MGT300 – EXAM 2 STUDY GUIDE (MODULES 5-10)
MODULE 5 – PLANNING
Lecture 1: The Fundamentals of Planning
Functions of Management
Planning
oYou set goals and decide on how to achieve them
Organizing
oYou arrange tasks, people, and other resources to accomplish the work
Leading
oYou motivate, direct, and otherwise influence people to work hard to achieve the
organization’s goals
Controlling
oYou monitor performance, compare it with goals, and take corrective action as
needed
Planning Defined
“Setting goals and deciding how to achieve them.”
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
Strategy: Setting Long-Term Direction
Strategy or strategic plan
oA large-scale action plan that sets the long-term goals and direction for an
organization
oRepresents an “educated guess” about what must be done in the long term for
the survival or the prosperity of the organization or its principal parts
oStrategic plans generally reconsidered every year due to everchanging business
conditions
Strategic Management
Strategic Management
oA process that involves managers from all parts of the organization in the
formulation and the implementation of strategies and strategic goals
Planning and Strategic Management Process
1. Establish the mission and vision and values
2. Assess the current reality
3. Formulate the grand strategy & strategic, tactical & operational plans
4. Implement the strategy
5. Maintain strategic control
Why Planning and Strategic Management Matter
1. Providing direction and momentum
2. Encouraging new ideas
3. Developing a sustainable competitive advantage
Fundamentals of Planning
Mission Statement:
o“What is the reason for our being?”
oExpresses the purpose of an organization
o“Why are we here?”
Vision Statement:
o“Who do we want to become?”
oIt is a clear sense of the future and the actions needed to get there.
o“Where do we want to go?”
Values Statement:
o“What values do we want to emphasize?”
oWhat the company stands for: its core priorities, the values its employees
embody, and what its products contribute to the world
o“What values do we want to emphasize?”
Strategic Planning
oDone by top managers for the next 1-5 years
o goals action plans
Tactical Planning
oDone by middle managers for the next 6-24 months
o goals action plans
Operational Planning
oDone by first-line managers for the next 1-52 weeks
o goals action plans
Example: NestFresh Eggs
“NestFresh strives to provide you and your family with a more sustainable, humane
alternative to conventional eggs, which are produced in caged facilities. We insist on
producing cage free and organic eggs to create awareness about the need for humane
treatment of egg laying hens and the importance of environmental responsibility.”
oMission Statement
Another Way to Remember:
“The main thing is to keep the main thing, the main thing.” -Stephen R. Covey
Example: Values Statement
Integrity
Communication
Respect
Excellence
Ex: Enron Corp
Three Levels of Management – Three Types of Planning
Top Management
oChief executive officer, president, vice president, general managers, division
heads
oStrategic Planning: 1-5 years
Make long-term decisions about overall direction of organization.
Managers need to pay attention to environment outside the organization,
be future oriented, deal with uncertain and highly competitive conditions
Middle Management
oFunctional managers, product-line managers, department managers
oTactical Planning: 6-24 months
Implement policies and plans of top management, supervise and
coordinate activities of first-line managers below, make decisions often
without base of clearly defined information procedures
First-line Management
oUnit managers, team leaders, first-line supervisors
oOperational Planning: 1-52 weeks
Direct daily tasks of nonmanagerial personnel; decisions often
predictable, following well-defined set of routine procedures
Question
Danny is participating with other managers in a discussion about what his organization's
goals should be for the next decade. He is participating in
A. strategic planning.
B. operational planning.
C. tactical planning.
D. controlling.
Benefits of Planning
Helps you check on progress
Helps you coordinate activities
Helps you think ahead
Helps you cope with uncertainty
Dealing with Uncertainty
Four Strategy Types
oDefenders
Expert at producing and selling narrowly defined products
oProspectors
Develops new products and in seeking out new markets, rather than
waiting for things to happen
oAnalyzers
Letting other organizations take the risks of product development and
marketing and then imitate what seems to work best
oReactors
Make adjustments only when finally forced to by environment pressures
“Not to decide is to decide”
Lecture 2 – The Planning / Control Cycle
SMART Goals – Acronym
There is no clear consensus about precisely what the 5 keywords mean or even what
they are. Possible values are:
SPECIFIC
MEASURABLE
ATTAINABLE
oor agreed, achievable, assignable, actionable
RESULTS-ORIENTED
oor realistic, relevant, results, resourced
TARGET DATES
oor time framed, timed, time-based, timeboxed, timely, timebound, time-specific,
timetabled
Action Plans
Action Plan-Defines the course of action needed to achieve the stated goal
“Who will do what by when?” – the critical question
Example – Exercise Resolution
oI want to get in shape
oI am going to join a health club this week and work out three times a week for 1
½ hours each time to get in shape and improve my health-by the end of the
month.
o(Who) I am going to (What) join (Where) a health club (When) this week and
work out (Measurable) three times a week for 1 ½ hours each time to (Why) get
in shape (Measurable) (increase flexibility through range of motion by X amount
and increase strength through muscles strength by X amount) and improve my
health (increase cardiovascular endurance through heart rate by X amount)
(Target Date)-by the end of the month.
The Planning / Control Cycle
The Two Planning Steps:
1. Make the plan
2. Carry out the Plan
The Two Control Steps:
3. Control the direction by comparing the results with the plan
4. Control the direction in 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 order)
Carrying Out the Plan (aka, implementing or executing)
“After all was said and done…”
“After all was said and done more was said than done”
IDEO VIDEO
One of the most influential product design/development company in the world
Company is domiciled in Paolo Alto, CA (heart of Silicon Valley)
Dave Kelly – leader of IDEO
The company’s secret weapon for innovation
The company was challenged to take something old and familiar (i.e. shopping cart) and
completely redesign it for ABC news in just 5 days
“shopping cart project”
Designed medical equipment, and the 25-foot mechanical whale in movie “Free Willy”,
and the first computer mouse for Apple, Smith ski goggles, Nike sunglasses, NEC
computer screens
“were not experts in any given area” “were experts in how to design stuff”
Peter Skillman – Project Leader
o35 year old, Sanford engineer
oHe’s a leader because he’s good with groups
oOnly been at IDEO for 6 years
Safety emerges as an important issue, and theft
No titles and no permanent assignments at IDEO
Team splits in groups for the “shopping cart project”
Each group shared the information they learned
Company Mantras:
oWritten everywhere in their office
o“One conversation at a time, stay focused on the topic”
o“Encourage wild ideas, defer judgment, build on the ideas of others”
“Enlightened trial and error succeeds over the planning of the lone genius”
oIDEO’s approach
New shopping cart
oWould cost the same as today’s cart
oModular shopping cart, with baskets on it
oTechnological shopping cart with a scanner mounted on it
oBuilt around child safety
oCart’s wheels turn 90 degrees
oBags are hooked on cart’s hooks
“fail often to succeed sooner”
IDEO’s tips for innovation success:
oA lot of hours, an open mind, a boss who demands fresh ideas, a belief that
chaos can be constructive, and a great deal of teamwork
Project Planning at IDEO
Stage 1: Definition- Big Picture; State the Problem, Assess Assumptions/Risks, Identify
Goals/Objectives, Determine Budget/Schedule
oIDEO team was instructed to design a shopping cart that meets the needs of
today’s shopper. What might those needs be?
Stage 2: Planning-Consider the Details to Make the Big Picture Happen; Identify
Facilities, Equipment, People/Duties, Schedule, Coordination Efforts
oIDEO broke into teams with one overall project manager
Stage 3: Execution-Work Stage; Define Management Style / Establish Controls
oIDEO teams needed to re-focus/re-group
Stage 4: Closing-When the Project is Accepted by the Client
oIDEO presented cart to grocery store owners
MODULE 6 – STRATEGIC MANAGEMENT
Lecture 1: Strategic Management - Terms & Definitions
Organization
“A group of people who work together to achieve some specific purpose.”
