I need help with my assignment in Management curse

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Chapter 21Part

The Evolution of Management Thinking

Are You a New-Style or an Old-Style Manager? The Historical Struggle

The Things of Production Versus the Humanity of Production

Is Social Business the Answer? Classical Perspective

Scientific Management Bureaucratic Organizations Administrative Principles

Humanistic Perspective Early Advocates Human Relations Movement

New Manager Self-Test: Evolution of Style

Human Resources Perspective Behavioral Sciences Approach

Management Science Recent Historical Trends

Systems Thinking Contingency View

Innovative Management Thinking Into the Future

Contemporary Management Tools Managing the Technology-Driven

Workplace Managing the People-Driven Workplace

After studying this chapter, you should be able to:

1. Summarize how historical forces influence the practice of management.

2. Explain how social business is bridging the historical struggle between managing the “things of production” and the “humanity of production.”

3. Describe the major components of the classical and humanistic management perspectives.

4. Discuss the management science approach and its current use in organizations.

5. Explain the major concepts of systems thinking and the contingency view.

6. Provide examples of contemporary management tools and explain why these trends change over time.

7. Describe the management changes brought about by a technology- driven workplace, including the role of big data analytics and supply chain management.

8. Explain how organizations are implementing the ideas of bossless workplaces and employee engagement to facilitate a people-driven workplace.

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Mostly True Mostly False

1. Supervise my subordinates closely to get better work from them. __________ __________

2. Set the goals and objectives for my subordinates and sell them on the merits of my plans.

__________ __________

3. Set up controls to ensure that my subordinates are getting the job done. __________ __________

4. Make sure that my subordinates’ work is planned out for them. __________ __________

5. Check with my subordinates daily to see if they need any help. __________ __________

6. Step in as soon as reports indicate that progress on a job is slipping. __________ __________

7. Push my people if necessary in order to meet schedules. __________ __________

8. Have frequent meetings to learn from others what is going on. __________ __________

Are You a New-Style or an Old-Style Manager?1 InstructIons: The following are various behaviors in which a manager may engage when relating to subordinates.

Read each statement carefully and rate each one Mostly True or Mostly False, to reflect the extent to which you would use that behavior.

scorIng And InterpretAtIon: Add the total number of “Mostly True” answers and mark your score on the scale below. Theory X tends to be “old-style” management and Theory Y “new-style” because the styles are based on different assumptions about people. To learn more about these assumptions, you can refer to Exhibit 2.4 later in this chapter and review the assumptions related to Theory X and Theory Y. Strong Theory X assumptions are typically considered inappropriate for today’s workplace. Where do you fit on the X-Y scale? Does your score reflect your perception of yourself as a current or future manager?

X-Y Scale Theory X 10 5 0 Theory Y

W hen members of Sonya Green’s customer support team at Git-Hub, a collabo-ration software company in San Francisco, want to change a procedure, they just do it. No need to check with Green, who is ostensibly a team leader. Green is what Git-Hub refers to as a “primarily responsible person (PRP).” The company avoids the term manager because top executives here expect and assume that people can manage themselves.2 It is an extreme Theory Y approach being adopted by a number of companies that are embracing the trend toward less-hierarchical, even bossless, organizations (Theory Y will be explained in detail later in the chapter). At least 18 organizations around the world, including French automotive components manufacturer FAVI, tomato processor Morning Star, based in Woodland, California, and Spain’s diversified Mondragon Corpo- ration, are operated as primarily bossless workplaces.3 Although some management and human resource (HR) professionals and scholars question whether the bossless trend will last for long,4 it is interesting to note that some of these companies have been operating without traditional bosses for decades. When Jean-François Zobrist took over as CEO of FAVI in 1983, he eliminated two things: the personnel department and the bosses. “I have no idea what people are doing,” Zobrist told Fast Company magazine. He believes that since

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the people on the front lines are the ones with the expertise to do the work, they are capable of working without someone looking over their shoulders.5

Some organizations will continue to operate with little or no hierarchy, and others will move toward a more hierarchical structure. Managers are always on the lookout for fresh ideas, innovative management approaches, and new tools and techniques. Management philosophies and organizational forms change over time to meet new needs and respond to current challenges. The workplace of today is different from what it was 50 years ago— indeed, from what it was even 10 years ago—yet historical concepts form the backbone of

management education.6 In addition, some management practices that seem modern have actually been around for a long time. Techniques can gain and lose popularity because of shifting historical forces and the persistent need to balance human needs with the needs of production activities.7

This chapter provides a historical overview of the ideas, theories, and manage- ment philosophies that have contributed to making the workplace what it is today. The final section of the chapter looks at some recent trends and current approaches that build on this foundation of management understanding. This foundation illus- trates that the value of studying management lies not in learning current facts and research, but in developing a perspective that will facilitate the broad, long-term view needed for management success.

The Historical Struggle Studying history doesn’t mean merely arranging events in chronological order; it means developing an understanding of the impact of societal forces on organizations. Studying history is a way to achieve strategic thinking, see the big picture, and improve conceptual skills. Social, political, and economic forces in the broader society influence organizations and the practice of management over time.8 Social forces refer to those aspects of a cul- ture that guide and influence relationships among people. What do people value? What are the standards of behavior among people? These forces shape what is known as the social contract, which refers to the unwritten, common rules and perceptions about rela- tionships among people and between employees and management. Political forces refer to

Go to the “Small Group Breakout” on page 65, which pertains to how historical events and forces shape the lives of individuals.

Green Power Drop Back and Punt

Glenn Rink’s innovative product—popcornlike sponges for absorbing oil spills—received a cool re- ception in the 1990s. Corporate skeptics said that traditional skimming of oil off water remained the preferred choice for disaster cleanup. Blocked by resistance to his product, Rink, founder of Abtech Industries, followed the historic and time-honored tradition of football teams, which sometimes need to drop back and punt before they can go on of- fense again.

Rink decided to focus on smaller-scale disasters instead. For more than a decade, Abtech Industries

built a reputation for offering low-cost alternatives to address the cleanup needs of cities struggling with a variety of water pollution problems. The strategy paid off. In 2011, a revitalized Abtech, maker of the Smart Sponge Plus, partnered with the huge company Waste Management Inc. as the exclusive North American distributor to cities, and oil cleanup orders began pouring in. To date, Smart Sponge Plus has been used in more than 15,000 spill locations worldwide.

Source: “Innovation #71: Glenn Rink, Founder of Abtech Industries,” Fast Company (June 2012): 136 (part of “The 100 Most Creative People in Business 2012,” pp. 78–156).

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the influence of political and legal institutions on people and organizations. Some manag- ers expect increasing government regulation in the coming years, for example, which will strongly affect organizations.9 Economic forces pertain to the availability, production, and distribution of resources in a society. Governments, military agencies, churches, schools, and business organizations in every society need resources to achieve their goals, and eco- nomic forces influence the allocation of scarce resources.

Management practices and perspectives vary in response to social, political, and eco- nomic forces in the larger society. Exhibit 2.1 illustrates the evolution of significant man- agement perspectives over time. The timeline reflects the dominant time period for each approach, but elements of each are still used in today’s organizations.10

The Things of ProducTion Versus The humaniTy of ProducTion One observation from looking at the timeline in Exhibit 2.1 is that there has long been a struggle within management to balance “the things of production” and “the humanity of production.”11 When forces either outside or within the organization suggest a need for change to improve efficiency or effectiveness, managers have often responded with a technology or numbers-oriented solution that would make people little more than a cog in a big machine. For instance, as the United States shifted from a world of small towns and small businesses to an industrialized network of cities and factories in the late nineteenth century, people began looking at management as a set of scientific practices that could be measured, studied, and improved with machinelike precision (the classical perspective). Frederick Taylor wrote that “the best management is a true science, resting upon clearly defined laws, rules, and principles.” By the 1920s, there was a minor rebellion against this emphasis on the quantifiable with a call for more attention to human and social needs (the humanistic perspective). In the first issue of the Harvard Business Review (1922), Dean Wallace B. Donham wrote that the “development, strengthening, and multiplication

1870

Classical Perspective

Humanistic Perspective

Management Science Perspective

Systems Thinking

Contingency View

Total Quality Management

The Technology-Driven Workplace (Big Data)

Social Business (Social Media)

The People-Driven Workplace (Bossless)

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Exhibit 2.1 Management Perspectives Over Time

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Hot topIc

of socially-minded business men is the central problem of business.”12 This dilemma—the scientific numbers-driven push for greater productivity and profitability and the call for more humanistic, people-oriented management—has continued to the present day.

is social Business The answer? Social business, which refers to using social media tech- nologies for interacting with and facilitating communication and collaboration among employees, customers, and other stakeholders, is one current answer to the historical struggle. Social media programs include company online com- munity pages, wikis for virtual collaboration, social media sites  such as Facebook or LinkedIn, video channels such as YouTube, microblogging platforms such as Twitter, and company online forums.

For the first time, a new technology (thing of production) adds directly to the humanity of production. Social media technology can improve efficiency, increase productivity, and facilitate faster and smoother operations by improving communication and collaboration within and across firms.13

Social media can also improve the human aspect of organizations by facilitating communication, collaboration, and knowledge sharing to tap into employee capabilities and create a competitive advantage.

In addition, social media technology is being used by com- panies to build trusting relationships with customers.14 An early leader in this realm was Morgan Stanley Wealth Management. As director of digital strategy, Lauren Boyman worked closely with the company’s sales manager and investment advisors to use Twitter and other social media for communicating with clients.15 Dell launched a social media command room to monitor what is being said about the company on social media platforms.16 Managers in other companies set up alerts on Google or Bing that let them know when something has been said on social media about them, their company, their products, and so forth.17

Just as important, social media can build stronger, more authen- tic relationships between managers and employees. Mark Reuss left General Motors (GM) in Australia to run GM’s operations in North America just after the company filed for bankruptcy in 2009 and was implementing plans to eliminate more than 2,000 U.S. dealer- ships. Reuss chose to communicate with the dealer network through a “get to know you” messaging part of Facebook rather than through e-mails or other corporate communications. The strategy helped

build trust and credibility because Reuss made himself accessible and was willing to engage others authentically. “No matter what happened,” Reuss said, “they knew that I was listen- ing and that they had . . . someone to talk to in the company and they could do it instantly. And if you look at how we got through that period and the dealers that we have and the trust that I have built . . . it’s because of that conversation on Facebook.”18 Other managers are also finding social media a great way to quickly build trust and credibility. Shortly after arriving as the new CEO of MassMutual, Roger Crandall attended the company’s biggest sales conference and was asked by an employee with a Flip cam if she could record him at

“Social media is no longer the wave of the future. It is already a state-of-the- art leadership tool that surpasses many traditional approaches to listening and communicating with stakeholders.”

—LeSLie GaineS-RoSS, CHief RePutation

StRateGiSt at WeBeR SHandWiCk and

autHoR of CEO Capital: a GuidE tO BuildinG

CEO REputatiOn and COmpany SuCCESS

Social media initiatives, such as setting up a Facebook page or Twitter account, have become commonplace among businesses large and small. However, all businesses need to keep track of how these steps are affecting the business. Some results—such as customer sentiment and goodwill—are hard to measure, while other results—such as an increase in sales following a particular social media advertising campaign—can be used to quantify the financial gains realized from social media initiatives.

Concept Connection

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the conference and post the video on the company intranet’s community page. “A Week in the Life” was available for the whole company to watch in real time, and “was a great way to create a personal connection,” Crandall said.19 Some managers have begun incorporating video streams into their blogs because they allow them to engage with people in real time on a highly personal level.20

Social business is one of the most recent approaches in the evolution of management thinking and practice, as shown in Exhibit 2.1. In the following sections, we describe some of the other major management perspectives listed in the exhibit that reflect the historical struggle.

• Managers are always on the lookout for new techniques and approaches to meet shifting organizational needs.

• Looking at history gives managers a broader perspective for interpreting and responding to current opportunities and problems.

• Management and organizations are shaped by forces in the larger society.

• Social forces are aspects of a society that guide and influence relationships among people, such as their values, needs, and standards of behavior.

• Political forces relate to the influence of political and legal institutions on people and organizations.

• The increased role of government in business is one example of a political force.

• Economic forces affect the availability, production, and distribution of a society’s resources.

• The struggle to balance “the things of production” with the “humanity of production” has continued from the 19th century to today.

• Social business, which refers to using social media technologies for interacting with and facilitating com- munication and collaboration among employees, cus- tomers, and other stakeholders, is one current answer to the historical struggle.

• Social media programs include company online community pages, wikis for virtual collaboration, social media sites such as Facebook or LinkedIn, video chan- nels such as YouTube, microblogging platforms such as Twitter, and company online forums.

Remember This

Classical Perspective The practice of management can be traced to 3000 b.c., to the first government organiza- tions developed by the Sumerians and Egyptians, but the formal study of management is relatively recent.21 The early study of management as we know it today began with what is now called the classical perspective.

