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chapter1

Are You Ready to Be a Manager? Why Innovation Matters The Definition of Management The Four Management Functions Planning Organizing Leading Controlling Organizational Performance Management Skills Conceptual Skills Human Skills Technical Skills When Skills Fail Management Types Vertical Differences Horizontal Differences What Is It Like to Be a Manager? Making the Leap: Becoming a New Manager New Manager Self-Test: Manager Achievement Manager Activities Manager Roles Managing in Small Businesses and Nonprofit Organizations Management and the New Workplace New Workplace Characteristics New Management Competencies

Learning Outcomes

Chapter Outline

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After studying this chapter, you should be able to: 1. Describe the four management functions and the type of management activity associated with each. 2. Explain the difference between efficiency and effectiveness and their importance for organizational performance. 3. Describe conceptual, human, and technical skills and their relevance for managers. 4. Describe management types and the horizontal and vertical differences between them. 5. Define ten roles that managers perform in organizations. 6. Appreciate the manager’s role in small businesses and nonprofit organizations. 7. Understand the personal challenges involved in becoming a new manager. 8. Discuss characteristics of the new workplace and the new management competencies needed to deal with today’s turbulent environment.

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P AR T 1 I NTRODUCTION

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In the past, many managers did exercise tight control over employees. But the field of management is undergoing a revolution that asks managers to do more with less, to engage whole employees, to see change rather than stability as natural, and to inspire vision and cultural values that allow people to create a truly collaborative and productive workplace. In today’s work environment, managers rely less on command and control and more on coordination and communication. This approach differs significantly from a traditional mind-set that emphasizes tight top-down control, employee separation and specialization, and management by impersonal measurement and analysis. This textbook introduces and explains the process of management and the changing ways of thinking about the world that are critical for managers. By reviewing the actions of some successful and not-so-successful managers, you will learn the fundamentals of management. By the end of this chapter, you will already recognize some of the skills managers use to keep organizations on track, and you will begin to understand how managers can achieve astonishing results through people. By the end of this book, you will understand fundamental management skills for planning, organizing, leading, and controlling a department or entire organization.

WHY INNOVATION MATTERS The theme of this text is innovation. To gain or keep a competitive edge, managers have renewed their emphasis on innovation, shifting away from a relentless focus on controlling costs toward investing in the future. In a survey of nearly 1,000 executives in North America, Europe, South America, and Asia, 86 percent agreed that “innovation is more important than cost reduction for long-term success.”3 Why does innovation matter? Innovations in products, services, management systems, production processes, corporate values, and other aspects of the organization are what keeps companies growing, changing, and thriving. Without innovation, no company can survive over the long run. The growing clout and expertise of companies in developing countries, particularly China and India, have many Western managers worried. In a hypercompetitive global environment, companies must innovate more—and more quickly—than ever. Throughout this text, we will spotlight various companies that reflect this new innovation imperative. In addition, Chapter 10 discusses innovation and change in detail. First, let’s begin our adventure into the world of management by learning some basics about what it means to be a manager.

THE DEFINITION OF MANAGEMENT Every day, managers solve difficult problems, turn organizations around, and achieve astonishing performances. To be successful, every organization needs good managers. What characteristic do all good managers have in common? They get things done through their organizations. Managers are the executive function of the organization, responsible for building and coordinating an entire system rather than performing specific tasks. That is, rather than doing all the work themselves, good managers create the systems and conditions that enable others to perform those tasks. As a boy, Wal-Mart founder Sam Walton made $4,000 a year at his paper route. How? Walton had a natural talent for management, and he created a system whereby he hired and coordinated others to help deliver papers rather than simply delivering what he could on his own.4 By creating the right systems and environment, managers ensure that the department or organization will survive and thrive beyond the tenure of any specific supervisor or manager. Consider that Jack Welch was CEO of General Electric through 20 amazingly successful years, but the leadership transition to Jeff Immelt in 2001 was as smooth as silk, and GE has stayed at or near the top of lists such as Fortune magazine’s “Most Admired Companies,” the Financial Times “most respected” survey,

C H AP T E R 1 INNOVATIVE M ANAGEMENT

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As a new manager, remember that management means getting things done through other people. You can’t do it all yourself. As a manager, your job is to create the environment and conditions that engage other people in goal accomplishment.

TakeaMoment

THE FOUR MANAGEMENT FUNCTIONS Exhibit 1.1 illustrates the process of how managers use resources to attain organizational goals through the functions of planning, organizing, leading, and controlling. Although some management theorists identify additional management functions, such as staffing, communicating, or decision making, those additional functions m anagement The attainment will be discussed as subsets of the four primary functions in Exhibit 1.1. Chapters of this book are devoted to the multiple activities and skills associated with each of organizational goals in an function, as well as to the environment, global competitiveness, and ethics, which eefffective and effi cient manner th rough planning, organizing, infl uence how managers perform these functions. le ading , and controlling org o anizational resources.