Strategy Related Definitions
Strategy: large-scale action plan that sets the direction
Strategic Plan: determines where the organization is going over the next 1-5 years, how
it’s going to get there, how it will know it got there
Strategic Management: process that involves managers from all parts of the
organization in the formulation and implementation of strategies
Why does “Strategy” Matter?
“The ‘surplus society’ has a surplus of similar organizations, employing similar people,
with similar backgrounds, working on similar jobs, coming up with similar ideas,
producing similar things, with similar prices and similar quality”
-Nordstrom & Ridderstrale
Strategic Management Process
(in module 5 lecture 1)
1. Establish Mission, Vision and Values
(in module 5 lecture 1)
2. Assess the Current Reality
Look at where the organization stands internally and externally – what’s working and
what’s not
See what can be changed to increase efficiency and effectiveness in achieving the vision
Use tools of competitive intelligence, SWOT analysis, forecasting, benchmarking…
Tools to Assess Current Reality
Competitive Intelligence
oGaining information about one’s competitors’ activities so that you can anticipate
their moves and react appropriately
SWOT Analysis
oAssessing the organization’s Strengths, Weaknesses, Opportunities, and Threats
Forecasting
oTrend Analysis
Hypothetical extension of a past series of events into the future
oContingency Planning
Creation of alternative hypothetical but equally likely future conditions
Benchmarking
oProcess by which a company compares its performance with that of high-
performing organizations
SWOT Analysis
INSIDE MATTERS- Analysis of Internal Strengths and Weaknesses
Strengths: inside matters
oStrengths could be work processes, organization, culture, staff, product quality,
production capacity, image, financial resources & requirements, service levels,
and other internal matters
Weaknesses: inside matters
oWeaknesses could be in the same categories as stated for Strengths: work
processes, organization, culture, etc.
OUTSIDE MATTERS- Analysis of External Opportunities & Threats
Opportunities: outside matters
oOpportunities could be market segment analysis, industry & competition
analysis, impact of technology on organization, product analysis, governmental
impacts, and other external matters
Threats: outside matters
oThreats could be in the same categories as stated for Opportunities: market
segment analysis, etc.
Question
When analyzing the “W” in SWOT analysis, Roberta, the manager might be assessing:
A. Possible challenges in the market
B. Competitor’s actions
C. High turnover of employees
D. Good financial resources of the firm
3. Formulate the Grand Strategy
Growth
oInvolves expansion, as in sales revenues, market share, number of employees, or
number of customers
Stability
oInvolves little or no significant change
Defensive (aka ‘retrenchment’ or ‘turn around’)
oInvolves reduction in the organization’s efforts
4. Strategy Implementation
Putting strategic plans into effect
Means dealing with roadblocks within the organization’s structure and culture and
seeing if the right people and control systems are available to execute the plans
Execution: getting things done
oConsists of using questioning, analysis, and follow-through in order to mesh
strategy with reality, align people with goals and achieve results promised
5. Strategic Control
Monitoring the execution of strategy and taking corrective action, if necessary
Keeping on track means you:
(1) engage people
(2) keep it simple
(3) stay focused
(4) keep moving forward
STRATEGY AT PANERA BREAD VIDEO (use of SWOT analysis)
Ron Shaich, founder of Panera Bread
oWas most interested in developing a restaurant chain that served nourishing
food, with the speed of a fast food restaurant and the engaging environment of a
sit-down venue
Sound organizational vision
Management educated to lead rather than dictate
Front-line employees empowered to make great customer service choices
Originally formed as Au Bon Pain in 1981
The company went public in 1991
St. Louis Bread Co. in 1993
Shaich is a super involved CEO with his staff and customers
Shaich and his team set long-term goals when he created Panera, and laid strategic plans
to set the company in the direction of being unique, competitive and successful
They broke down their goals into steps, and set short-term objectives and developed
tactical plans to achieve them
1996 they started to make changes in the concept of the company
oThey added bagels & volumes grew 25%
In 1997, they added another business to their platform
oVolumes popped to 1,750,000, & was a 30% increase in one year
Ron and his staff collected data on each of the businesses in the platform and decided to
let go of some of the businesses, they realized that one concept beat the others
They sold all of their other businesses, and their original name stake business Au Bon
Pain
180 stores in 1999 to over 700 stores today
Shaich’s purpose as CEO is to plan and control Panera’s growth
oHe leads rank and file employees by helping middle management organize the
steps necessary to achieve Panera’s goals
To be successful, that kind of control requires not only planning, but measuring
achievement against an established set of goals and values
Concept Essence-a document prepared and wrote by Ron and the Panera staff, written in
a café in 1994, that is the most powerful piece to the Panera Story
oIt’s a vision for how they compete in the marketplace
They’re always trying to get closer and closer to the vision that they wrote in 1994
oCurrently about 80% of that vision, it forces them to stay in the future, and forces
them to look at where they’re trying to get to
They use SWOT analysis
oThe greatest risk for Panera (high-growth company) is to choke on the
extraordinary opportunities they have before them
oPanera stays disciplined in order to grow
oShaich stays in contact with his customers and solicits feedback and new ideas in
order to ensure that the company is reaching established goals
oPanera’s best feedback has come from within its own industry
The rewards they earns shows them that they are touching a cord with
the American consumer
oRon empowers his Panera team to make dynamic decisions by imparting them
with the core value of recognizing every stakeholder in the business
Size and scale are counterproductive in a people business
o“people work for people, not for companies”
oPanera spends a great deal of time focused on how they should execute, and
execute well through local franchises, local joint venture partners, and highly
skilled and committed people at the local level
Quality hiring
oPanera works on a foundation of trust and building trust in great relationships
with their customers
Ron’s vision gives the company focus and direction
by establishing company values and risking fundamental changes, Ron inspires his front-
line employees to feel free to make the kinds of dynamic decisions that keep Panera a
brand recognized for great products and friendly service
Lecture 2 – Porter on Strategy
Michael Porter
Professor at Harvard Business School
“The single most important strategist…”
o“What is Strategy?” (HBR Classic)
oCompetitive Strategy: creating and sustaining superior performance
oCompetitive Advantage: techniques for analyzing industries and competitors
o(Understanding Porter, Joan Magrette)
Three Principles of an Effective Strategy
1. Strategy is the creation of a unique and valuable position
2. Strategy requires trade-offs in competing
3. Strategy involves creating a “fit” among activities
Why Does “Strategy” Matter?
(in module 6 lecture 1)
Five Competitive Forces
1. Threat of new entrants
oTime and cost of entry
oSpecialist knowledge
oEconomies of scale
oCost advantages
oTechnology protection
oBarriers to entry
oEtc.