The classical perspective on management emerged during the nineteenth and early twentieth centuries. The factory system that began to appear in the 1800s posed chal- lenges that earlier organizations had not encountered. Problems arose in tooling the plants, organizing managerial structure, training employees (many of them non-English-speaking immigrants), scheduling complex manufacturing operations, and dealing with increased labor dissatisfaction and resulting strikes.

These myriad new problems and the development of large, complex organizations de- manded a new approach to coordination and control, and a “new sub-species of economic man—the salaried manager”22—was born. Between 1880 and 1920, the number of profes- sional managers in the United States grew from 161,000 to more than 1 million. 23 These professional managers began developing and testing solutions to the mounting challenges of organizing, coordinating, and controlling large numbers of people and increasing worker productivity. Thus began the evolution of modern management with the classical perspective.

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This perspective contains three subfields, each with a slightly different emphasis: scientific management, bureau- cratic organizations, and administrative principles.24

scienTific managemenT Scientific management emphasizes scientifically deter- mined jobs and management practices as the way to improve efficiency and labor productivity. In the late 1800s, a young engineer, Frederick Winslow Taylor (1856–1915), proposed that workers “could be retooled like machines, their physi- cal and mental gears recalibrated for better productivity.”25 Taylor insisted that improving productivity meant that man- agement itself would have to change and, further, that the manner of change could be determined only by scientific study; hence, the label scientific management emerged. Taylor suggested that decisions based on rules of thumb and tra- dition be replaced with precise procedures developed after careful study of individual situations.26

The scientific management approach is illustrated by the unloading of iron from rail cars and reloading finished steel for the Bethlehem Steel plant in 1898. Taylor calculated that with the correct movements, tools, and sequencing, each man was capable of loading 47.5 tons per day instead of the

typical 12.5 tons. He also worked out an incentive system that paid each man $1.85 a day for meeting the new standard, an increase from the previous rate of $1.15. Productivity at Bethlehem Steel shot up overnight.

Although known as the father of scientific management, Taylor was not alone in this area. Henry Gantt, an associate of Taylor’s, developed the Gantt chart, a bar graph that measures planned and completed work along each stage of production by time elapsed. Two other important pioneers in this area were the husband-and-wife team of Frank B. and Lillian M. Gilbreth. Frank B. Gilbreth (1868–1924) pioneered time and motion study and arrived at many of his management techniques independent of Taylor. He stressed efficiency and was known for his quest for the one best way to do work. Al- though Gilbreth is known for his early work with bricklayers, his work had great impact on medical surgery by drastically reducing the time that patients spent on the operat- ing table. Surgeons were able to save countless lives through the application of time and motion study. Lillian M. Gilbreth (1878–1972) was more interested in the human aspect of work. When her husband died at the age of 56, she had 12 children ages 2 to 19. The undaunted “first lady of management” went right on with her work. She pre- sented a paper in place of her late husband, continued their seminars and consulting, lectured, and eventually became a professor at Purdue University.27 She pioneered in the field of industrial psychology and made substantial contributions to human resource management.

Exhibit 2.2 shows the basic ideas of scientific management. To use this approach, man- agers should develop standard methods for doing each job, select workers with the ap- propriate abilities, train workers in the standard methods, support workers and eliminate interruptions, and provide wage incentives.

The ideas of scientific management that began with Taylor dramatically increased productivity across all industries, and they are still important today. Indeed, the idea of engineering work for greater productivity has enjoyed a renaissance in the retail industry.

Automaker Henry Ford made extensive use of Frederick Taylor’s scientific management techniques, as illustrated by this automobile assembly line at a Ford plant circa 1930. Ford replaced workers with machines for heavy lifting and moving autos from one worker to the next. This reduced worker hours and improved efficiency and productivity. Under this system, a Ford car rolled off the assembly line every 10 seconds.

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Supermarket chains such as Meijer Inc. and Hannaford, for example, use computerized labor waste elimination systems based on scientific management principles. The system breaks down tasks such as greeting a customer, working the register, scanning items, and so forth, into quantifiable units and devises standard times to complete each task. Ex- ecutives say the computerized system has allowed them to staff stores more efficiently because people are routinely monitored by computer and are expected to meet strict standards.28

A Harvard Business Review article discussing innovations that shaped modern manage- ment puts scientific management at the top of its list of 12 influential innovations. Indeed, the ideas of creating a system for maximum efficiency and organizing work for maximum productivity are deeply embedded in our organizations.29 However, because scientific man- agement ignores the social context and workers’ needs, it can lead to increased conflict and clashes between managers and employees. The United Food and Commercial Work- ers Union, for instance, filed a grievance against Meijer in connection with its cashier- performance system. Under such performance management systems, workers often feel exploited—a sharp contrast from the harmony and cooperation that Taylor and his fol- lowers had envisioned.

BureaucraTic organizaTions A systematic approach developed in Europe that looked at the organization as a whole is the bureaucratic organizations approach, a subfield within the classical perspective. Max Weber (1864–1920), a German theorist, introduced most of the concepts on bureau- cratic organizations.30

During the late 1800s, many European organizations were managed on a personal, family-like basis. Employees were loyal to a single individual rather than to the orga- nization or its mission. The dysfunctional consequence of this management practice was that resources were used to realize individual desires rather than organizational goals. Employees in effect owned the organization and used resources for their own gain rather than to serve customers. Weber envisioned organizations that would be managed on an impersonal, rational basis. This form of organization was called a bureaucracy. Exhibit 2.3 summarizes the six characteristics of bureaucracy as specified by Weber.

General Approach •  Developed standard method for performing each job •  Selected workers with appropriate abilities for each job • Trained workers in standard methods •  Supported workers by planning their work and eliminating interruptions •  Provided wage incentives to workers for increased output

Contributions •  Demonstrated the importance of compensation for performance •  Initiated the careful study of tasks and jobs •  Demonstrated the importance of personnel selection and training

Criticisms •  Did not appreciate the social context of work and higher needs of workers •  Did not acknowledge variance among individuals • Tended to regard workers as uninformed and ignored their ideas and suggestions

Exhibit 2.2 Characteristics of Scientific Management

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Weber believed that an organization based on rational authority would be more efficient and adaptable to change because continuity is related to formal structure and positions rather than to a particular person, who may leave or die. To Weber, rationality in organizations meant employee selection and advancement based not on whom you know, but rather on competence and technical qualifications, which are assessed by examination or according to specific training and experience. The organization relies on rules and written records for continuity. In addition, rules and procedures are impersonal and ap- plied uniformly to all employees. A clear division of labor arises from distinct definitions of authority and responsibility, legitimized as of- ficial duties. Positions are organized in a hierarchy, with each posi- tion under the authority of a higher one. The manager gives orders successfully not on the basis of his or her personality, but on the legal power invested in the managerial position.

The term bureaucracy has taken on a negative meaning in today’s organizations and is associated with endless rules and red tape. We have all been frustrated by waiting in long lines or following seem- ingly silly procedures. However, the value of bureaucratic principles is still evident in many organizations, such as United Parcel Service (UPS), sometimes nicknamed Big Brown.

Division of labor, with clear definitions

of authority and responsibility

Positions organized in a hierarchy of authority

Managers subject to rules and procedures that

will ensure reliable, predictable behavior

Management separate from the ownership of the

organization

Administrative acts and decisions recorded

in writing

Personnel selected and promoted based on

technical qualifications

Exhibit 2.3 Characteristics of Weberian Bureaucracy

SOURCE: Adapted from Max Weber, The Theory of Social and Economic Organizations, ed. and trans. A. M. Henderson and Talcott Parsons (New York: Free Press, 1947), pp. 328–337.

“Students would be more likely to have a positive impact on the future of management if they were more engaged with the history and traditions of management—particularly that of a German sociologist [Weber] who died nearly 100 years ago.” —StePHen CuMMinGS and todd BRidGMan,

ViCtoRia uniVeRSity of WeLLinGton,

neW ZeaLand

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As this example shows, there are positive as well as negative aspects associated with bureaucratic principles. Weber also struggled with the good and bad sides of bureaucracy.32 Although he perceived bureaucracy as a threat to basic personal liber- ties, he recognized it as the most efficient and rational form of organizing. Rules and other bureaucratic procedures provide a standard way of dealing with employees. Everyone gets equal treatment, and everyone knows what the rules are. Almost every organization needs to have some rules, and rules multiply as organizations grow larger and more complex. Some examples of rules governing employee behavior in a furniture manufacturing company, for example, might include:33

● Employees must wear protective eye and ear equipment when using machines. ● Employees must carry out any reasonable duty assigned to them, including shop

maintenance. ● Employees must maintain an accurate time sheet, showing job and activity. ● The following will be considered causes for dismissal: excessive tardiness or ab-

senteeism; willful damage to equipment; continual careless or unsafe behavior; theft; being under the influence of alcohol or illegal drugs while at work.

adminisTraTive PrinciPles Another major subfield within the classical perspective is known as the administrative principles approach. Whereas scientific management focused on the productivity of the individual worker, the administrative principles approach focused on the total organi- zation. The major contributor to this approach was Henri Fayol (1841–1925), a French mining engineer who worked his way up to become head of a large mining group known as Comambault. Pieces of Comambault survive today as part of ArcelorMittal, the world’s largest steel and mining company. In his later years, Fayol wrote down his concepts on ad- ministration, based largely on his own management experiences.34

Read the “ethical dilemma” on pages 65–66, which pertains to problems with bureaucracy.

What would it be like for you to be a manager in a bureaucratic organization? Complete the “experiential exercise,” on pages 64–65, to find out if you would thrive in that type of environment.

Innovative Way UPS

UPS is the largest package delivery company in the world and a leading global provider of specialized transportation and logistics services. The company operates in more than 200 countries and territories worldwide.

Why has UPS been so successful? One important factor is the concept of bureaucracy. UPS operates according to strict rules and regulations. It teaches drivers an astounding 340 steps for how to deliver a package correctly, such as how to load the truck, how to fasten their seat belts, how to walk, and how to carry their keys. Specific safety rules apply to driv- ers, loaders, clerks, and managers. Strict dress codes are enforced—clean uniforms (called browns), every day, black or brown polished shoes with nonslip soles, no beards, no hair below the collar, no tattoos visible during deliveries, and so on. Before each shift, drivers conduct a “Z-scan,” a Z-shaped inspection of the sides and front of their vehicles. Employees are asked to clean off their desks at the end of each day so they can start fresh the next morning. Man- agers are given copies of policy books with the expectation that they will use them regularly, and memos on various policies and rules circulate by the hundreds every day.

UPS has a well-defined division of labor. Each plant consists of specialized drivers, loaders, clerks, washers, sorters, and maintenance personnel. UPS thrives on written records, and it has been a leader in using new technology to enhance reliability and efficiency. All drivers have daily worksheets that specify performance goals and work output. Technical qualification is the criterion for hiring and promotion. The UPS policy book says the leader is expected to have the knowledge and capacity to justify the position of leadership. Favoritism is forbidden. The bureaucratic model works just fine at UPS, “the tightest ship in the shipping business.”31

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Part 1 Introduction to Management48

In his most significant work, General and Industrial Management, Fayol discussed 14 general principles of management, several of which are part of management philosophy today. For example:

● Unity of command. Each subordinate receives orders from one—and only one—superior. ● Division of work. Managerial work and technical work are amenable to specialization

to produce more and better work with the same amount of effort. ● Unity of direction. Similar activities in an organization should be grouped together

under one manager. ● Scalar chain. A chain of authority extends from the top to the bottom of the organiza-

tion and should include every employee.

Fayol felt that these principles could be applied in any organizational setting. He also identified five basic functions or elements of management: planning, organizing, command- ing, coordinating, and controlling. These functions underlie much of the general approach to today’s management theory.

The overall classical perspective as an approach to management was very powerful and gave companies fundamental new skills for establishing high productivity and effective treat- ment of employees. Indeed, the United States surged ahead of the world in management techniques, and other countries, especially Japan, borrowed heavily from American ideas.

• The study of modern management began in the late nineteenth century with the classical perspective, which took a rational, scientific approach to management and sought to turn organizations into efficient operating machines.

• Scientific management is a subfield of the classical perspective that emphasizes scientifically determined changes in management practices as the solution to improving labor productivity.

• Frederick Winslow Taylor is known as “the father of scientific management.”

• Scientific management is considered one of the most significant innovations influencing modern management.

• Some supermarket chains are using computerized systems based on scientific management principles to schedule employees for maximum efficiency.

• Another subfield of the classical perspective is the bureaucratic organizations approach, which emphasizes management on an impersonal, rational basis through elements such as clearly defined authority and responsibility, formal recordkeeping, and separation of management and ownership.

• Max Weber introduced most of the concepts about bureaucratic organizations.

• The administrative principles approach is a subfield of the classical perspective that focuses on the total organi- zation rather than the individual worker and delineates the management functions of planning, organizing, commanding, coordinating, and controlling.

• Henri Fayol, a major contributor to the administrative principles approach, outlined 14 general principles of management, several of which are a part of management philosophy today.