Planning Planning means identifying goals for future organizational performance and deciding on the tasks and use of resources needed to attain them. In other words, managerial planning defines where the organization wants to be in the future and how

planning The management fu nction concerned with defi ning goals for future organizatio o nal perfo rformance and d ddeci ecid ding on the tasks and resources nneeded to attain them.

1 Introduction

and Barron’s most admired companies. People who have studied GE aren’t surprised. The company has thrived for more than a century because managers created the right environment and systems. In the late 1800s, CEO Charles Coffin emphasized that GE’s most important product was not lightbulbs or transformers, but managerial talent. Managers at GE spend a huge amount of time on human resources issues—recruiting, training, appraising, mentoring, and developing leadership talent for the future.5 Recognizing the role and importance of other people is a key aspect of good management. Early twentieth-century management scholar Mary Parker Follett defined management as “the art of getting things done through people.”6 More recently, noted management theorist Peter Drucker A business may develop from a stated that the job of managers is to give direction to their founder’s talent, but good management and vision can take it to organizations, provide leadership, and decide how to use the next level. Tattoo artists Ami James (left) and Chris Núñez (right) organizational resources to accomplish goals.7 Getting started the business Miami Ink, which is the namesake of the TLC/ things done through people and other resources and proDiscovery reality television program in its fourth season in 2008. The partners pitched the concept for the show with a friend and viding leadership and direction are what managers do. These activities apply not only to top executives such as Eric turned their business into the most well-known tattoo design studio in the United States. Planning for life after reality TV, James and Schmidt of Google or Indra Nooyi of PepsiCo, but also to Núñez are creating another Miami tattoo studio, Love Hate Tattoo, the manager of a restaurant in your home town, the leader because TLC/Discovery will own the rights to the name Miami Ink of an airport security team, a supervisor of an accounting when the series ends. department, or a director of sales and marketing. Thus, our definition of management is as follows: Management is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources. This definition holds two important ideas: (1) the four functions of planning, organizing, leading, and controlling, and (2) the attainment of organizational goals in an effective and efficient manner. Let’s first take a look at the four primary management functions. Later in the chapter, we’ll discuss organizational effectiveness and efficiency, as well as the multitude of skills managers use to successfully perform their jobs.

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EXHIBIT

P AR T 1 I NTRODUCTION

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M ANAGEMENT

The Process of Management

organizing The managementt fuun ction concerned with assign ing task s, grouping tasks into ddepartments, and allocating reesources to d department s.

to get there. An example of good planning comes from Time Warner, Inc., where the marketing chiefs of the various divisions—HBO, Time Inc., Turner Broadcasting, Warner Bros., AOL, New Line Cinema, and Time Warner Cable—get together every three weeks to talk about future projects and how the divisions can work together to make them more successful. Thanks to careful planning, for example, almost every division is involved in promoting major films such as The Golden Compass, Hairspray, and The Lord of the Rings trilogy.8

Organizing Organizing typically follows planning and reflects how the organization tries to accomplish the plan. Organizing involves assigning tasks, grouping tasks into departments, delegating authority, and allocating resources across the organization. In recent years, companies as diverse as IBM, the Catholic Church, Motorola, and the Federal Bureau of Investigation have undergone structural reorganizations to accommodate their changing plans. At Avon Products, where sales have stalled and overhead costs have run amok, CEO Andrea Jung recently trimmed seven layers of management and reorganized the company into a structure where more decisions and functions are handled on a global basis to achieve greater efficiency of scale.9 ©ELAINE THOMSON/ASSOCIATED PRESS

lea ding The manag ement fuunction that involves the uuse of in fluence to motivate employees to ac hieve th e orrganization’s goal s.

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As Chairman and CEO of Google, Eric Schmidt works with co-founders Sergey Brin and Larry Page to strike the right balance between innovation and discipline. These managers place a high priority on leading through shared values and goals to keep Google’s employees motivated and energized. Yet from his experience of engineering a turnaround at struggling Novell, Schmidt knows the other management functions of planning, organizing, and controlling are just as important for success. In discussing his management role at Google, Schmidt says, “I keep things focused.”

Leading Leading is the use of influence to motivate employees to achieve organizational goals. Leading means creating a shared culture and values, communicating goals to employees throughout the organization, and infusing employees with the desire to perform at a high level. Leading involves motivating entire departments and divisions as well as those individuals working immediately with the manager. In an era of uncertainty, global competition, and a growing diversity of the workforce, the ability to shape culture, communicate goals, and motivate employees is critical to business success.