2. Bargaining power of suppliers
oNumber of suppliers
oSize of suppliers
oUniqueness of service
oYour ability to substitute
oCost of changing
3. Bargaining power of buyers
oNumber of customers
oSize of each other
oDifference between competitors
oPrice sensitivity
oAbility to substitute
oCost of changing
4. Threat of substitute products or services
oSubstitute performance
oCost of change
5. Rivalry among competitors
oNumber of competitors
oQuality differences
oOther differences
oSwitching costs
oCustomer loyalty
oCosts of leaving market
Example: Carbonated Soft Drink (Coke/Pepsi) Industry
oThreat of New Entrants: low, both have over 100 years of existence in the
market, strong brand image, capital investment is large, retail channels favor
Coke over Pepsi
oBargaining Power of Suppliers: primary ingredients are sugar (corn syrup, other
sweeteners) and the packaging materials (glass, plastic, metal cans)… all easy to
obtain by several suppliers
oBargaining Power of Buyers: (retail channels-food stores, vending): Fast food
chains/retail outlets have some power when negotiating
oThreats of Substitute Products or Services: Many alternatives—bottled water,
juice, tea. Coke and Pepsi either developed new products or acquired existing to
stay competitive.
oRivalry: Fierce competition between Coca Cola and Pepsi Co
Four Competitive Strategies
Cost-Leadership
oKeep the costs, and hence prices, of a product or service below those of
competitors and to target a wide market
Differentiation
oOffer products that are of unique and superior value compared to those of
competitors but to target a wide market
Cost-Focus
oKeep the costs of a product below those of competitors and to target a narrow
market
Focused-Differentiation
oOffer products that are of unique and superior value compared to those of
competitors and to target a narrow market.
YOU NEED STRATEGY FOR YOUR ORGANIZATION – MICHAEL PORTER VIDEO
Competition is getting stronger today
Markets are opening, competition is rising
You have to earn your success
oYou can do this with a strategy
The need for strategy is greater today than ever before
Most companies DON’T have a strategy
Today, there is a lot of confusion about strategy
Management fads that have confused leaders as they think about how to build a
strategy for their organization
How do you tell? On what principles should the strategy be based? Is the strategy
sustainable? Is it something that you’re going to be able to maintain over time and
maintain your success? –
obasic questions that people need to answer about their own organization
oessence of management
Why do companies have difficulty with strategy?
oMany managers have a confusion about how to think about competition itself
oThe way you think about strategy has a lot to do with how you think about
competition and the marketplace
oManagers think about competition as competing to be the best in their industry
That’s the mindset we think about in our lives (sports)
Dangerous way to think about competition
There is no best in business competition
Leads you to have a very destructive competition
It all depends on what needs you’re trying to serve
To understand what the customers’ real needs are, to understand how to best organize
production—fundamental challenge of competition
Proper way of thinking about competition is that your job is to create a unique company,
a company that offers something different and unique, in which it has an advantage over
its competitors, to deliver something competitors can’t offer
oCreates a form of competition that’s much more likely to lead to company
success, as well as to benefit society, to produce unique products, to create
unique value for the customer
PORTER’S FIVE COMPETITIVE FORCES VIDEO
In order to understand what it takes for a company to be successful within a
marketplace, it’s necessary to first understand the environmental challenges within the
dynamics of that industry
These challenges can be summarized using Porter’s five competitive forces
oThreats of New Entrants
New entrants to any industry pose a huge threat to existing competitors
and their market share
Industries that have low barriers to entry, such as lower startup costs,
easy market access, and low demand for specialized knowledge or skill
are more susceptible to new entrants
In order to secure a position within an industry, it is important that
companies establish competitive advantages
Ex. Economies of scale or proprietary rights over technologies
Ex: Uber & AirBnB are big threats to taxi companies and hotels
oBargaining Power of Suppliers
Companies providing products or services to a market must obtain
resources from suppliers
This power, or ability to control prices, impacts competitiveness
This power is driven by the number of suppliers providing the same
materials, the uniqueness of the materials they provide, and the amount
of money it would cost to switch suppliers
Ex: De Beers was the dominant supplier of diamonds, so the company
had strong bargaining power that allowed it to manipulate the price
standards of the industry
oBargaining Power of Buyers
Companies that purchase raw materials or resources may have strong
influence on the marketplace
This power is driven by the number of buyers buying the same material,
the uniqueness importance of the buyer to the seller, and how easy it is
for the buyer to switch suppliers
Ex: Apple is an example of a buyer with high bargaining power because of
its strong product line and consumer base
oThreats of Substitute Products or Services
Competitiveness may hinge on how easy it is to switch from one product
or service to another
This power is driven by the number of options a buyer has
When substitution is easy, the power of a company is diminished
Ex: switching to a gas-fueled car to an electric vehicle
oRivalry Among Competitors
The impact of the other four forces on the marketplace that creates this
dynamic for rivalry
Influenced by the number of competitors vying for consumers, and the
ability of those competitors
Ex: grocery stores and fast food restaurants are examples of intense
competition, where end consumers may have substitute choices
The more competitors and the more similar their offerings, the less power
a company has
These competitive forces determine how much competitive power a company holds
within an industry
PORTER’S FOUR COMPETITIVE STRATEGIES VIDEO
Focuses on two characteristics: advantage and scope
Advantages: lower costs and differentiation
Scope: narrow targets and broad targets
These characteristics interact to form the four strategies:
oCost-Leadership
When a company aims to have lower costs and broader targets
Low costs can be achieved by creating economies of scale, proprietary
technology, and preferential access to raw materials
Should lead to above-average performance by a company
Ex: Dunkin’ Donuts uses this strategy
It is far cheaper than Starbucks and the company’s top selling
product
oDifferentiation
When a company aims to differentiate itself from its competitors and
reach a broad target
This strategy requires an understanding of what consumers consider
important
Companies most focus on R&D, marketing, and customer service
Achieving uniqueness is rewarded by the ability to sell the product or
service at a premium price
Ex: Amazon Prime uses this strategy
uses its fast and reliable shipping and large variety of products to
differentiate itself from competitors
oCost-Focus
When a company relies on lower costs for a narrow target
A focus on a narrow target includes the exclusion of other segments of
consumers
Ex: Redbox uses this strategy
For consumers that are looking to rent movies on DVD, Redbox
offers the lowest price and highest convenience
oFocused-Differentiation
When a company aims to differentiate itself from competitors and reach
a narrow target
Using this strategy, companies hope to carve out a niche in a market for
which companies with broad targets can’t reach or compete
Ex: Tesla uses this strategy
Tesla aims to sell high performance electric cars to consumers
with higher incomes
Lecture 3 – Ideas of Others on Strategy
Treacy & Wiersema
“The Discipline of Market Leaders”
oOperation Excellence (Cost)
oCustomer Intimacy (Service)
oProduct Leadership (Innovation)
Market Leader: Choose one; be average at other two
Advice from Dad
Find something you really like to do
Something that you’re good at
Something that will allow you to make a good living
Hedgehog Principle
“Good to Great: why some companies make the leap…and others don’t” -Jim Collins
“Hedgehog Principle” – focus on one big thing
oMix of what you are deeply passionate about, what you can be the best in the
world at, what drives your economic engine
Diversification
Single-Product Strategy
oCompany makes and sells only one product within its market
Benefit – focus
Risk - vulnerability
Diversification Strategy
oOperating several businesses under one ownership that operate independently
of one another
Related (General Motors)
Unrelated (General Electric)
BCG Matrix
A means of evaluating strategic business units on the basis of:
o(1) their business growth rates
o(2) their share of the market
Stars
oHave high growth, high market share-definite keepers
Question Marks
oRisky new ventures-some will become stars, some dogs
oHigh growth, but low market share
Cash cows
oHave slow growth but high market share—income finances stars and question
marks
Dogs
oHave low growth and low market share-should be gotten rid of
FREE FOR ALL, PROFIT FOR SOME VIDEO
The internet, everything is free
Free has become a new business model as opposed to a marketing trick
Chris Anderson argues that businesses will profit by giving things away
oDigital stuff costs so little to make, reproduce, and redistribute
oIt is possible for a few to subsidize many
Free is the advertising, “free is the best form of advertising”