Remember This

Humanistic Perspective The humanistic perspective on management emphasized the importance of understand- ing human behaviors, needs, and attitudes in the workplace, as well as social interactions and group processes.35 There are three primary subfields based on the humanistic perspec- tive: the human relations movement, the human resources perspective, and the behavioral sciences approach.

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Chapter 2 The Evolution of Management Thinking

early advocaTes Two early advocates of a more hu- manistic approach were Mary Parker Follett and Chester I. Barnard. Mary Parker Follett (1868–1933) was trained in philosophy and political science, but she applied herself in many fields, including social psychol- ogy and management. She wrote of the importance of common su- perordinate goals for reducing con- flict in organizations.36 Her work was popular with businesspeople of her day but was often overlooked by management scholars.37 Follett’s ideas served as a contrast to scientific management and are re-emerging as applicable for modern managers dealing with rapid changes in today’s global environment. Her approach to leadership stressed the importance of people rather than engineering techniques. She offered the pithy admonition, “Don’t hug your blueprints,” and analyzed the dynamics of management-organization interactions. Follett addressed issues that are timely today, such as ethics, power, and leading in a way that encourages employees to give their best. The concepts of empowerment, facilitating rather than controlling employees, and allowing employees to act depending on the author- ity of the situation opened new areas for theoretical study by Chester Barnard and others.38

Chester I. Barnard (1886–1961) studied economics at Harvard but failed to receive a degree because he did not take a course in laboratory science. He went to work in the statistical department of AT&T, and in 1927, he became president of New Jersey Bell. One of Barnard’s significant contributions was the concept of the informal organization. The informal organization occurs in all formal organizations and includes cliques, informal net- works, and naturally occurring social groupings. Barnard argued that organizations are not machines and stressed that informal relationships are powerful forces that can help the orga- nization if properly managed. Another significant contribution was the acceptance theory of authority, which states that people have free will and can choose whether to follow manage- ment orders. People typically follow orders because they perceive positive benefit to them- selves, but they do have a choice. Managers should treat employees properly because their acceptance of authority may be critical to organization success in important situations.39

human relaTions movemenT The human relations movement was based on the idea that truly effective control comes from within the individual worker rather than from strict, authoritarian control.40 This school of thought recognized and directly responded to social pressures for enlightened treatment of employees. The early work on industrial psychology and personnel selection received little attention because of the prominence of scientific management. Then a series of studies at a Chicago electric company, which came to be known as the hawthorne studies, changed all that.

Beginning about 1895, a struggle developed between manufacturers of gas and electric lighting fixtures for control of the residential and industrial market.41 By 1909, electric lighting had begun to win, but the increasingly efficient electric fixtures used less total

Concept Connection This 1914 photograph shows the initiation of a new arrival at a Nebraska planting camp. This initiation was not part of the formal rules and illustrates the significance of the informal organization described by Barnard. Social values and behaviors were powerful forces that could help or hurt the planting organization, depending on how they were managed.

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Part 1 Introduction to Management50

power, which was less profitable for the electric companies. The electric companies began a campaign to convince indus- trial users that they needed more light to get more productiv- ity. When advertising did not work, the industry began using experimental tests to demonstrate their argument. Manag- ers were skeptical about the results, so the Committee on Industrial Lighting (CIL) was set up to run the tests. To fur- ther add to the tests’ credibility, Thomas Edison was made honorary chairman of the CIL. In one test location—the Hawthorne plant of the Western Electric Company—some interesting events occurred.

The major part of this work involved four experimen- tal and three control groups. In all, five different tests were conducted. These pointed to the importance of factors other than illumination in affecting productivity. To examine these factors more carefully, numerous other experiments were conducted.42 The results of the most famous study, the first Relay Assembly Test Room (RATR) experiment, were ex- tremely controversial. Under the guidance of two Harvard professors, Elton Mayo and Fritz Roethlisberger, the RATR studies lasted nearly six years (May 10, 1927 to May 4, 1933) and involved 24 separate experimental periods. So many factors were changed and so many unforeseen factors uncontrolled that scholars disagree on the factors that truly contributed to the general increase in performance over that time period. Most early interpretations, however, agreed on one point: Money was not the cause of the increased

output.43 It was believed that the factor that best explained increased output was human relations. Employees performed better when managers treated them in a posi- tive manner. Recent re-analyses of the experiments have revealed that a number of factors were different for the workers involved, and some suggest that money may well have been the single most important factor.44 An interview with one of the original participants revealed that just getting into the experimental group meant a huge increase in income.45

These new data clearly show that money mattered a great deal at Hawthorne. In addition, worker productivity increased partly as a result of the increased feelings of importance and group pride that employees felt by virtue of being selected for this important project and the camaraderie that developed among group members.46 One unintended contribution of the experiments was a rethinking of field research practices. Researchers and scholars realized that the researcher can influence the out-

come of an experiment by being too closely involved with research subjects. This phenom- enon has come to be known as the Hawthorne effect in research methodology. Subjects behaved differently because of the active participation of researchers in the Hawthorne experiments.47

From a historical perspective, whether the studies were academically sound is less im- portant than the fact that they stimulated an increased interest in looking at employees as more than extensions of production machinery. The interpretation that employees’ output increased when managers treated them in a positive manner started a revolution in worker treatment for improving organizational productivity. Despite flawed methodology or inac- curate conclusions, the findings provided the impetus for the human relations movement. This approach shaped management theory and practice for well over a quarter-century, and the belief that human relations is the best area of focus for increasing productivity persists today.

Before reading on, take the “new Manager Self-test.” this test will give you feedback about how your personal manager frame of reference relates to the perspectives described in this chapter.

This is the Relay Room of the Western Electric Hawthorne, Illinois, plant in 1927. Six women worked in this relay assembly test room during the controversial experiments on employee productivity. Professors Mayo and Roethlisberger evaluated conditions such as rest breaks and workday length, physical health, amount of sleep, and diet. Experimental changes were fully discussed with the women and were abandoned if they disapproved. Gradually, the researchers began to realize they had created a change in supervisory style and human relations, which they believed was the true cause of the increased productivity.

Concept Connection

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Chapter 2 The Evolution of Management Thinking

NEw MANAgEr Self-Test Evolution of Style

instructions: This questionnaire asks you to describe yourself. For each item, give the number “4” to the phrase that best describes you, “3” to the item that is next best, and on down to “1” for the item that is least like you.

1. My strongest skills are: ______ a. Analytical skills

______ b. Interpersonal skills

______ c. Political skills

______ d. Flair for drama

2. The best way to describe me is: ______ a. Technical expert

______ b. Good listener

______ c. Skilled negotiator

______ d. Inspirational leader

3. What has helped me the most to be successful is my ability to: ______ a. Make good decisions

______ b. Coach and develop people

______ c. Build strong alliances and a power base

______ d. Inspire and excite others

4. What people are most likely to notice about me is my: ______ a. Attention to detail

______ b. Concern for people

______ c. Ability to succeed in the face of conflict and opposition

______ d. Charisma

5. My most important leadership trait is: ______ a. Clear, logical thinking

______ b. Caring and support for others

______ c. Toughness and aggressiveness

______ d. Imagination and creativity

6. I am best described as: ______ a. An analyst

______ b. A humanist

______ c. A politician

______ d. A visionary

Scoring and interpretation: Managers typically view their world through one or more mental frames of reference. (1) The structural frame of reference sees the organization as a machine that can be economically efficient and that pro- vides a manager with formal authority to achieve goals. This manager frame became strong during the era of scientific management and bureaucratic administration. (2) The human resource frame sees the organization as people, with manager emphasis given to support, empowerment, and belonging. This manager frame gained importance with the rise of the humanistic perspective. (3) The political frame sees the organization as a competition for resources to achieve goals, with manager emphasis on negotiation and hallway coalition building. This frame reflects the need within systems theory to have all the parts working together. (4) The symbolic frame of reference sees the organization as a theater—a place to achieve dreams—with the manager emphasizing symbols, vision, culture, and inspiration. This manager frame is impor- tant for today’s adaptive organizations.

Which frame reflects your way of viewing the world? The first two frames of reference—structural and human resource— are more important for new managers. These two frames usually are mastered first. As new managers gain experience and move up the organization, they should acquire political skills and also learn to use symbols for communication. It is important for new managers not to be stuck for years in one way of viewing the organization because their progress may be limited. Many new managers evolve through and master each of the four frames as they become more skilled and experienced.

Compute your scores as follows:

ST 5 1a 1 2a 1 3a 1 4a 1 5a 1 6a 5 ________________

HR 5 1b 1 2b 1 3b 1 4b 1 5b 1 6b 5 ________________

PL 5 1c 1 2c 1 3c 1 4c 1 5c 1 6c 5 ________________

SY 5 1d 1 2d 1 3d 1 4d 1 5d 1 6d 5 ________________

The higher score represents your way of viewing the organi- zation and will influence your management style.

Source: © 1988, Leadership Frameworks, 440 Boylston Street, Brookline, MA 02146. All rights reserved. Used with permission.

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Part 1 Introduction to Management52

human resources PersPecTive The human relations movement initially espoused a dairy farm view of management—just as contented cows give more milk, satisfied workers will produce more work. Gradually, views with deeper content that elevated the “humanity of production” began to emerge. The human resources perspective maintained an interest in worker participation and considerate leadership but shifted the emphasis to considering the daily tasks that people perform. The human resources perspective combines prescriptions for design of job tasks with theories of motivation.48 In the human resources view, jobs should be designed so that tasks are not perceived as dehumanizing or demeaning but instead allow workers to use their full potential. Two of the best-known contributors to the human resources perspec- tive were Abraham Maslow and Douglas McGregor.

Abraham Maslow (1908–1970), a practicing psychologist, observed that his patients’ problems usually stemmed from an inability to satisfy their needs. Thus, he generalized his work and suggested a hierarchy of needs. Maslow’s hierarchy started with physiological needs and progressed to safety, belongingness, esteem, and, finally, self-actualization needs. Chapter 16 discusses his ideas in more detail.

Douglas McGregor (1906–1964) had become frustrated with the early, simplistic human relations notions while president of Antioch College in Ohio. He challenged both the classi- cal perspective and the early human relations assumptions about human behavior. Based on his experiences as a manager and consultant, his training as a psychologist, and the work of Maslow, McGregor formulated Theory X and Theory Y, which are explained in Exhibit 2.4 .49 McGregor believed that the classical perspective was based on Theory X assumptions about workers. He also felt that a slightly modified version of Theory X fit early human relations ideas. In other words, human relations ideas did not go far enough. McGregor proposed Theory Y as a more realistic view of workers for guiding management thinking.

The point of Theory Y is that organizations can take advantage of the imagination and intellect of all their employees. Employees will exercise self-direction and self-control to contribute to organizational goals when given the opportunity. A few companies today still use Theory X management, but many are using Theory Y techniques. Consider how Semco applies Theory Y assumptions to tap into employee creativity and mind power.

Assumptions of Theory X • The average human being has an inherent dislike of work and will avoid it if possible. •   Because of the human characteristic of dislike for work, most people must be coerced, con-

trolled, directed, or threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.

•  The average human being prefers to be directed, wishes to avoid responsibility, has relatively  little ambition, and wants security above all.

Assumptions of Theory Y •  The expenditure of physical and mental effort in work is as natural as play or rest. The average 

human being does not inherently dislike work. •   External control and the threat of punishment are not the only means for bringing about effort 

toward organizational objectives. A person will exercise self-direction and self-control in the ser- vice of objectives to which he or she is committed.

•  The average human being learns, under proper conditions, not only to accept but to seek  responsibility.

•  The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the  solution of organizational problems is widely, not narrowly, distributed in the population.

•   Under the conditions of modern industrial life, the intellectual potentialities of the average  human being are only partially utilized.

Exhibit 2.4 Theory X and Theory Y

SOURCE: Douglas McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), pp. 33–48. © McGraw-Hill Companies, Inc. Reprinted by permission.

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For managers like Ricardo Semler, command and control is a thing of the past, with the future belonging to those companies that build leadership throughout the organization. The Theory Y approach has helped Semco succeed in a tough environ- ment. As described at the beginning of this chapter, a number of companies are using less hierarchical management systems that rely on Theory Y principles that are more in line with today’s emphasis on employee engagement and involvement.

Behavioral sciences aPProach The behavioral sciences approach uses scientific methods and draws from sociol- ogy, psychology, anthropology, economics, and other disciplines to develop theories about human behavior and interaction in an organizational setting. This approach can be seen in practically every organization. When a company such as Zappos.com conducts research to determine the best set of tests, interviews, and employee profiles to use when selecting new employees, it is using behavioral science techniques. When Best Buy electronics stores train new managers in the techniques of employee motivation, most of the theories and findings are rooted in behavioral science research.