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1 Introduction

One doesn’t have to be a well-known top manager to be an exceptional leader. Many managers working quietly in both large and small organizations around the world also provide strong leadership within departments, teams, nonprofit organizations, and small businesses. For example, Cara Kakuda is an area general manager in Hawaii for Nextel Partners, the rural-market division of Nextel Communications. Kakuda earned the job because of her ability to motivate and inspire employees. “People give her 150 percent,” said a Nextel executive.10

Controlling Controlling is the fourth function in the management process. Controlling means monitoring employees’ activities, determining whether the organization is on target toward its goals, and making corrections as necessary. Managers must ensure that the organization is moving toward its goals. Trends toward empowerment and trust of employees have led many companies to place less emphasis on topdown control and more emphasis on training employees to monitor and correct themselves. Information technology is helping managers provide needed organizational control without strict top-down constraints. Companies such as Cisco Systems and Oracle use the Internet and other information technology to coordinate and monitor virtually every aspect of operations, which enables managers to keep tabs on performance without maintaining daily authoritarian control over employees.11

ORGANIZATIONAL PERFORMANCE The other part of our definition of management is the attainment of organizational goals in an efficient and effective manner. Management is so important because organizations are so important. In an industrialized society where complex technologies dominate, organizations bring together knowledge, people, and raw materials to perform tasks no individual could do alone. Without organizations, how could technology be provided that enables us to share information around the world in an instant; electricity be produced from huge dams and nuclear power plants; and thousands of videogames, compact discs, and DVDs be made available for our entertainment? Organizations pervade our society, and managers are responsible for seeing that resources are used wisely to attain organizational goals. Our formal definition of an organization is a social entity that is goal directed and deliberately structured. Social entity means being made up of two or more people. Goal directed means designed to achieve some outcome, such as make a profit (Wal-Mart), win pay increases for members (AFL-CIO), meet spiritual needs (United Methodist Church), or provide social satisfaction (college sorority). Deliberately structured means that tasks are divided and responsibility for their performance is assigned to organization members. This definition applies to all organizations, including both profit and nonprofit. Small, offbeat, and nonprofit organizations are more numerous than large, visible corporations—and just as important to society. Based on our definition of management, the manager’s responsibility is to coordinate resources in an effective and efficient manner to accomplish the organization’s goals. Organizational effectiveness is the degree to which the organization achieves a stated goal, or succeeds in accomplishing what it tries to do. Organizational effectiveness means providing a product or service that customers value. Organizational efficiency refers to the amount of resources used to achieve an organizational goal. It is based on how much raw materials, money, and people are necessary for producing a given volume of output. Efficiency can be calculated as the amount of resources used to produce a product or service. Efficiency and effectiveness can both be high in the same organization. Managers at retailer Target, for instance, continually look for ways to increase efficiency while also meeting the company’s quality and customer satisfaction goals.

controlling The manageme nt t fu nction concerned with monitto o ring employees’activities, keep ing the org anization on track to w ard its g oals, and making co co rrec ti o ns as nee ded. o rgani zati on A social entity th at is goal directed and delib erratel e y structured. effectiveness The degree to whi w ch the organization achieves aa stated goal. efficiency The use of minimal re sources—raw material s, monney ey, an d peopll e—to prod duce a des d ired volume of output.

8 Target

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Expect more, pay less. An astonishing 97 percent of Americans recognize Target’s red-andwhite bull’s-eye brand, and almost as many are familiar with the slogan. “Sometimes we focus a little bit more on the ‘pay less,’ sometimes on the ‘expect more,’ but the guardrails are there,” says Gregg Steinhafel, who took over as CEO of the trendy retailer in May 2008. Target’s slogan not only offers a promise to customers, it also reflects the company’s emphasis on both effectiveness and efficiency. Target has an elite, secret team, called the “creative cabinet” that is made up of outsiders of various ages, interests, and nationalities who provide ideas and insights that keep the company on the cutting edge of consumer trends and give their input regarding managers’ strategic initiatives. Innovation, design, and quality are key goals, and managers focus on providing a fun store experience and a unique, exciting product line. At the same time, they keep a close eye on costs and operating efficiencies to keep prices low. “I talk a lot about gross margin rate and the key drivers to improve our metrics and performance,” Steinhafel says. In its SuperTarget centers, the retailer is able to consistently underprice supermarkets on groceries by about 10 percent to 15 percent and comes very close to Wal-Mart’s rock-bottom prices. As the economy slows, Target, like other retailers, has found the need to adjust worker hours and look for other efficiencies, which has drawn unfavorable attention from worker advocacy groups. Managers have to walk a fine line to continue to meet their goals for both efficiency and effectiveness.12

All managers have to pay attention to costs, but severe cost cutting to improve efficiency can sometimes hurt organizational effectiveness. The ultimate responsibility of managers is to achieve high performance, which is the attainment of organizational goals by using resources in an efficient and effective manner.

MANAGEMENT SKILLS A manager’s job is complex and multidimensional and, as we shall see throughout this book, requires a range of skills. Although some management theorists propose a long list of skills, the necessary skills for managing a department or an organization can be summarized in three categories: conceptual, human, and technical.13 As illustrated in Exhibit 1.2, the application of these skills changes as managers move up in the organization. Although the degree of each skill necessary at different levels of an organization may vary, all managers must possess skills in each of these important areas to perform effectively.

performance The org anizati on’s ability to attain its ...