oBecause you’re not telling someone about a product, you’re allowing them to try
it
Dan Ariely conducted an experiment with chocolate to test the power of free
oPeople always choose things that are free, no matter what it is
An irrational decision
oWhen prices are involved, people choose quality
Sarah Rotman Epps “Youtube is very successful, but not profitable”
oIt provides a huge archive of searchable videos for free
oWhile YouTube’s parent company Google made 4 billion dollars in profits in the
previous year by offering free searches subsidized by highly targeted advertising
oGoogle forces you to look at this free economy because Google is the exception
that either proves or breaks the rule
“free is not working for everyone” “free does not go far enough to power our whole
economy”
In the digital world, it depends on how you do the accounting
The decision to allow people to sample content, helps to grow a subscriber base (WSJ)
MODULE 7 – DECISION MAKING
Lecture 1 – Rational and Non-rational Decision-Making
Decision Making as Either Rational or Non-Rational
Decision
oChoice made from among numerous available options
Decision Making
oProcess of identifying and choosing alternative courses of action
oCan be made rationally, but is frequently non-rational
System 1: intuitive and largely unconscious
System 2: analytical and conscious
Four Steps in Rational Decision Making
Stage 1: identify the problem or opportunity
Stage 2: think up alternative solutions
Stage 3: evaluate alternatives & select a solution
Stage 4: implement & evaluate the solution chosen
Limitations of the Rational Model
Complete Information, No Uncertainty
oYou should obtain complete, error-free information about all alternative courses
of action and the consequences that would follow from each choice
Logical, Unemotional Analysis
oHaving no prejudices or emotional blind spots, you are able to logically evaluate
the alternatives, ranking them from best to worst according to your personal
preferences
Best Decision for the Organization
oConfident of the best future course of action, you coolly choose the alternative
that you believe will most benefit the organization
Bounded Rationality (Herbert Simon)
Bounded Rationality
oSuggests that the ability of decision makers to be rational is limited by various
constraints:
Complexity : problems that need solving are often exceedingly complex
and beyond understanding
Time and Money: There is neither sufficient time nor money to gather all
of the needed information
Imperfect Information: Managers have imperfect, fragmented
information about options, their consequences, the risks, etc. from which
decisions must be made
Different Priorities: Some data are considered more important, so certain
facts are ignored
Conflicting Goals: Other managers, including colleagues, have conflicting
goals
Information Overload: There is often too much information for one
person to process
Satisficing Model
Satisficing Model
oManagers seek alternatives until they find one that is satisfactory (versus
optimal)
Intuition and Decision Making
Intuition
oMaking a choice without the use of conscious thought or logical inference
Traits Comprising Intuition
oExpertise: a person’s explicit and tacit knowledge about a person, situation,
object, or decision opportunity
oAutomated experience: the involuntary emotional response to those same
matters
Making Ethical Decisions
Ethics
oStandards of right and wrong that influence behavior
Ethics Officer
oSomeone trained about the matters of ethics in the workplace, particularly about
resolving ethical dilemmas
Ethical Decision Tree
Evidence-Based Management
Seven Implementation Principles
oTreat your organization as an unfinished prototype.
oDon’t brag, just use facts.
oSee yourself and your organization as outsiders do.
oEvidence-based management is not just for senior leaders.
oLike everything else, you still need to sell it.
oIf all else fails, slow the spread of bad practice.
oThe best diagnostic question: What happens when people fail?
Decision-Making Styles
Analytical
oLow value orientation, high tolerance for ambiguity
Conceptual
ohigh value orientation, high tolerance for ambiguity
Directive
oLow value orientation, low tolerance for ambiguity
Behavioral
oHigh value orientation, low tolerance for ambiguity
Lecture 2 – Decisiveness and Group Decision Making
Analytics and Evidence-Based Decisions
Business Analytics
oThe process of evaluating data related to business management and/or business
operations
Types of Data Organizations Analyze to Make Decisions
oFinancial (e.g. profit and loss, revenue, expenses, etc.)
oMarketing (e.g. impressions, segment penetration, etc.)
oLogistics (e.g. unit availability throughout supply chain, etc.)
oHuman Resources/People-Management Data
Staffing performance (e.g. time to fill, cost per hire, etc.)
Leadership performance (e.g. employee engagement, retention, etc.)
Training performance (e.g. post-training performance, training cost per
attendee, etc.)
Compensation management, employee relations, litigation, benefits
administration and management, etc.
Contemporary People-Management Analytics
Interviewing Recent Grads for Call Center Supervisor
oUniversally accepted measures such as resume, degree, and years of similar (or
industry) experience
oBehavioral assessment such as Predictive Index (et al.)
oDetermine common trends or demographic information from successful
incumbents in the role
Student organization leadership experience
Specific major or specific university
Employment during schooling
GPA
Specific past times during college
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oAirliners, manufacturing companies, technology firms, financial firms, and
advertising companies use the software today
Ineffective Responses to a Decision Situation
Relaxed Avoidance
oManager takes no action believing that no significant negative consequence will
result
Relaxed Change
oManager, understanding that something must be done, opts for the first available
option that involves low risk
Defensive Avoidance
oManager, unable to find a good solution, either procrastinates, openly allows
someone else to make the decision, or denies the risk of any negative
consequences
Panic
oManager frantically divests the problem because he/she cannot deal with the
situation
Effective Responses to a Decision Situation
Evaluate Importance
oDetermine how much priority to give the situation
Evaluate Credibility
oDetermine how believable the data is about the situation
oConsider the source of the information
Evaluate Urgency
oDetermine how quickly you must act on this information
oEvaluate the window of opportunity or the nature of the threat
Common Decision-Making Biases ( Heuristics )
Availability Bias
oManager uses information readily available from memory to make decisions
oManager likely to make a decision based solely on her/his experience versus
search for more information
Confirmation Bias
oSeeking information to support one’s point of view, discounting incongruous
information
Sunk-Cost Bias
oManager over-values the amount of time or money already spent on a project
oDead-end solution may be pursued because so much time has already been
invested in the solution
Framing Bias
oTendency of decision makers to be influenced by the way a situation is presented
to them
Group Decision Making
Advantages
oGreater pool of knowledge
oDifferent perspectives
oIntellectual stimulation
oBetter understanding of decision rationale
oDeeper commitment to the decision
Disadvantages
oGroupthink
oSatisficing
oGoal displacement
oA few people may dominate or intimidate
Groupthink
The Challenges of Groupthink
oWhen group members strive to agree for the sake of unanimity and thus avoid
accurately assessing the decision situation
oThe product of an overly cohesive group
oSymptoms of groupthink
Sense of invulnerability
Rationalization
Illusion of unanimity and peer pressure
“The wisdom of crowds”
Groups and Decision Making
Four Characteristics of Groups
oThey are less efficient
oTheir size effects decision quality
oThey may be too confident
oKnowledge Counts
Group Problem Solving Techniques
Four Approaches to Problem Solving
oStrive for consensus
oBrainstorming
oDelphi technique
oComputer-aided decision making
DECISIONS, DECISIONS VIDEO
“Life is one decision after another”
Jonah Leherer “choices as a tug of war” and “an exhausting battle between our gut
feelings and our reasoned thoughts”
oRational brain can only take in a few bits of information at any given moment
oWhen it comes to making a decision, “stop all the thinking, and just go for it”
oour emotional brain is much better at taking in lots of information
Elliot became pathologically indecisive
Our emotions are essential in the decision-making process
“Emotions are like a storm that destroys everything in its path” -Jennifer Lerner
Both happiness and anger make you under perceive risk, take more risks, both are
associated with a sense of certainty and control
oEx: seat belts: if you are too happy or too angry, you may forget to wear one
“ if you’re sad, you might spend too much at the mall”
Yogi Berra: “When you come to a fork in the road, take it”
Americans love choice more than anywhere else in the world – Sheena lynger
More choices isn’t always better
More choices may make an actual purchase less likely
“supermarket jam experiment”
oCustomers are attracted by having multiple choices, but tend to buy items when
there are less choices available
MODULE 8 – CULTURE, STRUCTURE, AND DESIGN
Lecture 1: Organizational Culture
Organizational Culture Defined
The set of shared, taken-for-granted implicit assumptions that a group holds and that
determines how it perceives, thinks about, and reacts to its various environments
“The personality of the organization”
Also called “corporate culture”
What Drives an Organizational Culture?