One specific set of management techniques based in the behavioral sciences approach is organization development (OD). In the 1970s, OD evolved as a separate field that applied the behavioral sciences to improve the organization’s health and effectiveness through its ability to cope with change, improve internal relationships, and increase problem-solving capabilities.51 The techniques and concepts of OD have since been broadened and expanded to address the increasing complexity of organizations and the environment, and OD is still a vital approach for managers. OD will be discussed in detail in Chapter 11. Other concepts that grew out of the behavioral sciences approach include matrix organizations, self-managed teams, ideas about corporate culture, and management by wandering around. Indeed, the behavioral sciences approach has influ- enced the majority of tools, techniques, and approaches that managers have applied to organizations since the 1970s.

All the remaining chapters of this book contain research findings and management applications that can be attributed to the behavioral sciences approach.

Innovative Way Semco

The Brazil-based company Semco’s fundamental operating principle is to harness the wisdom of all its employees. It does so by letting people control their work hours, location, and even pay plans. Employees also participate in all organizational decisions, including what businesses Semco should pursue.

Semco leaders believe that economic success requires creating an atmosphere that puts power and control directly in the hands of employees. People can veto any new product idea or business venture. They choose their own leaders and manage themselves to accom- plish goals. Information is openly and broadly shared so that everyone knows where they and the company stand. Instead of dictating Semco’s identity and strategy, leaders allow it to be shaped by individual interests and efforts. People are encouraged to seek challenges, explore new ideas and business opportunities, and question the ideas of anyone in the company.

This high level of trust in employees has helped Semco achieve decades of high profit- ability and growth despite fluctuations in the economy and shifting markets. “At Semco, we don’t play by the rules,” says Ricardo Semler. Semler, whose father started the company in the 1950s, says it doesn’t unnerve him to “step back and see nothing on the company’s horizon.” He is happy to watch the company and its employees “ramble through their days, running on instinct and opportunity. . . .”50

Look back at your scores on the questionnaire at the beginning of this chapter related to theory X and theory y. How will your management assumptions about people fit into an organization today?

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Management Science World War II caused many management changes. To handle the massive and complicated problems associated with modern global warfare, managerial decision makers needed more sophisticated tools than ever before. Management science, also referred to as the quantitative perspective, provided a way to address those problems. This view is distinguished for its appli- cation of mathematics, statistics, and other quantitative techniques to management decision making and problem solving. During World War II, groups of mathematicians, physicists, and other scientists were formed to solve military problems that frequently involved moving massive amounts of materials and large numbers of people quickly and efficiently. Managers soon saw how quantitative techniques could be applied to large-scale business firms.52

Picking up on techniques developed for the military, scholars began cranking out nu- merous mathematical tools for corporate managers, such as the application of linear pro- gramming for optimizing operations, statistical process control for quality management, and the capital asset pricing model.53

These efforts were enhanced with the development and perfection of the computer. Coupled with the growing body of statistical techniques, computers made it possible for managers to collect, store, and process large volumes of data for quantitative decision mak- ing, and the quantitative approach is widely used today by managers in a variety of indus- tries. The Walt Disney Company used quantitative techniques to develop FastPass, a sophisticated computerized system that spares people the ordeal of standing in long lines for the most popular rides. Disney theme parks have machines that issue coupons with a return time that’s been calculated based on the number of people standing in the actual line, the number who have already obtained passes, and each ride’s capacity. The next gen- eration of technology, FastPass+, lets visitors book times for rides before they even leave home for their Disney vacation.54 Let’s look at three subsets of management science.

Operations research grew directly out of the World War II military groups (called opera- tional research teams in Great Britain and operations research teams in the United States).55 It consists of mathematical model building and other applications of quantitative techniques to managerial problems.

Operations management refers to the field of management that specializes in the physi- cal production of goods or services. Operations management specialists use management science to solve manufacturing problems. Some commonly used methods are forecasting, inventory modeling, linear and nonlinear programming, queuing theory, scheduling, simu- lation, and break-even analysis.

• The humanistic perspective emphasized understanding human behavior, needs, and attitudes in the workplace.

• Mary Parker Follett and Chester I. Barnard were early advocates of a more humanistic approach to management.

• Follett emphasized worker participation and empower- ment, shared goals, and facilitating rather than control- ling employees. Barnard’s contributions include the acceptance theory of authority.

• The human relations movement stresses the satisfac- tion of employees’ basic needs as the key to increased productivity.

• The Hawthorne studies were important in shaping ideas concerning how managers should treat workers.

• The human resources perspective suggests that jobs should be designed to meet people’s higher-level needs by allowing employees to use their full potential.

• The behavioral sciences approach draws from psy- chology, sociology, and other social sciences to develop theories about human behavior and interaction in an organizational setting.

• Many current management ideas and practices can be traced to the behavioral sciences approach.

Remember This

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information technology (it) is the most recent subfield of management sci- ence, which is often reflected in manage- ment information systems designed to provide relevant information to manag- ers in a timely and cost-efficient man- ner. IT has evolved to include intranets and extranets, as well as various software programs that help managers estimate costs, plan and track production, manage projects, allocate resources, or schedule employees. Most of today’s organizations have IT specialists who use quantitative techniques to solve complex organiza- tional problems.

However, as events in the mortgage and finance industries show, relying too heavily on quantitative techniques can cause problems for managers. Mortgage companies used quantitative models that showed their investments in subprime mortgages would be okay even if default rates hit historically high proportions. However, the models didn’t take into account that no one before in history had thought it made sense to give $500,000 loans to people making minimum wage!56 “Quants” also came to dominate organizational decisions in other financial firms. The term quants refers to finan- cial managers and others who base their decisions on complex quantitative analysis, under the assumption that using advanced mathematics and sophisticated computer technology can accurately predict how the market works and help them reap huge profits. The virtu- ally exclusive use of these quantitative models led aggressive traders and managers to take enormous risks. When the market began to go haywire as doubts about subprime mortgages grew, the models went haywire as well. Stocks predicted to go up went down, and vice versa. Events that were predicted to happen only once every 10,000 years happened three days in a row in the market madness. Scott Patterson, a Wall Street Journal reporter and author of The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, suggests that the financial crisis that began in 2008 is partly due to the quants’ failure to ob- serve market fundamentals, pay attention to human factors, and heed their own intuition.57

• Management science became popular based on its successful application in solving military problems during World War II.

• Management science, also called the quantitative perspective, uses mathematics, statistical techniques, and computer technology to facilitate management decision making, particularly for complex problems.

• The Walt Disney Company uses management science to solve the problem of long lines for popular rides and attractions at its theme parks.

• Three subsets of management science are operations research, operations management, and information technology (IT).

• Quants have come to dominate decision making in financial firms, and the Wall Street meltdown in 2007–2008 shows the danger of relying too heavily on a quantitative approach.

Remember This

Concept Connection

At Catholic Health Partners, a nonprofit hospital, hospice, and wellness center system that spans a number of Midwestern states, information technology (IT) is a top priority. IT is critical to the efficient running of all aspects of the healthcare system, as well as to maintaining up-to-the-minute, completely accurate records on patients.

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Recent Historical Trends Despite heavy use of management science techniques, the post–World War II period also saw a return to the humanistic side of management. Peter Drucker’s books Concept of the Corporation (1946) and The Practice of Management (1954) emphasized the corporation as a social and human institution. He revived interest in the work of Mary Parker Follett from the 1920s in his call for managers to involve and respect employees.58 Thus, although many managers continued to use management science techniques, among the approaches that we’ve discussed so far, the humanistic perspective has remained most prevalent from the 1950s until today. The post–World War II period saw the rise of new concepts, along with a continued strong interest in the human aspect of managing, such as team and group dynamics and other ideas that relate to the humanistic perspective. Two new concepts that appeared were systems thinking and the contingency view.

sysTems Thinking Systems thinking is the ability to see both the distinct elements of a system or situation and the complex and changing interaction among those elements. A system is a set of interrelated parts that function as a whole to achieve a common purpose.59 Subsystems are parts of a system, such as an organization, that depend on one another. Changes in one part of the system (the organization) affect other parts. Managers need to understand the synergy of the whole organization, rather than just the separate elements, and to learn to reinforce or change whole system patterns.60 Synergy means that the whole is greater than the sum of its parts. The organization must be managed as a coordinated whole. Managers who understand subsystem interdependence and synergy are reluctant to make changes that do not recognize the impact of subsystems on the organization as a whole.

Many people have been trained to solve problems by breaking a complex system, such as an organization, into discrete parts and working to make each part perform as well as possible. However, the success of each piece does not add up to the success of the whole. In fact, sometimes changing one part to make it better actually makes the whole system function less effectively. For example, a small city embarked on a road-building program to solve traffic congestion without whole-systems thinking. With new roads available, more people began moving to the suburbs. Rather than reduce congestion, the solution actually increased traffic congestion, delays, and pollution by enabling suburban sprawl.61

It is the relationship among the parts that form a whole system—whether a community, an automobile, a nonprofit agency, a human being, or a business organization—that mat- ters. Systems thinking enables managers to look for patterns of movement over time and focus on the qualities of rhythm, flow, direction, shape, and networks of relationships that accomplish the performance of the whole. When managers can see the structures that un- derlie complex situations, they can facilitate improvement. But doing that requires a focus on the big picture.

An important element of systems thinking is to discern circles of causality. Peter Senge, author of The Fifth Discipline, argues that reality is made up of circles rather than straight lines. For example, Exhibit 2.5 shows circles of influence for increasing a retail firm’s profits. The events in the circle on the left are caused by the decision to increase advertising; hence the retail firm adds to the advertising budget to aggressively promote its products. The ad- vertising promotions increase sales, which increase profits, which provide money to further increase the advertising budget.

But another circle of causality is being influenced as well. The decision by marketing managers will have consequences for the operations department. As sales and profits in- crease, operations will be forced to stock up with greater inventory. Additional inventory will create a need for additional warehouse space. Building a new warehouse will cause a

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delay in stocking up. After the warehouse is built, new people will be hired, all of which add to company costs, which will have a negative impact on profits. Thus, understanding all the consequences of their decisions via circles of causality enables company leaders to plan and allocate resources to warehousing as well as to advertising to ensure stable increases in sales and profits. Without understanding system causality, top managers would fail to un- derstand why increasing advertising budgets could cause inventory delays and temporarily reduce profits.

conTingency view A second recent extension to management thinking is the contingency view. The classical perspective assumed a universalist view. Management concepts were thought to be univer- sal; that is, whatever worked in one organization in terms of management style, bureau- cratic structure, and so on would work in any other one. In business education, however, an alternative view exists. In this case view, each situation is believed to be unique. Principles are not universal, and one learns about management by experiencing a large number of case problem situations. Managers face the task of determining what methods will work in every new situation.

To integrate these views, the contingency view emerged, as illustrated in Exhibit 2.6.62 Here, neither of the other views is seen as entirely correct. Instead, certain contingencies, or variables, exist for helping managers identify and understand situations. The contingency view tells us that what works in one setting might not work in another. Contingency means

Advertising Budget

Decision to Advertise

Sales

Hire People

Added Cost

DelayPro�ts

Build Warehouse

Stocking Up

Exhibit 2.5 Systems Thinking and Circles of Causality

SOURCE: Based on concepts presented in Peter M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday/Currency, 1990).

“Every situation is unique.”

Case View

Universalist View

Organizational phenomena exist in logical patterns. Managers devise and apply similar responses to common types of problems.

“There is one best way.”

Contingency View

Exhibit 2.6 Contingency View of Management

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that one thing depends on other things, and a manager’s response to a situation depends on identifying key contingencies in an organizational situation.

One important contingency, for example, is the industry in which the organization op- erates. The organizational structure that is effective for an online company, such as the microblogging services Twitter and China’s Sina Weibo, would not be successful for a large auto manufacturer, such as Toyota or Ford. A management-by-objectives (MBO) system that works well in a manufacturing firm, in turn, might not be right for a school system. When managers learn to identify important patterns and characteristics of their organiza- tions, they can fit solutions to those characteristics.

• A system is a set of interrelated parts that function as a whole to achieve a common purpose. An organization is a system.

• Systems thinking means looking not just at discrete parts of an organizational situation, but also at the continually changing interactions among the parts.

• When managers think systemically and understand subsystem interdependence and synergy, they can get a better handle on managing in a complex environment.

• Subsystems are parts of a system that depend on one another for their functioning.

• The concept of synergy says that the whole is greater than the sum of its parts. The organization must be managed as a whole.

• The contingency view tells managers that what works in one organizational situation might not work in others. Managers can identify important contin- gencies that help guide their decisions regarding the organization.

Remember This

Innovative Management Thinking Into the Future All of the ideas and approaches discussed so far in this chapter go into the mix that makes up modern management. Dozens of ideas and techniques in current use can trace their roots to these historical perspectives.63 In addition, innovative concepts continue to emerge to address new management challenges. Smart managers heed the past but know that they and their organizations have to change with the times. Recall the example of UPS discussed earlier in this chapter. The company still emphasizes efficiency, but when third-party logistics services became a growing part of the business, managers knew they had to expand employees’ mindsets and encourage them to be more innovative and flexible as well. They did it by giving employees a history lesson—talking about the many moments of innovation and transformation in the long history of UPS, such as the shift from bicycle delivery to trucks and the move into air freight with the introduc- tion of the company’s own cargo liner. Employees began to see that UPS had been both efficient and innovative all along, and that the two were not incompatible.64 Compare UPS managers’ approach to that of General Motors (GM). GM was the “ideal” organi- zational model in a post–World War II environment, but by 2009, it had collapsed into bankruptcy and sought billions of dollars in government aid because managers failed to pay attention as the world changed around them.65 GM managers assumed that the preeminence of their company would shelter it from change, and they stuck far too long with a strategy, culture, and management approach that were out of tune with the shifting environment.

