses.

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In the monitor role, managers scan their environment for information, actively contact others for information, and, because of their personal contacts, receive a great deal of unsolicited information. In the disseminator role, managers share the information they have collected with their subordinates and others in the company. In contrast to the disseminator role, in which managers distribute information to employees inside the company, managers in the spokesperson role share information with people outside their departments and companies.

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In the entrepreneur role, managers adapt themselves, their subordinates, and their units to change. In the disturbance handler role, managers respond to pressures and problems so severe that they demand immediate attention and action. In the resource allocator role, managers decide who will get what resources and how many resources they will get. In the negotiator role, managers negotiate schedules, projects, goals, outcomes, resources, and employee raises.

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Technical skills are the specialized procedures, techniques, and knowledge required to get the job done. Human skills can be summarized as the ability to work well with others. Managers with human skills work effectively within groups, encourage others to express their thoughts and feelings, are sensitive to others’ needs and viewpoints, and are good listeners and communicators. Conceptual skills are the ability to see the organization as a whole, to understand how the different parts of the company affect each other, and to recognize how the company fits into or is affected by its external environment such as the local community, social and economic forces, customers, and the competition. Motivation to manage is an assessment of how motivated employees are to interact with superiors, participate in competitive situations, behave assertively toward others, tell others what to do, reward good behavior and punish poor behavior, perform actions that are highly visible to others, and handle and organize administrative tasks.

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Technical skills are the ability to apply the specialized procedures, techniques, and knowledge required to get the job done.

Technical skills are most important for lower level managers, because these managers supervise the workers who produce products or serve customers. Team leaders and first-line managers need technical knowledge and skills to train new employees and help employees solve problems. Technical skills become less important as managers rise through the managerial ranks, but they are still important.

Human skills, the ability to work well with others, are equally important at all levels of management, from first-line supervisors to CEOs. However, because lower level managers spend much of their time solving technical problems, upper level managers may actually spend more time dealing directly with people.

Conceptual skills are the ability to see the organization as a whole, how the different parts of the company affect each other, and how the company fits into or is affected by its external environment. Conceptual skill increases in importance as managers rise through the management hierarchy.

Managers typically have a stronger motivation to manage than their subordinates, and managers at higher levels usually have stronger motivation to manage than managers at lower levels.

Furthermore, managers with stronger motivation to manage are promoted faster, are rated by their employees as better managers, and earn more money than managers with a weak motivation to manage.

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Exhibit 1.5 lists the top 10 mistakes that managers make.

These mistakes make the difference between “arrivers”—managers who made it all the way to the top of their companies—and “derailers”—managers who were successful early in their careers but were knocked off the fast track at the middle to upper management levels. Both groups were very similar and had enjoyed past success. The biggest difference between the two were how they managed people. Arrivers were much more effective in their interpersonal skills than were derailers.

Derailers were insensitive to others by…

• using an abrasive, intimidating, and bullying management style
• being cold, aloof, or arrogant
• lacking concern for others
• being overly political

Use this fact to reinforce the importance of being able to manage people rather than just processes, when it comes to management effectiveness.

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In the book Becoming a Manager: Mastery of a New Identity, Harvard Business School professor Linda Hill followed the development of 19 people in their first year as managers. Becoming a manager produced a profound psychological transition that changed the way these managers viewed themselves and others.

Exhibit 1.6 describes the transition to management.

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In a study by Stanford University professor Jeffrey Pfeffer, companies who used the management practices listed on this slide achieved financial performance that, on average, was 40 percent higher than that of other companies.

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Camp Bow Wow: Innovative Management for a Changing World

Sue Ryan, a Camp Bow Wow franchisee from Colorado, knows the ins and outs of managing a care center for pets. To help launch her business a few years ago, Ryan recruited experienced pet care worker Candace Stathis, who came on as a camp counselor. Ryan soon recognized that Stathis was a star performer with a natural ability to work with clients and pets alike, and today Stathis serves as the camp’s general manager. At Camp Bow Wow, store managers have distinct roles from camp counselors. Whereas counselors typically take care of dogs, answer phones, and book reservations, managers must know how to run all operations and mange people as well. To keep camp running as efficiently as possible, Stathis maintains a strict daily schedule for doggie baths, nail trimmings, feedings, and play time.