Founder’s values
Industry and business environment
National culture
Organization’s visions and strategies
Behavior of leaders
Companies Emphasizing Culture
Revenue: 166% NO, 682% YES
Work Force: 36% NO, 282% YES
Stock Price: 74% NO, 901% YES
Net Income: 1% NO, 756% YES
Understanding Culture
Level 1: Observable Artifact
oPhysical manifestations of culture
Level 2: Espoused Values
oExplicitly stated values and norms
Level 3 Basic Assumptions
oCore values of the organization
Competing Values Framework
Clan
oThrust: Collaborate
oMeans: Cohesion, participation, communication, empowerment
oEnds: Morale, people development, commitment
Adhocracy
oThrust: Create
oMeans: Adaptability, creativity, agility
oEnds: Innovation, growth, cutting-edge output
Hierarchy
oThrust: Control
oMeans: Capable processes, consistency, process control, measurement
oEnds: Efficiency, timeliness, smooth, functioning
Market
oThrust: Compete
oMeans: Customer focus, productivity, enhancing competitiveness
oEnds: Market share, profitability, goal achievement
Four Types of Organizational Culture
Clan Culture
oHas an internal focus
oValues flexibility rather than stability
oEncourages collaboration among employees
Adhocracy Culture
oHas an external focus
oValues flexibility
oAdaptable, creative and quick to respond to marketplace
Market Culture
oFocused on the external environment
oValues stability and control
oDriven by competition and a strong desire to deliver results
Hierarchy Culture
oHas an internal focus
oValues stability and control over flexibility
oFormalized, structured work environment
How Employees Learn Culture
Symbols: an object, an act, a quality, or an event that conveys meaning to others
Stories: narrative based on true events repeated-and sometimes embellished upon-to
emphasize a particular value
Heroes: person whose accomplishments embody the values of the organization
Rites and Rituals: activities and ceremonies that celebrate important occasions and
accomplishments
Organizational socialization: the process by which people learn the values, norms, and
required behaviors of an organization
Question
In the Mary Kay Cosmetics Co., the best salespeople receive pink Cadillacs in special
awards ceremonies. This is an example of
A. a symbol.
B. a value.
C. a rite or ritual.
D. both a symbol and a rite.
Changing Culture
Primary Anchoring Mechanisms
oWhat leaders pay attention to
oHow leaders react to critical incidents/crises
oCriteria by which leaders allocate scarce resources
oRole modeling, teaching, coaching by leaders
oCriteria by which leaders allocate rewards
oCriteria by which leaders recruit, select, promote, retire, and excommunicate
organizational members
Secondary Reinforcement Mechanisms
oOrganization design and structure
oOrganizational systems and procedures
oOrganizational rites and rituals
oDesign or physical space
oStories, legends and myths about people and events
oFormal statements of organizational philosophy, values and creeds
“leadership and culture are two sides of the same coin” – Edgar Schein
How to Stand Out in a New Job
Be aware of the power of first impressions
See how people behave by arriving early and staying late
Network with people and find out how the organization works
Ask for advice
Overdeliver
Ex: Zappo’s Wow Factor
Working at SAS
An ideal environment for new ideas
“if you treat employees as if they make a difference, they will make a difference
“satisfied employees create satisfied customers”
Company culture based on trust
CULTURE AT SAS VIDEO
Free M&M’s every Wednesday
Fitness center for the employees to go to during working hours
oAll free and designed to keep the SAS workforce happy
Britt, an employee of SAS since 1989
Mark, another employee, works a flexible schedule
SAS creates business software
oEncourages employees to get their work done in a 35-hour week
SAS has no dress code
“laidback is the unofficial posture here”
Onsite car detailing, putting green, and masseur
Jim Goodnight – CEO of SAS
o“What’s wrong with treating your people good?”
oWealthiest man in North Carolina
oSAS is privately held
“there is no trust anymore in public companies”
SAS has never had a losing year and has never laid off a single employee
SAS keeps turnover low with its employee perks
o9,000 employees
SAS has four Montessori daycare programs for the children of SAS employees
“the savings from perks like onsite healthcare far exceed the costs”
Culture is very accepting
Lecture 2: Organizational Structure and Design
Organizational Structure
A formal system of task and reporting relationships that coordinates and motivates an
organization’s members so that they can work together to achieve the organization’s
goals
Concerned with who reports to whom and who specializes in what work
Who reports to whom and who does what
The Three Types of Organizations
For-Profit Organizations
oFormed to make money, or profits, by offering products or services
Nonprofit Organizations
oFormed to offer services to some clients, not to make a profit
oExample: hospitals, colleges
Mutual-Benefit Organizations
oVoluntary collectives whose purpose is to advance members’ interests
oExamples: unions, trade associations
Common Elements of Organizations
Four main elements proposed by Edgar Schein:
oCommon Purpose
Gives everyone an understanding of the organization’s reason for being
oCoordinated Effort
The coordination of individual effort into group-wide effort
oDivision of Labor
Having discrete parts of a task done by different people
oHierarchy of Authority
Making sure the right people do the right things at the right time (unity of
command)
Three additional authorities”
oSpan of Control
The number of people reporting directly to a given manager; narrow or
wide
oAuthority
Accountability, responsibility, and delegation; line vs. staff positions
oCentralized vs. Decentralized Authority
Who makes decisions; upper management or middle
The Organization Chart
Line Positions and Staff Positions
Organizational Design
The process of creating, selecting, or changing the structure of an organization
Types of Organizational Structures:
oSimple
oFunctional
oDivisional (product, customer, geographic)
oMatrix
oHorizontal (aka team based)
oHollow (aka network)
oModular
oVirtual
Basic Types of Organizational Structures
Simple Structure
oAuthority is centralized in a single person with few rules and low work
specialization
oOwner Administrative Assistant
oMore than 80% of employing organizations have fewer than 19 employees
oFlat hierarchy
Functional Structure
oPeople with similar occupational specialties (functions) are put together in formal
groups
Divisional Structure
oPeople with diverse occupational specialties are put together in informal groups
by similar products, customers, or geographic regions.
Matrix Structure
oCombines functional and divisional chains of command in a grid so that there are
two command structures-vertical and horizontal
Horizontal Design
oTeams or workgroups, either temporary or permanent, are used to improve
collaboration and work on shared tasks by breaking down internal boundaries
Hollow Structure
oThe organization has a central core of key functions and outsources other
functions to vendors who can do them cheaper or faster
Modular Structure
oFirm assembles product chunks, or modules, provided by outside contractors
Virtual Organization
oOrganization whose members are geographically distant, usually working via e-
mail, collaborative computing, and other computer connections
Virtual Structure
oCompany outside a company that is created “specifically to respond to an
exceptional market opportunity” that is often temporary
Question
XYZ Hospital has a chief of medical services, a director of administrative services, and a
director of outpatient services. XYZ has a ___________ structure.