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conTemPorary managemenT Tools Managers are always looking for new techniques and approaches that more adequately respond to customer needs and the demands of the environment. A recent survey of Euro- pean managers reflects that managers pay attention to currently fashionable management concepts. The following table lists the percentage of managers reporting that they were aware of these selected management trends that have been popular over the past decade.66

Concept Awareness (%)

E-business 99.41

Decentralization 99.12

Customer relationship management (CRM) 97.50

Virtual organization 91.19

Empowerment 83.41

Reengineering 76.65

Managers especially tend to look for fresh ideas to help them cope during difficult times. The “Manager’s Shoptalk” lists a wide variety of ideas and techniques used by today’s man- agers, as revealed by the “2013 Management Tools and Trends” survey by Bain & Company.

In the Bain survey, the majority of executives said that they are concerned about the slow economic recovery so they are looking for new and creative approaches that can help them both cut costs and have more money to invest in innovation for the future. Other top concerns of managers as revealed in the survey include rising health care costs, decreasing customer loyalty, the growing potential for cyber attacks against organizations, and the demands of younger employees for changes in workplace cultures and practices.67 Responding to these and other concerns, the tools most used by today’s managers tend to fall into the dual categories of managing the technology-driven workplace and managing the people-driven workplace.

managing The Technology-driven workPlace Managers see IT presenting both opportunities and threats to their organizations. A total of 65 percent of managers surveyed said that their company’s spending on IT must in- crease over the next three years to keep pace with evolving needs and technology. Two popular new uses of this technology are big data analytics and supply chain management.

Big Data Analytics The newest business technology is big data analytics, which refers to technologies, skills, and processes for searching and examining massive, complex sets of data that traditional data processing applications cannot handle to uncover hidden patterns and correlations.68 Facebook, for example, uses the personal data that you put on your page and tracks and monitors your online behavior, then searches through all that data to identify and suggest potential “friends.”69 Amazon.com collects tons of data on customers, including what books they buy, what else they look at, how they navigate through the Web site, how much they are influenced by promotions and reviews, and so forth. The company uses algorithms that predict and suggest what books a customer might be interested in reading next. Moreover, the predictions get better every time a customer responds to or ignores a recommenda- tion.70 Another example of the power of big data analytics comes from the world of online dating Web sites such as eHarmony and Match.com, which sift through huge amounts of data to compare millions of people across hundreds of different variables and make matches for users in a matter of minutes, sending new matches out on a daily basis. The

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MANAgEr’S Shoptalk Current Use of Management Tools and Trends

O ver the history of management, many fashions and fads have appeared. Critics argue that new techniques may not represent permanent solu- tions. Others feel that managers must adopt

new techniques for continuous improvement in a fast- changing world. In 1993, Bain & Company started a large research project to interview and survey thou- sands of corporate executives about the 25 most popu- lar management tools and techniques.

The Top Ten. The list of the top ten tools for 2012– 2013 is shown here. How many of the tools are you familiar with? For more information on specific tools, see Bain’s Management Tools 2013: An Executive’s Guide at http://www.bain.com/Images/MANAGEMENT _TOOLS_2013_An_Executives_guide.pdf.

Tool or Technique Percentage Saying They Plan to Use in 2013

CRM 83

Strategic planning 81

Benchmarking 80

Mission and vision statement 79

Core competencies 78

Change management programs 77

Supply chain management 74

Employee engagement surveys 73

Balanced scorecard 73

Outsourcing 71

Popularity. In the most recent survey, strategic plan- ning and customer relationship management (CRM) zoomed to the top of the list. Across all geographical areas and industries, CRM emerged as managers’ most important investment priority, reflecting a concern with the decline in customer loyalty. Managers also put a priority on investing in employee engagement based on evidence of a link between highly motivated employees and customer loyalty. Outsourcing declined significantly in usage from the previous year’s survey as managers decreased their heavy emphasis on cost- cutting and efficiency. Three tools that ranked high in both use and satisfaction were strategic planning, mis- sion and vision statements, and CRM, which can guide managers’ thinking on strategic issues during times of rapid change.

Global Trends. Firms in Asia-Pacific and North America reported using the largest number of tools. Among firms in Latin America and Europe, the Middle East, and Africa (EMEA), tool use substantially declined from the previous year’s survey. In North America, the most widely used tool was employee engagement sur- veys, which aim to measure and improve employee motivation and by extension productivity, whereas in EMEA, balanced scorecards, which help companies measure and improve manager performance, topped the list in terms of usage. Asia-Pacific region firms use CRM more than any other tool, while managers in Latin America favor business process reengineer- ing, which didn’t even make the top-ten list for usage among firms overall.

Source: Darrell Rigby and Barbara Bilodeau, “Management Tools and Trends 2013,” Copyright © 2013, Bain & Company, Inc., http://www.bain.com /publications/articles/management-tools-and-trends-2013.aspx. Reprinted by permission.

professional networking site LinkedIn recently announced a similar idea with its “People You May Want to Hire” recruiting feature. The company will plumb the depths of its huge data mines and provide a list of perfect candidates for a company’s job openings.71

However, big data is not just for online companies. Big data analytics can be thought of as a direct descendant of Frederick Winslow Taylor’s scientific management and the most recent iteration of the quantitative approach to management.72 Walmart collects more than 2.5 petabytes of data (a petabyte is about a million gigabytes, or the equivalent of about 20 million filing cabinets of written data) every hour from customer transactions and uses those data to make better decisions.73 The gaming corporation Caesars Entertainment

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analyzes customer data to fine-tune customer segments and build effective loyalty pro- grams for its casinos and resorts. Researchers at the Johns Hopkins School of Medicine found that they could use data from Google Flu Trends (which Google uses to collect and aggregate flu-related search terms) to predict surges in flu-related emergency room visits a week before warnings came from the Centers for Disease Control (CDC).74

Supply Chain Management Supply chain management refers to managing the sequence of suppliers and purchas- ers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers.75 Exhibit 2.7 illustrates a basic supply chain model. A supply chain is a network of multiple businesses and individuals that are connected through the flow of products or services.76 Many organizations manage the supply chain with sophisti- cated electronic technology. In India, for example, Walmart managers have invested in an efficient supply chain that electronically links farmers and small manufacturers directly to the stores, maximizing value for both ends.77 However, today’s global supply chains create many challenges for managers. Several garment factory fires in Bangladesh in 2012 and the collapse of another apparel plant in 2013 that killed 1,100 workers put the spotlight on poor working conditions in that country. The problem for retailers such as Walmart, H&M, Target, and other big companies is that similar poor working conditions exist in other low-wage countries such as Pakistan, Cambodia, Indonesia, and Vietnam, which produce most of the world’s clothing. Both European and U.S. retailers have announced plans aimed at improving safety in overseas factories, but the challenge of monitoring con- tractors and subcontractors in low-wage countries is a massive one. Even when an organi- zation such as H&M thinks that it is hiring a responsible supplier, that company might subcontract or obtain materials from less responsible ones.78 Supply chain management will be discussed in detail in the Appendix.

managing The PeoPle-driven workPlace Organizations are undergoing tremendous changes. Some are related to new technology, whereas others are brought about primarily because of shifting needs of people. Recall that one of the concerns of executives in Bain’s 2013 survey was the demands of younger em- ployees for changes in workplace cultures and practices. Two responses to these issues are the bossless workplace and a renewed emphasis on employee engagement.

Suppliers Manufacturers

Flow of Products

Distributors Retailers

Exhibit 2.7 Supply Chain for a Retail Organization

SOURCE: Adapted from an exhibit from the Global Supply Chain Games Project, Delft University and the University of Maryland, R. H. Smith School of Business, www.gscg.org:8080/opencms/export/sites/default/gscg/images/supplychain_simple.gif (accessed February 6, 2008).

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The Bossless Workplace As described at the beginning of this chapter, a few bossless work environments have ex- isted for decades, but this has become a real trend in recent years. For one thing, how and where work gets done has shifted in major ways because many people can work from home or other locations outside a regular office with ease. At Symantec, for example, most em- ployees used to work in cubicles, but now many of them work from home or other remote locations scattered all over the world.79 When everyone has access to the information they need and the training to make good decisions, having layers of managers just eats up costs and slows down response time.80

Many bossless companies, such as Valve Software (Web platform for video games), Netflix (video streaming and rentals), and Atlassian (enterprise software) operate in technology-related industries, but companies as diverse as GE Aviation (aviation man- ufacturing), W. L. Gore & Associates (best known for Gore-Tex fabrics), Whole Foods Market (supermarkets), and Semco (diversified manufacturing, described previously), have succeeded for years with bossless structures. One of the most interesting examples of a bossless work environment is a tomato processor.

Innovative Way

Morning Star

Chris Rufer, founder of Morning Star, the world’s largest tomato processor, with three fac- tories that produce products for companies such as Heinz and Campbell Soup Company, believes that if people can manage the complexities of their own lives without a boss, there is no reason they can’t manage themselves in the workplace. Rufer organized Morning Star, where 400 or so employees produce over $700 million a year in revenue, based on the following principles of self-management:

•  No one has a boss.

•  Employees negotiate responsibilities with their peers.

•  Everyone can spend the company’s money.

•  There are no titles or promotions.

•  Compensation is decided by peers.

How does such a system work? As the company grew from the original 24 colleagues (as employees are called) to around 400, problems occurred. Some people had trouble work- ing in an environment with no bosses and no hierarchy. Thus, Rufer created the Morning Star Self-Management Institute to provide training for people in the principles and systems of self-management. Every colleague now goes through training, in small groups of 10–15 people, to learn how to work effectively as part of a team, how to handle the responsibilities of “planning, organizing, leading, and controlling” that are typically carried out by managers, how to balance freedom and accountability, how to understand and effectively communicate with others, and how to manage conflicts.

Today, every associate writes a personal mission statement and is responsible for ac- complishing it, including obtaining whatever tools and resources are needed. That means that anyone can order supplies and equipment, and colleagues are responsible for initiating the hiring process when they need more help. Every year, each person negotiates a Colleague Letter of Understanding (CLOU) with the associates most affected by his or her work. Every CLOU has a clearly defined set of metrics that enable people to track their progress in achieving their goals and meeting the needs of their colleagues. “Around here,” one associate said, “nobody’s your boss and everybody’s your boss.”81

In a bossless work environment such as that at Morning Star, nobody gives orders, and nobody takes them. Accountability is to the customer and the team rather than to a man- ager. There can be many advantages to a bossless work environment, including increased

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flexibility, greater employee initiative and commitment, and better and faster deci- sion making.82 However, bossless work environments also present new chal- lenges. Costs may be lower because of reduced overhead, but money has to be invested in ongoing training and devel- opment for employees so that they can work effectively within a bossless system. The culture also has to engage employees and support the nonhierarchical environ- ment. Employee engagement is essential for a successful bossless workplace.

Employee Engagement Employee engagement means that people are emotionally involved in their jobs and are satisfied with their work conditions, contribute enthusiastically to meeting team and organizational goals, and feel a sense of belonging and commitment to the organization and its mission.83 To engage employees, man- agers unite people around a compelling purpose that encourages them to give their best. Young Generation Y employees (some- times called Millennials), the most educated generation in the history of the United States, grew up technologically adept and globally conscious. Unlike many workers in the past, they typically are not hesitant to question their superiors and challenge the status quo. They want a flexible, collaborative work environment that is challenging and supportive, with access to cutting-edge technology, opportunities to learn and further their careers and personal goals, and the power to make substantive decisions in the workplace. Meeting the shifting needs of this generation is one reason that organizations put employee engage- ment surveys near the top of the list of tools and techniques they are using (the technique ranked number one in North America).84

Meanwhile, smart managers are looking ahead to the next generation, alternatively called the Pluralist Generation, Generation Z, or the Re-Generation (Re-Gens). Re-Gens, born beginning around 1995, will soon be flooding into the workforce, bringing their own changes and challenges to the practice and evolution of management. Some observers pre- dict that a sense or meaning and commitment, especially environmental responsibility, will be high on their list of priorities. 85

• Modern management is a lively mix of ideas and tech- niques from varied historical perspectives, but new con- cepts continue to emerge.

• Managers tend to look for innovative ideas and ap- proaches, particularly during turbulent times.

• Two recent trends are the transition to a more technology-driven workplace and a corresponding emphasis on a people-driven workplace.