1. functional
2. simple
3. divisional
4. matrix
Factors in Creating the Best Structure
Contingency Design
oThe process of fitting the organization to its environment
oThree factors to consider:
1. Environment: mechanistic versus organic
2. Environment: differentiation versus integration
3. Link between strategy, culture, and structure
Mechanistic vs. Organic Organizations
Mechanistic Organizations
oCentralized hierarchy of authority
oMany rules and procedures
oSpecialized tasks
oFormalized communication
oFew teams or task forces
oNarrow span of control, taller structures
Organic Organizations
oDecentralized hierarchy of authority
oFew rules and procedures
oShared tasks
oInformal communication
oMany teams or task forces
oWider span of control, flatter structures
Differentiation vs. Integration
Differentiation
oTendency of the parts of an organization to disperse and fragment
Integration
oTendency of the parts of an organization to draw together to achieve a common
purpose
Link Between Strategy, Culture, and Structure
Aligning strategy, culture, and structure
oOrganizational culture and organizational structure should be aligned with its
vision and strategies.
oIf managers change the strategy of the organization, they need to change the
culture and structure to support it.
oSimilarly, as companies grow, the culture and structure need to grow with it.
MODULE 9 – HUMAN RESOURCE MANAGEMENT
Lecture 1 – Strategic Human Resource Management
Strategic Human Resource Management
Human Resource (HR) Management
oConsists of the activities managers perform to plan for, attract, develop, and
retain an effective workforce
oHR professionals are key business partners for the organization’s other leaders as
those leaders maintain their teams and grow the organization
oFortune 50 companies credit a significant part of the competitive advantage to
strategic HR initiatives
Human Capital
oEconomic or productive potential of employee knowledge, experience, and
actions
Knowledge Worker
oSomeone whose occupation is principally concerned with generating or
interpreting information as opposed to manual labor
Social Capital
oEconomic or productive potential of strong, trusting, and cooperative
relationships
HR Functions for Managers
Recruiting
Training & Development
Risk Management & Safety
Labor Relations
Employee Relations
Goals for HR Managers
Establish the mission & the vision
Establish the grand strategy
Formulate the strategic plans
Plan human resources needed
Recruit & select people
Orient, train & develop
Perform appraisals of people
oProf Knott’s Furniture Warehouse
Promote Internally, Hire Externally
Match for Current Culture, Evolve Our Sales Culture
Market Wages & Benefits, Above or Below Market
Purpose: get optimal work performance to help realize company’s mission & vision
Evaluating Current Employees’ Roles
Job Analysis
oTo determine, by observation and analysis, the basic elements of a particular job
Job Description
oA summary of the essential functions of the position—what the job holder does,
why, and how
oThe product of a job analysis
Job Specification
oA description of the minimum qualifications a person must have to perform the
job successfully
oOften called “Minimum Qualifications”
THE GOOGLE LIFE VIDEO
Google runs a fleet of free buses equip with free wireless internet for over 1,000 of its
employees that takes them to and from work every day
Google also offers free breakfast for its employees in the Google café
“it keeps employees focused on the tasks they need to get done”
this may be the key to Google’s success
Google’s 8,000 employees that work at its Silicon Valley HQ eat for free every day in any
one of its 19 different cafes
Google has a ton of employee perks
oFree Fitness center
oCompany subsidized massages
oPlaces to rest
oWorkout pools
oLaundry machines + free eco-friendly detergent
“make an environment that’s efficient for people”
Google gave a woman 8 months of fully paid maternity leave
Google has subsidized daycare programs
“social engineering perspective”
Google listens to the opinions of its employees
Lecture 2 – Talent Acquisition and Talent Management
Recruiting
The process of locating and attracting qualified applicants for jobs open in the
organization
Types of Recruiting
Internal Recruiting
oMaking people already employed by the organization aware of the job opening(s)
oCandidates are solicited using formal job postings
LinkedIn
Organization’s career page
Online job boards, etc.
External Recruiting
oAttracting qualified applicants from outside of the organization
Internal Recruiting
Advantages
oEmployees tend to be inspired to greater effort and loyalty. Morale is enhanced
because they realize that working hard and staying put can result in more
opportunities.
oThe whole process of advertising, interviewing, and so on is cheaper.
oThere are fewer risks. Internal candidates are already known and are familiar
with the organization.
Disadvantages
oInternal recruitment restricts the competition for positions and limits the pool of
fresh talent and fresh viewpoints.
oIt may encourage employees to assume that longevity and seniority will
automatically result in promotion.
oWhenever a job is filled, it creates a vacancy elsewhere in the organization.
External Recruiting
Advantages
oApplicants may have specialized knowledge and experience
oApplicants may have fresh viewpoints
Disadvantages
oThe recruitment process is more expensive and takes longer
oThe risks are higher because the persons hired are less well known
Selection Process: Overview
Selection Process
oScreening of applicants to hire the best candidate
Three Key Aspects of the Selection Process
oBackground information
Application, resume, references
LinkedIn and even social media
oInterviewing
Unstructured Interview
“…Involves asking probing questions to find out what the
applicant is like.”
Conducted as an ordinary conversation
Interviewer ensures particular topics/items are discussed, but the
conversation is loose (unstructured)
Typical of higher-level leaders
Structured Interview
Involves asking each applicant the same questions and comparing
their responses to a standardized set of answers
Usually required of managers and supervisors
Tend to side-step legal concerns because each question has been
carefully planned and considered
Structured behavior interviews tend to yield the best results
Behavioral-Description Interview
Also called a “behavioral” interview
Requires the candidate to tell a specific time when the question
applied to her/him
Strongest predictive value comes from behavioral interviews
Situational Interview
Interviewer focused on hypothetical situations
Weaker predictive value vs. behavioral
oEmployment tests
“...Legally considered to consist of any procedure used in the employment
selection decision process, even application forms, interviews, and
educational requirements”
Ability Tests
Measures physical abilities, strength, etc.
Can only be administered if the position requires specific, atypical
physical abilities
Assessment Center
Management candidates participate in activities for a few days
while being assessed
Off-site, completely structured
Internal candidates are the focus
Personality Tests
Behavioral assessments that identify the behavioral traits of
successful incumbents and assess those same traits in candidates
Valid and reliable assessments can lawfully be used to aid in
screening candidates
Validity and Reliability
Validity
oThe test measures what it purports to measure and is free of bias
Reliability
oThe degree to which a test measures the same thing consistently
oAn individual’s score should remain relatively the same over time
Compensation
Three Parts to Compensation
oWages & Salaries
oIncentives
oBenefits
Training & Development
Onboarding
Performance Management
Performance Appraisals
Positioning New Employees for Success
Onboarding
oHelps employees integrate and transition to new jobs by familiarizing them with
company policies, procedures, cultures, and politics by clarifying work-role
expectations and responsibilities
oCommonly lasts between 30 and 90 days
Ensuring Employees Can Perform
Orientation
oHelping the new hire fit smoothly into the job and the organization
oTypically a presentation in a class format where new hires learn about the
organization and meet each other
Training
oEducating technical and operational employees in how to better do their current
jobs
oSuccess should be tied to measurable results
Development
oEducating professionals and managers in the skills they need to do their jobs in
the future
oOften used to help employees progress into positions of greater responsibility
Micro-Learning
oSegments learning into bite-size content, enabling a student to master one piece
of learning before advancing to anything else
Performance Management Cycle
Performance Management
oA set of processes and managerial behaviors that involve defining, monitoring,
measuring, evaluating, and providing consequences for performance
expectations
oStep 1: Define Performance
Set goals and communicate performance expectations
oStep 2: Monitor & Evaluate Performance
Measure and evaluate progress and outcomes
oStep 3: Review Performance
Deliver feedback and coaching
oStep 4: Provide Consequences
Administer valued rewards and appropriate punishment
Performance Appraisals: Meaningful?
Performance Appraisal (or Performance Review)
oConsists of assessing an employee’s performance and then providing the
employee with feedback
oThe longer the period between performance discussions, the less the impact of
the performance appraisal process
Objective and Subjective Performance Appraisals
Objective Appraisals
oBased on facts, often numerical
oMeasures tangible aspects of performance (i.e. units sold per week versus the
goal, customer satisfaction scores, etc.)
oMore defensible if employee disagrees with the assessment, but frequently tells
an incomplete picture of overall performance
Objective appraisals tend to omit the behavioral components that
supplement performance (i.e. whether the employee demonstrates
integrity, is a good team member, is friendly with co-workers, is someone
others enjoy working with, etc.)
Subjective Appraisals
oBased on manager’s perceptions of an employee’s traits and behaviors
oFrequently utilizes a behaviorally-anchored rating scale, rating the employee
gradations in performance according to scales of specific behaviors
Several Types of Performance Assessments
360-Degree Assessment
oEmployees are appraised not only by their managerial superiors but also by
peers, subordinates, and sometimes clients/customers
oCan become difficult to manage in larger organizations; survey fatigue among
employees
oTypically a healthy mixture of objective and subjective feedback
Forced Ranking Performance Reviews
oAll employees within a business unit are ranked against one another and grades
are distributed along some sort of a bell curve
Formal vs. Informal Appraisals
Formal Appraisal
oConducted on an unscheduled basis and consist of less rigorous indications of
employee performance
Informal Appraisal
oConducted on an unscheduled basis and consist of less rigorous indications of
employee performance
Lecture 3 – Employment Law and Labor Relations
Labor Relations & Employee Relations
Employee Transitions
Employment Law
Union Management
Types of Transitions
Employee Movement
oPromotion
oDemotion
oTransfer (internally)
oLayoff
oDownsizing
oFiring
oResignation
Types of Dismissals
Layoff
oEmployees are dismissed—likely due to a lack of work or other economic factors
—but may be recalled at a later date
Downsizing
oAlso called a reduction in force (or RIF)
oEmployees are dismissed due to workload or other economic factors but will not
be recalled
Firing
oTypically called a termination or separation
oEmployee is involuntarily exited from the organization for poor performance,
misconduct, or attendance (i.e. for cause)
Resignation
oEmployee resigns—a voluntary separation of employment
Exit Interviews vs. Stay Interviews
Exit Interviews
oFormal conversation between a manager and a resigning employee to find out
why she/he is leaving and to learn about potential problems within the
organization
oDepending on the situation, HR may perform these
Stay Interviews
oFormal conversation between a manager, the manager’s leader, or HR and the
team to discover what employees think about management, benefits, working
conditions, etc.
Severance Agreements
Severance May be Offered to Departing Employees
oContract between the exiting employee and the organization where the terms of
the separation (along with other conditions) are formalized
oTypically includes a monetary incentive for the employee
oMay include a non-disparagement agreement
Contract between two parties that prohibits one party from criticizing the
other
Often used to prohibit former employees from criticizing their former
employers
More and more difficult to enforce
Highlights of Federal Employment Laws
1963 - Equal Pay Act
oRequires men and women be paid equally for performing equal work
1964 (amended 1972) - Civil Rights Act, Title VII
oProhibits discrimination on basis of race, color, religion, national origin, or sex
1967 (amended 1978 and 1986) - Age Discrimination in Employment Act (ADEA)
oProhibits discrimination in employees over 40 years old; restricts mandatory
retirement
1970 - Occupational Safety & Health Act (OSHA)
oEstablishes minimum health and safety standards in organizations
1974 - Employee Retirement Income Security Act (ERISA)
oSets rules for managing pension plans; provides federal insurance to cover
bankrupt plans
1985 – Consolidated Omnibus Budget Reconciliation Act(COBRA)
oRequires an extension of health insurance benefits after termination
1990 - Americans with Disabilities Act (ADA)
oProhibits discrimination against essentially qualified employees with physical or
mental disabilities or chronic illness; requires “reasonable accommodation” be
provided so they can perform duties
1991 - Civil Rights Act
oAmends and clarifies Title VII, ADA, and other laws; permits suits against
employers for punitive damages in cases of intentional discrimination
1993 - Family & Medical Leave Act
oRequires employers to provide 12 weeks of unpaid leave for medical and family
reasons, including for childbirth, adoption, or family emergency
1996 - Health Insurance Portability &Accountability Act (HIPPA)
oAllows employees to switch health insurance plans when changing jobs and
receive new coverage regardless of preexisting health conditions; prohibits group
plans from dropping ill employees
2007 - Fair Minimum Wage Act
oIncreased federal minimum wage to $7.25per hour on July 24, 2009
2010 - Patient Protection & Affordable Care Act
oEmployers with more than50 employees must provide health insurance
Equal Employment Opportunity
Equal Employment Opportunity Commission (EEOC)
oEnforces anti-discrimination (including anti-harassment) and other employment-
related laws
oCreated by Title VII of the Civil Rights Act
Classes Protected by the Commission
oAge
oDisability
oGenetic information
oNational origin
oSex (including pregnancy and sexual orientation)
oRace
oColor
oReligion
oThose who complain about alleged misconduct
Discrimination and Harassment
Workplace Discrimination
oOccurs when employees are hired or promoted—or denied hiring or promotion
—for reasons not relevant to the job
Adverse Impact
oWhen an organization uses an employment practice or procedure that results in
unfavorable outcomes to a protected class over another group of people
oEmployment practice or procedure is typically facially neutral
Disparate Treatment
oWhen employees from protected groups are intentionally treated differently
(typically unfavorably)
Affirmative Action
oFocuses on achieving equality of opportunity within an organization
oTypically required for government entities and federal contractors
oRequires targeted, deliberate recruiting and promotion efforts
Unlawful Harassment
oUnwelcome conduct that is based on an employee’s protected characteristic that
has either become a condition of employment, or is severe and pervasive
Hostile work environment
Sexual Harassment
oUnwanted sexual attention that creates an adverse or hostile work environment
Can be hostile work environment or quid pro quo sexual harassment
Bullying
Bullying Becoming a Greater Focus in U.S. Workplaces
oRepeated mistreatment of one or more persons by one or more perpetrators
oAbusive physical, psychological, verbal, or nonverbal behavior that is threatening,
humiliating, or intimidating
Labor-Management Issues (Labor Relations)
Labor Unions
oOrganizations of employees formed with the intention of protecting and
advancing the employees’ mutual interest by bargaining with management over
job-related issues
Types of Labor Unions:
oClosed Shop
Employer may hire only workers for a job who are already in the union
Illegal
oUnion Shop
Workers aren’t required to be union members when hired for a job but
must join the union within a specified time
Not allowed in right-to-work states
oAgency Shop
Workers must pay equivalent of union dues, but aren’t required to join
the union
Applies to public-sector teachers in some states, prohibited in others
oOpen Shop
Workers may choose to join or not join a union
Applies in right-to-work states
MODULE 10 – ORGANIZATIONAL CHANGE AND IMPACT
Lecture 1 – Organizational Change
The Nature of Change in Organizations
What will you be called on to deal with?