• Supply chain management refers to managing the sequence of suppliers and purchasers, covering all stages

Remember This

(Continued)

Concept Connection

Research has shown that organizations can deliberately create a culture that engages employees and encourages greater job satisfaction. At international shipping company Deutsche Post DHL Group (DHL), for example, the company is big on thanking employees for their contributions through thank- you notes, monetary rewards, and more. Other engagement tactics include communicating honestly with employees, supporting career development, and enabling employees to serve their communities.

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of processing from obtaining raw materials to distribut- ing finished goods to consumers.

• Two ideas related to a people-driven workplace are the bossless work environment and employee engagement.

• Engagement means that people are involved in their jobs and are satisfied with their work conditions, contribute enthusiastically to meeting team and

organizational goals, and feel a sense of belonging and commitment to the organization and its mission.

• Managers are looking ahead to the next generation of employees, sometimes called Re-Gens, to try to predict what changes and challenges they may bring to the evo- lution of management thinking.

Ch2 Discussion Questions

1. How would you feel about working in a bossless orga- nization? What might be your role as a “manager” in such an environment? Do you think this is a trend that will continue to grow or fade away? Why?

2. Big data analytics programs (analyzing massive data sets to make decisions) use gigantic computing power to quantify trends that would be beyond the grasp of human observers. As the use of this quantitative analysis increases, do you think it may decrease the “humanity of production” in organizations? Why?

3. Can you think of potential drawbacks to retailers using labor-waste elimination systems based on scientific management principles, as described in the text? Do you believe that scientific management characteristics will ever cease to be a part of organizational life, since they are now about 100 years old? Discuss.

4. A management professor once said that for successful management, studying the present was most important, studying the past was next, and studying the future should come last. Do you agree? Why?

5. As organizations become more technology-driven, which do you think will become more important—the

management of the human element of the organization or the management of technology? Discuss.

6. Why do you think Mary Parker Follett’s ideas tended to be popular with businesspeople of her day but were ignored by management scholars? Why are her ideas appreciated more today?

7. Explain the basic idea underlying the contingency view. How would you go about identifying key contingencies facing an organization?

8. Why can an event such as the Hawthorne studies be a major turning point in the history of management, even if the results of the studies are later shown to be in error? Discuss.

9. How would you apply systems thinking to a problem such as poor performance in your current academic studies? What about a problem with a romantic part- ner or family member? Try to identify all the elements and their interdependencies.

10. Can a manager be effective and successful today without using social media? What do you see as the most important ways for managers to use this technology?

Ch2 Apply Your Skills: Experiential Exercise Security or Autonomy86

Respond to each statement here based on whether you Mostly Agree or Mostly Disagree with it.

Mostly Mostly Disagree Agree 1. I value stability in my job. ______ ______ 2. Rules, policies, and procedures generally frustrate me. ______ ______ 3. I enjoy working for a firm that promotes employees based heavily on seniority. ______ ______ 4. I’d prefer some kind of freelance job to working for the government. ______ ______ 5. I’d be proud to work for the largest and most successful company in its field. ______ ______ 6. Given a choice, I’d rather make $90,000 a year as a VP in a small company than

$100,000 a year as a middle manager in a large company. ______ ______

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Scoring: Give yourself one point for each answer of Mostly Agree to the odd-numbered questions and one point for each Mostly Disagree to the even-numbered questions. Interpretation: Your answers determine whether your preferences would fit better with a bureaucratic organiza- tion. If your score is 8–10, a large, formal company would be most compatible with your style and wishes. A score of 4–7 suggests that you would receive modest satisfaction from working within a bureaucratic organization. A score of 1–3 suggests that you would likely be frustrated by

working in a large bureaucracy and would prefer more of a bossless organization instead.

A large, bureaucratic organization provides security, benefits, and certainty compared to smaller or entrepre- neurial firms, where freedom and autonomy are greater. Do you want to optimize security or autonomy in your career? Would you be more satisfied in a large formal organization or in an organization that emphasizes a human resources or even bossless perspective? Compare your scores with other students’ scores and discuss any differences.

Ch2 Apply Your Skills: Small Group Breakout turning Points on the Road to Management Step 1. Interview a manager whom you know at your university or place of employment, or a parent or friend who is a manager, and ask the following question: “What was a turning point in your life that led you to become the person, and manager, that you are today?”(A turning point could be an event, such as a divorce, birth of a child, busi- ness failure, loss of job; or a decision, such as to quit college and start a business, go back to school, get married, and so on.) Collect information on a second turning point if the interviewee has one to describe. Your goal is to learn the specifics about how each turning point led to the person’s current position in life.

Step 2. Divide into groups of four to six members. One person at a time, share what you learned about a manager’s career turning points. What themes or patterns character- ize the turning points among the managers interviewed? Step 3. Have you personally experienced any turning points in your life? Each group member should describe your personal turning point to the group. With the addi- tional turning points, analyze again for themes and patterns across all the turning points. Step 4. What lessons does your group learn from its analysis? How does history (events, decisions) play a role in the lives and careers of the managers interviewed, and in the lives of your group members?

Ch2 Apply Your Skills: Ethical Dilemma the New test87

The Civil Service Board in a midsize city in Indiana de- cided that a written exam should be given to all candidates for promotion to supervisor. A written test would assess mental skills and would open access to all personnel who wanted to apply for the position. The board believed a written exam for promotion would be completely fair and objective because it eliminated subjective judgments and personal favoritism regarding a candidate’s qualifications.

Maxine Othman, manager of a social service agency, loved to see her employees learn and grow to their full potential. When a rare opening for a supervising clerk oc- curred, Maxine quickly decided to give Sheryl Hines a shot at the job. Sheryl had been with the agency for 17 years and had shown herself to be a true leader. In her new position, Sheryl worked hard at becoming a good supervisor, just as she had always worked hard at being a top-notch clerk. She paid attention to the human aspects of employee prob- lems and introduced modern management techniques that

strengthened the entire agency. Because of the board’s new ruling, however, Sheryl would have to complete the exam in an open competition—anyone could sign up and take it, even a new employee. The board wanted the candidate with the highest score to get the job but allowed Maxine, as manager of the agency, to have the final say.

Because Sheryl had accepted the provisional opening and proved herself on the job, Maxine was upset that the entire clerical force was deemed qualified to take the test. When the results came back, she was devastated. Sheryl placed twelfth in the field of candidates, while one of her newly hired clerks placed first. The Civil Service Board, impressed by this person’s high score, urged Maxine to give the new clerk the permanent supervisory job over Sheryl; however, it was still Maxine’s choice. Maxine wondered whether it was fair to base her decision only on the results of a written test. The board was pushing her to honor the objective written test, but could the test really assess fairly who was the right person for the job?

7. I’d rather work directly for a single manager than on a team with shared responsibilities. ______ ______ 8. I generally prefer to multitask and be involved in multiple projects. ______ ______ 9. Good employee benefits are important to me. ______ ______ 10. Rules are made to be broken. ______ ______

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What Would You Do?

1. Ignore the test. Sheryl has proven herself via work experience and deserves the job.

2. Give the job to the candidate with the highest score. You don’t need to make enemies on the Civil Service Board, and, although it is a bureaucratic procedure, the test is an objective way to select a permanent placement.

3. Press the board to devise a more comprehensive set of selection criteria—including test results, but also taking into account supervisory experience, ability to motivate employees, and knowledge of agency procedures—that can be explained and justified to the board and to employees.

Ch2 Apply Your Skills: Case for Critical Analysis More hassle from hR? In their three years at Vreeland Pharmaceuticals, Vitorio Nuños and Gary Shaw had rarely crossed paths, and they had exchanged no more than a dozen sentences. But here they were, seatmates on a plane headed to company head- quarters in Kansas City, Missouri. And suddenly, they had a lot to say to each other.

“What I’d like to know is why we’re wasting a trip to Kansas City to hash out some new policies about leader competencies,” Vitorio said.

“Because Connie Wyland is HR at Vreeland, and you and I both know that policies and models and all of that touchy-feely people stuff are the lifeblood of HR,” Gary re- plied. “I also think a lot of this is the result of panic on the heels of the scandals in sales last year.”

“I don’t think there’s cause for panic. The company fired the guys, apologized, and then you just move on,” said Vitorio.

Gary laughed sarcastically. “No, you fire them, you apologize, and then you analyze the whole thing ad nau- seam, and then you hamstring your management team with endless rules and bureaucratic standards just to make sure it doesn’t happen again.”

“So we all pay for their mistakes,” replied Vitorio. “We pay because HR feels guilty that those guys

moved up so high in the system,” Gary replied. “So now Connie and her staff have devised the ultimate solution to the problem. I don’t know why we all have to go in to discuss it; she’s already decided what she’s going to do, and she’s positive this is the cure-all to prevent any further embarrassment to the company.”

“Let’s look at the document,” Vitorio said. He reached under the seat, retrieved and unpacked his tablet, placed it on the tray table, and turned it on.

“Too much glare,” Gary said, peeking over. Vitorio pulled down the window shade.

“Is that better?” Gary nodded. The two men read through the

document. “I resent the term ‘rogue leaders,’ ” Gary remarked,

pointing to the phrase. Vitorio shrugged. “It’s a rough draft. They’ll clean up

the language . . . I think.” “It’s really just a rehash of the mission statement and

all of the things we learned in training. This is stuff we all learned in business school. I feel like I’m being lectured.”

“Yeah.” Vitorio scrolled up and down the document. “Any business student could have written this.”

“I hear the HR crew put in lots of overtime,” said Gary. Vitorio smirked. “For this? I’ll tell you . . . and this is

just between you and me, but I really resent this, and we’re some of the newer members of management. I would love to hear what the older managers are saying.”

“I know Connie,” Gary said. “She and her staff are going to come in tomorrow all gung-ho on this.” He turned the tablet in order to see it easier. “We already know what’s expected of us.” He scrolled down, stopping at key phrases. “Look at this . . . ‘critical values’ . . . ‘core behaviors’ . . . ‘foster- ing conflict resolution’ . . . and here’s one—‘implementing employee involvement strategies.’ How does she think we got these jobs in the first place?” Gary paused. “What really makes me angry is that I heard Connie is going to start manager training sessions where she will teach us the behaviors associated with each value! Can you believe that? She will have us role-playing and stuff. I will fight this if it goes beyond general value statements that we can follow in our own way.”

“I can’t wait to hear what Vreeland says,” Vitorio remarked.

“Are you kidding? He’ll go along with it. He’ll spend 10 to 15 minutes telling us how great we all are and insinuat- ing that we don’t really need this, and then he’ll back Con- nie all the way. Face it, this is the way it’s going to be, and he really doesn’t need our input or approval. It just looks good,” commented Gary.

Vitorio turned off and closed the tablet. “I just feel that imposing something like this on management is a slap at every one of us. We know what’s expected. We don’t need training. We also know our people and we have to have some flexibility within a broad set of boundaries. This sort of thing just hamstrings us. Connie wants the Stepford Wives.”

“I just hope a couple of senior managers speak up at this meeting and voice some concerns. Maybe it will be toned down a little,” Gary said. “You and I are middle management and we haven’t been with the company long enough. All we can do at this meeting is sit and nod.”

Questions

1. Are Connie and her staff on the right track to avoid man- ager mishaps by defining a new set of leader rules and core values and imposing it by fiat, from the top down?

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2. Do you think a more participative and open culture can be imposed on managers with value statements and training sessions? Why?

3. Why do you think Vitorio and Gary are on the defensive? Might the emphasis on core leadership behaviors be handled in a different way? What do you suggest?

Ch2 On the Job Video Cases

On the Job: barcelona Restaurant Group: the Evolution of Management thinking Questions

1. In what ways is Barcelona’s management approach consistent with modern developments in management thinking?

2. In what ways does Barcelona’s management approach run counter to contemporary developments in manage- ment thinking?

3. What aspects of restaurant work are especially challenging to wait staff, and how does Barcelona’s approach to management help employees overcome the downsides of the job?

Ch2 Endnotes 1. This questionnaire is from William Pfeiffer and John E.

Jones, eds., “Supervisory Attitudes: The X-Y Scale,” in The 1972 Annual Handbook for Group Facilitators (New York: John Wiley & Sons, 1972), pp. 65–68. This mate- rial is used by permission of John Wiley & Sons, Inc. The X-Y scale was adapted from an instrument developed by Robert N. Ford of AT&T for in-house manager training.

2. Rachel Emma Silverman, “Some Tech Firms Ask: Who Needs Managers?” The Wall Street Journal (August 6, 2013), http://online.wsj.com/article/SB10001424127 887323420604578652051466314748.html (accessed August 20, 2013).

3. Lisa Thorell, “How Many Bossless Companies Exist Today?” Innovatini (April 1, 2013), http://www .innovatini.com/how-many-bossless-companies -are-there/ (accessed August 20, 2013).

4. See John Hollon, “The Bossless Office Trend: Don’t Be Surprised If It Doesn’t Last Long,” HR Manage- ment, TLNT.com ( July 2, 2012), http://www.tlnt .com/2012/07/02/the-bossless-office-trend-dont-be -surprised-if-it-doesnt-last-long/ (accessed August 20, 2013).