1. The marketplace is becoming more segmented; more niche products
2. More competitors offering targeted products, requiring faster speed-to-market
3. Some traditional companies may not survive radically innovative change: disruptive
innovation
4. China, India, and other offshore suppliers are changing the way we work
5. Knowledge, not innovation, is becoming the new competitive advantage
Organizational Change
“Any alteration of people, technology, structure, or strategy”
70% of Change Efforts FAIL
Forces for Change
Outside Forces
oDemographic Characteristics
Age
Education
Skill Level
Gender
Immigration
oTechnological Advancements
Manufacturing automation
Information technology
oShareholder, customer, & market changes
Changing customer preferences
Domestic & international competition
Mergers & acquisitions
oSocial & political pressures
War
Values
Leadership
Inside Forces
oHuman resources concerns
Unmet needs
Job dissatisfaction
Absenteeism & turnover
Productivity
Participation/suggestions
oManagers’ behavior
Conflict
Leadership
Rewards Systems
Structural reorganization
Question
Tony, the owner of Cirodi Pasta restaurant on Cape Cod is open during the “high season”
from May until October. He has always hired college students on summer vacation. In
recent years, the number of workers who quit mid-summer has risen significantly. When
he asks, they say they are quitting because they “have enough money” or “want the
time off”. This is probably an example of a(n) ________change.
A. market
B. social or political
C. economic
D. technological
Two Types of Change
Reactive Change
oMaking changes in response to problems or opportunities as they arise
Proactive (or planned) Change
oInvolves making carefully thought-out changes in anticipation of possible or
expected problems or opportunities
Lewin’s Change Model
(1) Unfreezing
oCreate the motivation to change
(2) Changing
oNew information, models, & Procedures
(3) Refreezing
oSupport & reinforce the change
A System’s Approach To Change
Graph
Change Failure
Resistance to Change
oAn emotional /behavioral response to real or imagined threats to an established
work routine
Reasons Employees Resist Change
Individual’s predisposition toward change
Surprise and fear of the unknown
Climate of mistrust
Fear of failure
Loss of status or job security
Peer pressure
Disruption of cultural traditions or group relationships
Personality conflicts
Lack of tact or poor timing
Non-reinforcing reward system
Types and Models of Change
Three Types of Change
oLeast threatening: Adaptive Change
Reintroduction of a familiar practice
oSomewhat threatening: Innovative Change
Introduction of a practice that is new to the organization
oVery threatening: Radically innovative change
Involves introducing a practice that is new to the industry
Question
At the Big Peaches Department Store, employees generally know that during annual
inventory they are required to work overnight shifts. This is an example of a(n)
__________ change.
A. adaptive
B. reactive
C. innovative
D. proactive
Steps in Leading Organizational Change
1. Establish a sense of urgency
a. Unfreeze the organization by creating a compelling reason for why change is
needed.
2. Create the guiding coalition
a. Create a cross-functional, cross-level group of people with enough power to lead
the change
3. Develop a vison and a strategy
a. Create a vision and a strategic plan to guide the change process
4. Communicate the change vision
a. Create and implement a communication strategy that consistently communicates
the new vision and strategic plan
5. Empower broad-based action
a. Eliminate barriers to change and use target elements of change to transform the
organization. Encourage risk taking and creative problem solving
6. Generate short-term wins
a. Plan for and create short-term “wins” or improvements. Recognize and reward
people who contribute to the wins.
7. Consolidate gains and produce more change
a. The guiding coalition uses credibility from short-term wins to create more
change. Additional people are brought into the change process as change
cascades throughout the organization. Attempts are made to reinvigorate the
change process
8. Anchor new approaches in the culture
a. Reinforce the changes by highlighting connections between new behaviors and
processes and organizational success. Develop methods to ensure leadership
development and succession.
Organizational Development
Organization Development (OD)
oSet of techniques for implementing planned change to make people and
organizations more effective
Change Agent
oA consultant with a background in behavioral sciences who can be a catalyst in
helping organizations deal with old problems in new ways
What Can OD Be Used For?
1. Managing conflict: An OD expert or “executive coach” can help advise on how to
improve relationships within the organization.
2. Revitalizing organizations: OD experts can help by opening communication, fostering
innovation, and dealing with stress.
3. Adapting to mergers: OD experts can help integrate two firms with varying cultures,
products, and procedures.
How OD Works
1. Diagnosis
a. What is the problem?
2. Intervention
a. What shall we do about it?
3. Evaluation
a. How well has the intervention worked?
4. Feedback
a. How can the diagnosis be further refined?
“Prescription without diagnosis is malpractice.”
The Effectiveness of OD
1. Success tends to include multiple interventions.
2. It is more likely to succeed with management support.
3. It has more success when oriented to achieve both short and long-term results
4. OD is affected by cross-cultural considerations
ORGANIZATIONAL CHANGE AND EFFECTIVENESS AT FORD VIDEO
Ford is a car company confident enough of its survival and avoided bankruptcy
Alan Mulally (Ford CEO since 2006)
oIn 2006, Ford lost $12.6 billion
oHe restructured boeing aircrafts after 9/11
oBill Ford stepped down as CEO and continued to stay with the company, but then
Alan Mulally took his place as CEO
Ford recognized their problems earlier and jumped on them earlier
Ford borrowed $23 ½ billion that gave them a 3 year head start on its Detroit rivals
Norfolk, Edison, Lorain, Wayne assembly plants had been shut down
Union took over retiree healthcare
Ford’s labor costs were $70-80/hour per worker, now they’re down to almost $50/hour
Ford’s pick-up trucks are their most popular cars
ONE FORD plan for turning the company around
Ford is still losing money, but less than before
Lecture 2 – Organizational Innovation
Promoting Innovation
Invention
oCreating or making up something new
Creativity
oDeveloping new and imaginative ideas into reality
Innovation
oThe activity of creating new ideas and converting them into useful applications—
specifically, new goods and services
Two Myths about Innovation
Myth #1: Innovation happens in a “Eureka!” moment
oMost innovation is the product of hard work and dedication
Myth #2: Innovation can be systematized
oThere is no standardized process to achieve success
oThough success is unpredictable, cultural conditions can increase the likelihood
of success
Six Seeds of Innovation
1. Hard work in a specific direction
2. Hard work with direction change
3. Wealth and money
4. Curiosity
5. Necessity
6. Combination of seeds
Types of Innovation
Product Innovation
oChange in the appearance or performance of a product or the creation of a new
one
Process Innovation
oChange in the way a product is conceived, manufactured, or disseminated
Core Innovations
oThe optimizing of products or services for existing customers
Transformational Innovations
oThe invention of breakthrough products or services and that are aimed at
creating brand new markets and customers
Question
Wendy's created display screens at its drive-through windows that show customers their
orders and prices. This is an example of a(n) _________ innovation.
A. product
B. process
C. adaptive
D. reactive
How Does Failure Impede Innovation
“You learn more from failure than you do from success.”
Factors that reduce an organization’s ability to learn from failure:
oPlay the “blame game” blaming an individual when failures are due to internal or
external matters
oSuffer “self-serving bias”—perceiving yourself as overly favorable
oDon’t recognize that failures are not created equal; some may be preventable,
some uncontrollable
oBe afraid to discuss failures and take risks; the company isn’t a learning
organization
Okay with risk-taking
oAre reluctant to experiment
How Companies Foster Innovation
Create an innovation strategy
Get commitment from top managers
Foster an innovation culture and climate
Establish the required structure and processes
Obtain the necessary human capital
Institute the necessary human resources policies, practices, and procedures
Obtain the appropriate resources
Innovation in Organizations
“Learning and innovation go hand in hand. The arrogance of success is to think that
what you did yesterday will be sufficient for tomorrow.” – William Pollard
MGT300 – EMPLOYMENT RELATIONSHIP ASSESSMENT
Challenge #7 “Managing for your own happiness & life goals
What do you really want?