5. Matthew E. May, “Mastering the Art of Bosslessness,” Fast Company (September 26, 2012), http://www .fastcompany.com/3001574/mastering-art-bosslessness (accessed August 20, 2013).

6. M. S. S. el Namaki, “Does the Thinking of Yesterday’s Management Gurus Imperil Today’s Companies?” Ivey Business Journal (March–April 2012), www .iveybusinessjournal.com/topics/strategy/does-the -thinking-of-yesterdays-management-gurus-imperil -todays-companies (accessed June 19, 2012).

7. Walter Kiechel III, “The Management Century,” Harvard Business Review (November 2012): 62–75; Eric Abrahamson, “Management Fashion,” Academy of Management Review 21, no. 1 ( January 1996): 254–285.

8. Daniel A. Wren, The Evolution of Management Thought, 4th ed. (New York: Wiley, 1994).

9. Jena McGregor, “‘There Is No More Normal,’” Business- Week (March 23 and 30, 2009): 30–34.

10. Robert Tell and Brian Kleiner, “Organizational Change Can Rescue Industry,” Industrial Management (March– April 2009): 20–24.

11. This discussion is based on Walter Kiechel III, “The Management Century,” Harvard Business Review (November 2012): 62–75.

12. These quotes are from Kiechel, “The Management Century.”

13. Jacques Bughin, Michael Chui, and James Manyika, “Capturing Business Value with Social Technologies,” McKinsey Quarterly (November 2012), http://www .mckinsey.com/insights/high_tech_telecoms_internet /capturing_business_value_with_social_technologies (accessed September 27, 2013).

14. Roland Deiser and Sylvain Newton, “Six Social-Media Skills Every Leader Needs,” McKinsey Quarterly, Issue 1 (February 2013), http://www.mckinsey.com/insights /high_tech_telecoms_internet/six_social-media_skills _every_leader_needs (accessed August 21, 2013).

15. David Kiron, Douglas Palmer, and Robert Berkman, “The Executive’s Role in Social Business,” MIT Sloan Management Review (Summer 2013): 83–89.

16. Ibid.

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17. Leslie Gaines-Ross, “Get Social: A Mandate for New CEOs,” MIT Sloan Management Review (March 7, 2013), http://sloanreview.mit.edu/article /get-social-a-mandate-for-new-ceos/ (accessed August 21, 2013).

18. Ibid. 19. Ibid. 20. Deiser and Newton, “Six Social Media Skills Every

Leader Needs.” 21. Daniel A. Wren, “Management History: Issues and

Ideas for Teaching and Research,” Journal of Manage- ment 13 (1987): 339–350.

22. Business historian Alfred D. Chandler, Jr., quoted in Jerry Useem, “Entrepreneur of the Century,” Inc. (20th Anniversary Issue, 1999): 159–174.

23. Useem, “Entrepreneur of the Century.” 24. The following is based on Wren, Evolution of Manage-

ment Thought, Chapters 4 and 5; and Claude S. George, Jr., The History of Management Thought (Englewood Cliffs, NJ: Prentice-Hall, 1968), Chapter 4.

25. Cynthia Crossen, “Early Industry Expert Soon Realized a Staff Has Its Own Efficiency,” The Wall Street Journal, November 6, 2006.

26. Alan Farnham, “The Man Who Changed Work For- ever,” Fortune ( July 21, 1997): 114; Charles D. Wrege and Ann Marie Stoka, “Cooke Creates a Classic: The Story Behind F. W. Taylor’s Principles of Scientific Management,” Academy of Management Review (October 1978): 736–749; Robert Kanigel, The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency (New York: Viking, 1997); and “The X and Y Factors: What Goes Around Comes Around,” special section in “The New Organisation: A Survey of the Company,” The Economist ( January 21–27, 2006): 17–18.

27. Wren, Evolution of Management Thought, 171; and George, History of Management Thought, 103–104.

28. Vanessa O’Connell, “Stores Count Seconds to Trim Labor Costs,” The Wall Street Journal, November 17, 2008; and Vanessa O’Connell, “Retailers Reprogram Workers in Efficiency Push,” The Wall Street Journal, September 10, 2008.

29. Gary Hamel, “The Why, What, and How of Manage- ment Innovation,” Harvard Business Review (February 2006): 72–84; Peter Coy, “Cog or CoWorker?” Business- Week (August 20 and 27, 2007): 58–60.

30. Max Weber, General Economic History, trans. Frank H. Knight (London: Allen & Unwin, 1927); Max Weber, The Protestant Ethic and the Spirit of Capitalism, trans. Talcott Parsons (New York: Scribner, 1930); and Max Weber, The Theory of Social and Economic Organiza- tions, ed. and trans. A. M. Henderson and Talcott- Parsons (New York: Free Press, 1947).

31. Nadira A. Hira, “The Making of a UPS Driver,” Fortune (November 12, 2007): 118–129; David J. Lynch,

“Thanks to Its CEO, UPS Doesn’t Just Deliver,” USA Today, July 24, 2006, www.usatoday.com/money /companies/management/2006-07-23-ups_x .htm ?tab1=t2 (accessed July 24, 2006); Kelly Barron, “Logistics in Brown,” Forbes ( January 10, 2000): 78–83; Scott Kirsner, “Venture Vérité: United Parcel Service,” Wired (September 1999): 83–96; “UPS,” The Atlanta Journal and Constitution, April 26, 1992; Kathy Goode, Betty Hahn, and Cindy Seibert, “United Parcel Service: The Brown Giant” (unpublished manuscript, Texas A&M University, 1981); and “About UPS,” UPS corpo- rate Web site, www.ups.com/content/us/en/about /index.html (accessed June 19, 2012).

32. Stephen Cummings and Todd Bridgman, “The Relevant Past: Why the History of Management Should Be Critical to Our Future,” Academy of Management Learn- ing & Education 10, no. 1 (2011): 77–93.

33. These are based on Paul Downs, “How I Fire People,” You’re the Boss blog, The New York Times, June 4, 2012, http://boss.blogs.nytimes.com/2012/06/04/how-i -fire-people/ (accessed June 20, 2012).

34. Henri Fayol, Industrial and General Administra- tion, trans. J. A. Coubrough (Geneva: International Management Institute, 1930); Henri Fayol, General and Industrial Management, trans. Constance Storrs (London: Pitman and Sons, 1949); and W. J. Arnold et al., Business-Week, Milestones in Management (New York: McGraw-Hill, vol. I, 1965; vol. II, 1966).

35. Gregory M. Bounds, Gregory H. Dobbins, and Oscar S. Fowler, Management: A Total Quality Perspective (Cincinnati, OH: South-Western Publishing, 1995), pp. 52–53.

36. Mary Parker Follett, The New State: Group Organiza- tion: The Solution of Popular Government (London: Longmans, Green, 1918); and Mary Parker Follett, Creative Experience (London: Longmans, Green, 1924).

37. Henry C. Metcalf and Lyndall Urwick, eds., Dynamic Administration: The Collected Papers of Mary Parker Follett (New York: Harper & Row, 1940); Arnold, Business-Week, Milestones in Management.

38. Follett, The New State; Metcalf and Urwick, Dynamic Administration (London: Sir Isaac Pitman, 1941).

39. William B. Wolf, How to Understand Management: An Introduction to Chester I. Barnard (Los Angeles: Lucas Brothers, 1968); and David D. Van Fleet, “The Need- Hierarchy and Theories of Authority,” Human Relations 9 (Spring 1982): 111–118.

40. Curt Tausky, Work Organizations: Major Theoretical Perspectives (Itasca, IL: F. E. Peacock, 1978), p. 42.

41. Charles D. Wrege, “Solving Mayo’s Mystery: The First Complete Account of the Origin of the Hawthorne Studies—The Forgotten Contributions of Charles E. Snow and Homer Hibarger,” paper presented to the Management History Division of the Academy of Management (August 1976).

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42. Ronald G. Greenwood, Alfred A. Bolton, and Regina A. Greenwood, “Hawthorne a Half Century Later: Relay Assembly Participants Remember,” Journal of Manage- ment 9 (Fall/Winter 1983): 217–231.

43. F. J. Roethlisberger and W. J. Dickson, Management and the Worker (Cambridge, MA: Harvard University Press, 1939).

44. H. M. Parson, “What Happened at Hawthorne?” Science 183 (1974): 922–932; John G. Adair, “The Hawthorne Effect: A Reconsideration of the Method- ological Artifact,” Journal of Applied Psychology 69, no. 2 (1984): 334–345; and Gordon Diaper, “The Hawthorne Effect: A Fresh Examination,” Educational Studies 16, no. 3 (1990): 261–268.

45. R. G. Greenwood, A. A. Bolton, and R. A. Greenwood, “Hawthorne a Half Century Later,” 219–221.

46. F. J. Roethlisberger and W. J. Dickson, Management and the Worker; and Kiechel, “The Management Century.”

47. Ramon J. Aldag and Timothy M. Stearns, Management, 2d ed. (Cincinnati, OH: South-Western Publishing, 1991), pp. 47–48.

48. Tausky, Work Organizations: Major Theoretical Perspec- tives, p. 55.

49. Douglas McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), pp. 16–18; Robert A. Cunningham, “Douglas McGregor: A Lasting Impres- sion,” Ivey Business Journal (October 2011): 5–7.

50. Ricardo Semler, “Out of This World: Doing Things the Semco Way,” Global Business and Organizational Excel- lence ( July–August 2007): 13–21.

51. Wendell L. French and Cecil H. Bell Jr., “A History of Organizational Development,” in Wendell L. French, Cecil H. Bell Jr., and Robert A. Zawacki, Organization Development and Transformation: Managing Effective Change (Burr Ridge, IL: Irwin McGraw-Hill, 2000), pp. 20–42.

52. Mansel G. Blackford and K. Austin Kerr, Business Enterprise in American History (Boston: Houghton Mifflin, 1986), Chapters 10 and 11; and Alex Groner and the editors of American Heritage and BusinessWeek, The American Heritage History of American Business and Industry (New York: American Heritage Publish- ing, 1972), Chapter 9.

53. Geoffrey Colvin, “How Alfred P. Sloan, Michael Porter, and Peter Drucker Taught Us All the Art of Manage- ment,” Fortune (March 21, 2005): 83–86.

54. Brooks Barnes, “Disney Technology Tackles a Theme- Park Headache: Lines,” The New York Times, December 28, 2010, B1; and “Disney Cracks Down on FastPass Enforcement,” Tampa Bay Times, March 9, 2012, B2.

55. Larry M. Austin and James R. Burns, Management Science (New York: Macmillan, 1985).

56. Dan Heath and Chip Heath, “In Defense of Feelings: Why Your Gut Is More Ethical Than Your Brain,” Fast Company ( July–August 2009): 58–59.

57. Scott Patterson, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (New York: Crown Business, 2010); and Harry Hurt III, “In Practice, Stock Formulas Weren’t Perfect,” The New York Times, February 21, 2010.

58. Discussed in Kiechel, “The Management Century.” 59. Ludwig von Bertalanffy et al., “General Systems Theory:

A New Approach to Unity of Science,” Human Biology 23 (December 1951): 302–361; and Kenneth E. Bould- ing, “General Systems Theory—The Skeleton of Sci- ence,” Management Science 2 (April 1956): 197–208.

60. This section is based on Peter M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday, 1990); John D. Sterman, “Systems Dynamics Modeling: Tools for Learning in a Complex World,” California Management Review 43, no. 4 (Summer 2001): 8–25; Andrea Gabor, “Seeing Your Company as a System,” Strategy + Business (Summer 2010), www.strategy-business.com/article /10210?gko=20cca (accessed June 20, 2012); and Ron Zemke, “Systems Thinking,” Training (February 2001): 40–46.

61. This example is cited in Sterman, “Systems Dynamics Modeling.”

62. Fred Luthans, “The Contingency Theory of Manage- ment: A Path Out of the Jungle,” Business Horizons 16 ( June 1973): 62–72; and Fremont E. Kast and James E. Rosenzweig, Contingency Views of Organization and Management (Chicago: Science Research Associates, 1973).

63. Thomas H. Davenport and Laurence Prusak, with Jim Wilson, What’s the Big Idea? Creating and Capitalizing on the Best Management Thinking (Boston, MA: Harvard Business School Press, 2003); Theodore Kinni, “Have We Run out of Big Ideas?” Across the Board (March– April 2003): 16–21; Hamel, “The Why, What, and How of Management Innovation”; and Joyce Thompson Heames and Michael Harvey, “The Evolution of the Con- cept of the Executive from the 20th-Century Manager to the 21st-Century Global Leader,” Journal of Leadership and Organizational Studies 13, no. 2 (2006): 29–41.

64. John T. Seaman Jr. and George David Smith, “Your Company’s History as a Leadership Tool: Take Your Organization Forward by Drawing on the Past,” Harvard Business Review (December 2012): 45–52.

65. David Hurst, “The New Ecology of Leadership: Revisit- ing the Foundations of Management,” Ivey Business Jour- nal (May–June 2012): 1–5; Michael Murphy, “The Race to Failure” (a review of Crash Course by Paul Ingrassia, Random House 2010), The Wall Street Journal, January 29, 2010, A13.

66. Annick Van Rossem and Kees Van Veen, “Managers’ Awareness of Fashionable Management Concepts: An Empirical Study,” European Management Journal 29 (2011): 206–216.

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67. Darrell Rigby and Barbara Bilodeau, Management Tools and Trends 2013 (Bain & Company, 2013), down- loaded from http://www.bain.com/Images/BAIN _BRIEF_Management_Tools_%26_Trends_2013.pdf (August 21, 2013).

68. Darrell K. Rigby, Management Tools 2013: An Execu- tive’s Guide (Bain & Company 2013), http://www.bain .com/Images/MANAGEMENT_TOOLS_2013 _An_Executives_guide.pdf (accessed August 27, 2013); Margaret Rouse, “Big Data Analytics,” TechTarget.com ( January 10, 2012), http://searchbusinessanalytics .techtarget.com/definition/big-data-analytics (accessed August 27, 2013); and David Kiron, Renee Boucher Ferguson, and Pamela Kirk Prentice, “From Value to Vision: Reimagining the Possible with Data Analytics,” MIT Sloan Management Review Special Report (March 5, 2013), http://sloanreview.mit.edu/reports /analytics-innovation/ (accessed August 27, 2013).

69. Steve Lohr, “Sure, Big Data Is Great. But So Is Intu- ition,” The New York Times, December 29, 2012.

70. Andrew McAfee and Erik Brynjolfsson, “Big Data: The Management Revolution,” Harvard Business Review (October 2012): 61–68.

71. Spandas Lui, “eHarmony Translates Big Data into Love and Cash,” ZDNet.com (November 6, 2012) http:// www.zdnet.com/eharmony-translates-big-data-into -love-and-cash-7000006884/ (accessed August 27, 2013); and Jeff Russell, “LinkedIn’s eHarmony-Style Recruiting: Big Data Meets HR,” HR.com (April 16, 2013), http://www.hr.com/en/app/blog/2013/04 /linkedin%E2%80%99s-eharmony-style-recruiting-big -data-meet_hfl6zpzd.html (accessed August 27, 2013).

72. Lohr, “Sure, Big Data Is Great.” 73. McAfee and Brynjolfsson, “Big Data: The Management

Revolution.” 74. Examples reported in Thomas H. Davenport and

Jeanne G. Harris, Competing on Analytics: The New Science of Winning (Boston, MA: Harvard Business School Press, 2007); and McAfee and Brynjolfsson, “Big Data: The Management Revolution.”

75. This definition is based on Steven A. Melnyk and David R. Denzler, Operations Management: A Value-Driven Ap- proach (Burr Ridge, IL: Richard D. Irwin, 1996): p. 613.

76. The Global Supply Chain Games project, www.gscg.org (accessed July 16, 2008).

77. Eric Bellman and Cecilie Rohwedder, “Western Grocer Modernizes Passage to India’s Markets,” The Wall Street Journal, November 28, 2007.

78. Steven Greenhouse and Stephanie Clifford, “U.S. Retailers Offer Safety Plan for Bangladeshi Facto- ries” The New York Times ( July 10, 2013), http:// www.nytimes.com/2013/07/11/business/global /us-retailers-offer-safety-plan-for-bangladeshi-factories .html?pagewanted=all&_r=0 (accessed August 21, 2013); and Kate O’Keeffe and Sun Narin, “H&M Clothes Made in Collapsed Cambodian Factory,” The Wall Street Journal (May 21, 2013), http://online.wsj .com/article/SB1000142412788732478700457849709 1806922254.html (accessed August 21, 2013).

79. Roxane Divol and Thomas Fleming, “The Evolution of Work: One Company’s Story,” McKinsey Quarterly, Issue 4 (2012): 111–115.

80. Tom Ashbrook, “The Bossless Office,” On Point with Tom Ashbrook ( June 20, 2013), http://onpoint.wbur .org.

81. Doug Kirkpatrick, “Self-Management’s Success at Morning Star,” T+D (October 2012): 25–27; and Gary Hamel, “First, Let’s Fire All the Managers,” Harvard Business Review (December 2011): 48–60.

82. Hamel, “First, Let’s Fire All the Managers.” 83. This definition is based on Mercer Human Resource

Consulting’s Employee Engagement Model, as described in Paul Sanchez and Dan McCauley, “Measuring and Managing Engagement in a Cross-Cultural Workforce: New Insights for Global Companies,” Global Business and Organizational Excellence (November–December 2006): 41–50.

84. Rigby and Bilodeau, “Management Tools and Trends 2013.”

85. Max Mihelich, “Another Generation Rises: Looking Beyond the Millennials,” Workforce (April 12, 2013), http://www.workforce.com/articles/108-another -generation-rises-looking-beyond-the-millennials (accessed August 22, 2013).

86. Adapted from Don Hellriegel, Susan E. Jackson, and John W. Slocum Jr., Managing: A Competency-Based Approach (Mason, OH: Cengage South-Western, 2008), p. 73.

87. Based on Betty Harrigan, “Career Advice,” Working Woman ( July 1986): 22–24.

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part 1 Integrative Case Part One: introduction to Management The Clean-Energy Future Is Now

As Green Car Journal prepared to publish its much- anticipated “Green Car of the Year” edition for 2012, audiences might have expected a tribute to the Toyota Prius, Nissan Leaf, or another innovation in electric or hybrid motoring. Instead, the panel of environmental and automotive experts assembled by the magazine made a surprising choice—one that signaled a sea change in green energy. The judges selected the Honda Civic Natural Gas, an alternative-fuel, partial-zero- emissions vehicle that operates solely on compressed natural gas. As the magazine noted, not only is the Civic’s sticker price of $26,155 more affordable than electric vehicles, the car possesses a driving range and horsepower on par with conventional compacts, but the Civic’s alternative fuel costs approximately half the price of gasoline and is sourced almost entirely from abundant reserves in the United States. Since winning the award, this version of the Honda Civic has paved the way for other natural gas vehicles (NGVs), such as the 2014 Ford F-150 pickup truck and the 2015 Chevrolet Impala.

Against a backdrop of ubiquitous marketing for electric cars and hybrids, the choice of an NGV for Green Car of the Year was an unmistakable nod to a development in green energy that is so immense that it promises to transform the U.S. energy grid and end North American dependence on foreign oil. That development is the discovery of the Marcellus Shale. Located throughout the Appalachian Basin of the eastern United States, the Marcellus Shale is a mas- sive sedimentary rock formation deep beneath the Earth’s surface that contains one of the largest meth- ane deposits anywhere in the world. Once thought to possess a modest 1.9 trillion cubic feet of natural gas, this 600-mile-wide black shale formation below Pennsylvania, Ohio, New York, and West Virginia was explored by geologists in 2004 and was found to con- tain between 168 trillion and 516 trillion cubic feet of natural gas. Combined with other U.S. shale plays, in- cluding the Barnett Shale in Texas, the discovery of the Marcellus led the International Energy Agency (IEA) to rank the United States the new number-one natu- ral gas producer in the world, edging out resource-rich

Russia. In addition, the Marcellus has triggered a green-energy boom known as the Great Shale Gas Rush, which is creating thousands of green jobs, revi- talizing the nation’s economy, and pointing the way to a clean-energy future.

This breakthrough couldn’t have come at a bet- ter time. In a highly turbulent business environment shaken by a global recession and new government re- strictions on traditional energy, today’s business man- agers struggle to know which energy alternatives are viable, or even affordable. The unexpected bankruptcy of well-funded green-energy darlings Solyndra and Beacon Power further underscore the uncertainty of the alternative energy marketplace. To gain stability for their organizations, managers need solutions that are reliable now, not decades into the future.

Thanks to an abundant supply of affordable natu- ral gas, the green energy future has arrived. According to the U.S. Environmental Protection Agency (EPA) profile on clean energy, natural gas is a clean-burning fuel that generates roughly half the carbon emissions of coal and oil while releasing no sulfur dioxide or mer- cury emissions. Given its low price relative to other energy sources, natural gas has game-changing im- plications for trucking fleets, consumer automobiles, electric power generation, and commercial heating— not to mention natural gas ovens, clothes dryers, water heaters, and other appliances.

While shale gas is a win-win for business and the environment, its impact on green jobs and the econ- omy is equally important. According to a recent IHS Global Insight study, shale gas production—currently 34 percent of all natural gas production in the United States—will deliver an estimated 870,000 green jobs by 2015. As for the national economy, shale gas contributed $76.9 billion to the U.S. gross domestic product (GDP) in 2010 and is projected to contribute $118.2 billion in 2015. Over the next 25 years, shale gas will raise more than $933 billion in tax revenue for local, state, and federal governments. The news about natural gas is good for average consumers as well. In 2011, property owners in the Marcellus region re- ceived $400 million in natural gas royalties—a number that will climb even higher in the next decade. In ad- dition, individual U.S. consumers can expect $926 per year in cost savings related to natural gas. Combined, this economic activity equates to much-needed relief in hard times.

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What does the switch to natural gas mean for industry-leading companies? For automakers like Honda and Ford, NGVs have begun making their way into regular assembly-line production. Transport busi- nesses such as UPS are converting fleets from diesel to natural gas as part of the White House’s National Clean Fleets Partnership. Transit leaders like Navi- star and Clean Energy Fuels have launched strategic partnerships to build America’s Natural Gas High- way. Manufacturers such as Westport Innovations have made organizational changes to become leading producers of liquefied and compressed natural gas en- gines. Utility companies like Dominion are replacing coal-based electricity with gas-fired electric generation. And drillers like Range Resources are finding new ways to improve the quality and safety of natural gas exploration while controlling costs.

There are no limits to the possibilities of the Great Shale Gas Rush. However, it will take visionary leader- ship and skillful management to deliver on the promise of a truly sustainable clean-energy future.

Questions

1. What turbulent forces are causing business leaders to rethink their use of energy?

2. Which managers—top managers, middle manag- ers, or first-line managers—would make company- wide decisions about energy use? How might the new workplace enable all managers to capitalize on the Great Shale Gas Rush?

3. Which historical management perspectives have particular relevance to the exploration and extrac- tion of natural gas? Explain.

Sources: Based on “Honda Civic Natural Gas Is 2012 Green Car of the Year,” Green Car Journal, November 17, 2011, www.greencar.com/articles /honda-civic-natural-gas-2012-green-car-year.php (accessed June 7, 2012); Ros Krasny, “GM to Sell Cars Next Year Powered by Natural Gas,” Reuters, October 16, 2013, http://www.reuters.com/article/2013/10/16/autos -gm-naturalgas-idUSL1N0I510I20131016 (accessed January 4, 2014); Michael Graham Richard, “2014 Ford F150 Pickup Truck Will Run on Compressed Natural Gas,” Treehugger, August 5, 2013, http://www .treehugger.com/cars/2014-ford-f150-pickup-truck-will-run-compressed -natural-gas-cng.html (accessed January 4, 2014); Elwin Green, “Natural Gas Locked in the Marcellus Shale Has Companies Rushing to Cash in on Possibilities,” Pittsburgh Post-Gazette, March 16, 2012, www.post-gazette .com/stories/business/news/natural-gas-locked-in-the-marcellus-shale -has-companies-rushing-to-cash-in-on-possibilities-370058/(accessed June 7, 2012); Kevin Begos, “Gas Drillers Generate About $3.5 Billion in Revenues from Marcellus Shale,” Associated Press, May 5, 2012, www .timesunion.com/business/article/AP-Pa-gas-drilling-brought-3-5- billion-in-2011-3536873.php (accessed June 8, 2012); Timothy J. Con- sidine, Robert Watson, and Seth Blumsack, The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impacts, and Future Potential, John and Willie Leone Family Department of Energy and Mineral Engineer- ing, Penn State University, July 20, 2011, http://marcelluscoalition.org /wp-content/uploads/2011/07/Final-2011-PA-Marcellus-Economic -Impacts.pdf (accessed June 8, 2012); IHS, “Shale Gas Supports More Than 600,000 American Jobs Today; by 2015, Shale Gas Predicted to Support Nearly 870,000 Jobs and Contribute $118.2 Billion to GDP,” press release, December 6, 2011, http://press.ihs.com/press-release/energy-power /shale-gas-supports-more-600000-american-jobs-today-2015-shale-gas -predict (accessed June 8, 2012); “IEA: U.S. to Overtake Russia as Top Gas Producer,” Reuters, June 5, 2012, http://af.reuters.com/article /energyOilNews/idAFL3E8H45WZ20120605 (accessed June 8, 2012); Environmental Protection Agency, “Clean Energy: Air Emissions,” www .epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html (accessed June 8, 2012); Clifford Krauss, “There’s Gas in Those Hills, The New York Times, April 8, 2008, www.nytimes.com/2008/04/08/business/08gas .html (accessed June 8, 2012).

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